Gold World News Flash

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• How Gold Will Respond to Declining Discovery
• Check out what Google autocomplete tells us about America
• The SECRET SILVER STOCKPILE, Part I
• Gold Daily and Silver Weekly Charts – Hotel California
• Governments suppress gold to try to conceal inflation, Grant Williams tells KWN
• China and U.S. likely cooperate in gold suppression, researcher Koos Jansen says
• Gold Prepared for the Attack of the Short Sellers
• Groupthink Or Black Swan Rising? Not A Single 'Economist' Expects An Economic Downturn
• Weak U.S. Housing Data Supports Euro
• Gold and Silver Stocks Begin Oversold Bounce
• Hoisington On The End Of The Fed's (Mythical) "Wealth Effect"
• Thomas Piketty's "Sensational" New Book
• The Middle Class In Canada Is Now Doing Better Than The Middle Class In America
• Mugabe Considers Revival Of "Hyperinflated" Zimbabwe Dollar
• The Gold Price Added $3.60 Today for a Comex Close at $1,284.20
• The Gold Price Added $3.60 Today for a Comex Close at $1,284.20
• Eight Energy Myths Explained
• West Hemorrhaging Gold But Here’s Its True Achilles’ Heel
• Gold Sentiment Reaching Key Level
• Gold Daily and Silver Weekly Charts - El Camino Real
• Gold Daily and Silver Weekly Charts - El Camino Real
• Gold's long backwardation makes Turk expect a good year for the monetary metal
• Why Niocorp (NB.V or NIOBF) Is Soaring Over 230% in 2014
• Turk - Western Central Banks To Run Out Of Gold This Year
• Gene Arensberg: Elephant tracks signal upward reversal in gold
• The Secret Silver Stockpile, Part I
• Silver $50: Three Years After the "Shortage"
• Silver $50: Three Years After the "Shortage"
• Silver $50: Three Years After the "Shortage"
• How Gold Will Respond to Declining Discovery
• So central bank gold is being held in investment bank vaults
• "Technicals Dominate" Gold Prices But "Algos Disappointed" as Trading Stays "Dull"
• Gold and Miners Outperform Once Again
• The current London Gold Pool will collapse as the first did, Grant Williams tells KWN
• Reuters notes that central banks trade gold every day but doesn't grasp what it means
• The Big Currency Reset
• The Big Currency Reset
• More War Needed
• More War Needed
• Gold in Crisis
• Gold in Crisis
• Prepared for the Attack of the Short Sellers: Joe Reagor
• Prepared for the Attack of the Short Sellers: Joe Reagor
• Prepared for the Attack of the Short Sellers: Joe Reagor

How Gold Will Respond to Declining Discovery Posted: 23 Apr 2014 11:00 PM PDT by Bill Bonner, Daily Reckoning.com: As metals prices boomed during the last decade, small explorers and big miners spent billions of shareholder dollars seeking new deposits. Investors wanted the high rewards of a discovery as metals soared in price. At $1,900 per ounce of gold, even mediocre finds could make money. Richard Schodde, of MinEx Consulting, has studied past exploration cycles in detail. He says we are seeing a tightening of the sector, as the availability of capital has plummeted. Costs of exploration are coming down as companies cut back on high-salaried employees and reduce operating costs. The following chart from MinEx shows exploration expenditures rising quickly during the boom years: Read More @ DailyReckoning.com

Check out what Google autocomplete tells us about America Posted: 23 Apr 2014 10:30 PM PDT from Sovereign Man: "Why does Obama suck?" If you're not sure, ask Google. It seems that millions of Americans already have asked this question, along with: "Why does the government want to kill us?", and "Can the government take your gold?" These are among the jewels of Google autocomplete– instantly displaying results from the most popular searches. Try it yourself. The results vary slightly based on geography, but if you type, for example, "Obama is ", I get the following: Read More @ sovereignman.com

The SECRET SILVER STOCKPILE, Part I Posted: 23 Apr 2014 08:15 PM PDT by Jeff Nielson, Bullion Bulls Canada: As indicated in my most-recent commentary; we are very likely already in a Post-Default World in the gold market. Specifically, at some time (likely several years ago) the bankers' paper "gold market" experienced technical default, where current and immediate claims on existing gold inventories significantly exceeded those inventories. Actual (versus "official") inventories of gold in the bankers' metals warehouses today are now a large, negative number – in the many millions of ounces. Official (and visible) default in the gold market has only been averted by a cornucopia of fraud, primarily "fractional-reserve banking" in the gold market, i.e. through "selling" each ounce of actual gold possessed by the banking cabal to numerous chump-owners. The magnitude of this 'fractional-reserve' fraud is something about which we can only speculate, but we do have parameters. Read More @ BullionBullsCanada.com

Gold Daily and Silver Weekly Charts – Hotel California Posted: 23 Apr 2014 08:00 PM PDT from Jesse's Café Américain: Its funny the way that 476,000 ounces of gold have been ‘delivered’ so far this month, but the warehouse inventories never seem to go down. Like the Hotel California, you can check out, but you can never leave. When I was seconded to the ITU in Genève for many weeks at a time, I used to stay in a smaller hotel on the Rue Gevray that was called the Hotel California. It was very convenient because they had efficiency rooms on the top floor with a small kitchen and a balcony with a nice view of the lake. And it was not a bad walk up the hill to the old League of Nations building, and an equally pleasant walk over to the restaurant areas. Read More @ Jessescrossroadscafe.blogspot.ca

Governments suppress gold to try to conceal inflation, Grant Williams tells KWN Posted: 23 Apr 2014 07:50 PM PDT 10:50p ET Wednesday, April 23, 2014 Dear Friend of GATA and Gold: Gold price suppression is crucial to Western governments that are creating vast amounts of money in the name of rescuing their economies, Singapore gold fund manager Grant Williams tells King World News. It's a matter of concealing inflation, he says. An excerpt from the interview is posted at the KWN blog here: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/4/23_We... CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. ADVERTISEMENT Buy precious metals free of value-added tax throughout Europe Europe Silver Bullion is a fast-growing dealer sourcing its products from renowned mints, refiners, and distributors. Because of a legal loophole that will close soon, you can acquire the world's most popular bullion coins free of value-added tax throughout the European Union. You can collect your order in person at our headquarters in Tallinn, Estonia, or have it delivered in any of the 28 EU countries. Europe Silver Bullion is owned and operated by North American and European experts in selling, storing, and transporting precious metals. We have an extensive product inventory of silver, gold, platinum, and palladium, and our network spans the world. Visit us at www.europesilverbullion.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/ Committee for Monetary Research and Education Spring Dinner Meeting Union League Club, New York City Thursday, May 22, 2014 http://www.cmre.org/news/spring-meeting-2014/ 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... New Orleans Investment Conference Wednesday-Saturday, October 22-25, 2014 Hilton New Orleans Riverside Hotel New Orleans, Louisiana https://jeffersoncompanies.com/new-orleans-investment-conference/home * * * 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 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.

China and U.S. likely cooperate in gold suppression, researcher Koos Jansen says Posted: 23 Apr 2014 07:40 PM PDT 10:43p ET Wednesday, April 23, 2014 Dear Friend of GATA and Gold: China and the United States are probably cooperating for the time being in suppressing the price of gold so that China can obtain gold to hedge its foreign exchange surplus of U.S. dollars without collapsing the dollar's value or exploding the gold price, China gold market expert Koos Jansen tells Sprott Money News in an interview today. Jansen, a consultant to GATA, adds that he expects China's next official announcement of its gold reserves to be in the range of 4,000 to 5,000 tonnes. The interview is available in both audio and text at the Sprott Money Internet site here: http://www.sprottmoney.com/news/ask-the-expert-koos-jansen-april-2014 Meanwhile Jansen reports at his Internet site, In Gold We Trust, that Chinese gold demand remains in a downtrend over the last few weeks: http://www.ingoldwetrust.ch/chinese-gold-demand-dropping 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/ Committee for Monetary Research and Education Spring Dinner Meeting Union League Club, New York City Thursday, May 22, 2014 http://www.cmre.org/news/spring-meeting-2014/ 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... New Orleans Investment Conference Wednesday-Saturday, October 22-25, 2014 Hilton New Orleans Riverside Hotel New Orleans, Louisiana https://jeffersoncompanies.com/new-orleans-investment-conference/home * * * 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 precious metals free of value-added tax throughout Europe Europe Silver Bullion is a fast-growing dealer sourcing its products from renowned mints, refiners, and distributors. Because of a legal loophole that will close soon, you can acquire the world's most popular bullion coins free of value-added tax throughout the European Union. You can collect your order in person at our headquarters in Tallinn, Estonia, or have it delivered in any of the 28 EU countries. Europe Silver Bullion is owned and operated by North American and European experts in selling, storing, and transporting precious metals. We have an extensive product inventory of silver, gold, platinum, and palladium, and our network spans the world. Visit us at www.europesilverbullion.com.

Gold Prepared for the Attack of the Short Sellers Posted: 23 Apr 2014 07:07 PM PDT Despite the ongoing attack of the short-sellers, the fundamentals of gold and silver production are increasingly robust. ROTH Capital's Joe Reagor tells The Gold Report why he believes the price of gold is steaming toward $1,500/oz, with silver prices following in the wake. Reagor highlights several junior precious metals miners in a market that is out to prove the bears The Gold Report: Let's talk about the growth and stability of gold and silver sales in Q2/14. What catalysts are on the horizon?

Groupthink Or Black Swan Rising? Not A Single 'Economist' Expects An Economic Downturn Posted: 23 Apr 2014 07:06 PM PDT Submitted by Pater Tenebrarum of Acting-Man blog, A 100% Consensus This doesn't happen very often.  Marketwatch reports that Jim Bianco points out in a recent market comment that the 67 economists taking part in a regular Bloomberg survey have a unanimous forecast regarding treasury bond yields: they will be higher 6 months from now. This is a truly striking result, and given the well-known propensity of mainstream economists to guess wrong (their forecasts largely consist of extrapolating the most recent short term trend), it may provide us with a few insights. In fact, considering that there have been only a handful of instances since 2009 when a majority of the economists surveyed predicted a decline in yields, we can already state that their forecasts regarding treasuries are quite often (though obviously not always) wide of the mark. In fact, so far this year they are already wrong again – and so are fund managers, as they hold their lowest exposure to treasuries in seven years. This is not the only thing there is complete unanimity about. Not a single economist taking part in a separate survey believes an economic downturn is possible. “Economists are unwavering in their assessment of where yields are headed in the next half year.   Jim Bianco, of Bianco Research, points out in a market comment Tuesday that a survey of 67 economists this month shows every single one of them expects the 10-year Treasury yield to rise in the next six months.   The survey, which is done each month by Bloomberg, has been notably bearish for some time now, with nearly everyone expecting rising rates. In March, 97% expected rising rates. In February, 95% expected yields to climb. And in January, 97% held that expectation. Since the beginning of 2009, there have only been a handful of instances where less than 50% expected rates to rise.   Still, the fact that every single survey participant is bearish is striking. The last time the survey had that result was in May 2012, when benchmark yields were well below 2%.   “Literally there is maybe one economist in the United States straddling the bullish/bearish divide on interest rates. The rest are bearish,” Bianco writes.   He adds that a J.P. Morgan client survey shows that the percentage of money manager respondents who said they are underweight Treasurys is the second highest in seven years.   This is all the more surprising when we consider that investors went into 2014 thinking yields would rise significantly. Instead, the benchmark yield is lower than when the year started, as the market waded throw subpar economic data, geopolitical tensions, and uncertainty over the Federal Reserve. The 10-year note last traded at a yield of 2.72% on Tuesday, down from just over 3% on Dec. 31.   Then again, a separate poll of economists recently showed that exactly zero expect the economy to contract.   But when the entire market thinks one thing is about to happen, the opposite outcome is often in store, notes James Camp, managing director of fixed income at Eagle Asset Management. So don’t count out that result with Treasurys, he advises.   “It’s the most hated asset class,” says Camp, but Treasurys are some of the best performers year-to-date.” (emphasis added) Color us unsurprised regarding the fact that the 'most hated asset class' has turned out to be one of the better performing so far this year. Gold is probably hated even more, and for similar reasons. Everybody expects the weakest recovery of the entire post WW2 era to reach 'escape velocity' (whatever that is supposed to mean), even after adding almost $8 trillion to the federal debt and some $4.8 trillion to the broad true money supply since the 2008 crisis have led to such a dismal outcome (of course as card-carrying Austrians we believe this development is precisely what should have been expected).     Likely Outcomes While treasury bond yields have only moved down a little so far this year, one must keep in mind that they are at a historically very low level to begin with. At a yield of roughly 4%, a 50 basis points move represents 12.5% of the entire distance to zero. However, we also know that a lot more downside is possible. Yields have already been quite a bit lower on a number of occasions. There can be little doubt that if the consensus of economists turns out to be wrong again, it will likely be wrong on both t-bond yields and the economy. As an aside, it is noteworthy that long term yields have weakened considerably even while five year yields have remained roughly unchanged and yields on the short end of the curve have actually risen slightly since the beginning of the year. We interpret this as the market judging the Fed to be adopting a tighter monetary policy, and expecting weaker aggregate economic activity to ultimately result from this new stance. Clearly, the 'tapering' of 'QE' does represent a tightening of policy, no matter what Fed members are saying about it. It means the pace of money supply inflation is being slowed down. Note that something similar happened in the run-up to the 2008 crisis, only in this instance the yield curve actually inverted prior to the economic downturn. One should not expect a complete yield curve inversion to warn in a timely fashion of a recession when the central bank is hell-bent on keeping its policy rate at or near zero. We know this from 'ZIRP' experiments that have been undertaken in other countries, such as e.g. Japan. If the economy doesn't do what seemingly everybody expects it to do in the famed 'second half' (practically the entire sell-side shares the consensus of the economists surveyed by Bloomberg), then treasuries and gold should be expected to rise, while equities could end up getting hit quite badly.   30 year t-bond yield: declining since the beginning of the year – click to enlarge.   It is clear that one of the reasons why economists expect no contraction in the economy is that 'traditional' recession indicators still appear largely benign, if somewhat weaker than previously. We prefer to keep an eye on things most people don't watch, such as the ratio of capital to consumer goods production, which shows how factors of production are pulled toward the higher stages of the capital structure when monetary pumping is underway. This ratio tends to peak and reverse close to recessions. Its recent trend isn't entirely conclusive yet as it has begun to move sideways, but it clearly seems to be issuing a 'heads up' type warning signal.   Capital vs. consumer goods production – it tends to peak close to the beginning of recession periods, and declines while recessions are underway, as the production structure is temporarily shortened again – click to enlarge.   Note also that the transition from expansion to contraction is usually quite swift, and never widely expected.   Conclusion: This is an astonishing degree of consensus thinking, but it perfectly mirrors the complacency we see in stock market sentiment and positioning data. The probability that such a unanimous view will turn out to be correct is traditionally extremely low. The economy is likely resting on a much weaker foundation than is generally believed. This is not least the result of massive monetary pumping and deficit spending, both of which tend to severely weaken the economy on a structural level, even though they can create a temporary illusion of 'growth'.

Weak U.S. Housing Data Supports Euro Posted: 23 Apr 2014 07:04 PM PDT Earlier today, the common currency moved higher against the U.S. dollar after data showed that the euro zone manufacturing PMI rose to 53.3 in April from 53.0 in the previous month (while analysts had expected an unchanged reading). Later in the day, the Commerce Department showed that sales on new homes dropped 14.5%, which supported the euro as well. Whether these positive numbers are in line with the technical picture of EUR/USD?

Gold and Silver Stocks Begin Oversold Bounce Posted: 23 Apr 2014 06:56 PM PDT The bottoming process for gold and silver shares has been arduous as they’ve oscillated back and forth for almost a year. We noted a month ago that the failed breakout in March was strong evidence that an interim top was in place. Heading into this week it looked like the miners would fall further before finding support. However, over the past two days the sector clearly reversed its short-term course. For now this appears to be a rebound from an oversold bounce.

Hoisington On The End Of The Fed's (Mythical) "Wealth Effect" Posted: 23 Apr 2014 06:35 PM PDT Authored by Lacy Hunt and Van Hoisington of Hoisington Investment Management, Hoisington Investment Management – Quarterly Review and Outlook, First Quarter 2014 Optimism at the FOMC The Federal Open Market Committee (FOMC) has continuously been overly optimistic regarding its expectations for economic growth in the United States since the last recession ended in 2009. If their annual forecasts had been realized over the past four years, then at the end of 2013 the U.S. economy should have been approximately $1 trillion, or 6%, larger. The preponderance of research suggests that the FOMC has been incorrect in its presumption of the effectiveness of quantitative easing (QE) on boosting economic growth. This faulty track record calls into question their latest prediction of 2.9% real GDP growth for 2014 and 3.4% for 2015. A major reason for the FOMC’s overly optimistic forecast for economic growth and its incorrect view of the effectiveness of quantitative easing is the reliance on the so-called “wealth effect”, described as a change in consumer wealth which results in a change in consumer spending. In an opinion column for The Washington Post on November 5, 2010, then FOMC chairman Ben Bernanke wrote, “...higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.” Former FOMC chairman Alan Greenspan in a CNBC interview on Feb. 15, 2013 said, “The stock market is the key player in the game of economic growth.” This year, in the January 20 issue of Time Magazine, the current FOMC chair, Janet Yellen said, “And part of the [economic stimulus] comes through higher house and stock prices, which causes people with homes and stocks to spend more, which causes jobs to be created throughout the economy and income to go up throughout the economy.” FOMC leaders may feel justified in taking such a position based upon the FRB/US, a large- scale econometric model. In part of this model, employed by the FOMC in their decision making, household consumption behavior is expressed as a function of total wealth as well as other variables. The model predicts that an increase in wealth of one dollar will boost consumer spending by five to ten cents (see page 8-9 “Housing Wealth and Consumption” by Matteo Iacoviello, International Finance Discussion Papers, #1027, Board of Governors of the Federal Reserve System, August 2011). Even at the lower end of their model's range this wealth effect, if it were valid, would be a powerful factor in spurring economic growth. After examining much of the latest scholarly research, and conducting in house research on the link between household wealth and spending, we found the wealth effect to be much weaker than the FOMC presumes. In fact, it is difficult to document any consistent impact with most of the research pointing to a spending increase of only one cent per one dollar rise in wealth at best. Some studies even indicate that the wealth effect is only an interesting theory and cannot be observed in practice. The wealth effect has been both a justification for quantitative easing and a root cause of consistent overly optimistic growth expectations by the FOMC. The research cited below suggests that the concept of a wealth effect is in fact deeply flawed. It is unfortunate that the FOMC has relied on this flawed concept to experiment with over $3 trillion in asset purchases and continues to use it as the basis for what we believe are overly optimistic growth expectations. Consumer Wealth and Consumer Spending Many episodes of rising and falling financial and housing asset wealth have occurred throughout history. The question is whether these periods of wealth changes are associated in a consistent and reliable way with changes in consumer spending. We examined, separately, percent changes in real consumption expenditures per capita against percent changes in the real S&P 500 index (financial wealth) and against percent changes in Robert Shiller’s real home price index (housing wealth). If economic relationships are valid they should work for all time periods, regardless of highly different idiosyncratic conditions, as opposed to an isolated subset of historical experience. As such, we conducted our analysis from 1930 through 2013, the entire time period for which all variables were available. Financial Wealth. Chart 1 is a scatter diagram of current percent changes in both real per capita personal consumption expenditures (PCE), the preferred measure of spending, and the real S&P 500 stock price index. It is made up of 84 dots, which constitutes a robust sample. Over our sample period, as with most extremely long periods, time will tend to link economic variables to each other; population is a key factor that can cause such an association. By expressing consumption in per capita terms, trending has been reduced, and in turn, an artificially overstated degree of correlation has been avoided. If financial wealth drives consumer spending, an unambiguous positively sloped line should be evident on this scatter diagram. Larger gains in the S&P 500 would be associated with faster increases in spending; conversely, declines in the S&P 500 would be tied to lower spending. If there was a strong positive correlation, the large gains in stock prices would be associated with strong gains in spending, and they would fall in the upper right quadrant of the graph. In addition, sizeable declines in the S&P would be associated with large decreases in consumer spending, and the dots would fall in the lower left quadrant, resulting in an upward sloping line. For the relationship to be stable and dependable the dots should be packed in an around the trend line. This is clearly not the case. The trend line through the dots is positive, but the observations in the upper left quadrant of the graph and those in the lower right exhibit a negative rather than positive correlation. Furthermore, the dots are not clustered close to the trend line. The goodness of fit (coefficient of determination) of 0.27 is statistically significant; however, the slope of the line is minimally positive. This suggests that an approximate one dollar increase in wealth will boost real per capita PCE by less than one cent, far less than even the lower band of the effect in the Fed’s model. Theoretically, lagged changes are preferred because when current or coincidental changes in economic variables are correlated the coefficients may be biased due to some other factor not covered by the empirical estimation. Also, lags give households time to adjust to their change in wealth. As such, we correlated the current percent change in real per capita PCE against current changes as well as one- and two-year lagged changes (expressed as a three-year moving average) in the S&P 500. The lags did not improve the goodness of fit as the coefficient of determination fell to 0.21. An increased dollar of wealth, however, still resulted in a one cent increase in consumption. We then correlated current percent change in real per capita PCE with only lagged changes in the real S&P 500 for the two prior years (expressed as a two-year moving average), and the relationship completely fell apart as the goodness of fit fell to a statistically insignificant 0.06. Housing Wealth. Chart 2 is a second scatter diagram, relating current percent changes in real home prices to current percent changes in real per capita PCE. Once again, the trend line does have a small positive slope, but there are so many observations in the upper left quadrant that the coefficient of determination does not meet robust tests for statistical significance. The dots are even more dispersed from the trend line than in the prior scatter diagram. As with the analysis on financial wealth, when current changes in consumption were correlated against the lagged changes in home prices (both the three-year moving average and the two-year moving average), the goodness of fit deteriorated significantly and was not statistically significant in either case. Correlations, or the lack thereof, indicated by these scatter diagrams do not prove causation. Nevertheless, economic theory offers an explanation for the poor correlation. If a person has an appreciated asset and wishes to increase spending, one option is to sell the asset, capture the gain and buy something else. However, the funds to make the new purchase comes from the buyer of the asset. Thus, when financial assets are sold, money balances increase for the seller but fall for the buyer. The person with an appreciated asset could choose to borrow against that asset. Since new debt is current spending in lieu of future spending, the debt option may only provide a temporary boost to economic activity. To avoid an accentuated business cycle, debt must generate an income stream to repay principal and interest. Otherwise any increase in debt to convert wealth gains into consumer spending may merely add to cyclical volatility without producing any lasting benefit. Scholarly Research Scholarly research has debated the impact of financial and housing wealth on consumer spending as well. The academic research on financial wealth is relatively consistent; it has very little impact on consumption. In “Financial Wealth Effect: Evidence from Threshold Estimation” (Applied Economic Letters, 2011), Sherif Khalifa, Ousmane Seck and Elwin Tobing found “a threshold income level of almost $130,000, below which the financial wealth effect is insignificant, and above which the effect is 0.004.” This means a one dollar rise in wealth would, in time, boost consumption by less than one-half of a penny. Similarly, in “Wealth Effects Revisited 1975- 2012,” Karl E. Case, John M. Quigley and Robert J. Shiller (Cowles Foundation Discussion Paper #1884, December 2012) write, “The numerical results vary somewhat with different econometric specifications, and so any numerical conclusion must be tentative. We find at best weak evidence of a link between stock market wealth and consumption.” This team looked at quarterly observations during the 17-year period from 1982 through 1999 and the 37-year period from 1975 through the spring quarter of 2012. The research on housing wealth is more divided. In the same paper referenced above, Karl E. Case, John M. Quigley and Robert J. Shiller write, “In contrast, we do find strong evidence that variations in housing market wealth have important effects upon consumption.” These findings differ from the findings of various other economists. In “The (Mythical?) Housing Wealth Effect” (NBER Working Paper #15075, June 2009), Charles Calomiris, Stanley D. Longhofer and William Miles write, “Models used to guide policy, as well as some empirical studies, suggest that the effect of housing wealth on consumption is large and greater than the wealth effect on consumption from stock holdings. Recent theoretical work, in contrast, argues that changes in housing wealth are offset by changes in housing consumption, meaning that unexpected shocks in housing wealth should have little effect on non- housing consumption.” Furthermore, R. Glenn Hubbard and Anthony Patrick O’Brien (Macroneconomics, Fourth edition, 2013, page 381) provide a highly cogent summary of the aforementioned research by Charles Calomiris, Stanley D. Longhofer and William Miles. They argue that consumers “own houses primarily so they can consume the housing services a home provides. Only consumers who intend to sell their current house and buy a smaller one – for example, ‘empty nesters’ whose children have left home – will benefit from an increase in housing prices. But taking the population as a whole, the number of empty nesters may be smaller than the number of first time home buyers plus the number of homeowners who want to buy larger houses. These two groups are hurt by rising home prices.” Amir Sufi, Professor of Finance at the University of Chicago, also indicates that the effect of housing wealth is much smaller than assumed in the policy models and earlier empirical research. Dr. Sufi calculates that an increase of one dollar of housing wealth may yield as little as one cent of extra spending (“Will Housing Save the U.S. Economy?”, April 2013, Chicago Booth Economic Outlook event). This is in line with a 2013 study by Sherif Khalifa, Ousmane Seck and Elwin Tobing (“Housing Wealth Effect: Evidence from Threshold Estimation”, The Journal of Housing Economics). These economists found that a threshold income level of $74,046 had a wealth coefficient that rounded to one cent. Income levels between $74,046 and $501,000 had a two cent coefficient, and incomes above $501,000 had a statistically insignificant coefficient. In total, the majority of the research is seemingly unequivocal in its conclusion. The wealth effect (financial and housing) is barely operative. As such, it is interesting to note its actual impact in 2013. Where Was the Wealth Effect in 2013? If the wealth effect was as powerful as the FOMC believes, consumer spending should have turned in a stellar performance last year. In 2013 equities and housing posted strong gains. On a yearly average basis, the real S&P 500 stock market index increase was 17.7%, and the real Case Shiller Home Price Index increase was 9.1%. The combined gain of these wealth proxies was 26.8%, the eighth largest in the 84 years of data. The real per capital PCE gain of just 1.2% ranked 58th of 84. The difference between the two was the fifth largest in the 84 cases. Such a huge discrepancy in relative performance in 2013, occurring as it did in the fourth year of an economic expansion, raises serious doubts about the efficacy of the wealth effect (Chart 3). In econometrics, theoretical propositions must be empirically verifiable. Researchers using numerous statistical procedures examining various sample periods should be able to identify at least some consistent patterns. This is not the case with the wealth effect. Regardless if examining a simple scatter diagram or something far more sophisticated, the wealth effect is weak and inconsistent. The powerful wealth coefficients imbedded in the FRB/US model have not been supported by independent research. To quote Chris Low, Chief Economist of FTN (FTN Financial, Economic Weekly, March 21, 2014), “There may not be a wealth effect at all. If there is a wealth effect, it is very difficult to pin down ...” Since the FOMC began quantitative easing in 2009, its balance sheet has increased more than $3 trillion. This increase may have boosted wealth, but the U.S. economy received no meaningful benefit. Furthermore, the FOMC has no idea what the ultimate outcome of such an increase will be or what a return to a ‘normal’ balance sheet might entail. Given all of this, we do not see any evidence for economic growth as robust at the FOMC predicts. Without a wealth effect, the stock market is not the “key player” in the economy, and no “virtuous circle” runs through the stock market. We reiterate our view that nominal GDP will rise just 3% this year, down from 3.4% in 2013. M2 growth in the latest twelve months was 5.8%, but velocity should decline by at least 3% and limit nominal GDP to 3% or less. The Flatter Yield Curve: An Opportunity for Treasury Bond Investors The Fed has indicated that the federal funds rate could begin to rise in the next couple of years, and the Treasury market has moderately anticipated this event. Similar to the 2004-2005 federal funds rate cycle, long before the federal funds rate increased short Treasury rates began their ascent (Chart 4). Interestingly, once the federal funds rate did begin to rise in 2004, long Treasury rates fell over the next two years. From May of 2004 until Feb. 2006 the federal funds rate increased by 350 basis point (bps) and the five-year note increased by 80 bps, yet the 30-year bond fell by 84 bps as inflation expectations fell. If the Fed follows through with its forecast and short rates rise, the dampening effect on inflation expectations should again cause long rates to fall. On the other hand, should economic activity continue to moderate then the downward pressure on inflation will continue. The prospect for lower Treasury yields appears favorable. Van R. Hoisington Lacy H. Hunt, Ph.D.

Thomas Piketty's "Sensational" New Book Posted: 23 Apr 2014 06:03 PM PDT Submitted by Hunter Lewis via The Mises Economic blog, This 42 year economist from French academe has written a hot new book: Capital in the Twenty-First Century. The US edition has been published by Harvard University Press and, remarkably, is leading the best seller list, the first time that a Harvard book has done so. A recent review describes Piketty as the man “who exposed capitalism’s fatal flaw.” So what is this flaw? Supposedly under capitalism the rich get steadily richer in relation to everyone else; inequality gets worse and worse. It is all baked into the cake, unavoidable. To support this, Piketty offers some dubious and unsupported financial logic, but also what he calls “a spectacular graph” of historical data. What does the graph actually show? The amount of U.S. income controlled by the top 10% of earners starts at about 40% in 1910, rises to about 50% before the Crash of 1929, falls thereafter, returns to about 40% in 1995, and thereafter again rises to about 50% before falling somewhat after the Crash of 2008. Let’s think about what this really means. Relative income of the top 10% did not rise inexorably over this period. Instead it peaked at two times: just before the great crashes of 1929 and 2008. In other words, inequality rose during the great economic bubble eras and fell thereafter. And what caused and characterized these bubble eras? They were principally caused by the U.S. Federal Reserve and other central banks creating far too much new money and debt. They were characterized by an explosion of crony capitalism as some rich people exploited all the new money, both on Wall Street and through connections with the government in Washington. We can learn a great deal about crony capitalism by studying the period between the end of WWI and the Great Depression and also the last twenty years, but we won’t learn much about capitalism. Crony capitalism is the opposite of capitalism. It is a perversion of markets, not the result of free prices and free markets. One can see why the White House likes Piketty. He supports their narrative that government is the cure for inequality when in reality government has been the principal cause of growing inequality. The White House and IMF also love Piketty’s proposal, not only for high income taxes, but also for substantial wealth taxes. The IMF in particular has been beating a drum for wealth taxes as a way to restore government finances around the world and also reduce economic inequality. Expect to hear more and more about wealth taxes. Expect to hear that they will be a “one time” event that won’t be repeated, but that will actually help economic growth by reducing economic inequality. This is all complete nonsense. Economic growth is produced when a society saves money and invests the savings wisely. It is not quantity of investment that matters most, but quality. Government is capable neither of saving nor investing, much less investing wisely. Nor should anyone imagine that a wealth tax program would be a “one time” event. No tax is ever a one time event. Once established, it would not only persist; it would steadily grow over the years. Piketty should also ask himself a question. What will happen when investors have to liquidate their stocks, bonds, real estate, or other assets in order to pay the wealth tax? How will markets absorb all the selling? Who will be the buyers? And how will it help economic growth for markets and asset values to collapse under the selling pressure? In 1936, a dense, difficult-to-read academic book appeared that seemed to tell politicians they could do exactly what they wanted to do. This was Keynes’s General Theory. Piketty’s book serves the same purpose in 2014, and serves the same short-sighted, destructive policies. If the Obama White House, the IMF, and people like Piketty would just let the economy alone, it could recover. As it is, they keep inventing new ways to destroy it.

The Middle Class In Canada Is Now Doing Better Than The Middle Class In America Posted: 23 Apr 2014 05:05 PM PDT Submitted by Michael Snyder of The Economic Collapse blog, For most of Canada's existence, it has been regarded as the weak neighbor to the north by most Americans.  Well, that has changed dramatically over the past decade or so.  Back in the year 2000, middle class Canadians were earning much less than middle class Americans, but since then there has been a dramatic shift.  At this point, middle class Canadians are actually earning more than middle class Americans are.  The Canadian economy has been booming thanks to a rapidly growing oil industry, and meanwhile the U.S. middle class has been steadily shrinking.  If current trends continue, a whole bunch of other countries are going to start passing us too.  The era of the "great U.S. middle class" is rapidly coming to a bitter end. In recent years, I have been up to Canada frequently, and I am always amazed at how much nicer things are up there.  The stores and streets are cleaner, the people are more polite and it seems like almost everyone that wants to work has a job. But despite knowing all this, I was still surprised when the New York Times reported this week that middle class incomes in Canada have now surpassed middle class incomes in the United States... After-tax middle-class incomes in Canada — substantially behind in 2000 — now appear to be higher than in the United States. The poor in much of Europe earn more than poor Americans. And things are particularly dire for those in the U.S. on the low end of the scale... The struggles of the poor in the United States are even starker than those of the middle class. A family at the 20th percentile of the income distribution in this country makes significantly less money than a similar family in Canada, Sweden, Norway, Finland or the Netherlands. Thirty-five years ago, the reverse was true. Even while our politicians and the media continue to proclaim that everything is "just fine", the U.S. middle class continues to slide toward oblivion. The biggest reason for this is the lack of middle class jobs.  Millions of good jobs have been shipped overseas, and millions of other good jobs have been replaced by technology. The value of our labor is declining with each passing day, and this has forced millions upon millions of very qualified Americans to take whatever they can get.  As NBC News recently noted, this is a big reason why the temp industry has been booming... For Americans who can't find jobs, the booming demand for temp workers has been a path out of unemployment, but now many fear it's a dead-end route.   With full-time work hard to find, these workers have built temping into a de facto career, minus vacation, sick days or insurance. The assignments might be temporary — a few months here, a year there — but labor economists warn that companies' growing hunger for a workforce they can switch on and off could do permanent damage to these workers' career trajectories and retirement plans.   "It seems to be the new norm in the working world," said Kelly Sibla, 54. The computer systems engineer has been looking for a full-time job for four years now, but the Amherst, Ohio, resident said she has to take whatever she can find. It has been estimated that one out of every ten jobs is now filled by a temp agency.  I have worked for temp agencies myself in the past.  Big companies like the idea of having "disposable workers", and this is a trend that is likely to only grow in the years ahead. But temp jobs and part-time jobs don't pay as well as normal jobs.  And those kinds of jobs generally cannot support middle class families. At this point, nine out of the top ten occupations in the United States pay an average wage of less than $35,000 a year. That is absolutely stunning. These days most families are barely scraping by, and they don't have much extra money to go shopping with. This is a big reason for the "retail apocalypse" that we are now witnessing.  This week we learned that retail stores in the United States are closing at the fastest pace that we have seen since the collapse of Lehman Brothers.  But you won't hear much about that on the mainstream news. You can find lots of "space available" signs and empty buildings in formerly middle class neighborhoods all over the country.  For example, one of my readers recently shot the following YouTube video in Scottsdale, Arizona.  As you can see, empty commercial buildings are all over the place... As the middle class shrinks, more families are being forced to take in family members that can't find decent work.  I have written previously about the huge rise in the number of young adults that are moving back in with their parents.  But this is not just happening to young people.  As the Los Angeles Times recently detailed, the number of Americans 50 and older that are moving in with their parents has absolutely soared in recent years... For seven years through 2012, the number of Californians aged 50 to 64 who live in their parents' homes swelled 67.6% to about 194,000, according to the UCLA Center for Health Policy Research and the Insight Center for Community Economic Development.   The jump is almost exclusively the result of financial hardship caused by the recession rather than for other reasons, such as the need to care for aging parents, said Steven P. Wallace, a UCLA professor of public health who crunched the data.   "The numbers are pretty amazing," Wallace said. "It's an age group that you normally think of as pretty financially stable. They're mid-career. They may be thinking ahead toward retirement. They've got a nest egg going. And then all of a sudden you see this huge push back into their parents' homes." The U.S. economy is slowly but steadily falling apart, and more people fall out of the middle class every single day. A recent Gallup survey found that 14 percent of all Americans would experience "significant financial hardship" within one week of a job loss. An additional 29 percent of all Americans would experience "significant financial hardship" within one month of a job loss. That means that 43 percent of the entire country is living right on the edge. It is no wonder why only about 30 percent of all Americans believe that we are moving in the right direction as a nation. Most people know deep down that something is seriously wrong.  But most people can't explain exactly what that is or how to fix it. Meanwhile, the politicians and the media keep telling us that if we just keep doing the same old things that everything will work out okay somehow.  The blind are leading the blind, and we are rapidly marching toward disaster.

Mugabe Considers Revival Of "Hyperinflated" Zimbabwe Dollar Posted: 23 Apr 2014 04:38 PM PDT It seems every bubble is coming back. 5 Years after Zimbabwe abandoned the Zim Dollar (in favor of the US Dollar) after inflation surged to 500 billion percent the year before (according to the IMF), Bloomberg reports that Robert Mugabe's ruling party is considering reintroducing the local currency as it struggles to meet its monthly wage bill. "If they bring back the [Zim] dollar it will quickly deteriorate to worse than then, we'll have nothing," warns one businessman as the appeal of reviving the Zimbabwe Dollar - allowing the government to print money to meet its needs - is surely outweighed by the lessons of the past. "We'll just die - we can't go back to 2008," but it seems governments never learn and memories are short. Get long wheel-barrows.     As Bloomberg reports, Zimbabwe is weighing the reintroduction of the national currency it abandoned in 2009 in favor of the U.S. dollar as it struggles to meet its monthly wage bill, three members of the ruling party's decision-making body said. While the revival of the Zimbabwe dollar would allow the government to print money to meet its needs it could damage the popularity of President Robert Mugabe's Zimbabwe African National Union-Patriotic Front, said the people, who asked not be identified because the discussions are private. Patrick Chinamasa, the country's finance minister, didn't answer calls made to his mobile phone.   Zimbabwe abolished its national currency in 2009 after inflation surged to 500 billion percent the year earlier, according to International Monetary Fund estimates, and the party lost its parliamentary majority in elections while retaining the presidency.   ...   The party's politburo is trying to decide whether it will do more harm to its image by reintroducing the currency and meeting its wage commitments or continuing to use foreign exchange, protecting the country's citizens against inflation, the people said. A majority of politburo members are currently against its reintroduction, they said.   ...   "We'll just die, we can't go back to 2008," said Jehosephat Dambadza, a furniture-maker in Harare, the capital, said in a telephone interview. "If they bring back the dollar it will quickly deteriorate to worse than then, we'll have nothing."   This year the economy has slowed with sales of consumer goods falling as much as 30 percent in February and revenue collection declining by a 10th, according to the Treasury. Consumer prices fell for a second month in March, while wages accounted for 58 percent of government expenditure in February. Pay increases agreed to by the government earlier this year were delayed.   Together with soldiers and police Zimbabwe has about 285,000 government workers.   ...   "Zimbabwe has big economic problems. They have a huge current account-deficit and a fiscal shortfall," Viljoen said. "They need money from somewhere and they're running out of options. Reintroducing the Zimbabwe dollar could be an option." Is that really an option? It seems governments never learn or care to learn...

The Gold Price Added $3.60 Today for a Comex Close at $1,284.20 Posted: 23 Apr 2014 04:17 PM PDT 23-Apr-14 Price Change % Change Gold Price, $/oz 1,284.20 3.60 0.28% Silver Price, $/oz 19.43 0.08 0.41% Gold/Silver Ratio 66.094 -0.084 -0.13% Silver/Gold Ratio 0.0151 0.0000 0.13% Platinum Price 1,403.20 3.60 0.26% Palladium Price 786.25 2.35 0.30% S&P 500 1,875.39 -4.16 -0.22% Dow 16,501.65 -12.72 -0.08% Dow in GOLD $s 265.63 -0.95 -0.36% Dow in GOLD oz 12.85 -0.05 -0.36% Dow in SILVER oz 849.29 -4.12 -0.48% US Dollar Index 79.95 -0.04 -0.05% The GOLD PRICE added $3.60 today for a Comex close at $1,284.20. Silver closed Comex up 7.9 cents to 1943c. Ranges today were tiny, the GOLD PRICE range was $8.70 and the SILVER PRICE range was 17 cents, but their gains bring little comfort. The overlapping trading simply doesn't depict a rally, but correction without much conviction or direction. I'm still guessing that the downside risk for the gold price probably isn't more than $14 from here. Silver on 15 April made a low at 1922c, and another on 21 April at 1923c. That might have fulfilled the downside thrust, but we might still witness a V-move to 1900c. In any event, all that is my anticipating, since neither market has yet flashed a signal it is turning up. Be patient here, but don't go to sleep. I bought a good bit today to balance my own position. I don't think there's too much downside risk here, and I certainly don't want to be short. Markets are drifting, without much conviction one way or the other. Like a torpid snake, though, that can change any time. On narrow ranges today stocks turned down, slightly. Dow abdicated 12.72 (0.08%) to a 16,501.65 close. S&P500 dropped 4.16 (0.22%) to close at 1,875.39. Since markets don't make triple tops (or bottoms) but usually break through that barrier to continue higher, we can probably expect a higher top in stocks. However, the charts don't speak unequivocally. As they rise in seniority from Nasdaq Comp to S&P500 to the Dow, they look better. First two are in downtrends, Dow has moved sideways, yet the overall uptrend says they will move yet higher, unless a breakdown is confirmed. That would require universal closes below the 200 day moving averages. Dow in gold inched down 0.19% to 12.85 oz (G$265.63 gold dollars). Dow in Silver hooked down 0.232% to 848.94 oz (S$1,098.91 silver dollars). That probably does not mark the top, although yesterdays 851.70 oz was awfully close to the 853.66 oz (S$1,103.72) December 2013 high. Yet the high lieth not far away. US DOLLAR INDEX fell 4 basis points, nothing really, but it has been repulsed trying to climb above the 20 and 50 day moving averages, to its shame revealing its weakness. One of these days the dollar will do something, but probably not tomorrow. Drifting sideways. Euro rose a little today, 0.8% to $1.3817, but not enough to break above its downtrend line. Not enough to sneeze at, in fact. Yen is tippy-toeing back and over its 50 DMA. Rose 0.1% to 97.57 cents per Y100, going nowhere. Aurum et argentum 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 Added $3.60 Today for a Comex Close at $1,284.20 Posted: 23 Apr 2014 04:17 PM PDT 23-Apr-14 Price Change % Change Gold Price, $/oz 1,284.20 3.60 0.28% Silver Price, $/oz 19.43 0.08 0.41% Gold/Silver Ratio 66.094 -0.084 -0.13% Silver/Gold Ratio 0.0151 0.0000 0.13% Platinum Price 1,403.20 3.60 0.26% Palladium Price 786.25 2.35 0.30% S&P 500 1,875.39 -4.16 -0.22% Dow 16,501.65 -12.72 -0.08% Dow in GOLD $s 265.63 -0.95 -0.36% Dow in GOLD oz 12.85 -0.05 -0.36% Dow in SILVER oz 849.29 -4.12 -0.48% US Dollar Index 79.95 -0.04 -0.05% The GOLD PRICE added $3.60 today for a Comex close at $1,284.20. Silver closed Comex up 7.9 cents to 1943c. Ranges today were tiny, the GOLD PRICE range was $8.70 and the SILVER PRICE range was 17 cents, but their gains bring little comfort. The overlapping trading simply doesn't depict a rally, but correction without much conviction or direction. I'm still guessing that the downside risk for the gold price probably isn't more than $14 from here. Silver on 15 April made a low at 1922c, and another on 21 April at 1923c. That might have fulfilled the downside thrust, but we might still witness a V-move to 1900c. In any event, all that is my anticipating, since neither market has yet flashed a signal it is turning up. Be patient here, but don't go to sleep. I bought a good bit today to balance my own position. I don't think there's too much downside risk here, and I certainly don't want to be short. Markets are drifting, without much conviction one way or the other. Like a torpid snake, though, that can change any time. On narrow ranges today stocks turned down, slightly. Dow abdicated 12.72 (0.08%) to a 16,501.65 close. S&P500 dropped 4.16 (0.22%) to close at 1,875.39. Since markets don't make triple tops (or bottoms) but usually break through that barrier to continue higher, we can probably expect a higher top in stocks. However, the charts don't speak unequivocally. As they rise in seniority from Nasdaq Comp to S&P500 to the Dow, they look better. First two are in downtrends, Dow has moved sideways, yet the overall uptrend says they will move yet higher, unless a breakdown is confirmed. That would require universal closes below the 200 day moving averages. Dow in gold inched down 0.19% to 12.85 oz (G$265.63 gold dollars). Dow in Silver hooked down 0.232% to 848.94 oz (S$1,098.91 silver dollars). That probably does not mark the top, although yesterdays 851.70 oz was awfully close to the 853.66 oz (S$1,103.72) December 2013 high. Yet the high lieth not far away. US DOLLAR INDEX fell 4 basis points, nothing really, but it has been repulsed trying to climb above the 20 and 50 day moving averages, to its shame revealing its weakness. One of these days the dollar will do something, but probably not tomorrow. Drifting sideways. Euro rose a little today, 0.8% to $1.3817, but not enough to break above its downtrend line. Not enough to sneeze at, in fact. Yen is tippy-toeing back and over its 50 DMA. Rose 0.1% to 97.57 cents per Y100, going nowhere. Aurum et argentum 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.

Eight Energy Myths Explained Posted: 23 Apr 2014 03:35 PM PDT Submitted by Gail Tverberg of Our Finite World blog, Republicans, Democrats, and environmentalists all have favorite energy myths. Even Peak Oil believers have favorite energy myths. The following are a few common mis-beliefs,  coming from a variety of energy perspectives. I will start with a recent myth, and then discuss some longer-standing ones. Myth 1. The fact that oil producers are talking about wanting to export crude oil means that the US has more than enough crude oil for its own needs. The real story is that producers want to sell their crude oil at as high a price as possible. If they have a choice of refineries A, B, and C in this country to sell their crude oil to, the maximum amount they can receive for their oil is limited by the price the price these refineries are paying, less the cost of shipping the oil to these refineries. If it suddenly becomes possible to sell crude oil to refineries elsewhere, the possibility arises that a higher price will be available in another country. Refineries are optimized for a particular type of crude. If, for example, refineries in Europe are short of light, sweet crude because such oil from Libya is mostly still unavailable, a European refinery might be willing to pay a higher price for crude oil from the Bakken (which also produces light sweet, crude) than a refinery in this country. Even with shipping costs, an oil producer might be able to make a bigger profit on its oil sold outside of the US than sold within the US. The US consumed 18.9 million barrels a day of petroleum products during 2013. In order to meet its oil needs, the US imported 6.2 million barrels of oil a day in 2013 (netting exported oil products against imported crude oil). Thus, the US is, and will likely continue to be, a major oil crude oil importer. If production and consumption remain at a constant level, adding crude oil exports would require adding crude oil imports as well. These crude oil imports might be of a different kind of oil than that that is exported–quite possibly sour, heavy crude instead of sweet, light crude. Or perhaps US refineries specializing in light, sweet crude will be forced to raise their purchase prices, to match world crude oil prices for that type of product. The reason exports of crude oil make sense from an oil producer’s point of view is that they stand to make more money by exporting their crude to overseas refineries that will pay more. How this will work out in the end is unclear. If US refiners of light, sweet crude are forced to raise the prices they pay for oil, and the selling price of US oil products doesn’t rise to compensate, then more US refiners of light, sweet crude will go out of business, fixing a likely world oversupply of such refiners. Or perhaps prices of US finished products will rise, reflecting the fact that the US has to some extent in the past received a bargain (related to the gap between European Brent and US WTI oil prices), relative to world prices. In this case US consumers will end up paying more. The one thing that is very clear is that the desire to ship crude oil abroad does not reflect too much total crude oil being produced in the United States. At most, what it means is an overabundance of refineries, worldwide, adapted to light, sweet crude. This happens because over the years, the world’s oil mix has been generally changing to heavier, sourer types of oil. Perhaps if there is more oil from shale formations, the mix will start to change back again. This is a very big “if,” however. The media tend to overplay the possibilities of such extraction as well. Myth 2. The economy doesn’t really need very much energy.   We humans need food of the right type, to provide us with the energy we need to carry out our activities. The economy is very similar: it needs energy of the right types to carry out its activities. One essential activity of the economy is growing and processing food. In developing countries in warm parts of the world, food production, storage, transport, and preparation accounts for the vast majority of economic activity (Pimental and Pimental, 2007). In traditional societies, much of the energy comes from human and animal labor and burning biomass. If a developing country substitutes modern fuels for traditional energy sources in food production and preparation, the whole nature of the economy changes. We can see this starting to happen on a world-wide basis in the early 1800s, as energy other than biomass use ramped up. Figure 1. World Energy Consumption by Source, Based on Vaclav Smil estimates from Energy Transitions: History, Requirements and Prospects and together with BP Statistical Data on 1965 and subsequent The Industrial Revolution began in the late 1700s in Britain. It was enabled by coal usage, which made it possible to make metals, glass, and cement in much greater quantities than in the past. Without coal, deforestation had become a problem, especially near cold urban areas, such as London. With coal, it became possible to use industrial processes that required heat without the problem of deforestation. Processes using high levels of heat also became cheaper, because it was no longer necessary to cut down trees, make charcoal from the wood, and transport the charcoal long distances (because near-by wood had already been depleted). The availability of coal allowed the use of new technology to be ramped up. For example, according to Wikipedia, the first steam engine was patented in 1608, and the first commercial steam engine was patented in 1712. In 1781, James Watt invented an improved version of the steam engine. But to actually implement the steam engine widely using metal trains running on metal tracks, coal was needed to make relatively inexpensive metal in quantity. Concrete and metal could be used to make modern hydroelectric power plants, allowing electricity to be made in quantity. Devices such as light bulbs (using glass and metal) could be made in quantity, as well as wires used for transmitting electricity, allowing a longer work-day. The use of coal also led to agriculture changes as well, cutting back on the need for farmers and ranchers. New devices such as steel plows and reapers and hay rakes were manufactured, which could be pulled by horses, transferring work from humans to animals. Barbed-wire fence allowed the western part of the US to become cropland, instead one large unfenced range. With fewer people needed in agriculture, more people became available to work in cities in factories. Our economy is now very different from what it was back about 1820, because of increased energy use. We have large cities, with food and raw materials transported from a distance to population centers. Water and sewer treatments greatly reduce the risk of disease transmission of people living in such close proximity. Vehicles powered by oil or electricity eliminate the mess of animal-powered transport. Many more roads can be paved. If we were to try to leave today’s high-energy system and go back to a system that uses biofuels (or only biofuels plus some additional devices that can be made with biofuels), it would require huge changes. Myth 3. We can easily transition to renewables. On Figure 1, above, the only renewables are hydroelectric and biofuels. While energy supply has risen rapidly, population has risen rapidly as well. Figure 2. World Population, based on Angus Maddison estimates, interpolated where necessary. When we look at energy use on a per capita basis, the result is as shown in Figure 3, below. Figure 3. Per capita world energy consumption, calculated by dividing world energy consumption (based on Vaclav Smil estimates from Energy Transitions: History, Requirements and Prospects together with BP Statistical Data for 1965 and subsequent) by population estimates, based on Angus Maddison data. The energy consumption level in 1820 would be at a basic level–only enough to grow and process food, heat homes, make clothing, and provide for some very basic industries. Based on Figure 3, even this required a little over 20 gigajoules of energy per capita. If we add together per capita biofuels and hydroelectric on Figure 3, they would come out to only about 11 gigajoules of energy per capita. To get to the 1820  level of per capita energy consumption, we would either need to add something else, such as coal, or wait a very, very long time until (perhaps) renewables including hydroelectric could be ramped up enough. If we want to talk about renewables that can be made without fossil fuels, the amount would be smaller yet. As noted previously, modern hydroelectric power is enabled by coal, so we would need to exclude this. We would also need to exclude modern biofuels, such as ethanol made from corn and biodiesel made from rape seed, because they are greatly enabled by today’s farming and transportation equipment and indirectly by our ability to make metal in quantity. I have included wind and solar in the “Biofuels” category for convenience. They are so small in quantity that they wouldn’t be visible as a separate categories, wind amounting to only 1.0% of world energy supply in 2012, and solar amounting to 0.2%, according to BP data. We would need to exclude them as well, because they too require fossil fuels to be produced and transported. In total, the biofuels category without all of these modern additions might be close to the amount available in 1820. Population now is roughly seven times as large, suggesting only one-seventh as much energy per capita. Of course, in 1820 the amount of wood used led  to significant deforestation, so even this level of biofuel use was not ideal. And there would be the additional detail of transporting wood to markets. Back in 1820, we had horses for transport, but we would not have enough horses for this purpose today. Myth 4. Population isn’t related to energy availability. If we compare Figures 2 and 3, we see that the surge in population that took place immediately after World War II coincided with the period that per-capita energy use was ramping up rapidly. The increased affluence of the 1950s (fueled by low oil prices and increased ability to buy goods using oil) allowed parents to have more children. Better sanitation and innovations such as antibiotics (made possible by fossil fuels) also allowed more of these children to live to maturity. Furthermore, the Green Revolution which took place during this time period is credited with saving over a billion people from starvation. It ramped up the use of irrigation, synthetic fertilizers and pesticides, hybrid seed, and the development of high yield grains. All of these techniques were enabled by availability of oil. Greater use of agricultural equipment, allowing seeds to be sowed closer together, also helped raise production. By this time, electricity reached farming communities, allowing use of equipment such as milking machines. If we take a longer view of the situation, we find that a “bend” in the world population occurred about the time of Industrial Revolution, and the ramp up of coal use (Figure 4). Increased farming equipment made with metals increased food output, allowing greater world population. Figure 4. World population based on data from “Atlas of World History,” McEvedy and Jones, Penguin Reference Books, 1978 and Wikipedia-World Population. Furthermore, when we look at countries that have seen large drops in energy consumption, we tend to see population declines. For example, following the collapse of the Soviet Union, there were drops in energy consumption in a number of countries whose energy was affected (Figure 5). Figure 6. Population as percent of 1985 population, for selected countries, based on EIA data. Myth 5. It is easy to substitute one type of energy for another. Any changeover from one type of energy to another is likely to be slow and expensive, if it can be accomplished at all. One major issue is the fact that different types of energy have very different uses. When oil production was ramped up, during and following World War II, it added new capabilities, compared to coal. With only coal (and hydroelectric, enabled by coal), we could have battery-powered cars, with limited range. Or ethanol-powered cars, but ethanol required a huge amount of land to grow the necessary crops. We could have trains, but these didn’t go from door to door. With the availability of oil, we were able to have personal transportation vehicles that went from door to door, and trucks that delivered goods from where they were produced to the consumer, or to any other desired location. We were also able to build airplanes. With airplanes, we were able to win World War II. Airplanes also made international business feasible on much greater scale, because it became possible for managers to visit operations abroad in a relatively short time-frame, and because it was possible to bring workers from one country to another for training, if needed. Without air transport, it is doubtful that the current number of internationally integrated businesses could be maintained. The passage of time does not change the inherent differences between different types of fuels. Oil is still the fuel of preference for long-distance travel, because (a) it is energy dense so it fits in a relatively small tank, (b) it is a liquid, so it is easy to dispense at refueling stations, and (c) we are now set up for liquid fuel use, with a huge number of cars and trucks on the road which use oil and refueling stations to serve these vehicles. Also, oil works much better than electricity for air transport. Changing to electricity for transportation is likely to be a slow and expensive process. One important point is that the cost of electric vehicles needs to be brought down to where they are affordable for buyers, if we do not want the changeover to have a hugely adverse effect on the economy. This is the case because salaries are not going to rise to pay for high-priced cars, and the government cannot afford large subsidies for everyone. Another issue is that the range of electric vehicles needs to be increased, if vehicle owners are to be able to continue to use their vehicles for long-distance driving. No matter what type of changeover is made, the changeover needs to implemented slowly, over a period of 25 years or more, so that buyers do not lose the trade in value of their oil-powered vehicles. If the changeover is done too quickly, citizens will lose their trade in value of their oil-powered cars, and because of this, will not be able to afford the new vehicles. If a changeover to electric transportation vehicles is to be made, many vehicles other than cars will need to be made electric, as well. These would include long haul trucks, busses, airplanes, construction equipment, and agricultural equipment, all of which would need to be made electric. Costs would need to be brought down, and necessary refueling equipment would need to be installed, further adding to the slowness of the changeover process. Another issue is that even apart from energy uses, oil is used in many applications as a raw material. For example, it is used in making herbicides and pesticides, asphalt roads and asphalt shingles for roofs, medicines, cosmetics, building materials, dyes, and flavoring. There is no possibility that electricity could be adapted to these uses. Coal could perhaps be adapted for these uses, because it is also a fossil fuel. Myth 6. Oil will “run out” because it is limited in supply and non-renewable. This myth is actually closer to the truth than the other myths. The situation is a little different from “running out,” however. The real situation is that oil limits are likely to disrupt the economy in various ways. This economic disruption is likely to be what leads to an  abrupt drop in oil supply. One likely possibility is that a lack of debt availability and low wages will keep oil prices from rising to the level that oil producers need for extraction. Under this scenario, oil producers will see little point in investing in new production. There is evidence that this scenario is already starting to happen. There is another version of this myth that is even more incorrect. According to this myth, the situation with oil supply (and other types of fossil fuel supply) is as follows: Myth 7. Oil supply (and the supply of other fossil fuels) will start depleting when the supply is 50% exhausted. We can therefore expect a long, slow decline in fossil fuel use. This myth is a favorite of peak oil believers. Indirectly, similar beliefs underly climate change models as well. It is based on what I believe is an incorrect reading of the writings of M. King Hubbert. Hubbert is a geologist and physicist who foretold a decline of US oil production, and eventually world production, in various documents, including Nuclear Energy and the Fossil Fuels, published in 1956.

West Hemorrhaging Gold But Here’s Its True Achilles’ Heel Posted: 23 Apr 2014 02:29 PM PDT Today one of the most highly respected fund managers in Singapore warned King World News that the West is continuing to hemorrhage gold, but also cautioned that was not the West's true Achilles' heel. Grant Williams, who is portfolio manager of the Vulpes Precious Metals Fund, described the great danger for the West, and also discussed the massive demand coming out of the East from countries such as Russia and China. This posting includes an audio/video/photo media file: Download Now

Gold Sentiment Reaching Key Level Posted: 23 Apr 2014 02:26 PM PDT This article is based on the latest premium edition of the Sentimentrader report (click here for a free trial). Market sentiment towards gold and silver are analyzed and put into perspective. In March, we showed the sentiment report for gold and silver. In Gold and Silver Sentiment Improving Significantly, we showed how gold sentiment had been improving but was due for a break. The key was not to pull back to a score of 40 or 50. From the latest sentiment report, it  appears that sentiment towards both gold and silver has reached a normal pullback. However, it should not go lower from here. From Sentimentrader: On March 14, we took a look at gold sentiment, and noted that it had reached a two year high. When looking at such high optimism in spite of the metal still at least 10% below its previous 52 week high, it tended to suffer going forward. It did again this time, and sentiment has understandably moderated. From a high of near 80% in March, the current reading is now 44%. During bull markets, sentiment tends to stay above 50% the majority of the time, and rarely gets below 40%. During bear markets, it tends to stay below 50% and rarely gets above 60%. That’s what had happened for most of the past couple of years. We’ve discussed previously that if gold did correct and worked off the optimistic sentiment, then bullishness should stay above the 40%-50% zone during subsequent corrections. It’s testing that now. There’s no hard and fast rule that says if sentiment dips below 40% that gold is automatically back in a bear market, it’s just a rule of thumb that tends to hold up over time and across contracts. So if gold is indeed in a new bull market, then the current display of “bull market pessimism” should not get much worse, and we should see buying pressure start to take hold. If not, and gold not only breaks its early April lows but sentiment also gets worse, then the nascent bull market is in trouble. gold sentiment

Gold Daily and Silver Weekly Charts - El Camino Real Posted: 23 Apr 2014 01:40 PM PDT

Gold Daily and Silver Weekly Charts - El Camino Real Posted: 23 Apr 2014 01:40 PM PDT

Gold's long backwardation makes Turk expect a good year for the monetary metal Posted: 23 Apr 2014 12:36 PM PDT 3:35p ET Wednesday, April 23, 2014 Dear Friend of GATA and Gold: The long and continuing backwardation in gold makes GoldMoney founder and GATA consultant James Turk think that the gold price suppression scheme will run out of metal soon and that this will be a good year for gold and silver. Turk's comments come in an interview with King World News: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/4/23_Tu... 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/ Committee for Monetary Research and Education Spring Dinner Meeting Union League Club, New York City Thursday, May 22, 2014 http://www.cmre.org/news/spring-meeting-2014/ 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... New Orleans Investment Conference Wednesday-Saturday, October 22-25, 2014 Hilton New Orleans Riverside Hotel New Orleans, Louisiana https://jeffersoncompanies.com/new-orleans-investment-conference/home * * * 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

Why Niocorp (NB.V or NIOBF) Is Soaring Over 230% in 2014 Posted: 23 Apr 2014 12:31 PM PDT On April 4th, 2014, I published a report on Niocorp (NB.V or NIOBF) with an interview with the CEO Mark Smith.  Since that time the stock has soared parabolically.  I have owned this stock for more than two years and just took some partial profits above $.50 in Canada.  I will look to add on pullbacks to the 20 or 50 day moving averages. Niocorp is soaring and has reached a short term overbought condition.  New investors should look for a healthy pullback or consolidation to the 20 or 50 day moving averages. Niocorp (NB.V or NIOBF) has soared over 230% this year while the S&P500 has been flat.  As a long term investor back from 2012 I have taken some partial profits on this major move.  Instead of chasing the stock higher wait for pullbacks as the long term uptrend may be just beginning. See my recent interview with CEO Mark Smith below.  Mark built Molycorp (MCP) from hardly nothing to a billion dollar company…Niocorp (NB.V or NIOBF) may be his next major project he brings into production. I would like to warn you that the stock has soared on major volume.  Try not to chase the stock higher and look instead for healthy pullbacks to support to add.  The stock has nearly doubled in less than four weeks, so a healthy shakeout could be restorative at this point. Disclosure: Author Owns Niocorp and has recently taken partial profits above $.50.  Niocorp is a website sponsor. ___________________________________________________________________________ Sign up for my free newsletter by clicking here…  Sign up for my premium service to see new interviews and reports by clicking here… Please see my disclaimer and full list of sponsor companies by clicking here… Accredited investors looking for relevant news click here… Please forward this article to a friend.  To send feedback or to contact me click here… Listen to other interviews with movers and shakers in the mining industry below or by clicking here… Listen to internet radio with goldstocktrades on BlogTalkRadio

Turk - Western Central Banks To Run Out Of Gold This Year Posted: 23 Apr 2014 10:59 AM PDT As global markets continue to see some wild trading, today James Turk told King World News that Western central banks are going to run out of gold this year. This is one of Turk's most important interviews because he is now predicting that the West will run out of gold to keep the price suppressed. Turk also followed up on his viral interview which covered the unprecedented and historic backwardation we are seeing in the gold market. This posting includes an audio/video/photo media file: Download Now

Gene Arensberg: Elephant tracks signal upward reversal in gold Posted: 23 Apr 2014 10:54 AM PDT 1:51p ET Wednesday, April 23, 2014 Dear Friend of GATA and Gold: At the Got Gold Report today, Gene Arensberg identifies what he calls "elephant tracks," the record of big investment banks closing a large amount of gold short positions amid what is only a small decline in the price, a signal for an upward reversal. Arensberg's commentary is headlined "Goldman Sachs: Kinross Gold No Longer Worth Selling" and it's posted at the GGR here: http://www.gotgoldreport.com/2014/04/goldman-sachs-kinross-gold-no-longe... CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. ADVERTISEMENT Jim Sinclair to hold gold market seminar in Toronto on April 26 Mining entrepreneur and gold advocate Jim Sinclair's next gold market seminar will be held from 1 to 5 p.m. Saturday, April 26, at the Pearson Hotel & Conference Centre at Toronto's Pearson International Airport, 240 Belfield Road, Toronto. For details on tickets, please visit Sinclair's Internet site, JSMineSet.com, here: http://www.jsmineset.com/2014/04/01/toronto-qa-session-announced/ 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/ Committee for Monetary Research and Education Spring Dinner Meeting Union League Club, New York City Thursday, May 22, 2014 http://www.cmre.org/news/spring-meeting-2014/ 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... New Orleans Investment Conference Wednesday-Saturday, October 22-25, 2014 Hilton New Orleans Riverside Hotel New Orleans, Louisiana https://jeffersoncompanies.com/new-orleans-investment-conference/home * * * 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

The Secret Silver Stockpile, Part I Posted: 23 Apr 2014 09:52 AM PDT SILVER PRICES hit $50 three years ago this week, writes Miguel Perez-Santalla at BullionVault.   It was on April 25, 2011 that silver traded $49.80 per ounce in the New York spot market. That means silver traded $50 somewhere. There was a lot of business going on at that time, but after holding above $49 for the rest of that week, silver prices began to retreat. Fast.   One of the factors that many traders were looking at was the Gold/Silver Ratio. Some believed that silver was much undervalued versus gold, and would recover its historical price parity of about 16 ounces of silver per ounce of gold.   So even though silver hadn't been so expensive in terms of gold for 28 years, and even though Dollar prices had doubled inside 6 months, some traders felt the move wouldn't be complete unless silver traded above the $50 price level it had hit in 1980.   The silver market environment of 2011's run to $50 per ounce was, however, very different to that of 1980. The principal driver back then was the continued inflation in consumer prices, plus the attempt by Nelson Bunker Hunt and his partners to corner the silver market – an attempt eventually brought to an end by efforts of the Federal Reserve Bank and certain members of the Commodities Exchange.   Thirty years later the global economy again faced serious concerns. Not only was the US economy still reeling from the mortgage crisis and 2008 Lehman Brothers collapse. Now the Eurozone faced break-up as Greece, Ireland, Portugal, Italy and Spain all reported serious problems with their finances.   In the United States confidence in the economy continued at record lows. The news out of Europe only heightened concerns of another financial crisis. Then the Fed announced another round of Quantitative Easing beginning in November 2010. Silver coin sales by the US Mint hit a monthly record, surpassed only by early 2011's surge in private-investor demand. Because this new QE meant printing more Dollars (or rather, their "electronic equivalent" as then Fed chair Ben Bernanke had said). So in the minds of many investors the Dollar was under the gun. Seeking safe-haven assets, likely to hold or grow their real value during a prolonged inflation, became of paramount importance.   Internal to the silver market, meantime, there were reports that seemed to support a bullish long-term view on silver's industrial demand. The photovoltaic industry for one began consuming silver in much larger quantities than in previous years. Solar panel production starts with silver paste, and that requires a finer grade of silver than the main wholesale market trades. As the sector's growing demand sucked in these 0.9999 fine bars, it drew a lot of attention. Because while there was no shortage of the more common 0.999 bars, there was a shortage of immediate supply of this higher purity. And because of the growing demand, and the coincidental rise in the silver price, the story stuck.   Then vice-president of sales at Heraeus Precious Metals Management in New York, I was asked to debunk this myth – the idea that the photo-voltaic industry was driving the silver price higher – for clients starting in January 2011. The bottom line was that solar-panel demand was only beginning to fill the major hole left in silver offtake by the ever-shrinking photographic industry, which had previously been the world's largest consumer of silver for many decades.   Still, the physical supply anomaly between standard wholesale bars and the finer .9999 metal did give the impression that stockpiles were tight. Additionally, as that story snowballed, the incredible private-investor demand for small bars and coins in silver due to the economic global crisis caused immediately-available retail products to go to higher premiums than product for later delivery. That carried into the futures market in February 2011.   Why? When demand exceeds expectations in physical goods, often it is difficult for the manufacturers to meet new customer orders quickly. If that makes supply become sporadic, it gives the impression that there is a shortage of raw material, when in reality there is only a shortage of product. But as silver prices headed for $50 per ounce 3 years ago, the idea of vanishing silver supplies – rather than just tight supply of small bars or coin – was frequently promoted by many retail distributors as part of their sales pitch.   Backwardation is when the price of silver in a future month is cheaper than the "spot" or immediate month. Silver futures normally trade in the inverse position, because the seller of metal has to pay the costs to carry the inventory until settlement, and those costs are reflected in the price. So this early 2011 backwardation, suggesting a lack of immediately available silver, put another feather in the cap of silver bulls.   Let's take a quick look however at the actual statistics of physical demand versus supply of silver. The photovoltaic industry did experience large growth from 2008 to 2011. In fact, in that time period the industry grew its silver demand by 338% according to Thomson Reuters GFMS. This of course was astronomical for the solar industry. But for silver demand more broadly, it barely registered as a fundamental market driver.   Looking at a chart of supply and demand for silver from 2003 to 2012 we can see that supply met demand annually. There was never any shortage. In fact, the silver market was in a significan surplus 6 times over that decade.   The leading data providers in the silver market, Thomson Reuters GFMS, used to call this "implied investment". It was, as they said, "the residual" between the supply and demand data they collected. Meaning it was a balancing item, included so that supply and demand matched, whatever the shortfall or excess recorded on the visible numbers.   GFMS are now calling a spade a spade, starting with their new Gold Survey 2014. Their new Silver Survey, due for launch next month through the Washington-based Silver Institute, will surely make the same change. And as you can see, if we view that old balancing item of "implied investment" as a market surplus or deficit each year, the excess of supplied metal over visible demand ran near 15% in each of 2010-2012.   Yes, investment demand grew along with silver demand from the photovoltaic industry. But even the combination of the two did not exceed the growth in supply, which constantly increased because of the higher prices in the marketplace. Miners and scrap collectors were more than happy to increase supplies.   So like the ancient Roman writer Phaedrus said, "Things are not always what they seem; the first appearance deceives many." And silver's seeming shortage in spring 2011 – which did so much to spur extra investment, especially from private households caught up by calls to "Buy now! Time is running out quickly!" – was in truth no such thing.   In the same chart above, you will note that fabrication demand decreased in 2012. This is no surprise considering the volatility and the high price of silver in 2011. This caused what is called "thrifting" in the industrial sector.   Thrifting is what manufacturers do when a commodity used to produce their product exceeds expected costs, or becomes too difficult to manage due to price volatility. To prevent losses due to wild market prices, the manufacturers begin to invest money in attempting to use the least amount possible of the offending commodity. In this case that offending commodity was silver. And the thrifting provoked by the high silver prices of early 2011...in good part provoked by that phantom shortage...led to lower industrial demand, as we'll see in Part 2.

Silver $50: Three Years After the "Shortage" Posted: 23 Apr 2014 09:30 AM PDT April 2011 saw silver prices double from 6 months before. Why, and what happened next...?   SILVER PRICES hit $50 three years ago this week, writes Miguel Perez-Santalla at BullionVault.   It was on April 25, 2011 that silver traded $49.80 per ounce in the New York spot market. That means silver traded $50 somewhere. There was a lot of business going on at that time, but after holding above $49 for the rest of that week, silver prices began to retreat. Fast.   One of the factors that many traders were looking at was the Gold/Silver Ratio. Some believed that silver was much undervalued versus gold, and would recover its historical price parity of about 16 ounces of silver per ounce of gold.   So even though silver hadn't been so expensive in terms of gold for 28 years, and even though Dollar prices had doubled inside 6 months, some traders felt the move wouldn't be complete unless silver traded above the $50 price level it had hit in 1980.   The silver market environment of 2011's run to $50 per ounce was, however, very different to that of 1980. The principal driver back then was the continued inflation in consumer prices, plus the attempt by Nelson Bunker Hunt and his partners to corner the silver market – an attempt eventually brought to an end by efforts of the Federal Reserve Bank and certain members of the Commodities Exchange.   Thirty years later the global economy again faced serious concerns. Not only was the US economy still reeling from the mortgage crisis and 2008 Lehman Brothers collapse. Now the Eurozone faced break-up as Greece, Ireland, Portugal, Italy and Spain all reported serious problems with their finances.   In the United States confidence in the economy continued at record lows. The news out of Europe only heightened concerns of another financial crisis. Then the Fed announced another round of Quantitative Easing beginning in November 2010. Silver coin sales by the US Mint hit a monthly record, surpassed only by early 2011's surge in private-investor demand. Because this new QE meant printing more Dollars (or rather, their "electronic equivalent" as then Fed chair Ben Bernanke had said). So in the minds of many investors the Dollar was under the gun. Seeking safe-haven assets, likely to hold or grow their real value during a prolonged inflation, became of paramount importance.   Internal to the silver market, meantime, there were reports that seemed to support a bullish long-term view on silver's industrial demand. The photovoltaic industry for one began consuming silver in much larger quantities than in previous years. Solar panel production starts with silver paste, and that requires a finer grade of silver than the main wholesale market trades. As the sector's growing demand sucked in these 0.9999 fine bars, it drew a lot of attention. Because while there was no shortage of the more common 0.999 bars, there was a shortage of immediate supply of this higher purity. And because of the growing demand, and the coincidental rise in the silver price, the story stuck.   Then vice-president of sales at Heraeus Precious Metals Management in New York, I was asked to debunk this myth – the idea that the photo-voltaic industry was driving the silver price higher – for clients starting in January 2011. The bottom line was that solar-panel demand was only beginning to fill the major hole left in silver offtake by the ever-shrinking photographic industry, which had previously been the world's largest consumer of silver for many decades.   Still, the physical supply anomaly between standard wholesale bars and the finer .9999 metal did give the impression that stockpiles were tight. Additionally, as that story snowballed, the incredible private-investor demand for small bars and coins in silver due to the economic global crisis caused immediately-available retail products to go to higher premiums than product for later delivery. That carried into the futures market in February 2011.   Why? When demand exceeds expectations in physical goods, often it is difficult for the manufacturers to meet new customer orders quickly. If that makes supply become sporadic, it gives the impression that there is a shortage of raw material, when in reality there is only a shortage of product. But as silver prices headed for $50 per ounce 3 years ago, the idea of vanishing silver supplies – rather than just tight supply of small bars or coin – was frequently promoted by many retail distributors as part of their sales pitch.   Backwardation is when the price of silver in a future month is cheaper than the "spot" or immediate month. Silver futures normally trade in the inverse position, because the seller of metal has to pay the costs to carry the inventory until settlement, and those costs are reflected in the price. So this early 2011 backwardation, suggesting a lack of immediately available silver, put another feather in the cap of silver bulls.   Let's take a quick look however at the actual statistics of physical demand versus supply of silver. The photovoltaic industry did experience large growth from 2008 to 2011. In fact, in that time period the industry grew its silver demand by 338% according to Thomson Reuters GFMS. This of course was astronomical for the solar industry. But for silver demand more broadly, it barely registered as a fundamental market driver.   Looking at a chart of supply and demand for silver from 2003 to 2012 we can see that supply met demand annually. There was never any shortage. In fact, the silver market was in a significan surplus 6 times over that decade.   The leading data providers in the silver market, Thomson Reuters GFMS, used to call this "implied investment". It was, as they said, "the residual" between the supply and demand data they collected. Meaning it was a balancing item, included so that supply and demand matched, whatever the shortfall or excess recorded on the visible numbers.   GFMS are now calling a spade a spade, starting with their new Gold Survey 2014. Their new Silver Survey, due for launch next month through the Washington-based Silver Institute, will surely make the same change. And as you can see, if we view that old balancing item of "implied investment" as a market surplus or deficit each year, the excess of supplied metal over visible demand ran near 15% in each of 2010-2012.   Yes, investment demand grew along with silver demand from the photovoltaic industry. But even the combination of the two did not exceed the growth in supply, which constantly increased because of the higher prices in the marketplace. Miners and scrap collectors were more than happy to increase supplies.   So like the ancient Roman writer Phaedrus said, "Things are not always what they seem; the first appearance deceives many." And silver's seeming shortage in spring 2011 – which did so much to spur extra investment, especially from private households caught up by calls to "Buy now! Time is running out quickly!" – was in truth no such thing.   In the same chart above, you will note that fabrication demand decreased in 2012. This is no surprise considering the volatility and the high price of silver in 2011. This caused what is called "thrifting" in the industrial sector.   Thrifting is what manufacturers do when a commodity used to produce their product exceeds expected costs, or becomes too difficult to manage due to price volatility. To prevent losses due to wild market prices, the manufacturers begin to invest money in attempting to use the least amount possible of the offending commodity. In this case that offending commodity was silver. And the thrifting provoked by the high silver prices of early 2011...in good part provoked by that phantom shortage...led to lower industrial demand, as we'll see in Part 2.

Silver $50: Three Years After the "Shortage" Posted: 23 Apr 2014 09:30 AM PDT April 2011 saw silver prices double from 6 months before. Why, and what happened next...?   SILVER PRICES hit $50 three years ago this week, writes Miguel Perez-Santalla at BullionVault.   It was on April 25, 2011 that silver traded $49.80 per ounce in the New York spot market. That means silver traded $50 somewhere. There was a lot of business going on at that time, but after holding above $49 for the rest of that week, silver prices began to retreat. Fast.   One of the factors that many traders were looking at was the Gold/Silver Ratio. Some believed that silver was much undervalued versus gold, and would recover its historical price parity of about 16 ounces of silver per ounce of gold.   So even though silver hadn't been so expensive in terms of gold for 28 years, and even though Dollar prices had doubled inside 6 months, some traders felt the move wouldn't be complete unless silver traded above the $50 price level it had hit in 1980.   The silver market environment of 2011's run to $50 per ounce was, however, very different to that of 1980. The principal driver back then was the continued inflation in consumer prices, plus the attempt by Nelson Bunker Hunt and his partners to corner the silver market – an attempt eventually brought to an end by efforts of the Federal Reserve Bank and certain members of the Commodities Exchange.   Thirty years later the global economy again faced serious concerns. Not only was the US economy still reeling from the mortgage crisis and 2008 Lehman Brothers collapse. Now the Eurozone faced break-up as Greece, Ireland, Portugal, Italy and Spain all reported serious problems with their finances.   In the United States confidence in the economy continued at record lows. The news out of Europe only heightened concerns of another financial crisis. Then the Fed announced another round of Quantitative Easing beginning in November 2010. Silver coin sales by the US Mint hit a monthly record, surpassed only by early 2011's surge in private-investor demand. Because this new QE meant printing more Dollars (or rather, their "electronic equivalent" as then Fed chair Ben Bernanke had said). So in the minds of many investors the Dollar was under the gun. Seeking safe-haven assets, likely to hold or grow their real value during a prolonged inflation, became of paramount importance.   Internal to the silver market, meantime, there were reports that seemed to support a bullish long-term view on silver's industrial demand. The photovoltaic industry for one began consuming silver in much larger quantities than in previous years. Solar panel production starts with silver paste, and that requires a finer grade of silver than the main wholesale market trades. As the sector's growing demand sucked in these 0.9999 fine bars, it drew a lot of attention. Because while there was no shortage of the more common 0.999 bars, there was a shortage of immediate supply of this higher purity. And because of the growing demand, and the coincidental rise in the silver price, the story stuck.   Then vice-president of sales at Heraeus Precious Metals Management in New York, I was asked to debunk this myth – the idea that the photo-voltaic industry was driving the silver price higher – for clients starting in January 2011. The bottom line was that solar-panel demand was only beginning to fill the major hole left in silver offtake by the ever-shrinking photographic industry, which had previously been the world's largest consumer of silver for many decades.   Still, the physical supply anomaly between standard wholesale bars and the finer .9999 metal did give the impression that stockpiles were tight. Additionally, as that story snowballed, the incredible private-investor demand for small bars and coins in silver due to the economic global crisis caused immediately-available retail products to go to higher premiums than product for later delivery. That carried into the futures market in February 2011.   Why? When demand exceeds expectations in physical goods, often it is difficult for the manufacturers to meet new customer orders quickly. If that makes supply become sporadic, it gives the impression that there is a shortage of raw material, when in reality there is only a shortage of product. But as silver prices headed for $50 per ounce 3 years ago, the idea of vanishing silver supplies – rather than just tight supply of small bars or coin – was frequently promoted by many retail distributors as part of their sales pitch.   Backwardation is when the price of silver in a future month is cheaper than the "spot" or immediate month. Silver futures normally trade in the inverse position, because the seller of metal has to pay the costs to carry the inventory until settlement, and those costs are reflected in the price. So this early 2011 backwardation, suggesting a lack of immediately available silver, put another feather in the cap of silver bulls.   Let's take a quick look however at the actual statistics of physical demand versus supply of silver. The photovoltaic industry did experience large growth from 2008 to 2011. In fact, in that time period the industry grew its silver demand by 338% according to Thomson Reuters GFMS. This of course was astronomical for the solar industry. But for silver demand more broadly, it barely registered as a fundamental market driver.   Looking at a chart of supply and demand for silver from 2003 to 2012 we can see that supply met demand annually. There was never any shortage. In fact, the silver market was in a significan surplus 6 times over that decade.   The leading data providers in the silver market, Thomson Reuters GFMS, used to call this "implied investment". It was, as they said, "the residual" between the supply and demand data they collected. Meaning it was a balancing item, included so that supply and demand matched, whatever the shortfall or excess recorded on the visible numbers.   GFMS are now calling a spade a spade, starting with their new Gold Survey 2014. Their new Silver Survey, due for launch next month through the Washington-based Silver Institute, will surely make the same change. And as you can see, if we view that old balancing item of "implied investment" as a market surplus or deficit each year, the excess of supplied metal over visible demand ran near 15% in each of 2010-2012.   Yes, investment demand grew along with silver demand from the photovoltaic industry. But even the combination of the two did not exceed the growth in supply, which constantly increased because of the higher prices in the marketplace. Miners and scrap collectors were more than happy to increase supplies.   So like the ancient Roman writer Phaedrus said, "Things are not always what they seem; the first appearance deceives many." And silver's seeming shortage in spring 2011 – which did so much to spur extra investment, especially from private households caught up by calls to "Buy now! Time is running out quickly!" – was in truth no such thing.   In the same chart above, you will note that fabrication demand decreased in 2012. This is no surprise considering the volatility and the high price of silver in 2011. This caused what is called "thrifting" in the industrial sector.   Thrifting is what manufacturers do when a commodity used to produce their product exceeds expected costs, or becomes too difficult to manage due to price volatility. To prevent losses due to wild market prices, the manufacturers begin to invest money in attempting to use the least amount possible of the offending commodity. In this case that offending commodity was silver. And the thrifting provoked by the high silver prices of early 2011...in good part provoked by that phantom shortage...led to lower industrial demand, as we'll see in Part 2.

How Gold Will Respond to Declining Discovery Posted: 23 Apr 2014 07:53 AM PDT As metals prices boomed during the last decade, small explorers and big miners spent billions of shareholder dollars seeking new deposits. Investors wanted the high rewards of a discovery as metals soared in price. At $1,900 per ounce of gold, even mediocre finds could make money. Richard Schodde, of MinEx Consulting, has studied past exploration cycles in detail. He says we are seeing a tightening of the sector, as the availability of capital has plummeted. Costs of exploration are coming down as companies cut back on high-salaried employees and reduce operating costs. The following chart from MinEx shows exploration expenditures rising quickly during the boom years: The amount of money spent exploring rose during the last decade from $2.9 in 2002 to $29.4 billion in 2012, before falling back to $21 billion in 2013 says Mr. Schodde. Over the time-frame 2002-12 $136 billion was spent world-wide on non-bulk exploration, resulting in 647 significant new discoveries, of which only 18 are considered to be 'top tier.' Despite a 10-fold increase in the amount of money spent on exploration over the last decade, the amount of new discoveries was relatively unchanged – meaning that more money was spent per new discovery. Mr. Schodde explains that as more money went into the sector, expenses related to exploring went up. Geologists and engineers demanded higher salaries. Drilling equipment and operators became more expensive, and money was spent liberally on general and administrative expenses. As an ebullient market sentiment took hold, money was also wasted on projects with negligible odds of success or likelihood of development and often incompetent management. So despite high expenditures of capital, the pace of discoveries remained relatively tame. Mr. Schodde notes that today, salaries and G&A expenses have come down since 2012, and he believes that this trend will continue as capital remains scarce. Adding to the challenge, finding new deposits will become much tougher for the exploration industry, he says, because most 'easy-to-find' deposits have already been discovered. Explorers will have to drill deeper in known mineral-rich locations, such as Western Australia, or look in problematic jurisdictions, such as Central Africa. Making discoveries should become more costly for these reasons. Already, new discoveries are barely keeping pace with depletion, says Mr. Schodde. As he explains, only about half of new decently-sized deposits will later become a mine. Depending on the commodity and location it will take 10-15 years on average for a discovery to become a mine. So we must discover about twice as much metal today as we will be using in a decade from now in order to maintain supply. Looking ahead to expected production rates in 2020, gold is being discovered at 1.5 times the expected depletion rate. New copper deposits are being discovered at 1.7 times the projected consumption rate in 2020, which is also below the 'replacement rate' for the metal. The exploration sector is contracting — spending less money and pursuing fewer projects – and is being forced to be more efficient, Mr. Schodde explains. While exploration expenses have come down, the need for new deposits is strong. The exploration industry will need to make more new discoveries, despite decreasing capital available, or the supply of mined metals is likely to decline in coming years. Regards Henry Bonner for The Daily Reckoning Ed. Note: While investing in pre-operational, exploratory ventures is always risky, there are ways for investors to significantly minimize that risk… And readers of the Daily Resource Hunter email edition were shown two specific ETFs that look relatively cheap at the moment… but that have plenty of upside potential if declining supply helps push prices back towards $2,000 gold.

So central bank gold is being held in investment bank vaults Posted: 23 Apr 2014 07:36 AM PDT 10:38a ET Wednesday, April 23, 2014 Dear Friend of GATA and Gold: Today's Reuters report about changes at the gold and currency trading desks of investment banks, which was called to your attention in a dispatch a little while ago -- http://www.reuters.com/article/2014/04/22/banks-gold-forex-idUSL6N0NE3K9... -- is notable for more than its acknowledgment that central banks are surreptitiously trading gold every day, an acknowledgement made last September by the Banque de France: http://www.gata.org/node/13373 For in reporting that "banks that serve central banking customers with large bullion reserves to manage will have a greater need to offer gold trading and storage services," Reuters also has acknowledged that much central bank gold is now held outside central bank vaults. That's what the reference to "storage services" is about. Presumably the central bank gold being vaulted by investment banks is gold that central banks have leased or swapped into the market for market-rigging purposes. Of course anyone who has been following GATA realizes that neither Reuters nor any other mainstream financial news organization will be permitted to pursue this issue, and that gold market "analysts" from CPM Group's Jeff Christian to the World Gold Council's Pierre Lassonde will conscientiously distract from it. So let's be grateful that Reuters has let this much slip and hope that the news service won't suffer too much official retaliation for it. 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/ Committee for Monetary Research and Education Spring Dinner Meeting Union League Club, New York City Thursday, May 22, 2014 http://www.cmre.org/news/spring-meeting-2014/ 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... New Orleans Investment Conference Wednesday-Saturday, October 22-25, 2014 Hilton New Orleans Riverside Hotel New Orleans, Louisiana https://jeffersoncompanies.com/new-orleans-investment-conference/home * * * 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/

"Technicals Dominate" Gold Prices But "Algos Disappointed" as Trading Stays "Dull" Posted: 23 Apr 2014 06:36 AM PDT GOLD PRICES gave back a $5 rally Wednesday lunchtime in London, trading back at $1282 per ounce as European stock markets reversed earlier losses following strong Eurozone manufacturing data.   China's manufacturing sector contracted for the fourth month running on the HSBC PMI index.   Gold prices are being "undermined by improving macro data and reports that China imports tied to financing demand," reckons Robin Bhar, analyst at Societe Generale, pointing to last week's comments on China's gold trade financing from market-development organization the World Gold Council.   "The only real support for gold prices," says Germany's Commerzbank in a note, "is coming from any tension that still exists in the Ukraine."   "In line with our expectations," says Russian investment bank VTB's gold-dealing desk, "the market has reached early April's lows already."   Gold prices "could still consolidate a little in dull trading this week," it adds, "unless selling intensifies on a sustained close below $1278/80 per ounce."   Also looking at gold price charts, "Technicals dominate direction," says the trading desk note from Standard Bank's commodities team – currently being acquired by China's ICBC – "and again technicals indicating trend is to the downside.   "With a decisive break under 1278," says Standard, gold prices "could see $1255/1240 next."   Tuesday's action questioned the importance of that level, however, "to the chagrin of the algos [computer programs] and day traders," says brokerage Marex Spectron's London team.   "The follow through was fairly non-existent and the market held reasonably well and closed back in the 1280s."   Looking at the US gold derivatives market, "technical trading" ahead of tomorrow's expiry of Comex options for May "[is] keeping gold from a vigorous rally," says George Gero at RBC Wealth Management in New York.   "Tomorrow night we may see beginnings of volatile up and down on Friday."   Meantime in China, the Shanghai Gold Exchange's most active contract ended Wednesday some 75¢ per ounce above equivalent London quotes, marking only the 6th such premium to international benchmarks in the last 9 weeks.   London gold borrowing costs today edged back, slipping for the second day running from last Thursday's new 8-month highs.

Gold and Miners Outperform Once Again Posted: 23 Apr 2014 06:05 AM PDT Briefly: In our opinion no speculative positions are justified from the risk/reward perspective. Yesterday’s price action in the precious metals market might seem perplexing to some investors and there’s good reason for it. Gold declined, but silver didn’t, and mining stocks actually managed to rally more than 1%. Let’s take a closer look (charts courtesy of http://stockcharts.com).

The current London Gold Pool will collapse as the first did, Grant Williams tells KWN Posted: 23 Apr 2014 05:41 AM PDT 8:40a ET Wednesday, April 23, 2014 Dear Friend of GATA and Gold: Singapore-based fund manager Grant Williams tells King World News that the gold market "is now a game of patience by those who can run the numbers and who mathematically comprehend that this price suppression simply cannot go on forever." Williams adds: "This second London Gold Pool will be overrun just like the first one was. At some point this disparity between paper prices and physical demand is going to resolve itself, and when it does it will mean an explosion of the gold price to the upside." An excerpt from the interview is posted at the KWN blog here: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/4/23_Co... Also at King World News, fund manager Stephen Leeb says China and Russia are positioning their currencies to revolve around gold: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/4/22_Ax... CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. ADVERTISEMENT Buy precious metals free of value-added tax throughout Europe Europe Silver Bullion is a fast-growing dealer sourcing its products from renowned mints, refiners, and distributors. Because of a legal loophole that will close soon, you can acquire the world's most popular bullion coins free of value-added tax throughout the European Union. You can collect your order in person at our headquarters in Tallinn, Estonia, or have it delivered in any of the 28 EU countries. Europe Silver Bullion is owned and operated by North American and European experts in selling, storing, and transporting precious metals. We have an extensive product inventory of silver, gold, platinum, and palladium, and our network spans the world. Visit us at www.europesilverbullion.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/ Committee for Monetary Research and Education Spring Dinner Meeting Union League Club, New York City Thursday, May 22, 2014 http://www.cmre.org/news/spring-meeting-2014/ 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... New Orleans Investment Conference Wednesday-Saturday, October 22-25, 2014 Hilton New Orleans Riverside Hotel New Orleans, Louisiana https://jeffersoncompanies.com/new-orleans-investment-conference/home * * * 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 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.

Reuters notes that central banks trade gold every day but doesn't grasp what it means Posted: 23 Apr 2014 04:55 AM PDT 8a ET Wednesday, April 23, 2014 Dear Friend of GATA and Gold: Reuters has produced a news report about the currency markets that acknowledges not only that gold is primarily a competitive form of money but also that central banks are trading it surreptitiously every day. But of course the report fails to perceive and explain what that means -- that central banks are surreptitiously rigging the gold market and, with it, all other markets. Excerpts from the Reuters story are appended. CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. * * * E-Trading Pulls Gold into Forex Units as Commodity Desks Shrink By Clara Denina and Jan Harvey Reuters Wednesday, April 23, 2014 LONDON -- The increasing use of technology on financial trading floors is driving a trend for banks to roll precious metals operations into their forex businesses as a separate unit from other commodities activities. Barclays on Tuesday followed similar moves by rivals Deutsche Bank, UBS, JPMorgan Chase & Co., and Morgan Stanley by announcing that it would keep its gold trading business while hiving off most of its global commodities operations. ... "If you were to look at the size of the banks' trading teams in foreign exchange (compared with) 10 years ago, they are a shadow of their former selves," one former banker said. "The machines have taken over. ... If you have gold, there is no reason at all why you wouldn't include that as another currency pair." ... Trading gold alongside foreign exchange operations makes a lot of sense. The metal is often regarded as a dual asset, both a commodity and a store of value. Prices tend to be more sensitive to factors such as U.S. interest rate policy, inflation expectations, and forex rates than the supply and demand flows that exert a heavy influence on commodities such as oil or industrial metals. ... The client base is also different from that for other commodities. For instance, banks that serve central banking customers with large bullion reserves to manage will have a greater need to offer gold trading and storage services. ... ... For the full story: http://www.reuters.com/article/2014/04/22/banks-gold-forex-idUSL6N0NE3K9... 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/ Committee for Monetary Research and Education Spring Dinner Meeting Union League Club, New York City Thursday, May 22, 2014 http://www.cmre.org/news/spring-meeting-2014/ 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... New Orleans Investment Conference Wednesday-Saturday, October 22-25, 2014 Hilton New Orleans Riverside Hotel New Orleans, Louisiana https://jeffersoncompanies.com/new-orleans-investment-conference/home * * * 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 precious metals free of value-added tax throughout Europe Europe Silver Bullion is a fast-growing dealer sourcing its products from renowned mints, refiners, and distributors. Because of a legal loophole that will close soon, you can acquire the world's most popular bullion coins free of value-added tax throughout the European Union. You can collect your order in person at our headquarters in Tallinn, Estonia, or have it delivered in any of the 28 EU countries. Europe Silver Bullion is owned and operated by North American and European experts in selling, storing, and transporting precious metals. We have an extensive product inventory of silver, gold, platinum, and palladium, and our network spans the world. Visit us at www.europesilverbullion.com.

The Big Currency Reset Posted: 23 Apr 2014 01:44 AM PDT Buying gold & silver miners in anticipation of "the big reset"...   The NETHERLANDS-based Commodity Discovery Fund focuses on mining discoveries and start-up producers in precious, base and specialty metals.   Founded by author, entrepreneur and publicist Willem Middelkoop, and with senior researcher Terence van der Hout also studying critical metals, the Commodity Discovery Fund's key belief is the world's reserve currency will "reset" away from the US Dollar in the next decade, forcing gold prices to rise and mining equities to follow.   Here, Van der Hout and Middelkoop tell The Gold Report that by focusing on producers, near-producers and turnaround stories, they plan to capitalize on opportunities in North America, Africa and beyond.   The Gold Report: Willem, your first book predicted the collapse of the global financial system a year before the 2008 fall of Lehman Bros. In your new book The Big Reset: War on Gold and the Financial Endgame, you're predicting the demise of the Dollar as the reserve currency by 2020. You said it can occur as a carefully planned event or as the result of a crisis. What would these two scenarios look like?   Willem Middelkoop: Authorities always prefer to act within a well-planned scenario. The US and the International Monetary Fund understand that the US Dollar has to be replaced one day. It could be 2020. It could be 2018. It could be 2023. It has to be replaced by another anchor to support the worldwide monetary system.   Both the US and the IMF will try to stay in the driver's seat as they propose the transformation of the worldwide financial system. They could introduce special drawing rights, an international reserve asset created by the IMF in 1969 to supplement its member countries' official reserves. Its value is based on a basket of four key international currencies, and SDRs can be exchanged for freely usable currencies. The US and the IMF could propose that the SDRs be used to replace the Dollar as the anchor for the worldwide financial system.    However, the IMF and its partners, the central banks around the world, will need at least five more years to prepare the system for such a change. A crisis of confidence around the Dollar could occur before the IMF and its partners are ready for a reset operation. If a crisis of confidence occurs, the IMF would have to mount a rescue operation to save worldwide trade, as we saw in early 2009. We had some similar, but smaller, resets following the crisis in Germany after the Weimar hyperinflation in 1923 and, more recently, in Cyprus.    The SDRs could act like a monetary umbrella and consist of Dollars, Euros, British pounds and Chinese Yuan after a monetary reset.   TGR: A lot of this plan is going on backstage. Most people don't know about it. What signs should we look for to signal the shift so we can adjust our portfolios?   Willem Middelkoop: This is a very important question. Investors need to understand that such a transformation in our monetary system might be introduced over a weekend. In Cyprus, there were not many warning signs. That's why I started thebigresetblog.com, where I follow the latest information, and I'm publishing the latest signs pointing toward such a reset. On March 17, I published a story that was based on an interview with George Soros. In that interview with the Financial Times, Soros said the system is broken and needs to be reconstituted. I also published an interview with Christine Lagarde, head of the IMF. She used the term "reset" multiple times in interviews during the World Economic Forum.   Another important sign is an editorial by the Chinese state press agency recently saying that the time has come for a new international reserve currency to be created to replace the dominant US Dollar.    Both East and West sent out specific signals pointing toward this transformation. Of course, it's important to watch the gold and Dollar charts on a daily basis, because when a reset is close, you can expect major moves.   TGR: What does this mean for gold? The signs are out there – why is the price hovering around $1300 per ounce?   Willem Middelkoop: It's quite easy to understand why central banks would like to revalue gold to devalue the Dollar at a certain stage of this reset. The US's official gold reserves, which are still 8,000 tonnes, are valued at the historical cost price of $42 per ounce. A revaluation toward $4,200 per ounce would grow the value of these gold reserves from the current $11 billion to $1.1 trillion. Without such a revaluation, gold prices will have to rise as well given the structural deficits in the gold market. Worldwide gold production can't keep up with the growing demand for physical gold. Recent figures by the World Gold Council show a deficit of 700 tonnes physical gold.   We have seen lots of manipulation of the gold price, similar to the 1960s when the London Gold Pool was keeping gold prices at $35 per ounce. Central bankers have done this for a number of years by selling large amounts of gold from the official reserves of Western central banks. We've seen another round of manipulation of the gold price in the last few years. This can't go on for another 5 to 10 years.    TGR: If the gold price went up, would the precious metals mining stocks follow or, because of the manipulation, would there not be a connection?   Willem Middelkoop: The gold price started to rise at the end of December. When the gold price went up 10%, precious metal mining stocks went up sometimes as much as 30%. Investors will come to understand that the gold price might trade higher in the following weeks and months, and precious metal mining stocks should also go higher.    Countries like China and Russia are also growing their gold reserves enormously. With estimates for yearly deficits in the physical gold market up to around 1,000 tons/year, more investors see precious metal companies as the only ones that own huge amounts of physical tons still in the ground. When they can be sold at higher prices, these companies will become hugely profitable.    We've seen that in the past. In the 1970s, we had the last gold rush and lots of free cash flow was generated by gold and silver producers. In the late 1970s and the early 1980s, these amounts were enormous. Senior producers had gains of 200-300% in the last two years of the gold bull market. The junior producers and the exploration companies showed gains of more than 1,000% on average.   TGR: What markets do you think are good right now? What commodities do you like?   Willem Middelkoop: We still have 60% of our equity investments in gold-related equities, 20% in silver-related and the last 20% in base metals and specialty metals. The only change in the last two years has been that we decreased our investment in exploration companies and increased our investment in royalty companies and senior producers.   TGR: Why was that?   Willem Middelkoop: Because of the low valuation in the correction since the middle of 2011. The valuation for gold producers became almost laughable. Of course, a producer, which is creating cash flow and is still profitable at these prices, has only upside in the current market. It was a defensive move.    Terence van der Hout: Technically, an exploration company that has no assets can just go to zero – there are a number that are doing that – whereas producers will always be worth something, even at fire sales.    That's another consideration that we've been looking at on the downside. Very recently, we've been subtly shifting from producers and near-producers to advanced developers. We see a turn in the markets. Those companies are well leveraged to the gold price and have a fairly extreme undervaluation to catch up with. Normally, they will be revalued to something relating to the amount of resource they produce.   TGR: A number of the companies in your fund are in Africa. How do you assess risk for a given region in Africa?   Terence van der Hout: There are various types of risks in Africa. There is a cost risk in West Africa because power is expensive and infrastructure is lacking. South Africa has energy issues and social and labor unrest. We have 70% of our portfolio invested in less risky areas, like North America. We used to avoid South Africa entirely, but something has changed in the way that we look at platinum. For one thing, we very much like the future for platinum group metals given that the Chinese automobile market is exploding and will need all the PGMs that the world can provide.   TGR: Considering South Africa has posed risks in the past, what do you look for in a successful miner?   Willem Middelkoop: A strong, proven, successful mine manager or entrepreneur can build companies time and again. The longer we are in this business – we're investors for more than 10 years now – the more we try to follow the good management teams.   Terence van der Hout: That's a derisking aspect of the business: management. Management is one of the prime parameters for us.   Willem Middelkoop: However, we're quite fed up with the high salaries being paid to executives running companies that don't perform. The industry has to understand that investors are taking these compensation packages into consideration when they decide if they should invest or not.   TGR: Do you predict an impact from the conflict in Russia as it is a supplier of PGMs?   Willem Middelkoop: Only if more sanctions are applied. Russian president Vladimir Putin understands how vulnerable the US and the Dollar have become. If strong sanctions were applied against Russia, it would be very easy for the Russians to stop selling oil in Dollars and start selling it in Yuan, rubles or even in gold. The US knows it should be careful not to make Putin too mad because the Dollar is too vulnerable. This is why no strong sanctions have been implemented until recently.    TGR: Any final advice for our readers as we're going into this shifting world?   Willem Middelkoop: I would like to talk a little about silver. We talked a lot about gold, and gold is very important. It's my opinion that gold will come back in the monetary system. I don't expect a full gold standard, but gold will become more important. But silver is poor man's gold. When the gold price goes up too much, more people start to buy silver instead. However, there are no large, above-the-ground stockpiles available anymore. Silver was still used to produce coins until the 1980s. These above-the-ground silver stockpiles are almost completely gone. We're very interested in great silver companies with lots of ounces in the ground.   TGR: Thank you both for your time.

The Big Currency Reset Posted: 23 Apr 2014 01:44 AM PDT Buying gold & silver miners in anticipation of "the big reset"...   The NETHERLANDS-based Commodity Discovery Fund focuses on mining discoveries and start-up producers in precious, base and specialty metals.   Founded by author, entrepreneur and publicist Willem Middelkoop, and with senior researcher Terence van der Hout also studying critical metals, the Commodity Discovery Fund's key belief is the world's reserve currency will "reset" away from the US Dollar in the next decade, forcing gold prices to rise and mining equities to follow.   Here, Van der Hout and Middelkoop tell The Gold Report that by focusing on producers, near-producers and turnaround stories, they plan to capitalize on opportunities in North America, Africa and beyond.   The Gold Report: Willem, your first book predicted the collapse of the global financial system a year before the 2008 fall of Lehman Bros. In your new book The Big Reset: War on Gold and the Financial Endgame, you're predicting the demise of the Dollar as the reserve currency by 2020. You said it can occur as a carefully planned event or as the result of a crisis. What would these two scenarios look like?   Willem Middelkoop: Authorities always prefer to act within a well-planned scenario. The US and the International Monetary Fund understand that the US Dollar has to be replaced one day. It could be 2020. It could be 2018. It could be 2023. It has to be replaced by another anchor to support the worldwide monetary system.   Both the US and the IMF will try to stay in the driver's seat as they propose the transformation of the worldwide financial system. They could introduce special drawing rights, an international reserve asset created by the IMF in 1969 to supplement its member countries' official reserves. Its value is based on a basket of four key international currencies, and SDRs can be exchanged for freely usable currencies. The US and the IMF could propose that the SDRs be used to replace the Dollar as the anchor for the worldwide financial system.    However, the IMF and its partners, the central banks around the world, will need at least five more years to prepare the system for such a change. A crisis of confidence around the Dollar could occur before the IMF and its partners are ready for a reset operation. If a crisis of confidence occurs, the IMF would have to mount a rescue operation to save worldwide trade, as we saw in early 2009. We had some similar, but smaller, resets following the crisis in Germany after the Weimar hyperinflation in 1923 and, more recently, in Cyprus.    The SDRs could act like a monetary umbrella and consist of Dollars, Euros, British pounds and Chinese Yuan after a monetary reset.   TGR: A lot of this plan is going on backstage. Most people don't know about it. What signs should we look for to signal the shift so we can adjust our portfolios?   Willem Middelkoop: This is a very important question. Investors need to understand that such a transformation in our monetary system might be introduced over a weekend. In Cyprus, there were not many warning signs. That's why I started thebigresetblog.com, where I follow the latest information, and I'm publishing the latest signs pointing toward such a reset. On March 17, I published a story that was based on an interview with George Soros. In that interview with the Financial Times, Soros said the system is broken and needs to be reconstituted. I also published an interview with Christine Lagarde, head of the IMF. She used the term "reset" multiple times in interviews during the World Economic Forum.   Another important sign is an editorial by the Chinese state press agency recently saying that the time has come for a new international reserve currency to be created to replace the dominant US Dollar.    Both East and West sent out specific signals pointing toward this transformation. Of course, it's important to watch the gold and Dollar charts on a daily basis, because when a reset is close, you can expect major moves.   TGR: What does this mean for gold? The signs are out there – why is the price hovering around $1300 per ounce?   Willem Middelkoop: It's quite easy to understand why central banks would like to revalue gold to devalue the Dollar at a certain stage of this reset. The US's official gold reserves, which are still 8,000 tonnes, are valued at the historical cost price of $42 per ounce. A revaluation toward $4,200 per ounce would grow the value of these gold reserves from the current $11 billion to $1.1 trillion. Without such a revaluation, gold prices will have to rise as well given the structural deficits in the gold market. Worldwide gold production can't keep up with the growing demand for physical gold. Recent figures by the World Gold Council show a deficit of 700 tonnes physical gold.   We have seen lots of manipulation of the gold price, similar to the 1960s when the London Gold Pool was keeping gold prices at $35 per ounce. Central bankers have done this for a number of years by selling large amounts of gold from the official reserves of Western central banks. We've seen another round of manipulation of the gold price in the last few years. This can't go on for another 5 to 10 years.    TGR: If the gold price went up, would the precious metals mining stocks follow or, because of the manipulation, would there not be a connection?   Willem Middelkoop: The gold price started to rise at the end of December. When the gold price went up 10%, precious metal mining stocks went up sometimes as much as 30%. Investors will come to understand that the gold price might trade higher in the following weeks and months, and precious metal mining stocks should also go higher.    Countries like China and Russia are also growing their gold reserves enormously. With estimates for yearly deficits in the physical gold market up to around 1,000 tons/year, more investors see precious metal companies as the only ones that own huge amounts of physical tons still in the ground. When they can be sold at higher prices, these companies will become hugely profitable.    We've seen that in the past. In the 1970s, we had the last gold rush and lots of free cash flow was generated by gold and silver producers. In the late 1970s and the early 1980s, these amounts were enormous. Senior producers had gains of 200-300% in the last two years of the gold bull market. The junior producers and the exploration companies showed gains of more than 1,000% on average.   TGR: What markets do you think are good right now? What commodities do you like?   Willem Middelkoop: We still have 60% of our equity investments in gold-related equities, 20% in silver-related and the last 20% in base metals and specialty metals. The only change in the last two years has been that we decreased our investment in exploration companies and increased our investment in royalty companies and senior producers.   TGR: Why was that?   Willem Middelkoop: Because of the low valuation in the correction since the middle of 2011. The valuation for gold producers became almost laughable. Of course, a producer, which is creating cash flow and is still profitable at these prices, has only upside in the current market. It was a defensive move.    Terence van der Hout: Technically, an exploration company that has no assets can just go to zero – there are a number that are doing that – whereas producers will always be worth something, even at fire sales.    That's another consideration that we've been looking at on the downside. Very recently, we've been subtly shifting from producers and near-producers to advanced developers. We see a turn in the markets. Those companies are well leveraged to the gold price and have a fairly extreme undervaluation to catch up with. Normally, they will be revalued to something relating to the amount of resource they produce.   TGR: A number of the companies in your fund are in Africa. How do you assess risk for a given region in Africa?   Terence van der Hout: There are various types of risks in Africa. There is a cost risk in West Africa because power is expensive and infrastructure is lacking. South Africa has energy issues and social and labor unrest. We have 70% of our portfolio invested in less risky areas, like North America. We used to avoid South Africa entirely, but something has changed in the way that we look at platinum. For one thing, we very much like the future for platinum group metals given that the Chinese automobile market is exploding and will need all the PGMs that the world can provide.   TGR: Considering South Africa has posed risks in the past, what do you look for in a successful miner?   Willem Middelkoop: A strong, proven, successful mine manager or entrepreneur can build companies time and again. The longer we are in this business – we're investors for more than 10 years now – the more we try to follow the good management teams.   Terence van der Hout: That's a derisking aspect of the business: management. Management is one of the prime parameters for us.   Willem Middelkoop: However, we're quite fed up with the high salaries being paid to executives running companies that don't perform. The industry has to understand that investors are taking these compensation packages into consideration when they decide if they should invest or not.   TGR: Do you predict an impact from the conflict in Russia as it is a supplier of PGMs?   Willem Middelkoop: Only if more sanctions are applied. Russian president Vladimir Putin understands how vulnerable the US and the Dollar have become. If strong sanctions were applied against Russia, it would be very easy for the Russians to stop selling oil in Dollars and start selling it in Yuan, rubles or even in gold. The US knows it should be careful not to make Putin too mad because the Dollar is too vulnerable. This is why no strong sanctions have been implemented until recently.    TGR: Any final advice for our readers as we're going into this shifting world?   Willem Middelkoop: I would like to talk a little about silver. We talked a lot about gold, and gold is very important. It's my opinion that gold will come back in the monetary system. I don't expect a full gold standard, but gold will become more important. But silver is poor man's gold. When the gold price goes up too much, more people start to buy silver instead. However, there are no large, above-the-ground stockpiles available anymore. Silver was still used to produce coins until the 1980s. These above-the-ground silver stockpiles are almost completely gone. We're very interested in great silver companies with lots of ounces in the ground.   TGR: Thank you both for your time.

More War Needed Posted: 23 Apr 2014 01:24 AM PDT America's last 2 adventures were so successful, we should go into Ukraine...   COMING off such successes in Iraq and Afghanistan, writes Bill Bonner in his Diary of a Rogue Economist, it makes sense that the US should send troops to Ukraine, no?   When we first read this in the Washington Post, we thought it might be a late April Fools' Day joke. Then we discovered the writer was sincere about it. Apparently James Jeffrey is a fool all year round: "The best way to send Putin a tough message and possibly deflect a Russian campaign against more vulnerable NATO states is to back up our commitment to the sanctity of NATO territory with ground troops, the only military deployment that can make such commitments unequivocal.    "To its credit, the administration has dispatched fighter aircraft to Poland and the Baltic states to reinforce NATO fighter patrols and exercises. But these deployments, like ships temporarily in the Black Sea, have inherent weaknesses as political signals. They cannot hold terrain – the ultimate arbiter of any military calculus – and can be easily withdrawn if trouble brews.    "Troops, even limited in number, send a much more powerful message. More difficult to rapidly withdraw once deployed, they can make the point that the United States is serious about defending NATO's eastern borders." And why not?   The US has a global empire, supported by an unprecedented mountain of debt. All bubbles need to find their pins. And all empires need to blow themselves up. What Jeffrey is proposing is to speed up the process with more reckless troop deployments.   We're with him all the way. Push ol' Humpty Dumpty off the wall and get it over with...so the US can go back to being a decent, normal country without phony "red alerts"..."see something, say something" snitches...and a trillion-Dollar "security" budget that reduces our safety.   But we doubt it will be that easy. Empires do not go gently into that good night. Instead, they rail...rant...and rave against the dying of the light.   They also make one awful mess of things. Empires depend on military force for their survival. And to meet their budget goals.   Typically, they steal things. In the Punic Wars, for example, the Romans filled an alarming budget gap by conquering the city of Tarentum. They then stole all that was portable...and sold its citizens into slavery.   Problem solved...for a while.   The US is unique in the annals of imperial history. It always imagines it will reap a rich reward – at least in status, if not in money – from its conquests. It never does. President Wilson believed he would be hailed as a great international statesman. Instead, Europeans laughed at him and his 14 Points. ("Even God himself only needed 10," quipped French prime minister Georges Clemenceau.) President Johnson imagined a big "thank you" from the Vietnamese. Instead, he got a "no thanks" from Americans. And President George W. Bush imagined the oil riches of Iraq flowing back to the homeland...only to end up with the most costly and unrewarding war in US history. It is only because the US is so rich that it has been able to afford this kind of malarkey. But that is coming to an end. For much of the last 30 years, the imperial war machine has been financed mainly on credit – aided and abetted by a credit-crazed central bank.   How long this can go on is anyone's guess. Probably no longer than the Fed's credit bubble can continue to inflate.   In the meantime, the defense contractors, the military lobbyists, and the other zombies in the security industry will continue to push for more meddling – in Syria...Ukraine...heck, wherever...   The bubble must find its pin somewhere!

More War Needed Posted: 23 Apr 2014 01:24 AM PDT America's last 2 adventures were so successful, we should go into Ukraine...   COMING off such successes in Iraq and Afghanistan, writes Bill Bonner in his Diary of a Rogue Economist, it makes sense that the US should send troops to Ukraine, no?   When we first read this in the Washington Post, we thought it might be a late April Fools' Day joke. Then we discovered the writer was sincere about it. Apparently James Jeffrey is a fool all year round: "The best way to send Putin a tough message and possibly deflect a Russian campaign against more vulnerable NATO states is to back up our commitment to the sanctity of NATO territory with ground troops, the only military deployment that can make such commitments unequivocal.    "To its credit, the administration has dispatched fighter aircraft to Poland and the Baltic states to reinforce NATO fighter patrols and exercises. But these deployments, like ships temporarily in the Black Sea, have inherent weaknesses as political signals. They cannot hold terrain – the ultimate arbiter of any military calculus – and can be easily withdrawn if trouble brews.    "Troops, even limited in number, send a much more powerful message. More difficult to rapidly withdraw once deployed, they can make the point that the United States is serious about defending NATO's eastern borders." And why not?   The US has a global empire, supported by an unprecedented mountain of debt. All bubbles need to find their pins. And all empires need to blow themselves up. What Jeffrey is proposing is to speed up the process with more reckless troop deployments.   We're with him all the way. Push ol' Humpty Dumpty off the wall and get it over with...so the US can go back to being a decent, normal country without phony "red alerts"..."see something, say something" snitches...and a trillion-Dollar "security" budget that reduces our safety.   But we doubt it will be that easy. Empires do not go gently into that good night. Instead, they rail...rant...and rave against the dying of the light.   They also make one awful mess of things. Empires depend on military force for their survival. And to meet their budget goals.   Typically, they steal things. In the Punic Wars, for example, the Romans filled an alarming budget gap by conquering the city of Tarentum. They then stole all that was portable...and sold its citizens into slavery.   Problem solved...for a while.   The US is unique in the annals of imperial history. It always imagines it will reap a rich reward – at least in status, if not in money – from its conquests. It never does. President Wilson believed he would be hailed as a great international statesman. Instead, Europeans laughed at him and his 14 Points. ("Even God himself only needed 10," quipped French prime minister Georges Clemenceau.) President Johnson imagined a big "thank you" from the Vietnamese. Instead, he got a "no thanks" from Americans. And President George W. Bush imagined the oil riches of Iraq flowing back to the homeland...only to end up with the most costly and unrewarding war in US history. It is only because the US is so rich that it has been able to afford this kind of malarkey. But that is coming to an end. For much of the last 30 years, the imperial war machine has been financed mainly on credit – aided and abetted by a credit-crazed central bank.   How long this can go on is anyone's guess. Probably no longer than the Fed's credit bubble can continue to inflate.   In the meantime, the defense contractors, the military lobbyists, and the other zombies in the security industry will continue to push for more meddling – in Syria...Ukraine...heck, wherever...   The bubble must find its pin somewhere!

Gold in Crisis Posted: 23 Apr 2014 01:06 AM PDT A study of prices during the Syria, then Ukraine crises, plus the real crisis facing US investors...   TODAY I want to talk about crises, writes Laurynas Vegys, research analyst at Doug Casey's eponymous research group.   Two of the most notable ones that have been in the public eye over the course of the past 6-8 months are obviously the conflicts in Ukraine and Syria. The two are very different, yet both seemed to cause rallies in the gold market.   I say "seemed" because, while there were days when the headlines from either country sure looked to kick gold up a notch, there were also relevant and alarming reports from Argentina and emerging markets like China during many of the same time periods. Nevertheless, looking at the impressive gains during these periods, one has to wonder if it actually takes a calamity for gold to soar.   If so, can the yellow metal still return to and beat its prior highs, absent a major political crisis or a full-blown military conflict? My answer: Who needs a new crisis when we live in an ongoing one every day?   More on this in a moment. Let's first have a quick look at what happened in Ukraine and Syria as relates to the price of gold. Here's a quick look at the timeline of some of the major events from the Ukrainian crisis, followed by the same for Syria.     There seems to be a fairly clear pattern in both of these charts. Gold seems to rise in the anticipation of a conflict; once the conflict gets going, or turns out not as bad as feared, however, it sells off.     We see, for example, that as the news broke that chemical weapons were being used in Syria and Obama was threatening to intervene, gold moved up. But when the US did not wade into the bloodshed and Putin proposed his diplomatic solution, gold slid into a protracted sell-off, ending up lower than where it began.   It's impossible to say with any degree of certainty how much of gold's recent rise was due to anticipation of the Ukraine/Crimea crisis, but there were certainly days when gold seemed to move sharply in response to news of escalation in the conflict. And again, after it became clear that the US and EU would do little more than condemn Russia's actions with words, gold retreated. As of this writing, it's down about $85 from its high a little over a month ago. (We think many investors underestimate the potential impact of tit-for-tat sanctions, but they are not wrong to breathe a sigh of relief that a war of bullets didn't start between East and West.)   In sum, to the degree that global crisis headlines do impact the price of gold, the effects are short-lived. Unless they lead directly to consequences of long-term significance, these fluctuations may capture the attention of day traders, but are little more than distractions for serious gold investors betting on the fundamentals.   You have to keep your eye on the ball.   Major financial, economic, or political trends – the kind we like to base our speculations upon – don't normally appear as full-fledged disasters overnight. In fact, quite the opposite; they tend to lurk, linger, and brew in stealth mode until a boiling point is finally reached, and then they erupt into full-blown crises (to the surprise and detriment of the unprepared).   Fortunately, the signs are always there...for those with the courage and independence of mind to take heed.   So what are the signs telling us today – what's the real ball we need to keep our eyes upon, if not the distracting swarm of potential black swans?   The big-league trend destined for some sort of major cataclysmic endgame that will impact everyone stems from government fiscal policy: profligate spending, leading to debt crisis, leading to currency crisis, leading to a currency regime change. And not in Timbuktu – we're talking about the coming fall of the US Dollar.   The first parts of this progression are already in place. Consider this long-term chart of US debt.     Notice that government debt was practically nonexistent halfway through the 20th century, but has seen a dramatic increase with the expansion of federal government spending.   Consider this astounding fact: The government has accumulated more debt during the Obama administration than it did from the time George Washington took office to Bill Clinton's election in 1992. Total US government debt at the end of 2013 exceeded $16 trillion.   Let's put that in perspective, since today's Dollars don't buy what a nickel did a hundred years ago.     Except for the period of World War II and its immediate aftermath, never before has the US government been this deep in debt. Having recently surpassed the threshold of 100% debt to GDP, America has crossed into uncharted territory, getting in line with the likes of... Japan: "leading" the world with a 242% debt-to-GDP ratio Greece: 174% Italy: 133% Portugal: 125% Ireland: 117% The projection in the chart above is based on the 9.4% average annual rate of debt-to-GDP growth since the US embarked on its current course in response to the crash of 2008. If the rate persists, the US will be deeper in debt relative to its GDP than Ireland next year, deeper than Portugal in 2016, Italy in 2017, Greece in 2019, and even Japan in 2023 (and the US does not have the advantage of decades of trade surpluses Japan had).   Granted, the politicians and bureaucrats say they will slow this runaway train, but we're not talking about Fed tapering here. Congress will have to embrace the pain of living within its means. We'll believe that when we see it.   But let's take a more conservative, 10-year average growth rate (an arbitrary standard many analysts use): 5.3%. At this rate, the US will still be deeper in debt than Ireland and Portugal in 2017, Italy in 2019, Greece in 2024, and Japan in 2030.   Either way, this is still THE crisis of our times; all of the countries mentioned above are undergoing excruciating economic and social pain. It's no stretch to imagine the kind of social and political turmoil that has resulted from the European debt crisis coming to Main Street USA, as American debt goes off the charts.   It's also important to understand that the debt charted above excludes state and local debt, as well as the unfunded liabilities of social entitlement programs like Social Security and Medicare.   This ever-growing mountain – volcano – of government debt is a long-term, systemic, and extremely-difficult-to-alter trend. Unlike the crises in Ukraine and Syria (at least, so far), it's here to stay for the foreseeable future. While some investors have grown accustomed to this government-created phenomenon and no longer regard it as dangerous as outright military conflict, make no mistake – in the mid to long term, it's just as dangerous to your wealth and standard of living.   Still think it can't happen here? To fully understand how stealthily a crisis can sneak up on you, watch Casey Research's eye-opening documentary, Meltdown America.

Gold in Crisis Posted: 23 Apr 2014 01:06 AM PDT A study of prices during the Syria, then Ukraine crises, plus the real crisis facing US investors...   TODAY I want to talk about crises, writes Laurynas Vegys, research analyst at Doug Casey's eponymous research group.   Two of the most notable ones that have been in the public eye over the course of the past 6-8 months are obviously the conflicts in Ukraine and Syria. The two are very different, yet both seemed to cause rallies in the gold market.   I say "seemed" because, while there were days when the headlines from either country sure looked to kick gold up a notch, there were also relevant and alarming reports from Argentina and emerging markets like China during many of the same time periods. Nevertheless, looking at the impressive gains during these periods, one has to wonder if it actually takes a calamity for gold to soar.   If so, can the yellow metal still return to and beat its prior highs, absent a major political crisis or a full-blown military conflict? My answer: Who needs a new crisis when we live in an ongoing one every day?   More on this in a moment. Let's first have a quick look at what happened in Ukraine and Syria as relates to the price of gold. Here's a quick look at the timeline of some of the major events from the Ukrainian crisis, followed by the same for Syria.     There seems to be a fairly clear pattern in both of these charts. Gold seems to rise in the anticipation of a conflict; once the conflict gets going, or turns out not as bad as feared, however, it sells off.     We see, for example, that as the news broke that chemical weapons were being used in Syria and Obama was threatening to intervene, gold moved up. But when the US did not wade into the bloodshed and Putin proposed his diplomatic solution, gold slid into a protracted sell-off, ending up lower than where it began.   It's impossible to say with any degree of certainty how much of gold's recent rise was due to anticipation of the Ukraine/Crimea crisis, but there were certainly days when gold seemed to move sharply in response to news of escalation in the conflict. And again, after it became clear that the US and EU would do little more than condemn Russia's actions with words, gold retreated. As of this writing, it's down about $85 from its high a little over a month ago. (We think many investors underestimate the potential impact of tit-for-tat sanctions, but they are not wrong to breathe a sigh of relief that a war of bullets didn't start between East and West.)   In sum, to the degree that global crisis headlines do impact the price of gold, the effects are short-lived. Unless they lead directly to consequences of long-term significance, these fluctuations may capture the attention of day traders, but are little more than distractions for serious gold investors betting on the fundamentals.   You have to keep your eye on the ball.   Major financial, economic, or political trends – the kind we like to base our speculations upon – don't normally appear as full-fledged disasters overnight. In fact, quite the opposite; they tend to lurk, linger, and brew in stealth mode until a boiling point is finally reached, and then they erupt into full-blown crises (to the surprise and detriment of the unprepared).   Fortunately, the signs are always there...for those with the courage and independence of mind to take heed.   So what are the signs telling us today – what's the real ball we need to keep our eyes upon, if not the distracting swarm of potential black swans?   The big-league trend destined for some sort of major cataclysmic endgame that will impact everyone stems from government fiscal policy: profligate spending, leading to debt crisis, leading to currency crisis, leading to a currency regime change. And not in Timbuktu – we're talking about the coming fall of the US Dollar.   The first parts of this progression are already in place. Consider this long-term chart of US debt.     Notice that government debt was practically nonexistent halfway through the 20th century, but has seen a dramatic increase with the expansion of federal government spending.   Consider this astounding fact: The government has accumulated more debt during the Obama administration than it did from the time George Washington took office to Bill Clinton's election in 1992. Total US government debt at the end of 2013 exceeded $16 trillion.   Let's put that in perspective, since today's Dollars don't buy what a nickel did a hundred years ago.     Except for the period of World War II and its immediate aftermath, never before has the US government been this deep in debt. Having recently surpassed the threshold of 100% debt to GDP, America has crossed into uncharted territory, getting in line with the likes of... Japan: "leading" the world with a 242% debt-to-GDP ratio Greece: 174% Italy: 133% Portugal: 125% Ireland: 117% The projection in the chart above is based on the 9.4% average annual rate of debt-to-GDP growth since the US embarked on its current course in response to the crash of 2008. If the rate persists, the US will be deeper in debt relative to its GDP than Ireland next year, deeper than Portugal in 2016, Italy in 2017, Greece in 2019, and even Japan in 2023 (and the US does not have the advantage of decades of trade surpluses Japan had).   Granted, the politicians and bureaucrats say they will slow this runaway train, but we're not talking about Fed tapering here. Congress will have to embrace the pain of living within its means. We'll believe that when we see it.   But let's take a more conservative, 10-year average growth rate (an arbitrary standard many analysts use): 5.3%. At this rate, the US will still be deeper in debt than Ireland and Portugal in 2017, Italy in 2019, Greece in 2024, and Japan in 2030.   Either way, this is still THE crisis of our times; all of the countries mentioned above are undergoing excruciating economic and social pain. It's no stretch to imagine the kind of social and political turmoil that has resulted from the European debt crisis coming to Main Street USA, as American debt goes off the charts.   It's also important to understand that the debt charted above excludes state and local debt, as well as the unfunded liabilities of social entitlement programs like Social Security and Medicare.   This ever-growing mountain – volcano – of government debt is a long-term, systemic, and extremely-difficult-to-alter trend. Unlike the crises in Ukraine and Syria (at least, so far), it's here to stay for the foreseeable future. While some investors have grown accustomed to this government-created phenomenon and no longer regard it as dangerous as outright military conflict, make no mistake – in the mid to long term, it's just as dangerous to your wealth and standard of living.   Still think it can't happen here? To fully understand how stealthily a crisis can sneak up on you, watch Casey Research's eye-opening documentary, Meltdown America.

Prepared for the Attack of the Short Sellers: Joe Reagor Posted: 23 Apr 2014 01:00 AM PDT Despite the ongoing attack of the short-sellers, the fundamentals of gold and silver production are increasingly robust. ROTH Capital's Joe Reagor tells The Gold Report why he believes the price of gold is steaming toward $1,500/oz, with silver prices following in the wake. Reagor highlights several junior precious metals miners in a market that is out to prove the bears on Wall Street wrong.

Prepared for the Attack of the Short Sellers: Joe Reagor Posted: 23 Apr 2014 01:00 AM PDT Despite the ongoing attack of the short-sellers, the fundamentals of gold and silver production are increasingly robust. ROTH Capital's Joe Reagor tells The Gold Report why he believes the price of gold is steaming toward $1,500/oz, with silver prices following in the wake. Reagor highlights several junior precious metals miners in a market that is out to prove the bears on Wall Street wrong.

Prepared for the Attack of the Short Sellers: Joe Reagor Posted: 23 Apr 2014 01:00 AM PDT Despite the ongoing attack of the short-sellers, the fundamentals of gold and silver production are increasingly robust. ROTH Capital's Joe Reagor tells The Gold Report why he believes the price of... Visit the aureport.com for more information and for a free newsletter

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