Gold World News Flash

Richard Russell - Endless Propaganda & A Horrifying Endgame
Amanda Bynes Tweets About Father’s Abuse and Microchip in Her Brain; Now Under Involuntary Psychiatric Hold
Jim Rogers on Owning Gold, Silver and Real Assets
Gold: ‘Near-Term Outlook Uncertain… Long-Term Prospects Glorious’
How To Blow Up OPEC In Three Easy Steps
Imperial Pax Americana
The Defining Problem Of Our Times (In 1 Simple Chart)
Gold initiative is needed to restore Swiss independence, Barron tells KWN
Ambrose Evans-Pritchard: The great lira revolt has begun in Italy
Silver and Gold Prices Higher with the Gold Price Closing at $1,229.30
This Is What Happens When Someone Is Desperate To Sell $750 Million Of Stocks
Why the Next Collapse Will Be More than the Fed Can Handle
Silver Price At Historical Extremes Compared To Oil And Stocks
Gold Daily and Silver Weekly Charts - A Little Flight to Safety
Suddenly, We Have Problems
Powerful Reversal and Shakeout in the Junior Gold Mining Stocks at May Lows Around $33
This Will Send Massive Shock Waves Through The Gold Market
Will Swiss Gold Initiative transform the Gold Market?
Russian oil exec accuses Saudis of manipulating oil price down
Gold trades near four-week high
Precious Metals Monthly Bank Participation Report: October 2014
Monday Morning Links
How to Ebola-Proof Your Portfolio
FT's Martin Wolf in "Not Wrong" Shocker
Must Read: 10 Companies Adrian Day Sees as Stable in a World that Is Not
Must Read: 10 Companies Adrian Day Sees as Stable in a World that Is Not
Gold and Silver Price To Rally Or Not To Rally
Dollar Heavier to Start Week

Richard Russell - Endless Propaganda & A Horrifying Endgame

Posted: 13 Oct 2014 09:01 PM PDT

Today the Godfather of newsletter writers, 90-year old Richard Russell, condemned the endless propaganda coming out of the United States and the Federal Reserve, and also warned about this bear market will be about the end of fiat money. The 60-year market veteran also covered gold, silver, stocks, China, the U.S. dollar and more.

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

Amanda Bynes Tweets About Father’s Abuse and Microchip in Her Brain; Now Under Involuntary Psychiatric Hold

Posted: 13 Oct 2014 08:40 PM PDT

Amanda Bynes posted a series of tweets about her father sexually abusing her and a microchip inside her brain. She was then taken to a hospital in Los Angeles by Sam Lutfi – Britney Spears' ex-handler who was around her when she had her infamous meltdown.

from Vigilant Citizen:

In my previous articles about Amanda Bynes, I described how she is a clear product of mind control. The title of these articles pretty much sum her road to mind control hell : "Amanda Bynes: Another Product of Entertainment Industry Mind Control?", "Amanda Bynes Detained in Involontary Psychiatric Hold", and "Amanda Bynes Following in the Footsteps of Britney Spears, Placed Under Conservatorship".

In the past days, Bynes has been displaying erratic behavior that is typical of a MKULTRA meltdown. Here's a disturbing video of her infamous "shoplifting incident".

On October 10th, Bynes apparently had a meltdown – or a rare moment of clarity – as she posted "the truth" (in her words) about her father and her own condition. Incidentally, the things she tweeted all describe symptoms of a MK slave : Sexual abuse at a young age by a father who turned into a handler, being "brainwashed" and a "microchip in her brain" telling her what to do.

Read More @ VigilantCitizen.com

Jim Rogers on Owning Gold, Silver and Real Assets

Posted: 13 Oct 2014 07:40 PM PDT

from Boom Bust:

Gold: ‘Near-Term Outlook Uncertain… Long-Term Prospects Glorious’

Posted: 13 Oct 2014 07:20 PM PDT

by Lawrence Williams, MineWeb.com

I've taken the title of this piece from within an email from New York precious metals analyst Jeff Nichols (nicholsongold.com) introducing his latest commentary entitled – Is now a good time to buy gold? In it Nichols states that he is no gold bug in that he is not a believer that a return to the gold standard would set the global economy to rights, or that gold is the only true currency, but does confess to being 'super-bullish' on gold and that unprecedented appreciation in the metal price lies ahead. Indeed, later in his note to subscribers he ascribes a degree to the kind of appreciation he is expecting with the comment that he expects gold prices to at least double their all-time highs over the next three to five years.

Now Nichols has indeed been bullish all along through gold's rise and fall (or correction as he'd probably put it). His bullishness has probably been for all the right reasons as gold's longer-term outlook would appear to be very positive, but unfortunately the recent drivers of the gold market haven't been paying heed, although Nichols has always tempered his bullishness with warnings that any upwards path would be far from smooth. He has not tended to be a mega-bull of the order of some with their talk of $10 000 gold so his reference to a more than doubling of gold's historic high inside the current decade represents the peak of his perhaps more realistic expectations – although most mainstream bank analysts would still describe his projections as over the top.

Read More @ MineWeb.com

How To Blow Up OPEC In Three Easy Steps

Posted: 13 Oct 2014 05:44 PM PDT

By Raúl Ilargi Meijer of The Automatic Earth

How To Blow Up OPEC In Three Easy Steps

It's easily been longer than I care to remember that I first wrote it was only a matter of time before individual OPEC members would throw out the cartel's agreements on prices and production, and just produce at full force and capacity, and then some. We may have seen that time arrive.

The underlying reason I first talked about it was two-fold. First: the economic crisis, which could lead to one thing only: less global demand. And second: the fast increasing wealth and population numbers in oil-producing nations which, as initially defined by Jeffrey Brown and Sam Foucher in the Export Land Model, has proven to be a much bigger factor in OPEC economies than people realized.

Hardly anyone, still to this day, talks about the Export Land Model, but birth rates in Arab oil producing nations have been sky-high for many years, and the fact that in a country like Saudi Arabia some 50% of the population is younger than 20 years old, has enormous consequences domestically. Certainly with the King and the rest of the reigning class seriously getting on in age.

A generational clash can be avoided only by pampering the young, and that comes with a big surge in domestic demand for oil. And since for many young people there are no jobs, Saudi Arabia has no industries to speak of, there are many who follow the example of Saudi's like Osama Bin Laden into extremism.

Wait, first let me point to a nice piece of Fed 'communication'. There's been an entire parade of Fed heads paraded in the media lately, and one of the major issued addressed is that the global slowdown, which finally looks to have sunk in all over the place, would cause Yellen et al to be careful with, and postpone if needed, its interest rate hikes. Analysts and 'experts' also look to be wholly convinced of this. But then comes vice head Stanley Fisher and says a rate hike wouldn't hurt anyone anyway:

Fed's Fischer Says Rate Hike Won't Damage Global Economy

The Federal Reserve's eventual rate increase, the first since 2006, will not damage the global economy, Federal Reserve Vice Chairman Stanley Fischer said on Saturday. While there could be "trigger further bouts of volatility" in international markets when the Fed first hikes, "the normalization of our policy should prove manageable for the emerging market economies," Fischer said in a speech at the IMF's annual meeting.

[..] Since last year, Fischer said, the Fed has "done everything we can, within limits of forecast uncertainty, to prepare market participants for what lies ahead." The Fed has been as clear as it can be about the future course of its policy course, and markets understand, Fischer said. "We think, looking at market interest rates, that their understanding of what we intend to do is roughly correct … "

Any emerging market governments paying attention should feel a shiver of cold air when reading that. Fisher provides the Fed with an alibi here: if, make that when, rate hikes start makes victims, Fisher and Yellen can say they had no idea, that their models clearly stated that would not happen. Don't count on them waiting.

Then back to OPEC. Like the EU, 54-year old OPEC has lived past its best before date. Predictably, individual members' interests have started to diverge too much for it to remain a coherent entity. And the divergence widens fast these days.

I've hinted before at the long-standing cooperation between the US and Saudi Arabia, and there's little doubt in my mind that the two are up to something. Washington has it in for Putin, first and foremost. The 'Ukraine project' has not brought what was intended.

Russia also still stands behind its only Middle East sphere of influence, Syria, something the Saudis like as little as America (but which Moscow won't give up and and end up with zero say in the region) . And there's always Venezuela, OPEC member and very vulnerable to power oil prices. Then there are a dozen other possible 'targets' among oil producers that the Saudi/US partnership may want to weaken. Who likes Iran, for one thing?

We've known for a while that the Saudis were lowering their prices. Which is something other OPEC members will be plenty upset about. But now we find out they're also increasing production, and trying to catch EUropean and Asian customers before other fellow members can. That adds a whole extra dimension to the story:

Saudis Make Aggressive Oil Push in Europe

Days after slashing prices in Asia, Saudi Arabia is now making an aggressive push in the European oil market, traders say. The kingdom is taking the unusual step of asking buyers to commit to maximum shipments if they want to get its crude. "The Saudi push is not just in Asia. It's a global phenomenon," one oil trader said. "They are using very aggressive tactics" in Europe too, the trader added.

This month, state-owned Saudi Aramco stunned the rest of OPEC by slashing its November prices to defend its market share in Asia's growing market. The move, setting a price war in the oil-production group, was combined with a boost in the kingdom's output in September.

But Riyadh is also moving to protect its sales to Europe, a declining market where it is facing rivalry from returning Libyan production. After cutting its November prices there, Saudi Aramco is also asking refiners to commit to full, fixed deliveries in talks to renew contracts for next year, the traders say. [..] "They are threatening buyers" to discontinue sales if they don't agree with the fixed deliveries, another trader said.

What follows from that is that Saudi Arabia more or less unilaterally decides where oil prices are going. Iran and Iraq have already announced price cuts, and the rest has no choice but to follow, no matter how badly they need higher prices. It's a kind of musical chairs, and quite a few nations will fall be the wayside. Though not necessarily Russia.

Algeria and Kuwait, for whatever reasons, seem to be lined up with the Saud family against the rest of OPEC:

Oil Bear Market Tests OPEC Unity as Venezuela Seeks Meeting

Oil ministers from Kuwait and Algeria dismissed possible production cuts as crude's slump to a four-year low prompted Venezuela to call for an emergency meeting of OPEC. [..] Bear markets for Brent and U.S. crude are putting pressure on OPEC's consensus on output ahead of the group's scheduled Nov. 27 meeting in Vienna …

OPEC supplies 40% of the world's oil, and its largest Persian Gulf producers, including Saudi Arabia, Iraq and Iran, are offering deeper discounts to buyers in Asia to maintain market share amid a global glut. "If we had a way to preserve the stability of prices or something that would bring it back to previous levels, we would not hesitate in that," Kuwait'sAl-Omair said in remarks reported by KUNA yesterday. "There is no room for countries to reduce their production," he said, without giving details.

Ample supply, helped by surging U.S. and Russian output, pushed Brent crude into a bear market last week. The European benchmark slumped more than 20% from its peak for the year on June 19, meeting a common definition of a bear market. Brent fell on Oct. 10 to its lowest since December 2010.

"This is going to increase pressure for Saudi Arabia to cut output to raise prices …" "They are increasingly giving signs they won't do it on their own. Saudi Arabia doesn't want to lose market share in Asia … ".

OPEC is boosting production as its members fight for market share and seek to meet rising domestic demand. [..] Saudi Arabia, Iran and most recently Iraq all widened the discounts they'll offer on their main grades sold to Asia next month to the most since at least 2009.

Venezuelan President Nicolas Maduro gave instructions to ask for an extraordinary OPEC meeting, the country's foreign ministry said in a post on its Twitter account on Oct. 10. "The price of oil is important for our country, and we'll start actions to stop its fall," the ministry cited former oil minister Rafael Ramirez as saying.

Crude prices have fallen because of several factors, including U.S. shale production, geopolitics and speculation, Algeria's Yousfi said yesterday at a news conference in the city of Oran. "We follow with great attention the level of oil prices, but we are very tranquil," he said. Crude probably won't fall below $76 to $77 a barrel because that price level represents the highest cost of production in the U.S. and Russia, Al-Omair of Kuwait said. Both countries have abundant supply and are outside the group..

'There is no room for countries to reduce their production', says Kuwait. In other words, it's everybody for themselves. Because supply and demand numbers seem to indicate there's lots of room to cut production. So that can't be it. Still, production rises in Saudi Arabia, US, Russia and undoubtedly many other producing nations. What else can they do when prices fall, but try and sell higher volumes to the highest bidder, as demand wanes in a shrinking global economy that's done blowing bubbles? There's nothing left but to pump all out and hope for the best.

OPEC Members' Rift Deepens Amid Falling Oil Prices

A rift between OPEC members deepened over the weekend, as producers in the cartel moved in different directions amid falling oil prices. Venezuela, which has been one of the most outspoken proponents of a production cut by the Organization of the Petroleum Exporting Countries, called over the weekend for an emergency meeting of the group to respond to falling prices. But Kuwait said Sunday that OPEC was unlikely to act to rein in output.

Also on Sunday, Iraq's State Oil Marketing Company cut the price of Basrah Light crude in November for Asian and European buyers by 65 cents to a discount of $3.15 a barrel below the Oman/Dubai benchmark for Asian customers and $5.40 below the Brent benchmark for European customers…

The moves and countermoves are the latest in a time of particular discord in OPEC. The organization was founded to leverage members collective output to help influence global prices. In recent periods of low prices, Saudi Arabia, OPEC's top producer and de facto leader has managed to cobble together some level of consensus.

But even modest cooperation between many members has broken down, and Saudi Arabia, in particular, has moved to act on its own. While it cut output earlier this summer, other members didn't go along. Since then, it has dropped its prices.

Each member has a different tolerance for lower prices. Kuwait, the United Arab Emirates and Saudi Arabia generally don't need prices quite as high as Iran and Venezuela to keep their budgets in the black.

The 3 easy steps to blow up OPEC are easy indeed. The question may be why now, and why the way it happens. But that it's happening is clear.

Step 1: raise output
Step 2: lower prices
Step 3: watch member nations' governments go down like cats in a sack, trying to keep control of their societies.
Step 3a: yank up the US dollar

This is not a purely economic issue, it's political. The US has a large voice in it in the director's role, and the House of Saud plays the part of the protagonist. This is a major development in world politics, it's not just some financial market-driven move.

World power relations are being hugely changed on the fly as we're all watching and trying to figure what to make of all this. One thing's for sure: the world will never be the same.

Why it happens now is a great question, which is impossible to answer. And that's fine: it's enough to try and understand exactly what is going on, let alone why.

But I bet you it has to do with the US and Europe realizing they can no longer keep pretending their economies are growing or recovering or doing fine.

We've landed in the next phase of what arguably started in 2007, but what you could place back many years before that, an economic system based on the fantasy that is debt driven growth, inflated by a factor of a trillion, give or take a few zeros.

That system is in the process of dying. And the people who have tried to make you believe, and succeeded, that it would all be fine in the end, are now jockeying for position in the aftermath of the demise of a world built on debt.

And they are the same people who built that world, profited from it to an insane degree, and want to use those profits to hang on to power in a world that will be dramatically different from the one they called the shots in. And that doesn't bode well; it tells us violent clashes will be on the horizon.

Imperial Pax Americana

Posted: 13 Oct 2014 05:08 PM PDT

What is the health of the American empire? How does the American empire differ from all other empires in history? What factor will inevitably be the collapse of the American empire? Is it supporting policies that actually play against US interests? CrossTalking with Eric Draitser, Bruce Fein and...

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

The Defining Problem Of Our Times (In 1 Simple Chart)

Posted: 13 Oct 2014 04:36 PM PDT

Submitted by Tim Price via Sovereign Man blog,

“When sorrows come,” wrote Shakespeare, “they come not single spies, but in battalions.”

True. And Jeremy Warner for the Daily Telegraph identifies ten such sorrows in his ‘ten biggest threats to the global economy’:

1) Geopolitical risk;

2) The threat of oil and gas price spikes;

3) A hard landing in China;

4) Normalization of monetary policy in the Anglo-Saxon economies;

5) Euro zone deflation;

6) ‘Secular stagnation’;

7) The size of the debt overhang;

8) Complacent markets;

9) House price bubbles;

10) Ageing populations.

We’ll start with point #7: the size of the debt overhang.

Since this was never addressed in the immediate aftermath of the Global Financial Crisis, it’s hardly a surprise to see the poison of debt continue to drip onto all things financial.

ALL German government paper out to three years, for example, now offers a negative yield. Investors must pay rent to the German government in order to buy its debt.

This has implications. And much of the rest of Warner’s ‘threats’ are inextricably linked to this debt overhang.

Point #8: Complacent markets? Check. (Though stocks have lost a lot of their nerve…)

Point #9: House price bubbles? Check. Since the monetary policy response to having too much debt in the system has been to slash rates and keep them at multi-century lows, it’s hardly a surprise to see property prices in a bubble. Again.

Point #5: Euro zone deflation? Check. This is less of a threat to solvent consumers, but deadly for indebted governments.

Point #4: Pending normalization of monetary policy in the UK and US? Check.

This threatens the integrity of the credit markets. And it’s worth asking whether central banks could possibly afford to let interest rates rise and risk bankrupting their governments.

We saw one particularly eye-catching chart last week, via Grant Williams, comparing the leverage ratios of major US financial institutions over recent years (shown below).

The Fed’s leverage ratio (total assets to capital) now stands at just under 80x. That compares with Lehman Brothers’ leverage ratio, just before it went bankrupt, of just under 30x.

Sometimes a picture really does paint a thousand words.

And this, again, brings us back to the defining problem of our time: too much debt in the system.

In a recent interview with Jim Grant, Sprott Global questioned the famed interest rate observer about the likely outlook for bonds. Grant responds:

“I’m not sure what a bear market would look like, but I think that it would be characterized at first by a lot of people rushing through a very narrow gate. ”

Grant was also asked if it was possible for the Fed to lose control of the bond market:

“Absolutely, it could. The Fed does not control events for the most part. Events certainly will end up controlling the Fed. To answer your question – yeah. I think the Fed can and will lose control of the bond market.”

As we have written on innumerable prior occasions, we wholeheartedly agree. What will drive pretty much all asset markets over the near, medium and longer term is almost entirely down to how credit markets behave.

The fundamentals (again, take one look at the chart) are utterly shocking, as are the implications.

And let us not confuse the prognosis by arguing over the diagnosis.

As Professor Antal Fekete writes in his Monetary Economics 101: The real bills doctrine of Adam Smith -

“Hyperinflation and hyper-deflation are just two different forms of the same phenomenon: credit collapse.

Arguing which of the two forms will dominate is futile: it blurs the focus of inquiry and frustrates efforts to avoid disaster.”

Gold initiative is needed to restore Swiss independence, Barron tells KWN

Posted: 13 Oct 2014 04:25 PM PDT

7:25p ET Monday, October 13, 2014

Dear Friend of GATA and Gold:

As the Swiss National Bank opposes the Swiss gold initiative, it is actually advocating keeping Switzerland subservient to the European Central Bank and particularly to the most financially irresponsible members of the euro zone, mining entrepreneur Keith Barron tells King World News today.

The SNB, Barron says, has "shackled the Swiss franc to the euro by pegging the franc at 1.20. They have supported that peg by buying up an incredible amount of euros. Now about 83 percent of Switzerland's foreign reserves are held in euros. What does that mean? To me it means that the independence of Switzerland is on the verge of being lost."

Barron says switching some of the Swiss reserves into gold is necessary to restore the country's independence.

Barron's interview is excerpted at the KWN blog here:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/10/13_T...

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

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Ambrose Evans-Pritchard: The great lira revolt has begun in Italy

Posted: 13 Oct 2014 04:12 PM PDT

By Ambrose Evans-Pritchard
The Telegraph, London
Monday, October 13, 2014

The die is cast in Italy. Beppe Grillo's Five Star movement has launched a petition to drive for Italian withdrawal from Europe's monetary union and for the restoration of economic sovereignty.

"We must leave the euro as soon as possible," said Mr Grillo, speaking at a rally over the weekend. "Tonight we are launching a consultative referendum. We will collect half a million signatures in six months -- a million signatures -- and we will take our case to parliament, and this time, thanks to our 150 legislators, they will have to talk to us."

Ever since the pugnacious comedian burst on the political scene, the eurozone elites have comforted themselves that the party is not really Eurosceptic at heart and certainly does not wish bring back the lira. This illusion has been shattered. ...

... For the remainder of the report:

http://www.telegraph.co.uk/finance/economics/11159649/The-great-Lira-rev...

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Silver and Gold Prices Higher with the Gold Price Closing at $1,229.30

Posted: 13 Oct 2014 03:51 PM PDT

13-Oct-14	Price	Change	% Change
Gold Price, $/oz	1,229.30	8.30	0.68%
Silver Price, $/oz	17.29	0.04	0.24%
Gold/Silver Ratio	71.082	0.308	0.44%
Silver/Gold Ratio	0.0141	-0.0001	-0.43%
Platinum Price	1,260.70	-0.40	-0.03%
Palladium Price	785.10	0.90	0.11%
S&P 500	1,874.74	-31.39	-1.65%
Dow	16,321.07	-223.03	-1.35%
Dow in GOLD $s	274.45	-5.64	-2.01%
Dow in GOLD oz	13.28	-0.27	-2.01%
Dow in SILVER oz	943.74	-15.23	-1.59%
US Dollar Index	85.53	-53.00	-38.26%

Have to make this fast. We're under a tornado warning and I need to get someplace safe. Susan'll kill me if I get hit by a tornado.

These blasted metals markets are really bogus. Comex closes, then the aftermarket jumps way up. Looks like the fingerprints of the Nice Government men.

The comex GOLD PRICE closed up $8.30 to 1,229.30, but in the aftermarket is now trading up 1.3% from Friday at $1,236.80. The SILVER PRICE closed up 4.2 cents at $17.294, then in the aftermarket rose to $17.52, up 1% from Friday. Which is real, and which is Memorex?

From here, markets are confirming that Stocks have topped and will move lower, and silver and GOLD PRICES will move higher. Gold right now is pennies below that $1,237 resistance which is the next barrier. Ought to fall tomorrow, along with $17.50 for silver.

Not sure yet that silver and gold prices have bottomed, but prices on 3 October were the lowest in the last three years (closes, I mean).

Buy some gold and silver now.

Charles Hugh smith had a provocative article today at www.oftwominds.com/blog.html. He asks, Will the Fed let the stock market crash before an election? But the deeper question he asks is, if the Fed and other central banks have manipulated stocks higher so long, what's to prevent their doing it longer? What IS the ultimate brake on their money printing? I believe it is that someday that money they are creating to inflate stock prices will escape into consumer prices. I'm not saying hyperinflation is certain, but central banks are sure making it easy.

Thinking about the present media, government, and CDC fulminations about Ebola, my son said, "See if these words bring anything to mind: 'swine flu,' bird flu', 'West Nile Virus.' It's the same old horror movie, The Bacteria That Ate Cleveland." NOW TO MARKETS

Dow sank 223.03 (1.35%) today and is now down 1.5% for the year. S&P500 sank 31.39 (1.65%) to 1,874.74. Big losses came after 2:00 p.m. across all markets, which looks like a panic.

Dow in gold closed at 13.20 oz (G$272.86), crashing thru its 50 DMA and into the even-sided triangle whence it broke out in July. Tanking.

Dow in silver dropped 1.94% to close 933.17 oz (S$1,206.52). Long above smashed its 20 DMA, now trying to break down thru the upper resistance line that it threw over in September.

Dow in silver crashed through its20 DMA (S$1,244.95 silver dollars or 962.89 oz) and skidded to a stop down 1.89% atS$1,242.17 (960.74 oz).

US dollar index lost 53 basis points (0.61%) and closed 85.53. Headed lower soon, probably tomorrow. Euro rose 0.75% to $1.2719. Yen rose another 0.71% to 93.54, rallying.

Got to run. Lightning is getting close.

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.

This Is What Happens When Someone Is Desperate To Sell $750 Million Of Stocks

Posted: 13 Oct 2014 03:22 PM PDT

At 1532ET today (Columbus Day - with half the market absent), someone - apparently having waited to see if the almost 'ubiquitous' 330pm Ramp would occur - decided it was time to dump three-quarters of a billion dollars notional of US equity market exposure in 1 second. The results of this forced liquidation (or utter disregard for fiduciary duty) were as follows...

A complete collapse of all liquidity in the S&P 500 e-mini futures contract - the world's most liquid equity exposure vehicle...

The liquidity evaporation began at 15:32:37 after 4,492 eMini contracts were dumped in 28 milliseconds $ES_F $SPY

— Eric Scott Hunsader (@nanexllc) October 13, 2014

An instantaneous 9 point plunge in the S&P 500...

And total chaos in the S&P 500 ETF (SPY) which saw offers below bids for what is hours to liquidity-providing HFTs (who appeared to step away for coffee)...

This chart shows just 1 second of SPY trading (corresponding to the volume spike above)

As Nasdaq quotes fell dramatically behind reality...

Given that NYSE margin debt at record highs and investor net worth at record lows...

The vicious cycle feedback from any extended push lower on liquidations is more than a little concerning (and may well explain the aggressive VIX buying today - and massive inversion of the VIX term structure)

Charts: Bloomberg and Nanex and @noalpha_allbeta

Why the Next Collapse Will Be More than the Fed Can Handle

Posted: 13 Oct 2014 02:44 PM PDT

Somewhere in Washington today, Federal Reserve chairwoman Janet Yellen and Treasury Secretary Jack Lew are holed up in a conference room — conducting a drill in the event a major bank collapses.

Their British counterparts, finance minister George Osborne and central bank chief Mark Carney, are also taking part in the exercise.

The location of the “war room” is a secret, but the event is being hosted by the Federal Deposit Insurance Corporation. The FDIC’s headquarters is on 17th St. NW in Washington — one of those horrible Soviet-architecture buildings from the ’60s that blight much of the nation’s capital.

Presumed location of today’s Fed/Treasury war game…

“We are going to make sure that we can handle an institution previously regarded as too big to fail,” promised Mr. Osborne on Friday. “We’re confident that we now have choices that did not exist in the past.”

Uh-huh.

Exactly what those “choices” would mean for the markets and the economy and your life, well, he wouldn’t say. But we already have a good idea, thanks to the Prophesy 2015 project we’ve been working on with the one and only Jim Rickards.

The timing of the drill seems… uh… a little ominous, in light of analysis we were reading over the weekend by experts outside the Agora Financial realm…

“The developed world is now in deep financial trouble,” writes Alasdair Macleod from GoldMoney. Then he regales us with a laundry list.

“Parts of the eurozone are in great difficulty, and only last weekend S&P the rating agency warned that Greece will default on its debts ‘at some point in the next 15 months.’ Japan is collapsing under the wealth destruction of Abenomics. China is juggling with a debt bubble that threatens to implode. The U.S. tells us through government statistics that their outlook is promising, but the reality is very different with one-third of employable adults not working; furthermore, the GDP deflator is significantly greater than officially admitted. And the U.K. is financially overgeared and overdependent on a failing eurozone…

“Those in charge of our money know that monetary expansion has failed to stimulate recovery. They also know that their management of financial markets, always with the objective of fostering confidence, has left them with market distortions that now threaten to derail bonds, equities and derivatives.”

Derivatives, you might recall, are the complex and interconnected web of options, swaps and other “sophisticated” instruments Wall Street uses to juice its returns. A type of derivative known as mortgage-backed securities led straight to the Panic of 2008.

“Increasingly, it looks like ‘risk off’ and big trouble,” adds Doug Noland from the Prudent Bear family of mutual funds. He has derivatives on the brain…

“There is absolutely no doubt that buoyant derivatives markets have promoted epic risk-taking,” he writes — “in finance generally, in securities markets, in asset and commodities markets, in real economies globally. Especially in our zero short-term financing rate environment, all varieties of derivative strategies have made it too easy to leverage up and chase yields and market returns…

“…it should be expected that an even larger collapse will overwhelm the Fed’s balance sheet.”

“The global leveraged speculating community… is close to some serious problems. Losses would be met with redemption notices and forced liquidations. And with lots of players all crowded into similar trades, things could quickly topple into a panic for the exits. Such a circumstance would quickly crack wide open serious shortcomings in derivatives trading, in the securities markets and for leveraged participants throughout these markets.”

In other words, a rerun of 2008, but worse — exactly what Jim Rickards has been warning about.

This time, the trouble will be more than the Federal Reserve can handle. “Since Federal Reserve resources were barely able to prevent complete collapse in 2008,” Jim wrote in The Death of Money, “it should be expected that an even larger collapse will overwhelm the Fed’s balance sheet.

“The specter of the sovereign debt crisis suggests the urgency for new liquidity sources, bigger than those that central banks can provide, the next time a liquidity crisis strikes. The logic leads quickly from one world to one bank to one currency for the planet.”

Regards,

Dave Gonigam
for The Daily Reckoning

P.S. In today’s issue of the 5 Min. Forecast, I gave my readers a chance to get on an exclusive list of people who will join Jim Rickards on a live conference call tomorrow morning. It’s a one-time event that you can only access by invitation. Click here now to sign up for The 5 Min. Forecast and never miss another great opportunity like this.

Silver Price At Historical Extremes Compared To Oil And Stocks

Posted: 13 Oct 2014 01:37 PM PDT

Official national debt has increased from roughly one-third of a $ Trillion in 1964 to nearly $18 Trillion today. The price of a barrel of crude oil has increased from about $1.50 to about $90 over the past 50 years. A pack of cigarettes has increased from a quarter to nearly $6. There are 1,001 more examples of increasing prices, often not matched by increases in personal incomes.

Consumer prices have broadly increased with some price rises far exceeding others – college tuition and healthcare come to mind. Also bonuses on Wall Street have been outstanding.

Examine the following graph of silver divided by crude oil. They increase together on average, but silver currently looks inexpensive compared to crude oil. Expect silver to rise in price more rapidly than crude oil.

Examine the graph of (100 times) silver divided by the S&P 500 Index. The attractiveness of financial assets (S&P) varies widely compared to the need for hard assets such as silver and gold. Note that the ratio has dropped from over 3 to less than 1 in the past 3 years. Expect silver to rally substantially compared to the S&P.

Do you expect the emphasis upon warfare and welfare to change? Do you expect fewer dollars to be created? Do you expect central banks will self-destruct by allowing interest rates to rise and/or deflationary forces to overwhelm the economy?

An accident where the financial elite are hurt more than the masses could happen but it seems like an unlikely scenario. Hence, as with the past 50 years, expect more currency in circulation, much more debt, higher consumer prices, more warfare, and more welfare.

Further, expect the prices for silver and gold to increase relative to the S&P, and expect silver prices to increase more rapidly than the price of crude oil.

Inevitable? Certainly not, but the best overall predictor of future prices, future policies, and future wars seems to be the long term trends shown by past prices, policies, and wars.

Unless (until) something unlikely and world changing occurs, we should expect:

More warfare
More welfare
Increasing consumer prices
More debt
More government statistics proving everything is wonderful in election years
More volatility, anxiety, worry, and concern over markets, ebola, war, the NSA, which insider will purchase the presidency etc.
More gold and silver coins sold to Americans and Europeans who increasingly distrust paper assets.
More gold and silver purchases by Asian individuals and governments who increasingly distrust paper assets.
More talk-talk on financial TV about the great stock buying opportunities available in 2014, 2015, 2016, and through 2030.

Silver is currently inexpensive compared to the S&P 500 Index, crude oil, the size and rate of increase of the national debt, and especially the future price for silver after markets have reset, paper assets have devalued, and hard assets have jumped much higher in price.

Examine the following graph of weekly silver prices since 1994. Based on the stochastic index and the disparity index (and many more such indicators that are not shown) silver prices are ready to rally. The black vertical lines are spaced 5.75 years apart and they show significant lows in silver prices in 1997, 2003, 2008, and about now. Guarantee? No! Probability? Yes!

Gary Christenson | The Deviant Investor | GEChristenson

Gold Daily and Silver Weekly Charts - A Little Flight to Safety

Posted: 13 Oct 2014 01:28 PM PDT

Suddenly, We Have Problems

Posted: 13 Oct 2014 10:54 AM PDT

A rising stock market, like a rising tide, can cover a multitude of interesting and/or scary things. The thinking seems to be that if the finance guys who really know what’s going on are buying, then the disturbing stories that lead each evening’s news must be manageable. So, in general, we’re okay.

But let the market fall a bit and those headlines suddenly begin to seem both oppressive and really, really numerous. And maybe we’re not okay after all. To take just a few of the issues that, in the wake of the recent equity correction, now loom large:

Islamic State, the tiny band of religious crazies that the US armed to do its bidding in the Syrian civil war is now threatening to take Baghdad, capital of Iraq and home to a US embassy that will live forever in the annals of hubristic excess. Actually a small, self-contained city, the embassy contains all kinds of sensitive equipment, documents and personnel, and will be defended with (thousands of) boots on the ground if an Islamic State victory appears imminent — which it now seems to be. In other words, we’re getting ready to dump another trillion or so dollars into the hole where we previously dumped two trillion with nothing to show for it but chaos.

Ebola, a nasty virus that was previously polite enough to stay in Africa, has escaped and is now touring Europe and the US. Either it has mutated to become more communicable or the West’s protocols for dealing with it are inadequate. Either way, there is now talk of the disease breaking free and causing a First World pandemic. See Ebola pandemic spreading across Europe is ‘unavoidable,’ WHO warns.

The strong dollar, meanwhile, has had the same effect on the world as would higher US interest rates, slowing growth and causing hot money to leave emerging markets and pour into US Treasuries. So while everyone is waiting for the Fed to raise interest rates and court the traditional “taper tantrum” liquidity crisis, the foreign exchange markets have done the heavy lifting already. See Why a strong dollar is scarier than taper tantrum.

Japan and Europe are dropping into recessions that could easily become system-threatening depressions. While US stocks were rising it was possible to view America as an island of stability in a chaotic world. But when US stocks start to fall it’s much easier to envision an interconnected world where everyone feels everyone else’s pain. Which is the accurate viewpoint, because who will buy our stuff — including the bonds that finance our deficits — if the other major economies grind to a halt?

Junk bonds, typically a canary in the financial-bubble coal mine, began selling off in September, just as the dollar started to spike. This was also easy to ignore while equity prices were rising, but now looks like the first of many dominoes to fall in a financial panic.

And it’s October! All of the above happening simultaneously would be scary anytime, but coming in the month when some of the most dramatic stock market crashes have for some reason occurred, this must feel like deja vu all over again for folks with a sense of financial history.

It’s impossible, of course, know whether something is a crisis until it becomes one. So this might turn out to be nothing more than a hic-up in the permanent new normal of ever-rising financial asset prices. We’ll know soon enough.

Powerful Reversal and Shakeout in the Junior Gold Mining Stocks at May Lows Around $33

Posted: 13 Oct 2014 09:45 AM PDT

Summary Three years ago in early 2011, I cautioned my readers to be careful to chase gold and silver higher as it was moving parabolic. Now it is oversold and ignored. Be careful now of parabolic rises in the S&P500 (SPY), Long term US Treasuries (TLT) and US dollar (UUP). Investors are scared and looking for liquidity. Silver (SLV) is trading below $17, Gold (GLD) is testing major support at $1200. The GDXJ has been outperforming and has not violated 2013 lows. If $1180 does not hold, gold (GLD) may test lower prices near $1050 as that is the approximate 50% retracement of the 2001-2011 bull market. Some smart traders are expecting a triple bottom at $1180 on gold with a bounce off current oversold levels with a small pullback in December for tax loss selling. Junior Gold Mining ETF (GDXJ) Makes Bullish Reversal at May Lows around $33.

This Will Send Massive Shock Waves Through The Gold Market

Posted: 13 Oct 2014 08:54 AM PDT

Today one of the legends in the business spoke with King World News about an event that is going to send massive shock waves through the gold market as well as the entire financial world. Keith Barron, who consults with major companies around the world and is responsible for one of the largest gold discoveries in the last quarter century, also discussedwhat is happening with the gold and silver markets.

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

Will Swiss Gold Initiative transform the Gold Market?

Posted: 13 Oct 2014 08:47 AM PDT

KWN weekly – October 11, 2014

Podcast – Egon von Greyerz: "Nigel Farage (MEP and leader of UKIP) was recently in Switzerland to speak about the EU. His view is that the UK and all other EU members should exit the EU since it is a failed union. At the same meeting the Swiss Gold Initiative was discussed. Farage is … Read the rest

Russian oil exec accuses Saudis of manipulating oil price down

Posted: 13 Oct 2014 07:57 AM PDT

Oil Surplus in World Market Temporary, Rosneft Vice President Says

From RIA Novosti, Moscow
Sunday, October 12, 2014

http://en.ria.ru/business/20141012/193992405/Oil-Surplus-in-World-Market...

MOSCOW -- The surplus of oil on the world market is a temporary phenomenon, the vice president of Russian oil giant Rosneft, Mikhail Leontyev, said Sunday.

"The current price dynamic, which has been developing for the last few months, may not reflect the objective trend," Leontyev told the Russkaya Sluzhba Novostei radio.

... Dispatch continues below ...

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"Prices can be manipulative. First of all, Saudi Arabia has begun making big discounts on oil. This is political manipulation, and Saudi Arabia is being manipulated, which could end badly.

"The second factor is the stolen ISIL [Islamic State] oil, which reaches the market through Turkey and Israel with a triple discount. It is not much, but it is stolen, so it is cheap," the Rosneft vice president said.

That the market, primarily in the United States, is filled with American oil is due to the so-called shale revolution and it is a long-term factor, Leontyev stated.

On Friday, after the publication of the OPEC (Organization of the Petroleum Exporting Countries) October report that noted an increase in oil production in the countries belonging to the OPEC countries, international oil prices began to decline.

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Gold trades near four-week high

Posted: 13 Oct 2014 07:46 AM PDT

AverageJoeOptions.com founder Todd Horwitz and Bloomberg's Joseph Deaux discuss the price of gold

Precious Metals Monthly Bank Participation Report: October 2014

Posted: 13 Oct 2014 07:27 AM PDT

The CFTC releases at the end of each month the futures positions in precious metals of the large banks. A detailed analysis was provided by Ed Steer in his latest newsletter (click here to subscribe). We want to share his analysis because Ed Steer comes to the following factual conclusion: once again, it’s Citigroup, HSBC USA, Scotiabank, along with the ring leader JPMorgan Chase, that run the show in all four precious metals.

From Ed Steer's daily gold and silver newsletter:

Along with the Commitment of Traders Report came the companion October Bank Participation Report. This report strips out the Comex long and short positions for all the banks on Planet Earth that hold positions in the Comex futures market. There were improvements in the Comex net short positions of all the world’s banks in all four precious metals, from big changes to small ones.

Don’t forget that this BPR data is extracted directly from the current COT Report data, so for this one day a month we can compare apples to apples—and see what the bullion banks have been up to versus the rest of the traders.

In gold, ‘3 or less’ U.S. banks were net short 2,633 Comex contracts. In the September BPR, these same ‘3 or less banks’ were net short 10,064 Comex contracts, so there has been an improvement of about 8,400 contracts during the reporting month. Since Ted puts JPMorgan’s long-side corner in the Comex gold market at 21,000 contracts, this means that the other ‘2 or less’ U.S. bullion banks—which would be HSBC USA and Citigroup—have to be net short about 18,400 Comex contracts between them to make the math work out properly.

Also in gold, ’19 or more’ non-U.S. banks held 49,887 Comex contracts net short. In the September report, these same banks were short 60,925 Comex contracts. I would be prepared to bet a decent amount of money that Canada’s Scotiabank is short a third of those 60,925 contracts all by itself. That would make the remaining 40,000 contracts or so, divided up between the remaining 18 non-U.S. banks, are more or less immaterial.

Below is the BPR chart for gold going back to 2000. Note the blow-out in the short position in gold in the U.S. banks [red bars on Charts 4 and 5] in August of 2008. This is when JPMorgan took over the Comex short positions of Bear Stearns. Also note the blow-out in gold in the non-U.S. banks [the blue bars on Chart #4] when Scotiabank got ‘outed’ in October of 2012. The net Comex short position there blew out by almost double. The net long position also increased. The ‘click to enlarge’ feature really helps here.

In silver, ‘3 or less’ U.S. bullion banks were net short 9,867 Comex contracts. [In the September report, the same number of banks were short 15,953 Comex contracts] Since Ted pegs JPM’s short position in silver at 10,500 contracts, this means that the other U.S. banks must be net long the Comex futures market to the tune of 700 contracts or so. Obviously JPMorgan holds the largest silver short position of all the U.S. banks.

Also in silver, ’11 or more’ non-U.S. banks are net short 19,585 Comex silver contracts. [In the September BPR these same banks were short 22,298 Comex silver contracts] Just like in gold, I’d bet money that the lion’s share of the non-U.S. banks’ short position in silver is held by Canada’s Scotiabank—approaching 90 percent, if not higher. It’s my opinion that their short position in the Comex silver market now dwarfs that of JPMorgan. It’s almost not worth mentioning, but the Comex short positions in silver held by the other 10 bullion banks are totally immaterial.

Below is the BPR chart for silver and, once again, cast your eyes on the events of August 2008 on charts #4 and #5—and October 2012 in chart #4—to see where JPMorgan took over the silver short position once held by Bear Stearns—and where Canada’s Scotiabank was ‘outed’ by the CFTC. Both events stand out like the proverbial sore thumbs that they are.

In platinum, ‘3 or less’ U.S. bullion banks are net short 6,196 Comex contracts, which is a huge decrease compared the prior three reports. Note on chart #5 the tiny long positions held by these U.S. banks, compared to their massive short positions. This is proof positive that these positions are held solely for price management purposes. I would bet that JPMorgan is the proud owner of the lion’s share of these positions as well.

Also in platinum, ’14 or more’ non-U.S. banks are net short 4,453 Comex contracts, which is also a massive improvement from prior months. As a ‘for instance’ these same banks were short 8,880 Comex platinum contracts in the July BPR, which was the low before the last rally in gold and silver began. Divided up more or less equally, which they probably aren’t, most of the positions held by these 14 banks approach immaterial as well, at least compared to the outrageous short positions held by the U.S. bullion banks, principally JPMorgan Chase.

In palladium, ‘3 or less’ U.S. bullion banks are net short 8,687 Comex contracts, which is down from the 10,643 contracts they were net short in September, but virtually the same as they were short back in the July BPR. So even though JPMorgan et al engineered the price down by about $150 during the reporting month, to its lowest level since mid April, that’s the best they could do. The non-technical traders on the long side in the Managed Money category flatly refused to puke up their positions, or go short by much. That situation holds true to a certain extent in platinum as well.

Also in palladium, ’13 or more’ non-U.S. banks were net short 3,765 Comex contracts, which is down big from the 5,937 Comex contracts they held net short in September’s BPR. But it’s only a marginal improvement in their 4,694 short position they held back at the end of June.

Try as they might, da boyz can’t get any traction in palladium—and that’s certainly obvious over the last 18 months in the chart below. And as an aside in Chart #5, look at the obscene short positions compared to their puny long positions held by the ‘3 or less’ U.S. banks. It’s so grotesque, one doesn’t know whether to laugh or cry.

So, once again, it’s Citigroup, HSBC USA, Scotiabank—along with the ring leader JPMorgan Chase that run the show in all four precious metals. And it’s a good bet that they, at least the U.S. banks, have their little piggy noses in the copper, crude oil and dollar index troughs as well.

Chart courtesy: Sharelynx.

Monday Morning Links

Posted: 13 Oct 2014 06:01 AM PDT

MUST READS Can all US hospitals safely treat Ebola? – AP CDC criticized for blaming ‘protocol breach’ as nurse gets Ebola – Reuters War against Isis: US air strategy in tatters as militants march on – Independent Dollar Drops as Fed Officials Warn on Slowing Growth – Bloomberg I.M.F. Warns of Global Financial Risk From Fiscal Policies – NY Times U.S. [...]

How to Ebola-Proof Your Portfolio

Posted: 13 Oct 2014 03:43 AM PDT

Dear Reader,

News of a healthcare worker in Texas testing positive for Ebola has heightened concern about the disease among investors—and the population in general. I’ll tackle the issue, and its implications for resource investors, below.

Before getting into that, however, I wanted to remind readers of two upcoming events at which fellow Casey Researchers will be speaking:

Doug Casey, Jeff Clark, Nick Giambruno, Terry Coxon, and Paul Rosenberg will be speaking at the Grand Cayman Liberty Forum on Grand Cayman Island, November 16-20, 2014. There is a $300 discount for those with a link to the Liberty Forum. For more information, please call Opportunity Travel at 800-926-6575 or +561-243-6276, or see the event web page.

Doug Casey will also be speaking at the New Orleans Investment Conference, October 22-25, 2014. Alan Greenspan will be there, too, among other famous and infamous luminaries. For more information, please see the event web page.

Now, on to the main event, which I hope will help sort out some of the facts and fears related to the outbreak.

Sincerely,

Louis James
Senior Metals Investment Strategist
Casey Research

Rock & Stock Stats	Last	One Month Ago	One Year Ago
Gold	1,223.18	1,244.10	1,296.90
Silver	17.39	18.86	21.90
Copper	3.07	3.11	3.25
Oil	85.82	90.42	102.89
Gold Producers (GDX)	20.77	24.10	23.55
Gold Junior Stocks (GDXJ)	32.50	37.60	36.11
Silver Stocks (SIL)	10.14	12.25	12.34
TSX (Toronto Stock Exchange)	14,227.36	15,471.89	12,894.41
TSX Venture	827.13	984.00	935.52

How to Ebola-Proof Your Portfolio

Louis James, Chief Metals & Mining Investment Strategist

There is an increasing level of hysteria regarding the West African Ebola outbreak. Is it justified? Should we fear for our own safety? Maybe, maybe not, but it’s likely the fear will impact various investments, and that’s a subject we can and should try to think clearly about.

First, however, I want to say that I am deeply dismayed by the outbreak; as a human being, I feel for those directly affected, I mourn for those we’ve lost, and I understand the concern of those who fear the spread of the disease. Whatever else may be said, this outbreak is a tragedy of historic proportions unfolding.

I can only hope that individual people, groups and organizations, and society as a global whole will learn from what happens. We must emerge wiser, if sadder, as a result, or all the deaths will be for naught.

Now, some key facts:

As of October 8, the World Health Organization (WHO) reported 8,399 “confirmed, probable and suspected” cases and 4,033 deaths in seven countries: Guinea, Liberia, Nigeria, Senegal, Sierra Leone, Spain, and the United States.

The vast majority—99.7%—of the cases (8,376) and 99.8% of the deaths (4,024) have occurred in the three West African countries most affected: Guinea, Liberia, Sierra Leone. Liberia is the worst hit, with 57.4% of the deaths (2,316).

Ebola outbreaks occur periodically in Africa. There is no scientific evidence yet that this strain is very different from any others. (Studies are underway.)

This outbreak is the deadliest yet, but that could be due to social or cultural issues that have helped it spread, such as burial practices that expose people to infection.

Contrary to rumors and baseless statements bandied about by barstool experts, there is no evidence that this strain is airborne.

Given the transmission through bodily fluids and the lack of roads in much of Africa, I stated at our Casey Summit last month and in the International Speculator that the Ebola outbreak was more likely to spread (further) in Europe or to the Americas, via air travel, before appearing in East or South Africa. I didn’t mean to make a prediction, but the Texas cases show that I was right.

The incubation period for Ebola can last up to three weeks. That means that the new “touchless” temperature screening initiated at major US airports for travelers arriving from West Africa will not catch those who’ve been infected but are weeks from showing any symptoms.

The long incubation period also means that even if this outbreak were contained today, we wouldn’t know for another month, at soonest.

I wish to neither add nor subtract from the gravity of these facts, which are alarming enough, even without the hype and fearmongering pervading TV “news” and social media. And, of course, I’m no epidemiologist. But I do have some analysis of my own to offer:

Given various cultural, poverty, and other social issues, as well as the general tendency of governments to underreport bad news, I think the outbreak is already much worse than reported, and I think it’s far from contained.

I just flew back from East and North Africa last week, and no officials anywhere along the way asked me if I’d had contact with anyone from the affected regions, nor any questions at all related to the outbreak. What’s being done is too little, too late. I’m convinced the news will get much worse before it gets better and would not be surprised to see the death toll exceed 50,000 or even 100,000 before the outbreak is stamped out. That said, I do think the outbreak will be stamped out, with most of the death toll in the countries already most affected.

I think the measures taken by Western governments to stop the spread of the disease from West Africa, even the new ones just announced, are going to prove futile. All possible and ethical aid should be given to the regions affected to help stop the spread from the sources. This is enlightened self-interest.

Despite the infection of a medical worker in the hospital where the US Ebola fatality occurred, I do believe the US, EU, and wealthier countries will be able to contain the disease when it does crop up within their borders. However, those measures will be reactive; helping fight the disease at the sources remains the best way to get the outbreak contained.

China has been “buying” Africa for more than a decade; instead of sending troops to conquer and seize resources, they’ve been sending billions of dollars in aid in exchange for valuable minerals rights and other concessions. They have also been sending thousands and thousands of engineers, architects, and other workers to build roads, mines, and other projects in the countries where they’ve been buying up resources and building their presence. Many of those people travel to China frequently… I would not be surprised if China already has an Ebola problem but just doesn’t know it—or won’t admit it. Some of these Chinese workers are and will be sent to South America, where China is pursuing a similar agenda.

Desperate Africans from many countries are crawling their way north, paying their life’s savings to board overcrowded boats, intent on smuggling themselves into Europe. Europe has been unable to stop this exodus and spends considerable resources plucking the victims out of the sea when their decrepit, overloaded boats sink. Even if Europeans stop rescuing African shipwreck survivors, that won’t stop the flood of those on ships that don’t sink. Full military interdiction of the waters separating Europe from Africa and quarantining of persons intercepted would be hideously expensive—a cost the struggling European economy can ill afford today.

Cuba has historical ties with many African countries and is reported to have sent “hundreds” of doctors to help. What are the odds that none will be infected—or that all will be quarantined until proven clear, before being allowed to return home, just off the coast of Florida? (And not so far from where I live, in Puerto Rico.)

I’ve not seen a reasonable estimate of the economic fallout of what has already transpired, but I’m sure it’s huge—and going to get much worse. Africa may seem like an impoverished backwater of little consequence to North Americans and others far around the world, but Africa is a major trading partner to America’s major trading partners, and the source of many important raw materials used by our global economy. For just one example, Côte d’Ivoire borders Liberia and is the world’s largest cocoa producer. Yes, chocolate prices could be affected. The World Cocoa Foundation is taking donations to help join the fight.

In our market sector, its important to remember that Africa is a major source of the world’s mineral wealth, including oil, gas, and diamonds, in addition to copper, gold, platinum, and other metals. If the outbreak gets bad enough, metals prices could be affected.

Northeast Africa is closer to the Middle East than North Africa is to southern Europe. If the Ebola outbreak does spread north and east, the oil and gas of North Africa and the Middle East could be affected, impacting energy prices.

Unfortunately, measures that would really help stop Ebola’s spread, such as fully quarantining the countries that have outbreaks, would exchange the risk of the disease’s spread for the certainty of economic hardship. It’s important not to kid ourselves about what those words mean: increased economic hardship for those already on the bottom rungs of the social ladder means falling off, which can be just as fatal as Ebola.

Those who’ve been wondering why the UN or someone doesn’t just quarantine the three countries most affected, or all of West Africa—or the whole continent—should ask themselves: Why not quarantine Texas? Or, if we’re talking countries, why not quarantine the entire United States? And if we're talking continents, we'd have the throw Canada and Mexico in too…

Answer: the cost would be astronomical, and it would come with a death toll as well.

No. Not yet, at any rate; the disease is spreading, but its growth does not yet seem exponential. The “cure” must not be worse than the disease. Our best bets are to help the sources deal with the outbreak and to accelerate research and deployment of new treatments. A real cure—a medical solution that kills Ebola without killing people—that should be our top priority.

Investment Implications

All of the above has implications for all people living on this planet, as well as more specific import for investors who read this column.

So… How can one “Ebola-proof” one’s investment portfolio?

Unfortunately, with the disease already present in the US and EU, the only sure answer is to sell everything and go 100% to cash.

As with other nuclear options like quarantining the US or Spain, that would exchange the risk of being affected by the spread of the disease for the certainty of holding paper assets the governments of the world are working to debase as fast as they guess they safely can ("guess" being the key word there). And it means you are completely out of the market, as an investor.

It’s premature to embrace such extreme measures, so what should we be doing?

The obvious and pressing concern is to minimize or eliminate exposure to investment risk in areas where Ebola is most likely to become a serious problem. (I assume anyone paying attention has already sold their stock in companies that rely upon or have close connections to Liberia, Guinea, and Sierra Leone—if not the rest of the countries on the outbreak list, except for the US and Spain.)

For my money, that’s primarily Côte d’Ivoire (which borders Guinea as well as Liberia) and Mali (which borders Guinea and Senegal—and Niger, but the outbreak there does not seem to be spreading). We’ve not made any investments in Côte d’Ivoire plays since I’ve been with Casey Research, but we have recommended stocks in companies with mines in western Mali.

Unfortunately, the gold fields in the region are not far from the border with Guinea, and that border is highly porous. The port of Dakar in Senegal is an important part of the supply route for the mines. There has been no report of an outbreak in Mali yet, but the area is rural, civil infrastructure almost nonexistent, and I don’t trust the government, which is still nominally fighting a civil war to the northeast, to do what’s necessary to prevent the spread of the disease. Consequently, we’ve recommended selling those stocks.

We could also speculate on the price of chocolate rising if, or perhaps when, Ebola spreads from Liberia to Côte d’Ivoire. However, I don’t know much about the chocolate business, so I’m reluctant to offer any advice there. Stocking up on Nutella is probably as far as I’ll go.

More pertinent for us as metals investors is that West Africa’s gold fields are a major source of global mine supply, and if the disease does spread farther across the continent, especially east and south, there could be serious supply issues with copper, uranium, and other metals. Demand for industrial metals would presumably drop as well during a global epidemic, but Africa supplies far more than it consumes, so taking much of Africa out of the supply-and-demand equation is likely going to be net negative for supply and therefore potentially bullish for prices.

But such sweeping chains of events are not certain yet; the trends are indeterminate.

This leaves us with the defensive measures touched on above. Think of it as an orderly retreat, made only when necessary in the face of a clear and present danger, such as Mali or Côte d’Ivoire looking like the next Ebola dominoes to fall.

There’s one thing I should stress again, because it can’t be stressed enough: unless you want to be completely out of the market, you can’t avoid investing in 100% of the countries on the Ebola outbreak list, as well as those that border them. That would mean selling everything in the US, Canada, Mexico… and the EU, for that matter.

But isn’t the rest of Africa more at risk than France, or Oklahoma? As above, I do think those areas across insecure borders from already heavily impacted areas are certainly so. However, it’s a long walk from Freetown to Cape Town. My guess is that we’ll see more cases in Europe—Italy seems a likely target—before we see more distant parts of Africa infected.

One more thing… Don't panic. Don't let alarmist headlines and fear-mongering distract you from the facts. The disease is hard to treat, but it spreads relatively slowly—more like AIDS than a cold or flu. Even if the death toll eventually rise to a quarter of a million people, that's fewer than are killed on China's roads every year. It's terrible, but we must maintain some perspective.

This is why I’m not ready to sell everything in Africa yet. I am, however, watching developments closely, and will keep readers appraised as the trends shape up and the risks and rewards become clearer.

Stay tuned. And if you agree with my thinking, please forward this article to other investors who may benefit from it. Best of luck riding this one out—to you and all the people of our highly interconnected world.

Gold and Silver HEADLINES

WGC Wants India to Put Idle Gold Stock to Use (Mineweb)

The World Gold Council (WGC) has urged the Indian government to find ways of mobilizing and monetizing household savings imbedded in gold. This recommendation was unveiled at the second edition of the India International Bullion Summit organized by the India Bullion and Jewellers Association (IBJA).

The WGC suggested that India should become the “jeweler to the world,” aiming to target a fivefold increase in gold jewelry exports to $40 billion by 2020, from the current level of $8 billion. The WGC noted that as the country attempts to put to use its gold lying idle with households and temples, it could reduce its dependence on imports in the next five years.

Indian households have an estimated 22,000 tonnes to 25,000 tonnes of gold. They tend to hold on to their gold, so we’re not sure how successful this campaign might be, but it’s an interesting development.

Festival Appetite Inspires Gold Shipments to Shimmer (Business Standard)

While gold prices have fallen sharply in the past two weeks, imports of the yellow metal have surged in India. Premium trading houses have reported heavy imports during the last week of September, increasing the country’s gold import bill for t

FT's Martin Wolf in "Not Wrong" Shocker

Posted: 13 Oct 2014 02:52 AM PDT

Today's debt bubble is a real problem, says a key cheerleader...

AS WE predicted, volatility is rising. Investors are beginning to squirm, writes Bill Bonner in his Diary of a Rogue Economist.

Why?

The Fed is ending QE. And it could hike short-term interest rates as soon as next year. The EZ money is getting scarce.

"We are trapped in a cycle of credit booms," writes Martin Wolf in the Financial Times.

Wolf is wrong about most things. But he is not wrong about this.

"On the whole," he writes, "there has been no aggregate deleveraging since 2008."

Wolf does not mention his supporting role in this failure. When the financial world went into a tailspin, caused by too much debt, in 2008, he joined the panic – urging the authorities to take action!

As a faithful and long-suffering reader of the FT, we recall how Wolf howled against "austerity" in all its forms.

His solution to the debt crisis?

Bailouts! Stimulus! Deficits! In short, more debt!

Since then, only America's household and financial sectors have deleveraged...and only slightly. Businesses and government have added to their debt.

Overall, the world has much more debt than it did six years ago – more than $100 trillion worth.

Wolf has come to realize where his own misguided policy suggestions lead.

As a recent paper by banking think tank the International Center for Monetary and Banking Studies put it, fighting a debt crisis with more debt leads to a "poisonous combination of higher and higher debt and slow and slowing real growth."

That is the world we live in. Thanks a lot, Martin.

The future is a blank slate. It whacks us all – but differently, depending on how exposed we are. What can we do but try to protect our backs...and squint, peering through the glass darkly ahead.

"These credit booms did not come out of nowhere," writes Wolf. "They are the outcome of previous policies adopted to sustain demand as previous bubbles collapsed."

Why sustain unsustainable demand? Why not just let the bubble collapse?

Under oath in a New York courtroom, two former US secretaries of the Treasury have told us why.

Not bailing out AIG would have been "catastrophic," said Hank Paulson on Monday. A failure of AIG would have led to "mass panic," chimed in Timothy Geithner on Tuesday.

At least they had their story straight. But it is not hard to connect the dots. When a credit bubble pops, it causes fear and panic. The authorities take action to stop it.

What can they do?

Whatever it takes, is their answer.

What does it take to stop a deflating credit bubble?

More money! More credit! More debt!

"We need to escape this grim and apparently relentless cycle," Wolf concludes.

Meanwhile, "IMF warns of third Euro-zone recession since financial crisis," reports the FT elsewhere.

The IMF also downgraded its forecast for world GDP growth to 3.3%.

High debt. Slow growth. And another colossal crisis coming.

No wonder investors are nervous.

Must Read: 10 Companies Adrian Day Sees as Stable in a World that Is Not

Posted: 13 Oct 2014 01:00 AM PDT

Fund Manager Adrian Day has a ready answer for investors wondering why the gold price has been so depressed. It is the strength of the dollar. The Bank of Japan can act like a drunken sailor buying bonds at negative interest rates and the European Central Bank can do all the quantitative easing it wants, but as long as the dollar remains high, the gold price will suffer. That is why in this interview with The Gold Report, he focuses on 10 companies that can remain stable at almost any price.

Must Read: 10 Companies Adrian Day Sees as Stable in a World that Is Not

Posted: 13 Oct 2014 01:00 AM PDT

Gold and Silver Price To Rally Or Not To Rally

Posted: 12 Oct 2014 10:12 PM PDT

Both gold and silver rallied nicely off their lows the past week. So, is this the start of something bigger or just another blip in a doom and gloomy bear market? Let's have a look at the charts to find out. We'll begin with gold.

Dollar Heavier to Start Week

Posted: 12 Oct 2014 05:00 PM PDT

The U.S. dollar is trading heavier against most of the major and emerging market currencies. The euro and sterling remain within the ranges seen before the weekend while the dollar slipped to JPY107 in a Tokyo-less Asian session.