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Monday, October 6, 2014

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Silver’s Disconnect: Silver Price Falls Amid A Strengthening Physical Market

Posted: 06 Oct 2014 12:57 PM PDT

Chartwise, gold and silver do not look very constructive. As we have detailed in the last couple of weeks here, here and here, there is a high probability that the silver and gold price decline are not over. 

In this article, Jeff Clark’s from Casey Research describes the huge disconnect developing in the silver market as we speak. In his new Big Gold report he describes the potential catalysts that could spark a turnaround in this market.

He correctly points out that we are living in a central bank-controlled world. However, the odds of central planners steering us out of the corner they've painted us all into are remote. “The math just doesn't work, and history has demonstrated the outcome of such fiscal, monetary, and economic foolishness numerous times.”

The price of all precious metals have dropped. However, the silver price has suffered the most. As a monetary metal, it seems to defy logic that silver has plummeted while debt levels have soared, money printing is at historic levels, and fiscal deficits remain stubbornly high in spite of record federal tax revenue. But the disconnect is bigger than just the price vs. silver's monetary role. Look at the following facts and figures which are provided by Jeff Clark’s.

Note that we wrote already last year about the Great Disconnect Between Paper & Physical Silver.

The Big Disconnect In The Silver Market

While all precious metals have dropped, the silver price has suffered the most. As a monetary metal, it seems to defy logic that silver has plummeted while debt levels have soared, money printing is at historic levels, and fiscal deficits remain stubbornly high in spite of record federal tax revenue.

But the disconnect is bigger than just the price vs. silver's monetary role. Consider the following aspects of the silver market that are rising:

  • Global electronics demand;
  • Global jewelry demand, especially in Asian countries;
  • Total industrial demand (now expected to grow 5% per year through 2016 and outpace global GDP growth);
  • The number of new industrial applications;
  • The number of new biomedical uses;
  • Photovoltaic (solar) demand;
  • Volume on the Shanghai Futures Exchange (which already surpassed the Comex last year);
  • US Mint sales YTD: silver Eagle sales in September were double July and August; it sold 766,000 Eagles on the last day of the month alone;
  • Perth Mint sales: they were 41.6% higher in August than July, and September sales were the third highest of the year;
  • The likelihood of a supply deficit this year (based on CPM Group estimates);
  • Domestic demand in China, which is expected for the first time in history to exceed 250 million ounces this year;
  • Gold/silver ratio (closing in on a five-year high);
  • SLV ETF holdings (and now a gnat's eyelash away from 2011 record highs); and
  • The difference between price and the cost of production.

The following aspects of the silver market are falling:

  • Price
  • Sentiment

It's honestly hard to find a more distorted market anywhere else in the world today. At some point, this disconnect must be rectified.

But the disconnect is worse than that…

  • The RSI (Relative Strength Index), a measure of how overbought and oversold a security is, just reached its lowest reading ever on SLV. The index hit 11.68 on September 30, the lowest level since the fund's inception, including the selloff in 2008. In fact, the index never fell below 15 until September 22, 2014.

In other words, SLV has never been this oversold.

This doesn't mean the silver price can't fall further, nor that if it bounces from such oversold levels it will be sustainable. But it does mean the rubber band is more stretched than at any other time we know of.

The disconnect is worse still. We all know that silver is more volatile than gold, so it's not surprising that it has sold off more than gold in this recent downdraft. But…

  • During the waterfall decline in 2008, silver fell 27.1% more than gold (as measured from its high that year to its low). However, so far in 2014, silver has fallen 40.6% more than gold.

Last, silver is closing in on its longest bear market in modern history…

This updated snapshot shows six decades of bear markets. The black line represents silver's decline from April 2011 through October 3, 2014.

silver bear markets 1968 September 2014 price

 

The disconnect between the silver price and its fundamentals is greater than ever.

 

Jim Grant: We’re in an Era of ‘Central Bank Worship’

Posted: 06 Oct 2014 12:45 PM PDT

I think this is a time where people will look back on us and see it as a period of practically central bank worship. The central bankers – Draghi, Yellen, Bernanke – have become almost celebrities in America.  People have invested unreasonable hopes in what these central banks can know, and what they can do. […]

The post Jim Grant: We're in an Era of 'Central Bank Worship' appeared first on Silver Doctors.

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US Dollar is Extreme

Posted: 06 Oct 2014 12:01 PM PDT

Biwii

Sit down before reading... You won't believe what one U.S. Congressman is proposing now

Posted: 06 Oct 2014 11:28 AM PDT

From Mike “Mish” Shedlock at Global Economic Trend Analysis:

In a Time Magazine Op-Ed, Congressman Charles Rangel (Democrat from New York), a combat veteran says It’s Time for a War Tax and a Reinstated Draft.

While I am optimistic about our Commander-in-Chief’s strategy to defeat the Islamic State of Iraq and Syria, I voted against the Continuing Appropriations Resolution 2015 that would grant the President the authority to provide funds to train and arm Syrian rebels against the enemy. I opposed the amendment because I strongly believe amassing additional debt to go to war should involve all of America debating the matter. That is why I have called for levying a war tax in addition to bringing back the military draft.

Both the war surcharge and conscription will give everyone in America a real stake in any decision on going to war, and compel the public to think twice before they make a commitment to send their loved ones into harm’s way.

For a decade I have been calling for the reinstatement of the draft because our military personnel and their families bear a tremendous cost each time we send them to fight.

Draft Worse Than Slavery

Slavery is involuntary servitude. Is a draft anything less than slavery?

Actually, it’s worse. You take a guy’s freedom away, ship him overseas, give him a rifle, and force him to kill other people against whom he has no direct grievance, when the best such a person can ever hope for is to come back in one piece, years later, possibly with huge psychological stress after needless killing.

Rangel points out the “tremendous cost each time we send them [U.S. troops] to fight” then proposes the stupidest solution possible, to force everyone to have the same opportunity.

I propose there can be no debate on a draft just as there can be no debate on whether we should revive slave trade from Africa.

Financing Wars

Rather than admit the stupidity of wasting $6 trillion in Iraq and Afghanistan and vowing to never do it again, Rangel proposes a War Tax.

The United States has borrowed almost $2 trillion to fund our military engagements on foreign soil. It is estimated that the total cost would be close to $6 trillion; we continue to pay a heavy toll for these conflicts. Each dollar spent on war is a dollar not spent on education, energy, housing, or healthcare. We cannot afford to tread this same path when we are slashing domestic programs that are the lifelines for so many Americans. I will soon introduce a bill that will impose war tax to ensure that we do not have to choose between further gutting the social safety net and adding to the $17.7 trillion of national debt.

Rangel was once Chairman of the House Ways and Means Committee.

Let’s Bomb the Entire Muslim World

George Monbiot, writer for the Guardian, says “Humanitarian arguments, if consistently applied, could be used to flatten the entire Middle East”.

Monbiot sarcastically asks Why stop at Isis when we could bomb the whole Muslim world?

Let’s bomb the Muslim world – all of it – to save the lives of its people. Surely this is the only consistent moral course? Why stop at Islamic State (Isis), when the Syrian government has murdered and tortured so many? This, after all, was last year’s moral imperative. What’s changed?

In Gaza this year, 2,100 Palestinians were massacred: including people taking shelter in schools and hospitals. Surely these atrocities demand an air war against Israel? And what’s the moral basis for refusing to liquidate Iran? Mohsen Amir-Aslani was hanged there last week for making “innovations in the religion” (suggesting that the story of Jonah in the Qur’an was symbolic rather than literal). Surely that should inspire humanitarian action from above? Pakistan is crying out for friendly bombs.

Is there not an urgent duty to blow up Saudi Arabia? It has beheaded 59 people so far this year, for offences that include adultery, sorcery, and witchcraft. It has long presented a far greater threat to the west than Isis now poses. In 2009 Hillary Clinton warned in a secret memo that “Saudi Arabia remains a critical financial support base for al-Qaida, the Taliban … and other terrorist groups.” 

The humanitarian arguments aired in parliament last week, if consistently applied, could be used to flatten the entire Middle East and west Asia. By this means you could end all human suffering, liberating the people of these regions from the vale of tears in which they live. 

Yes, the agenda and practices of Isis are disgusting. It murders and tortures, terrorises and threatens. As Obama says, it is a “network of death.” But it’s one of many networks of death. Worse still, a western crusade appears to be exactly what Isis wants.

And if the bombing succeeds? If – and it’s a big if – it manages to tilt the balance against Isis, what then? Then we’ll start hearing once more about Shia death squads and the moral imperative to destroy them too – and any civilians who happen to get in the way.

The targets change; the policy doesn’t. Never mind the question, the answer is bombs. In the name of peace and the preservation of life, our governments wage perpetual war. 

While the bombs fall, our states befriend and defend other networks of death. The US government still refuses – despite Obama’s promise – to release the 28 redacted pages from the joint congressional inquiry into 9/11, which document Saudi Arabian complicity in the U.S. attack. In the UK, in 2004 the Serious Fraud Office began investigating allegations of massive bribes paid by the British weapons company BAE to Saudi ministers and middlemen. Just as crucial evidence was about to be released, Tony Blair intervened to stop the investigation. 

Last week’s Private Eye, drawing on a dossier of recordings and emails, alleges that a British company has paid £300m in bribes to facilitate weapons sales to the Saudi national guard. When a whistleblower in the company reported these payments to the British Ministry of Defence, instead of taking action it alerted his bosses. He had to flee the country to avoid being thrown into a Saudi jail.

There are no good solutions that military intervention by the UK or the US can engineer. Whenever our armed forces have bombed or invaded Muslim nations, they have made life worse for those who live there. The regions in which our governments have intervened most are those that suffer most from terrorism and war. That is neither coincidental nor surprising.

Yet our politicians affect to learn nothing. Insisting that more killing will magically resolve deep-rooted conflicts, they scatter bombs like fairy dust.

Fraud of Humanitarian Wars

For humanitarian reasons, 2009 Nobel Peace Laureate Barack Obama has bombed seven Muslim nations: Iraq, Syria, Afghanistan, Pakistan, Yemen, Somalia, and Libya.

The utter lack of interest in what possible legal authority Obama has to bomb Syria is telling indeed: Empires bomb who they want, when they want, for whatever reason (indeed, recall that Obama bombed Libya even after Congress explicitly voted against authorization to use force, and very few people seemed to mind that abject act of lawlessness; constitutional constraints are not for warriors and emperors). 

It was just over a year ago that Obama officials [Sec of State John Kerry] were insisting that bombing and attacking Assad was a moral and strategic imperative. Instead, Obama is now bombing Assad’s enemies while politely informing his regime of its targets in advance. It seems irrelevant on whom the U.S. wages war; what matters it that it will be at war, always and forever.

Six weeks of bombing hasn’t budged ISIS in Iraq, but it has caused ISIS recruitment to soar. That’s all predictable: the U.S. has known for years that what fuels and strengthens anti-American sentiment (and thus anti-American extremism) is exactly what they keep doing: aggression in that region. If you know that, then they know that.

As the disastrous Libya “intervention” should conclusively and permanently demonstrate, the U.S. does not bomb countries for humanitarian objectives. Humanitarianism is the pretense, not the purpose.

On May 2, Glenn Greenwald wrote about The Fraud of Humanitarian Wars. “All wars, even the most unjustifiably aggressive, are wrapped in the same pretty rhetorical packaging.”

Goering at the Nuremberg Trials

Please recall what Reichsmarschall Hermann Wilhelm G… ring (in English his name is also spelled as Hermann Goering) Nazi founder of the Gestapo, Head of the Luftwaffe, said at the Nuremberg Trials.

Here is a clip of the interview in Goering’s cell in prison, after the war.

Goering: Why, of course, the people don’t want war. Why would some poor slob on a farm want to risk his life in a war when the best that he can get out of it is to come back to his farm in one piece? Naturally, the common people don’t want war; neither in Russia nor in England nor in America, nor for that matter in Germany. That is understood. But, after all, it is the leaders of the country who determine the policy and it is always a simple matter to drag the people along, whether it is a democracy or a fascist dictatorship or a Parliament or a Communist dictatorship.

Gilbert: There is one difference. In a democracy, the people have some say in the matter through their elected representatives, and in the United States only Congress can declare wars.

Goering: Oh, that is all well and good, but, voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country. 

We Gotta Do Something!

Please note that all it took was a couple of beheadings for warmongers to get the rest of Congress behind bombing ISIS in Syria. And that’s all it took for Obama to break his promise to get out of Afghanistan. Instead, we will be there until 2024 “at least.”

For details, please see “Come Hell or High Water” Promise Morphs Into “Infinity and Beyond”

Public sentiment following the beheadings is “We Gotta Do Something!”

Indeed we do.

Instead of a draft coupled with a war tax, I propose we kick the warmongers out of office and stop all war funding except what’s explicitly needed to protect U.S. borders here, not half-way around the globe.

Unfortunately that goal is next to impossible. The industrial-military war machine backs every candidate who is in favor of perpetual war.

Perception vs. Reality at the Fed

Posted: 06 Oct 2014 11:15 AM PDT

The collapse of the Soviet Union should have been a lesson. The world should have learned that central planning cannot work, even in something simple like food or iron production. The USSR was plagued with shortages of everything. America today does not have central planning of simple things like food. Farmers make the allocation decisions […]

The post Perception vs. Reality at the Fed appeared first on Silver Doctors.

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China/India Gold Demand: 2013 Déjà Vu

Posted: 06 Oct 2014 11:06 AM PDT

In 2013; a chain of events led to what was (at the time) the greatest stampede into gold in human history. It began with the Cyprus Steal, the West's first "bail-in". This led to the realization (by the Smart Money) that no paper assets were safe any longer, within any Western financial institution or market.

In turn, this led to an unprecedented stampede out of the banksters' paper-called-gold "products", primarily their ultra-fraudulent bullion-ETF's. With the paper-called-gold market being 100 times larger than the real (physical) gold market; this naturally caused a plunge in the official price of gold.

It was at this point that the stampede into (physical) gold began. Some of this demand was from the West: sellers of these vast quantities of paper-called-gold suddenly saw the wisdom in holding real bullion: having physical custody of their asset, and thus zero counterparty risk.

Most of the demand, however, came from the East. With the price of gold falling roughly 30%, from already depressed levels; this was nothing less than a "dinner chime" for Pavlov's dogs. Unlike the serf-populations of Western nations; appreciation (and understanding) of precious metals has not been blunted by roughly 30 years of relentless anti-gold (and anti-silver) propaganda.

With this Eastern understanding; the world had already been witnessing a relentless transfer of the world's bullion holdings from West to East. Thus like women flocking to a shoe-store sale; this "30% off" on the price of gold in 2013 led to a spike in Asian demand beyond anything previously seen.

As indicated in a previous commentary in June of last year; at that time both China and India were on a pace to import roughly 2,000 tonnes of gold – surpassing any previous total for either nation. China, indeed, ended 2013 with net imports exceeding 2,000 tonnes, according to gold analyst (and China specialist) Koos Jansen.

Gold demand in India was temporarily derailed, however; as India imposed (what was at one point) a near-total embargo on (legal) gold imports into that nation. This draconian measure was a capitulation to blackmail from the One Bank, which had caused a "currency crisis" in India by attacking the value of the rupee in (rigged) global FX markets. The bankers made it explicitly clear that nothing less than a dramatic drop in gold imports would/could rescue the rupee from these currency market attacks.

Official imports into India plunged dramatically, and India ended the year having imported considerably less than 2,000 tonnes. A precise number is not possible; as the legal restrictions on gold imports into India reignited gold smuggling into that country. Indeed, the Indian government had spent years previously "liberalizing" its gold market, precisely in order to stem blackmarket flows across its porous borders.

As gold-smuggling exploded, and it became more and more obvious that a legal ban on importing gold could not stop the flow of bullion into that nation; the bankers themselves capitulated, and allowed India's government to restore official gold imports to somewhere close to "normal" (i.e. pre-2013 levels). However, making it easier to legally import gold into India has not resulted in a drop-off in smuggling. Indeed, recent reports indicate that gold-smuggling into India is accelerating further.

Now, as more bankster manipulation has caused a (relatively) modest further retreat in bullion prices (roughly a 5% recent drop in the price of gold, and 10% for silver); we see indications of gold demand into China and India returning to that torrid pace of 2013 – just as the beginning of the seven-month "gold season" in India looms before us.

Why NED Davis is Dead Wrong About $660 Gold

Posted: 06 Oct 2014 10:57 AM PDT

John LaForge, commodities strategist at Ned Davis Research says gold is going to $660 an ounce. In an appearance on CNBC on Thursday, LaForge said that the end of the current “supercycle” for gold could push the precious metal down to $660 an ounce, or about 40% lower than where it is currently trading. LaForge […]

The "smart money" is now betting on a BIG decline in this asset

Posted: 06 Oct 2014 10:53 AM PDT

From Tom McClellan’s Chart in Focus:

The U.S. Dollar Index has recently been in one of the biggest blowoff moves we have seen in years. The lesson of the past blowoffs is that the downward slope out of the eventual top tends to symmetrically match the slope of the advance up into it.

This week’s chart shows us that the commercial traders of various currency futures contracts are already making a huge bet on a dollar decline. The indicator in the chart is one that I created several years ago by combining the commercial traders’ net position in multiple currency futures contracts into a single indicator. It does not include all of the currency related contracts which are now featured in the most recent Commitment of Traders (COT) reports, because they do not all have the same lengthy and consistent history of reporting. This indicator combines the commercials’ net position in the euro, yen, pound, Mexican peso, Swiss franc, Canadian dollar, and US Dollar Index futures, each weighted according to the dollar value of each position.

The current reading is the highest in the history of this indicator, which dates back to the creation of the euro currency in 1999. That is another way of saying that the “smart money” commercial traders are making a huge bet that this uptrend in the dollar is going to reverse itself. Commercial traders are often early in adopting a lopsided position, but they are nearly always proven to be correct.

This same lopsided position is also apparent when we look at the commercials’ positions in the individual contracts. Here is a chart showing the commercials’ net position in just the Dollar Index futures:

For this contract alone, the commercial traders are not quite at an all-time record net short position. But they are nevertheless at a pretty big one, and this condition usually is associated with an important top for the Dollar Index.

A similar (but opposite) condition exists in the COT Report data for the euro futures. A trader who is long the euro versus the dollar could also be said to be short the dollar versus the euro. The euro is the single biggest component in the Dollar Index, accounting for a larger weight than all of the other components put together. As the euro’s value has fallen in recent weeks, the commercial traders have responded by increasing their net long position to a huge degree, evidently betting on a big upside reversal for the euro (eventually). Upward movement for the euro would mean downward movement for the dollar.

If the commercial traders are correct about the dollar reversing course and heading lower in value, then this will have profound implications across multiple market segments. Commodities prices should rise, commensurate with the percentage amount of the dollar’s fall. Small caps should reverse their recent trend of underperformance which is correlated to the dollar’s outperformance; when the dollar is up, small companies have a tougher time competing in the international markets.

And a falling dollar should also mean rising CPI inflation rates. All of these changes have been modeled by other indicators, as described in the previous articles linked below. It is nice when there are multiple layers of confirmation.

For stock market investors, this all matters because of how changes in the value of the dollar especially affect small cap stocks. Here is a chart comparing the US Dollar Index to a relative strength line for the Russell 1000 Index (large caps) versus the Russell 2000 (small caps).

The relative strength line in this chart rises when large caps are outperforming, or when small caps are underperforming. The 2014 blowoff up move in the Dollar Index has been hurting the Russell 2000 stocks and not having much of an effect on the large caps, thereby making the line rise. Once the dollar tops and turns down, small caps should be expected to be the outperformers again.

And oh, by the way, a big dollar downturn should be a huge tailwind for gold prices finally starting to rise.

Macro Trade Reverses from Friday

Posted: 06 Oct 2014 10:34 AM PDT

This set of comments will be brief as I am extremely busy today.

Friday's jobs numbers sent the Dollar soaring and the commodity complex reeling. Today, that trade is being reversed with the Dollar sinking sharply lower and the entirety of the commodity complex is now soaring.

If you ask me the reason for this you will get a simple answer: "Beats the hell out me". I have no idea what is going or why but that does not matter as the funds are covering shorts or buying like mad in the commodity complex for today.

In looking over the Board, the only commodities I see in the red today are natural gas and feeder cattle. Everything else if going mad.

What we get tomorrow is anyone's guess but larger scale traders are more than likely looking to sell rallies.

Tuesdays are famously called "Turnaround Tuesdays" in this business. We'll see if it lives up to its reputation tomorrow.

One big short covering squeeze day does not reverse a trend.

Ron Paul: This is the only thing you really need to know about Iraq and Afghanistan now

Posted: 06 Oct 2014 10:01 AM PDT

From Ron Paul at The Ron Paul Institute for Peace and Prosperity:

After 13 years of war in Afghanistan – the longest in U.S. history – the U.S. government has achieved no victory. Afghanistan is in chaos and would collapse completely without regular infusions of U.S. money. The war has been a failure, but Washington will not admit it.

More than 2,000 US fighters have been killed in the 13 year Afghan war. More than 20,000 Afghan civilians were also killed. According to a study last year by a Harvard University researcher, the wars in Iraq and Afghanistan will cost in total between four and six trillion dollars. There is no way of looking at the U.S. invasion of Afghanistan and seeing a success.

So in light of this failure, what does the Obama Administration do? Do they admit the mistake? Do they pull the remaining U.S. troops out of Afghanistan and try to avoid making matters even worse? No! As with all U.S. government programs, if the desired result is not achieved they just pump in more resources and continue with the same policies. The past 13 years have been an utter failure, so this past week the U.S. government signed on for ten more years of war!

U.S. troops were legally required to be out of Afghanistan by the end of this year, according to a status of forces agreement between the U.S. and Afghanistan. The U.S. was unsuccessful in negotiating a new status of forces agreement with outgoing president Hamid Karzai. The Afghan leader had grown critical of the U.S. military presence – which has actually increased under President Obama. So, the U.S. needed a new puppet in government.

As international correspondent Eric Margolis pointed out recently, the elections in Afghanistan earlier this year were a farce. The candidates were hand-picked by the U.S. government. Furthermore, wrote Margolis, “[t]he largest, most popular party in Afghanistan, Taliban…[has] been excluded as ‘terrorists’ from the current and past elections.”

But they got their new status of forces agreement. U.S. troops will remain through 2024.

The United States’ war on Iraq has also been a failure. The neocons want to blame the current disintegration of Iraq on President Obama for pulling U.S. troops out. This is historical revisionism at its worst. The real blame goes to those who put the troops in in the first place.

In fact, President Obama didn’t even want to pull U.S. troops out of Iraq. He had tried to re-negotiate a new status of forces agreement with the Maliki government in Iraq, but Maliki hesitated to extend immunity from prosecution to the remaining U.S. troops. The U.S. responded by turning on Maliki, eventually demanding that he step down even though he had been elected.

Maintaining U.S. troops in Iraq would not have prevented the current unrest there for the simple reason that it was the presence of U.S. troops in the first place that caused the unrest. It was the U.S. invasion that led to the emergence of al-Qaeda in Iraq and other extremist Islamist groups. This should not have been a surprise to war planners: Saddam Hussein had been using brutal means to keep these groups at bay for decades. The same is true with Afghanistan.

The Taliban government of 2001 in Afghanistan did not attack the United States. Al-Qaeda did. But the 2003 U.S. attack on Iraq under false pretenses removed a leader who had fought ruthlessly against al-Qaeda and other radical Islamist fighters. The result was that the al-Qaeda we were supposed to be fighting in Afghanistan flourished in post-invasion Iraq, along with other even more brutal groups.

Will our government ever learn that invasion and occupation are not the solution, but rather the problem? No new status of forces agreement can change that basic fact.

Crux note: If you’re a Ron Paul fan like us, there’s something you need to see…

In short, Dr. Paul will soon be joining an all-star lineup of special guests and presenters at the final Stansberry Conference event of the year… and for a limited time, Crux readers are invited to claim a spot to see it all LIVE. Click here for the details.

Nevada’s Newest Gold Miner

Posted: 06 Oct 2014 10:00 AM PDT

Nevada is well known as the United States' top gold-mining jurisdiction.  The numerous mines within its massive gold trends combined to produce a whopping 5.4m ounces in 2013, which accounted for 74% of total domestic output.  This output ranks Nevada as the world's fourth-largest gold producer, behind only the countries of China, Australia, and Russia. […]

The post Nevada's Newest Gold Miner appeared first on Silver Doctors.

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Guest Post: "Confirmation That PBOC Does NOT Purchase Gold Through the SGE", by Koos Jansen

Posted: 06 Oct 2014 09:02 AM PDT

This week's guest for our "A2A" webinar series will be Dutch metals analyst, Koos Jansen. In preparation, I urge everyone to read this extremely important, new post that Koos put out last Friday.

read more

Alasdair Macleod: Iceland’s Currency Collapse & The Velocity Myth

Posted: 06 Oct 2014 09:00 AM PDT

Iceland’s currency collapse is not an isolated event.  The purchasing power of a fiat currency varies constantly, even to the point of losing it altogether. The truth of the matter is the utility of a fiat currency is entirely dependent on the subjective opinions of individuals expressed through markets, and has nothing to do with a […]

The post Alasdair Macleod: Iceland’s Currency Collapse & The Velocity Myth appeared first on Silver Doctors.

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Most investors have forgotten about these stocks... but they're quietly soaring again

Posted: 06 Oct 2014 08:22 AM PDT

From Dr. David Eifrig, MD, MBA, editor, Retirement Millionaire:

It’s an industry many consider a “Black Box.”

Money goes in and a lot more money comes out, but few people really know what’s happening on the inside.

I’ve been on the inside… and this industry, I can tell you, is not as complex as people think. And more important for us… it’s one of the most profitable industries on Earth.

Today, investors are just starting to give these stocks their due again after a long time of staying away. As I’ll explain in a moment, that’s great for investors… and great for the U.S. economy…

If you haven’t figured it out, I’m talking about Wall Street and the finance industry…

Finance is an immensely important part of our economy. For one, it makes up about 8% of our gross domestic product (GDP). When it functions right, its immeasurable benefits provide a much bigger boost to our economy.

The true purpose of finance is to help capital and wealth find their most efficient uses. Take one man with some extra savings that he’d like to earn a decent return on and another who has the time and know-how to build a new business. The finance industry pairs those two up so investors earn a return and the business gets built.

That’s a win-win, and it’s how our economy grows.

Of course, the financial industry can get off track. There’s always risk in the system… especially when individuals start eyeing their own bonuses rather than their firms’ long-term interests. That’s what created the conditions that sparked the financial crisis of 2008. But the memory of the multibillion-dollar bailouts Wall Street needed to survive and the bankruptcies of investment banks Lehman Brothers and Bear Stearns are fresh.

The banks won’t let that happen again for a few years… at least until it has been long enough to forget about lessons of the past.

And despite the crash – and the poor sentiment that followed – financial stocks have produced strong, steady returns for about three years now. Take a look:

The reason is that banks and other financials have been getting their businesses in order. They’re stronger and more profitable than they’ve been in a long time.

Banks took on too much risk during the housing boom of 2007 and 2008. They nearly went out of business in 2008, but the government bailed them out.

Since then, the banks have had to deal with two problems. They’ve had to rearrange their balance sheets to be safer. And they’ve had to deal with super-low interest rates, which can make it hard for banks to make money.

Right now, banks are recapitalizing under new rules that will make them safer. So far, those rules have not proven to be so restrictive as to choke off their businesses.

Banks have also dealt with low interest rates, while consistently earning higher margins. Look at the return on equity for U.S. banks as a whole…

The financial industry is learning to thrive again… even in this tough environment. And although nobody is talking about it, that’s great news for investors… and great news for the health of the U.S. economy.

Crux note: In his Retirement Trader service, Doc just recommended a special income trade on one of his favorite financial stocks. This trade should net us 19.1% in as little as four months… for an annualized return of 57%.

Doc’s used this powerful income-generating technique to lock in gains on 186 out of 188 positions. In fact, it’s been so successful for his readers, he recently compiled a book explaining this powerful, safe-money trading strategy so anyone can understand. You can get all the details right here.

Gold suffers as U.S. housing boom nears end

Posted: 06 Oct 2014 08:02 AM PDT

Gold had a torrid September and suffered further losses last week of 2.2%.

Start a Business for Less Than $150 in One of the Least Expensive Capitals in the World

Posted: 06 Oct 2014 08:00 AM PDT

The best places in the world to live and do business are often some of the smallest, for precisely this reason. Not only are the governments generally more in touch with their populations, but they've got to try much harder to appeal to outsiders. When countries are actively competing for you and your business, you […]

The post Start a Business for Less Than $150 in One of the Least Expensive Capitals in the World appeared first on Silver Doctors.

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Metals market update for October 6

Posted: 06 Oct 2014 07:53 AM PDT

Gold fell $22.00 or 1.81% to $1,191.80 per ounce and silver slid $0.29 or 1.7% to $16.81 per ounce Friday.

How low can gold go and why your bet went wrong - Ritholtz

Posted: 06 Oct 2014 07:42 AM PDT

Barry Ritholtz lambasts some gold investors for having too much zeal and not enough discipline.

Gold prices in India remain stable

Posted: 06 Oct 2014 07:29 AM PDT

According to most recent study conducted by the Associated Chambers of Commerce and Industry of India, the gold prices in India are likely to remain steady in the next six months.

Indian bullion trade association to retail gold and silver

Posted: 06 Oct 2014 06:45 AM PDT

India's bullion trade body, India Bullion and Jewellers Association Ltd., has entered into retailing of gold and silver coins and bars.

Technical Trading: Gold Bulls Defend Overnight Test Of 2013 Low

Posted: 06 Oct 2014 05:50 AM PDT

forbes

Gold Support At $1,180/oz and $1,161/oz, Then At $1,000/oz

Posted: 06 Oct 2014 05:14 AM PDT

Technically, gold is vulnerable to a further fall to test its bottom from July, 2010, at $1,161/oz. This is particularly the case in the very short term, in other words, this week. A breach of the $1,161/oz level could result in a rapid fall to test $1,110/oz and the long term support at $1,000/oz. Silver is also vulnerable after breaking below key resistance. Technical support is at $15/oz. The long term fundamentals remain very sound and those who are patient and focus on gold's strong fundamentals and still robust global demand, especially from China and India, will be rewarded again.

Gold had a torrid September and suffered further losses last week of 2.2%.


Gold in U.S. Dollars,  5 Years (Thomson Reuters)

The move lower in September was technically driven as there was no negative headline data, obvious reasons for price falls or indeed evidence of physical gold selling. Most of the selling was on the COMEX and gold remained firm in Asian trading throughout the month.

Indeed, the mood music for gold is quite positive – especially the appalling western relations with Russia, Middle Eastern tensions and attendant geopolitical risk.

One plausible factor for gold's weakness is the ever increasing, "irrationally exuberant" appetite for the dollar globally which may be impacting gold.

Despite, poor economic data out of the U.S. in recent days, the dollar has continued to eke out gains.

Poor data has not led to the bounce in gold that one would have expected. The permanently levitating stock markets have seen weakness and this may be a prelude to much larger losses.

There is increasing evidence that the U.S. consumer is struggling and close to being tapped out. Indeed, housing data has been poor recently which suggests the recent housing boom could be on its last legs. The latter scenario is likely the case which will prove bullish for gold in the long term.

Technically, gold is vulnerable to a further fall to test its bottom from July, 2010, at $1,161/oz. This is particularly the case in the very short term, in other words, this week. A breach of the $1,161/oz level could result in a rapid fall to test $1,110/oz and the long term support at $1,000/oz.

Silver in U.S. Dollars,  5 Years (Thomson Reuters)

Silver is also vulnerable after breaking below key resistance. Technical support is at $15/oz.

Therefore, short term weakness is a real risk and those considering reducing allocations should sell in the short term. At the same time, it is important to remember that with market manipulations of today, technical analysis is not as useful a tool as heretofore.

The long term fundamentals remain very sound and those who are patient and focus on gold's strong fundamentals and still robust global demand, especially from China and India, will be rewarded again.

MARKET UPDATE
Today's AM fix was USD 1,193.25, EUR 951.56 and GBP 746.67 per ounce.
Friday's AM fix was USD 1,207.50, EUR 956.06 and GBP 751.03 per ounce.

Gold fell $22.00 or 1.81% to $1,191.80 per ounce and silver slid $0.29 or 1.7% to $16.81 per ounce Friday. Gold and silver both finished down for the week at 2.11% and 4.65% respectively.

Gold on the New York Globex was pushed to to its lowest level in almost 15 months at the open on Sunday night prior to gold in Hong Kong moving higher from $1,187/oz an ounce to $1,195/oz.
Singapore gold bullion markets, a key bullion trading centre in Southeast Asia, were also closed for a public holiday.

Precious metals are at multi-year lows. Platinum hit its lowest price since 2009, silver fell to its weakest since 2010, and palladium touched an 8-month low.

Gold premiums in Hong Kong were $1.20 to $1.60 an ounce to the spot London prices, in line with last week, even though there was a sharp drop in cash gold prices.

With Chinese markets closed for national holidays until Wednesday, an increase in demand should come about on the return of the world's largest gold bullion buyer.

 

Gold Support At $1,180/oz and $1,161/oz, Then At $1,000/oz

Posted: 06 Oct 2014 05:01 AM PDT

gold.ie

Gold recovers from lowest 2014 price

Posted: 06 Oct 2014 04:23 AM PDT

Gold rose from the lowest price this year as the U.S. dollar weakened and investors anticipated the return of Chinese buyers.

Dubai property oversupply falls as strong demand takes up inventory and $80bn chases IPO

Posted: 06 Oct 2014 04:19 AM PDT

The large excess inventory of Dubai residential real estate this website noticed six months ago has fallen significantly over the summer. But the oversupply of property in the emirate is still likely to result in a price correction over the coming year.

Back in the Spring residential units available for rent or sale on the Dubizzle.com website hit 192,000, admittedly a figure that multiple listings would net down to a much lower amount. Today the total stands at 164,000.

New build 15,000 units p.a.

It is impossible to estimate exactly how many empty units for rent or sale this now represents. But this could easily be 30-40,000 when netted out. There are also around 15,000 units being added annually to this inventory by developers, according to the private survey carried out by the Emirates Specialities Company and revealed to ArabianMoney last week.

This building materials producer and supplier has reviewed the projects now underway in Dubai by the all the major developers to reach this conclusion. However, 15,000 units will barely keep pace with the current rate of population expansion. This is nothing like the excesses of the 2003-8 boom.

Indeed, given the propensity for projects to fall behind schedule for all manner of reasons from less than expected pre-sales to problems with raising construction finance or sourcing suitable contractors, then a shortage of property could emerge again in the near future like the one that propelled Dubai house prices to gain the most in the world last year.

Economic headwinds

However, in the meantime the Dubai real estate market still has a large inventory to fill, oil prices are falling and global interest rate trends are now against real estate. This is likely to put a squeeze on prices and rents in the short-term, though the correction will be a more normal real estate cyclical downturn of 20-30 per cent rather than the massive 60 per cent drop of the local depression in 2009.

Besides this prediction is already happening. Property agent Knight Frank reports that only $13.6 billion was invested in Dubai real estate in the first half of this year, less than half the amount invested in the same months of 2013. In July and August the volume of Dubai property transactions slumped by 22 per cent on a year ago, according to agents CBRE.

A lot will clearly now depend on how the Dubai economy continues to perform with headwinds from lower oil prices particularly significant in the Gulf of Arabia. Orders for Dubai companies fall with a six-month time lag as oil prices drop. The high dollar is also bad for local tourism, making it more expensive for the key European market which is already going back into recession.

$80bn IPO

That said the Emaar Malls Group IPO attracted $80 billion in subscriptions at the end of last month, and there is a big questionmark over where this liquidity will move to next. In 2006 when a stock market bubble burst in Dubai the money flowed into real estate for almost three years.

Dubai real estate remains cheap by the standards of London, Hong Kong and New York so you cannot discount the possibility of still higher prices.

On the other hand, local stocks may not be at their peak either. The Dubai Financial Market General Index at around 5,000 is well short of the adjusted 2006 high of 8,000-plus points. We would expect a stock market correction from current levels in this global macro environment for oil but it is not a given or necessarily going to be for a long period.

Plunging German factory orders as exports point to fresh recession and euro-dollar parity

Posted: 06 Oct 2014 04:09 AM PDT

Risks for the euro remain on the downside as German factory orders fell 5.7 per cent in August, after climbing 4.9 per cent in July. Export orders dropped 8.4 per cent in August, a large fall though nothing like the 29 per cent fall of April 2009.

Valentin Marinov, London-based head of European Group of 10 currency strategy at Citigroup, says the euro may fall to as low as $1.20 by the end of the year and ‘lower still down the road.’ He speaks with Jonathan Ferro on Bloomberg Television’s ‘On The Move’ after German factory orders plunged the most since 2009, underlining the risk of a slowdown in Europe's largest economy…

WGC wants India to put idle gold stock to use

Posted: 06 Oct 2014 04:05 AM PDT

With an estimated 25,000 tonnes of gold in Indian households and temples, the government needs to monetise it: WGC

US dollar rally over as gold and silver bounce back notes Credit Agricole

Posted: 06 Oct 2014 04:03 AM PDT

Just when the consensus was absolutely convinced that the dollar could only go higher it is falling back today and precious metals are rallying. Contrarian analysis rules as we suggested it might earlier today.

Credit Agricole European head of FX strategy Adam Myers discusses opportunities in the foreign exchange market with Manus Cranny, Anna Edwards and Mark Barton on ‘Countdown’…

Durga puja festivities ring in golden splendour in India

Posted: 06 Oct 2014 03:52 AM PDT

As India pays host to the ceremonial worship of the Mother Goddess, gold showcases the triumph of good over evil.

Monex Precious Metals Review: Gold support $1180, Silver $16.72

Posted: 06 Oct 2014 02:06 AM PDT

Monex spot gold prices opened the week at $1,221 . . . traded as high as $1,221 on Monday and as low as $1,191 on Friday . . . and the Monex AM settlement price on Friday was $1,194, down $27 for the week

Catalyst Check: Natural Resources Watchlist at Three Months

Posted: 06 Oct 2014 01:00 AM PDT

At the Cambridge House Canadian Investment Conference in June, The Gold Report Publisher Jason Mallin asked a panel of experts picking a portfolio of stocks with upside potential for the 2014...

Visit the aureport.com for more information and for a free newsletter

CHARTS : Gold Probes the 1183.8 Cycle Low; Bear Bias for Key 1155.6/ 1154.5 Area

Posted: 06 Oct 2014 12:40 AM PDT

fxstreet

Gold getting sold heavily in the early Asian market & “Gold prices are on the brink of collapse”

Posted: 05 Oct 2014 11:05 PM PDT

forexlive

$1180 : Gold: Sellers have a go at key $1,180.00

Posted: 05 Oct 2014 11:00 PM PDT

fxstreet

Could the gold price fall to $1,100 an ounce?

Posted: 05 Oct 2014 10:04 PM PDT

Where’s the bottom for the gold price and the top for the US dollar? The bears were out in force this morning shifting the gold price lower. Still even the arch bears at Goldman Sachs do have gold rebounding very much higher in the near future.

IG market strategist Evan Lucas discusses falling gold prices, whether this is a time for bargain hunting among mining stocks and what's driving the drop with Bloomberg's John Dawson on ‘On The Move.’…

Time to shift out of the US dollar and into these Asian currencies?

Posted: 05 Oct 2014 09:03 PM PDT

Everybody loves the US dollar. It’s becoming a crowded trade. Is this the moment to be buying another currency?

Dariusz Kowalczyk, senior economist and strategist at Asia ex-Japan, Credit Agricole, explains why the South Korean won and Malaysian ringgit offer buying opportunities…


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Demand Explodes, Part 2: China’s Coming for the West’s Gold

Posted: 05 Oct 2014 09:00 PM PDT

In the past 2 days, the U.S. Mint has nearly sold the entirety of the Silver Eagles sold in the month of July! This also stretches the silver to gold sales ratio to 220 to 1 (if buffaloes are counted). At a gold to silver ratio of 70 to 1, this means that in dollar terms, […]

The post Demand Explodes, Part 2: China's Coming for the West's Gold appeared first on Silver Doctors.

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Conversations with God...about Gold and Silver!

Posted: 05 Oct 2014 07:00 PM PDT

Road to Roota

PM Fund Manager: Cartel Attempting to Do to Gold What They Did in 1974

Posted: 05 Oct 2014 03:50 PM PDT

In the back of my mind (going back to 2003/2004) I've always been worried that they might do to gold eventually what they did to it in late 1974 when they took it from $200 back down to $100 by early 1976. Please note that the end of 1974 is when gold futures trading was first introduced […]

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Gold & Silver Finish Brutal Week Rolling Over into the Close- Will Cartel Push Them Off the Precipice on Sunday’s Globex Open?

Posted: 05 Oct 2014 02:02 PM PDT

After a brutal trading week which saw silver close at 4 year lows and gold only $10 from summer 2013 lows, GATA Chairman Bill Murphy joins the show discussing:  Silver closes under $17 & gold rolls over into the close- is a waterfall capitulation collapse coming on Sunday night’s Globex open?  Murphy explains why this is […]

The post Gold & Silver Finish Brutal Week Rolling Over into the Close- Will Cartel Push Them Off the Precipice on Sunday’s Globex Open? appeared first on Silver Doctors.

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The U.S. Mint Sells Over 750,000 Silver Eagles In One Day

Posted: 05 Oct 2014 12:45 PM PDT

The market has reacted to the big drop in the paper price of silver by a huge increase in Silver Eagle purchases.  September was turning out to be a much stronger month compared to July and August even before the last update of the month. On Monday, the U.S. Mint reported 3,375,000 sales for the […]

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