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Tuesday, November 4, 2014

Gold World News Flash

Gold World News Flash

As Gold & Silver Rout Continues, Physical Demand Is Stunning

Posted: 03 Nov 2014 11:30 PM PST

from KingWorldNews:

The central planners are fighting an all out war against the precious metals. Getting PayPal to close the account of the Swiss Gold Initiative in order to stop donations just goes to show how far they are willing to go.

PayPal's bending to the will of central planners is just one example of what everyone who owns physical gold and silver is up against. Nevertheless, this example of central planner intervention provides a strong reason why we must not lose sight of what Congressman Howard Buffett, the father of Warren Buffett, said in a brilliant speech in 1948: "In a free country the monetary unit rests upon a fixed foundation of gold or gold and silver independent of the ruling politicians.

James Turk continues @ KingWorldNews.com

A Silver Primer – Where Are We Now?

Posted: 03 Nov 2014 09:20 PM PST

by Dr. Jeffrey Lewis, Silver-coin-investor:

My wife killed one of our cars recently. It was a good car. Old, recycled, reliable, safe.

We had a small coolant leak and the car had been overheating for some time. (Not all divisions of household labor and responsibilities are beneficial.) But we don't drive much. When we do, it's only for short distances. But not long enough to break down completely.

Eventually, my wife reported a "funny sound". I walked outside to check the car, and I could feel it 20 feet away. By then it was too late. We tried to repair the leak, replace the broken hose. We flushed it, and then re-started. No luck. The oil was a coolant-muddied mix.

Read More @ silver-coin-investor.com

Richard Russell Warns We Will See Violent Action Ahead

Posted: 03 Nov 2014 09:02 PM PST

Today the Godfather of newsletter writers, 90-year old Richard Russell, warned that we will see violent action ahead. The 60-year market veteran also covered the Great Recession, the Bank of Japan, the U.S. dollar, gold, silver, stocks, and a plethora of other topics as only Russell can at the age of 90.

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

Interest Rates Are the Lowest In Decades

Posted: 03 Nov 2014 09:00 PM PST

by David Schectman, MilesFranklin.com:

Now you see why the economy and especially the stock market faired as well as they did. How do you think they will fair, going forward, without QE?

I have not given up on Jim Sinclair. No one is right all the time, not in this heavily manipulated marketplace. Logic dictates that the Fed must continue QE in one form or another or interest rates will rise, and that is a political disaster since it will badly affect GDP and the stock market. Interest rates will not remain low with foreign countries backing away from our Treasuries and interest rates are the lowest in decades. The buyer of last resort IS THE FEDERAL RESERVE. Will the Fed follow the Bank of Japan and eventually purchase virtually all the maturing bonds? Until and unless interest rates rise high enough to cover "risk" and a fair return, the Fed can't drop out. Gold is now suffering the wrath of the fickle hedge funds and the horrible manipulation of commodities by the bullion banks. Let them have their short-term day in the sun. This will turnabout sooner rather than later and the investments that are now being shunned (gold, silver, platinum, etc.) will lead the way back up. It must end up that way. Inflation is on the way, best shown when the dollar reverses direction and then the currency debasement of the dollar will push prices up. Not demand, but currency-driven. Don't be fooled by the temporarily strong dollar. Its foundation is hot air and sand.

Read More @ MilesFranklin.com

Casting Gold and Silver Into the Streets

Posted: 03 Nov 2014 08:20 PM PST

Alan Greenspan To Marc Faber: "I Never Said The Fed Was Independent"

Posted: 03 Nov 2014 07:02 PM PST

Marc Faber, editor of "The Gloom, Boom & Doom Report", spoke with Bloomberg TV's Trish Regan today at length on a wide variety of topics. He commented on Bill Gross' remarks about deflation (noting "the concept of inflation and deflation is frequently misunderstood") and explained why he thinks Japan is engaged in a Ponzi Scheme (since "all the government bonds that the Treasury issues are being bought by the Bank of Japan"). He also spoke on oil prices (warning that "if oil prices went lower, it may actually have an adverse impact on the US economy"), gold and Goldman Sachs ("Goldman Sachs is very good at predicting lower prices when they want to buy something") and the midterm elections (adding that "I don’t think it really matters, [both parties] have blown money away.") But it is discussion of the independence of the Fed with Alan Greenspan that will raise the most eyebrows as it seems yet another conspiracy theory dies at the hands of the fact police.

*  *  *

TRISH REGAN: Bond investor Bill Gross is saying deflation is a “growing possibility” as governments worldwide struggle to create inflation and to stimulate growth. In his second investment outlook since joining Janus Capital, Mr. Gross writes, “The real economy needs money printing, yes, but money spending more so. Until then, deflation remains a growing possibility, not the kind that creates prosperity but the kind that’s trouble for prosperity.”  What do you think here about what Bill Gross is saying? Do you think in fact deflation is a real possibility for the United States?
 
MARC FABER: Well, I think the concept of inflation and deflation is frequently misunderstood because in some sectors of the economy you can have inflation and in some sectors deflation. But if the investment implication of Bill Gross is that – and he’s a friend of mine. I have high regard for him. If the implication is that one should be long US treasuries, to some extent I agree. The return on 10-year notes will be miserable, 2.35 percent for the next 10 years if you hold them to maturity in each of the next 10 years. However, if you compare that to French government bonds yielding today 1.21 percent, I think that’s quite a good deal, or Japanese bonds, a country that is engaged in a Ponzi scheme, bankrupt, they have government bond yields yielding 0.43 percent. So –

*  *  *
Faber: Japan Is Engaged in a Ponzi Scheme

 

FABER: Well I think they’re engaged in a Ponzi scheme in the sense that all the government bonds that the Treasury issues are being bought by the Bank of Japan.

 

REGAN: So Japan’s engaged in a Ponzi scheme. What about the US? We’ve done our share of money printing. We’ve had record low interest rates for six years.

 

FABER: I think the good news is – for Japan is that most countries are engaged in a Ponzi scheme and it will not end well. But as Carlo Ponzi proved, it can take a long time until the whole system collapses.

 

REGAN: So all this QE in your view is a form of a Ponzi scheme. It’s going to take some while before it catches up with us, and yet, Marc, you look at the jobs numbers coming out of the US. You look at the GD print (ph). All this has actually been pretty good lately. So isn’t there a case to be made for some economic growth here?

 

FABER: I really have to laugh when I look at the economic statistics because they are published by the Obama administration, and there I would be very careful to take every figure for granted. The fact is simply that first-time home buyers in the US are now at the 30-year low. What does it tell you? That people don’t want to live in homes anymore? No. They can’t afford to live in homes anymore. That is the problem. And the whole exercise with quantitative easing has been to boost asset prices, but the bigger problem is the affordability. A lot of people are being squeezed very badly because the costs of living are rising more than their salaries and wages.

Faber: The US unfunded liabilities are another Ponzi scheme

REGAN: You mentioned the economic numbers out of the US. You said people should take them – to not take them for granted. You also mentioned in the same sentence because they’re coming from the Obama administration. What is your concern there about what they’re telling us?

 

FABER: Well first of all, if we talk about GDP growth, we have to – the figures are adjusted essentially for inflation, the PCE in the case of the US. Now depending on how you weight the basket of goods and services that you take into your inflation measure, you will get completely different results. And if you print money and if you have large budget deficits, and last year up to October 13 of this year the total government debt in the US increased by over a trillion dollars. So I would say that is kind of a deficit figure that makes halfway sense, but it does not include the unfunded liabilities. That’s another Ponzi scheme we’ll have to talk about in a few years’ time.

 

In any event, the point is that (inaudible) improvement in the economy has taken place, there’s no question, from the 2009 lows. The question is more had we had a further decline in home prices, would actually affordability for most people have improved or not? And I would argue why do people rush out when there are sales in department stores? Because they get the bargain. At the present time when young people want to buy something, they buy the stock market at an expensive valuation. They buy bonds at miserable yields.

 

That I didn’t have to do when I started to work in 1970. In the early ‘70 the Dow Jones was yielding 4 to 6 percent. Bonds, they were yielding 6 percent on treasuries and they rose to 15 percent, add (ph) the benefit of a huge compounding effect. Not (inaudible) I’m smart, but $1 invested in 1970 at 100 years at 5 percent grows to $131.

Faber: Doesn't Matter If GOP Gains Control of Senate

 

REGAN: We’ve got midterm elections here in the US tomorrow. Do they matter for the markets? Does the configuration of the US Senate in your view really matter?

 

FABER: Well it will be perceived as positive if the Republicans gain the control, but I don’t think it really matters because on (inaudible) Democrats and Republicans, they’ve blown money away. It’s not that the Democrats – actually under Mr. Obama spending has been relatively muted partly because of the sequester and so forth. But nevertheless, as a percent of the economy it hasn’t grown much. It’s actually contracted.

Faber: Gold has done better than stocks over the last 10 years, Goldman is "very good at predicting lower prices when they want to buy something"

REGAN: I know you have been bullish in gold for – well, pretty much forever, Marc. But now we’re in a situation where gold is at a four-year low. Goldman now predicting 10, 15 down (ph). Soc Gen saying $1,000. Where do you see gold finishing the year?

 

FABER: I would say Goldman Sachs is very good at predicting lower prices when they want to buy something. But that is a (inaudible) I would say, yes, we are down from $1,900 to $1,160 or something like this, and it’s been a miserable performance since 2011. However, from the 1990 lows we’re still up more than four times. So I just looked at performance tables over 10 years and 15 years. Gold hasn’t done that badly, has done actually better than stocks.

 

Now I personally, I think that we may still go lower. It’s possible. I’m not a profit, but I’m telling you I want to own some gold because I don’t trust the financial system anymore. I think the whole thing is going to collapse one day and then I’ll be happy to have some assets. But of course the custody (ph) is important. I wouldn’t hold my gold at the Federal Reserve because they will lend it out. I wouldn’t hold my gold in the US at all.

 

REGAN: Okay. So you want gold even at these levels. Where do you see – you still see it going lower however as we close out the year?

 

FABER: I don’t know whether it will go lower, but I think say – I’m now 68. by the time I die, and I don’t think it will be 100 (inaudible) I’m not that optimistic, but by the time I die it will be meaningfully higher.

Faber: Low Oil Prices May Have Adverse Impact on Economy

 

REGAN: Marc, let’s talk a little bit about crude oil as we talk about some of these commodities here. You just told me you thought gold won’t necessarily be going higher any time soon, but over the long run a good investment. We’ve got crude oil now closing below $80 for the first time since June of 2012. Is there any floor in site here for oil or do you expect the slide to continue?

 

FABER: Well basically if oil falls below $75 to $70, I don’t think it will stay there because a lot of production will be cut and exploration will be cut, and actually some companies will get into serious trouble financially. The oil price decline is not necessarily very good for the United States. It helps the consumer to some extent, but a lot of capital spending has gone into oil and natural gas, and some of these companies are already today cash flow negative. So if oil prices went lower, it may actually have an adverse impact on the US economy.

 

REGAN: Do you think to a certain extent – and I actually wrote about – I wrote about this in – in my column in USA Today this week. I wonder to what extent, Marc, OPEC actually enjoys seeing lower prices right now because of the success of drilling in the US. In other words, it makes it far less attractive for drillers in the US to be investing in that sector.

 

FABER: Except too much of a good thing may not be very good for Saudi Arabia and the other oil producers. You can extract oil in Saudi Arabia at very low cost, but you have to understand the population of Saudi Arabia has now reached I think 25 million. So the social cost is very large. They need an oil price of around $80. If oil prices went down – and let me remind you oil hit a high in July 2008 at $147 and within six months it dropped to $32, but it didn’t stay there. It rebounded. And I think Saudi Arabia and most oil producers would be in trouble if the oil price went below $70 and stayed there.

 

REGAN: But you don’t anticipate that it will stay there. It’s – it’s supply and demand ultimately, and if it goes to $70 you see less investment and drilling and thus less supply here in the US. So $70 is the floor in your view?

 

FABER: Not necessarily the floor, but it won’t stay low for a very long time. I think it’s – at the present time, farmers are by and large losing money because the price of corn, wheat, soybeans has collapsed by around 50 percent from the highs and the costs are up substantially. I don’t think oil would stay down for very long because I live in an emerging economy. I can see one thing. The demand for oil in the regions of the emerging world where 80 perent of the population of the world lives is going up still from very low per capita consumption levels compared to say the European economy or the US.

 

So I think the long-term trend for demand is up, but obviously the decline of oil prices, some people blame it on Saudi Arabia and some other blame it on the US and who knows what, the fact is maybe the decline in oil prices tells you that the global economy is not recovering as all the bullish analysts think, but actually it’s weakening, yes, weakening. But some countries benefit from lower oil prices, particularly India.

 

REGAN: So in fact you see the global recovery as not really happening, that we are in an increasingly weak global environment as you look around. And certainly we see some poor data that indicates that out of Asia and Europe.

 

FABER: Yes. I think that in Europe we have essentially a flat (inaudible) economy. Now maybe a year they will grow at 1 percent and the next year they’ll contract at 1 percent, basically you can’t expect much growth from Europe. In China, we have now obviously – and this is well documented – a meaningful slowdown in economic growth. As a result, China also buys less resources from the resource producers in the world, from Argentina to Brazil, over (inaudible) Asia, central Asia, Russia (inaudible) and so on. And this has all an impact on these countries’ economies, and so they themselves are buying less goods from the Western world and you have the potential of a downside spiral.

Faber: Alan Greenspan told me The Fed is not independent

REGAN: Anything else? A lot of people have made that point that the Fed has been somewhat backed into a corner in terms of having to be aggressive because they haven’t gotten any cooperation from Washington. Is there any truth to that?

 

FABER: Well it’s interesting that you raise this issue because I was on a panel with Alan Greenspan a week ago, and I knew Alan from my days at Y12 in 1970, 1971 when he was the consulting economist. And actually he even recognized me. He said you’re one of the few ones that always came to my presentations. I have to say one thing. I’m critical of him as a Fed chairman, but he’s a highly intelligent man and he’s actually a very nice man. But equally, he’s a diplomat. He’s a politician.

 

And I was allowed to ask him a few questions, so I asked him, Alan, you’ve been Fed chairman since 1987 until 2006. Would you have done anything different if you were again Fed chairman? And then he explained this and that, and then I interrupted him and I said, you mean to say that the Federal Reserve is not independent? He immediately said, Marc, I never said the Fed was independent. That’s what he said. I never said that the Fed was independent. In other words, the Fed and the treasury and the government is basically one and the same.

Faber: Be diversified, Own Gold

REGAN: Okay. Real quick before I let you go, I know you like gold. Anything else you’d be telling investors to buy right now in this uncertain global environment?

 

FABER: Because in this unsettled global environment nobody knows how the world will look like in five years’ time, Alan Greenspan said the same, he doesn’t know, I would be diversified. And my diversification is about a quarter in equities, not in US stocks. I like other equities better. And some bonds and cash and some gold and some real estate.

Election 2014 – "Why I Opt Out of Voting"

Posted: 03 Nov 2014 06:43 PM PST

Submitted by The Dissident Dad via Liberty Blitzkrieg blog,

Note from Mike Krieger,

Before I get to the Dissident Dad’s latest post, I want to provide my own perspective with regard to this very important debate. While I agree that voting is generally meaningless in our current system, this is because the two choices we are given are 99% of the time captured cronies of the two corrupt political parties.

 

So this begs the question, can we ever get real choices on the ballot? I believe we can, but we need a much larger percentage of the population aware and engaged. While I completely respect the decision to not vote for either false choice (for example, in Colorado both choices for Governor are horrific), I hope people who make this choice don’t altogether give up on grassroots activism and civil disobedience, but rather direct their energy elsewhere.

The Ritual of Voting
by the Dissident Dad

Screen Shot 2014-11-03 at 12.43.53 PM

This year, my wife and I will – for the second time in our adult lives – not vote. Previously, I would have seen this stance as many people do: as an irresponsible act. The ritual of voting is very much like taking communion in church for half of this country.

As a father, I want to raise responsible adults, which is why my wife and I will not be heading to the polls this election.

I want to always help my children understand that they are sovereign men and women, and have no obligation to any government.

When it comes to voting, my wife and I are personally opting out of the system. There are a lot of reasons for us not to vote, but at the core it comes down to not wanting to enforce our will on others. I’m fine with making our voices heard, but when the vote has a direct impact on how much money is stolen from another family, I want nothing to do with it.

Both Democrats and Republicans support militarism, taxation, spying on us, inflation, redistribution of wealth, Keynesian economics and corporatism once they get in office.

My children need not to identify with this group of sociopaths, so to vote would be a bad example for them. Plus, as my friend Doug Casey has noted, voting just encourages them – the politicians, that is. Whether you’re voting for or against someone, winning an election gives the politician a sense of a mandate that they are obligated to create new rules, taxes and redistribution of wealth schemes to satisfy their voting bloc. That somehow they are in the right, because no matter how sick their political philosophy is, the majority has demanded they implement it into the minority’s lives.

The current options for voting within the system has conditioned Americans into becoming busybodies. We’re always given the choice of taking away the rights of others, stealing their property through taxation, and creating new laws for minority groups. Or worse, outright murdering people overseas because they consider our tens of thousands of troops, drones and ships off their coastlines a threat to their own national sovereignty.

I believe that intentionally not voting will serve as a positive reinforcement for my kids that you don’t have to comply with society’s expectations and you never have to take part in the lesser of two evils. The lesser of two evils is still evil.

The oligarchs laugh at all us plebs on Election Day because they know that no matter what we do, they’re going get what they want. If you voted for Bush, you got Ben Bernanke as the master of your dollar’s value and chief of banker bailouts. If you voted for Obama, who was supposed to be the anti-Bush, guess what; you still got Ben Bernanke as master of your dollar’s value and chief of banker bailouts.

Raising responsible adults in a world that is completely upside down continues to be my most difficult task as a father. As I’ve mentioned in previous posts, your own personal choice between mainstream and independent thought is the easy part. What becomes far less manageable are your very own loved ones: family, friends, and neighbors who are fully part of the system and who blindly endorse its atrocities against mankind and defend the oligarchs every step of the way.

This is why not voting for my family has to be more than just a political protest, but something I will have to defend and take the time to explain at family gatherings.

For my children, I want them to know that the system is not their friend. It doesn’t mean that people who live within the system are our enemy; it just means that as sovereign people, we have no obligation to it, and it’s not us who should be embarrassed for not embracing it. Instead, it’s the thieves and busybodies who partake in the theft of someone else’s wealth — and even their lives — every time they prop up one these central planners.

Oh, and while we’re on the topic of sham elections and corrupt, insane politicians. Make sure you watch the following:

 

 

Pricing Gold in the Real World

Posted: 03 Nov 2014 06:40 PM PST

by Jeff Nielson, Bullion Bulls Canada:

As we see the price of gold and silver dragged lower once again in our Hostage Markets; a reality-check is badly needed – since we certainly get no reality from the Corporate media. However, while the mainstream media provides no "reality", it does provide consistency.

As any knowledgeable reader already knows; gold (and silver) is both a commodity and a "monetary metal" (i.e. real money). With respect to the perverse reporting of the Corporate media; the pattern has been unequivocal. Whenever it has some bearish fiction to distribute about the monetary fundamentals of gold; it treats gold as a monetary metal. And whenever it has some bearish fiction to distribute about the commodity fundamentals of the gold market; it treats gold as a commodity.

Read More @ BullionBullsCanada.com

10 Examples Of The Extreme Incompetence That Now Pervades The Federal Government

Posted: 03 Nov 2014 06:11 PM PST

Submitted by Michael Snyder of The End of the American Dream blog,

There has always been a substantial level of incompetence at federal agencies, but under the Obama administration incompetence has risen to unprecedented levels.  This year the incompetence of the Secret Service, the Veterans Administration, the Department of Homeland Security and the CDC have all made national headlines.  And it is hard to forget how the launch of Obamacare was such a failure that it became a global joke.  We live at a time when our government officials can’t seem to do anything right.  When Americans complain about the government, most of the time they focus on how corrupt and wicked our politicians have become, and that should not be downplayed whatsoever.  But just replacing those politicians is not going to fix what ails our government.  The quality of the workers throughout the government bureaucracy has fallen so dramatically that our federal agencies can no longer be depended upon to perform even the most basic governmental functions competently.  The following are 10 examples of the extreme incompetence that now pervades the federal government…

#1 The Secret Service

Once upon a time, the Secret Service was considered to be one of the finest security organizations in the entire world.  But these days, they seem to be too busy partying and chasing prostitutes around to do their jobs properly.

For instance, multiple intruders have recently been able to cross the White House lawn and walk right into the White House without being stopped by anyone.  Here is just one example…

An intruder made his way across the White House lawn and through the building almost to the Obama living quarters before being stopped by a Secret Service officer who was off duty: This chilling news is more than just a kind of melodramatic movie scenario come true.

 

Next to the military, the Secret Service is probably the most highly regarded institution within the executive branch. Or it was.

 

Now we learn its agents can’t catch a guy running across the White House lawn; can’t stop the guy at the front door; can’t get to him before he gets to the stairs that lead to the rooms where the president’s daughters sleep.

#2 The Obamacare Website

The launch of Obamacare overall has been a complete and total disaster, but the launch of the Obamacare website in particular was such a dramatic failure that it is hard to put into words.  The Obama administration spent more than 2 billion dollars on healthcare.gov and trumpeted it as the future of healthcare in America, but the website was a technical nightmare.  The following is how one news outlet described it…

Healthcare.gov has shutdown, crapped out, stalled, and mis-loaded so consistently that its track record for failure is challenged only by Congress.

#3 Dropping Weapons To ISIS Terrorists

It is well known that ISIS is using captured U.S. vehicles and weapons to take over vast stretches of territory in Iraq and Syria.

So what do we do?  U.S. planes drop even more weapons into the region to aid in “the fight against ISIS”, but ISIS is ending up with many of those weapons too…

At least one bundle of U.S. weapons airdropped in Syria appears to have fallen into the hands of ISIS, a dangerous misfire in the American mission to speed aid to Kurdish forces making their stand in Kobani.

An ISIS-associated YouTube account posted a new video online Tuesday entitled, “Weapons and munitions dropped by American planes and landed in the areas controlled by the Islamic State in Kobani.” The video was also posted on the Twitter account of “a3maq news,” which acts as an unofficial media arm of ISIS. The outfit has previously posted videos of ISIS fighters firing American made Howitzer cannons and seizing marijuana fields in Syria.

 

ISIS had broadly advertised its acquisition of a broad range of U.S.-made weaponsduring its rampage across Iraq. ISIS videos have showed its fighters driving U.S. tanks, MRAPs, Humvees.

 

There are unconfirmed reports ISIS has stolen three fighter planes from Iraqi bases it conquered.

#4 The Immigration Crisis

The Obama administration has refused to secure our borders and has openly encouraged mass illegal immigration from Central and South America.

As a result, our border patrol is absolutely overwhelmed.  Tens of thousands of women and children are turning themselves over to border patrol agents and asking for asylum.  They expect to be taken care of and given a new life in this country.  As a result, “processing centers” along our southern border are packed to the gills with women and children living in absolutely deplorable conditions as the federal government figures out what to do with them.

#5 The VA Scandal

Under the Obama administration, military veterans have been treated like human garbage.   For years they have been denied the care that they need, and many Americans were absolutely shocked when they learned that countless veterans have died waiting to get an appointment at one of our VA facilities.  Needless to say, this scandal has greatly shaken the confidence that the public has in the Veterans Administration…

The Veterans Administration was viewed favorably by 68 percent of those polled last year. But it too has since been swept up in a scandal over long wait times for veterans seeking care and records that were falsified to camouflage the problems. In the CBS poll, just 30 percent rated the VA as doing a good job.

#6 The SEC

Many wonder why the SEC never seems to go after the big Wall Street banks.  Well, perhaps one of the reasons is because many SEC employees have been too busy watching porn all day long…

One senior attorney at SEC headquarters in Washington spent up to eight hours a day accessing Internet porn, according to the report, which has yet to be released. When he filled all the space on his government computer with pornographic images, he downloaded more to CDs and DVDs that accumulated in boxes in his offices.

 

An SEC accountant attempted to access porn websites 1,800 times in a two-week period and had 600 pornographic images on her computer hard drive.

 

Another SEC accountant used his SEC-issued computer to upload his own sexually explicit videos onto porn websites he joined.

 

And another SEC accountant attempted to access porn sites 16,000 times in a single month.

#7 The Environmental Protection Agency

You know that things are bad at your agency when employees have to be told not to poop in the hallways…

It appears, however, that a regional office has reached a new low: Management for Region 8 in Denver, Colo., wrote an email earlier this year to all staff in the area pleading with them to stop inappropriate bathroom behavior, including defecating in the hallway.

 

In the email, obtained by Government Executive, Deputy Regional Administrator Howard Cantor mentioned “several incidents” in the building, including clogging the toilets with paper towels and “an individual placing feces in the hallway” outside the restroom.

 

Confounded by what to make of this occurrence, EPA management “consulted” with workplace violence “national expert” John Nicoletti, who said that hallway feces is in fact a health and safety risk. He added the behavior was “very dangerous” and the individuals responsible would “probably escalate” their actions.

And just like the SEC, there has been a lot of porn watching going on at the EPA too.  The following is from a recent Washington Post article…

In May, the Environmental Protection Agency’s inspector general disclosed that a senior-level employee was caught spending as much as six hours of his day looking at porn. The IG found that the employee had downloaded and viewed more than 7,000 pornographic files. The Justice Department is investigating further for possible prosecution.

 

Four months later, the employee has not been fired and is still collecting government pay, Environment & Energy Publishing reported last week.

 

That prompted Rep. Mark Meadows (R-N.C.) to introduce a bill the day Congress left town to make it a uniform federal government law that employees cannot look at porn at work.

#8 NASA

Generally, NASA has been regarded as one of the more competent government agencies.  That is why it is so alarming that a rocket recently exploded just before liftoff at a NASA facility in Virginia…

An unmanned commercial rocket headed for the International Space Station to deliver supplies exploded just after launching Tuesday, filling the sky with a massive fireball.

 

The Antares rocket supplied by contractor Orbital Sciences blew up moments after liftoff at NASA’s space launch facility on the Eastern Shore of Virginia, the space agency said.

 

The explosion destroyed the rocket and spacecraft and immediately raised questions about the future of NASA’s reliance on private commercial ventures to carry vital payloads into space to supply and support the orbiting space station.

#9 The Federal Reserve

The Federal is NOT a government agency, but it claims such a close relationship with the government that I have added it to this list.

Since the Federal Reserve was initially created, the U.S. dollar has become more than 20 times less valuable, and the U.S. national debt has gotten more than 5000 times larger.

More recently, the Federal Reserve’s quantitative easing program has been an unmitigated failure.  The Federal Reserve created 3.5 trillion dollars out of thin air and pumped it into the financial system, but all of that money has done next to nothing for the real economy.  The percentage of Americans that are employed is about the same as it was during the depths of the last recession, the homeownership rate in this country has been falling for seven years in a row, and half of all Americans now make less than $28,031 a year.

#10 Ebola

This is the one area where the incompetence of the federal government could be the most dangerous.  Originally we were told by the CDC that Ebola could only be spread by “direct contact” with the bodily fluids of someone else.  But now we have learned that the government believes that Ebola is “aerostable“, and we have also learned that researchers have discovered that Ebola can remain on surfaces for up to 50 days.  If Ebola does start spreading widely in this country, giving people bad information could accelerate the spread of the disease.

And Barack Obama continues to refuse to ban all non-essential air travel between the United States and the nations in West Africa where Ebola is raging out of control.

As far as Obama is concerned, incompetence is the best case scenario.  There is absolutely no excuse for not protecting the American people from what could become the greatest health crisis that any of us have ever seen.  If a major Ebola pandemic does erupt in this country, the blood of countless numbers of Americans could potentially be on his hands.

Nevada: The Land of Silver

Posted: 03 Nov 2014 05:40 PM PST

Silver mining has a long, storied history in Nevada, and to this day the state’s silver deposits remain economically important. So much so that Nevada is nicknamed “the Silver State.”


According to the Nevada Mining Association, Nevada’s silver deposits led the way to it joining the United States, as they drove the economy and the development of settlements.

In The News Today

Posted: 03 Nov 2014 05:19 PM PST

Silver Fraud? Author : Bill Holter Published: November 3rd, 2014 Thursday and Friday were very bad days for gold, silver and the shares.  The explanation on Wednesday afternoon and Thursday was because the Fed discontinued QE 3.  Along came Friday and guess what, the QE baton was passed to Japan as they announced an increase... Read more »

The post In The News Today appeared first on Jim Sinclair's Mineset.

Japanese Stocks Tumble 500 Points From Highs; Nikkei Futures Back Below 17,000; Bond Yields Crashing

Posted: 03 Nov 2014 04:42 PM PST

One word - seppuku

Not laughing now eh, QE-boy?

Here's one problem:

  • *GPIF PANEL MEMBER SAYS GOVERNANCE LAW REFORM MAY TAKE A YEAR

We're gonna need a biggerer QQE!

  • *JAPAN'S 20-YEAR YIELD DROPS TO 1.21%, LOWEST SINCE APRIL 2013

Everyone is greatly rotating into JGBs! 20Y yield collapses 8bps!

 

back to crazy chaos levels from last year

 

And 30Y yield is totally crashing -20bps!!! 2nd biggest drop on record

 

Bond stress focusd on long-duration buying panic

 

And Japanese stocks plunge the most intraday in 10 days 

 

And Nikkei VIX surges past 30...

 

US equity futures are tumbling too - notably decoupled from USDJPY

 

It seems not everyone is rushing headlong into unprotected longs in Japan

 

Now where have we seen that before?

 

Charts: Bloomberg

*  *  *

Abe on the tape with more lies:

*ABE: HAVE BEEN SUCCESSFUL IN ALTERING DEFLATIONARY MINDSET - Nope!

 

*  *  *

It seems a few commenters are unaware that yesterday was a market holiday in Japan and so the Nikkei cash index move is from Friday's Japan close. Nikkei Futures rose 1000 points since then and have no given back 500 points of those gains... your decision whether you consider the NKY up 500 or down 500... we know which we prefer to view given the trend...and note this is the biggest intraday reversal in 10 days

 

It is pretty clear by the surge in Nikkei VIX and JGB yield collapse that investors are focused on the current weakness as opposed to yesterday's and Friday's gains

China's Gold Strategy

Posted: 03 Nov 2014 04:33 PM PST

Submitted by Alasdair Macleod via GoldMoney.com,

China first delegated the management of gold policy to the People's Bank by regulations in 1983.

This development was central to China's emergence as a free-market economy following the post-Mao reforms in 1979/82. At that time the west was doing its best to suppress gold to enhance confidence in paper currencies, releasing large quantities of bullion for others to buy. This is why the timing is important: it was an opportunity for China, a one-billion population country in the throes of rapid economic modernisation, to diversify growing trade surpluses from the dollar.

To my knowledge this subject has not been properly addressed by any private-sector analysts, which might explain why it is commonly thought that China's gold policy is a more recent development, and why even industry specialists show so little understanding of the true position. But in the thirty-one years since China's gold regulations were enacted, global mine production has increased above-ground stocks from an estimated 92,000 tonnes to 163,000 tonnes today, or 71,000 tonnes* ; and while the west was also reducing its stocks in a prolonged bear market all that gold was hoarded somewhere.

The period I shall focus on is between 1983 and 2002, when gold ownership in China was finally liberated and the Shanghai Gold Exchange was formed. The fact that the Chinese authorities permitted private ownership of gold suggests that they had by then acquired sufficient gold for monetary and strategic purposes, and were content to add to them from domestic mine production and Chinese scrap thereafter rather than through market purchases. This raises the question as to how much gold China might have secretly accumulated by the end of 2002 for this to be the case.

China's 1983 gold regulations coincided with the start of a western bear market in gold, when Swiss private bankers managing the largest western depositories reduced their clients' holdings over the following fifteen years ultimately to very low levels. In the mid-eighties the London bullion market developed to enable future mine and scrap supplies to be secured and sold for immediate delivery. The bullion delivered was leased or swapped from central banks to be replaced at later dates. A respected American analyst, Frank Veneroso, in a 2002 speech in Lima estimated total central bank leases and swaps to be between 10,000 and 16,000 tonnes at that time. This amount has to be subtracted from official reserves and added to the enormous increase in mine supply, along with western portfolio liquidation. No one actually knows how much gold was supplied through the markets, but this must not stop us making reasonable estimates.

Between 1983 and 2002, mine production, scrap supplies, portfolio sales and central bank leasing absorbed by new Asian and Middle Eastern buyers probably exceeded 75,000 tonnes. It is easy to be blasé about such large amounts, but at today's prices this is the equivalent of $3 trillion. The Arabs had surplus dollars and Asia was rapidly industrialising. Both camps were not much influenced by western central bank propaganda aimed at side-lining gold in the new era of floating exchange rates, though Arab enthusiasm will have been diminished somewhat by the severe bear market as the 1980s progressed. The table below summarises the likely distribution of this gold.

Gold Supply 31102014.jpg

Today, many believe that India is the largest private sector market, but in the 12 years following the repeal of the Gold Control Act in 1990, an estimated 5,426 tonnes only were imported (Source: Indian Gold Book 2002), and between 1983 and 1990 perhaps a further 1,500 tonnes were smuggled into India, giving total Indian purchases of about 7,000 tonnes between 1983 and 2002. That leaves the rest of Asia including the Middle East, China, Turkey and South-East Asia. Of the latter two, Turkey probably took in about 4,000 tonnes, and we can pencil in 5,000 tonnes for South-East Asia, bearing in mind the tiger economies' boom-and-bust in the 1990s. This leaves approximately 55,000 tonnes split between the Middle East and China, assuming 4,850 tonnes satisfied other unclassified demand.

The Middle East began to accumulate gold in the mid-1970s, storing much of it in the vaults of the Swiss private banks. Income from oil continued to rise, so despite the severe bear market in gold from 1980 onwards, Middle-Eastern investors continued to buy. In the 1990s, a new generation of Swiss portfolio managers less committed to gold was advising clients, including those in the Middle East, to sell. At the same time, discouraged by gold's bear market, a western-educated generation of Arabs started to diversify into equities, infrastructure spending and other investment media. Gold stocks owned by Arab investors remain a well-kept secret to this day, but probably still represents the largest quantity of vaulted gold, given the scale of petro-dollar surpluses in the 1980s. However, because of the change in the Arabs' financial culture, from the 1990s onwards the pace of their acquisition waned.

By elimination this leaves China as the only other significant buyer during that era. Given that Arab enthusiasm for gold diminished for over half the 1983-2002 period, the Chinese government being price-insensitive to a western-generated bear market could have easily accumulated in excess of 20,000 tonnes by the end of 2002.

China's reasons for accumulating gold

We now know that China had the resources from its trade surpluses as well as the opportunity to buy bullion. Heap-leaching techniques boosted mine output and western investors sold down their bullion, so there was ample supply available; but what was China's motive?

Initially China probably sought to diversify from US dollars, which was the only trade currency it received in the days before the euro. Furthermore, it would have seemed nonsensical to export goods in return for someone else's paper specifically inflated to pay them, which is how it must have appeared to China at the time. It became obvious from European and American attitudes to China's emergence as an economic power that these export markets could not be wholly relied upon in the long term. So following Russia's recovery from its 1998 financial crisis, China set about developing an Asian trading bloc in partnership with Russia as an eventual replacement for western export markets, and in 2001 the Shanghai Cooperation Organisation was born. In the following year, her gold policy also changed radically, when Chinese citizens were allowed for the first time to buy gold and the Shanghai Gold Exchange was set up to satisfy anticipated demand.

The fact that China permitted its citizens to buy physical gold suggests that it had already acquired a satisfactory holding. Since 2002, it will have continued to add to gold through mine and scrap supplies, which is confirmed by the apparent absence of Chinese-refined 1 kilo bars in the global vaulting system. Furthermore China takes in gold doré from Asian and African mines, which it also refines and probably adds to government stockpiles.

Since 2002, the Chinese state has almost certainly acquired by these means a further 5,000 tonnes or more. Allowing the public to buy gold, as well as satisfying the public's desire for owning it, also reduces the need for currency intervention to stop the renminbi rising. Therefore the Chinese state has probably accumulated between 20,000 and 30,000 tonnes since 1983, and has no need to acquire any more through market purchases given her own refineries are supplying over 500 tonnes per annum.

All other members of the Shanghai Cooperation Organisation** are gold-friendly or have increased their gold reserves. So the west having ditched gold for its own paper will now find that gold has a new role as Asia's ultimate money for over 3 billion people, or over 4 billion if you include the South-East Asian and Pacific Rim countries for which the SCO will be the dominant trading partner.

*See GoldMoney’s estimates of the aboveground gold stock by James Turk and Juan Castaneda.
**Tajikistan, Kazakhstan, Kyrgyzstan, Uzbekistan, India, Iran, Pakistan, and Mongolia. Turkey and Afghanistan are to join in due course.

Turk: Gold and silver in backwardation -- Embry: Silver is most undervalued asset ever

Posted: 03 Nov 2014 04:07 PM PST

7:07p ET Monday, November 3, 2014

Dear Friend of GATA and Gold:

While central banks have pushed gold below the triple-bottom level of $1,180, GoldMoney founder and GATA consultant James Turk tells King World News today, it has come at the expense increased demand for real metal and has pushed both gold and silver into backwardation. An excerpt from the interview is posted at the KWN blog here:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/11/3_As...

And Sprott Asset Management's John Embry tells KWN about the continuing manipulation of the silver market and says he considers silver the most undervalued asset he has ever seen:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/11/3_Si...

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


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The Gold Price Fell $1.80 to $1,169.30, Silver Rose to $16.18

Posted: 03 Nov 2014 03:57 PM PST

3-Nov-14PriceChange% Change
Gold Price, $/oz1,169.30-1.80-0.15%
Silver Price, $/oz16.180.100.59%
Gold/Silver Ratio72.291-0.539-0.74%
Silver/Gold Ratio0.01380.00010.75%
Platinum Price1,243.707.500.61%
Palladium Price804.0512.601.59%
S&P 5002,017.81-0.24-0.01%
Dow17,366.24-24.28-0.14%
Dow in GOLD $s307.010.040.01%
Dow in GOLD oz14.850.000.01%
Dow in SILVER oz1,073.65-7.85-0.73%
US Dollar Index87.410.440.51%

3 Day Gold Price Chart
3 Day Silver Price Chart
The GOLD PRICE fell $1.80 (0.15%) to $1,169.30 on Comex. Silver "rose" 9.5 cents to $16.175.

Looking at the silver and GOLD PRICE charts, the only thought that occurs is, "Bottoms aren't formed this way." Silver and gold are both oversold, but some other progress is needed to point to a bottom. The only SOLID bit of evidence that points to a bottom is the premium on US 90% coin which during this October has risen from 75 cents an ounce over spot at wholesale to 160 cents. That's a very strong move and signals that 90% supply has dried up.

Now the silver and gold markets are comatose. The SILVER PRICE today ranged from $1574 to $1622. Gold from 1161 to 1173.40. Nothing happening.

For now I can only watch and wait.

Friends, I am trying very hard today to be nice, but, y'all, it just ain't workin'. So I'm gonna bite my lip and now say anything disrespectful to our Masters in Washington and Wall Street. I promise.

US Dollar Index today rose to territory not seen since June 2010. It rose 0.51% (44 basis points) to 87.41. Technical presumption must be that it will rise much further, having broken out of an area where it has been trapped for three years. Fed must be crazy, as a higher dollar will create all sorts of problems, but there it is. And remember: currency exchange rates are ALL manipulated by central banks. This has not happened because the Fed was caught napping.

Rather than make a secret agreement to depreciate its exchange rate, the Japanese just publicly announced they were going to dilute the yen the way a cheap saloon keeper dilutes his whiskey: to the max. Yen today gapped down again and closed at 87.74 cents to 100 yen, a 1.46% drop from Friday.

Euro has all but broken down. Dropped 0.27% today to $1.2486, a new low close for the past 6 months, but not a dramatic waterfall like the yen. Doomed to fall more.

Stocks caught their breath today after last week. Dow inched off 0.14% (24.28) to 17,366.24. S&P500 backed off a tiny 0.24 to 2,017.81.

Now ask yourself how stocks will yet go vastly higher after a five year run? Technically they appear to be topping and this appears a double top, but the central banks are in a tag team match, passing quantitative easing around the globe. Now it's Japan's turn. Figure it out, they're subsidizing a carry trade. Bank of Japan announces it will mightily depreciate the yen, speculators borrow yen at zero percent, sell the yen for dollars and invest in stocks that the inflation is driving up, and cannot lose. The money they borrowed is depreciating, and the depreciation is driving world stock markets higher.

Dad durn! I wish I could get that job.

Dow in gold rose 0.18% to 14.85 oz (G$306.98 gold dollars). Stalled at a resistance line. Dow in silver dropped 0.33% to 1,071.92 oz (S$1,385.92 silver dollars). Is another leg up in its future?

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.

JPMorgan faces U.S. criminal probe Into currency trading

Posted: 03 Nov 2014 03:45 PM PST

By Hugh Son and Michael J. Moore
Bloomberg News
Monday, November 3, 2014

NEW YORK -- JPMorgan Chase & Co. said today it faces a U.S. criminal probe into the firm's foreign-exchange business and increased the upper end of its "reasonably possible losses" related to legal matters.

The lender is cooperating with a criminal investigation by the Department of Justice as well as inquiries by the Commodity Futures Trading Commission and regulators in Britain and elsewhere, the New York-based company said in its quarterly regulatory filing. Reasonably possible losses could be as much as $5.9 billion, the bank said, an increase of $1.3 billion since the end of June.

"These investigations are focused on the firm's spot FX trading activities as well as controls applicable to those activities," according to the filing. JPMorgan "continues to cooperate with these investigations and is engaged in discussions with DOJ and various regulatory and civil enforcement authorities about resolving their respective investigations." ...

... For the remainder of the report:

http://www.bloomberg.com/news/2014-11-03/jpmorgan-faces-u-s-criminal-pro...


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Why the World Should Be Thanking Japan

Posted: 03 Nov 2014 03:34 PM PST

This post Why the World Should Be Thanking Japan appeared first on Daily Reckoning.

The Dow jumped another 195 points on Friday.

What do you think? Was that because the economy is so healthy? Are stock market investors looking for years of healthy earnings growth ahead? Did buying the Dow at today’s valuations suddenly become a reasonable investment move?

Or could it be because Japan has just done something monumentally absurd?

It is hard to know what attitude to take when talking about Japanese financial policies. Mockery? Pity? Gratitude?

It is easy to mock the Japanese. They have a government debt-to-GDP ratio of 250% — the highest in the world. And year after year — for a quarter of a century — they “stimulate” their economy with QE and deficits.

What do they get for it? Mostly more debt. Stock and housing prices are still just about one-third of what they were 25 years ago. They missed the big dot-com boom of the late 1990s. Then they missed the real estate and finance boom of 2003-07.

Meanwhile, Japan’s celebrated trade surplus is disappearing. And her people are getting old, retiring and dying. Japan has become a huge pension plan headed for bankruptcy.

It is easy to pity the Japanese, too. Most of their wounds may be self-inflicted. Still, they live in tiny houses… with a standard of living the rest of the developed world holds in contempt. And they’ve suffered two and a half decades of on-again off-again deflation.

…even a world-class economy can do something worthy of a banana republic.

They’ve tried everything to get out of this slump — stimulus deficits, zero interest rates, quantitative easing. They’ve tried everything, that is, except the one thing that would work!

Not surprisingly, things have gotten worse. In September, real household income fell at a 6% rate. Between 2013 and 2015, it’s expected to fall by almost 10%.

And now the Japanese are desperate.

That is where the gratitude comes in. Americans and Europeans should thank them for having shown us what not to do — for proving, if it needed proving, that you can’t fight a debt crisis with more credit.

More important, they’re showing what happens to Bismarck’s social welfare economy when you run out of young people, growth and credit.

Now, it’s time to double our gratitude. Because now the Japanese are showing us that even a world-class economy can do something worthy of a banana republic.

Already, for every dollar the Japanese government collects in revenue, it spends 40 cents more. Total debt — government and private — is near the highest in the world: at about six times GDP.

Tokyo is running out of time… and money. So, the Bank of Japan finances the government. It buys 70% of the issuance of Japanese government bonds. Last week, it announced that it would buy 85%.

Thank you, Japan! Let us say a prayer for the Japanese and learn from your example!

Japan is going to show us that you don’t have to be a Third World kleptocracy — such as Zimbabwe — to undertake extraordinary and disastrous policies.

Thank you, Japan! Let us say a prayer for the Japanese and learn from your example!

Yes, just 48 hours after the end of QE in the US, the Bank of Japan announced the most absurdly audacious QE plan in history. It’s jacking up QE to $750 billion in asset purchases — both bonds and stocks — a year.

Adjusted to the size of the Japanese economy, that’s the equivalent of QE of about $3 trillion a year in the US. Anticipating a flood of new cash, stocks rose around the world.

Coincidence? Lucky timing for Yellen & Co.?

It is almost as though central bankers got together in advance and planned it that way. QE stops in the US; the Japanese put it into hyper-drive. Stocks rise in both countries. All is well.

The Nikkei 225, faithfully recording the hopes and dreams of Japanese investors, leapt 5% on the news. The Dow followed suit.

Foreign investors — no dopes — figured out that there was money to be made in a revival of the old Japanese “carry trade.” They can borrow in Japan — at some of the lowest interest rates ever recorded on the planet.

Then what to do with the money? Hey, why not carry it over to the only world economy still growing at a decent rate: the US?

Regards,

Bill Bonner
for The Daily Reckoning

Ed. Note: If the US has learned anything from Japan, it certainly isn’t showing it. Or rather, it’s misinterpreting the hard-learned lessons of the “land of the rising sun”… and following in her footsteps. Any way you slice it, it likely won’t end well. That’s why it’s imperative that you know what to do should another crisis hit the US economy. Click here now to sign up for The Daily Reckoning, for FREE, and discover real, actionable advice on how to safeguard and grow you wealth in any kind of market.

This article originally appeared in Bill Bonner’s Diary of a Rogue Economist, here.

The post Why the World Should Be Thanking Japan appeared first on Daily Reckoning.

Hostile Paranoia: A Natural Reaction to Fed Money Printing

Posted: 03 Nov 2014 03:00 PM PST

This post Hostile Paranoia: A Natural Reaction to Fed Money Printing appeared first on Daily Reckoning.

At the bitter end of a long, long argument about it, I stubbornly maintain that being paranoid and hostile is not, in any real way, related to my being such a sub-par husband and father, which, now that we are talking about it, is actually the result of a lot of other people (not naming any names) having wildly unrealistic expectations that were WAY too high. Like, by a mile, in most cases.

On the contrary, being paranoid and hostile is a natural, organic reaction, namely, where sections of one's DNA turn on or off as a self-preservation response to the huge exogenous shock to the nervous system of the evil Federal Reserve creating so impossibly much excess money and credit that asset prices (stocks, bonds, real estate) have been inflated to unbelievable, unsustainable heights, and half the country is now receiving a government check each month.

These are, unfortunately, big, big, BIG, economy-exploding things that are now long, long overdue for a huge, painful correction back to, in yet another irritating spate of Mogambo Pointless Alliteration (MPA), some scattered semblance of sanity.

all the money, assets and debt… is a pile so big that not even Superman… could lift it.

Unfortunately, big deflations in asset prices would, at a leverage of 90% borrowed and 10% capital — or more! — cause instant, massive bankruptcy at the slightest downturn, since virtually all money is in the leveraged stock, bond and derivatives markets, whether you like it or not, which is kind of stupid of me to say since nobody would like it, which just proves how weird things are these days.

But who wouldn't be an angry paranoiac after a lifetime of suffering treachery after treachery? Like, for example, how teachers, police, and court-appointed morons always immediately fixate on blaming me, as some mythical "bad parent," for the misbehavior of my stupid children when they are accidentally left unsupervised for a few hours, or a couple of days, max.

Like all I have to do in life is watch a bunch of stupid kids, instead of out frantically scratching and scraping for more dollars with which to buy gold and silver to save the butts of the aforementioned stupid kids, and the sweet butts of their wonderful, delightful parents, when this whole bizarre, Keynesian-inspired deficit-spending stupidity finally destroys the world.

Or how about how I am always losing my stupid job? Why? Because the other employees secretly plot against me just because (they claim) I am lazy and incompetent so that they end up doing my work, too, even though we all know they hate me because I know that they are idiots who are not buying gold and silver in perilous economic times like these, even though I tell them over and over and over to do so. I mean, who's the victim here?

Or how about all my neighbors being rude to me because they are hateful little rodent-people, bristling with resentment about being informed that they are stupid, as in one recent episode where I was charmingly friendly and convivial, casually asking a neighbor out mowing his stupid lawn, "Hey, moron! Are you buying gold and silver bullion because the evil Federal Reserve and all the other central banks of the world are creating so insanely much cash and credit, under the laughable delusion of Keynesian economic idiocies, that we are doomed to an inflationary collapse, or are you still a moron?"

And then they get all huffy because they refuse to understand. "Don't be obtuse, you morons!" I haughtily say, knowing that they don't know the definition of obtuse is to refuse to understand something, because then I would have something ELSE to throw in their stupid faces the next time they say to me, "Well, Mister Know-It-All Mogambo (MKIAM), you have been wrong about silver and gold for more than a year, so that anybody who listened to your stupid advice lost money, and they also lost all credibility by actually believing anything you said, you horrible man, whose own children think you are horrible, too, as revealed in the first paragraph!"

Like most Earthlings, they are morons about gold and silver, even though I have told them countless times How Things Always Are (HTAA), which is that you have to own silver and gold at the end of long monetary booms, and if you don't, then you are a moron, regardless of any temporary aberrations caused by deliberate manipulation of the gold markets by the Federal Reserve. Nice and simple. So where's the justice for ME?

But, mostly, my paranoia and hostility stems from contemplating the world's One Big Problem (OBP). Namely, backbreaking debts created by central banks that are now so incomprehensibly huge, incalculably huge, so impossibly huge that it is an overwhelming sum, involving, as it does, virtually all the money, assets and debt in the Whole Freaking World (WFW), which is a pile so gigantically big that not even Superman, strange visitor from another planet with powers and abilities far beyond those of mortal men, could lift it.

…the only thing of which one can be absolutely sure… is that the [Fed]… will create gigantic amounts cash and credit…

And it's all leveraged to the maximum, all-or-nothing hilt to magnify looming losses, with so much debt known and unknown, so many parts and players known and unknown, pandemic political corruptions and frauds known and unknown, with so many divided loyalties back-stabbing each other, with so many treacherous cross-currents, cross-ownerships, grudges and revenge blood-lust that it cannot possibly be understood except as the supreme, swirling, stinking cesspool of everything turning to valueless crap, stinking and swirling and spiraling down the old crapper, which, fortunately, is merely a problem of hydrologic engineering, which is VERY well-understood.

So, what's new? Internal metrics of the stock, bond and housing markets deteriorating? Sub-zero bond yields? The Swiss voting on owning more gold? The evil International Monetary Fund (IMF) suggesting that we dump the fiat dollar and fiat euro in favor of a fiat Special Drawing Right (SDR) drawn on the selfsame IMF? Foreign countries forming trading blocs to the exclusion of the U.S. dollar? The Ebola virus being a Black Swan Event, or even a Butterfly Effect event? Asteroids plunging into the Earth? Volcanos erupting? Earthquakes? Drought? Invasions of ravenous vampire zombie space creatures from Mars?

It gets — yikes! — worse every day, in every way, and the only thing of which one can be absolutely sure, beyond a doubt, take it to the bank, is that the foul Federal Reserve, along with the other intellectually-corrupt central banks of the world, will create all the gigantic, exponential amounts cash and credit necessary to, if they have to, literally, buy up the entire stock market to keep prices high, just as they are doing for bonds. How can you NOT have stock market and bond market booms around the world when the central banks are busily creating the money and debt with which to buy stocks and bonds?

So you mock my paranoia and hostility, and my manic hysteria about buying gold and silver bullion? You ain't seen nothin' yet.

Regards,

The Mogambo Guru
for The Daily Reckoning

P.S. There’s only one solution that makes any sense when it comes to avoiding the Pure Economic Hell (PEH) we are all doomed to experience as the Fed continues to print money with impunity. And that’s to buy gold, silver and oil. But if you want a few more actionable ways to insulate yourself from the assured collapse of the global monetary system, your best bet is to sign up for The Daily Reckoning, for FREE, right here.

The post Hostile Paranoia: A Natural Reaction to Fed Money Printing appeared first on Daily Reckoning.

CIA Insider: Project Prophecy 2.0

Posted: 03 Nov 2014 02:52 PM PST

Whatever happens, one thing is for certain: The petro-dollar will no longer be the worlds' reserve currency in the near future. The BRICS countries (Brazil, Russia, India, China, South Africa) have been taking steps to move away from the dollar by entering into various trade agreements that exclude...

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

What’s Next For Silver?

Posted: 03 Nov 2014 02:16 PM PST

Disclosure: I expected the triple bottom in gold and silver to hold. It did not! Silver crashed lower (from $19.28 on August 28 to $17.26 on October 29 to under $16 on October 31) and then gold plunged below $1179 to about $1160.

What now?

  1. More of the same. Both silver and gold fall further. The High Frequency Traders and central banks have plenty of "dry powder" and can push prices lower. From the perspective of the Asians who are buyers, what is not to like? Or,
  2. Both rally from here, flop around, and then fall further. Or,
  3. Both build a base at these prices and maybe collapse again, but the "longs" stand for delivery and the COMEX is forced to default and "cash settle." Or,
  4. Both rally from here because breaking lower support was merely a consequence of the political and financial elite boosting the stock market and the dollar index prior to the US elections. Markets have a history of making unusual moves prior to elections. Or,
  5. Both rally from here and make new highs, probably in 2015.

Does it really matter?

  • Yes. These prices will force the mining industry to consolidate. There will be casualties. Eventually supply of gold and silver will decline and prices will rise.
  • Yes. The more gold and silver fall the more "weak hands" will bail out and move to cash or buy something they hope will move up. Eventually gold and silver will rally and the spike up will be as powerful as the crash down.
  • Yes. Large traders and others who have positioned themselves to profit from the take-downs and the subsequent rallies can book huge profits. Buy low and sell high, or sell short high and buy low. It is much easier when a trader has the inside track knowing when the paper market take-downs will occur, or if the trader can actually create the take-downs.
  • No. Because you were wise enough to walk away from the financial casino and the sharks on Wall Street and safely stack your silver and gold in a private vault.

What do I think? When the data does not confirm the expectation, it is time to revisit the plan. Gold and silver crashed below support. So, back to basics….

  1. US official national debt is increasing roughly $1 Trillion per year. It will increase. More debt means more currency in circulation. Over the past 100 years more currency in circulation has created higher prices for gold, silver, food, energy, cigarettes, beer, Wall Street bonuses, and payoffs to legislators.
  2. The Fed and other central banks will do almost anything to avoid deflation in stocks, bonds, and most consumer prices. Expect more "money printing" and higher inflation.
  3. Stocks and bonds can be levitated but not forever.
  4. Gold and silver can be crushed, but not forever. After all, they are real money.
  5. Asian demand for gold and silver is strong and expected to remain strong. It seems that western vaults are being emptied, gold is sent to Switzerland, recast into 1 kilo bars, and shipped to China, India, and Russia. It will probably continue until no more gold can be shipped from west to east. Price rises will occur.
  6. Wars are inflationary as more currency is borrowed and printed to pay for bombs, jets, bullets, military contractors, and soldiers. More wars are on the horizon.
  7. There are 100 other reasons why silver and gold will eventually rise substantially. They include more QE, Ponzi finance, Japanese QE, bond and currency market bubbles, massive debt, demographics, delusions, and deflationary forces.

But WHEN will gold and silver prices rally? I don't know. Ask the HF Traders, but US elections are Tuesday and that might be important.

What do the charts show? Obviously they show silver and gold prices falling, almost relentlessly since 2011. Prices have collapsed, technical indicators are deeply "oversold" on quarterly, monthly, weekly and daily charts. Expect prices to rise when they are finally ready to/allowed to rise. When? Ask the HF Traders. But oversold conditions are usually corrected with rallies. The more "over-sold" the more likely a strong rally will develop. Not inevitable – just likely.

Conclusion:

Debt is rising. Prices will eventually follow. Demand for gold coins, silver coins, and gold bars is strong. Yet prices fall. Strange!

More wars and larger wars are on the horizon. Currencies will be devalued and printed to finance the wars. Some investors will buy gold, silver, art, land, and real estate for protection from the inevitable inflation and devaluing currencies. Higher prices for gold and silver are coming.

Darryl Robert Schoon is correct when he says "buy gold, buy silver, have faith." And yes, stacking now is a good idea. For more information on higher gold prices, read my book: "Gold Value and Gold Prices From 1971 – 2021."

 

For important and astute analysis read:

Bill Holter Has China Played Possum?

Mish Will These Central Bank Morons Ever Learn?

Ted Butler The Silver Nightmare Will Be Over Soon

 

Gary Christenson | The Deviant Investor

The Secret Reason the SNB Opposes the Swiss Gold Referendum

Posted: 03 Nov 2014 01:46 PM PST

This post The Secret Reason the SNB Opposes the Swiss Gold Referendum appeared first on Daily Reckoning.

[Ed. Note: Where in the world is Switzerland's gold? And, more importantly, if the Swiss Gold Referendum passes how difficult will it be for Switzerland to repatriate its gold? Ronan Manly explores that, and the inconsistencies in the SNB's story. Read on...]

The Swiss referendum on monetary gold approaches on 30 November, less than four weeks, one aspect of the debate continues to focus on the need, or otherwise, for the Swiss National Bank (SNB) to continue to store a percentage of the Swiss gold reserves abroad.

One of the three objectives of the gold initiative is to have all Swiss gold stored in Switzerland. The Swiss central bankers and the 'no' campaign maintains that it's imperative to maintain foreign gold storage at major gold trading centres that can be quickly traded in the event of a financial crisis. While the 'yes' campaign counters that this argument is redundant and that it is far safer to have Switzerland's gold stored in Switzerland during a financial crisis.

For example, Luzi Stamm, an SVP politician of the 'yes' campaign, said recently that there is 'no compelling reason' to store Swiss gold abroad, while Thomas Jordan, chairman of the governing board of the Swiss National Bank maintains that it's easier to activate foreign held gold in a financial emergency if it’s stored at a major gold trading hub.

Within this aspect of the debate, it's therefore critical to look at where the foreign held Swiss gold is actually stored — with the Bank of Canada and Bank of England and in what form it may be stored — earmarked or unallocated.

…the gold initiative is an exceptional issue since, if it passes, it will have a direct impact on the activities of the SNB…

It is also important to examine where the substantial Swiss gold sales in the early 2000s took place from — which included Swiss gold holdings that were stored at the US Federal Reserve Bank.

The Swiss National Bank (SNB) continued to enter the debate about Switzerland's upcoming gold initiative last week, despite the SNB not normally entering into any political debates and discussions.

In an interview with Swiss newspaper NordWestSchweiz published on 29 October, SNB board member Fritz Zurbrügg said that while the SNB is usually very reluctant to comment on Swiss initiatives and referenda, on this occasion the central bank feels that they need to intervene.

In the SNB's view, the gold initiative is an exceptional issue since, if it passes, it will have a direct impact on the activities of the SNB and will prevent the Bank from fully following its mandate in terms of monetary and investment policy.

In a tactic similar to that used by the recently formed anti 'gold initiative' political campaign, Zurbrügg attempted to connect the SNB's gold holdings to the financial budgets of the Swiss cantons by highlighting that if gold holdings rose as a percentage of the SNB's balance sheet, then a fall in the gold price could reduce distributable income to the Swiss Federation and the cantons, and that additionally gold also does not pay any interest or dividends.

Zurbrügg stated that "a high gold content does not guarantee currency stability", and he re-introduced the argument that with the gold initiative calling for at least 20% of central bank reserve assets to be held in gold, that this gold cannot be sold and is therefore useless in a financial crisis.

This statement, that gold which cannot be sold becomes useless in a financial crisis is not factually correct. Many central banks in the past have either swapped monetary gold for US dollars as a way of raising dollar liquidity, for example the Swedish Riksbank in 2008, or used monetary gold as collateral to obtain US dollar loans during a crisis.

The World Gold Council (WGC) even has an entire team of staff dedicated to assisting and encouraging central banks to manage and optimise gold as part of their reserve portfolios, and the WGC regularly runs courses for central bank staff explaining how gold can provide liquidity and stability to central bank reserve portfolios.

In an argument for holding gold abroad, Zurbrügg said that an emergency supply of gold needs to be in 'major gold trading centres' of which he claimed both London and Ottawa to be 'major gold trading centres'. That's notwithstanding the fact that Ottawa has not been a major gold trading centre for many years.

One interesting question from the newspaper journalist to Zurbrügg that's worth repeating was that when Zurbrügg was asked "How often does the Swiss National Bank inspect and check that the Swiss stocks (foreign held gold) are actually on site?", he replied "I can say only this much: There are regular visits. The gold bars are numbered and identified at all times."

According to a report in the Swiss newspaper 'Tages Anzeiger' on 7 October, when Luzi Stamm's gold initiative campaign team submitted their initiative to the Swiss Federal Chancellor in March 2013, the campaign founders had claimed that "almost half of the Swiss gold reserves were stored abroad — much of it in the United States", and that it was specifically this claim that prompted the SNB to then reveal In April 2013, for the first time, that the Swiss gold reserves were 70% stored in Switzerland, 20% in England and 10% in Canada.

If there had, at some time, been almost half of Switzerland's 2,590 tonnes of gold held abroad, much of it in the US, then there would have been approximately 1,300 tonnes of gold stored abroad, much of it in the US.

On 26 April 2013, just over a week after the Federal Chancellor had confirmed the validity of the gold initiative signature count and the wording of the gold initiative referendum, the Swiss National Bank (SNB) appeared to be panicked, since, at its general shareholders meeting, the Bank's chairman of the governing board, Thomas Jordan spent over half his speech (4 entire pages of a 7 page speech) attempting to defend the Bank's approach to its gold holdings.

Jordan began by disparagingly referring to the gold initiative as the 'so-called gold initiative' when in fact, 'gold initiative' forms part of the popular initiative's official title, as confirmed by the Federal Chancellor Corina Casanova in her statement the previous week.

Jordan also attempted to dilute the gold initiative's goal of repatriating foreign stored gold reserves by defending the strategy of keeping gold stored outside Switzerland, and by also revealing the locations of the foreign held gold.

Attributing the location revelations to the fact that "the SNB is aware that there has been a growing need for transparency in our population in the last few years", Jordan went on to say that of the 1,040 remaining tonnes of Swiss gold, 'more than' 70% was stored in Switzerland, 'roughly 20%' was stored at the Bank of England and "approximately 10%" was stored at the Bank of Canada. He also stated that "the SNB has been storing gold exclusively in these countries for over ten years", which would imply that there had not been any Swiss gold stored in the US since as early as late 2002.

On the subject of why the SNB stored some of its gold abroad, the SNB chairman stated that "it ensures that the SNB can in fact access its gold reserves, especially in an emergency." Jordan also attempted to reassure those who might be concerned about whether the foreign held gold was there at all by stating "our partner central banks keep clearly identifiable gold bar holdings for the SNB. Each bar stored abroad has a bar identification and remains the property of the SNB. The availability of our gold holdings is fully guaranteed at all times."

On 7 October 2014, in further reaction to the gold initiative in the run-up to the referendum, the SNB released a 'media dossier on gold' question and answer format, with this document only being available in French and German.

In the media dossier, the SNB answers some interesting questions about the locations and former locations of Switzerland's foreign gold holdings, and reveals that Swiss foreign gold had included gold that was in custody with the US Federal Reserve, but that this gold had been completely sold as part of the Swiss gold sales. Since all foreign gold in the custody of the US Federal Reserve is held in the gold vaults of the Federal Reserve Bank of New York, the SNB are referring to their gold account held at the FRBNY vault, sometimes referred to as the 'Banque National Suisse' gold account.

Given that the SNB's Thomas Jordan had said in April 2013 that the SNB had for over 10 years exclusively stored its non-domestic gold with the Bank of England and Bank of Canada, this implies that the Swiss gold stored at the Federal Reserve would have had to have been completely sold prior to at least early 2003 if not earlier.

SNB Q: Since when has the SNB not stored additional gold in the United States? Were these (gold) stocks sold or repatriated?

SNB A: "The SNB stores 30% of its gold reserves abroad: 20% is stored in the Bank England, and 10% in the Bank of Canada. For over ten years, the SNB stores its gold reserves only in these two countries. Stocks that were once at the Federal Reserve (Fed) have been sold."

The SNB also reveals that most of the 1,550 tonnes of Swiss gold sold from 2000 to 2008 was from gold holdings held abroad. These sales of gold held abroad also undermine the arguments of the SNB and associated politicians who claim that foreign held gold is more valuable in a time of financial crisis than gold stored in Switzerland. If the approximate 700 remaining tonnes of gold now held by the SNB in Switzerland was not as important as the large quantities of gold held abroad, then why were the gold holdings that were held aboard sold and not the gold that was held domestically?

SNB Q: Are we sure that the SNB gold stored abroad is still available?

SNB A: Partner central banks store bars clearly identifiable like those of the SNB. Each ingot stored abroad is inventoried with an identification number; it remains at all times in the stock of the National Bank and remains the property of the SNB. Gold sales that occurred in the past have largely focused on stocks held abroad. They showed that gold stocks are available at any time.

The above two facts, and the claim by the gold initiative organisers that most of the foreign held gold was held in the US, reveal that the SNB had held significant gold at the Federal Reserve Bank of New York and that most of the gold sold by the Swiss in the 1,550 tonne gold sales was sold from stocks held abroad, including significant quantities of Swiss gold sold out of the Federal Reserve Bank of New York vaults.

Former head of the SNB Philipp Hildebrand stated in 2005, when commenting on the 2000-2005 Swiss gold sales, that 730 tonnes of these sales had been done on the spot market between 2001 and 2004, and that "typically, the Bank of England was used for the physical settlement of these operations."

This does not necessarily mean that the gold sales that settled at the Bank of England were from Swiss gold that had been stored at the Bank of England. The SNB could have executed sizeable gold location swaps between New York and London so as to have had enough gold in London in order to settle gold sales out of London.

In an educational publication of the Federal Reserve Bank of New York titled 'A Day at the Fed' by Charles Parnow, published from 1973 to 1983, it states that in the Fed's New York gold vault there is "a smaller auxiliary vault built in 1963" that holds the gold of three account holders. "One account with 107,000 bars is stacked with bricklayer precision into a solid wall 12 feet high, 10 feet wide and 18 feet deep."

These 107,000 gold bars were US Assay office bars, as were the majority of gold bars stored at the FRBNY. If these bars were of .995 fineness and average weight of 400oz each, this would total approximately 1,330 tonnes. When this Fed guide was published, there were only a handful of central banks/international organisations that could have held 1,300 tonnes of gold at the FRB New York, Germany, the IMF and Switzerland. France had most of its gold stored in Paris and Italy had over half its gold not stored in New York.

The IMF, according to its Articles of Association, had to have over 50% of its 3,400 tonnes of gold stored in New York so this would be over 1,700 tonnes and would exceed the 107,000 mentioned by Charles Parnow.

The Bundesbank in January 2013 stated that it held 1,536 tonnes of gold (122,597 bars) in the Fed's New York vaults. Therefore, this 107,000 bar wall of gold most likely belonged to the Swiss National Bank's gold account, and if this was the case, would suggest that the SNB disposed of this entire 1,300 tonnes of gold from New York.

Other questions in the SNB's Q&A dossier address the foreign held gold stored at the Bank of England in London and the Bank of Canada in Ottawa.

SNB Q: Do representatives from the SNB have access to the storage locations?

SNB A: Access to the gold is governed by the provisions of the central bank and takes place by agreement between the parties.

SNB Q: When was the last visit of the SNB to these sites (abroad)?

SNB A: Representatives of the National Bank inspect the storage rooms of gold at regular intervals and in agreement with the central bank partners. The SNB has been satisfied in all respects by the result of these visits.

There are a number of significant facts about the Bank of Canada's gold vault in Ottawa that the SNB is not telling the Swiss public. In fact, the SNB do not tell the Swiss public very much at all about the Swiss gold held in Ottawa. The following SNB Q&A illustrate the dearth of information imparted by the SNB:

SNB Q: Why does the SNB store gold in the UK and Canada? Where exactly are the stocks in these countries?

SNB A: The choice of countries where gold is stored meets a series of clearly defined criteria. It also achieves, outside Switzerland, an appropriate geographical and geopolitical diversification; the selected country must have a high level of economic and political stability, provide a high level protection for the immunity for central bank investments, but also provide an advantage in terms of market access. The Swiss National Bank knows the precise geographic location of storage areas in the countries concerned, but does not provide any information on that subject.

SNB Q: Since when has gold been stored in these countries (England and Canada)?

SNB A: Deposits in these two countries have existed for several decades.

References by the SNB to the Bank of Canada in Ottawa as a 'major gold trading centre' are also inaccurate.

As well as Canada having sold nearly all of its own gold reserves in the 1980s and 1990s, the Bank of Canada only acts as gold custodian to four foreign central banks. As well as Switzerland, it's known that the Netherlands and Sweden both gold small quantities of gold with the Bank of Canada in Ottawa. The 4th foreign central bank gold depositor is most likely the Bank of England or the Banque de France as they both had strong historic gold trading connections with the Bank of Canada during the 1950s and 1960s, as well as storing gold in the Ottawa vault during WWII.

What the SNB has also not said in the Swiss gold initiative debate is that the Bank of Canada’s remaining custody gold that had been stored in its gold vault in Ottawa has recently been moved to another vault.

The Bank of Canada’s headquarters building is situated on Wellington Street. The gold vault under the Bank of Canada's HQ building runs from Wellington Street on one side of the building out towards Sparks Street on the other side.

This building is currently undergoing an extensive multi-year renovation which required the Bank to vacate the entire building last year, and empty it’s entire contents, including the gold stored in the subterranean vault. The renovations will not be complete until January 2017. Representing 10% of the SNB's total gold holdings of 1,040 tonnes, this means that over 100 tonnes of Swiss gold has recently been moved and the Swiss public are not aware of this.

The gold in the Bank's Ottawa vault, in the form of bars and coins, was relocated in advance of the Bank personnel move. Whatever gold was moved from the Bank of Canada's HQ vault has most likely been moved to the Royal Canadian Mint (RCM) gold refinery vault just a mile down the road from Wellington Street.

This would also explain why historic Canadian gold coins from 1912-1914 that had been stored in the Bank's vault for 75 years recently ended up in the RCM's vault in November 2012, and why ex Bank of Canada governor Mark Carney appeared in publicity photo shoots at the RCM vault at that time, while holding the Bank of Canada gold coins.

"”The Bank of Canada is proud to have safeguarded these national treasures for over 75 years and we are pleased that they have returned to the Mint so that Canadians can collect them as precious historical objects,” said Mark Carney, Governor of the Bank of Canada."

If the Swiss gold that was previous held at the Bank of Canada's Ottawa vault is now being stored in the Royal Canadian Mint's vault, the Swiss public should be told this, and be assured that the Swiss gold is segregated from the Mint's working inventory of gold.

In March 2013, just after the gold initiative committee had completed their signature gathering campaign to call a popular initiative referendum on the Swiss gold, Michael Paprotta, the former head of money market and precious metals at the Swiss National Bank, was interviewed by Central Banking magazine about the proposed gold referendum.

Of all Swiss National Bank employees and former employees, Paprotta is probably the one person who is most familiar with the Swiss gold reserves and the sales programme, since, while he worked at the SNB, he was actually responsible for the famous gold sales program, or as he put it in his LinkedIn profile "execution of a gold sales program of 1,300 tons". This gold sales accomplishment was quickly removed from his LinkedIn profile in October 2012 after it became publicised.

As well as responsibility for the execution of the gold sale programme, Michael Paprotta, in his SNB gold role, also had responsibility for the SNB's “gold lending portfolio. Prior to working in the SNB, Paprotta worked at Edmond Safra's Republic National Bank in precious metals trading and sales, but moved to the SNB in January 2000, just after Republic National was taken over by HSBC.

Patrotta joined the SNB a few months before the start of the 1,300 gold sales programme which began in May 2000. The first 220 tonnes of sales were conducted via the gold trading desk of the Bank for International Settlements (BIS) in Basel. As well as loco London and loco New York, the BIS offers gold safekeeping and settlement facilities loco Berne, through its gold holdings in the Berne gold vaults of the Swiss National Bank.

The SNB have said subsequently that the first Swiss gold sales in 2000 and 2001 were conducted using the BIS as selling agent because the SNB did not have the "necessary professionals, know-how, trading resources and contacts to the international gold market to trade directly". But this statement does not make sense in light of the fact that the SNB hired precious metals trader Paprotta in January 2000 with responsibility for the execution of the gold sales programme. So using the BIS as a selling agent in 2000 and 2001 was no doubt done for another specific reason. The BIS are, after all, the world's inter-central bank gold broker.

In the 2013 Central Banking interview, Paprotta, now head of precious metals and bank notes trading at Raiffeisen bank in Switzerland, indicated that he plans to vote against the initiative. “It influences the total reserve management of the Swiss National Bank, and I don’t think that is a good thing,” he is quoted as saying.

Paprotta also said that if ratified in the Constitution, the Swiss gold initiative would create "colliding interests" and that in recent intervention operations where the SNB has been purchasing large amounts of foreign currency as a way of preventing the appreci

Gold Daily and Silver Weekly Charts - Will the Fed Ever Learn?

Posted: 03 Nov 2014 01:44 PM PST

As Gold & Silver Rout Continues, Physical Demand Is Stunning

Posted: 03 Nov 2014 12:35 PM PST

With crude oil tumbling over $2 a barrel and the gold and silver rout continuing, today James Turk spoke with King World News about the ongoing smash in gold and silver and what is happening in the physical market for both metals. Below is what Turk had to say in this timely and powerful interview.

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

Dollar smashes through resistance as mega-rally gathers pace

Posted: 03 Nov 2014 12:19 PM PST

HSBC says we are at the early stages of a dollar bull run that will change the world




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

Gold Price Declines Once Again As Expected

Posted: 03 Nov 2014 12:14 PM PST

Briefly: In our opinion speculative short positions (full) in gold, silver and mining stocks are justified from the risk/reward perspective. Gold and mining stocks declined yesterday in a rather profound way. The GDX ETF finally broke below its 2013 lows and the volume that corresponded to this action was high. However, silver almost didn’t react – why didn’t it? Will we see a rally shortly? In short, not likely. There was a good reason for silver to hold up strongly at this time. However, before we move to this situation, let’s take a look at the “background info” – the changes in the USD Index (charts courtesy of http://stockcharts.com).

A Sunny Silver Forecast: Low Price Today Means High Price Tomorrow

Posted: 03 Nov 2014 11:34 AM PST

Solar power has been the next big thing in energy for as long as most people have been alive. But it was always too expensive to be anything more than a niche technology, attractive more for its coolness than its efficiency. That has changed, in a big way.

According to a report by Deutsch Bank, generating electricity from sunlight is now as cheap as getting it from coal in most US states when current subsidies are included. Extrapolate the inexorably-falling cost of solar just a few more years, and the subsidies won’t be necessary.

At that point the floodgates will open, with every homeowner in the US sunbelt and pretty much every other warm part of the world slapping solar panels on their rooftops and happily watching their meters run backwards. According to a new report by the International Energy Administration, between now and 2050 solar’s share of global electricity production will rise from the current 1% to 27%, making it humanity’s single largest power source.

That’s great news for climate change, air quality and West Virginia (where they won’t have to blow the tops off of so many mountains to get coal). But the point for silver? Well, every traditional silicon solar panel uses a bit of silver paste to conduct electricity out of its constituent solar cells. And among the other cost cutting measures solar panel makers have been pursuing lately is a reduction in the amount of silver they use. Some alternatives have been found, but none are worth the trouble at current low silver prices. And presumably further research has become less urgent relative to immediate challenges like raising efficiency and lowering installation costs.

So silver is unlikely to be supplanted in this generation of solar panels, which means demand from the solar industry is going to soar along with panel installations. Here’s how a recent Forbes Magazine article does the math:

Trends In Silver Demand By The Solar Photovoltaic Industry


Approximately 20 grams of silver are used in each crystalline silicon solar panel, which accounts for around 85% of the total market. Roughly 80 metric tons of silver or approximately 2.8 million ounces of silver are needed to generate approximately 1 Gigawatt of solar power.

Growth in Installed Solar PV Capacity
Globally, installed solar capacity stood at 139 GW at the end of 2013. Installed solar capacity has risen exponentially from a paltry 1.3 GW in 2000. Most of this growth in installed capacity in the past has come from Europe, particularly Germany, with favorable government policies facilitating the incorporation of a greater share of renewable energy into the country's energy mix. Europe accounted for around 75% of global installed solar PV capacity in 2010. However, the pace of new installed capacity in Europe is expected slow down due to a reduction in incentives for PV installations in some major markets, such as Germany.

The growth in installed solar PV capacity will be driven by China in the years to come. China is making a concerted effort to reduce its dependence on coal as a source of energy. The country is targeting 70 GW in installed solar capacity by 2017, as compared to 18.6 GW in 2013. Thus, China's thrust on solar energy will provide the impetus for growth in solar PV capacity additions.

As per European Photovoltaic Industry Association estimates, by 2018, cumulative installed PV capacity will grow to 430 GW in an optimistic scenario and 321 GW in a pessimistic scenario. The incremental PV capacity addition in 2018 is expected to be 69 GW in the optimistic scenario and 39 GW in the pessimistic scenario. If we consider an intermediate scenario where installed capacity grows to about 375 GW by 2018, it represents a compounded annual growth rate of about 22% from the 139 GW in installed solar capacity in 2013. This will correspond to roughly 54 GW in incremental solar PV capacity addition in 2018.

Silver Demand from PV industry
If we assume that over the next five years, crystalline solar silicon panels will continue to account for roughly 85% of the market, then these will account for approximately 38 GW in installed capacity in 2014 and around 46 GW in installed capacity in 2018.

Taking into account that roughly 2.8 million ounces of silver are required to generate 1 GW of solar power, the demand for silver translates into roughly 106 million ounces and 151 million ounces in 2014 and 2018 respectively. To put this into perspective, global silver mine production is expected to be roughly 800 million ounces and 750 million ounces in 2014 and 2018 respectively. Mine production accounted for roughly 75% of silver supply in 2012. If we assume that this ratio holds till 2018, overall silver supply will stand at roughly 1.07 billion ounces and 1 billion ounces in 2014 and 2018 respectively. Assuming a balanced market in which supply matches demand, the demand for silver from the solar PV industry will rise from 10% of the total demand for silver in 2014 to around 15% in 2018.

And even this might understate the case. The above formula assumes declining mine supply, but — another effect of the recent silver price smash to below current mining costs — the falloff might actually be far steeper. From mining analyst Andy Hoffman:

Kamikaze Attack and the End of Mining

And now, for the main event – and perhaps, the denouement of the most vicious paper precious metals raids since 2008. Gold and silver prices are now so far below their actual costs of production, both cash and sustaining, that my recent estimate of a 25%+ drop in global PM production is likely far more imminent than inevitable.

Combine soaring solar demand with falling mine output and it’s possible that solar panels will consume 20% of available silver in 2018 (again, up from virtually zero a decade ago) and that this trend won’t begin to flatten until a much higher silver price boosts production and scales back solar demand.

Is that where all that gold going into China is coming from?

Posted: 03 Nov 2014 11:25 AM PST

No. 1 Gold ETF Sees Biggest Monthly Outflow This Year in October

By Jan Harvey
Reuters
Monday, November 3, 2014

LONDON -- The world's largest gold-backed exchange-traded fund, New York's SPDR Gold Shares, saw an outflow of over $1 billion of metal last month as investors lightened holdings in anticipation of a further price drop from current four-year lows.

Data from the GLD fund showed on Monday that its holdings slid to their lowest in six years after an outflow of 28.7 tonnes in October, their biggest of any month this year. ...

... For the remainder of the report:

http://www.reuters.com/article/2014/11/03/gold-etf-outflow-idUSL5N0SP5PJ...


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Gold Standard: Crackpot or Near Perfection?

Posted: 03 Nov 2014 11:23 AM PST

If the gold standard were so rubbish, why did it back America's best years...?
 
OVER at the Washington Post's "Wonkblog" column, Matt O'Brien wrote a typical sort of hysterical screed about the gold standard system – the system that the United States used for nearly two centuries, until 1971, writes Nathan Lewis at New World Economics.
 
During that time, the country went from a handful of rebellious subsistence farmers, worn down by over a decade of war, hyperinflation and unstable government, to the most successful and wealthiest country in the world.
 
Think about that. Now, let's see what O'Brien wrote:
"When it comes to crackpot economic ideas, the gold standard is, well, the gold standard.
 
"It's a barbarous relic that has nothing to recommend it today. Pegging the Dollar to the price of gold, you see, is just a doomsday device for turning recessions into depressions."
To me, even without getting into any details, this smacks of a certain lack of connection with any fact of reality or history. You just don't become the most successful country of the last two centuries with a "crackpot" monetary system that is a "doomsday device".
 
The last twenty years of the US's gold standard era – the Bretton Woods years when the Dollar was worth 1/35th of an ounce of gold – were times of prosperity and abundance, especially for the US middle class. The gold standard era didn't end in 1971 because it was producing bad results, and people decided it was time to find something better. It ended because those responsible for maintaining it were idiots.
 
I would even say that those years, the 1950s and 1960s, were the best of the last century, 1914-2014.
 
If the gold standard system is so horrible, then how did that happen?
 
Since 1971, even by the US government's falsely sunny statistics, the US "real" median full-time male income has gone nowhere.
 
If today's funny-money arrangement is so wonderful, how did that happen?
 
A gold standard system is a fixed-value system. The value of the currency, such as the Dollar, is fixed at $20.67 per ounce (before 1933) or $35 per ounce. (after 1933). Once you have a fixed-value system, you no longer have a panel of bureaucrats making stuff up as they go along, to deal with unemployment, interest rates, exchange rates, asset markets, government financing, or whatever the problems of the day may be. Money is neutral and definite.
 
I call this the Classical approach. Today's approach is what I call Mercantilism – and that's what both John Maynard Keynes and Murray Rothbard called it too.
 
Although there are no gold-standard currencies today, the Classical approach is, in fact, quite common. Whether through a "common currency," or via a fixed-value policy with another currency or benchmark, many governments today use a Classical fixed-value strategy. In the process, they abandon any Mercantilist ambitions to "manage" the economy by jiggering the currency.
 
Places like Spain, Italy and Slovakia, or the Dollar-linked countries like Ecuador and Hong Kong, have no domestic monetary policy. They just have a fixed-value link.
 
There are now 18 countries that are part of the Eurozone, another ten small states and territories that use the Euro but are not part of the Eurozone, and 27 countries that have a currency that is fixed to the Euro. That's a total of 55 governments that use a Classical fixed-value approach, linked to the Euro.
 
The only difference between these "Euro-standard" policies and a "gold standard" policy is the choice of the "standard of value." Apparently the Classical fixed-value approach has not been sent to the "junk heap of history" after all, but is in fact quite common.
 
Why do these countries use the Euro instead of gold? Mostly because everyone else does; to use a gold basis today would introduce intolerable volatility in trade relationships. This was not a problem in the past, because the world's major currencies also used a gold basis.
 
But, using a Euro basis might prove rather problematic in the not-too-distant future. Some countries used a German Mark basis after WWI, and a Russian Ruble basis in the 1990s. It didn't go very well.
 
O'Brien also makes some comments about "price stability" during the gold standard era. The supposed "price volatility" he claims is mostly just a benchmark phenomenon. The US Consumer Price Index as we know it only dates from 1940. The 1920-1940 period was recorded by the BLS Wholesale Price Index (broad commodities), and the pre-1914 era is mostly described by a straight commodities index, typically the Warren-Pearson index which covers raw commodity prices in just one location, New York City.
 
In other words, the apparent "volatility of prices" is just a matter of looking at a raw commodities price index instead of something similar to today's CPI.
 
The use of a gold basis is actually about stability of value, not "stability of prices". This might seem like a subtle or even nonsensical point, but let me make a very simple example: the "purchasing power" of the Dollar – for example, a $20 bill – changes enormously if you go from Manhattan to Queens, or to Albany, or to Quito, Ecuador. However, the value of the Dollar didn't change at all. Prices are just different, depending on where you are.
 
Or, depending on the time. For example, the Japanese Yen was worth 12,600 per ounce of gold from 1950 to 1970. However, the "purchasing power" of the Yen changed dramatically during that time, because Japan enjoyed an incredible economic expansion. The price of a rental apartment, or a restaurant, or a taxi ride rose enormously from 1950 to 1970, but the value of the Yen was unchanged. (The official Japanese CPI rose 80% between January 1955 and January 1970.)
 
The Mercantilists, like O'Brien, are in hysterics because their experiment is likely to fall apart soon, and they know it. If you want to take a look at what a gold standard system really is, and what it has accomplished in centuries of real-life experience, I actually have a book about that: Gold: the Monetary Polaris. You can download it in .pdf format for free. So, no excuses. If you are more of a voice-and-pictures person, here's a thirty-minute talk on these topics, from earlier this year. Read or watch, and then tell me what you think.
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A New Global Arms Race Has Been Kicked Off

Posted: 03 Nov 2014 11:12 AM PST

This post A New Global Arms Race Has Been Kicked Off appeared first on Daily Reckoning.

[Ed. Note: As Addison pointed out today, the the U.S. military counts for 40% of global military spending. That explains why the iShares Aerospace and Defense ETF (NYSE:ITA) we recommended is up 11% since October 14th... and up 109% since you originally had a chance to buy it in 2010. Below, you'll see our military historian Byron King analyze the new global arms race all this military spending has wrought. With no real let up in sight, ITA is likely to continue to be a good play...]

We're kicking off into a new global arms race. You can like it or not. You can invest in it or not. But the new arms race is happening, and you owe it to yourself to understand the facts. Watch the world through this lens, and many things will become clearer.

Last week's Russian air show around Europe is just one of many similar incidents. In recent months, Russian aircraft have probed Alaska airspace, and flown down off the coast of California. Russian aircraft have moved near northeast Canada, into simulated "launch" positions for missile strikes on, say, Norfolk Navy Base… or Washington.

The short answer is Ukraine. Russia is responding to NATO encroachment eastward, to a Western-backed coup against the previous Ukrainian government (no matter how bad it was), to U.S.-NATO ships in the Black Sea, and to constant Western military surveillance.

The new arms race is happening, and you owe it to yourself to understand the facts…

Beyond Ukraine, however, we have a long string of events that unfolded since the breakup of former Yugoslavia in the early and mid-1990s. Think Serbia, Kosovo, Iraq, Afghanistan, Libya and more. Russians view these Western military expeditions as encircling moves.

At the level of policy-politics in the U.S. — in much of the West, actually — the leadership class seems to have been near oblivious to what's happening. It's not hard to make the case that, in the U.S., the Clinton-Bush-Obama administrations have walked (perhaps "sleep-walked" is a better term) into serial buzz saws of confrontation; and Russia is but one aspect of the multi-dimensional competition that's breaking out.

Add in China, which continuously displays more and more willingness to stand up for its perceived self-interests. Plus, we must deal with other aggressive players such as Iran, "Militant Islam" and several so-called "emerging" societies across the world. It's becoming more and more complex, pretty much every month.

Don't take my word for it, though. Here's what no less than the president of Russia, Vladimir Putin, said last week. He took the proverbial gloves off and ripped into the U.S., NATO and the West in general, at a major speech in Sochi.

The theme of the Sochi gathering was, "The World Order: New Rules or No Rules?" Right away, it's clear that the forum was based on Russian perceptions that the West has worked to overturn the pre-existing global order since the fall of the Soviet Union. What are the rules? Or are there no rules, except those that the U.S. and allies make up as they go along?

Putin flat-out accused the U.S. of undermining the post-Cold War world order. He predicted that, absent a new system of global governance, the world will collapse into chaos and anarchy.

"We didn't start this," declared Mr. Putin, and then he listed a long series of U.S. led military expeditions, from the former Yugoslavia to Libya. Putin chastised the U.S. for taking a triumphal attitude when the Cold War ended, working to "reshape the world to suit (U.S.) needs and interests."

Putin was only warming up, however. He declared, "This is the way the nouveaux riches behave when they suddenly end up with a great fortune — in this case, in the shape of world leadership and domination. Instead of managing their wealth wisely… I think they have committed many follies."

Looking back, and if you're old enough to remember the original Cold War of the late 1940s through about 1990, you may shake your head and think, "Oh man… not again," or something like that.

You don't have to like the idea of a new level of great power confrontation; but at least you ought to get ready to deal with it. This is NOT your father's Cold War; it won't be a simple replay of the first one.

The next struggle will cover all manner of land, sea, air and space domains, plus cyberspace. It'll involve military hardware, to be sure, but it will also require policymakers with keen knowledge and understanding of economics, energy, trade flows, cultural differences, religions and much more.

The next arms race won't necessarily be based only on which economy — Capitalist or Communist — can build more ships, tanks and airplanes, although my hunch is that the Russian economy (and Chinese economy, too, while we're on the topic) can produce lots of ships, tanks and airplanes if the need arises.

The next arms race will move into entire new levels of battle space. Land, sea and air, of course. Outer space too, but in ways far surpassing what we saw in the old U.S.-NATO versus Soviet competition. Add in cyber — the "Fifth Domain of War," as I've discussed many other times; software is asymmetrical, in its own way.

It brings me back to why I started writing these missives, and I suspect why you subscribed. You can see what's happening; and this free e-letter brings you an investment angle to marry up with what's in the headlines, as well as deep inside the "professional" level academic, policy and trade press.

Regards,

Byron King
for The Daily Reckoning

P.S. We’re monitoring the global arms race and investment angles on your behalf in the Daily Reckoning email episodes — free to you as a subscriber. Our missives are the most informative and entertaining 15 min. read of your day. But if you’re not signed up you miss out on all of the context and laughs our analysts provide. And you won’t find them all here on our site. Sign up now to receive our daily reckonings at no charge.

The post A New Global Arms Race Has Been Kicked Off appeared first on Daily Reckoning.

GoldCore details Swiss National Bank's dissembling about gold reserves

Posted: 03 Nov 2014 11:08 AM PST

2:05p ET Monday, November 3, 2014

Dear Friend of GATA and Gold:

The Swiss National Bank's evasiveness and dissembling about the location and disposition of Switzerland's gold reserves is explored in detail in GoldCore's daily gold market commentary, written today by Ronan Manley:

http://www.goldcore.com/goldcore_blog/Where_Is_Swiss_Gold_Location_Locat...

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


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Do Not Buy Gold. Repeat...

Posted: 03 Nov 2014 11:00 AM PST

Traders looking for bull or bounce turn away, says this technical analyst...
 
DO NOT buy gold right now, writes technical analyst Greg Guenther in Addison Wiggin's Daily Reckoning. Just don't do it!
 
The Midas metal has turned to fool's gold. It's sunk in the black night of a deep bear market – and it's about to plunge even deeper.
 
Over the next several weeks, the gold price could threaten lows not seen since 2009, when it hovered around the $1000 mark. And if you're thinking gold is a dirt-cheap bargain right now, think again...
 
Word to the wise: don't bet on gold. If you already have, get out now.
 
Look, I'm going to let you in on a little secret here: Gold is a commodity that trades in cycles, just like any other asset. And the evidence tells me it's heading down right now. If there's one thing I want to drill into that head of yours, it's that you can't trade on your emotions. You'll go broke.
 
Hey, I also love coffee. But if I think the price of coffee is heading down, I'm betting against it. Does that mean I hate coffee? Are you out of your gourd? So if you're a gold bug, don't shoot, man. I'm just the messenger.
 
Here's how gold's bear market is unfolding...
 
The first phase of gold's death march began 18 months ago. It was pushing $1600 in mid-April, and then WHAM – the bottom fell out. A vicious $200 drop knocked it down to about $1385 an ounce in just two days. Longtime gold investors who'd enjoyed a decade of sunny skies were like, 'Dude, what the @#$% just happened?'
 
Remember that? I sure do. And I saw the writing on the wall. I wrote the following words in the early morning hours of April 17, 2013, when the gold guys thought it was just an isolated squall that would soon pass:
"I can't make this any clearer: You shouldn't even consider trying to buy gold right now."
You know the rest of the story. It's been raining on the yellow stuff ever since. It now sits at $1169. That's about $450 off its April 2013 high.
 
And as I type, we're seeing the same nasty weather forming in the charts as we saw 18 months ago. It feels like last April all over again.
 
So, this morning...as gold sits below $1170 an ounce for the first time since 2010...I'm gonna say it again – only louder...
 
YOU SHOULDN'T EVEN CONSIDER TRYING TO BUY GOLD RIGHT NOW!
Just look at the similarity between the big 2013 nosedive and today's downward action. In both cases, the gold price topped out with a series of lower highs before the crash accelerated. Last year, this action handed investors losses of more than 23%.
 
The main culprit in the big flush in the gold price right now? The continued strength of the US Dollar. Well, the relative strength of the Dollar, I should say. Every other major currency has been worse. The buck is just the tallest midget in the circus.
 
Regardless, greenbacks soared last week after the Bank of Japan surprised everyone with its aggressive efforts to weaken the yen – think QE with rice and sushi. So the Dollar has risen on the international market.
 
The Dollar's relative strength has lit the match on gold's demise. But that alone isn't enough to kill the Gold Bull. The gasoline on the fire will come from the jilted investors who've finally given up on gold. And give up they will...
 
Gold is now breaking below $1180. Bargain hunters stepped up multiple times when gold was below $1200, both in 2013 and 2014. They thought it was a great buying opportunity. They were wrong. The big golden rebound they kept waiting for never came. They lost money – and now they know it. Investors tend to take things personally – and they won't be fooled again. So gold is out there on its own right now – shunned – and hated. It will soon be a spinster.
 
Bottom line: Gold is now entering the second leg of its bear market. No, it won't take the elevator to zero. But investors will keep pushing the down button – gold has let them down once too often. As I told you 18 months ago, the great golden decade that saw prices leap from $300 to almost $2000 is finished. Gold investors can prepare for more pain in the weeks and months ahead.
 
It gives me no joy to say it...but I expect the gold price to eventually come to rest somewhere near $1000. A fall to the 1K mark will break the final leg of the 10-year gold bull. Bet on it. The fat lady's already warming up.
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What kind of financial journalism doesn't care and doesn't ask questions?

Posted: 03 Nov 2014 10:40 AM PST

1:51p ET Monday, November 3, 2014

Dear Friend of GATA and Gold:

With his sneering at GATA today, commodity letter writer Dennis Gartman (https://www.thegartmanletter.com/) inadvertently signifies what's wrong about Western financial journalism -- its fear of committing journalism.

Gartman writes: "The 'gold bugs' shall apparently never give up. They are as convinced now that the gold market is rigged as they were in years past. They are confident that they are right in their belief that the central banks are selling gold at every opportunity and that if only this 'manipulation' is brought to everyone's collective attention and exposed, then gold shall rally and rally and rally some more.

... Dispatch continues below ...


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"We shall argue simply that we do not care a whit about manipulation, for if it is there or if it is not it is unimportant to the battles that we have to face.

"We note then the following statement from GATA over the weekend regarding last week's collapse in gold prices:

Note that the bombing of the gold market last week as described by [Andrew] Maguire's interview at King World News --

http://www.gata.org/node/14643

-- did not happen in the middle of the night, as some bombings do, but at the market open in London. This sudden mobilization of huge amounts of paper gold in the futures market, like the sudden mobilization of huge amounts on April 12 and 15, 2013, wasn't retail trading -- it was plainly an intervention by a central bank or group of central banks.

"How do they know that this was 'intervention by a central bank or a group of central banks'? Where is the proof and why should we care?

"The point here is that gold prices have weakened; that buyers were less aggressive than were the aggressive sellers; that the longs are on the defensive and that the shorts are dominant. What more need we know?"

In the first place, GATA does not purport to represent "gold bugs," who come in several varieties. No, GATA consists largely of adherents of free markets and limited and transparent government who concentrate on the manipulation of the gold market because it is the essential mechanism of market rigging generally and the accumulation of absolute power in government.

How do we know that overwhelming, abrupt, and anomalous smashes in the gold market are central bank and government interventions? Because only central banks and governments have access to the metal and money involved and because governments conceal their activities in the gold market more closely than they conceal the disposition of their nuclear weapons --

http://www.gata.org/node/12016

http://www.gata.org/node/11012

-- turning away even the most basic questions about their involvement in the gold market.

Using the imperial "we," Gartman writes: "We do not care a whit about manipulation, for if it is there or if it is not it is unimportant to the battles that we have to face."

But how can someone who purports to analyze markets not care about the forces that move them?

Since central banks and governments can create infinite money and deploy it secretly, and since U.S. government documents show that central banks now are receiving volume discounts for secretly trading all major futures contracts on all major futures exchanges in the United States --

http://www.gata.org/node/14385

http://www.gata.org/node/14411

-- how can someone who purports to analyze markets be indifferent to the prospect that there really aren't any markets at all anymore?

This issue is far bigger than gold, far bigger even than money itself. It involves the very nature of society and the relation of all peoples and nations. And yet Gartman boldly proclaims his indifference, echoing what Lincoln perceived as the attitude of Northern apologists for Southern slavery: "A policy of 'don't care' on a question about which all true men do care."

Financial writers who don't care excuse themselves from questioning central banks -- that is, excuse themselves from questioning all the money and power in the world. That's not journalism. It's toadyism.

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

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How the Swiss Gold Referendum May Be Pushing Down the Gold Price

Posted: 03 Nov 2014 10:32 AM PST

This post How the Swiss Gold Referendum May Be Pushing Down the Gold Price appeared first on Daily Reckoning.

[Ed. Note: For the last month and a half, we've been discussing the upcoming Swiss Gold Referendum -- specifically how, if passed, it could lead to a serious collapse of the financial markets, and send the price of gold skyrocketing. But before that happens, there's significant downward pressure on the yellow metal -- a fact not lost on Dave Gonigam or our colleague Greg Guenthner. Read on...]

"Do you think," one of our 5 Min. Forecast readers wrote us late on Friday, "that the decline in the price of gold has anything to do with the upcoming Swiss referendum regarding gold?

"Maybe the Swiss powers that be are suppressing the price so they can buy gold cheap in anticipation of the outcome of the vote.

"Just a thought."

Hmmm… With the passage of the weekend, it's a thought we won't dismiss out of hand.

This morning, the bid on gold is about where it was on Friday — $1,168.

Don't expect it to hold, says Greg Guenthner of our trading desk. Or as he put it succinctly in this morning's Rude Awakening, "Do not buy gold right now."

If you've been with us for a while, you know "Gunner" got no small amount of grief from our readers in early 2013 when he accurately called gold's slide at $1,650. "Antichrist" was one of the kinder names readers gave him.

But the call was spot-on. From there it was down, down, down to $1,180 in late June.

Three times since then gold has tested that $1,180 level. On Friday, it failed that test.

This failure is at least as significant, he says, as the day gold crashed through $1,550 in April of 2013. "Just look at the similarity between the big 2013 nosedive and today’s downward action," he says as he directs your attention to this chart…

Gold Spot Price, 2010-2014

"In both cases, gold topped out with a series of lower highs before the crash accelerated. Last year, this action handed investors losses of more than 23%."

"It gives me no joy to say it…" Greg summed up this morning’s Rude, "but I expect the gold price to eventually come to rest somewhere near $1,000. A fall to the 1K mark will break the final leg of the 10-year gold bull. Bet on it. The fat lady's already warming up…"

If the fat lady's warming up, perhaps the libretto is written in Mundart — the Swiss dialect of German.

As we've chronicled for the last five weeks, Swiss voters go to the polls on Nov. 30 to decide three matters pertaining to the Swiss National Bank's (SNB) gold hoard. If the measure passes…

  • The SNB would be forbidden from selling any of its gold
  • The SNB would be required to buy enough gold to equal 20% of the country's foreign-exchange reserves (it's currently 7.7%)
  • All Swiss gold held at the Federal Reserve Bank of New York would be returned to Switzerland.

The SNB has declared its opposition to the initiative, on the grounds it would give them less "flexibility". To which supporters would counter, "Yes, that's the whole idea." Heh…

One of the people heading up the "yes" campaign is a friend of Agora Financial — Egon von Greyerz. He's the proprietor of Gold Switzerland, a firm that affords high-net-worth individuals access to a vault located in the "free zone" at Zurich International Airport, outside the reach of even Swiss customs authorities.

Egon's public-awareness effort is called the Swiss Gold Initiative. It's been accepting donations to help spread the word, with many of them coming from the United States.

But not via Paypal — not since last Wednesday.

"We have received an unexpected simple template notification from PayPal that they can no longer receive donations," says a statement on the Swiss Gold Initiative website. The notice said the decision was final.

And with that the Swiss Gold Initiative joins some exclusive company — including WikiLeaks and an adult film starlet named Teal Conrad…

Teal Conrad, WikiLeaks and the Swiss Gold Initiative - All Banned By PayPalBanned by PayPal!

The Swiss Gold Initiative is asking PayPal why it got the ban hammer when it fully complies with Swiss law. It's still waiting for a response. Presumably donations will be returned to the donors, but even that hasn't been made clear.

Meanwhile, the vote on the Swiss Gold Referendum is 27 days away. The polling data is all over the place, with a sizeable number of undecideds.

“There is some nervousness and as a risk event the focus is increasing,” UBS strategist Beat Siegenthaler tells Reuters. "Chances of a ‘Yes’ vote are low, but if it does happen there will be huge implications, and just not for gold.”

That's what our Jim Rickards has been saying for more than a month. "The gold market and central banks," he said in this space on Oct. 1, "are whistling past this graveyard. They may be in for a shock when the votes are counted."

Regards,

Dave Gonigam
for The Daily Reckoning

P.S. This is just one of the many “snowflakes” Jim sees that could lead to a financial avalanche that brings the whole system down. Time will tell, but it’s best to stay informed. Keep watching this space for regular updates as the story progresses. And for exclusive access to real, actionable advice on how to prepare yourself, click here now to sign up for my 5 Min. Forecast.

The post How the Swiss Gold Referendum May Be Pushing Down the Gold Price appeared first on Daily Reckoning.

Pricing Gold in the Real World

Posted: 03 Nov 2014 10:20 AM PST

As we see the price of gold and silver dragged lower once again in our Hostage Markets; a reality-check is badly needed – since we certainly get no reality from the Corporate media. However, while the mainstream media provides no "reality", it does provide consistency.

As any knowledgeable reader already knows; gold (and silver) is both a commodity and a "monetary metal" (i.e. real money). With respect to the perverse reporting of the Corporate media; the pattern has been unequivocal. Whenever it has some bearish fiction to distribute about the monetary fundamentals of gold; it treats gold as a monetary metal. And whenever it has some bearish fiction to distribute about the commodity fundamentals of the gold market; it treats gold as a commodity.

This relentless "heads I win/tails you lose" reporting is more than just biased and annoying. It is nonsensical. This point was made in a previous commentary, approximately a year and a half earlier. It revolved around a quote taken from the heart of precious metals propaganda: Basher Central – aka "Kitco News".

"$1,300 is not a sustainable gold price."

What makes this mainstream quote of particular significance is that at the time it was made, gold was trading at $1389.60 (as noted in the article itself). With most gold miners claiming "all in" production costs of between $1100 and $1250/oz; what motivated the assertion that $1,300/oz was (is) an unsustainable price in the gold market?

It's because contrary to the claims of the miners themselves; the "all in" cost of production they quote in their news releases/financial reports is not really the total cost of producing an ounce of gold. In the case of the senior gold miners (who produce the majority of the world's newly-mine gold); these bloated behemoths do little actual exploration for gold themselves.

Rather; they rely upon the junior "exploration" mining companies to find most of the world's significant deposits, and once these junior explorers find a large deposit (generally 5+ million ounces) these larger miners swoop in to buy these deposits, and often the junior miner, itself.

These significant "acquisition costs" are not factored into the supposed "all in" costs of production. But that is only part of the reason why the price of gold has to be significantly higher than these "all in" production costs, in order for the gold mining industry (and thus the gold market itself) to be sustainable.

In many industries; they can be sustained (indefinitely) by break-even prices for the good they produce. Shareholders may not be happy, but the companies do manage to stay in business. Not in the mining industry.

Silver Is One Of The Greatest Opportunities In World History

Posted: 03 Nov 2014 09:12 AM PST

Today a man who has been involved in the financial markets for 50 years told King World News that the silver market represents one of the greatest opportunities in history for investors. John Embry, who is business partners with billionaire Eric Sprott, also cautioned "This is the most dangerous time in world history."

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

Germany's euroskeptic party sells gold bars and coins to raise funds

Posted: 03 Nov 2014 09:01 AM PST

By Justin Huggler
The Telegraph, London
Monday, November 3, 2014

BERLIN -- Germany's rising eurosceptic party, riding high following its recent electoral successes, has branched out in a somewhat surprising direction -- and entered the gold-trading market.

The Alternative for Germany (AfD) has started selling gold bars and coins online to raise funds for its operations.

The AfD, which is not so much anti-EU as anti-euro, has built its success on a central platform of getting rid of the common currency -- but its latest move is not some hare-brained attempt to return to the gold standard. Instead it is a somewhat elaborate scheme to get around Germany's party-funding laws. ...

... For the remainder of the report:

http://www.telegraph.co.uk/news/worldnews/europe/germany/11205562/German...


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Where the Gold Price Will Eventually Hit Bottom

Posted: 03 Nov 2014 07:57 AM PST

This post Where the Gold Price Will Eventually Hit Bottom appeared first on Daily Reckoning.

Do not buy gold right now. Just don't do it!

The Midas metal has turned to fool's gold. It's sunk in the black night of a deep bear market — and it's about to plunge even deeper.

Over the next several weeks, the gold price could threaten lows not seen since 2009, when it hovered around the $1,000 mark. And if you're thinking gold is a dirt-cheap bargain right now, think again…

Word to the wise: don't bet on gold. If you already have, get out now.

Look, I'm going to let you in on a little secret here: Gold is a commodity that trades in cycles, just like any other asset. And the evidence tells me it's heading down right now. If there's one thing I want to drill into that head of yours, it's that you can't trade on your emotions. You'll go broke. Hey, I also love coffee. But if I think the price of coffee is heading down, I'm betting against it. Does that mean I hate coffee? Are you out of your gourd?

So if you're a gold bug, don't shoot, man. I'm just the messenger.

Here's how gold's bear market is unfolding…

The first phase of gold's death march began 18 months ago. It was pushing $1,600 in mid-April, and then WHAM — the bottom fell out. A vicious $200 drop knocked it down to about $1,385 an ounce in just two days. Longtime gold investors who'd enjoyed a decade of sunny skies were like, 'Dude, what the @#$% just happened?' Remember that?

I sure do. And I saw the writing on the wall. I wrote the following words in the early morning hours of April 17, 2013, when the gold guys thought it was just an isolated squall that would soon pass:

"I can't make this any clearer: You shouldn't even consider trying to buy gold right now."

You know the rest of the story. It's been raining on the yellow stuff ever since. It now sits at $1,169. That's about $450 off its April 2013 high.

And as I type, we're seeing the same nasty weather forming in the charts as we saw 18 months ago. It feels like last April all over again.

So, this morning… as gold sits below $1,170 an ounce for the first time since 2010… I'm gonna say it again — only louder…

YOU SHOULDN'T EVEN CONSIDER TRYING TO BUY GOLD RIGHT NOW!

Gold Spot Price, 2010-2014

Just look at the similarity between the big 2013 nosedive and today's downward action. In both cases, the gold price topped out with a series of lower highs before the crash accelerated. Last year, this action handed investors losses of more than 23%.

The main culprit in the big flush in the gold price right now? The continued strength of the US dollar. Well, the relative strength of the dollar, I should say. Every other major currency has been worse. The buck is just the tallest midget in the circus.

Regardless, greenbacks soared last week after the Bank of Japan surprised everyone with its aggressive efforts to weaken the yen — think QE with rice and sushi. So the dollar has risen on the international market.

The dollar's relative strength has lit the match on gold's demise. But that alone isn't enough to kill the Gold Bull. The gasoline on the fire will come from the jilted investors who've finally given up on gold. And give up they will…

Gold is now breaking below $1,180. Bargain hunters stepped up multiple times when gold was below $1,200, both in 2013 and 2014. They thought it was a great buying opportunity. They were wrong. The big golden rebound they kept waiting for never came. They lost money — and now they know it. Investors tend to take things personally — and they won't be fooled again. So gold is out there on its own right now — shunned — and hated. It will soon be a spinster…

Bottom line: Gold is now entering the second leg of its bear market. No, it won't take the elevator to zero. But investors will keep pushing the down button — gold has let them down once too often. As I told you 18 months ago, the great golden decade that saw prices leap from $300 to almost $2,000 is finished. Gold investors can prepare for more pain in the weeks and months ahead.

It gives me no joy to say it…but I expect the gold price to eventually come to rest somewhere near $1,000. A fall to the 1K mark will break the final leg of the 10-year gold bull. Bet on it. The fat lady's already warming up…

Regards,

Greg Guenthner
for The Daily Reckoning

P.S. So if gold isn’t a buy, what is? Well, in today’s email edition of The Rude Awakening I gave my readers the chance to discover a few strong buys right now that could push up their portfolios through the end of the year – and beyond. To get your chance at these kinds of unique and profitable stock picks, click here now to sign up for The Rude Awakening for FREE.

The post Where the Gold Price Will Eventually Hit Bottom appeared first on Daily Reckoning.

JIM ROGERS - RUSSIA / CHINA / BRAZIL Joining Forces to Avoid U.S. DOLLAR

Posted: 03 Nov 2014 07:56 AM PST

Russia has little debt, ample resources and its currency freely floats and he speculates at some point a challenge to the US dollar will take place, he says Jim Rogers thinks the US is a "flawed currency" that should be replaced and he thinks the BRICs nations can do it, minus India. Jim...

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

Is There More Downside In The Price Of Gold?

Posted: 03 Nov 2014 06:09 AM PST

Perhaps this weekend's New York Marathon got traders pumped up, because markets are off to a blistering start to the trading week. US equity futures are pointing to an open at all-time highs, EURUSD hit its lowest level in over two years, USDJPY is testing a 7-year high, and Gold has dropped to its lowest level in 4.5 years.

Focusing in on the yellow metal, there is no obvious single catalyst for the big drop. Of course, the persistently strong dollar has played a big role, as has last week's solid US economic data, which decreased safe-haven demand for gold. In addition, traders pulled $1.3B from gold ETFs, showing that sentiment toward gold is also souring.

On a technical basis, prices dropped through key previous support at 1180 last week, confirming the breakdown from an 18-month descending triangle pattern. At the same time, the weekly MACD indicator is edging lower below both the signal line and the "0" level, while the RSI indicator has still not reached oversold territory, suggesting the commodity may have further to fall this week.

If the breakdown from the descending triangle pattern is indeed valid, it would point toward an eventual move down equal to the height of the triangle, or around $250-$300 dollars, over the next couple of years. More immediately though, bears will want to see whether previous support at 1180 becomes resistance this week, as well as if the metal can break below its longer-term Fibonacci retracement level at 1155. Meanwhile, a recovery back above 1180 early this week could point to a more extended bounce, though the longer-term bias would still remain to the downside.

gold price weekly chart 3 november 2014 price

 

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Chinese gold demand insatiable, Jansen reports; in Germany, a run on silver

Posted: 03 Nov 2014 04:49 AM PST

7:50a ET Monday, November 3, 2014

Dear Friend of GATA and Gold:

Chinese gold demand continues to be huge, insatiable, and largely ignored or underestimated by the Western financial news media, Bullion Star market analyst and GATA consultant Koos Jansen reports today:

https://www.bullionstar.com/blog/koos-jansen/insatiable-chinese-gold-dem...

And the Goldreporter Internet site in Germany reports today that there is a run on silver coins in that country:

http://www.goldreporter.de/german-precious-metal-dealers-report-huge-run...

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

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Gold, Silver Fell 5%, 6% Last Week - Remain Vulnerable

Posted: 03 Nov 2014 03:22 AM PST

Today’s AM fix was USD 1,170.75, EUR 936.90 and GBP 731.90    per ounce. Friday’s AM fix was USD 1,173.25, EUR 933.45 and GBP 733.47 per ounce. Gold and silver were both sharply down for the week at 4.78% and 5.99% respectively. Gold fell $26.30 or 2.2% to $1,172.40 per ounce Friday and silver slid $0.33 or 2% to $16.16 per ounce.  Gold fell nearly 1% to $1,161.75/oz today and dropped to 4 year lows as the U.S. dollar strengthened and technical selling continued as prices had a weekly close below $1,180/oz. 

A Silver Primer - Where Are We Now?

Posted: 03 Nov 2014 02:58 AM PST

My wife killed one of our cars recently. It was a good car. Old, recycled, reliable, safe.  We had a small coolant leak and the car had been overheating for some time. (Not all divisions of household labor and responsibilities are beneficial.)But we don’t drive much. When we do, it’s only for short distances. But not long enough to break down completely.

German Precious Metal Dealers Report Huge Run on Silver

Posted: 03 Nov 2014 02:53 AM PST

Goldreporter writes: Precious metal dealers in Germany have literally been run down after the latest slump in gold and silver. Wholesalers already expect deferred deliveries. The latest plunge in gold and silver late last week has led to a sharp increase in demand by German precious metals investors, which also continued on Saturday. There was a particularly strong demand for silver coins. “On Thursday and Friday people had to draw numbers in order for us to control the run”, reports Andreas Heubach, CEO of Heubach Edelmetalle in Nuremberg. “On both days we sold each around 40,000 silver ounces – incredible”, he said. “Demand is back – and hysteria as well”, he evaluated.

Gold Crashes, Wall Street Doesn’t: What Now?

Posted: 03 Nov 2014 02:36 AM PST

Dear Reader,

Two weeks ago, we warned readers that various indicators were signaling a near-term market crash in mainstream equities. We warned that if it happened, even gold could get whacked briefly due to the resulting liquidity squeeze. That’s not what’s happened—yet.

However, gold melted down significantly last week anyway, falling even lower than last December’s low, bringing it all the way back to prices not seen since 2010.

So did we get everything wrong?

Perhaps, but that remains to be seen. Upbeat Fed statements and encouraging US GDP numbers conveniently appearing the week before a mid-term election don’t persuade me that our wise politicians and their appointees have saved the global economy and everything is fine now. Our technical friends and other analysts we respect still say mainstream markets look poised for a fall.

Marin Katusa’s new book, The Colder War, tells us that Putin would love to play the role suggested by Nietzsche, pushing Western economies into a crash—not just because objects on the verge of falling deserve to be pushed, but because it advances the agenda he’s been pursuing relentlessly for decades.

Still, we understand how nerve-racking it can be when markets don’t go the way we want them to. It’s no surprise that many readers have written in with questions about our gold-centric investment strategy. Jeff Clark has boiled these down to a few main concerns, which he tackles in his Q&A article below.

I hope nervous readers find Jeff’s answers persuasive, because this is a time when it would be easy to panic and make the wrong moves—particularly realizing losses on good companies that have what it takes to pull through.

As we’ve said many times, when it comes to investing in the resource sector, one is either a contrarian or one becomes road kill, and this takes great courage and discipline.

Those attributes are being tested—and may be tested even more sorely if a broader market crash takes metals prices even lower.

That would, of course, be a spectacular buying opportunity, precisely because so few people will take it. Easy to say, tough to do, and not the first time we’ve said it. But that doesn’t make it any less true.

Sincerely,

Louis James
Senior Metals Investment Strategist
Casey Research

Rock & Stock Stats
Last
One Month Ago
One Year Ago
Gold 1,172.95 1,211.60 1,323.70
Gold (SGE) 1,172.56 1,232.03 1,354.43
Silver 16.16 17.06 21.87
Copper 3.08 3.01 3.30
Oil 80.54 91.16 96.38
Gold Producers (GDX) 17.21 21.36 25.10
Gold Junior Stocks (GDXJ) 24.47 33.62 37.58
Silver Stocks (SIL) 8.68 10.64 12.91
TSX (Toronto Stock Exchange) 14,613.32 14,960.51 13,361.26
TSX Venture 769.59 909.29 958.86

Jeff Clark Tackles Tough Questions from Investors
Jeff Clark, Senior Precious Metals Analyst

With the price of our favorite metal fluctuating so strongly last week, we’ve had a lot of good questions sent our way. Without further ado, let’s have a look at them…

Question: If you’re right about possible deflation, won’t the gold price fall?

Initially, probably so. But it won’t stay there. One reason is because the Fed and other central bankers won’t sit idly by—they’ll print even more money, and will keep doing so until they get the inflation they want.

But it isn’t just inflation vs. deflation; it’s crisis. And crises usually bring fear. Look how gold has responded whenever fear—as measured by the VIX—has been high and the broader stock market fell.


During these eight periods of high systemic risk, gold rose every time but one. This doesn’t mean it won’t sell off in the next one, especially in the initial phases of a downturn, but it does show that gold is strong when fear is high.

Question: If the Swiss Gold Initiative passes, won’t the gold price explode higher?

It will almost certainly impact the price, but probably not as much as some articles project. The initiative, among other things, would require the Swiss National Bank (SNB) to hold at least 20% of its total assets in gold (it’s currently around 7%). The referendum was brought forth by Luzi Stamm, a representative of the Swiss People’s Party, which is concerned that current Swiss monetary policy (a quintupling of its balance sheet since 2009) is potentially disastrous for the country. The vote is November 30, and if it passes, Switzerland would need to purchase roughly 1,500 tonnes, or 48+ million ounces.

That’s a lot of gold, and it would surely be positive for the price. Perhaps it could be the spark that turns the industry around. It could even have a ripple effect and influence other countries to pursue similar requirements.

However, the SNB would have five years to meet the 20% requirement, so the buying wouldn’t occur all at once. With the demand spread out, the effect on the price would probably be limited to the initial news of its passage. It would definitely add support to the market, though, as 48 million ounces is nearly two-thirds of annual global production.

The Swiss government could also reduce its balance sheet to help meet the 20% requirement, which would lower the amount of gold it would need to purchase, though we wouldn’t hold our breath on that. And if the referendum doesn’t pass, gold could potentially dip, but we’d expect it to be minimal since there hasn’t been much of a run-up in the price from the initiative.

Polls give a slight edge to the initiative passing, though many politicians vehemently oppose it. One stipulation is that the Swiss National Bank would “not have the right to sell its gold reserves.” This and the limit it would impose on its ability to print money are restrictions the Swiss government desperately doesn’t want to adhere to.

Which is exactly why it should pass. I like this chart our friends at Miles Franklin put together:


Not what you’d think from the Swiss, eh? Stay tuned on this…

Question: How much gold do you think China has?

Bud Conrad recently returned from speaking at a conference in Tianjin, China, and among other things shared this chart from Koos Jansen with the audience.


Combining jewelry holdings, domestic mining, known imports, and likely reserves, China probably has somewhere around 15,000 tonnes of gold inside the country. This equates to almost a half billion ounces, and is almost triple what it had not 10 years ago.

This is just an estimate, but either way that’s a lot of bullion—and I think it leads to control of the gold market in the very near future.

Question: If interest rates rise, won’t gold fall?

I tire of this claim from mainstream economists. The argument goes that as rates rise, the demand for gold decreases because you can get a high rate of return on your money elsewhere, and because it costs money to store gold.

But history clearly shows that it’s not the interest rate per se that influences gold, but the real rate. The real rate is the return after inflation—generally regarded as the 10-year Treasury minus the CPI. If that rate is negative, then the atmosphere for gold is bullish, regardless of how high interest rates may be. Some of the highest rates in modern history occurred in the late 1970s—and gold recorded one of its biggest bull markets on record. The real rate was negative because inflation was higher than interest rates. Gold has shown that it clearly responds more to inflation indicators than interest rates.

This mainstream view is shortsighted for other reasons. The influence of interest rates overlooks consumer demand for gold. The World Gold Council reports that 58% of global gold demand is linked to consumption and grows when GDP increases, a situation that generally coincides with rising interest rates. Also, monetary tightening and easing cycles are not the same everywhere. If the Fed raised interest rates, other countries with a strong affinity to gold may maintain or even lower their rates.

Question: Can’t you admit you’re wrong about gold? It’s been falling since 2011, and now your 2014 Crash Report says it could fall further!

Yes, it has taken longer than we thought. No, it isn’t any fun. We’re investors too, so we have some of the same feelings and reactions others do.

Someone is on the wrong side of the gold trade—the gentleman who wrote this question, or me. Nouriel Roubini, or Casey Research.

It feels like we’re the ones who are wrong. But that’s normal; bear turns in the markets never “feel” good. Investors should be guided by reason, not emotion, and the reasons for owning gold right now are bigger than just persevering until the start of the next bull phase.

Central bank actions—historic money printing, runaway debt levels, interest-rate suppression—were initially positive for gold, but their impact has faded. There are multiple reasons why that’s the case, but I think our investment in precious metals is now based less on those actions and more on the risk those actions have introduced into the system. And those risks are expanding, not shrinking, despite some positive economic indicators. In other words, the need for insurance has escalated.

Here are some questions that shed light on the multitude of risks we’re exposed to right now…

  • What if banks begin lending out the money the Fed has loaned them?
  • What if the Fed decides it needs another round of QE, regardless of what it calls it?
  • What if interest rates rise, whether initiated by the Fed or pushed higher by the markets?
  • What happens when—not if—the stock market enters a correction and mainstream investors begin losing money? What if the average investor remembers 2008 and decides to bail? How will the Fed react if this coincides with the end of QE?
  • What will be the mainstream reaction if the real estate market goes flat or reverses? How would the Fed respond?
  • What happens if the economy does grow—and kick-starts inflation?
  • What happens if the debt load overwhelms the Fed’s printing efforts? Will it give up or double down?
  • What if a developed country selectively or fully defaults on its debt?
  • What if we reach a tipping point where other countries tire of the nonstop currency dilution and slow or reverse their treasury purchases?
  • What happens if the markets lose confidence in the Fed or other central banks’ abilities to manage their respective economies and markets?
  • What if politicians don’t institute serious fiscal reforms, and Fed interventions are reduced to nothing more than monetizing deficit spending by causing inflation?
  • How would global central bankers respond if deflation takes root?
  • What happens if the geopolitical conflicts deteriorate and lead to war?
  • What happens when—not if—control of the gold market shifts to China, away from North America and the Comex?

The point is that we face increased systemic risk. The concern is that central bankers have painted themselves into a corner, and there is no easy exit from their policy mistakes. Since these issues have not been dealt with effectively and political leaders show no sign of doing so, systemic risk has greatly increased. Sooner or later there must be a reckoning—the math doesn’t work, and history has demonstrated the outcome of such fiscal crises numerous times.

Even if precious metals prices temporarily slip further, keep in mind that it’s less about the exact price and date of the bottom for this market and more about how you will protect yourself against the risks outlined above—they are real, in spite of what we read in mainstream headlines. If any transpire, they will wreak havoc on your investment portfolio and your ability to maintain your current lifestyle. That’s worth insuring.

This is the major reason why I haven’t given up on gold, and why you shouldn’t, either. It’s not a speculation on rapid gains, but essential wealth insurance. In fact, the need to own gold is greater now than it was in 2008.

Invest accordingly.



Gold and Silver HEADLINES

China Gold Imports Rise to Five-Month High Before Holiday Sales (Bloomberg)

China’s net gold imports from Hong Kong hit the highest level in five months in September as the world’s biggest consumer stocked up ahead of its National Day holiday. Net imports from Hong Kong to the mainland were 61.7 metric tons last month, the most since April.

Total gold imports from Hong Kong totaled 91.8 tonnes, as the nation observed its annual holiday the first week of October, a time when millions of people travel and spend more than usual. It also marks a pickup in weddings, which boost demand for gold jewelry.

By way of background, Chinese citizens began buying physical gold en masse when it entered a bear market in 2013, pushing the nation past India as the world’s largest gold consumer.

Russia Added to Gold Reserves for Sixth Straight Month in September (Reuters)

Russia increased its gold reserves for the sixth straight month in September, while Azerbaijan added to its holdings for a second month, according to the International Monetary Fund.

Russia, which has one of the world’s largest gold reserves, added 37 tonnes to last month, taking the total to 1,149 tonnes. Azerbaijan raised its reserves by 4 tonnes; its total now is at 27 tonnes.

Kazakhstan increased its gold holdings by 2.1 tonnes to 184 tonnes, and Turkey added 12 tonnes to reach 532 tonnes.

Gold buying and selling by central banks can influence gold prices—sometimes to a very notable degree—so it’s encouraging to see some countries continue to hoard gold at impressive levels.

Gold Investment Commentary Looks to Q4 2014 (World Gold Council)

The World Gold Council (WGC) has just published its latest edition of Investment Commentary (note: login may be required to access a full online copy of the report).

The issue examines gold’s performance year to date and explores relevant macroeconomic factors that can influence gold’s performance in Q4 2014.

In a nutshell, the WGC doesn’t believe interest rates will rise notably in the US anytime soon or that they’ll have the devastating effect that gold many experts predict. Quite the opposite—it sees the gold market as being structurally robust to support its long-term growth.

Of course we think monetary issues could ultimately prove to be gold’s biggest catalyst.


Recent News in International Speculator and BIG GOLD—Key Updates for Subscribers

 International Speculator

  • One of our favorite exploration teams announced excellent drill results from its flagship gold project in Nevada. The high grade and thickness look economic at almost any gold price, but with the zone successfully broadened at depth, more positive results are likely just around the corner.
  • This exploration company just released impressive drill results, delivering bulk-grade material over thicknesses close to 100 meters. Holes like that can add a lot of tonnage, and we like the consistency we see.

 BIG GOLD

  • Many BIG GOLD companies released quarterly reports last week—

    IMF warns of Dollar Devaluation and Hyper-inflation

    Posted: 03 Nov 2014 12:33 AM PST

    The IMF Just Talked It Over — And They're Worried About The Global Economy The International Monetary Fund's member countries on Saturday said bold action was needed to bolster the global economic recovery, and they urged governments to take care not to squelch growth by tightening budgets too...

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Paul Adams: Macro Trumps Micro in Resource Sector

Posted: 03 Nov 2014 12:00 AM PST

Investors in Australia's junior mining sector are feeling the same pain as those in North America but Paul Adams, an analyst with brokerage firm DJ Carmichael in Perth, believes select junior resource companies will outperform the broad markets as macro-level events impact certain commodities. In this interview with The Gold Report, Adams suggests that strong demand fundamentals in nickel, zinc and uranium could mean better years ahead for equities with exposure to those commodities. Adams also discusses DJ Carmichael's new investment strategy and several companies that fit into it.
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