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- Peak Gold is Here to Stay!
- Peter Schiff's Advice for Switzerland
- Australia’s Treasurer: Loose Monetary Policy Has Made the Rich Richer
- They’re Burning The Furniture Now
- Doc Eifrig: Here's a "perfect" income stream you've probably never considered
- Gold at in ‘Acceleration Mode’ as Long as Below Median Line
- $15 Silver: What Happens Next?
- Video of the Day – Watch as 8 Police Officers Fire 46 Shots and Kill a Homeless Man in Broad Daylight
- [KR676] Keiser Report: Fools & Their Money
- Gold downslide continues, Indian demand fails to support
- Wall Street Spends Record Sum in Midterm Election (Betting on Republican Puppets This Time)
- Gold not done dropping
- Silver splurge empties U.S. Mint
- Metals market update for November 6
- Indian airports see huge drop in legal gold imports
- New Study: the Middle Class is Collapsing in the United States
- Turd on with The Doc
- Miners facing 'bloodbath' if gold sinks to $1,000
- Euro Falls on ECB Stimulus Plan
- When An Entire Asset Class “Transformered” Into Insurance
- U.S. Mint Sells Out of Silver Eagle Coins as Buying Surges
- Gold Daily and Silver Weekly Chart - Send In the Clowns
- U.S. Mint Sells Out of Silver Eagle Coins as Buying Surges
- Elite Supernova Death Dance In PMs?
- Gold prices heading lower in the short term due to oversupply says Randgold CEO
- The Return of the Trade Cold War?
- Avocet cuts full-year gold production forecast
- Silver Eagles Sold Out at U.S. Mint Amid Huge Demand
- Cash is king as gold and silver prices collapse but how long will this reign last?
- Searching for Nazi Gold: No Interest or Research for Nearly Forty Years!: Gov Report
- Gold and U.S. Dollar
- American Eagle Silver Coins Sold Out as Demand Soars
- 1430 : The gold of Mutapa
- Protected: Outlook for HUI & GDXJ
- *Alert: US Mint SOLD OUT of Silver Eagles! 2 Million Coin Surplus Sold in Under 2 Hours!
- US Mint Caught Totally Off Guard By EPIC Wave of Silver Demand- Physical Market Screams No Mas!
- On the use of gold coins as money
- Gold Buyers Drop 19%, Sellers Rise 9%
- US Mint stops selling silver coins because it can’t cope with a huge surge in demand
- Harvey Organ: HUGE Drive-By Shooting in Gold & Silver!
- Demand For Coins And Bars Exploding While Gold And Silver Prices Pushed Down
- Silver and Powerful Forces
- The Economy Of The Largest Superpower On The Planet Is Collapsing Right Now
- Gold continues to suffer
- Eldorado Gold Corp. said to weigh $1.5 billion sale of China mines
- Recycling boom to minimize India's addiction to gold imports
- Porter Stansberry, “Dr. Doom” Marc Faber, and former Fed chair Alan Greenspan just had a surprising conversation
| Posted: 06 Nov 2014 12:30 PM PST The wave of zero-interest liquidity washing over the financial world could result in a short-term gold bottom of $1,000 per ounce, reports Oliver Gross of Der Rohstoff-Anleger (The Resource Investor). The good news is that Peak Gold is here to stay, which means that midtier producers will soon be desperate to buy low-cost, high-quality deposits. […] The post Peak Gold is Here to Stay! appeared first on Silver Doctors. |
| Peter Schiff's Advice for Switzerland Posted: 06 Nov 2014 12:15 PM PST With the all-important vote on the Swiss Gold Initiative just 24 days away, today Peter Schiff chimes in with this excellent and informative video address to the good people of Switzerland. |
| Australia’s Treasurer: Loose Monetary Policy Has Made the Rich Richer Posted: 06 Nov 2014 11:15 AM PST The Treasurer of Australia (equivalent to the Secretary of the Treasury in the US, or Finance Minister in most European countries) has made a stunning admission. Joe Hockey stated that the policy of ultra-low interest rates hasn't spurred economic growth; instead it has mainly had one effect—making rich people richer. "Loose monetary policy has done […] The post Australia's Treasurer: Loose Monetary Policy Has Made the Rich Richer appeared first on Silver Doctors. |
| They’re Burning The Furniture Now Posted: 06 Nov 2014 10:30 AM PST Last night around 12:30 a.m. EST, $1.5 billion of paper gold was dumped into the Comex Globex computer trading system during one of the least liquid periods of trading in any 24 hour period. It was done when there was almost no resistance from the physical market. The two largest physical buying markets in the world […] The post They're Burning The Furniture Now appeared first on Silver Doctors. |
| Doc Eifrig: Here's a "perfect" income stream you've probably never considered Posted: 06 Nov 2014 10:29 AM PST From Dr. David Eifrig, MD, MBA, editor, Retirement Millionaire: I like to call it the “perfect income investment.” The majority of individual investors have never even heard of this investment, but it’s popular with sophisticated investors… the kind that manage billions of dollars. This investment has the safety of a bond. It pays regular income. But it’s better than a bond… because it has the upside of stocks. And right now it’s on sale, trading for about $0.91 on the dollar. That’s because most investors have no idea what it is or what it’s really worth. Today, I’ll tell you all about this opportunity – which pays a little more than 7% right now. And again, it has the safety of a bond and the upside potential of a stock… That’s why I often call it the “perfect income investment.” Even better, you can buy it through your broker with a single click of the mouse. Here are the details… When most folks think of investing, they think of either stocks, which provide the potential for capital gains, or bonds, which provide safe and steady fixed income. Both can be valuable additions to any income investor’s portfolio. And it turns out that you don’t necessarily have to choose between the two. There’s actually one area of the market where you can combine the safety of a bond with the capital-gains upside of a stock… When you hold a stock, you own a small part of a business. If the business does well, its owners – the shareholders – should profit, through rising share prices and dividends. Of course, the company can decide to reduce or eliminate its dividend when it’s not doing well, which directly hurts investors’ portfolios. On the other hand, bondholders don’t own a stake in a business. They are simply making a loan to a company. The company pays bondholders a predetermined interest payment for the duration of the bond. At the end of the bond’s life, the company pays back the original loan. If the business grows and makes more money, bondholders don’t get higher returns. The interest payments on a bond are non-negotiable. If a company misses the interest payments on its bond, it’s in big trouble. It violates a legal contract… and creditors can declare it in default. Bankruptcy could be looming. You may be wondering… what kind of investment combines bond-like safety with stocks’ potential for capital gains? I’m talking about preferred shares, or “preferreds.” When a company issues preferred shares, its shareholders are considered part-owners. The price of preferred shares can rise or fall based on the market’s perception. Because of these qualities, preferreds are considered equity rather than debt. So companies benefit from issuing them by keeping their debt levels lower… plus a little more flexibility than they get by issuing bonds. And investors benefit because preferred dividends are reliable. They aren’t as certain as bond interest payments, but they are much more certain than typical stock dividends. A company is contractually obligated to pay its preferred dividends before it can pay dividends to common shareholders. A dividend-paying stock would have to cut its dividend to zero before reducing its preferred payments by a cent. Companies don’t frequently reduce or eliminate their dividends. That’s one advantage of investing in preferreds. Another bonus for preferred shareholders… Most preferred dividends are cumulative. That means if a company can’t pay its preferred dividends, it has to pay back any missed preferred dividends before it can pay regular dividends to common shareholders. When you invest in high-quality companies, these things rarely happen. So you can see why preferreds have an added level of safety. Also, if a company increases its earnings, it can continue to raise its common dividend. With preferred shares, the dividend is predetermined – much like a bond payment. Of course, there is a tradeoff in buying preferred shares… While they pay high, safe dividends, the potential for capital gains is lower than that of a common stock. The share price of a preferred stock is unlikely to rise much, even if a company is successful. That’s because most preferred shares are “callable.” When a company issues preferred shares, it usually offers them at a price of $25 per share (called “par”). During the life of the shares, the price can fluctuate, but preferreds have a specific end date – usually five years. After the five years are up, the company can buy back – or “call” – its preferreds at a price of $25. So while preferred shares can fluctuate, prices don’t typically stray too far from $25. It’s foolish to buy preferreds for $30 if they could get called away at $25, although occasionally their high yields make buying preferreds trading above par worth the risk. Meanwhile, a preferred trading at $20 has the potential to return 25%, should it get called away. You can see why the price of preferreds rarely drifts too much. We aren’t looking for big capital gains. We’re here to collect the big streams of income. In the end, preferreds offer safer dividends than stocks and higher returns than bonds. But rather than investing in the preferred shares of a single company, I recommend balancing your portfolio with a “one click” preferred-shares fund, such as the Nuveen Quality Preferred Income Fund 2 (JPS). JPS is a closed-end fund that holds mostly investment-grade preferred shares. Because the fund uses some leverage (30%), it’s able to pay a monthly 7% dividend. As a closed-end fund, JPS raised money at its launch, which it manages to produce income. JPS shares then trade on the NYSE and fluctuate in price. Sometimes it is overvalued or undervalued based on its “net asset value” – or the real value of JPS’ holdings. Right now, JPS sells for a 9.7% discount to its NAV. This means you’re getting a dollar of assets for about $0.91. This discount gives us an added level of safety. Since I began recommending JPS in my Income Intelligence newsletter in January, shares are up 15%. But again, that’s not the point of holding JPS… Rather, we want to diversify our income portfolio with another safe income stream. And as expected, preferred shares declined with the market’s recent correction, but held their value better than regular stocks. That’s the stability that attracts us to preferreds, in action. If you haven’t considered investing in preferreds, take a look at JPS today. P.S. If you’d like to learn another unique way to earn safe income, don’t miss my completely FREE live webinar tonight at 8 p.m. ET. The strategy I’m going to talk about has helped my Retirement Trader subscribers earn a profit on 189 out of 191 trades over the last four years – a 98.95% win rate. And you can learn the basics for free tonight in my live webinar. Don’t miss out. You can register and get all the details right here. |
| Gold at in ‘Acceleration Mode’ as Long as Below Median Line Posted: 06 Nov 2014 10:28 AM PST |
| $15 Silver: What Happens Next? Posted: 06 Nov 2014 09:15 AM PST After a take-down to new lows near $15, what happens next to silver? Submitted by Deviant Investor: 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 […] The post $15 Silver: What Happens Next? appeared first on Silver Doctors. |
| Posted: 06 Nov 2014 09:00 AM PST A very sad and disturbing example of this happened in 2012, when a terrified, 49-year old, mentally illl homeless man, Milton Hall, was gunned down to death in broad daylight by 8 cops in Saginaw, Michigan. He represents everything our superficial, greed obsessed, immoral culture despises. He was a homeless, mentally ill black man. This is […] The post Video of the Day – Watch as 8 Police Officers Fire 46 Shots and Kill a Homeless Man in Broad Daylight appeared first on Silver Doctors. |
| [KR676] Keiser Report: Fools & Their Money Posted: 06 Nov 2014 08:59 AM PST We discuss how fools and their money are soon parted whether shale oil investors losing $1.17 for every dollar gained or housing market participants who seek to help people onto the so-called 'property ladder' and yet, by lowering standards, increase risk of total financial loss. In the second half Max interviews Dominic Frisby, author of "Bitcoin: The Future of Money?" about the hunt for Satoshi, the importance of bitcoin and the future of money. |
| Gold downslide continues, Indian demand fails to support Posted: 06 Nov 2014 08:50 AM PST Jeff Nichols said gold markets can no longer count on rising geopolitical risk to support rising prices. Lately, gold has largely ignored the myriad of global risks that occupy the daily headlines. |
| Wall Street Spends Record Sum in Midterm Election (Betting on Republican Puppets This Time) Posted: 06 Nov 2014 08:00 AM PST If you think anything is going to change for the better after Republicans take control of the Senate, you might have come down with a severe case of stupidity. Just like the Democrats before them, the new crop will answer to the same Wall Street masters. Submitted by Michael Krieger, Liberty Blitzkrieg: From Bloomberg: Most of […] The post Wall Street Spends Record Sum in Midterm Election (Betting on Republican Puppets This Time) appeared first on Silver Doctors. |
| Posted: 06 Nov 2014 07:40 AM PST It appears that the selling pressure in gold is not over with yet. The metal dropped again today to make a fresh swing low, and there does not appear to be any relief in sight. |
| Silver splurge empties U.S. Mint Posted: 06 Nov 2014 07:24 AM PST The gulf between the physical precious metals markets and the paper or electronic gold and silver markets is growing again, and risks are becoming as broad as it has ever been. |
| Metals market update for November 6 Posted: 06 Nov 2014 07:18 AM PST Gold fell $25.30 or 2.17% to $1,142.40 per ounce yesterday and silver slid $0.75 or 4.68% at $15.28 per ounce. |
| Indian airports see huge drop in legal gold imports Posted: 06 Nov 2014 07:01 AM PST The Customs and Central Excise Department had recently made it mandatory for any passenger bringing gold into India to declare his/her source of income. With legal gold imports dropping sharply during recent months, the authorities doubt whether this measure has backfired. |
| New Study: the Middle Class is Collapsing in the United States Posted: 06 Nov 2014 07:00 AM PST Central bankers print money, and it pushes up the value of assets that the rich already own, making them even richer. In other words, if you're born rich, you stay rich. If you're not, it's becoming harder to attain wealth. Talent and hard work matter less and less with each passing year. This is dreadfully, […] The post New Study: the Middle Class is Collapsing in the United States appeared first on Silver Doctors. |
| Posted: 06 Nov 2014 06:52 AM PST Late yesterday, Turd, Doc, and Eric Dubin met at the Silver Doctors site to discuss the current events in the metals. This includes a very interesting, direct report from The Doc on the current shortage of ASEs from the US Mint. |
| Miners facing 'bloodbath' if gold sinks to $1,000 Posted: 06 Nov 2014 06:52 AM PST The chief executive of the largest London-listed gold miner sounds a warning for the industry  This posting includes an audio/video/photo media file: Download Now |
| Euro Falls on ECB Stimulus Plan Posted: 06 Nov 2014 06:17 AM PST The Euro went one way ( down ) and stocks went the other ( up ) when comments from ECB President Draghi hit the wire this morning. What caught the attention of the Forex crowd, and the equity guys, was the indication that the Central Bank's program of buying asset-backed securities would last for two years. That news was not in the markets. Traders are interpreting it a evidence that the ECB is taking a more concerted stance at staving off the deflationary issues currently afflicting the Eurozone. Here is a chart of the Euro.  The common currency has fallen through a temporary support zone that had formed near the 1.250 region. Depending on its subsequent price action for the remainder of the week, it appears headed for a test of 1.2250 zone. Here is one of the Dollar as a result: From a technical analysis perspective, the Dollar remains on a relatively unhindered path for a test of its June 2010 high near the 89 level basis the USDX.  As usual, strength in the Dollar is weighing on gold this morning. I noticed that it had briefly popped its head into positive territory early in the session this morning but once the Draghi comments hit the wire, it sank lower. Traders see these various efforts by the Central Banks as evidence of deflationary pressure which is tending to reinforce the "there is no inflation" theme, especially as they see weaker crude oil prices. Still, the metal has been able to pull away from its worst session low which occurred overnight. A fair amount of that selling in the overnight session looks to me to be margin related. A brief comment on USDA grain export numbers this AM. Beans were strong once again but cancellations did indeed show up in the meal. Once again it was China that was the big buyer of US beans which continues to surprise me given the ongoing state of the US harvest and the cost differential between US origin beans and S. American origin beans. I should note however that a total of 651,000 metric tons were cancelled from "Unknown". Speculation will be rife as to whom that was and whether or it is the tip of the iceberg. That has caught my attention. On the meal side, a total of 306,800 metric tons of meal sales were cancelled this week. That is rather significant. There were sales of 183,300 metric tons so the NET RESULT was the cancellation of 123,700 metric tons of meal sales. If the idea was to ration meal until the pipeline was able to be replenished, it is certainly working. |
| When An Entire Asset Class “Transformered” Into Insurance Posted: 06 Nov 2014 05:09 AM PST Do you enjoy swapping out your Transformers from robots into tanks? Maybe you’d like to swap your derivatives for some real insurance. Wouldn’t it be great if you could hold a commodity (say gold) and be holding a currency (say bitcoin) simultaneously? Jon Matonis who is still directing, just not executive directing, explains for Bloomberg London. |
| U.S. Mint Sells Out of Silver Eagle Coins as Buying Surges Posted: 06 Nov 2014 04:47 AM PST U.S. Mint Sells Out of Silver Eagle Coins as Buying Surges The gulf between the physical precious metals markets and the paper or electronic gold and silver markets is growing again and risks becoming as broad as it has ever been. Demand for gold and particularly silver bullion has been very high across the world in recent weeks. The sharp price falls in recent days has led to even greater demand and concerns about supply and rising bullion premiums. Now the U.S. Mint is sold out and the Canadian Mint is rationing supplies.
This comes at a time when silver is being hammered in the futures market by entities who are selling enormous volumes of gold and silver futures. They are using leverage and are engaged in a form of naked short selling that is pushing the spot prices for physical delivery lower. By forcing the price down so dramatically they cause those parties who speculate on a higher price in the precious metals futures markets to capitulate. They also cause some physical owners, weak hands who are nervous regarding gold and silver prices, to sell. Often at the worst times. It also has the effect of dampening spirits in the precious metal markets and creating very negative sentiment. Sentiment is as poor as we have ever seen it regarding gold and silver amongst many analysts especially in banks, the media and the public.
However, there is a huge dichotomy as sentiment amongst the hard asset community or those who understand the importance of gold and silver as stores of value is very positive and they are the ones who are accumulating again on this price dip. Bullion dealers across the western world have been reporting shortages in silver bullion coins and bars. Yesterday the U.S. Mint who, heretofore had not reported any issues regarding supply, announced that they had been cleared out of their entire remaining inventory of 2014 silver eagle coins. With two months still remaining in the year their stock was cleared out yesterday when dealers, desperate to meet exploding retail demand,bought two million silver eagle coins in only two hours. So why is demand so robust at a time when the market action suggests that silver is not a desirable asset to own?
The ratio between the price of gold and the price of silver is now at around 74:1. The historical average has been roughly 15:1. Were this mean to be reverted to again, the price of silver would need to rise to around $76 even at these depressed gold prices. After six years of talk of recovery many people in the west have grown distrustful of the ability and will of their leaders to effect positive change for ordinary people and fear another crisis is imminent. They are taking matters into their own hands by becoming “their own central bank” as Doctor Marc Faber puts it. It is worth considering Dr. Faber’s take on Goldman Sachs talking down the precious metals markets. “I would say Goldman Sachs is very good at predicting lower prices when they want to buy something.” It may be that prices have been forced down specifically because large entities feel the need to begin accumulating physical gold and silver now that QE has been shelved. At least for now. Despite huge complacency, on par with that seen in 2006 prior to the last crisis, there remains considerable geopolitical, financial and monetary risk throughout the world. The increased demand we have seen in recent days is not likely to be a mere blip on price weakness and will likely continue until prices have risen significantly again. We strongly advise owning allocated and segregated individual bullion coins and bars stored in the safest vaults in the safest jurisdictions in the world. Get Breaking News and Updates on the Gold Market Here MARKET UPDATE Gold fell $25.30 or 2.17% to $1,142.40 per ounce yesterday and silver slid $0.75 or 4.68% at $15.28 per ounce. Gold inched higher on Thursday as a pull back in the U.S. dollar took some pressure off the yellow metal after its downward spiral to four-year lows. Prices remained essentially flat ahead of a European Central Bank meeting later today. Gold's 14-day relative strength index (RSI) was under 30 for a fifth day, signaling to some investors that prices will rebound. Spot silver slipped 0.2% to $15.3035 an ounce. An ounce of gold bought as much as 75.1862 ounces of silver yesterday, the most since January 2009. The ratio was at 74.8179 today. Silver has dropped for its 7th day its longest losing streak since April 2013. Spot platinum climbed 0.4% to $1,209.75 an ounce after the price fell yesterday to $1,197.13, the lowest in a month. Palladium was little changed at $758.75 an ounce. As the recent election showed, there is huge discontent regarding the U.S. economy. Middle America does not think the economy has improved. The headline figures disguise a very fragile economy where the middle classes and poor continue to struggle financially. |
| Gold Daily and Silver Weekly Chart - Send In the Clowns Posted: 06 Nov 2014 04:05 AM PST Le Cafe Américain |
| U.S. Mint Sells Out of Silver Eagle Coins as Buying Surges Posted: 06 Nov 2014 04:01 AM PST gold.ie |
| Elite Supernova Death Dance In PMs? Posted: 06 Nov 2014 03:00 AM PST A supernova occurs when a very big star explodes. This happens when a star runs out of energy to make heat and light, so it collapses, then explodes, its brilliance at its peak just prior to its ultimate demise. What we are witnessing in the gold and silver markets is the likely supernova death dance of the existing Rothschild dynasty, flaring […] The post Elite Supernova Death Dance In PMs? appeared first on Silver Doctors. |
| Gold prices heading lower in the short term due to oversupply says Randgold CEO Posted: 06 Nov 2014 01:52 AM PST The gold price remains under pressure in the aftermath of the end of QE3 and the start of the Japanese QE9. Is there a more fundamental issue of supply? Mark Bristow, chief executive officer at Randgold Resources Ltd, says there is more ‘pressure on the downside than the upside in the short term’ for gold prices and the market is in an ‘over-supply situation.’ He speaks to Anna Edwards, Manus Cranny and Ryan Chilcote on Bloomberg Television’s ‘Countdown’ after the company’s third-quarter net income fell on lower gold prices. |
| The Return of the Trade Cold War? Posted: 06 Nov 2014 01:50 AM PST Yves here. With an active US effort to isolate Russia, which Russia is seeking to undermine (with only limited success so far) in strengthening ties with China and other emerging economies, most analysts have seen the geopolitical struggle in terms of short-term effects, such as on Russia's and Europe's growth rates over the next year. At the same time, the Chinese initiative to create a development bank, meant to rival the World Bank, is seen by many as an important step in breaking the dollar hegemony, along with moves by China and Japan to enter into oil contracts denominated in currencies other than the greenback. As we've discussed in previous posts, we believe the frisson over the demise of the dollar as the world's reserve currency is greatly overdone. As much as the US is abusing its role, particularly in its aggressive use of its influence over the dollar payments system as a weapon, there are simply no viable candidates for replacement on the horizon. However, this post examines a consequence of US economic aggression against Russia that has not rceived the attention that it merits: that of reducing the amount of international trade, something economists see as a driver of growth. Note that per the Lipsey Lancaster theorem, there is ample reason to doubt the near-religious belief that more open trade is always a good thing. However, sudden restrictions in trade, which is what is taking place with US/European sanctions on Russia and Russia implementing counter-sanctions, is certain to cause short-term dislocations. And as we noted in a recent post, the cordon sanitaire being placed around Russia will led it to operate more as an autarky, which may not necessarily be a negative in the medium to long term. This post seeks to identify the impact of reduced trade between Russia and Europe. This sort of analysis could become more germane going forward. While a currency rival to the dollar any time soon looks to be far-fetched, ever-more obvious US economic imperialism may lead other countries to strengthen trade ties among themselves to the detriment of the US, or like Russia, to move to greater self-sufficiency as a defensive measure. While economists assume that our current open trade system could never be rolled back, that was the tacit assumption during the last great era of open trade, the period right before World War I. The Great War put that all in rapid reverse gear. While no one expects a violent rupture, we may be in the early stages of seeing fractures developing in the trade system. |
| Avocet cuts full-year gold production forecast Posted: 06 Nov 2014 01:11 AM PST The miner expects to produce about 95,000 ounces this year versus its earlier forecast of 105,000 ounces. |
| Silver Eagles Sold Out at U.S. Mint Amid Huge Demand Posted: 06 Nov 2014 12:12 AM PST In the past, articles about silver shortages were published mostly by precious metals’ websites. However, today’s news that U.S. Silver Eagles are sold out at the U.S. Mint was covered by CNBC and Reuters. I had just written to subscribers this morning about watching for premiums to rocket higher and supply disruptions to start taking place. This […] |
| Cash is king as gold and silver prices collapse but how long will this reign last? Posted: 05 Nov 2014 10:41 PM PST The subscription-only ArabianMoney investment newsletter told its readers that cash would be king this autumn back in the summer. That’s proven true. But now we are beginning to wonder what will happen to break the rise and rise of the US dollar. Gold held near a four-year low as investors extended sales from the largest bullion-backed exchange-traded product. Bloomberg’s David Ingles reports on ‘On The Move Asia’… |
| Searching for Nazi Gold: No Interest or Research for Nearly Forty Years!: Gov Report Posted: 05 Nov 2014 10:30 PM PST Charleston Voice |
| Posted: 05 Nov 2014 10:18 PM PST SunshineProfits |
| American Eagle Silver Coins Sold Out as Demand Soars Posted: 05 Nov 2014 10:18 PM PST "Just when you thought it was safe to come up for air" ¤ Yesterday In Gold & SilverJPMorgan et al, along with their HFT buddies, laid another licking on the precious metals again yesterday, with most of the damage---not unexpectedly---coming in gold and silver. Gold was under some selling pressure early in Far East trading, but the HFT boyz and their algorithms showed up at 1:30 p.m. Hong Kong time, with the new record low tick coming shortly before noon in London. From there it rallied about ten bucks off its low by 11:30 a.m. EDT---and then gave up almost all those gains by the 5:15 p.m. close of electronic trading. The high and low ticks were reported by the CME Group as $1,169.30 and $1,137.10 in the December contract. Gold finished the Wednesday session at $1,140.00 spot, down $28.20 from Tuesday's close. Net volume was over the moon once again at 231,000 contracts. The silver price chart was a virtual carbon copy of the gold chart, so I'll spare you the play-by-play. The high and new record low tick in this precious metal were recorded as $16.045 and $15.12 in the December contract, which was an intraday move of 5.75 percent. Silver closed yesterday at $15.315 spot, down an incredible 71.5 cents from Tuesday's close. Net volume was very heavy at 68,500 contracts. The engineered price declines in platinum and palladium were mini versions of what happened in gold and silver. Platinum was closed down $17---and palladium was down 26 bucks. Here are the charts. The dollar index closed late on Tuesday afternoon in New York at 86.995---and didn't do much until shortly before noon Hong Kong time. Then away it went to the upside, with the 87.60 high tick coming a minute or so after 12 o'clock noon in London. From there the index drifted quietly lower for the remainder of the day, closing at 87.47---up another 47 basis points---and a new high close. The gold stocks gapped down about 3.5 percent at the open, but managed to crawl back to almost unchanged by 11 a.m. EST---and tried twice more to break into positive territory, with the last time coming minutes before the 1:30 p.m. Comex close. Then just a few minutes before 2 p.m. an active seller, probably a mutual fund that was forced to sell, appeared---and by the time the carnage was over, Nick's HUI chart was down another chunky 4.74%. The silver equities more or less echoed the price activity of the gold stocks, except they got hit for even more, as Nick Laird's Intraday Silver Sentiment Index closed down 5.40%. And,as I mentioned yesterday, with all these sellers, the question still remains---who are the buyers? The CME's Daily Delivery Report showed that 4 gold and 35 silver contracts were posted for delivery within the Comex-approved depositories on Friday. The link to yesterday's Issuers and Stoppers Report is here. November deliveries are turning exactly as I said they might, as there's nothing to see here. December, of course, will be far more interesting, as it's the biggest delivery month of the year for both gold and silver. The CME's Preliminary Report for the Wednesday trading session showed that there are 56 gold contracts open in the November delivery month, an increase of 1 from yesterday. Silver's November o.i. is up 10 contracts to 135 contracts. Of course to get the true November open interest at this point, one must subtract the deliveries mentioned two paragraphs ago. Not surprisingly, there was another withdrawal from GLD yesterday, as an authorized participant took out 96,413 troy ounces, which was almost exactly 3 metric tonnes. And as of 9:24 p.m. EST yesterday evening, there were no reported changes in SLV. It was another big sales day over at the U.S. Mint. They sold 12,000 troy ounces of gold eagles---2,000 one-ounce 24K gold buffaloes---and another 635, 000 silver eagles. In the last four business days, the U.S Mint has sold 2,685,000 silver eagles, about twenty times their daily production rate---and I know for a fact that little of this was sales involving the demand from the general public. This was Ted Butler's 'Mr. Big' at the trough. Our store, along with every other bullion dealer in North America, got an e-mail from A-Mark Precious Metals, Inc. yesterday morning advising us that the U.S. Mint was sold out of silver eagles for the moment---and that should come as no surprise to anyone if you've been reading this column for any length of time---and I have three stories about this in the Critical Reads section further down. Bullion sales have certainly picked up at our store in the last five or six business days, but we're not exactly being run off our feet, either---and that's what I'm hearing from other retail bullion dealers we're talking to, which includes our wholesale supplier. By the way, silver maple leafs from the Royal Canadian Mint have been rationed since sometime in September, but I can tell you that the rationing has nothing to do with retail demand here in Canada, which has been pretty horrid. It was another huge day in gold over at the Comex-approved depositories on Tuesday---and the silver activity wasn't far behind, either. In gold, 90,908 troy ounces were reported received---and 135,726 troy ounces were shipped out. In the last six weeks or so, the in/out activity in gold has picked up substantially---and the link to Tuesday's activity is here. In silver, there was 1,409,598 troy ounces reported received---and 100,080 ounces were shipped out the door for parts unknown. The link to that action is here. Here are four charts courtesy of Nick Laird. The first two show gold and silver coin sales at the U.S. Mint---and the other two are gold and silver coin sales from The Perth Mint. Once again I don't have all that many stories for you today, which I'm sure suits you just fine, as it certainly does me. ¤ Critical Reads The Economy Is So "Strong" It Just Cost Obama The SenateBased on the ridiculous, seasonally-adjusted data released day after day by the various U.S. “Departments of Truth”, also known as the BLS, the Census, the Dept of Commerce, U Michigan, ADP, the Conference Board and so on, the U.S. economy is so strong and consumer confidence is so resurgent, America is on the verge of a second golden age. Sadly, for Obama, and last night’s epic rout for Democrats, it was all a lie - a lie perpetuated by a manipulated S&P500 which now hits daily record highs on unprecedented central bank liquidity injections which have now terminally disconnected the “markets” from the economy, and the welfare of the vast majority of the common “folk” – and said “folk” saw right through it. Bloomberg’s take is just one of many observations on the historic cognitive dissonance that is plaguing the mainstream media this morning, which has been furiously pumping up U.S. confidence by pitching the endless array of “fake data” (to use Paul Singer’s words), only to see it all blow up in its face today. This commentary put in an appearance on the Zero Hedge website yesterday---and it's the first offering of the day from Roy Stephens.  Marin Katusa: A Sneak Peek at The Colder WarToday I’m excited to share with you a brief excerpt from Marin Katusa’s brand-new book, The Colder War: How the Global Energy Trade Slipped from America’s Grasp. Though the book is still in pre-order, it has already climbed to #4 on Amazon’s list of best-selling investing books, just behind Michael Lewis’ blockbuster Flash Boys. Having read The Colder War, I have no doubt that it will climb to #1 once released. The reason I’m so sure is that although I read a lot of nonfiction books, I tend to lose interest about halfway through, once I feel that I’ve absorbed the important points the author has to offer. Not The Colder War. I read every word, and I wished there was more when it ended. That's pretty much how I felt about the book as well, dear reader. It's fantastic! This commentary about it by Dan Steinhart, the Managing Editor of The Casey Report---along with the free peek---showed up in the clear on the Casey Research website yesterday---and it's definitely worth your while.  I'm Terrified of My New TV: Why I'm Scared to Turn This Thing on -- and You'd Be, TooI just bought a new TV. The old one had a good run, but after the volume got stuck on 63, I decided it was time to replace it. I am now the owner of a new “smart” TV, which promises to deliver streaming multimedia content, games, apps, social media and Internet browsing. Oh, and TV too. The only problem is that I’m now afraid to use it. You would be too — if you read through the 46-page privacy policy. The amount of data this thing collects is staggering. It logs where, when, how and for how long you use the TV. It sets tracking cookies and beacons designed to detect “when you have viewed particular content or a particular email message.” It records “the apps you use, the websites you visit, and how you interact with content.” It ignores “do-not-track” requests as a considered matter of policy. It also has a built-in camera — with facial recognition. The purpose is to provide “gesture control” for the TV and enable you to log in to a personalized account using your face. On the upside, the images are saved on the TV instead of uploaded to a corporate server. On the downside, the Internet connection makes the whole TV vulnerable to hackers who have demonstrated the ability to take complete control of the machine. This amazing article appeared on the alternet.org Internet site on Tuesday---and it's worth reading if you have the time. I thank Roy Stephens for his second offering in today's column.  London Stock Exchange to freeze trading at midday to fend off high-frequency tradersTrading on the London Stock Exchange will be halted mid-session [for 2 minutes] for the first time in more than 200 years in a bid to protect its biggest customers from “flash boy” high-frequency traders. The LSE has two “auction” periods at the beginning and end of the day’s trading when share orders are submitted, but stock prices are frozen while buyers and sellers are matched to fix an opening and closing price. Institutional investors such as pension funds have taken advantage of these opaque pricing periods to sell large blocks of shares without signalling their intentions to the wider market and allowing the high-frequency traders exposed by author Michael Lewis’s Flash Boys book to move prices against them. The bigger market fish have increasingly traded in so-called “dark pools”, private exchanges run by big banks, in recent years to avoid the HFTs. I passed this by Ted Butler---and his comment was that this sort of action was "long overdue." This must read article showed up on the independent.co.uk Internet site on Wednesday---and I thank U.K. reader 'Paul C' for sharing it with us.  British mainstream freaks out over Russia Today U.K. launchU.K. news outlets and personalities are reacting with predictable venom to the just-launched RT U.K.’s pledge to “challenge” the U.K. status quo. The "red scare-mongering" portrays the network as a “Kremlin-backed mouthpiece” and a “key weapon” Vladimir Putin wields against Western societies. Even Reuters worried that RT is seeking “to extend Russia's soft power in a close US ally”. The Guardian and The Mirror went for "laughs" - scrambling up two stories on RT’s ‘greatest hits’ that included an activist refusing to discuss Chelsea Manning’s sentence as he was invited to do, an interview with Steven Seagal who criticized western media coverage of the Ukraine crisis and a video of Putin singing Blueberry Hill at a charity dinner. RT U.K.’s launch also coincided with a London panel debate on "countering Russian disinformation", hosted by a UAE-funded NGO – its press release mentioning the only Russian channel – RT. Tory activist and Conservative Home executive editor Mark Wallace got so worked up that he urged British MPs to boycott RT U.K. on the premise that speaking to the channel would spread “propaganda.” This very interesting news item was posted on the Russia Today website at 8:51 p.m. GMT on their Wednesday evening---and I thank Roy Stephens for sending it. Spain Moves Military Assets Into Catalonia Ahead of Weekend's 'Illegal' Secession Vote"Everything is all set for Nov. 9," says a senior Catalan regional government official as the region prepares to defy both the central government and the country's highest court and proceed with a much-disputed weekend vote on whether to secede from Spain. And while the Spanish government has not specified what legal consequences Catalan leaders, poll workers or voters might face Sunday, when they go to vote, The L.A. Times reports that Madrid has reportedly readied thousands of Civil Guard police officers to travel to Catalonia this weekend if needed. This Zero Hedge story was posted on their website at 2:21 p.m. EST yesterday afternoon---and it's courtesy of reader M.A.  European Commission's New Chief Says Sanctions Against Russia to RemainEuropean Commission President Jean-Claude Juncker said Wednesday European sanctions against Russia are likely to remain on the same level. “My impression is that the sanctions we have will remain where and as they are,” he told reporters. Since March, the European Union, the United States and their partners have imposed several rounds of economic sanctions against Russia over the country's alleged role in the Ukrainian crisis, while Moscow has repeatedly stated that Russia is not a party to the Ukrainian internal conflict. Earlier in September, several European businessmen and politicians said that it would be reasonable to cancel the anti-Russian sanctions, as the ceasefire in eastern Ukraine was holding and all the conflicting sides were sticking to the Minsk agreements reached at the Contact Group meeting on September 5. This story, filed from Brussels, showed up on the RIA Novosti website at 4:17 p.m. Moscow time on their Wednesday afternoon, which was 8:17 a.m. in New York. It's also courtesy of Roy Stephens, for which I thank him. 2 teens killed, 4 injured in shelling near Donetsk school, East UkraineTwo schoolchildren were killed and four injured as an artillery shell hit a stadium in front of a school in the Eastern Ukrainian city of Donetsk, local self-defense forces said. "All the wounded were taken to the Donetsk regional trauma unit,” Natalya Yemchenko, a militia official with the Donetsk People’s Republic, was cited as saying by Interfax-Ukraine news agency. “They are now in intensive care. One of them is in critical condition and three other are in a state of moderate severity.” “There were children – a lot of them – at the stadium” when the shell hit, Yemchenko wrote on her Facebook page. This Russia Today story appeared on their Internet site at 3:34 p.m. Moscow time yesterday afternoon---and once again I thank Roy Stephens for bringing it to our attention. Putin: Civil War Rages in Ukraine Despite Reconciliation DealsThe civil war rages in eastern Ukraine despite reconciliation agreements reached this fall with the participation of Russia and the Organization for Security and Co-operation in Europe, the Russian president said Wednesday. "A civil conflict, which in fact is a civil war, rages in Ukraine, near Russian borders. Despite Minsk agreements, peaceful cities are being shelled and civilians get killed," Vladimir Putin said at a meeting on Russia's military-technical cooperation. Putin added that ties with a number of Ukrainian entrepreneurs have been harmed as a result of the civil conflict. This news item appeared on the |
| Posted: 05 Nov 2014 10:00 PM PST Geographicus |
| Protected: Outlook for HUI & GDXJ Posted: 05 Nov 2014 09:38 PM PST The post Protected: Outlook for HUI & GDXJ appeared first on The Daily Gold. |
| *Alert: US Mint SOLD OUT of Silver Eagles! 2 Million Coin Surplus Sold in Under 2 Hours! Posted: 05 Nov 2014 09:21 PM PST
Click here for more on the US Mint selling out of Silver Eagles: |
| US Mint Caught Totally Off Guard By EPIC Wave of Silver Demand- Physical Market Screams No Mas! Posted: 05 Nov 2014 09:05 PM PST T. Ferguson joins The Doc & Eric Dubin for a Special Market Alert edition for this week’s Metals & Markets, discussing: US Mint caught completely off guard by EPIC physical demand, SOLD OUT of Silver Eagles after burning through over 2 million oz in less than 2 hours Wednesday morning! Primary Dealer of Silver Eagles […] The post US Mint Caught Totally Off Guard By EPIC Wave of Silver Demand- Physical Market Screams No Mas! appeared first on Silver Doctors. This posting includes an audio/video/photo media file: Download Now |
| On the use of gold coins as money Posted: 05 Nov 2014 09:00 PM PST Plata.com.mx |
| Gold Buyers Drop 19%, Sellers Rise 9% Posted: 05 Nov 2014 09:00 PM PST Bullion Vault |
| US Mint stops selling silver coins because it can’t cope with a huge surge in demand Posted: 05 Nov 2014 08:25 PM PST The US Mint issued a statement yesterday saying that it has stopped selling silver coins because it has run out of them after ‘tremendous’ demand in recent weeks. German bullion dealers have also reported a massive surge in sales as the silver price has fallen sharply recently. There is of course a good reason for this. The price of silver is set in the Comex futures market where paper notes purporting to be for future silver deliveries are traded. This is manipulated by the three main bullion banks on the orders of the central banks. Money printing The simultaneous ending of QE3 by the Fed and start of QE9 by the Bank of Japan has been accompanied by an attack on gold and silver prices. Retail investors rightly see this price shock as having nothing to do with the demand for the underlying physical metal which in the case of silver is in astonishingly short supply as the sudden ending of silver coin sales by the US Mint only goes to prove. In keeping with the secrecy that surrounds silver prices the US Mint did not make this announcement publicly but a spokesman confirmed to Reuters ‘that it has sent the statement to its authorized participants’. Reuters also reported that the Royal Canadian Mint has started rationing its Silver Maple Leaf coin sales to its global distributors in response to high demand in September when bullion prices fell. We hear that the Perth Mint is one of the few global suppliers of silver coins with an adequate stock but they are selling fast. Price spike coming What happens next in the silver market? The demand created by the artificial manipulation of silver prices is going to have the inevitable effect of pushing the price premium for physical silver up, and silver is such a small market that when demand takes off it does tend to produce a massive price spike. We saw that last in April 2011 when what is selling today for $15 and change was almost $50 an ounce. Silver will go higher on its next bounce and that can’t be far away. Something just has to blow-up in the paper market for silver before long. What if those paper holders all wanted delivery in the precious metal, or even a handful of them? Silver stocks are running low in the futures exchanges as well as the mints. Holding physical silver never made more sense. Watch what happens when a market that has been suppressed for 34 years rebalances… |
| Harvey Organ: HUGE Drive-By Shooting in Gold & Silver! Posted: 05 Nov 2014 04:27 PM PST We had a HUGE Drive-By shooting today in gold & silver, as the cartel smashed silver nearly to $15/oz, resulting in the US Mint COMPLETELY SELLING OUT OF SILVER EAGLES!! Let's head immediately to see the major data points for today: Submitted by Harvey Organ: Gold: $1145.40 down $22.90 Silver: $15.42 down 51 […] The post Harvey Organ: HUGE Drive-By Shooting in Gold & Silver! appeared first on Silver Doctors. |
| Demand For Coins And Bars Exploding While Gold And Silver Prices Pushed Down Posted: 05 Nov 2014 02:47 PM PST While the price of silver and gold have been breaking down, the demand for coins and bars is exploding, as evidenced by the following facts: Bloomberg reports on October 31st “U.S. Mint Silver-Coin Sales Jump to 21-Month High“:
Reuters reports today, November 5th “Silver lining in precious metals’ rout catches out coin mints“:
Reuters reports today, November 5th “U.S. Mint temporarily sold out of Silver Eagles amid huge demand“:
In Germany, precious metal dealers have literally been run down in the last week, as evidenced by GoldReporter:
Resource Investor reports on November 4th “Indian gold bullion imports hit 17-month high“:
Bullionstar on November 2nd: “Insatiable Chinese Gold Demand Continues Unabated.” Based on these data, except for the Perth Mint in Australia, all other sources are reporting a huge increase in demand for coins and bars across the globe. Retail investors primarily are looking taking advantage of these bargain prices. The price setting in the COMEX futures market has its effect on real world demand. The question is, when will wholesale demand start piling up on precious metals to trigger a supply shortage? That would be fun to observe … but we are unfortunately not there yet … prices should go even lower to trigger such a situation. |
| Posted: 05 Nov 2014 02:15 PM PST Example 1: When a golfer hits a shot to the green he often yells "sit" as he orders the ball to slow or stop near the flag. Even professionals indulge in this bit of satisfying self-delusion. However, the ball responds to powerful forces, such as wind, the undulations of the green, its own momentum, and gravity. Example 2: A mother demands that her teenage son clean his room. Instead he responds to powerful forces, such as testosterone surges, cute girls, and teenage rebellion. Example 3: Silver prices surged higher in early 2011 and have collapsed since then in spite of increasing investment demand. The silver market was responding to powerful forces. What forces?
What seems strange Demand for silver is strong and apparently increasing but the COMEX driven price for silver has been weak; it just hit a four plus year low. The "all-in" cost of silver production has been widely quoted at or considerably ABOVE current prices. But how long can this continue? Consider this chart of the S&P 500 Index and the Fed balance sheet. It appears that the $ Trillions created by the Fed dramatically assisted the S&P in its upward journey. But what happens when the newly created dollars, euros, and yen are used to buy silver and gold instead of bonds or stocks?
Consider this graph of silver investment demand, which has increased substantially. (2014 demand has been even stronger.)
Consider these graphs that show (estimates for) Chinese and Russian demand for gold. From which vaults do you think all that gold was removed?
Powerful forces can impact markets for considerable time. Gold has broken its triple bottom at about $1,180. Silver has made a new four year low near $15 – about a 70% loss from its 2011 high. What happens next? My guess is that the High-Frequency-Traders will attempt to squash all rallies until The-Powers-That-Be are properly positioned to make a fortune on the inevitable rally.
The longer a market is repressed or levitated, the more violent the correction. I suspect we will see violent corrections in the next six months in the silver, gold and stock markets. For several years it seems that powerful forces have been aligned against gold and silver. What will happen to prices when some or all of those powerful forces reverse and align in favor of precious metals, for their own protection and profit? They Are Burning The Furniture Now
Gary Christenson | The Deviant Investor | GEChristenson.com
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| The Economy Of The Largest Superpower On The Planet Is Collapsing Right Now Posted: 05 Nov 2014 02:08 PM PST
First of all, let's take a look at unemployment. If the U.S. was using honest numbers, the official unemployment rate would probably be somewhere close to 10 percent. But in many nations in Europe, the official unemployment rate is already above the ten percent mark... France: 10.2% Poland: 11.5% Italy: 12.6% Portugal: 13.1% Spain: 23.6% Greece: 26.4% The official unemployment rate for the eurozone as a whole is currently 11.5 percent. The lack of good jobs is causing the middle class to shrink all over Europe, and more people than ever are becoming dependent on government assistance. European nations are well known for their generous welfare programs, but all of this spending is causing debt to GDP ratios to absolutely explode... Spain: 92.1% France: 92.2% Belgium: 101.5% Portugal: 129.0% Italy: 132.6% Greece: 174.9% At the same time, the value of the euro has been steadily declining over the last six months. This is significantly reducing the purchasing power that European families have...
Many believe that the euro will ultimately go much lower than this. Nations such as Greece and Spain are already experiencing deflation, and the inflation rates in Germany and France are both currently below one percent. If the European Central Bank starts injecting lots of fresh euros into the system to combat this perceived problem, that will lift the level of inflation but it will also further erode the value of the euro. In the long run, it would not be a surprise to see the U.S. dollar at parity with the euro. When it happens, remember where you heard it. The Europeans are scared to death of a deflationary depression, but that is precisely where the long-term economic trends are taking them right now. The following is from a recent Forbes article...
In a desperate attempt to avoid widespread deflation in Europe, the ECB will inevitably take action at some point. It may not happen immediately, but when it does it will be yet another salvo in the emerging global currency war. Speaking of currencies, it is being reported that Russia is actually considering legislation that will ban the circulation of the U.S. dollar in that nation. The following is from an article that was posted on Infowars...
That is not good news for the U.S. dollar at all. Expect wild shifts in the foreign exchange markets in the months and years to come. Turbulent times are ahead for the dollar, the euro and the yen. Getting back to Europe, let us hope that things stabilize over there - at least for a while. But that might not happen. In fact, things could take a turn for the worse at any moment. Most people don't realize this, but European banks are even shakier than U.S. banks, and that is saying a lot. For example, the largest bank in the strongest economy in Europe is Deutsche Bank. At this point, Deutsche Bank has approximately 75 trillion dollars worth of exposure to derivatives. That amount of money is about 20 times the size of German GDP, and it is more exposure than any U.S. bank has. And Deutsche Bank is far from alone. All over Europe there are zombie banks that are essentially insolvent. Many of them are being propped up by their governments. Those governments know that if those banks failed that it would make their economic problems even worse. Just like in the United States, most economic activity in Europe is fueled by debt. So those banks are needed to provide mortgages, loans and credit cards to average citizens and businesses. Unfortunately, bad debt levels and business failures continue to shoot up all over Europe. The system is breaking down, and nobody is quite sure what is going to happen next. So keep an eye on Europe. In particular, keep an eye on Italy. I have a feeling that big economic news is about to start coming out of Italy, and it won't be good. In 2014, we have been experiencing "the calm before the storm". But 2015 is right around the corner, and it promises to be extremely "interesting". |
| Posted: 05 Nov 2014 01:00 PM PST Gold continues to suffer as the dollar erased yesterday's pullback and put in new contract highs overnight. So long as the dollar continues its strength relative to other foreign currencies, the precious metals as a whole will likely continue to feel the effects. |
| Eldorado Gold Corp. said to weigh $1.5 billion sale of China mines Posted: 05 Nov 2014 12:49 PM PST Eldorado Gold Corp., the largest foreign producer of the precious metal in China, is seeking a buyer for its mines in the country as part of a dual-track sale process, people with knowledge of the matter said. |
| Recycling boom to minimize India's addiction to gold imports Posted: 05 Nov 2014 12:39 PM PST The foray of large players into gold recycling business is likely to reduce India's over-dependence on gold imports. The boom in gold recycling business may help liquidate tons of gold held in households and temples. |
| Posted: 05 Nov 2014 11:59 AM PST From The Gold Report: When Dr. Alan Greenspan became chairman of the Federal Reserve, he moved from the world of rhetorical economics to the world of action. His most recent memoir, “The Map and the Territory 2.0: Risk, Human Nature, and the Future of Forecasting,” attempts to make sense of how the financial crisis of 2008 came to be and how we can better predict future crises, along with the role of gold in a global monetary system. In this excerpt from Greenspan’s appearance at the New Orleans Investment Conference with Navellier & Associates Senior Writer Gary Alexander, Gloom, Boom & Doom Report Publisher Marc Faber and Stansberry & Associates Investment Research Founder Porter Stansberry, The Gold Report delves into the role of gold versus fiat currency, why central banks own so much gold if it is truly “a barbarous relic,” and the reason China is buying so much gold today. Gary Alexander: You said that when you were named to the position of Federal Reserve chair you left the world of theoretical economics philosophy and entered the arena of action. You moved beyond the role of pamphleteer on the sideline to being part of the action. In what way did your objectivist teaching from your time with Ayn Rand and your belief in the gold standard influence the people around you? How did you convince people to see things your way or did you feel that most of the compromise went the other way? Alan Greenspan: When I wrote a paper on how agricultural subsidies made no sense to the farmers in the long run, two Republican senators from Nebraska taught me the reality of actually implementing the values we hold as best we can in the context of a political environment. I never changed my fundamental views because they were rational. President Ronald Reagan advised that other than your core beliefs, which are protected by the Constitution, sometimes you have to compromise. We learned to change the world bit by bit. GA: When you took office in August of 1987, the gold price was $460 an ounce ($460/oz) on your first day. It peaked at $504/oz in December of 1987. Over the next 12 years, it was cut in half to $252/oz by August of 1999. Many believe that during that time, the Fed must have been selling gold or manipulating the market in some way to push the price of gold down. Was anything like that happening? AG: No. Some central banks were major sellers of gold in that particular period. We were very concerned about that. If all the central banks sold gold at the same time, it really would have brought the price down. So they set up a partitioning scheme—some called it a cartel—where individual central banks were given quotas of what they could sell at certain times. The United States abstained from that group. In my new book, I cover the role of gold and why the U.S doesn’t sell all of its gold. If it’s a barbarous relic, as some say, and it earns nothing and it costs money to store it, why are central banks holding so much of it? GA: That’s a question I was going to ask you. Ron Paul asked Ben Bernanke in Congressional testimony that simple three-word question “Is gold money?” which got a one-word answer, “No.” What do think? AG: It’s currency, of course. Gold, and to a lesser extent silver, are the only major currencies that don’t require a third party credit guarantee. Gold is inbred in human nature. Gold is special. For more than two millennia, gold has had virtually unquestioned acceptance as payment to discharge an obligation. Remember, Germany could not import any goods in the last part of World War II unless it paid in gold. Today, China is beginning to convert part of its $4 trillion ($4T) foreign exchange reserve into gold as a partial diversification out of the dollar. Irrespective of whether the yuan is convertible into gold, the status of the Chinese currency could take on unexpected strength in today’s fiat money, floating international financial system. It would be a gamble for China to try to buy enough gold bullion to displace the United States’ $328 billion of gold reserves as the world’s largest holder of monetary gold. But the cost of being wrong, in terms of lost interest and cost of storage, would be quite modest. If China embarks on a gold accumulation program, global gold prices will rise, but only during the period of accumulation. GA: One of your statements in your book is that even though the gold standard was not practical, you still believe in the theory of the gold standard. AG: A return to the gold standard in any form is nowhere on anybody’s horizon. GA: The Fed has now been around for a hundred years. Would the Fed be considered a successful manager of the value of the dollar over the last century? AG: Remember, what the Fed does is what Congress requires of it. When the Fed started out, U.S. currency was still on the gold standard. It was set up largely in response to the panic of 1907 as the lender of last resort. The gold standard was abandoned in 1933 because it appeared to be depressing the general price level and inhibiting recovery out of the Great Depression. More important, the restrictive nature of gold undermined the fiscal flexibility required by the New Deal’s welfare state. Some blamed gold for the depression, but the problem wasn’t convertibility to gold, it was a problem with the people pricing it. What followed was fiat money price inflation. Between 1933 and 2008, prices for personal consumption increased more than thirteenfold. Central banks were then ceded the role of controlling the supply of money, and hence prices. The goal became keeping the rate of inflation down rather than the level of prices unchanged. As the world adopted a welfare state psychology, challenges began to emerge. Values, culture, ideas and philosophy determine what economic policies look like. Unless and until you change that, nothing will happen. It is ideas that matter in economics. GA: Interest rates remained very low from 2001 to mid-2004. The Fed funds rate was around 1% from 2004 to 2006. Do you regret, in retrospect, keeping rates so low? Might that have contributed in any way to the housing and real estate bubble? AG: It became apparent after the dot-com boom that the central banks had lost control of the wrong end of the money. In other words, the Federal Reserve and all the central banks fixed the short end like the federal funds rate, but not the real rate on 10-year notes. We began to see a huge amount of international arbitrage in the bond markets. The result was the federal funds rate went down for a year to 1% because we hadn’t seen price inflation. Money supply growth, long-term rates, all of the measures of inflation were unchanged. No one raised the issue at the time. Indeed, Economist Milton Friedman praised Federal Reserve policies. It wasn’t until 2006 or 2007 that there was a retrospective look at what occurred. GA: We all saw the headlines about people flipping homes and borrowing and refinancing homes and turning them into ATM machines. Wasn’t that an indication that something was out of control? AG: That had nothing to do with Federal Reserve policy. That was Fannie Mae and Freddie Mac keeping their debentures at an extraordinarily low level subsidized by the Federal government guarantee that they wouldn’t be allowed to fail. Then the Department of Housing and Urban Development required that the two lenders invest a significant amount of their balance sheet into affordable housing loans. That led to huge numbers of subprime mortgages with low down payments and adjustable interest rates. Eventually, it blew the system apart. Q: I’d like to turn now to the years after you left the Fed, which you wrote about in “The Age of Turbulence.” We’ve now had almost six years of effective zero interest rate policy and not much measurable inflation. You wrote: “Thus without a change of policy, a higher rate of inflation can be anticipated in the United States. I know that the Federal Reserve left alone has the capacity and perseverance to effectively contain the inflation pressures I foresee. Yet to keep the inflation rate down to a gold standard level of under 1% would have to constrain monetary expansion so drastically that it could temporarily drive up interest rates in the double-digit range.” However, they have done the opposite. The balance sheet has exploded, and yet rates have stayed so low. Inflation is not that measurable, and people are fearing deflation. Could you please explain the map of this territory? AG: Money supply hasn’t grown. The reason is very little of those excess reserves has been re-lent into the market to IBM or General Motors. That is because there is too much uncertainty, banks are better off holding it for 25 basis points. So we are left with this huge potential inflationary explosion tinder. Once those assets are triggered into the marketplace, then inflation will rise. It has to rise. GA: My theory is the federal government doesn’t want to raise rates because it has a $17T budget deficit to pay with interest, and that’s going to hurt. AG: When I was at the Fed, there was never a discussion between the Fed and the Department of the Treasury about the impact of rates on paying the deficit. With the size of the outstanding debt that we now have, the deficit could become fairly crippling if rates go up. GA: I want to ask you about banks. You say three times in your book that banks have failed terribly in regulating themselves and it’s usually the whistleblowers who draw attention to it. Today, we have the concept of too big to fail. Do you think we should allow big banks to fail? AG: The premise of a financial system is to facilitate the movement of society’s savings into productive capital assets, which will create a rising standard of living. To the extent that you don’t allow creative destruction of companies, you do not optimize the use of the savings of a society. The issue that people don’t want to address is the fact that creative destruction is an essential characteristic of a market economy, but it does have two aspects to it: creative and destructive. People like the creative, but they don’t want the destructive. You cannot have it both ways. You either have a high standard of living by allowing the savings of society to increase productive assets or you finance everybody—creative or not—and by doing that, you’re creating real serious problems. Porter Stansberry: The thing that I think has changed in our economy during my lifetime is that debt has gotten so cheap. Debt used to be the last resort for people, now it seems to be the first choice. It makes our institutions fragile in a way that they were not before. The investment banks that blew up in 2008–2009, requiring huge bailouts from taxpayers, were fragile because they were leveraged 50:1. People who ran those institutions thought that was normal and sane. And it wasn’t. We’ve all seen the culture of our country change. In my view, that’s because we’ve gone from the role of the creditor to the role of the debtor. There are many institutions that enabled that process. The Fed is one of them. AG: The standard of living in the economy is fundamentally tied to the issue of productivity and the degree of independent innovation. We have a very substantial degree of entitlements within this economy, an aggregate of Medicare, Medicaid, Social Security and a whole variety of other programs, all of which are mandated, not appropriated, by Congress under both parties. This leads to a reduction in the level of gross domestic savings, which immediately translates into lower capital of stock and lower standards of living. There is no way out of this arithmetic through bookkeeping. We are eating our seed corn. Marc Faber: There are many reasons the Western economies are slowing down. One is government spending. Between 1870 and 1910, nowhere in Europe or in the U.S. was it above 15% of the economy. Now, U.S. government spending, including states and municipalities, is at around 40% of gross domestic product (GDP). In France, government spending is 57% of GDP. The larger the government becomes, the less economic growth there will be. So Dr. Greenspan and I agree on the problem, but who financed all these entitlements? I believe the central banks with their artificially low interest rates are deliberately creating bubbles even though in a bubble, the majority loses, and the minority makes a lot of money. AG: The presumption is that if the Federal Reserve were not funding the deficits, they wouldn’t happen. You have it backwards. Politicians mandate the degree of expenditures and taxes. What would happen if there is no central bank is that interest rates would push up and crowd out the private sector. That is what actually occurs unless the central banks intervene. Central banks are not the primary cause of this problem, they are responding to government spending. If the government spending weren’t there, the issue wouldn’t arise. GA: With the current Federal Reserve probably winding up quantitative easing (QE) soon, what do you see as the outcome of the current Fed policies under Janet Yellen over the next year? PS: I really think that the current Fed is in a terribly difficult situation. The federal government is way over its head in debt. It’s $150,000 per taxpayer in debt. There is just no way politically to cut these expenditures nor is there a way to generate enough in income taxes or corporate taxes to cover the shortfall. I’ve looked at the data. It shows that even if you doubled the amount taken in income taxes, we’d still be running a deficit. So the Fed is in a really tough place. It is in charge of financing the government’s runaway spending and uncontrollable debt. Regardless of what the hawks may say, I just don’t believe that the Fed is ever going to become very aggressive with the purse strings. I think that we’re locked into a pattern of larger and larger QEs, lower and lower rates, until finally something breaks, whether that’s the commodity markets or the bond markets. I actually sort of feel sorry for the folks who are at the Fed currently because they’re stuck between a rock and a hard place. MF: My sense is that the Fed and other central banks around the world will keep interest rates at very low levels for a very long time. The whole investment world has been distorted by essentially zero interest rates and expansionary monetary policies. AG: If the Federal Reserve wants to keep the same degree of tightening, it has to actually raise the rate it’s paying on the money. There’s no other alternative. The issue of the size of the balance sheets is beyond comprehension. We are going to have to wait and see what happens when the huge amount of unused reserves starts moving. We have never seen anything like this before. If anyone has the guts to go out and forecast five years out from now, good luck. PS: Dr. Greenspan, you famously said while you were at the Fed that spotting bubbles is notoriously difficult until in retrospect. There are a couple of things going on today that strike me as bubble-like behavior: NASDAQ trading at almost seven times earnings, high-yield corporate debt offering less than 5%, beachfront condos in Miami selling for $30 million. Do any of those things strike you as being in bubble territory? AG: Commercial real estate, which was dead in the water with respect to price and volume, has now had a significant change in pricing. Prime areas have seen a surge in funding, but the volume of activity is not back to where it was. Multifamily is doing better because a lot of people have shifted from home ownership to rental status. You will know you are in very serious trouble when there is price inflation but no buyers; that’s suggestive of something not well going on. Yes, I think there are many signs. The stock prices have been very surprising. This is not sustainable, but we are not seeing any signs of inflation or real interest rates rising. . .yet. Bubbles are easy to see, but difficult—if not impossible—to pinpoint when they implode because of the way markets work. If people see it coming, it won’t happen. No one can forecast when those bubbles will break. GA: Marc Faber, what is the significance of the Swiss referendum coming up next month to have 20% gold backing, repatriated gold and forbid gold selling? MF: I think it will be rejected. If the proposal was for 100% backing, I would more enthusiastically endorse it. Twenty percent, in my opinion, is neither here nor there. I believe that smart investors need to have their own gold reserves. I would never trust anyone to hold these gold reserves on my behalf because they can lease it out or they can sell it. GA: Dr. Greenspan, did you in July 1998 testify that the Fed stands by, ready and willing to buy gold should the situation rise where it’s necessary? AG: No. But I have been writing about the significance of the gold standard since the 1960s. The crucial question is not the amount of gold individual countries own, only if they are willing to convert their currency into gold. The rest is strictly an investment position. This interview was condensed and edited from a transcript of the conversation at the New Orleans Investment Conference and Dr. Greenspan’s book, “The Map and the Territory 2.0.” You can order audio CDs and video DVDs of the conference here. Gary Alexander is senior writer for Navellier & Associates. For the previous 20 years, he was senior executive editor at InvestorPlace Media. From 1983–1989, he edited Gold Newsletter and Wealth magazine for Jim Blanchard. Swiss-born Marc Faber, who at age 24 earned his Ph.D. in economics magna cum laude from the University of Zurich, has lived in Hong Kong nearly 40 years. He worked in New York, Zurich and Hong Kong for White Weld & Co., an investment bank historically managed by Boston Brahmins until its sale to Merrill Lynch in 1978. From 1978 to 1990, Faber served as managing director of Drexel Burnham Lambert (HK), setting up his own investment advisory and fund management firm, Marc Faber Ltd. in mid-1990. His widely read monthly investment newsletter Gloom Boom & Doom Report highlights unusual investment opportunities. Faber is also the author of several books, including “Tomorrow’s Gold: Asia’s Age of Discovery” (2002), which spent several weeks on Amazon’s bestseller list and is being translated into Japanese, Chinese, Korean, Thai and German. He also contributes regularly to leading financial publications around the world. Much also has been written about Faber. Nury Vittachi, one of Asia’s most popular writers and speakers, published “Riding the Millennial Storm: Marc Faber’s Path to Profit in the Financial Markets” (1998). The Financial Times of London described him as “something of an icon” and Fortune called him a “congenital contrarian and shrewd Swiss investment advisor.” Former Federal Reserve Chairman Alan Greenspan (1987–2006) also served as chairman of the Federal Open Market Committee. From 1954–1974 and 1977–1987, he was chairman and president of Townsend-Greenspan & Co. From 1974–1977, he served as chairman of the President’s Council of Economic Advisors under President Gerald Ford and from 1981–1983 as chairman of the National Commission on Social Security Reform. Before his appointment to the Federal Reserve Board, Greenspan served as a director of numerous corporations, including J.P. Morgan & C., Mobil Corporation, General Foods Corp. and Capital Cities/ABC. He was a term member of the Board of Trustees of the Rand Corporation, a member of the Board of Overseers of the Hoover Institution and vice chairman and trustee of the Economic Club of New York. He is the author of “The Age of Turbulence: Adve |
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