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Gold World News Flash

2012-02-12T01:27:00.001-08:00

Gold World News Flash

GoldSeek.com Radio: Louis Navellier, John Rubino, The International Forecaster, and your host Chris Waltzek
Where a Nation’s Gold and Your Gold Should be Held – Part II
International Forecaster February 2012 (#4) - Gold, Silver, Economy + More
Taco Bell refuses 1 oz gold coin for .99 taco
Saturday Night With the ‘Doomsday Preppers'
Silver Update: 2/11/12 Socialism Fails
Whither Gold
2012: The Beginning of the END for the U.S. ?Petrodollar?!
Get Positioned: ?Gold Rush? Will Cause Gold Stocks to SOAR ? Here?s Why
Greece Now Meeds €145bn Bailout to Avoid Collapse
Precious Metals: The Only Alternative
What's crazier than creationism and gold? It's in your wallet
The Liberty Option
Warren Pollock STILL Disagrees with Gonzalo Lira
A Warning Flag For Silver
Pento - Looming Debt Market Collapse to Destroy the Dollar
Treasury Market Panic Reversal Due To Little Known Forces Called Supply and Demand
Greece at the Point of no Return
This is secured debt, which means that if every dollar in assets generating one dollar in GDP were to be liquidated and Greece sold off entirely in part or whole to Goldman Sachs et al, there would still be a 36% shortfall to the Troika
2 Misguided Assertions About Gold ? Read On Mr. Buffett!
Harvey Organ's Daily Gold & Silver Report
Keiser Report: FBI vs Gold Standard 'Extremists' (E248)
Sky is the Limit for Gold - John Rubino
Registered Ounces of Silver in the Comex Warehouse
Gold, Silver, War, Systemic Collapse & Social Unrest: Gerald Celente
Barley Investing Better Than Gold and Silver?
The Gospel of Gold According to Peter
Warren Buffett Trashes Gold, But What About Silver?
New Up-Cycle for Gold

GoldSeek.com Radio: Louis Navellier, John Rubino, The International Forecaster, and your host Chris Waltzek

Posted: 12 Feb 2012 04:00 PM PST

Headline news & the Market Weatherman Report. Spotlight Stock Picks. Host Chris Waltzek & Bob Chapman, The International Forecaster discussion and answer listener's questions. GUESTS: Louis Navellier, The Little Book That Makes You Rich John Rubino, The Coming Collapse of the Dollar

Where a Nation’s Gold and Your Gold Should be Held – Part II

Posted: 12 Feb 2012 01:00 PM PST

In Part I of this article we looked at the growing trend of governments moving their gold into their own home vaults to remove the influence and potential seizure of their gold when political policies clash with the country where the holding central bank was situated. We covered the dangers of holding gold at home and the difference in attitude individual's should have towards the problem of where and how to hold gold.

International Forecaster February 2012 (#4) - Gold, Silver, Economy + More

Posted: 12 Feb 2012 03:15 AM PST

2012 is going to be a difficult year, but not as dreadful as anticipated. The neutralization process, as usual, we covered over by the availability of money and credit. We have already seen that via Fed $1 trillion loans to the ECB and the admission by the Fed that QE 3 is on the way. In Europe banks have borrowed $3.2 trillion and they find they will need $1 trillion more. These borrowings are more than troubling and indicate that there are 523 banks in Europe in serious trouble.

Taco Bell refuses 1 oz gold coin for .99 taco

Posted: 11 Feb 2012 07:48 PM PST

Saturday Night With the ‘Doomsday Preppers'

Posted: 11 Feb 2012 04:53 PM PST

[Ed. Note: Part 1, Part 3, Part 4.]

by SGT:

So I just flipped on the TV this late Saturday evening and took a brief glance at the "guide" to see what's on which led me to NatGEO channel and a episode of 'Doomsday Preppers'. Although I'd heard about it, I've never seen it before. I'm posting Part 2 of the episode I am watching right now so you can see the portion I just watched – as I write this. Fast forward to the 9:00 minute mark to see where I started watching. The narrator in this show repeated mentions the "total economic collapse and chaos' as one of the primary reasons these folks "prep". I'm pretty sure that makes the people on this show 'enemies' of the U.S. government. Not sure if this is 'predictive programming' or 'educational' television, maybe it's both. But one thing's for sure – most of these folks are a helluva lot more prepared than most Americans.

Silver Update: 2/11/12 Socialism Fails

Posted: 11 Feb 2012 03:03 PM PST

from BrotherJohnF:

Whither Gold

Posted: 11 Feb 2012 03:03 PM PST

The prophetic words of Antal Fekete in his now infamous 'essay' on Gold are as relevant now (perhaps more so) as they were when he first wrote them 15 years ago - especially as the Euro-zone migrates from lossening fiat-money to quasi-money (greek pharma bonds for instance). While summarizing this must-read discussion of mainstream economic orthodoxy's mis-teachings is impractical, his initial introduction sets the stage for what is to come: "The year 1971 was a milestone in the history of money and credit. Previously, in the world's most developed countries, money (and hence credit) was tied to a positive value: the value of a well-defined quantity of a good of well-defined quality. In 1971 this tie was cut. Ever since, money has been tied not to positive but to negative values -- the value of debt instruments." After a brief, clarifying history of money, Fekete goes on to discuss the misnomers of currency depreciation, gold as wealth, the failings of kicking the can, quantitative easing, and finally in the misunderstanding of interest rates themselves - seeing them as nothing more than merely bribe-money, trying to persuade reluctant holders of irredeemable promises to hang on a while longer. Paradoxically, gold's importance is growing while its dispersal from official hoards and the mines continues apace. Dispersed gold represents latent power, far greater in scope than its nominal market value, as sound credit can be built only upon a gold base.

Log Scale chart of the price of Gold.

On Currency Depreciation:

Mainstream economic orthodoxy teaches that a depreciating currency is a boon to the country, and a valid tool in the hands of the government to increase competitiveness and thus to reduce or to eliminate the current account deficit. A debased currency makes the country an attractive place for foreigners in which to buy and an unattractive place in which to sell. Exports are boosted, imports curtailed; thus the deficit is narrowed.

Terms of Trade for Seven of the world's largest trade regions

This is one of the most pernicious doctrines ever concocted -- as demonstrated both by theory and practice. Deliberate currency depreciation puts the country at a clear disadvantage, causing its terms of trade to deteriorate. As all items for export have imported components, no one can maintain for long low export prices in the face of ever rising cost of imports.

On Gold as 'wealth':

It is important for us to realize that every word of the doctrine on the sterility of gold is an outright lie. Not only can the owner of gold earn a return in gold on his holdings even under the regime of irredeemable currency, but gold is the only form of tangible wealth that can be lent out at interest and that is in constant demand as such.

3 Month Gold Forward Offered Rate (Lending Gold On Swap Against the USD)

There is a lively gold loan market in the world: gold is put out in loans and is borrowed at interest on a regular basis. It is used in financing great capital projects as well as trade -- in the same way (although not on the same scale) as it always did under the gold standard.

On 'kicking the can':

The term `redistributive society', as it is used by both its protagonists and antagonists, refers to the redistribution of wealth and income -- after they have been produced. More ominously, a movement to redistribute future losses is afoot. If successful, losses will be perpetuated and passed on to society. The scheme will allow the indolent, the inefficient, the inept, and the consistent loss-maker to continue in business indefinitely at the expense of the industrious, the efficient, and the profit-conscious.

On Quantitative Easing & Monetization:

The central bank goes into the open market and buys government bonds. As a result bond prices go up or, what is the same, interest rates go down. But the flipside of this is that now there is even more irredeemable currency in circulation. This cannot help but make the pace of currency depreciation increase.

The rational basis upon which bond values rest was overthrown when gold-redeemability of the currency was abolished. The fanatic denial of this fact is central to mainstream economic orthodoxy.

On Interest rates:

Under the regime of irredeemable currency, interest is merely bribe-money, trying to persuade reluctant holders of irredeemable promises to hang on a while longer.

A low and stable interest-rate structure, in particular, cannot be achieved without making credit gold-bonded. This elementary truth is now in the public domain, even though our universities have been somewhat tardy in accepting it.

And on the future of Gold:

Paradoxically, gold's importance is growing while its dispersal from official hoards and the mines continues apace. Dispersed gold represents latent power, far greater in scope than its nominal market value, as sound credit can be built only upon a gold base. When the dispersal of gold reaches a certain threshold (nobody knows where exactly this threshold is), a metamorphosis of money will take place. Gold will reclaim its throne as constitutional monarch in the monetary and credit system of the world.

Charts: Bloomberg

Whither Gold

2012: The Beginning of the END for the U.S. ?Petrodollar?!

Posted: 11 Feb 2012 01:53 PM PST

A major portion of the U.S. dollar’s valuation stems from its lock on the oil industry and if it loses its position as the global reserve currency the value of the dollar will decline and gold will rise. Iran’s migration to a non-dollar based international trade system is the testing of the waters of a non-USD regime…transition to a world in which the U.S. Dollar suddenly finds itself irrelvant. [Let me explain.] Words: 1200 So says Marin Katusa ([url]www.caseyresearch.com[/url]) in edited excerpts from the original article* which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!) and www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) has edited ([ ]), abridged () and reformatted (some sub-titles and bold/italics emphases) below for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the inte...

Get Positioned: ?Gold Rush? Will Cause Gold Stocks to SOAR ? Here?s Why

Posted: 11 Feb 2012 01:53 PM PST

Whatever their reasons, the number of investors wanting exposure to gold is increasing. Many who ignored it a decade ago are now buying. Those who started buying, say, five years ago, continue purchasing it today in spite of paying twice what they paid then. Slowly but surely, it’s becoming more important to more people…but what happens when it becomes a must-own asset to a substantial majority instead of a small minority? Sure, the price will rise, probably parabolically, but putting aside speculation on the price of gold for now, have you thought about what happens if you have trouble finding any actual, physical gold to buy? [Let's explore that possibility and what that would mean for gold stocks*in such an eventuality.] Words: 870 So says Jeff Clark ([url]www.caseyresearch.com[/url]) in edited excerpts from his original article* which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!) and www.FinancialArticleSummariesToday.com (A site for sore eyes...

Greece Now Meeds €145bn Bailout to Avoid Collapse

Posted: 11 Feb 2012 01:49 PM PST

Greece could need an extra €15bn (£12.5bn) of international aid in addition to the €130bn in the works as the result of its continued failure to stem public spending.

[Ed. Note: Related.]

by Emma Rowley, Telegraph.co.uk:

Ahead of a crucial parliamentary vote to agree to a series of stark austerity measures designed to meet lenders' requirements, it emerged the so-called Troika of rescuers are preparing to plough more funds into the troubled European nation.

Amid scenes of continued mounting social unrest, politicians must today decide whether to sign off fresh austerity measures demanded by the country's international lenders in order to release a second aid package to Athens.

The rescue must be secured by March 20 in order to stave off bankruptcy. It is on that date that the Greek government has to pay back €14.5bn of its debt to holders of its bonds.

On Saturday night, Lucas Papademos, the Greek prime minister, told the nation in a televised address that a rejection of the deal would lead to "uncontrollable economic chaos and social explosion".

Read More @ Telegraph.co.uk

Precious Metals: The Only Alternative

Posted: 11 Feb 2012 01:44 PM PST

by Jeff Nielson, Bullion Bulls Canada:

One of the reasons why I stay very active in discussions with readers on our forum is that it is a wonderful way of keeping in touch with what the ordinary investor is thinking. More specifically, such interaction is frequently the inspiration for my commentaries, and that is once again the case with this topic.

The scenario is a familiar one for veteran investors in this sector. Gold and silver have again become temporarily imprisoned in a trading range. Meanwhile the anti-gold and silver propaganda machine is busy sowing doubt and creating uncertainty. Their goal is simple: play upon the fears of newer investors to the sector, or wear them out via ordinary impatience.

This piece is especially aimed at those newer investors, because it delivers a simple yet irrefutable message: you have no choice other than to protect yourselves with precious metals. To illustrate how the bankers and their servant politicians have forced us into focusing our investments in precious metals requires visiting and understanding three concepts.

Read More @ BullionBullsCanada.com

What's crazier than creationism and gold? It's in your wallet

Posted: 11 Feb 2012 12:28 PM PST

5:32p PT Saturday, February 11, 2012

Dear Friend of GATA and Gold:

Lawrence Summers, former U.S. treasury secretary and president of Harvard, is reported to have remarked the other day that "the gold standard is the creationism of economics":

http://www.gata.org/node/10955

Of course Summers meant the worst sort of disparagement, to liken gold standard advocates to religious crazies. And yet there are various creationisms and various gold standards.

What is called young earth creationism may have begun in 1650 with the Anglican bishop of Ireland, James Ussher, who famously calculated from his biblical research that God had created the universe in October 4004 B.C. Old earth creationism doesn't attempt to pinpoint the moment, arguing that the Creator's time frame is not man's and that His day as recounted in Genesis cannot be known to man. Old earth creationists may consider the issue settled by God's rebuke to Job: "Where wast thou when I laid the foundations of the Earth? Declare, if thou hast understanding." Despite their vast presumption to knowledge, even presidents of Harvard weren't around then.

... Dispatch continues below ...

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Sona Discovers Potential High-Grade Gold Mineralization
at Blackdome in British Columbia -- 13.6g over 1.5 Meters

From a Company Press Release
November 22, 2011

VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling.

"We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company."

Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered.

For the company's complete press release, please visit:

http://www.sonaresources.com/_resources/news/SONA_NR18_2011-opt.pdf

The historical gold standard pegged a currency to a fixed amount of gold and made the currency convertible. Essentially the money was gold and gold was the money, often with silver thrown in, though never at a very satisfactory ratio. Thus currency devaluations were obvious; there was no fudging them, as when the London Gold Pool, the gold price-rigging mechanism of the Western central banks throughout the 1960s, a coordinated and public scheme of gold reserve dishoarding meant to keep the value of the U.S. dollar at one 35th of an ounce of gold, collapsed in March 1968.

Then there is the more flexible sort of gold standard operating behind today's dollar, in which the U.S. government and the central banks of its allies undertake largely surreptitious gold sales, leases, swaps, and derivatives operations, essentially short sales of gold, to maintain the value of their currencies.

Gold trader, market analyst, and mining entrepreneur Jim Sinclair has been anticipating implementation of a gold standard without convertibility, what he calls a gold cover clause, in which the U.S. government would pledge to keep its money supply in a fixed ratio to its gold reserve. Of course such a mechanism might require of the U.S. government a lot more transparency with its gold reserve and international agreements, formal and informal, than it lately has permitted, the Federal Reserve in particular having recently been forced by GATA to acknowledge that its has many impossibly sensitive gold-related secrets:

http://www.gata.org/node/9917

And then there might be still another gold standard, a system in which currencies are simply always judged against each other in freely trading markets, much as was proposed by the Austrian school economist Friedrich Hayek in 1977. Gold inevitably would be one such currency, and given the world's traditional and renewed enthusiasm for it, probably the leading measure of all the rest. At least the many decades of Western central bank intervention in the gold market, both open and surreptitious, suggest that central banks know damned well what their primary competitor is.

Of course GATA may incline toward something like the latter gold standard, insofar as restoration of a traditional gold standard would have the government rather than the free market again determining the price of gold.

If all these gold standards are indeed crazy ideas, what can be said of the current international monetary system, in which only one country issues the world reserve currency, a boom-bust cycle is injected into most economies, the world is expropriated through the reserve currency-issuing country's chronic trade deficits, big and parasitic financial institutions are enriched and rescued by governments at the expense of the working class, and more and more government intervention is required to prevent markets from manifesting themselves and restoring some democracy and transparency to the planet?

Of course until very recently Summers himself was a primary architect of this system, and yet he presumes to mock both creationism and gold's monetary functions. Now that's crazy.

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

* * *

Join GATA here:

California Investment Conference
Sunday, February 12, 2012
Hyatt Grand Champions Resort
Indian Wells, California, USA

http://cambridgehouse.com/conference-details/california-investment-confe...

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:

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Prophecy Coal (TSX: PCY) Wins Positive Feasibility Study
for the 600-MW Chandgana Power Plant in Mongolia

Company Press Release
January 17, 2012

VANCOUVER, British Columbia, Canada -- Prophecy Coal Corp. (TSX: PCY, OTCQX: PRPCF, Frankfurt: 1P2) has received a positive feasibility study for the company's 600-megawatt Chandgana Mine-Mouth Power Project in central Mongolia. The report was independently prepared by Ralf Thomsen, project manager at Steag, a German firm specializing in the planning, financing, construction, and operation of highly efficient thermal power plants for fossil fuels.

The study covers technical specifications, deployment, and financial analysis of a 4x150-mw thermal power plant to be built adjacent to Prophecy's Chandgana Tal coal deposit, which contains 140 million tonnes of measured coal. Last year the power plant received a construction license and the coal deposit received a mining license. Engineering, procurement, and construction management selection and project financing discussion have begun and are expected to be concluded this year.

Construction is planned to start in April 2013, with the first 150-mw unit being commissioned in October 2015 and subsequent units to start in April 2016, October 2016, and April 2017. With proper maintenance the project will have 30 years of commercial operation.

For the complete statement from the company, including maps and charts, please visit:

http://www.prophecycoal.com/news_2011_jan17_prophecy_receives_power_plan...

The Liberty Option

Posted: 11 Feb 2012 11:29 AM PST

from internetanchorman.tv:

The Liberty Option is the first documentary film by popular youtuber Fabian4Liberty, Fabian Calvo. The Liberty Option examines today's destruction of our Republic at the hands of crazed criminal bankers and politicians. The son of immigrant parents who fled the tyranny of communist Cuba, Fabian discusses growing up seeing his parents live the American Dream. Now a father of two small children, he refuses to accept the role of complacent bystander in a country descending into central planning and TSA checkpoints.

The Liberty Option brings together a diverse cast of interviews, including Florida representative Jim Frische, the Mogambo Guru Richard Daughty, and the head of the Tampa Bay CAIR (Council of American Islamic Relations). This hard hitting 32 minute film emphasizes the economic and individual liberties that were once a fabric of the American Republic are being torn apart at the hands of a small group of elites, hell bent on the creation of a new 21st feudal system.

The Liberty Option examines the deregulation of Wall Street, Washington's Lobby Culture, foreign wars, and the continued slip into an American police state. The film reminds us that our sacred Constitutional Republic is worth fighting for, and that "We the People" can defeat a small band of ego driven central planners.

Warren Pollock STILL Disagrees with Gonzalo Lira

Posted: 11 Feb 2012 11:28 AM PST

No 1979 Redux! – 1971 & Gold, Steel, Oil, Labor, Empire, Breakdown

from WEPollock:

A Warning Flag For Silver

Posted: 11 Feb 2012 10:36 AM PST

from TFMetalsReport.com:

As you know, I'm very excited about the prospects for the fiat-conversion price of silver this year. It's going to a big year, perhaps even historic. That does not mean, however, that silver will move in a straight line up. I still believe the The Evil Empire intends to dramatically lessen, if not eliminate, their long-time manipulative short position. However, a careful review of the situation at ground level leads me to think that we're not out of the woods yet.

As you know, silver has already had a big 2012. Silver closed on 12/30/11 at $27.92/ounce. It closed yesterday at $33.60. In just six weeks, this means silver is already UP over 20%. Spectacular! At this rate, silver would be $40 by April 1st, $57 by mid-summer, $83 by fall and $120 by year end. Now, of course, the prospect of $120 silver makes you and I very excited. Jamie, Blythe and Ruprecht…not so much.

Read More @ TFMetalsReport.com

Pento - Looming Debt Market Collapse to Destroy the Dollar

Posted: 11 Feb 2012 09:13 AM PST

Today Michael Pento told King World News the large trade deficit and desire to consume foreign goods is evidence that the United States is growing weaker by the day. Pento, who founded Pento Portfolio Strategies, also said foreigners may soon start to reject the idea of purchasing US bonds. Pento had this to say about the situation: "The Main Stream Media is extolling the virtues of our rising U.S. trade deficit as a sure sign the economy is well on the road to a full and viable recovery. It was reported this week that our level of trade imbalance jumped to a six-month high in December to $48.8 billion (up 3.7%), from $47.1 billion in the prior month. For all of 2011, the shortfall grew 12% to $558 billion, the most since 2008."

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

Treasury Market Panic Reversal Due To Little Known Forces Called Supply and Demand

Posted: 11 Feb 2012 09:11 AM PST

Treasury Market Panic Reversal Due To Little Known Forces Called Supply and Demand

Courtesy of Lee Adler of the Wall Street Examiner

The Treasury market panic saw a bit of a reversal this week, partly due to an unexpected, large increase in supply because of a sharp drop in Federal tax revenues over the past couple of weeks, and partly due to the market misunderstanding of Thursday morning's news. The "better than expected" weekly unemployment claims data was one thing. Some piling on the "risk on" trade as a result of news of a deal for another Greek bailout, was another. But we are more interested in the more esoteric and little known drivers of prices, such as "supply" and "demand."

The short term knee-jerk reactions of hedge fund traders to news "don't impress me much." For one thing, today's (2-9) news has a shelf life of about 20 seconds. Likewise, traders are prone to misinterpreting "news" depending on their currently predominant position.

Since the boat is loaded long Treasuries, any "good" economic news triggers a one day selloff. When those selloffs come within the bounds of a trading range, they're nothing more than noise. To confirm a reversal in Treasuries we need a bona fide breakout. First, the 10 year yield needs to break 2.10, and then it needs to break 2.40. If that were to happen, it would signal a long term reversal. There are some signs that we're headed there, but we're not there yet. The jury is still considering the case.

In recent weeks the Treasury buying panic was helped by reduced supply, triggered by a massive bulge in withholding taxes from late December to late January. That bulge has now subsided, and the Treasury suddenly appears to be running short of cash. It made a surprise announcement today that it would need to raise a quick $20 billion in a 64 day CMB to be auctioned next week.

What had been the beneficial impact of reduced supply could reverse into greater than expected supply in the weeks ahead if tax revenues fall short of the government's optimistic estimates. The daily withholding data shows those revenues dropping but then pausing over the last few days, so it's not completely clear yet where that trend is headed. The data for the coming week should give us a better handle.

We'll also keep an eye on the dollar. The dollar's strength last year was primarily due to capital flight out of Europe. If the fears that drove those flows should ease, the dollar will weaken along with reduced demand for Treasuries. There have been hints of that in conjunction with the ECB's giant Long Term Refi Operation (LTRO) on December 21. The next one is scheduled for February 29. I'll also continue to review the flows associated with that in the Fed Report update this weekend.

Get regular updates the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market, in the Fed Report in the Professional Edition, Money Liquidity, and Real Estate Package. Click this link to try WSE's Professional Edition risk free for 30 days!

Greece at the Point of no Return

Posted: 11 Feb 2012 08:11 AM PST

Wolf Richter www.testosteronepit.com

"The European Union is suffering under Germany," Georgios Karatzaferis said on Friday. He is the president of the right-wing LAOS. With 15 members in parliament, the party is a minority partner in the coalition cabinet of party-less technocrat Prime Minister Lucas Papademos. Karatzaferis accused German Chancellor Angela Merkel of trying to "impose her will on Southern Europeans." He called the Netherlands, Austria, Finland, and Luxembourg "satellite states" of Germany. And he said that the center of the EU was no longer in Brussels but in Berlin.

But the true toxin in his outburst was the phrase: "I cannot accept this credit agreement." With it, he backtracked on his support for the austerity package agreed to amid flickers of hope the day before. And it pushed Greece a step closer to disorderly default and bankruptcy.

To avoid that fate, Greece must make a €14.5 billion bond payment on March 20, but it won't be able to unless it receives the next bailout payment, this one for €130 billion, a mind-boggling 56% of Greece's shriveling GDP. That payment process has to be initiated over the next few days, according to ratings agency Fitch, to give all countries and institutions involved sufficient time to deal with the administrative complexities of bailing out a country with taxpayer money.

On Thursday, for a few minutes at least, hope was flying high in the media: the three governing parties had agreed on an austerity package that included cutting the minimum wage by 22% and trimming the bloated public sector. But the fallout was immediate.

Deputy Labor and Social Security Minister Yiannis Koutsoukos, a member of the socialist PASOK, resigned in protest over the cuts in social programs; he hadn't been informed about them, nor had anyone asked him, he said.

Unions called for protests and a general strike for Friday and Saturday. The measures throw the unemployed, retirees, and young people into misery, said Ilias Iliopoulos, head of the union for civil servants. "We will not accept that, there will be a social revolt."

Greece's Police union threatened Troika inspectors with arrest. In a written declaration sent to representatives of the Troika, the union accused them of trying to overthrow democratic order in Greece, injuring national sovereignty, and robbing the Greek people of important goods.

The small tabloid Dimokratia featured Merkel in Nazi uniform (joe.ie). The headline, "Memorandum Macht Frei," evoked the infamous text above the entrance of the Auschwitz concentration camp. And demonstrators burned a German flag in front of the parliament.

Friday, public transportation came to a halt in Athens. Leaflets were handed out with Wanted printed on them, offering a reward of €1 euro for the arrest of a "Troikan." Peaceful demonstrations were followed by violent ones where demonstrators threw Molotov cocktails and rocks at police, who responded with teargas and clubs. More ministers offered their resignation. And on Saturday, the Prime Minister warned of collapse if parliament failed to agree on the austerity package. For more on the rough politics of bailout extortion, read.... Greece's Extortion Racket Maxed Out.

As the situation veers toward hopeless, it follows the step-by-step procedure laid out by Otmar Issing, former member of the Bundesbank and the ECB—a procedure that has been happening for months.... Kicking Greece out of the Eurozone.

The Troika hasn't always played hardball. For two years, it sent billions of euros to Greece to keep it afloat for a month or two at a time—though Greece had systematically misrepresented its deficits and debt since before it acceded to the Eurozone. In return for the bailout billions, the Troika asked for reforms. The Greek government promised them but failed to implement many of them. Politicians, ministries, and agencies refused to go along. The Greek people took to the streets. The bailout billions went up in smoke. The economy got worse. And Greece's refusal to wholeheartedly embrace these reforms exceeded Teutonic patience and willingness to throw ever more money their way.

So the Troika is letting Greece twist in the wind. At risk are €130 billion—many times larger than the smallish amounts with which it had been spoon-feeding Greece. If the payment were €5 billion, it would be made, if only to delay the inevitable another month. But €130 billion, 56% of Greece's GDP, won't happen unless all conditions down to the last iota are met, humiliating to Greece as these iotas may be.

The Troika decided to let the inevitable happen, it seems. Their impossible-to-fulfill conditions offer plausible deniability. Mekel and colleagues can say "afterwards" that they tried everything, but that Greece simply couldn't follow through. And Greek politicians are already planning for the "afterwards" as well. For that hair-raising debacle, read.... Greek Politicians Dive For Cover.

This is secured debt, which means that if every dollar in assets generating one dollar in GDP were to be liquidated and Greece sold off entirely in part or whole to Goldman Sachs et al, there would still be a 36% shortfall to the Troika

Posted: 11 Feb 2012 07:57 AM PST

The Cost Of The Combined Greek Bailout Just Rose To €320 Billion In Secured Debt, Or 136% Of Greek GDP

2 Misguided Assertions About Gold ? Read On Mr. Buffett!

Posted: 11 Feb 2012 07:44 AM PST

In which form would you prefer to hold your monetary savings — in the form of money that banks can create in unlimited amounts out of nothing, or in the form of a metal that has been used as money for thousands of years and whose supply never increases by more than 2% from one year to the next? The answer…isn’t necessarily straightforward [as] a*lot depends on the policies being implemented at the time by central banks and governments [- but let me try.] Words: 1366 So says Steve Saville ([url]www.TheSpeculativeInvestor.com[/url]) in edited excerpts from his original article* which Lorimer Wilson, editor of* www.munKNEE.com (Your Key to Making Money!) and www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) has edited ([ ]), abridged () and reformatted (some sub-titles and bold/italics emphases) below for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no per...

Harvey Organ's Daily Gold & Silver Report

Posted: 11 Feb 2012 06:58 AM PST

Italy and its Debt to GDP/Greece debt problems/USA Debt Problems/Gold and silver raid/

Keiser Report: FBI vs Gold Standard 'Extremists' (E248)

Posted: 11 Feb 2012 06:51 AM PST

discuss the gold standard extremism and how your dollar got to be worth just 3.8 cents, Francine McKenna of reTheAuditors.com...

Sky is the Limit for Gold - John Rubino

Posted: 11 Feb 2012 05:39 AM PST

John Rubino; co-author (with James Turk) of "The...

[[ This is a content summary only. Visit my website http://goldbasics.blogspot.com for full Content ]]

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

Registered Ounces of Silver in the Comex Warehouse

Posted: 11 Feb 2012 05:23 AM PST

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

Gold, Silver, War, Systemic Collapse & Social Unrest: Gerald Celente

Posted: 11 Feb 2012 05:20 AM PST

"It's obvious that the CFTC and the CME Group will do nothing to reign in the crooks in the Comex futures market." [COLOR=#7f4028] Yesterday in Gold and Silver As I mentioned in 'The Wrap' section of yesterday's column, the gold price didn't do much in the Far East on Friday until about fifteen minutes before the London open...and then a not-for-profit seller showed up on the Globex trading system...and had gold down about fifteen bucks in short order. From there it traded sideways to up until about 11:30 a.m. local time in London. Then another seller showed up...and the gold price declined to its low of the day...$1,703.40 spot...with the low occurring about five minutes after the Comex opened in New York. The subsequent $20 rally lasted until about 11:10 a.m. Eastern...with the price topping out around the $1,724 spot mark. After that, the gold price traded more or less sideways for the rest of the New York trading session...although it did get s...

Barley Investing Better Than Gold and Silver?

Posted: 11 Feb 2012 05:04 AM PST

Over the past five years, barley, of the eighteen commodities we follow, was the top performer. Rising by 180+% it bested Gold, +170%, and Silver, +150%. But why quibble? Nearly all commodity prices have done than paper equities. And perhaps they should, as real assets require real work to produce and are essential to the real world.

The Gospel of Gold According to Peter

Posted: 11 Feb 2012 04:43 AM PST

Peter Grandich believes that we're in the midst of a stealth gold bull market. Grandich, editor and publisher of The Grandich Letter, recently penned the book Confessions of a Wall Street Whiz Kid, the moniker "Good Morning America" gave to him after he predicted the Black Monday stock market crash in 1987. He's now predicting gold to top $2,350/oz in this exclusive interview with The Gold Report. The Gold Report: Going back to your time as a fund manager in the '80s on Wall Street, how does what was happening then compare with what is happening now?

Warren Buffett Trashes Gold, But What About Silver?

Posted: 11 Feb 2012 03:42 AM PST

“Gold gets dug out of the ground, then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”-Warren Buffett

New Up-Cycle for Gold

Posted: 11 Feb 2012 03:35 AM PST

My big-picture analytics of spot gold argue that a 5.5 month cycle low ended -- and a new cycle started -- at the Dec 29 low of $1522.48, after a multi-month correction from the Sep 6 high of $1921.50. The 21% decline concluded an intermediate-term correction within the larger, multi-year bull market in gold.

saveyourassetsfirst3

2012-02-11T13:32:00.001-08:00

saveyourassetsfirst3

Precious Metals: The Only Alternative
Italy and its Debt to GDP/Greece debt problems/USA Debt Problems/Gold and silver raid/
SilverFuturust: Where to Keep Your Silver
Gold, Silver, War, Systemic Collapse & Social Unrest: Gerald Celente
Gold advocate Pollitt 'cared more about being right than being rich'
Permanent Gold Backwardation
Celente - Gold, Silver, War, Systemic Collapse & Social Unrest
The Dollar Confirms a Possible Silver Pullback
Gold and Silver Will Go Up Forever
Links 2/11/12
Why Mark Zuckerberg Shouldn't Listen To Management Gurus
The Early Gold Wars
By the Numbers for the Week Ending February 10
Reflections On The New ECB Collateral Rules
Friday ETF Roundup: VXX Surges On Greek Woes, FXI Falls On Negative Chinese Outlook
A Crash Proof Investment Strategy
Dylan Grice: The Man With One Hand
This terrible trend in Detroit could be a warning of things to come
Pimco: This is who's actually going to be punished by the mortgage fraud settlement
Gold & Silver Investors and Traders.
Two rock-solid reasons why gold is not a bubble
Gold and Silver Disaggregated COT Report (DCOT) for February 10
Bob Chapman - Gold Radio Cafe - February 10, 2012
Gold Down on Week Following Rejection of “Weak” Greek Reforms, Draghi Denies “Stigma” of ECB Lending
Profit From Volatility In Gold and Silver Prices
This Is What An Economic Depression Looks Like In The 21st Century
Buffett: "Right To Be Fearful" of "Paper Money" - Favours Stocks Over Cash, Bonds and Gold
What the Mortgage Deal Reveals About The Obama Administration

Precious Metals: The Only Alternative

Posted: 11 Feb 2012 04:41 AM PST

Turn Back The Clock:

Go back even 15 years in time, and the world of investing bears absolutely no resemblance to the Carnival of Fools which we see today. Back in that era, the vast majority of financial advisors preached a single mantra: "buy and hold".

The premise is (was) simple: those people who place short-term bets in the market are not investors, they are gamblers – period. Investing by definition implies positioning one's self in a particular sector/company, and then allowing the time for that investment opportunity to mature/ripen. The principle factor which separates investing from gambling is time.

Put another way, investors (as opposed to gamblers) provide themselves with the luxury of waiting for the optimal time to harvest their profits. They give their investment the necessary time for the fundamentals which support that investment to assert themselves. Conversely the gamblers who do nothing but make serial, short-term bets are merely momentum players. Time their bet perfectly (or nearly so) and they will make a profit. Fail to do so and they suffer inevitable losses.

How did the world of investing devolve from the sober, careful allocation of funds into frantically flitting from one (short-term) bet to another like a swarm of rabid butterflies? Simple. The vast majority of financial advisors finally became aware of their own gross incompetence. Not having the slightest clue about where our economies have been headed, these "experts" eventually acknowledged (after being surprised by one market crash after another) that when it came to investing they were much better at destroying fortunes than creating them.

At the same time, these highly-paid professionals(?) were not prepared to publicly acknowledge their own, massive deficiencies (and forgo the commissions which they parasitically rake-in). Thus instead of admitting that they were no longer capable of providing competent advice for investing, they absurdly announced that investing itself no longer existed. "Buy and hold is dead," they (nearly) unanimously proclaimed.

Italy and its Debt to GDP/Greece debt problems/USA Debt Problems/Gold and silver raid/

Posted: 11 Feb 2012 02:08 AM PST

SilverFuturust: Where to Keep Your Silver

Posted: 11 Feb 2012 01:33 AM PST

from silver futurist:
If you pay somebody to hold your silver using the silver to pay them, the size of your silver stack will shrink over time and approach zero over a long enough time frame!

~TVR

Gold, Silver, War, Systemic Collapse & Social Unrest: Gerald Celente

Posted: 11 Feb 2012 01:28 AM PST

¤ Yesterday in Gold and Silver

As I mentioned in 'The Wrap' section of yesterday's column, the gold price didn't do much in the Far East on Friday until about fifteen minutes before the London open...and then a not-for-profit seller showed up on the Globex trading system...and had gold down about fifteen bucks in short order.

From there it traded sideways to up until about 11:30 a.m. local time in London. Then another seller showed up...and the gold price declined to its low of the day...$1,703.40 spot...with the low occurring about five minutes after the Comex opened in New York.

The subsequent $20 rally lasted until about 11:10 a.m. Eastern...with the price topping out around the $1,724 spot mark. After that, the gold price traded more or less sideways for the rest of the New York trading session...although it did get sold off a bit once the Comex closed at 1:30 p.m...and the trading in the New York Access Market began.

Gold closed at $1,722.10 spot...down $7.00 on the day. Net volume was pretty brisk at around 159,000 contracts...most of it of the meaningless HFT variety.

The silver price mirrored the gold price pretty much all day on Friday. Like gold, the low tick of the day in silver came at 7:25 a.m. Eastern...five minutes after Comex trading began in New York.

From that low tick, $33.09 spot, silver also rallied, but ran into the same not-for-profit seller at 11:10 a.m. just as it was about to take out Thursday's closing price and penetrate the $34.00 spot price level once again.

After the high was in, silver got sold off until well into the electronic trading session...and then proceeded to recover about half that loss going into the 5:15 p.m. close.

Silver closed at $33.59 spot...down 31 cents on the day. Net volume was pretty decent at 37,000 contracts.

Here's the 30-day silver chart. Note how the $34.00 spot price level is being defended. One has to wonder why...and by whom? I think I know the answer to both.

(Click on image to enlarge)

The dollar index chopped around between 78.6 and 78.8 until precisely 7:00 a.m. New York time, before a rally of some substance put in an appearance...and by 8:45 a.m. the dollar index had risen 40 basis points to 79.20. It could not hold that price level...and slid back to the 79 cent mark right at the close of trading in New York at 5:15 p.m.

If you can match the precious metals price action to the dollar index movements, you've got a better eye than I do.

Like the rest of the U.S. equity markets, the gold shares gapped down...and then more or less followed the gold price from there. The HUI closed down 1.72% for the day...and 3.23% on the week.

The silver shares finished mixed on the day...and Nick Laird's Silver Sentiment Index closed down 1.05%.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that only 27 gold contracts and zero silver contracts were posted for delivery on Tuesday.

The authorized participants deposited a very tiny 9,718 troy ounces of gold into GLD yesterday...and there were no reported changes in SLV.

For the second day in a row there was no sales report from the U.S. Mint.

Over at the Comex-approved depositories on Thursday, they reported receiving 681,699 ounces of silver...and shipped 832,769 ounces of the stuff out the door. The link to that activity is here.

Well, the Commitment of Traders Report lived up to my worst fears. In silver, the Commercial traders were the not-for-profit sellers once again...as they increased their short position by a monstrous 5,921 contracts, or 29.6 million ounces. The total Commercial net short position in silver is now up to 34,650 contracts, or 173.3 million ounces.

Back at the end of December, when silver hit $26 the ounce, the Commercial net short position in silver was all the way down at 14,100 contracts, or only about 71.0 million ounces. So, in the space of less than six weeks, the Commercial traders have added a bit over 20,000 contracts to their short positions...or 100 million ounces.

If these commercial traders, who neither produce nor consume the metal, were not there to go short against all the new long positions being placed, then the price of silver would be well north of $100 the ounce right now. Readers ask me what I mean by 'not-for-profit' sellers...well, here they are.

The Commercial traders are only there for one reason and one reason only...and that's to prevent the price from exploding to the outer edges of the known universe. Their rewards for doing this dirty work, besides making big profits on their engineered price declines, is protection from prosecution by the CME and the CFTC.

It is also obvious to me that JPMorgan and the other large Commercial traders are in no rush to cover their obscene short positions. I'll have more on that when I discuss the Bank Participation Report further down.

In gold, the not-for-profit Commercial traders added 11,210 contracts to their short positions, as the large and small speculators added to their long positions. The Commercial net short position is back up to 22.1 million ounces, which I'm sure Ted Butler isn't happy about either.

I haven't posted this "Days of World Production to Cover Short Positions" graph for quite a while. Ted Butler asked Nick Laird to make it up for him many years ago. It's obvious from the chart that the four precious metals are the center of attention for the bullion banks...with silver being the most controlled...and that the '4 or less' traders [mostly JPMorgan in all four metals] are totally dominant in each, as the '5-8' traders [the difference between the green and red bars] are a very small portion of the total 'Days to Cover'.

(Click on image to enlarge)

In silver, as of Tuesday, the '4 or less' traders were short 176.5 million ounces of the stuff, which is 3 million ounces more than the entire Commercial net short position. The '5 through 8' Commercial traders are short 38.2 million ounces of silver on top of that. When you remove the market-neutral spread trades from the Non-Commercial category, these eight traders hold more than 50% of the entire short position in the Comex futures market in silver. That's called a 'concentrated short position'...and the reason why silver is at $34/ounce, instead of $134/ounce...or more.

The February Bank Participation Report, for positions held at the close of trading on Tuesday, February 7th, did not make for happy reading either.

This data comes directly from the same data that the COT report is derived from, so for this one day per month, it's possible to see where the U.S. bullion banks fit into the grand scheme of things in the weekly COT report.

In silver, four U.S. bullion banks are net short 20,840 Comex futures contracts. That's a 5,000 contract increase from the January report...and exactly what Ted Butler said it would be. I'd bet a lot of money that well north of 90% of this short position is held by JPMorgan and HSBC. When you remove the market-neutral spread trades from the Non-Commercial category, these four U.S. bullion banks are short 24.2% [minimum] of the Comex futures market in silver all by themselves.

In February, the twelve non-U.S. banks that hold Comex future contracts were net short 1,195 between them...about 100 contracts each. In the January report, these same twelve banks were net long 100 contracts each! As you can tell, the price fixing operation in silver is strictly a U.S. bullion bank affair.

In gold, the February Bank Participation Report showed that five U.S. bullion banks were net short 104,717 Comex futures contracts...which was an increase in their net short position of 24,791 Comex in one month. As of Tuesday, these five U.S. bullion banks were net short 25.4% of the Comex futures market in gold.

In February, the nineteen non-U.S. banks were net short 35,747 Comex futures contract, which is an increase of about 4,100 contracts since the January report. On average, each non-U.S. bank is short less than 2,000 Comex contracts...but it's my guess that the short positions in gold are not equally distributed between banks, as some would be carrying larger short positions than others. Too bad they don't list the names of the banks as well...LOL!

These nineteen non-U.S. banks hold a net short position of about 8.3% of the net open interest in gold. Once again it's obvious that the gold price fixing scheme is mostly 'Made in the U.S.A.' as well.

Here's a chart that I dug up the other day. I have the website bookmarked, but rarely check it. However a story I read on Friday sort of jogged my memory. This is the Baltic Dry Index...and it's just set a new 10-year low. It's a combination of lousy international economic conditions...and the fact that a lot of shipping that was ordered in the boom times is now being delivered, further depressing the price.

The graph below is courtesy of Washington state reader S.A....and requires no further explanation from me.

Lastly is this Global Indices chart that Nick Laird sent me just after midnight. This last rally in the world's equity markets was on very narrow [and declining] volume...and as Nick said in his covering e-mail..."Appears to have topped out here. Soon we'll find out if the fiat-drenched rally is genuine or not." I agree.

(Click on image to enlarge)

I have a lot of stories for your reading pleasure this weekend...and some of them are pretty big reads that I've been saving for today's column. So I hope you have time to read them all, as they are certainly worth it.

It's obvious that the CFTC and the CME Group will do nothing to reign in the crooks in the Comex futures market.

Permanent Gold Backwardation. Gold advocate Pollitt 'cared more about being right than being rich'. Withholding Consent from the Khan.

¤ Critical Reads

MF Global Trustee Sees $1.6 Billion Customer Shortfall

MF Global commodity customers whose cash vanished when the firm collapsed last year are owed $1.6 billion — up significantly from previous estimates — the trustee tasked with recovering the money said on Friday.

The revised figure reflects growing concerns that the trustee will not be able to claw back $700 million in customer money trapped overseas. Until now, the trustee did not include the $700 million when projecting the shortfall, hoping to avoid a battle with MF Global's British arm, which is holding the customer money.

But now the trustee, James W. Giddens, has acknowledged that he is making little headway in recovering the money from KPMG, the court-appointed administrator for MF Global's British subsidiary. That money, Mr. Giddens said, was held for American clients who traded on foreign exchanges.

This story was posted on The New York Times website late yesterday afternoon...and I thank reader Phil Barlett for sending it to me in the wee hours of this morning. The link is here.

View full GSD edition

Pimco: Foreclosure Deal Cheaper Than Pensions

In what the U.S. called the largest federal-state civil settlement in the nation's history, five banks including Bank of America Corp. and JPMorgan Chase & Co. committed $20 billion in various forms of mortgage relief plus payments of $5 billion to state and federal governments yesterday.

"This was a relatively cheap resolution for the banks," said Simon, the mortgage head at Pimco, which runs the world's largest bond fund. "A lot of the principal reductions would have happened on their loans anyway, and they're using other people's money to pay for a ton of this. Pension funds, 401(k)s and mutual funds are going to pick up a lot of the load."

This Bloomberg story was posted yesterday afternoon...and I thank West Virginia reader Elliot Simon for providing it...and the link is here.

View full GSD edition

Office & Retail Delinquencies Hit New Highs as Overall CMBS Late-Pays Drop

Delinquencies for office and retail loans have hit their highest-ever levels while overall U.S. CMBS delinquencies fell for the sixth straight month, according to the latest index results from Fitch Ratings.

CMBS late-pays declined five basis points (bps) in January to 8.32% from 8.37% a month earlier. The improvement was driven by multifamily loans, which saw a 165-bp plunge in its rate month-over-month to 12.77%. The delinquency rates for office and retail rose to all-time highs of 7.30% and 7.21%, respectively.

January marked the first time post-recession that the office delinquency rate surpassed that of retail. Office is the only major property type that Fitch Ratings has a negative outlook on for 2012. Office delinquencies are expected to continue rising as leases made at the height of the real estate boom roll to market, impacting income available to cover debt service.

This story was posted on the fitchratings.com website...and I thank reader "Ryan" for sending it my way. The link is here.

Gold advocate Pollitt 'cared more about being right than being rich'

Posted: 11 Feb 2012 01:28 AM PST

Gold advocate Pollitt 'cared more about being right than being rich'

Murray Hoult Pollitt was a stockbroker, entrepreneur, and adviser to Canada's financial elite. Raised in the entourage of some of Canada's wealthiest and most powerful families -- he was the nephew of Bud McDougald and grew up near Conrad Black -- Pollitt preferred his father's approach of building wealth through industry rather than through financial engineering.

Pollitt died last Sunday while watching the Super Bowl at home after a 12-year battle with prostate cancer. He was 70.

Permanent Gold Backwardation

Posted: 11 Feb 2012 01:28 AM PST

Permanent Gold Backwardation

Could backwardation happen with gold? Gold is not in shortage. One just has to measure abundance using the right metric. If you look at the inventories divided by annual mine production, the World Gold Council estimates this number to be around 80 years.

In all other commodities (except silver), inventories represent a few months of production. Other commodities can even have "gluts," which usually lead to a price collapse. As an aside, this fact makes gold good for money. The price of gold does not decline, no matter how much of the stuff is produced. Production will certainly not lead to a "glut" in the gold market pulling prices downward.

Celente - Gold, Silver, War, Systemic Collapse & Social Unrest

Posted: 11 Feb 2012 01:28 AM PST

Celente - Gold, Silver, War, Systemic Collapse & Social Unrest

With growing fears about the stability of the financial system, a looming war and a stampede of wealthy investors into hard assets, today King World News interviewed Gerald Celente, Founder of Trends Research and the man many consider to be the top trends forecaster in the world. Celente had this to say about an increased number of investors that have been crowding into gold and other hard assets: "The smart people are (buying gold) and more and more people are waking up to it. So the people that are going to survive and thrive are going to be the ones that are prepared, the ones that are going to see history before it happens and get ready for it and there are very few."

The Dollar Confirms a Possible Silver Pullback

Posted: 11 Feb 2012 01:00 AM PST

SunshineProfits

Gold and Silver Will Go Up Forever

Posted: 10 Feb 2012 11:31 PM PST

:biggrin:

Not really. Is that coffee?

http://goldchat.blogspot.com/

Links 2/11/12

Posted: 10 Feb 2012 07:40 PM PST

Some recession-hit horse owners freeing animals into wild herds McClatchy (hat tip Lambert)

At an Airline That Caters to Pets, the Humans Are Howling New York Times

Two people are dead because they unfriended woman on Facebook NetTech (hat tip reader furzy mouse)

Somali famine 'will kill tens of thousands' BBC (hat tip reader May S)

Have Americans Given Up On McMansions? Atlantic Cities (hat tip reader May S)

The plan behind open-plan Gillian Tett, Financial Times. I suspect how you feel about this issue depends entirely on how extraverted you are.
Nuclear Regulatory Commission Ignores Fukushima, Green-Lights First New Reactors in 34 Years Truthout (hat tip reader May S)

Greeks inflamed by bail-out demands Financial Times

Venizelos, uncut FT Alphaville

Greek Endgame in Sight Philomila Tsoukala, Credit Slips

The neocons' big Iran lie Salon (hat tip reader May S)

Israel, MEK and state sponsor of Terror groups Glenn Greenwald (hat tip reader furzy mouse)

US JUSTICE DEPT: Switzerland's Largest Private Bank Is A 'Fugitive' Associated Press

Romney Calls Himself 'Severely Conservative' Bloomberg. Finally, some truth in political advertising.

By contrast, we have Obama budget promises deficit cuts with growth Financial Times

Richard Nixon gets it Ed Harrison

SEC Launches Inquiry Aimed at Private Equity Wall Street Journal. This is way too obvious. The issues are legit. The timing is not.

False dawns and public fury: the 1930s are not so far away Martin Taylor, Financial Times

Glencore Gets Free Ship With a Fuel Discount as Charter Rates Go Negative Bloomberg (hat tip reader furzy mouse)

Petroleum 3-Month Rolling Average Turns Sharply Lower; Negative Shipping Rates; Collapse in Global Trade Michael Shedlock

Mind-Blowing Charts From the Senate's Income Inequality Hearing Mother Jones (hat tip reader May S)

Lanny Breuer's Theory of Chatting Accountability for CEOs Marcy Wheeler

The big banks win again Matt Stoller, Salon

MF Global Trustee Sees $1.6 Billion Customer Shortfall New York Times. Aieee! Just like Lehman, the black hole is growing.

Antidote du jour:

Why Mark Zuckerberg Shouldn't Listen To Management Gurus

Posted: 10 Feb 2012 06:09 PM PST

By Felix Salmon:

This is why Mark Zuckerberg was smart to stay in complete control of Facebook and not listen to anybody telling him that a multi-billion-dollar company needed a seasoned, professional CEO in charge.

Jack and Suzy Welch are onto something when they diagnose a potential class problem at Facebook, post-IPO.

After its IPO, Facebook is going to have two classes of citizens. That's just reality. Some of its 3,000 or so employees — several hundred in number by some counts — will have significant riches in the hand. Newer hires, though — well, they'll mostly have options in the bush.

Where they go hilariously wrong is in their proposed solution to the

Complete Story »

The Early Gold Wars

Posted: 10 Feb 2012 04:45 PM PST

The Privateer

By the Numbers for the Week Ending February 10

Posted: 10 Feb 2012 02:14 PM PST

HOUSTON -- Just below is this week's closing table. The CFTC disaggregated commitments of traders (DCOT) recap table was posted previously.

If the images are too small click on them for a larger version.

Vultures, (Got Gold Report Subscribers) please note that updates to our linked technical charts, including our comments about the COT reports and the week's technical changes, should be completed by the usual time on Sunday evening (by 18:00 ET).

As a reminder, the linked charts for gold, silver, mining shares indexes and important ratios are located in the subscriber pages. In addition Vultures have access anytime to all 30-something Vulture Bargain (VB) and Vulture Bargain Candidates of Interest (VBCI) tracking charts – the small resource-related companies that we attempt to game here at Got Gold Report. Continue to look for new commentary often. This was a week of consolidation of the gains our "Faves" have seen over the past month. As expected, both gold and silver seem to be taking a breather from the recent rallies. We believe the signs support that breather for the time being, but likely not very long.

Continued…

Remember that the linked charts on the subscriber pages are always the first place to look for new commentary at GGR. In the future we intend to rely more on the charts to communicate, especially when it comes to our own trades. If we decide to make changes to our stop levels for our silver and GDXJ trades underway, we will note them on Sunday evening also.

It's an exciting time to be a Bargain Hunting Vulture. We are close to going to "Free Shares" on a number of our small, micro-cap issues following an excellent January. For new readers "Free Shares" is the term we use to describe our remaining position after easing out of a portion of our stake in a company, usually, but not always, after it has at least doubled in price.

That is all for now, but there is more to come.

Reflections On The New ECB Collateral Rules

Posted: 10 Feb 2012 11:07 AM PST

By Marc Chandler:

It is not just that a Greece deal continues to prove elusive that is challenging the euro. Market participants are also digesting the implications of the ECB collateral rule changes. While it appears more likely that the ECB will not cut the main repo rate in March, as previously appeared to be the case, the collateral rule changes mean that the ECB's balance sheet is likely to expand significantly in the period ahead.

In recent months, there has been a clear shift in focus from interest rates per se to central bank balance sheet considerations. In this respect, the fact that many observers remain convinced that the Federal Reserve's balance sheet will expand under a third round of asset purchases in a few months is a significant barrier to stronger US dollar sentiment. The greenback's recovery in latter part of last year is understood by many as more a function

Complete Story »

Friday ETF Roundup: VXX Surges On Greek Woes, FXI Falls On Negative Chinese Outlook

Posted: 10 Feb 2012 10:01 AM PST

By Jarred Cummans:

Déjà vu struck as investors welcomed the worst day of the year thus far. With downgrades, poor economic data and more troubles from Greece, today felt a lot more like 2011 than it did the bullish 2012 that we have been enjoying. The Dow capped off the day with losses of nearly 90 points while the S&P 500 lost about 0.7%. All but one of the 30 Dow components finished in the black while all 10 S&P sectors posted losses on this dismal trading day. The VIX, which is the CBOE Volatility Index, jumped 11.6%, the highest one-day rise in over three months.

As far as commodities are concerned, not even gold's safe haven qualities could keep it afloat today, as the precious metal promptly lost $18.4/oz. while crude oil dipped by $0.84. Commodities had been enjoying a rather strong year, but volatility struck the markets this week, preying on

Complete Story »

A Crash Proof Investment Strategy

Posted: 10 Feb 2012 09:00 AM PST

Financial markets and institutions are mighty unstable no matter where you look these days. Europe, America, China, Australia. Where are you supposed to go to invest your money?

Geography isn't the only maze full of dead ends. Traditional asset allocation theory has its knickers in a twist too. None of the asset classes are doing what they are supposed to.

Government bonds are proving dangerous, particularly in Europe. Academic theory tells you they're risk free (which explains how the Greeks got away with profligacy for so long).
Stocks have been going sideways for years. They are supposed to go up with the occasional correction. That's the whole point of having such a large part of your Superannuation invested in them.
2011 proved that property prices do not always go up, even in Australia.
Gold, that barbarous relic which pays no interest, has been going up in virtually a straight line, to paraphrase Alan Kohler when we spotted him on TV sometime last week.

And we've learned from the MF Global scandal that your brokerage might not actually have the things you supposedly own with them. Clients discovered their investments and cash were both outside of their trusty brokers reach.

Of course, everything that can go wrong is interconnected. A crash or default in any one asset class or country will unleash havoc in the others. That's what happened in 2008 - a problem in the obscure sub-prime lending market had investment banks dropping like flies within the year. Or faith in a major institution could be the cause of another global economic slowdown - another Lehman moment. The trigger everyone has their eye on this time around is of course Greece. It only takes one domino to fall before the rest reach their tipping point.

Then again, some plonkers seem to think that lining up dominoes decreases the chances of any specific one being knocked over.

Ian Verrender in The Age:

The only way that we will experience a US-style property crash here is if there is a serious rise in unemployment - a change that would spark loan defaults and flood of distressed property on to the market... For a US-style property collapse to occur here, we would need sovereign debt defaults across Europe, the disintegration of the European Union and a banking crisis that would cripple even China.

It only takes one of the scenarios Verrender mentions to happen, not all of them, for Australian property to be in trouble. Because all will follow on from each other.

For example, the IMF recently released a report warning China that Europe's woes are set to halve Chinese GDP growth. 'That would entail a growth rate far below the level the ruling Communist Party has identified as necessary to create enough jobs for it to maintain its grip on power.' Let alone prevent the expected banking crisis!

But wondering which domino will fall first may prove academic. It won't take you long to find evidence that all three criteria needed, according to Verrender, to set off a house price crash in Australia are already being met. Rising unemployment in Australia, sovereign debt defaults across Europe and a banking crisis in China. And Verrender may have causation the wrong way around to begin with. Falling house prices, as we had in 2011, can cause the unemployment that sees house prices continue to fall. In other words, the Australian house price bubble could be the first domino to fall, triggering the others.

When Is a Crash a Crash?

Of course, Australia wouldn't be the only country in trouble in a world of banking crises, sovereign debt defaults and crashing asset prices.

Despite all this, equity markets are plodding along nicely so far this year. But the suddenness of a turning point can change that very quickly. A seemingly insignificant event on the global stage, like the bursting of a housing bubble in Australia, has the power to trigger a heck of a lot of global turmoil in a short space of time.

Turning points come in many shapes and sizes. Let's sample a few of the past:

Property - Gareth Brown, also upset with Ian Verrender's analysis of the Australian property market, reminds us that 'the Case Shiller Index of US big city house prices fell a lesser 4.3 per cent in the year to September 30, 2007. By the time 2010 rolled around, it was down 30 per cent.' Not to mention the global financial crisis the property crash triggered.

Shares - Monday 19 October 1987 saw a 22% drop in the Dow Jones Industrial Average. Australia's stock market went on to fall 40% by the end of month. Marc Faber, who warned people to get out of the stock market a week before 'Black Monday', recently said 'I think the stock market this year has started in a similar way as in 1987'. We still don't really know what caused the 1987 selloff. But it happened in a similar year.

Sovereign bonds - Our favourite sovereign bond crisis is the Russian Ruble Crisis of 1998. Long Term Capital Management, a hedge fund run by the academics whose theories university students now learn, needed a bailout after that episode. Bailouts have been priced into sovereign bond investing ever since. The trigger, on August 13, was a 200% yield on Russian bonds. Also worth mentioning is that $5 billion in World Bank and IMF aid loans were stolen on arrival.

Bank failures - It's not just nations that fail. Lehman Brothers' botched bailout and subsequent disappearance showed how a single failure can cause mayhem throughout the entire global financial system.

So there's your summary of some of the crises and their turning points. Now get this. Australians are nicely lined up to experience all these types of problems at once.

We face a sovereign bond crisis in Europe, a property bubble here, banks overexposed to both of these, a resource sector over exposed to a Chinese construction bubble and a stock market made up of banks and resource companies.

If turning points and triggers start showing up in any of these exposures, things could go downhill fast. And you will want to ready your portfolio to weather the storm. So you have to ask yourself the following questions:

At what point is a falling stock market a crash?
At what point is a falling property market a crash?
At what point is a state going to default?
At what point is a bank insolvent?
At what point is a 20-year recession-free run going to come to a crashing halt?

When we finally learn the answers to those questions the hard way, it will be too late for the vast majority of people to protect their wealth. Or they will have done it inadequately. This video demonstrates nicely how a crisis trigger can have unexpected effects. While your attention is drawn to the action, the real crisis draws near behind you.

We don't have any particularly good answers to the questions about when a fall becomes a crash, a liquidity problem becomes a solvency problem and a recession becomes a depression. But you don't have to answer those questions about the timing of a crisis to protect your wealth if you can answer this one: How do you make the questions less relevant? We have an answer for you this week. At least part of it. The other half remains hidden, except to subscribers of Australian Wealth Gameplan.

The solution to unstable investment markets is a stable portfolio. And what's more stable than permanent?

Graham's Intelligent Investor vs. Browne's Permanent Portfolio

We tried to read Benjamin Graham's famous book 'The Intelligent Investor' over the last few months. It was like being back at university - that place where you learn things while they are being disproven in the real world. The first few chapters of the book explained why bonds were a good bet in the current environment. Inflation isn't likely to take off, Graham reckoned. 'We think it would be reasonable for an investor at this point to base his thinking and decisions on a probable (far from certain) rate of future inflation of, say 3% per annum.' Unfortunately, we were reading the 1972 edition. Eight years later, inflation was running at five times the assumed rate. And it spent the next decade above 3%.

Inflation 1965 - 2011

US inflation took off in 1973, reaching 15% by 1980

Reading pages and pages about why inflation should stay low and bonds are a good investment, knowing the disastrous consequences for those who followed his advice, made the book, to the point we kept reading, rather unpleasant.

Here is where Graham went wrong with his advice. Famed investor Warren Buffett wrote in his introduction to the book that 'the underlying principles of sound investment should not alter from decade to decade, but the application of these principles must be adapted to significant changes in financial mechanisms and climate.' Adapting principles is how you introduce human error. The whole point of a principle is that, if you stick by it, you won't stuff up the adaptation.

That's why we prefer Libertarian Harry Browne's 'permanent' solution to Benjamin Graham's 'adaptations of principles'. What's ironic is that Browne's book, published in 1970, made the accurate prediction about inflation that it didn't need to make for the strategy to pay off. Browne foresaw the very thing Graham got explicitly wrong - the inflation experienced from Nixon going off the gold standard. Well, Browne expected a devaluation, not a complete decoupling. But his strategy didn't depend on it. Despite calling his book 'How you can profit from the coming devaluation', the investment strategy Browne championed was a completely neutral one - the Permanent Portfolio. The idea being that you didn't have to adapt diddly squat to any 'changes in financial mechanisms and climate'. Apart from reweighting occasionally, you don't have to give the asset allocation a bit of thought. It's all laid out for you.

So what's in the Permanent Portfolio? Australian Wealth Gameplan subscribers have known since August. They've also been profiting from what editor Dan Denning calls 'The Revolution in the Desert' since June. And in this case, profit means two tips up over 120% at last count.

To get in on the action click here.

Nickolai Hubble.
The Daily Reckoning Weekend Edition

ALSO THIS WEEK in The Daily Reckoning Australia...

Natural Gas: The Big Transition in Energy
By Dan Denning

Yes. It's getting pretty interesting in the world's energy markets. We sense that we're on the verge of a big transition from one era to another. Not everyone is happy with that. For example, this Washington Post article reports what we've been saying since last summer: shale gas is a disruptive technology that changes the game in global energy markets.

Buying Gold in Uncertain Times
By Bill Bonner

During the Great Depression, for example, the price of gold rose...against dollars...even though the prices of food, clothing and other consumer items...as well as the prices of investment assets...were falling in dollar terms. Why? Because money gains value - relative to things - in a depression. Gold is money. It is the best money. It is the only money that has stood the test of time.

Goldman Sachs is a "Sell"
By Eric Fry

For once, we agree with the insiders at Goldman Sachs. The company's stock is a "Sell."

Okay, so the insiders didn't exactly say their stock is a "sell," but they didn't need to. Their feet did all the talking. Nine Goldman insiders scurried away from their stock as fast as the law would let them.

Stock Market Hindsight versus Foresight
By Greg Canavan

Bear market rallies are tailor-made to make you think things are getting better when they're not. Actually, they're designed to make you stop thinking, full stop. After worrying for months about Europe and Greece and the slowdown in China, a rising stock market makes you think all is well. You don't examine the reasons behind the rally - you just accept them

Posted: 10 Feb 2012 08:26 AM PST

From SHTFplan:

... The city of Detroit, which has been a harbinger for future trends soon to take hold across major metropolitan areas around the country, has no doubt experienced the worst of the depression thus far. Entire city blocks have become unlivable due to foreclosures and rampant crime, the jobless rate in 2009 exceeded 50%, and a mass exodus has left the population at levels not seen since 1910.

By all accounts, the Motor City is ground zero for the collapse of America as we know it. Reminiscent of poverty-stricken third world countries, it's gotten so bad in Detroit that there are areas of the city where police and emergency services personnel refuse to go.

This has left law-abiding residents of the city no choice but to arm themselves and start taking matters into their own hands...

Read full article...

More on the "End of America":

A post that every American should be required to read immediately

Porter Stansberry: These facts show the "End of America" is coming

"End of America" warning: Hollywood mogul is preparing to leave the U.S.

Pimco: This is who's actually going to be punished by the mortgage fraud settlement

Posted: 10 Feb 2012 08:11 AM PST

From Bloomberg:

The government's deal with banks over their foreclosure practices after 16 months of investigations is cheap for the loan servicers while costly for bond investors including pension funds, according to Pacific Investment Management Co.'s Scott Simon.

In what the U.S. called the largest federal-state civil settlement in the nation's history, five banks including Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM) committed $20 billion in various forms of mortgage relief plus payments of $5 billion to state and federal governments yesterday.

"This was a relatively cheap resolution for the banks," said Simon, the mortgage head at Pimco, which runs the world's largest bond fund. "A lot of the principal reductions would have happened on their loans anyway, and they're using other people's money to pay for a ton of this. Pension funds, 401(k)s and mutual funds are going to pick up a lot of the load."

Asset managers are frustrated with the deal because, in addition to the debt the banks own, it gives credit to the lenders for changes to loans they hold no interest in and oversee for investors. That "treats people's 401(k)s and pensions," which hold mortgage securities, "like perpetrators as opposed to victims," Simon said.

The deal comes after all 50 states announced a probe into foreclosures in 2010 following disclosures of faulty documents used to seize homes, costing bondholders as liquidations of bad debt were delayed.

"Think about this, you tell your kid, 'You did something bad, I'm going to fine you $10, but if you can steal $22 from your mom, you can pay me with that,'" Simon said yesterday in a telephone interview from Newport Beach, California.

Borrower Aid

Government officials say the costs will be "funded primarily by the banks, not third-party investors," according to a statement posted yesterday on a website created for the settlement. The five banks will get different amounts of credit for various types of borrower aid, with loans in government- backed mortgage bonds exempted.

The $250 billion Pimco Total Return Fund (PTTRX) last month was 50 percent invested in mortgage debt, typically government-backed securities, according to its disclosures. It also owns home-loan bonds in private funds for institutional clients.

Simon has said for more than two years that Pimco supports the greater use of principal cuts on debt that exceeds homes' values. It isn't clear how often reductions for individual borrowers sparked by yesterday's deal will be large enough to help, he said.

Principal Reduction

Laurie Goodman, the Amherst Securities Group LP analyst who has advocated mortgage forgiveness in testimony to Congress, joined him in criticizing the agreement yesterday.

"There is no one who has been more vocal in support of principal reduction than I have been," she said in a telephone interview. "There is a difference between principal reductions and giving banks credit for spending other people's money."
Investors have criticized servicers for allegedly basing decisions on loan modifications on their ownership of second- lien home-equity debt, which foreclosures can wipe out. Another allegation is that banks have hindered efforts to force repurchases of faulty mortgages and didn't have enough staff for troubled loans.

Such complaints were included in a letter sent to Bank of America in 2010 by a lawyer for a group including Pimco that later struck a proposed $8.5 billion settlement with the lender, which needs court approval.

Working Out Loans

Yesterday's deal does "encourage servicers to do what they are supposed to do" and try to work out loans, Simon said. It will also help the housing market and provide aid to homeowners and foreclosed-upon borrowers, with limited releases of legal liabilities for banks, he said.

In return, banks won't need to completely write down their home-equity debt before reducing mortgages, a "big deal for them" that "makes it incredibly difficult for the private market to develop," Simon said. After the worst housing slump since the 1930s, the government is helping to finance about 90 percent of new loans, according to newsletter Inside Mortgage Finance.

"Property rights and contract law once again take a beating," Simon said. "It ultimately means the private market will take longer to develop and credit will be less available. You'll need bigger down payments and higher rates. That's the problem you won't see for a while. Investors won't get tricked again."

'Small Share'

U.S. Housing Secretary Shaun Donovan told reporters yesterday that "a relatively small share, in the range of 15 percent, of the principal reduction" resulting from the settlement will come from investor-owned loans.

"Nothing in it requires any trustee or servicer to reduce principal where it's not allowed legally by the underlying documents," Donovan said. "The misunderstanding somehow that investors will be paying the banks' share is just false."

While officials said servicers will only rework mortgages when it is in bondholders' best interest, banks are now "doubly" incentivized, by the deal and their second-lien holdings, to skew such calculations, Goodman said.

Insufficient penalties imposed on banks for breaking rules may fail to prevent that from happening again, Simon said.

"There's a moral hazard element here," he said. "This settlement makes that potentially more likely to occur, not less."

To contact the reporter on this story: Jody Shenn in New York at jshenn@bloomberg.net.

To contact the editors responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net.

More on pensions:

Texas pension fund manager is calling for $10,000 gold

Massive fraud uncovered at California's giant public pension fund

Must-read: After Europe implodes, this could be the next big crisis

Gold & Silver Investors and Traders.

Posted: 10 Feb 2012 08:04 AM PST

The Dollar Confirms a Possible Silver Pullback

Based on the February 10th, 2012 Premium Update. Visit our archives for more gold & silver analysis.

"It was the best of times, it was the worst of times, it was the age of wisdom (for those who invest in gold) , it was the age of (central bank) foolishness, it was the epoch of belief (in Chinese growth) , it was the epoch of incredulity (in fiat money), it was the season of Light, it was the season of Darkness, it was the (Arab) spring of hope, it was the winter of (Syrian) despair."

With several of our own additions in parenthesis, these are the opening lines of the famous novel "A Tale of Two Cities," by Charles Dickens whose 200th year birthday was celebrated around the world this week. His words seem just as true and relevant today as in the time in which they were written.

Greece played the Artful Dodger this week and missed another deadline to approve conditions for a second €130bn bail-out on Tuesday night because of last-minute haggling with international lenders over emergency spending cuts. Negotiations to save Greece from a disorderly default are now teetering on the edge.

The delay fueled anxieties that Athens may be forced into a messy default next month and triggered concern over whether Greece remains committed to fiscal reform after two years of failing to implement measures agreed in return for financial support. Greece has already missed two deadlines this week. Finally a deal was presented for approval at a meeting of eurozone finance ministers Wednesday only to be sent back to Greece as incomplete with a fresh set of demands and an urgent deadline. The eurozone finance ministers dismissed as incomplete a reputed €3.3bn package of Greek budget cuts and sent the country's finance minister back to Athens with a fresh set of demands and an urgent deadline. They also warned of more intensive involvement in the Greek economy to improve tax collection and accelerate the sale of state-owned assets.

Earlier in the week the Great Expectations that a Greek rescue plan will be completed drove the dollar down sharply against the euro and boosted gold 1.5 per cent on Tuesday.

Gold could face a short-term pullback if Greece strikes a deal, as it may hurt the appeal of safe-haven assets, but on the other hand it will be good for the euro (bearish for USD Index), which might be bullish for gold. In the long run, the lingering euro zone debt crisis is expected to support sentiment in gold.

Charles Dickens said: "Do all the good you can and make as little fuss about it as possible." To see what good we can do for precious metals investors, let's begin the technical part with the analysis of the USD Index. We will start with the very long-term chart (charts courtesy by http://stockcharts.com.)

In the very long-term USD Index chart we see no significant changes. Thursday's closing index level is slightly below that of a week ago, but the recent move back below the long-term resistance line has not yet been confirmed. The index level is now more or less right at this support-resistance line, and the medium/long-term situation is slightly more bearish than not.

In the short-term USD Index chart, we see that the index "somewhat bottomed" at the cyclical turning point. Instead of a rally, a pause has followed with some sideways trading and small moves to the downside although declining at a much slower pace than seen in previous weeks. It seems likely that the index could actually rally in the very short term but the outlook for the medium term is bearish.

The situation for the USD Index appears rather bearish for the medium term but bullish for the short term, which might be a bearish short-term indication for the precious metals sector. It is also consistent with our recent view on the mining stocks part of the precious metals sector published on February 3rd, 2012 in our essay on the likely top in mining stocks:

(…) the medium- and long-term outlook for the gold and silver mining stocks is positive, however a correction is likely to be seen soon – perhaps it will start next week. Long-term investors should consider purchasing junior mining stocks, while short-term traders might want to trade the coming correction.(…) if you've been considering trying out our Premium Service, it appears to be a good idea to do so now.

Since the dollar is negatively correlated with the precious metals market, the likelihood of a rally is bearish factor for the precious metals sector – also for silver.

A look at the very long-term chart (if you're reading this essay at www.sunshineprofits.com, you may click on the above chart to enlarge it) reveals a rather uneventful week. Silver's price has been in a sideways trading pattern during the past two weeks after a strong rally in which the red support-resistance line was pierced and volume levels were significant. With silver now above this line, it seems that a move back to it, a test of the breakout may in fact be seen. The 38.2% Fibonacci retracement level based on the 2002 to 2011 rally is also in play and will likely assist in stopping a decline as well.

Summing up, the medium and long-term outlook for silver remains bullish but – also based on the analysis of the USD Index – the short term is now more bearish than not.

To make sure that you are notified once the new features are implemented, and get immediate access to my free thoughts on the market, including information not available publicly, we urge you to sign up for our free e-mail list. Gold & Silver Investors should definitely join us today and additionally get free, 7-day access to the Premium Sections on our website, including valuable tools and unique charts. It's free and you may unsubscribe at any time.

Thank you for reading. Have a great weekend and profitable week!

P. Radomski
Editor
www.SunshineProfits.com

* * * * *

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All essays, research and information found above represent analyses and opinions of Mr. Radomski and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Mr. Radomski and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above belong to Mr. Radomski or respective associates and are neither an offer nor a recommendation to purchase or sell securities. Mr. Radomski is not a Registered Securities Advisor. Mr. Radomski does not recommend services, products, business or investment in any company mentioned in any of his essays or reports. Materials published above have been prepared for your private use and their sole purpose is to educate readers about various investments.

By reading Mr. Radomski's essays or reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these essays or reports. Investing, trading and speculation in any financial markets may involve high risk of loss. We strongly advise that you consult a certified investment advisor and we encourage you to do your own research before making any investment decision. Mr. Radomski, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Two rock-solid reasons why gold is not a bubble

Posted: 10 Feb 2012 08:03 AM PST

From Sovereign Man:

After more than a decade of year-over-year appreciation, many people are wondering if gold is just another bubble waiting to burst. No commodity or asset class in our historical record has ever shown such long-term growth, and consequently, the "B-word" is being tossed around regularly in financial media.

... Ultimately, a bubble isn’' something whose price keeps going up. It's something that is steadily expanding, supported by nothing but hot air.

The exponential growth in Facebook users (or other digital platforms like Skype, Angry Birds, etc.) is underpinned by perceived value... not hot air. The growth in FBI background checks and firearm sales is underpinned by legitimate consumer demand, not phony speculation.

The growth rates in U.S. citizenship renunciants and U.S. government Google-user requests are equally underpinned by a legitimate (though unfortunate) trend of declining liberty. This is certainly not hot air.

The value of gold is...

Read full article...

More on gold:

A new reason gold stocks could soar

Why Warren Buffett's latest gold rant is completely wrong

Top gold manager Embry: This will be the strongest year for gold yet

Gold and Silver Disaggregated COT Report (DCOT) for February 10

Posted: 10 Feb 2012 07:32 AM PST

This week's Commodity Futures Trading Commission (CFTC) commitments of traders (COT) report suggests stepped up "opposition" to the gold and silver rallies by the usual "hedgers." The disaggregated COT report (DCOT) more or less "confirms" it. In the DCOT table below a net short position shows as a negative figure in red. A net long position shows in black. In the Change column, a negative number indicates either an increase to an existing net short position or a reduction of a net long position. A black figure in the Change column indicates an increase to an existing long position or a reduction of an existing net short position. The way to think of it is that black figures in the Change column are traders getting "longer" and red figures are traders getting less long or shorter.

All of the trader's positions are calculated net of spreading contracts as of the Tuesday disaggregated COT report.

(DCOT Table for Friday, February 10, 2012, for data as of the close on Tuesday, February 7. Source CFTC for COT data, Cash Market for gold and silver.)

Vultures, (Got Gold Report Subscribers) please note that updates to our linked technical charts, including our comments about the COT reports and the week's technical changes, should be completed by the usual time on Sunday evening (by 18:00 ET).

*** We will have more about the COT in the linked technical charts for Vultures by Sunday evening, including a very large jump in the combined commercial net short positioning for silver as the hedgers put up increasing opposition to both of the most popular precious metals. As shown above, the Producer/Merchants and the Swap Dealers were on the same page of the same playbook in that opposition this week, indicating their appetite to hedge was elevated as of Tuesday. ***

Combined (legacy, not disaggregated) Commercial Net Short Position for Silver, then Gold below. Source CFTC for COT, Cash market for gold and silver.

That is all. Carry on.

Bob Chapman - Gold Radio Cafe - February 10, 2012

Posted: 10 Feb 2012 07:15 AM PST

Bob Chapman - Gold Radio Cafe - February 10, 2012 : Greece is on the edge of...

[[ This is a content summary only. Visit my blog http://www.bobchapman.blogspot.com for the full Story ]]

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

Gold Down on Week Following Rejection of “Weak” Greek Reforms, Draghi Denies “Stigma” of ECB Lending

Posted: 10 Feb 2012 07:06 AM PST

Friday 10 February 2012, 09:00 EST

Gold Down on Week Following Rejection of "Weak" Greek Reforms, Draghi Denies "Stigma" of ECB Lending

U.S. DOLLAR gold prices were on course for a second weekly fall Friday lunchtime in London, heading down towards $1700 an ounce following European ministers' rejection yesterday of Greece's latest austerity reforms.

Silver prices also traded lower, hitting $33.27 per ounce – 1.4% down on last week's close.
Stocks, commodities and the Euro all fell, while the Dollar gained along with prices for major nation government bonds.

"Gains in the US Dollar and consistent disappointment from the European Union regarding the Greece debt deal are curbing any gains in gold," reckons Pradeep Unni, senior analyst at commodity brokerage Richcomm Global Services in Dubai.

"People are just throwing in the towel because we didn't see a rally," adds Afshin Nabavi, senior vice president at Swiss precious metals refiner MKS.

Spot market gold prices were down 1.2% for the week Friday lunchtime, hitting $1706 per ounce, their lowest level since Jan.25, the day the US Federal Reserve confirmed its policymakers expect near-zero interest rates until at least late 2014.

Eurozone finance ministers yesterday dismissed a reported €3.3 billion package of spending cuts presented to them by Greece's leaders, who have now been asked to find an additional €325 million in savings.

"No disbursement before implementation," said Luxembourg prime minister Jean-Claude Juncker, who chairs the Eurogroup of single currency finance ministers.

"We can't live with this system where promises are repeated and repeated and repeated and implementation measures are sometimes too weak."

The Eurogroup also suggested that there could be greater external involvement in the Greek economy, with the aim of improving tax collection and speeding up privatization of state assets. German finance minister Wolfgang Schaeuble meantime said the ministers "will certainly not discuss a top-up" of Greece's €130 billion second bailout.

"If we see the salvation and future of the country in the Euro area," said Greek finance minister Evangelos Venizelos, "[then] we have to do whatever we have to do to get the program approved."
"Venizelos, like some officials before him, is playing the 'in or out' card," says this morning's note from Standard Bank currency analysts Steve Barrow and Jeremy Stevens.

"We suspect [the Eurogroup's conditions] will be delivered, but not without some acrimony."
Thousands took to the streets in Athens Friday as unions called a two-day protest strike, the second this week following Tuesday's 24 hour action.

"With Greek elections planned for April 2012, it may be the case that the politicians who sign off on agreements to receive Euroland aid next week may be replaced quite swiftly by less amenable types," notes one gold bullion dealer here in London.

If the second bailout is not approved, Greece will be unable to pay over €14 billion of debt that matures on March 20.

"[Greek politicians] must get this deal agreed really within the next few days to enable them sufficient time and have the new bailout money disbursed before that bond is due," says Tony Stringer, managing director of global sovereigns at ratings agency Fitch.

"If they don't manage to achieve that, then it could be in the realm of a disorderly default."

European Central Bank president Mario Draghi meantime denied a suggestion put to him at Thursday's press conference that the ECB's three year longer term refinancing operation – at which European banks can borrow from the central bank at low rates – represents "hidden government financing" that some banks would prefer not to access.

Deutsche Bank chief executive Josef Ackermann said last week that: "the fact that we have never taken any money from the government has made us, from a reputation point of view, so attractive with so many clients in the world that we would be very reluctant to give that up."

"There is no stigma whatsoever attached to these facilities," said Draghi yesterday, adding that some bankers' statements were "statements of virility" and that many banks whose chiefs have made such comments have actually accessed the LTRO or other ECB credit facilities.

The ECB also announced Thursday that it is changing the rules on collateral banks can post against their ECB borrowing to widen eligibility, although the Governing Council decision was not unanimous.

Regulated commodity futures exchange CME has lowered its margin on gold futures trades, along with margins on silver and copper.

"The announcement…has failed to inspire much interest [in gold]" says Marc Ground, commodities strategist at Standard Bank.

CME raised its margin on gold trading in both August and September last year, "contributing to the sharp fall" in gold prices seen over those weeks, according to a note from Commerzbank this morning.

Ben Traynor
BullionVault

Gold value calculator | Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Profit From Volatility In Gold and Silver Prices

Posted: 10 Feb 2012 07:01 AM PST

Gold's (GLD) accelerated move to $1900 in the summer of 2011 past overhead resistance indicated the market was waiting for an inflationary QE3. The market got a surprise as Bernanke waited until 2012. This was no surprise for my readers and precious metals declined lower in the second half depicting a surprise move with gaps lower.
We were able to call the top in silver (SLV) in April 2011 and gold in September 2011 as it reached overbought conditions, locking in partial profits. On April 28, 2011 I wrote, "Remember that I am recommending partial profits if your winnings enable you to play with the house's money and you are still holding silver from our August 2010 Buy Signal at $18. Other readers who have not been able to build a position can wait for the inevitable pullback as additional buying opportunities." A few days later in May we saw a volatile decline in silver of close to 40%.
Likewise in August of 2011, I became concerned of a correction in gold as it reached overbought territory. On August 5, 2011 I wrote, "Although the technical picture for precious metals is improving, there will be periods of volatility as the global markets shake. A consolidation in gold would be normal and healthy." A few weeks later gold topped and corrected for the rest of 2011.
Mining equities (GDX) and precious metals sold off hard in the third and fourth quarter of 2011. When such unexpected short term pullbacks occur we must monitor the rebound. Negative news which causes a temporary decline with a powerful recovery indicates strength and resilience.
The precious metals and natural resource market appears to be finding its footing and now may return to close some of those downside gaps in 2012 . The recent selling panic in gold and silver bullion has abated and reversals are beginning to occur. We are on the verge of a breakout at $35 in silver, $4 copper (JJC) and $1800 gold could be significant. Junior mining stocks (GDXJ) are also making dramatic moves higher especially in the uranium (URA) and rare earths (REMX).
One should never get caught up with a selling panic like the end of 2011 especially in gold and silver bullion which has had significant up moves over the past 18 months and past ten decades. Recently gold's accelerated move to $1900 and silver's to $50 was overdue for a restorative, healthy pullback.
It must be emphasized acting in a knee jerk fashion following the herd and panic by selling at discounted levels for pennies on the dollar must be avoided. Some analysts were caught up with the decline irrationally calling the end to a 10 year bull trend. How foolish!
Gold and silver are finding support and the end of 2011 was not a time to call the end of a trend, but to realize that gold and silver was providing a discounted buying opportunity. The mining shares have never been so oversold in this entire decade long run as it was in the end of 2011. The recent volatile selloff created an extreme oversold condition where reversals occur. Although the recent rise has been on volume, a break above the 200 day on increased volume for the miners and silver could indicate that the downside gaps made in 2011 may be closed sooner rather than later and potentially very quickly.
Gold Stock Trades has weathered several corrections in miners, gold and silver over the past 10 years and each time we have maintained a strong hand.
It is normal and necessary to have corrections. Quality mining equities and precious metals begin new bases and reach compelling valuations that long term, contrarian investors can use to their benefit by adding to positions or initiating purchases in favorite stocks or sectors which one has not participated in yet.
One must not be discouraged or give up during volatile selloffs like 2008 or 2010 or 2011 and run to cash. One must use short term volatility to one's advantage and go against the latest fad. We buy winter coats in the summer.
We must stay focussed on the long term trends and realize that the mining stocks have been beaten down in 2011 to dramatically oversold levels. It is time to pick up resource stocks especially in uranium, rare earths and gold/silver explorers (SIL) selling at great discounts.
Despite recent carnage silver and the industrial metals are exhibiting relative strength to gold in 2012. The long term trend for silver is intact and it appears to have found support at its long term trend around $30. The momentum indicators have bounced off oversold levels. Silver has all the right criteria for a fast move to test all time highs.
It is no surprise why the uptrend in commodities is intact. The West is monetizing debt and printing dollars at a record pace to alleviate the debt crisis. Risk on has been the name of the game in 2012.
Those on the sidelines in cash (UUP) and treasuries(TLT), playing risk off are in fact playing a very risky game as inflation appears to be the flavor of the day.
Look for technical breakouts in gold, silver, copper, uranium and rare earths as they all appear to be reversing higher as the moving averages transition upward. Don't be unsettled by short term pullbacks or day to day volatility. Use pullbacks as opportunities on this long term upward trend in gold and silver. The risk off trade in Treasuries and the U.S. dollar appears to be losing momentum and dangerously teetering on a decline. Pay attention to the ball not the windup as we may be witnessing a trend change. To get scouting reports, specific targets and up to the minute updates on the natural resource market click here.

This Is What An Economic Depression Looks Like In The 21st Century

Posted: 10 Feb 2012 06:10 AM PST

Do you want to see what a 21st century economic depression looks like? Just look at Greece. Once upon a time, the Greek economy was thriving, the Greek government was borrowing money like there was no tomorrow and Greek citizens were thoroughly enjoying the bubble of false prosperity that all that debt created. Those that warned that Greece was headed for a financial collapse were laughed at and were called "doom and gloomers". Well, nobody is laughing now. You see, the truth is that debt is a very cruel master. Greeks were able to live way beyond their means for many, many years but eventually a day of reckoning arrived. At this point, the Greek economy has been in a recession for five years in a row, and the economic crisis in that country is rapidly getting even worse. It was just recently announced that the overall rate of unemployment in Greece has soared above 20 percent and the youth unemployment rate has risen to an astounding 48 percent. One out of every five retail stores has been shut down and parents are literally abandoning children in the streets. The frightening thing is that this is just the beginning. Things are going to get a lot worse in Greece. And in case you haven't been paying attention, these kinds of conditions are coming to the United States as well. We are heading down the exact same road as Greece went down, and the economic pain that this country is eventually going to suffer is going to be beyond anything that most Americans would dare to imagine.

All debt spirals eventually come to an end. For years, Greece borrowed huge amounts of very cheap money, but there came a point when the debt became absolutely strangling and the rest of the world refused to lend the Greek government money at such cheap rates anymore.

Greece would have defaulted long before now if the EU and the IMF had not stepped in to bail them out. But along with those bailouts came strings. The EU and the IMF insisted that the Greek government cut spending and raise taxes.

Well, those spending cuts and tax increases caused the economy to slow down. Tax revenues decreased and deficit reduction targets were missed. So the EU and the IMF insisted on even more spending cuts and tax increases.

Even after all of the spending cuts and all of the tax increases that we have seen, the debt to GDP ratio in Greece is still higher than it was before the crisis began. Today, the Greek national debt is sitting at 142 percent of GDP.

Now the EU and the IMF are demanding even more austerity measures before they will release any more bailout money.

Needless to say, the Greek people are pretty much exasperated by all of this. They created this mess by going into so much debt, but they certainly don't like the solutions that are being imposed upon them.

Protesters in Greece are absolutely outraged that the EU and the IMF are now demanding a 22 percent reduction in the minimum wage.

Most families in Greece are just barely surviving at this point. Unfortunately, Greece is probably looking at depression conditions for many years to come.

Over the past three years, the size of the Greek economy has shrunk by 16 percent.

In 2012, it is being projected that the Greek economy will shrink by another 5 percent.

Sadly, that projection is probably way too optimistic.

Over the past couple of months, it has been like someone has pulled the rug out from under the Greek economy. Just check out the following numbers from an article in the Telegraph by Ambrose Evans-Pritchard....

Another normal day at the Hellenic Statistical Authority.

We learn that:

Greece's manufacturing output contracted by 15.5pc in December from a year earlier.

Industrial output fell 11.3pc, compared to minus 7.8pc in November.

Unemployment jumped to 20.9pc in November, up from 18.2pc a month earlier.

I have little further to add. This is what a death spiral looks like.

Can you imagine unemployment going up by 2.7 percent in one month?

This is what a 21st century economic depression looks like.

And needless to say, civil unrest is rampant in Greece.

The following is how a USA Today article described some of the protests that we saw in Greece this week....

Scores of youths, in hoods and gas masks, used sledge hammers to smash up marble paving stones in Athens' main Syntagma Square before hurling the rubble at riot police.

The country's two biggest labor unions stopped railway, ferry and public transport schedules, and hospitals worked on skeleton staff while most public services were disrupted. Unions were planning protests in Athens and other cities around midday.

Greek citizens are exasperated by the endless rounds of austerity that are being imposed upon them. They wonder how far all of this is going to go.

How much higher can taxes go in Greece? Greece already has tax rates that are among the highest in Europe....

Greece has the third highest rate of VAT in Europe, second highest gas/petrol tax, third highest tax on social insurance contributions, fifth highest VAT on alcohol, highest property tax and one of the worst corporate tax rates, without the quality of living or competitiveness to match.

How much farther can government pay be cut? Greek civil servants have had their incomes slashed by about 40 percent since 2010.

How would you feel if your pay was reduced by 40 percent?

Large numbers of Greeks are rapidly reaching the end of their ropes. The following is from a recent article in the Independent....

"People are scared and haven't really realised what's happening yet," George Pantsios, an electrician for the country's public power corporation, said. He has only been receiving half of his €850 monthly wage since August. "But once we all lose our jobs and can't feed our kids, that's when it'll go boom and we'll turn into Tahrir Square."

Instead of turning violent, others are simply giving in to despair. According to the Daily Mail, large numbers of Greek children are being abandoned because their parents simply cannot afford to take care of them anymore. The note that one mother left with her little toddler was absolutely heartbreaking....

One mother, it said, ran away after handing over her two-year-old daughter Natasha.

Four-year-old Anna was found by a teacher clutching a note that read: 'I will not be coming to pick up Anna today because I cannot afford to look after her. Please take good care of her. Sorry.'

Sadly, there are an increasing number of Greeks that are giving up on life entirely. The number of suicides in Greece rose by 40 percent during just one recent 12 month time period.

But we haven't even seen the worst in Greece yet. The worst is still yet to come.

And the people of Greece are going to get angrier and angrier and angrier.

According to one recent poll, about 90 percent all of Greeks are unhappy with the interim government led by Prime Minister Lucas Papademos.

This week, that government has started to fall apart. Over just the past few days, 6 members of the 48-member government cabinet have resigned. Not only is there real doubt if the new austerity measures will be approved, there is very real doubt if this government will be able to hold together much longer.

Frustration with the EU and the IMF has reached a fever pitch in Greece. Just check out what Reuters is reporting....

In a letter obtained by Reuters on Friday, the Federation of Greek Police accused the officials of "...blackmail, covertly abolishing or eroding democracy and national sovereignty" and said one target of its warrants would be the IMF's top official for Greece, Poul Thomsen.

So what is going to happen next in Greece?

The truth is that nobody knows.

But whatever kind of "deals" are reached, the reality is that nothing is going to keep Greece from continuing to experience depression-like conditions for quite some time.

Unfortunately, Greece is not an isolated case.

Portugal, Ireland, Italy and Spain are all going down the same path and Europe does not have enough money to bail all of them out.

To get an idea of how much money it would take to bail out the financially troubled nations of Europe, just check out this infographic that was recently posted on ZeroHedge.

A day of reckoning is coming for the United States as well. As CNBC recently noted, the U.S. debt problem is far worse than the European debt problem is.

That is why I have written over and over about the U.S. national debt and about how the U.S. government is spending too much money.

Right now, the U.S. government is still able to borrow gigantic mountains of very cheap money and is spending money as if tomorrow will never come.

Well, just like we saw in Greece, when debt gets out of control a day of great pain eventually arrives.

What we are watching unfold in Greece right now is coming to America.

You better get ready.

Buffett: "Right To Be Fearful" of "Paper Money" - Favours Stocks Over Cash, Bonds and Gold

Posted: 10 Feb 2012 05:55 AM PST

Our friends at Stephen Flood's GoldCore.com write: "Warren Buffett, the billionaire chairman of Berkshire Hathaway, has released an interesting, if contradictory, adaptation from his upcoming shareholder letter - Warren Buffett: Why stocks beat gold and bonds .
In it, Buffett again extols the virtues of stocks over paper money, bonds and gold.

The Oracle of Omaha acknowledges and correctly warns that investors are "right to be fearful" of "paper money." Buffett said low interest rates and inflation should dissuade investors from buying bonds and cash. "They are among the most dangerous of assets."

Buffett again reaffirmed his opinion about gold's "significant shortcomings." He said that gold is "neither of much use nor procreative." He also suggested that gold was a bubble and compared it to the internet stock and housing bubbles.

Buffett Incorrect Regarding Gold

Buffett's thoughts regarding gold are a rehash of similar negative views on gold repeated in recent years.

Buffett criticises gold for having two shortcomings – it is "neither of much use nor procreative".
This is true, however Buffett completely ignores gold's primary use throughout history and today which is as finite money, a monetary safe haven asset, as financial insurance and as a store of value.
Buffett contradicts himself by suggesting that those who buy gold are fearful and they believe "that the ranks of the fearful will grow."

However, in the same article, he says that investors are "right to be fearful" of "paper money."
Buffett should have a chat with James Grant or other monetary authorities who realise gold is the ultimate form of cash. As Grant says "nothing beats a little cash in a bear market, of course, and the oldest form of cash is gold."

Buffett suggests that gold is a bubble and that the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis. He writes that as "bandwagon" investors join any party, they create their own truth -- for a while.
His article also shows a lack of knowledge regarding gold - Buffett says that gold is "currently a huge favourite of investors."

The data and statistical evidence shows that gold remains a fringe investment and remains under owned by retail investors in the western world. This is beginning to change and ownership has increased in recent years but ownership remains miniscule when looked at in historical context and when viewed versus ownership of stocks, bonds and cash today.

Buffett compares gold to the internet stock and housing bubbles.

This is a highly simplistic and dubious comparison. The very uncertain world of 2012, with a myriad of significant investment risks is leading to continuing strong fundamental demand for gold bullion amid constrained global supply.

These real fundamentals driving today's gold market were absent in the final years of the dotcom and property bubbles.

The fundamentals driving the gold market are not going to disappear in the foreseeable future and may be with us for the rest of this decade.

Also, gold so massively underperformed in the 1980s and 1990s (after huge outperformance in the 1970s and a parabolic price move in late 1979, January 1980) that gold has in effect been playing "catch up" with other assets in recent years.

The charts and tables show that gold's performance, since the start of Buffett's Berkshire Hathaway, has been equivalent to that of stocks (MSCI World and S&P 500) and with similar volatility.

Berkshire's Hathaway's performance has been phenomenal and must be respected, however Buffett's over concentration and allocation on stocks since 2000 has cost him and his shareholders dearly – and may do so again in the coming years. – GoldCore.com. More at the link below.

Source: GoldCore.com
http://www.goldcore.com/goldcore_blog/buffett-says-right-be-fearful-paper-money-favours-stocks-over-cash-bonds-and-gold

What the Mortgage Deal Reveals About The Obama Administration

Posted: 10 Feb 2012 05:28 AM PST

Edward Harrison here. I was reading Yves' excellent post on The Top Twelve Reasons Why You Should Hate the Mortgage Settlement and I thought about a post I wrote a year ago on what this was all about. I am re-posting this post verbatim below but I just want to say a few words first.

Clearly, the Obama Administration is positioning itself for the 2012 general election. The goal is to do the right things and say just enough to make the Administration's policies appear successful. The messaging is designed to build up a base from which to contrast Obama from the eventual Republican nominee in order to get out the vote. I doubt seriously that Obama's people want any of these mortgage fraud initiatives to have teeth. After all, the President is going for the Super PAC money.

This is kabuki theater for the masses. it is designed to give those people inclined to vote for a Democrat a reason to do so in November, nothing more.

Original post from 8 Mar 2011 below

Yves Smith wrote a post this morning highlighting the $20 billion mortgage settlement the Obama Administration, the banks and the State Attorneys General are hashing out. Her conclusion is that this is this is a Bailout as Reward for Institutionalized Fraud. Read the post. It is quite good.

Here is my take.

The Administration has now moved into re-election mode. Uppermost in their mind is the need to demonstrate that they have taken the right policy steps on the economy all along. And this means making the recovery stick.

-Obama's economic agenda for re-election, Nov 2010

What that means is that there will be no foreclosure moratoria, and certainly no 'fat cats on Wall Street' rhetoric. The Obama Administration is looking to cultivate a pro-business profile. This is why erstwhile Obama-basher and GE CEO Jeff Immelt has been brought on side as well. That's also why Obama has brought Bill Daley into the tent as Chief of Staff. Call it the Jamie Dimon comeback – that's what I am calling it. Call it whatever you like. The fact is the old Obama Administration already set policy early in 2009 and the new Obama Administration now has to defend it if the President wants to be re-elected, which he clearly does.

So, of course they are going to push for a mortgage settlement. As with the Goldman case this past summer, the number is eye-poppingly large enough to throw a bone to the anti-Wall Street crowd but small enough that it doesn't jeopardize the still fragile US financial system. Bankers can continue business as usual. And that is the goal, of course. Remember Tim Geithner's statement about the Administration's needing to do "deeply unpopular, deeply hard to understand" things to right the economic ship?

I watched exceptionally capable people just get killed in the court of public opinion as they defended those policies on the Hill. This is a necessary part of the office, certainly in financial crises. I think this really says something important about the president, not about me. The test is whether you have people willing to do the things that are deeply unpopular, deeply hard to understand, knowing that they're necessary to do and better than the alternatives.

More than ever, Tim Geithner runs the show for economic policy. He is the last man standing of the Old Obama team. Volcker, Summers, Orszag, and Romer are all gone. So Geithner's vision of bailouts and settlements is the one that carries the most weight.

What is Geithner saying with his policies?

The financial system was on the verge of collapse. We all know that now – about US banks and European ones too. Fed Chair Ben Bernanke has said so as has Bank of England head Mervyn King. The WikiLeaks cables affirmed systemic insolvency as the real issue most demonstrably.
When presented with a choice of Japan or Sweden as the model for crisis resolution, the US felt the Japan banking crisis response was the best historical precedent. It is still unclear whether this was a political or an economic decision.
The most difficult political aspect of the banking crisis response was socialising bank losses. All banking crisis bailouts involve some form of loss socialisation and this is a policy which citizens find abhorrent. That's what Geithner meant most directly about 'deeply unpopular, deeply hard to understand'.
Using pro-inflationary monetary policy and fiscal stimulus, the U.S. can put this crisis in the rear view mirror. Low interest rates and a steep yield curve combined with bailouts, stress tests, dividend reductions and private capital will allow time to heal all wounds. That is the Geithner view.
Once the system is healthy again, it should expand. The reason you need to bail the banks out is that they have expansion opportunities abroad. As emerging markets develop more sophisticated financial markets, the Treasury secretary believes American banks are well positioned to profit. American finance can't profit if you break up the banks.

I would argue that Tim Geithner believes we are almost at that final stage where the banks are now healthy enough to get bigger and take share in emerging markets. His view is that a more robust regulatory environment will keep things in check and prevent another financial crisis.

I hope this helps to explain why the Obama Administration is keen to get this $20 billion mortgage settlement done. The prevailing view in the Administration is that the U.S. is in a fragile but sustainable recovery. With emerging markets leading the economic recovery and U.S. banks on sounder footing, now is the time to resume the expansion of U.S. financial services. I should also add that given the balance sheet recession in the U.S., the only way banks can expand is via an expansion abroad.

I strongly disagree with this vision of America's future economic development. But this is the road we are on.

Gold World News Flash

2012-02-11T01:18:00.001-08:00

Gold World News Flash

Chris Duane Talks SILVER With Alt Investors Hangout
Gold Seeker Weekly Wrap-Up: Gold and Silver End Slightly Lower on the Week
By the Numbers for the Week Ending February 10
Where a Nation’s Gold and Your Gold Should be Held – Part II
Gold & Silver: THE Answers to Escalating Financial Doom
Gold Price Dropped $15.70 to Close at $1,723.30 from here $1,725 Becomes Resistance not Support
Guest Submission: Ten Year Technical Chart on Gold Suggests Possible Retest of $1300 an oz.
The Federal Minimum Wage, Unemployment, And The Implied Price Of Silver
Watching the "Decline Curve"
Watching the “Decline Curve”
Platform Technologies Promise Big Payoffs: Juan Sanchez
Permanent Gold Backwardation
Two Grandich Interviews
Thursday Afternoon Wrap-Up: It Will be GAME OVER for the U.S. Dollar
Fox Closes Freedom Watch With Judge Napolitano
John Williams - The US Edges Closer to Collapse
High Yield Plummets and VIX Flares Most In Almost 3 Months
All The World's Gold
The Gospel of Gold According to Peter
How Bull Markets Evolve into Bubbles
Profit in the Investment Ecosystem
This Is What An Economic Depression Looks Like In The 21st Century
Gold and Silver Disaggregated COT Report (DCOT) for February 10
Profit in the Investment Ecosystem: Catherine Austin Fitts
Silver Sucks, Buy Zimbabwe Currency, Awesomer!
Gold Daily and Silver Weekly Charts - Bear Raid, Risk Off Trade on Greece
COT Gold, Silver and US Dollar Index Report - February 10, 2012
The Dollar Confirms a Possible Silver Pullback

Chris Duane Talks SILVER With Alt Investors Hangout

Posted: 10 Feb 2012 05:22 PM PST

from AltInvestorshangout :

Gold Seeker Weekly Wrap-Up: Gold and Silver End Slightly Lower on the Week

Posted: 10 Feb 2012 04:00 PM PST

Gold fell $24.10 to $1704.70 by a little before 8:30AM EST before it rallied back higher in New York, but it still ended with a loss of 0.53%. Silver slipped to as low as $33.165 before it also rallied back higher in New York, but it still ended with a loss of 1.09%.

By the Numbers for the Week Ending February 10

Posted: 10 Feb 2012 03:14 PM PST

HOUSTON -- Just below is this week's closing table. The CFTC disaggregated commitments of traders (DCOT) recap table was posted previously.

If the images are too small click on them for a larger version.

Continued…

That is all for now, but there is more to come.

Where a Nation’s Gold and Your Gold Should be Held – Part II

Posted: 10 Feb 2012 01:00 PM PST

Gold & Silver: THE Answers to Escalating Financial Doom

Posted: 10 Feb 2012 12:36 PM PST

[/CENTER] [/CENTER] Reading*goes on to say, in part: Most every nation in the world today practices a fiat currency in which the printed notes representing money are just promises to redeem as legal tender. There is no backing of any asset, per se, to guarantee that these notes are going to be of value forever. On the other hand, most recognize that gold and silver at one time were used to ensure that value was always held in balance. These two precious metals have long since been removed from the picture as a store in value connected to the printing of currency. When the money supply is in the form of printed paper without backing that country runs the risk of using the printed matter to alleviate debt and stimulate the economy without basis. This is where the United States dollar and most international currencies reside right now. * What can be done to protect oneself and family from this impending event of seeing the dollar, and for that matter all international currencies, beco...

Gold Price Dropped $15.70 to Close at $1,723.30 from here $1,725 Becomes Resistance not Support

Posted: 10 Feb 2012 11:06 AM PST

Gold Price Close Today : 1,723.30
Gold Price Close 3-Feb : 1,737.90
Change : -14.60 or -0.8%

Silver Price Close Today : 3357.6
Silver Price Close 3-Feb : 3372.5
Change : -14.90 cents or -0.4%

Gold Silver Ratio Today : 51.325
Gold Silver Ratio 3-Feb : 51.532
Change : -0.21 or -0.4%

Silver Gold Ratio : 0.01948
Silver Gold Ratio 3-Feb : 0.01941
Change : 0.00008 or 0.4%

Dow in Gold Dollars : $ 153.56
Dow in Gold Dollars 3-Feb : $ 152.99
Change : $ 0.56 or 0.4%

Dow in Gold Ounces : 7.428
Dow in Gold Ounces 3-Feb : 7.401
Change : 0.03 or 0.4%

Dow in Silver Ounces : 381.26
Dow in Silver Ounces 3-Feb : 381.39
Change : -0.12 or 0.0%

Dow Industrial : 12,801.23
Dow Industrial 3-Feb : 12,862.23
Change : -61.00 or -0.5%

S&P 500 : 1,342.64
S&P 500 3-Feb : 1,344.90
Change : -2.26 or -0.2%

US Dollar Index : 79.034
US Dollar Index 3-Feb : 78.959
Change : 0.075 or 0.1%

Platinum Price Close Today : 1,656.40
Platinum Price Close 3-Feb : 1,621.50
Change : 34.90 or 2.2%

Palladium Price Close Today : 702.20
Palladium Price Close 3-Feb : 705.90
Change : -3.70 or -0.5%

Today wasn't a banner day for silver or the GOLD PRICE, either. GOLD dropped $15.70 to $1,723.30 and silver lost 30.8c, ending at 3357.6c.

Both SILVER and the GOLD PRICE continue to dig in their heels and give little ground. Gold dropped as low as $1,705.2 today, but plainly many idlers sat at $1,705 waiting to buy gold, and did, so it shot right back up and ended the day clinging to $1,725 support -- a little over the edge, but clinging still. From here $1,725 will become resistance, not support.

SILVER's low today came at 3318, and it has given back almost all the week's gains and again faces 3300c.

Expect more weakness next week from both metals. When/if silver breaks 3300c, as it likely will, it will drop faster than gold, taking the gold/silver ratio higher. I would buy silver (or gold) whenever that ratio reaches 57.50. Gold is not likely to drop lower than $1,680 - $1,650, nor silver below 3000c.

The market is handing you a last chance buying opportunity. Don't let it pass you by.

'Twas not a good week for stocks or gold or anything else much. Almost as exciting as a market in August, but even a market going nowhere tells us something.

Stocks soldiered away this week trying to burst through that May 2011 high but in the end couldn't beat 12,900 -- it beat them. And the closing (or near closing) of the Greek Debt Deal did not, as stock salesmen and assorted well-paid touts have been promising, usher in Fat City For Stocks. Rather, it brought only weight loss, disappointment, and the search for another chimerical rationale.

Dow today fell 89.23 (0.69%) and barely held on above 12,800 at 12,801.23. Odd, odd, passing odd: the S&P500 lost EXACTLY the same percentage, 0.69%, as the Dow, settling at 1,342.64 (lower by 9.31).

Let's nail the lid down on this coffin tight. Dow today fell lower than the five-day low (12,780), to 12,743, and traded below 12,800 all day long, until some Nice Government Angel came in during the last minutes and drove the Dow over the psychologically critical round number, 12,800. A market that behaves this way will move lower and that right soon.

But y'all don't believe me. I'm just a natural born fool from Tennessee, not one of them pointy-toe shoe wearing smart fellers from Wall Street.

US dollar index traced out a rounding bottom on its chart this week, with a low around 79.40. Today it spent most of its time above the morale- building 79.00 level, and gained a note-worthy 46.8 basis points (0.6%) to close 79.034.

This week may well have marked an end to the dollar's decline. If so, early next week it will climb above its 20 day moving average (now 79.61).

Don't know what caused the delay, but the euro gapped down today instead of yesterday. Fell 0.65% to 1.3198. 'Tis perched on its critical 62 day moving average (1.3149). Euro will enjoy a painful week next week.

Yen bounced 0.1% today to close at 128.87c/Y100 (Y77.60/US$1). Sitting just above support at 128.50c, yen could plunge deeply.

Someone sent me a headline today that claimed gold had fallen off today because the euro fell. Media market commentaries are daily filled with this same logical fallacy, post hoc, ergo propter hoc. This happened after that, so that caused this. This is as well grounded as inviting your brother-in-law to wreck your car again because the day he wrecked it last time your lottery ticket won. Without demonstrating some causative chain, these headlines demonstrate the near perfect vacuum in the heads of those writing.

On 10 February 1535 twelve nude Anabaptists ran through the streets of Amsterdam. Some sort of religious statement? SPECIAL OFFER DUCATS!

These nearly pure gold ducats have been minted in about the same weight (0.1106) and fineness (23-2/3 karat or 98.6% pure) since Roger II of Sicily began minting them in A.D. 1140. Venice minted them as ducato, then zecchino, and Florence minted them as florins, all to the same standard, 3.5 grams of 23-2/3 karat gold. Yes, this is the same size coin you read about in Shakespeare's plays.

Today the Austrian mint strikes four-ducat and one-ducat coins, and the Dutch strike one-ducats.

The Austrian four-ducat contains 0.4438 troy ounce fine gold, the Austrian one-ducats 0.1107 oz. and the Dutch 0.1106 oz. I have priced all these as if they all contained 0.1106 troy ounce per ducat, at a Three percent (3%) premium over spot gold.

Here's the deal: you can buy any combination equalling Twenty (20) one ducats for $196.75 per ducat (that's $787.80 for a four ducat), $3,939.00 plus $25 shipping per lot for a total of $3,964.00 per lot.

Please note that I will try but NOT guarantee you get any certain mix. If you order one four-ducat and sixteen one-ducats, you might get three four-ducats and eight one-ducats, but each lot will equal 20 one-ducats in gold content.

Sorry, no re-orders at these prices. Offer ends when my supply runs out.

Special Conditions:

First come, first served, and no re-orders at these prices. I will enter orders based on the time I receive your e-mail.

We will not take orders for less than the minimums shown above.

All sales on a strict "no-nag" basis. We will ship as soon as your check clears, but we allow Two weeks (14 days) for your check to clear. Calls looking for your order two days after we receive your check will be politely and patiently rebuffed. If you want faster shipping, please send a wire.

Spot gold basis for all prices above is $1,723.30. ORDERING INSTRUCTIONS:

1. You may order by e-mail only to . No phone orders, please.

Your email must include your complete name, address, and phone number. We cannot ship to you without your address. Sorry, we cannot ship outside the United States or to Tennessee.

Repeat, your email must include your complete name, address, and phone number. Our clairvoyant quit without warning last week and I stumbled and dropped my crystal ball, smashing it to pieces, so we can no longer read your mind.

2. Orders are on a first-come, first-served basis until supply is exhausted.

3. "First come, first-served" means that we will enter the orders in the order that we receive them by e-mail.

4. If your order is filled, we will e-mail you a confirmation. If you do not receive a confirmation, your order was not filled.

5. You will need to send payment by personal check or bank wire (either one is fine) within 48 hours. It just needs to be in the mail, not in our hands, in 48 hours.

6. We allow fourteen (14) days for personal checks to clear before we ship. If your hurry is greater than that, you can send a bank wire. Once we ship, the post office takes four to fourteen days to get the registered mail package to you. All in all, you'll see your order in about one month if you send a check.

Y'all enjoy your weekend!

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger
The-MoneyChanger.com

© 2012, 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 $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or 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.

Guest Submission: Ten Year Technical Chart on Gold Suggests Possible Retest of $1300 an oz.

Posted: 10 Feb 2012 11:00 AM PST

The following gold chart has been submitted by Juan Edwardo Morales Veas of moneygreedandfear.com. According to his work, gold may potentially retest the $1300 an oz. level. In looking at this chart, the big question remains—what financial market events would need to occur in order for gold to see a sell off of such magnitude?

(click to enlarge)

What are your thoughts on 2012′s direction in gold? Please share below!

Please support the site by joining our Free Mailing List and sharing this URL page link with friends, family, and your favorite chat forum.

Thanks,
Tekoa

The Federal Minimum Wage, Unemployment, And The Implied Price Of Silver

Posted: 10 Feb 2012 10:38 AM PST

I wonder...

Has the US Federal Reserve and it's banking buddies, thru a decades long suppression of the price of Silver, created an environment of high unemployment solely to support a low interest rate environment in an effort to make the US Government's debt habit affordable?

The Fed Resumes Printing

Bud Conrad, Chief Economist

The Federal Reserve recently announced important policy changes after its Federal Open Market Committee (FOMC) meeting. Here are the three most important takeaways, in its own words:

The Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions – including low rates of resource utilization and a subdued outlook for inflation over the medium run – are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.
The Committee judges that inflation at the rate of 2 percent, as measured by the annual change in the price index for personal consumption expenditures, is most consistent over the longer run with the Federal Reserve's statutory mandate. In the most recent projections, FOMC participants' estimates of the longer-run normal rate of unemployment had a central tendency of 5.2 percent to 6.0 percent.
The Fed released FOMC participants' target federal funds rate for the next few years.

Longer-Term Implications

The problem with printing money and promising to do so for years ahead of time is that the negative consequences of inflation only happen after a delay. As a result, it's difficult to know if a policy has gone too far until years down the road at times. Unfortunately, if confidence in the dollar is lost, the consequences cannot be easily reversed. One problem for the Fed itself is that it holds long-term securities that will lose value if rates rise. The federal government faces an even more serious problem when interest rates rise, as higher rates on its debt mean greater interest payments to service. Due to this federal-government debt burden, the Fed has an incentive to keep rates low, even if the long-term result is higher inflation. However, for now the Fed's statement suggests it sees inflation as "subdued," so it's putting those concerns aside for now.

Along with the promise of low rates, the Fed for the first time gave an inflation target of 2%, as measured by Personal Consumption Expenditures. The actual and target inflation show that the Fed is currently not under major pressure from missing its target… not yet.

(Click on image to enlarge)

The Fed has not even tried to set a target for the unemployment rate, which is only expected to edge below 8% by 2013. The Fed says that that the longer-run unemployment range is 5% to 6%. The big difference from the current level of 8.5% indicates that the Fed faces a greater challenge with unemployment than inflation now.

(Click on image to enlarge)

My conclusion from the Fed's actions is that it doesn't care as much about its inflation target as it does about improving the unemployment rate. Thus, it will err on the side of letting inflation rise, if it would improve unemployment. But holding rates too low too long fueled the housing bubble. Repeating the same game will have consequences of malinvestment in the form of new bubbles in the economy. The Fed hopes to restore employment before the negative consequences of loose monetary policy show up.

The Fed provided the accompanying chart of the Fed funds rates expected by the seventeen members of the FOMC. Each dot indicates the value (rounded to the nearest quarter-percent) of an individual participant's judgment of the appropriate level of the target Federal funds rate at the end of the specified calendar year. Over the long run, the Fed expects the funds rate to rise to around 4.25%. Eleven of the members indicate that the rate will rise before 2015. Only six expect the rate to stay close to zero through 2014.

The above chart should not be taken very seriously, as Fed predictions have been notoriously inaccurate. Furthermore, it's likely that rates will rise before 2014 as a result of market forces pushing them upward due to mistrust of the currency – measured by rising gold and commodity prices.

The Federal Reserve balance sheet expanded dramatically as the credit crisis became acute in 2008. The Policy Tools (shown below in black) grew by $2 trillion with the QE1 purchase of mortgage-backed securities and the QE2 purchase of long-term Treasuries. This was an unprecedented effort to support those markets, provide liquidity, and drive rates down to zero. A simple extrapolation of similar expansion policies to the end of 2014 suggests that the Fed may require an additional $2 trillion to extend its goals. The problem is that such action would surely weaken the dollar and drive gold much higher. If confidence is lost, rates could rise even as the Fed continues to print and buy securities. The Fed says that it will change its policy if conditions warrant. I think they will be forced to stop this policy well before 2014 is over. Nonetheless, in the meantime, they will plant the seeds of rising prices with ultralow rates.

(Click on image to enlarge)

The gold price is driven by Fed policies and its bias toward printing money rather than defending the dollar's purchasing power. This Fed bias was again reconfirmed by this announcement. With all the Fed's renewed vigor toward keeping rates low longer, we can once again reconfirm the ongoing downward slide for the dollar. As a result, gold remains the best investment against the damaging government deficits and central bank policies around the world.

___________________________

The Federal Reserve's Explicit Goal: Devalue The Dollar 33%

Charles Kadlec, Contributor, Forbes

The Federal Reserve Open Market Committee (FOMC) has made it official: After its latest two day meeting, it announced its goal to devalue the dollar by 33% over the next 20 years. The debauch of the dollar will be even greater if the Fed exceeds its goal of a 2 percent per year increase in the price level.

An increase in the price level of 2% in any one year is barely noticeable. Under a gold standard, such an increase was uncommon, but not unknown. The difference is that when the dollar was as good as gold, the years of modest inflation would be followed, in time, by declining prices. As a consequence, over longer periods of time, the price level was unchanged. A dollar 20 years hence was still worth a dollar.

But, an increase of 2% a year over a period of 20 years will lead to a 50% increase in the price level. It will take 150 (2032) dollars to purchase the same basket of goods 100 (2012) dollars can buy today. What will be called the "dollar" in 2032 will be worth one-third less (100/150) than what we call a dollar today.

The Fed's zero interest rate policy accentuates the negative consequences of this steady erosion in the dollar's buying power by imposing a negative return on short-term bonds and bank deposits. In effect, the Fed has announced a course of action that will steal — there is no better word for it — nearly 10 percent of the value of American's hard earned savings over the next 4 years.

Why target an annual 2 percent decline in the dollar's value instead of price stability? Here is the Fed's answer:

"The Federal Open Market Committee (FOMC) judges that inflation at the rate of 2 percent (as measured by the annual change in the price index for personal consumption expenditures, or PCE) is most consistent over the longer run with the Federal Reserve's mandate for price stability and maximum employment. Over time, a higher inflation rate would reduce the public's ability to make accurate longer-term economic and financial decisions. On the other hand, a lower inflation rate would be associated with an elevated probability of falling into deflation, which means prices and perhaps wages, on average, are falling–a phenomenon associated with very weak economic conditions. Having at least a small level of inflation makes it less likely that the economy will experience harmful deflation if economic conditions weaken. The FOMC implements monetary policy to help maintain an inflation rate of 2 percent over the medium term."

In other words, a gradual destruction of the dollar's value is the best the FOMC can do.

___________________________

The sad thing is, The Fed's devaluing of the Dollar is being sold to us, dumb Americans, as a path to "growth", and full employment. F***ing rediculous notion that....

If prices rise, things cost more...if we spend more, receipts for goods sold rise...rising sales receipts are reported as "growth in the economy"...when in fact the only thing growing is the money supply.

America's economy has been a statistical and mathematical lie since August 15, 1971 when President Nixon closed the US Dollar/Gold exchange window at the US Treasury. The ONLY "growth" in America, in over 40 years now, has been the growth of the money supply. How can the Fed even pretend to call it "economic growth" when wages have failed to keep up with the rise in prices [care of the rise in the money supply].

Consider the value of Silver. For most of recorded history, 1/10 of an ounce of Silver equated to a days pay for labor.

If the federal minimum wage is $7.25 an hour, a days labor today equals $58. [This is outrageous by the way.]

If a "days pay" were equal to 1/10 of an ounce of Silver, $58 Dollars a day would equate to the "implied value" of Silver being $464 an ounce! Today, February 10, 2012, Silver is $33.56 an ounce. Either Americans are overpaid [NOT!], or Silver is severely under priced.

Is the price of Silver being suppressed to keep wages under control, or to keep monetary inflation disguised so as not to effect a rise in wages?

Is the Federal Reserve really serious about "maintaining full employment"? How can they be? If the jobs market were really growing, wages would be rising with it. The Fed is deperately opposed to rising wages as that would expose their inflationary policies that are now masked by a global Gold and Silver price suppression scheme.

A wage-price spiral is one of the consequences of monetary inflation...if the Fed is serious about a Zero Interest rate policy [ZIRP] thru 2014, and a 2% cap on inflation, a falling unemployment rate is NOT going to make the Fed's ZIRP functional.

"We still have a long way to go before the labor market can be said to be operating normally," Bernanke said in testimony prepared for the Senate Budget Committee Tuesday that is identical to remarks he gave on Feb. 2 to the House Budget panel. "Particularly troubling is the unusually high level of long-term unemployment."

Ben says this, for the whole world to hear, just days after the President, and all the financial news media claim that the US Economy created 243,000 new jobs in January, and the "headline" unemployment rate fell again, to only 8.3%? The President might want to see the unemployment rate fall to boost his re-election chances [good luck with that], but Ben Bernanke does not, and he can not afford to see the unemployment rate fall.

A falling unemployment rate would trigger a rising inflation rate, and interest rates would begin to rise. Ben does NOT want to see rising interest rates...and neither does the US Treasury Department. Keeping the unemployment rate high, allows the Fed to keep interest rates low.

Is it any wonder why the American median income has been stagnant for the past 20 years?

In constant price, 2010 American median household income is only 0.75% higher than what it was in 1989.

Have American wages been held low, and unemployment kept high to support lower interest rates to finance US Government debt over the past 20 years? Have the prices of Gold and Silver been suppressed to allow wages to be kept low, and unemployment high?

If the minimum wage began to rise, so would the implied price of Silver. Suppress the price of Silver, and contain the cost of labor.

Name one commodity whose price today is below it's price in 1980. There is only one: Silver.

Silver is called the "poor man's Gold" for a reason. Silver has historically been the blue collar workers "money". Keep the price of Silver suppressed, and keep the global labor pool afordable. Nothing says profits to big business like "cheap labor".

___________________________

The Federal Reserve and Other Crimes Against Capitalism

Eric Fry, The Daily Reckoning

The Fed is a crime syndicate that relies on deception, coercion and grand larceny. It is a racketeer.

"Several forms of racket exist," Wikipedia explains. "The best-known is the protection racket, in which criminals demand money from businesses in exchange for the service of 'protection' against crimes that the racketeers themselves instigate. Traditionally, the word racket is used to describe a business (or syndicate)...that it is engaged in the sale of a solution to a problem that the institution itself creates or perpetuates, with the specific intent to engender continual patronage."

___________________________

Has the Fed and it's banking buddies, thru a decades long suppression of the price of Silver, created an environment of high unemployment solely to support a low interest rate environment in an effort to make the US Government's debt habit affordable?

I'll admit, I have made some outrageous assumptions here,...but something has to explain the global banks AND governments desperation to keep the price of Silver so severely undervalued. Why is Silver the only commodity that has NOT breached it's 1980 high price? And when it approached that 1980 $50 an ounce high in April 2011, it was quickly, and viciously attacked by the banks and tomahawked by almost 50% in just a couple of weeks time. What is it about Silver that scares the global banks and governments?

Perhaps what scares them most is that a strong Silver price would give "power to the people" and take it away from the banks.

We live in world today where all money is debt.

Publilius Syrus said: "Debt is the slavery of the free"

Could a price for Silver of over $50 an ounce result in an emancipation "we of the people" from the debt slavery the banks have imposed upon us?

"Banking was conceived in iniquity and was born in sin.
The Bankers own the earth. Take it away from them,
but leave them the power to create deposits,
and with the flick of the pen they will
create enough deposits to buy it back again.
However, take it away from them, and
all the great fortunes like mine
will disappear and they ought to disappear, for
this would be a happier and better world to live in.
But, if you wish to remain the slaves of Bankers
and pay the cost of your own slavery,
let them continue to create deposits."

attributed to:
Sir Josiah Stamp
(1880-1941) President of the Bank of England in the 1920's
__________________________

SPECIAL REPORT: $500 SILVER & Hyperinflation

Why Our Currency Will Fail
Wednesday, February 8, 2012, 9:18 am, by cmartenson

The idea that the very same economic forces that are currently plaguing Greece, et al., are somehow not relevant to the United States' circumstances does not hold water. As goes the rest of the world, so goes the US.

When we back up far enough, it is clear that money and debt are there to reflect and be in service to the production of real things by real people, not the other way around. With too much debt relative to production, it is the debt that will suffer. The same is true of money. Neither are magical substances; they are merely markers for real things. When they get out of balance with reality, they lose value, and sometimes even their entire meaning.

This report lays out the case that the US is irretrievably down the rabbit hole of deficits and debt, and that, even if there were endless natural resources of increasing quality available at this point, servicing the debt loads and liabilities of the nation will require both austerity and a pretty serious fall in living standards for most people.

Of course, the age of cheap oil is over. And as Jim Puplava says, the oil price is the new Fed funds rate, meaning that it is now the price of oil that sets the pace of economic movement, not interest rates established by the Fed.

However, of all the challenges that catch my eye right now, the one most worrisome is the shredding of our national narrative to the point that it no longer makes any sense whatsoever. I'm a big believer that our actions are guided by the stories we tell ourselves. To progress as a society, having a grand vision that aligns and inspires is essential.

But when words emphasize one set of priorities and actions support another, any narrative falls apart. At a personal level, if someone touts their punctuality but chronically shows up hours late, the narrative that says "this person is reliable" begins to fall apart.

Likewise, if a company boasts about being green but its track record belies them as a major polluter, the "green" narrative fizzles.

And at the national level, if we say we are a nation of laws, but the Justice Department selectively prosecutes only the weak and relatively powerless while leaving the well-connected and moneyed entirely alone, then the narrative that says "we are a nation of blind justice and equal laws" falls apart.

I wish this was just some idle rumination, but I see more and more examples validating the importance of alignment of narrative and behavior. Because when there is a disconnect between words and actions, anxiety and fear take root.

Unfortunately, there is quite a lot to fear and be anxious about in the most recent State of the Union address and GOP response.
State of the Union

The recent State of the Union speech by Obama, and its Republican response, are both remarkable for what they say as well as what they don't say. The summary is this: The status quo will be preserved at all costs.

Here are a few examples of the sorts of disconnects between rhetoric and reality that are absolutely toxic to the morale of all who are paying the slightest bit of attention.

Obama

Let's never forget: Millions of Americans who work hard and play by the rules every day deserve a government and a financial system that do the same. It's time to apply the same rules from top to bottom. No bailouts, no handouts, and no copouts. An America built to last insists on responsibility from everybody.

We've all paid the price for lenders who sold mortgages to people who couldn't afford them, and buyers who knew they couldn't afford them. That's why we need smart regulations to prevent irresponsible behavior.

It's time to apply the same rules from top to bottom? Is Obama aware of what Erik Holder is up to over there in the Justice Department? The robo-signing scandal alone has thousands and thousands of open and shut cases of felony forgery that can and should be applied to as many individuals as were directly involved, from top to bottom in every organization that was engaged in the practice.

Here's the reality. Under Obama, criminal prosecution of financial fraud fell to multi-decade lows during what is and remains one of the most target-rich environments in living memory.

<

Watching the "Decline Curve"

Posted: 10 Feb 2012 10:33 AM PST

February 10, 2012 [LIST] [*]How the "decline curve" could prove the shale naysayers wrong... and put money in your pocket [*]A stock market first in 2012? An event our small-cap specialist can't wait to get out of the way... [*]What ordinary Chinese value more than furniture, appliances, even food and clothing [*]A plea about the gold standard... more about $650 car payments... an ideal alternative investment... and more! [/LIST] Decline rates. Seriously. There are not very many people outside the "Peak Oil" crowd who care heck, even know what "decline rates" are. Yet the "story that isn't being told" is often where you find the best investment narratives. "At first," our resident energy enthusiast kicks us off with just such a tale, "the conservative approach was to estimate that the Marcellus wells would be productive for about two-three years and then the decline curve would kick in." "Now, after three years of testing in some areas, that windo...

Watching the “Decline Curve”

Posted: 10 Feb 2012 10:26 AM PST

Addison Wiggin – February 10, 2012

How the "decline curve" could prove the shale naysayers wrong… and put money in your pocket
A stock market first in 2012? An event our small-cap specialist can't wait to get out of the way…
What ordinary Chinese value more than furniture, appliances, even food and clothing
A plea about the gold standard… more about $650 car payments… an ideal alternative investment… and more!

Decline rates.

Seriously.

There are not very many people outside the "Peak Oil" crowd who care — heck, even know — what "decline rates" are.

Yet the "story that isn't being told" is often where you find the best investment narratives.

"At first," our resident energy enthusiast kicks us off with just such a tale, "the conservative approach was to estimate that the Marcellus wells would be productive for about two-three years and then the decline curve would kick in."

"Now, after three years of testing in some areas, that window is more like five years."

After five years? Many operators will go back and refrack the wells. Those five-year wells might become 10-year wells.

Or 15.

"We're finally making history," Byron King goes on. "We'll look back on 2012 as the best year for the energy business in Pennsylvania since Col. Drake drilled his first well. before the Civil War."

Full disclosure: We're still skeptical about the big claims Byron makes in his "Re-Made in America" forecast. Can a domestic energy boom really overcome decades of debt racked up at the local, state and federal levels? As with any functioning relationship, we keep an open mind.

And examine the evidence…

After 20 years of sinking deeper and deeper into dependence on foreign oil, the United States reversed that trend last year.

"Domestic oil output is the highest in eight years," reports Bloomberg, after crunching the numbers from the Department of Energy. "The U.S. is producing so much natural gas that, where the government warned four years ago of a critical need to boost imports, it now may approve an export terminal.

"The transformation, which could see the country become the world's top energy producer by 2020, has implications for the economy and national security — boosting household incomes, jobs and government revenue; cutting the trade deficit; enhancing manufacturers' competitiveness; and allowing greater flexibility in dealing with unrest in the Middle East."

Ahem.

Let's examine the numbers:

U.S. energy self-sufficiency bottomed in 2005 at 70%. Now it's 81%
Domestic crude production reached 5.7 million barrels a day last year — the highest since 2003
Natural gas output grew 10.9% between 2007-10.

"We've had large-scale drilling in Pennsylvania only over the past three years or so," says Byron, putting some flesh on the bones of that last statistic. After a laborious process of leasing land, seismic work, permits, drilling the wells, testing the wells, hooking the wells up to pipelines.

"We're finally — year 2012 — at that point where literally hundreds of new wells are coming online," Byron says. "It's part and parcel of the national 'gas glut' that's contributing to historically low pricing — and keeping your winter heating bills down, to boot."

Lying beneath the Marcellus is another shale bed that's even bigger — Utica.

"This Marcellus-Utica play isn't just big," says Byron. "It's massive. It's immensely productive. It's not some flash in the pan. It'll last for decades, and I mean MANY decades. And that's just in Pennsylvania, Ohio and West Virginia.

"Are there other shale plays elsewhere in the U.S.? Of course. It's part of the rebirth of the U.S. energy industry. It's going to change the nation, and in a very good way, I suspect."

Already these plays are putting big money in the pockets of ordinary people — like a sheriff's deputy in Louisiana who collected a $320,000 payday in one week. You can grab your own share of this new wealth, says Byron, but it's best to move on it before May.

Byron lays out his case here.

[Ed note: Hmnn. We're considering placing a wager on whether he's right or not. But what should we wager? Send us your suggestions here.]

Major U.S. stock indexes opened down 1% this morning… and have stayed there as of this writing.

Remarkably, "If the S&P maintains its downward direction into the close," says Greg Guenthner of our small-cap desk, "we could finally see the index's first 1%-plus loss of 2012."

So what does this mean?

"Well, nothing really," Greg goes on. "I'm labeling the phenomenon as a minor irregularity. I would guess that the market's trading range has tightened for the past six weeks due to investor uncertainty coming out of last year's correction."

"More than anything, I'd just like to see the market get the loss out of the way — mainly so people will stop yapping over its supposed significance."

In search of a ready explanation, the financial media have latched onto the latest budget agreement in Greece falling apart. Which is peculiar, seeing as the market didn't rally yesterday when the agreement was first announced…

The U.S. trade deficit widened in December to $48.8 billion — the highest in six months, according to the Commerce Department.

Exports grew, but imports grew more.

Precious metals are set to end the week lower than they began. At last check, the spot price of gold was down to $1,710. Silver's been knocked back to $33.40

As of Monday, CME Group is lowering margin requirements for gold, silver, platinum and copper futures.

Year-end figures of Hong Kong's gold shipments to mainland China are in… and they're jaw-dropping.

Despite a sharp drop in December, the year-over-year figure tripled to 428 metric tons.

China does not publish official gold-trade data, so the Hong Kong numbers are the best proxy we have.

"In 2010," explains analyst Lu Mi from CPM Group, "there were increased government measures against speculators in real estate. That helped some investors start to look to alternative assets, including gold."

"Across the Chinese retail sector, gold, silver and jewelry demand was the strongest performing segment in 2011," adds U.S. Global Investors chief and Vancouver stalwart Frank Holmes.

He's been reviewing the "Hands-On China Report" from J.P. Morgan. "Growth in [the precious metals] segment far outpaced clothing and footwear, household electrical appliances and even food, beverage, tobacco and liquor, all of which experienced more modest growth."

The report reckons much of the increase came from lower-tier cities. That's where income levels are rising the fastest and retail stores are expanding quickly to keep pace.

"Increasing incomes coupled with government policies that support growth have been the main drivers for rising gold prices," says Frank. "As residents in [China] acquire higher incomes, they have historically purchased more gold, driving gold prices higher."

For the moment — with both gold and stocks taking it on the chin today — gold stocks are in retreat. The HUI index is down about 1.5% at the moment… but at around 525, it's a darn sight better than when it started the year at 500.

[Ed. Note: Current owners of gold and silver shares will want to check out a new report from publisher Joe Schriefer — detailing how to collect cash payments on stocks already in your portfolio.

"These are cash deposits that instantly hit your account. They're not dividends, fractional shares of stocks, credits towards future purchases... or anything else like that."

Any of the stocks on this list are fair game...

And that list is not comprehensive. Read on to learn how you can collect payments of up to $2,345 without selling a single share.]

Looking to unload an old piece of jewelry? In Duluth, Minn., you might soon end up in a police database.

A proposed city ordinance would require jewelers, coin shops and antique dealers to notify police anytime someone sells them an item more than 1% gold, silver or platinum by weight. They'd also have to provide a color photo of the seller.

"I can't imagine asking a little old lady customer if I could take a mug shot of her to send to the police," says jeweler Dave Blustin."

"Our goal is to decrease the number of burglaries and increase our success in solving cases," says Duluth Police Sgt. Chad Nagorski. "We want to return stolen items to their rightful owners and hold the right people accountable for victimizing others."

A noble sentiment, to be sure. God forbid they do some detective work to accomplish the task. Better to create dossiers on the law-abiding.

"Please keep harping on the gold standard," a reader pleaded yesterday after enduring a description of our latest hobby, "for all of our sake!"

"One point neglected by many is that the current global monetary crisis is rooted in chronic imbalance of payments that's not possible in a free-market 100%-convertible gold standard. This is a major force behind the competitiveness loss and debt accumulation of chronic trade deficit countries like Greece and the U.S."

"A free-market 100%-convertible gold standard as assumed by Adam Smith and David Ricardo keeps debt levels limited, balances international trade and conveys the verdict of the marketplace quickly to all producers and consumers. Borrowers can borrow only the amount of actual gold that lenders wish to lend, so there is no excess leverage in the system."

"When one country exports more in value of goods and services than it imports, it receives excess gold in payment, shooting up its gold/money supply and then its prices. When another country imports more in value than it exports, it must send gold to pay for the excess, and its own gold/money supply declines and so then do its prices. The excess exporter's prices rise and the excess importer's prices fall to the point that trade balances and gold flows normalize."

"Countries and companies that are falling behind in terms of competitiveness get immediate incremental feedback from the market, and must make adjustments quickly to remain in business, and long before such differentials become excessively large."

"Let us know how we can help!"

The 5: Hmmnnn. We're still thinking it through…

"I figured it out," says another reader after reading about the couple who've taken on a car loan at $650 a month for 72 months. "These people who believe they are at a plateau in their lives now that money is good and the economy is doing fine have really bought into TV gossip called news."

"Just as with the gain statistics in employment from the government a few days ago, these people honestly do think their dollars are worth something. Who the hell would take on a load of an extra $650 a month in these times?"

"I'm getting the feeling that they are thinking the other way and raking in what they can (credit cards and cars are nonsecured loans), and if they go bankrupt, guess who will get screwed? That's right, those who have a sense of obligation to pay off that which they borrowed."

"An article about two weeks ago stated people were actually shopping last December. The numbers were great. Those people put it all on credit, and I can bet that many will default on ever paying it back."

"Thanks for The 5, it's always a must-read on my list."

The 5: Ours too!

Have a great weekend,

Addison Wiggin
The 5 Min. Forecast

P.S. We're leaving early in the morning for a publisher's jamboree down at the ranch in Nicaragua. In the off time, we're hoping to finalize plans for breaking ground on a piece of property high in an undeveloped neighborhood we've dubbed Monte Suerte.

If you've been reading The 5 and have wondered about what's going on down there in the land of Ollie North and the Sandinistas… you owe it to yourself to come down and check out our project.

"The International Monetary Fund estimates that Nicaragua's economic growth hit 4% last year," writes our friend Alex Green in this morning's Investment U, "and is on the verge of accelerating." Alex just returned from a conference on investing in emerging markets down at the ranch.

"Exports jumped 23% last year. Tourism is up. MSN Money ranked Nicaragua at the top of their list of 'Ten Exotic Retirement Spots for 2011,' telling readers '[Now] is the time to put this country at the top of your super-cheap overseas retirement list.' CNN Money calls it 'the next Costa Rica.' Indeed, Rancho Santana is just 50 miles north of the Costa Rican border."

"Good things are happening locally, too. A local business leader plans to invest $300 million next door in a world-class marina, golf and spa resort called Guacalito. Due to open in spring 2013, it's located just 30 minutes from Rancho Santana and is already bringing increased investment and improved infrastructure to the region. And an international airport is planned for the Tola area, located less than a half hour away."

In some ways, Alex suggested to his readers, Rancho Santana could be the perfect alternative investment.

We're hosting a similar event to the one Alex presented at we're calling The Rancho Santana Sessions, March 23-25, 2012. Come down. Learn how to diversify effectively — legally — out of the dollar. And enjoy our beautiful piece of the Pacific frontier. Call Kristen at 1-800-708-1020. She'll be on duty first thing Monday morning, Eastern Time.

Platform Technologies Promise Big Payoffs: Juan Sanchez

Posted: 10 Feb 2012 10:24 AM PST

The Life Sciences Report: Have any of the proposals from the U.S. Food and Drug Administration's (FDA) Critical Path Initiative begun to collapse timeframes or make drug development more efficient and less capital-intensive? Juan Sanchez: When the FDA's Critical Path Initiative first came out in 2004, it made a lot of sense. Back then, there were conversations on Wall Street about different parties and the FDA working together. That led to unique collaborations and kind of a different culture. But I'm not sure you can quantify the success of an initiative like that because you are, after all, at the mercy of biology as well as higher regulatory standards. The FDA is still approving 2230 new drugs every year, and I think it was 30 new ones in 2011. The fact that this continues to be the case when clinical trials are becoming so much more complicated and so much more difficult, and when the low-hanging fruit of drugable targets has already been taken, tells us something important when...

Permanent Gold Backwardation

Posted: 10 Feb 2012 10:24 AM PST

Synopsis: David Galland checks in on his Happiness Meter, and Keith Weiner discusses gold backwardation and the future of fiat currencies. Dear Reader, David Galland here. In a moment, we'll get to the main investing topic indicated in the title of today's edition, Permanent Gold Backwardation, but first a little bit of musing. If you are the serious type, with things to do and people to see, feel free to skip right on down the page until you strike that article you won't hurt my feelings. That's because, coming off a particularly busy week one that included putting out the February edition of The Casey Report (read it now, we'll take all the risk), I'm in the mood to muse about things more philosophical. The Happiness Meter By David Galland It was best-selling author Robert Ringer who first brought the concept of a "Happiness Meter" to my attention. (A bit of trivia: Ringer was involved in publishing Doug Casey's f...

Two Grandich Interviews

Posted: 10 Feb 2012 10:24 AM PST

The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio! February 10, 2012 01:35 PM * The Gospel of Gold According to Peter* (…Grandich, that is) Published February 10, 2012 By Brian Sylvester of The Gold Report * * Corporate Interviews.com A Few Minutes with Peter Grandich Recorded February 10, 2012 [url]http://www.grandich.com/[/url] grandich.com...

Thursday Afternoon Wrap-Up: It Will be GAME OVER for the U.S. Dollar

Posted: 10 Feb 2012 09:34 AM PST

by Andrew Hoffman, MilesFranklin.com:

So you thought I was angry yesterday?

You ain't seen nothin' yet, as today was the first time since abandoning mining stocks last Fall that I lost my temper, screaming at the screen like the old days as I watched the Cartel desperately attempt to maintain the status quo by holding down PM prices.

And desperate is the operative word, as their operations are becoming borderline psychotic in their regularity, intensity, and blatancy. Once their suppression scheme fails, it will be GAME OVER for not only the U.S. dollar as "world's reserve currency," but ALL fiat currencies – which is to say, ALL CURRENCIES. TPTB know this is coming as sure as day follows night, and are rapidly acquiring PHYSICAL gold and silver while they relentlessly attack PAPER PMs such as futures contracts, ETFs, and mining shares.

Read More @ MilesFranklin.com

Fox Closes Freedom Watch With Judge Napolitano

Posted: 10 Feb 2012 09:33 AM PST

[Ed. Note: Related.]

Fox business network is dropping three of their primetime shows, one including the top-rated show "Freedom watch" hosted by Judge Napolitano. Judge Napolitano covers topics from Occupy Wall street, to the National authorization act, in fact he has been consistently pro-Ron Paul and anti-war. To talk more about the cancellation of these shows Wayne Allen Root, a libertarian and author book "The consistence of a Libertarian; empowering the citizen revolution with God, guns, gold and tax cuts", joins RT's Kristine
Frazao.

John Williams - The US Edges Closer to Collapse

Posted: 10 Feb 2012 09:00 AM PST

John Williams, of Shadowstats, notes that fundamental conditions for the US dollar could not be worse. Williams says the record lack of confidence by the US public in their government now threatens global currency stability. Here is what Williams had to say about the situation: "One of the more important, long-range underlying variables impacting the exchange rate value of the U.S. dollar is the net foreign trade position of the United States. In the post World War II era, the U.S. trade position first fell into net deficit in 1971. By the late-1970s, widening annual trade shortfalls had become perpetual, as had the resulting structural deterioration in the U.S. economy and the foreign exchange weakness of U.S. dollar."

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

High Yield Plummets and VIX Flares Most In Almost 3 Months

Posted: 10 Feb 2012 08:56 AM PST

Credit (and vol) continue to lead the way as smart deriskers as ES (the e-mini S&P 500 futures contract) ends down only 0.5% - which sadly is the biggest drop since 12/28. The late day surge in ES, which was not supported by IG or HY credit (and very clearly not HYG - the HY bond ETF - which closed at its lows and saw its biggest single-day loss since Thanksgiving), saw heavier volumes and large average trade size which suggest professionals willing to cover longs or add shorts above in order to get filled. Materials stocks underperformed but the major financials had a tough day as their CDS deteriorated to one-week wides. VIX (and its many derivative ETFs) had a very bumpy ride today. VXX (the vol ETF) rose over 14% (most in 3 months) at one point before it pulled back (coming back to settle perfectly at its VWAP so not too worrisome). After the European close, FX markets largely went sideways with the USD inching higher (EUR weaker) as JPY strength reflected on FX carry pair weakness and held stocks down. Treasuries extended their gains from yesterday's peak of the week yields as 7s to 30s rallied around 6bps leaving the 30Y best performer on the week at around unchanged. Commodities generally tracked lower on USD strength with Oil the exception as WTI pushed back up to $99 into the close (ending the week +1.1% and Copper -1.1%). Gold and Silver ended the week down almost in line with USD's gains at around 0.25-0.5%. Broadly speaking risk has been off since around the European close yesterday and ES and CONTEXT have reconverged on a medium-term basis this afternoon (to around NFP-spike levels) as traders await the potential for event risk emerging from Europe.

As we warned yesterday, the significance of the divergence with credit in Europe and US was becoming palpable and the Storm that we noted was coming has begun we suspect. Stocks managed to cling to the cliff-edge that is the post NFP spike levels while credit has fallen significantly below pre-NFP levels. No follow through at all in credit on that late day surge in stocks and HYG seeing its single worst day since just before Thanksgiving (chart below).

Let's see how many investors who reached for yield stick with them when they realize that a third to a half of their annual yield just got taken away in 2 days - as we've said before, there is a reason they have a high yield.

VXX (the Vol ETF) was very volatile today as VIX (above) saw its largest jump in three months - as many know this is very typical VIX behavior, slow leak down and abrupt flare-up. We suspect the implied skewness and kurtosis discussions we had earlier in the week are being laid again after normalizing.

Treasuries roared back to life late yesterday and through today as supply ebbed and risk appetites dropped. 10Y seems the most volatile - perhaps on its mortgage hedging exposure - but 30Y outperformed on the week - ending just a little higher in yield.

The USD pulled back towards unchanged today after reaching its lows for the week just around the European close yesterday. Day after day we have seen the most volatility during the European day session with reversals into and around the closes and opens. After hours today EUR is pushing modestly higher on news that the Greek cabinet has approved loan plan but it is staying under 1.32 for now. JPY was the biggest loser on the week though stable as the USD strengthened against the other majors - this carry-pair impact dragged broad risk assets lower - though chatter is that a rotation to the EUR as a funding currency is occurring though we suspect the binary nature of the currency makes it a little too noisy for the risk-sensitive players.

To get a sense of how broad risk assets have been behaving this week we use a medium-term (as opposed to the short-term model that is used for trading and arb) CONTEXT - which as you can see is well synced with last week's pre- and post-NFP behavior. The whole week has seen a very narrow range for US equities that again and again has seen CONTEXT (broad risk asset proxy) and stocks converge around that post NFP spike level (green oval). Monday saw a broader derisking among risk assets but US equities maintained into Tuesday where Oil and Treasuries led risk-on and the faded to convergence. The sell-off and curve steepening in Treasuries along with Oil strength and FX carry all helped to push CONTEXT aggressively higher but the divergence lower in the latter part of the week reflects back to credit's underperformance dragging on stocks. Today saw Treasuries rally, curves flatten, and carry lose ground as non-equity risk assets fell back to earth and reconverged with stocks for pretty much the entire day session today in the US.

On the late-day news from Greece, Treasuries are modestly higher in yield, EUR (and carry) is modestly higher and CONTEXT is leading for now (as ES is closed) suggesting a 3-5pt bounce only. It will be along weekend.

Charts: Bloomberg and Capital Context

All The World's Gold

Posted: 10 Feb 2012 08:50 AM PST

10-Feb (NumberSlueth) — We here at NumberSleuth are all about exploring the world of numbers, and with this infographic we decided to take a look at the numbers behind the entire amount of gold in the world. Below are a series of questions that we began with and the answers we discovered in our research. We believe that this is the most thorough and in-depth resource about the world's gold on the Internet and we hope you have as much fun reading through the information as we did in putting it all together.

From: Number Sleuth

The Gospel of Gold According to Peter

Posted: 10 Feb 2012 08:45 AM PST

How Bull Markets Evolve into Bubbles

Posted: 10 Feb 2012 08:42 AM PST

Feb 10, 2012 The Daily Gold Free Newsletter There is a science to market movements and various trends because human nature is consistent over time. Bear markets follow a pattern as do bull markets. In recent weeks we’ve noted the similarities between the past four equity bull markets. They start off strong for six or seven years before slowing down over the next five years. Then they break to new highs and eventually accelerate into a bubble. As we show in this update, change in valuation explains how bull markets evolve into bubbles. The following chart shows the Nikkei (black) and its price to earnings ratio (blue). The chart comes from DailyWealth but the annotations are mine. In our opinion, the Japanese bull market began in the late 1960s. Note, from 1977-1983 the PE ratio tre...

Profit in the Investment Ecosystem

Posted: 10 Feb 2012 08:42 AM PST

When money managers refer to total return funds, they're generally talking about investments that promise to deliver returns that beat the prevailing rate of interest while preserving capital. Investment advisor and Solari Report Publisher Catherine Austin Fitts takes the totality concept to a whole new level by focusing on net positive total returns. As she explains in this exclusive interview with The Gold Report, she hunts for companies that offer value not only to stockholders but for society.

This Is What An Economic Depression Looks Like In The 21st Century

Posted: 10 Feb 2012 08:42 AM PST

from The Economic Collapse Blog:

Gold and Silver Disaggregated COT Report (DCOT) for February 10

Posted: 10 Feb 2012 08:32 AM PST

All of the trader's positions are calculated net of spreading contracts as of the Tuesday disaggregated COT report.

(DCOT Table for Friday, February 10, 2012, for data as of the close on Tuesday, February 7. Source CFTC for COT data, Cash Market for gold and silver.)

Combined (legacy, not disaggregated) Commercial Net Short Position for Silver, then Gold below. Source CFTC for COT, Cash market for gold and silver.

That is all. Carry on.

Profit in the Investment Ecosystem: Catherine Austin Fitts

Posted: 10 Feb 2012 08:21 AM PST

The Gold Report: According to your website, your mission is to provide the "deeper intelligence" investors need to succeed in this environment. From your perspective, what are the top two or three issues that most investors don't understand because they don't have that deeper intelligence they need to make better investment decisions? Catherine Austin Fitts: Our goal is to help readers, subscribers and clients build family wealth. We believe that the success of the family depends very much on the success and the building of community wealth. In other words, it's very difficult for people to build wealth if everybody is making money in ways that destroy the greater economy. So we focus both on family wealth and on the wider community wealth. My fundamental paradigm is economic warfare. I believe we have a group of people intentionally trying to centralize the economy in a way that shrinks wealth. As a result, literally every household in every country is, if you will, being harvested....

Silver Sucks, Buy Zimbabwe Currency, Awesomer!

Posted: 10 Feb 2012 08:16 AM PST

Happy Friday from Billy Joe, the king of fiat satire…

from HouseOfTheMoon:

I'm getting attacked on all sides by the silver fetish people. They're jealous of my legitimate investment strategy. They're jealous of my wealth. And I, the ZIM KING, own them all.

Gold Daily and Silver Weekly Charts - Bear Raid, Risk Off Trade on Greece

Posted: 10 Feb 2012 08:10 AM PST

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

COT Gold, Silver and US Dollar Index Report - February 10, 2012

Posted: 10 Feb 2012 07:32 AM PST

COT Gold, Silver and US Dollar Index Report - February 10, 2012

The Dollar Confirms a Possible Silver Pullback

Posted: 10 Feb 2012 07:19 AM PST