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Wednesday, October 10, 2012

Gold World News Flash

Gold World News Flash

Asian Metals Market Update

Posted: 10 Oct 2012 12:05 AM PDT

US dollar gains resulted in gold and silver falling while crude oil rose. This is just a consolidation phase for gold and silver. Technically they are in a neutral zone. At lower prices there are short term buyers as well as long term investors in gold and silver. Short term traders are buying on hopes that gold and silver will break $2000 and $42.00 before the close of the year.


In The News Today

Posted: 10 Oct 2012 12:00 AM PDT

My Dear Friends,

This very important court decision brings up two more extremely important questions. There really is an elephant in the court room. This decision is going to have an impact.

1. Roosevelt's confiscation of gold may appear unconstitutional. Should any such thing be considered in the future there would be a significant

Continue reading In The News Today

EU Getting First Taste of European Separatism Due to Financial Crisis

Posted: 09 Oct 2012 11:05 PM PDT

from Silver Vigilante:

For every reaction there is a reaction. Since World War II (and before even during the Nazis pushes), the push has been for a more consolidated union in order to "resolve historic conflicts" or so the powers that be have maintained. Along the way, European nations have surrendered sovereignty to Brussels, the seat of the European Union. From 1967, a major goal was a common currency, and this has been part-and-parcel of a similar political push.

But, as sovereignty has been sacrificed throughout the economic crisis, many regions in Europe are calling for independence not only from the EU, but also in some cases from their own countries. The mainstream press has highlighted first and foremost the north-south conflict developing in Europe as core nations like Germany and France impose measures for southern countries like Spain and Greece, namely through Europe-wide institutions such as the European Central Bank. But, just as prominent as these antagonisms, independence movements have gained momentum inside countries, especially in better-to-do regions. Populism is a considerable woven through these movements.

Read More @ Silver Vigilante

More Incredibly Important Developments In Both Gold & Silver

Posted: 09 Oct 2012 10:31 PM PDT

Today King World News is reporting on more incredibly important developments taking place in the gold and silver markets. Acclaimed commodity trader Dan Norcini updates KWN readers globally on what the key players are doing right now in these critical markets, and what to expect next as the battle in the gold and silver markets continues to rage.

Norcini has been stunningly accurate in his predictions of the movement of the gold and silver markets. Now the acclaimed trader discusses these important developments in both metals: "$1,800 has been a critical resistance level that has now been reinforced three times. This level has a great deal of technical significance because the bulls have attacked the $1,800 area on those three separate occasions, but each attempt has been rebuffed."


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

Hyperinflation and the Middle Eastern Powder Keg

Posted: 09 Oct 2012 10:30 PM PDT

by Marin Katusa, Financial Sense:

In the third century, greed got the best of Rome's emperors. As they spent through the silver in the treasury, one emperor after another reduced the amount of precious metal in each denarius until the coins contained almost no silver whatsoever.

It was the world's first experience with currency debasement and hyperinflation. As people saw the value of their savings evaporate, society grew angry and demanded a scapegoat. Christians became that scapegoat, and Romans turned on them with incredible violence.

This pattern – currency debasement leading to social upheaval and violence – would repeat many times over.

Read More @ financialsense.com

Why Is There Such An Interest In Gold?

Posted: 09 Oct 2012 10:05 PM PDT

Is gold a commodity or currency? How does it behave as an investment? What are the fundamentals of investing in gold? What are the different ways investors can get exposure to gold in their portfolios? The answers to these questions and many others are answered in this latest infographic from Visual Capitalist. So says [url]www.visualcapitalist.com[/url] in their 4th**in a 4-part series on*gold presented here by*www.munKNEE.com (Your Key to Making Money!) and www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds). Part 1 can be seen here, Part 2 here and Part 3 here. *[url]http://www.visualcapitalist.com/portfolio/the-gold-series-gold-as-an-investment-part-4[/url] Other Infographics on Gold: 1. Part 1: An Infographic on the History of Gold and What Makes It So Great Wars have been fought over gold, love has been expressed by it an gold has changed the landscape of civilizations and the world – but what makes gold so great? This infographic examines...


Gold Seeker Closing Report: Gold and Silver Fall With Stocks Again

Posted: 09 Oct 2012 10:00 PM PDT

Gold climbed to $1779.51 in early Asian trade before it fell back to $1760.56 by a little before noon EST and then bounced back higher midday, but it still ended with a loss of 0.6%. Silver rose to $34.21 before it dropped back to $33.554 and then also bounced back higher, but it still ended with a loss of 0.47%.


Gold Pierces October Low

Posted: 09 Oct 2012 09:21 PM PDT

courtesy of DailyFX.com October 08, 2012 04:34 PM Daily Bars Prepared by Jamie Saettele, CMT “A previously rare occurrence has popped up 3 times since June. That is, gold has traded in a double inside day AFTER an outside day. Before June, one had to look back to 2009 to find this pattern. The pattern is a function of volatility contraction and the plethora of orders on each side of the narrow range is conducive to false breaks. Gold rallied to a new and has pulled back in order to satisfy the false break.” The piercing of the October low triggers a bearish bias against the high. LEVELS: 1736.05 1750.90 1763.25 1791.49 1802.80 1819.05...


Silver Update 10/9/12 Power Of Markets

Posted: 09 Oct 2012 09:20 PM PDT

Physical silver market update

Posted: 09 Oct 2012 09:16 PM PDT

70 Second Market Outlook – Metals, Dollar, Bonds, Stocks, Energy

Posted: 09 Oct 2012 07:57 PM PDT

Chris of Technical Traders (author this article) will be contributing to the Market Shadows newsletter to bring us excellent weekly analyses of the stocks and commodities markets.

The latest newsletter, Fun With Numbers, is now posted, here. In it, we cover the jobs report from last week, the economy (with the rise in food stamps telling a different tale than the Household survey - info. via Zero Hedge), liquidity - there's plenty of money floating around to keep stocks elevated, technical analyses of stocks and commodities, and more. ~Ilene

 

70 Second Market Outlook – Metals, Dollar, Bonds, Stocks, Energy

By Chris Vermeulen

Over the past year some really interesting things unfolded in the market. Investing or even swing trading has been much more difficult because of the wild economic data and daily headline news from all over the globe causing strong surges or sell-offs almost every week.

For a while you could not hold a position for more than a week without some type of news event moving the market enough to either push it deep in the money or trigger a stop loss. This has caused a lot of individuals to give up on trading which is not a good sign for the financial market as a whole.

The key to navigating stocks which everyone thinks are overbought is to trade small position sizes and focus on the shorter time frames like the 4 hour charts. The 4 hours charts are my secret weapon. They provide large price swings which daily chart traders focus on while also showing clear intraday patterns for spot reversals or continuation patterns with precise entry/exit points.

While I could ramble on about why the stock market is primed for major long term growth, I will keep things short and simple with some 4 hour and daily charts for you to see what I'm thinking should unfold moving forward.

Keep in mind, the most accurate trading opportunities that happen week after week are the quick shifts in sentiment which only last 2-5 days at most, which is what most of my charts below are focusing on…

Dollar Index – 4 Hour Chart

This chart shows a mini Head & Shoulders reversal pattern and likely target over the next five sessions. The dollar index has been driving the market for the past couple years so a lower dollar means higher stock and commodity prices.

Dollar 70 Second Market Outlook – Metals, Dollar, Bonds, Stocks, Energy

Dollar Index Trading

 

Bond Futures – 4 Hour Chart

Money has been flowing into bonds for the past couple weeks with most traders and investors expecting a strong correction in stocks. As you can see the price of bonds hit resistance this week and as of Thursday has started selling off. Money flowing out of this "Risk Off" asset means money will move to the "Risk On" investments like stocks and commodities.

Bonds 70 Second Market Outlook – Metals, Dollar, Bonds, Stocks, Energy

Bond Futures Trading

 

Gold Futures – Daily Chart

Gold is stuck in both categories. It is a "Risk Off" safe haven when people are scared of falling stock prices, and it is also a "Risk On" speculative investment when people are feeling good about the market. Gold has been trading at key resistance for a couple weeks and looks as though it's starting its next rally.

Gold 70 Second Market Outlook – Metals, Dollar, Bonds, Stocks, Energy

Gold Futures Trading

 

Silver Futures – Daily Chart

Silver is in the same boat as gold though it carries much more volatility than gold. Expect 2-4% swings regularly and sloppy chart patterns in this metal.

Silver 70 Second Market Outlook – Metals, Dollar, Bonds, Stocks, Energy

Silver Futures Trading

 

SP500 Futures – Daily Chart

As much as everyone hates to buy stocks up at these lofty prices I hate to say it but I think they are going to keep going up and they could do this for a long time yet. If the dollar index continues to break down then I expect the SP500 to rally another 3% from here (1500) in the next 1-2 weeks.

SP500 70 Second Market Outlook – Metals, Dollar, Bonds, Stocks, Energy

SP500 Futures Trading

 

Crude Oil Futures – 4 Hour Chart

I have not been paying much attention to crude oil in the past few months. While it has had big price action, many of those big days took place on news causing an instant price movement making this extra dangerous to trade. I continue to watch rather than engaging.

Oil 70 Second Market Outlook – Metals, Dollar, Bonds, Stocks, Energy

Crude Oil Futures Trading

 

Natural Gas Futures – Daily Chart

Natural gas has been a great performer for us in the past 6 months as all the short positions were slowly covered. I just closed out my natural gas ETF trade this week with a 31.9% gain and plan on getting back in once the chart provides another low risk setup.

NatGas 70 Second Market Outlook – Metals, Dollar, Bonds, Stocks, Energy

Natural Gas Futures Trading

 

Trading Conclusion:

In short, the dollar index along with bonds should will correct over the next few weeks. That will trigger buying in stocks and commodities. Natural gas dances to its own drum beat. The dollar does not have much affect on its price, and most of the time, natural gas is doing the opposite of the broad market.

Get My Pre-Market Trading Analysis Video and Intraday Chart Analysis EVERY DAY, www.TheGoldAndOilGuy.com. ~ Chris Vermeulen

Market Shadows (http://s.tt/1pmc7)

European Banks Need To Sell Up $4.5 Trillion In Assets In Next 14 Months, IMF Warns

Posted: 09 Oct 2012 06:50 PM PDT

While yesterday it was the sovereigns who suffered the wrath of the IMF's wholesale growth outlook downgrade (unbeknownst to Christine Lagarde), today it is the turn of the financial sector (which is increasingly being blurred with the former in a world in which central banks are used to both backstop bank liabilities and fund endless public deficits, unafraid of the consequences in a closed loop fiat world in which defection is, so far, impossible) to be greeted by a cold dose of reality emanating from the IMF's "Global Financial Stability Report" especially as pertains to Europe's insolvent banking system. The most notable finding of said report is the admission that the IMF was only kidding when it said six months ago, in April of this year, that the worst case outlook now has European banks deleveraging to the tune of $3.8 trillion through the end of 2013, or over the next 14 months: now this number is 18% higher, or a gargantuan $4.5 trillion (12% of bank assets). This is how much debt Eurobanks will need to shed in a "weak policies" case in which Europe continues to delay implementing fiscal reform, aka austerity, as per Figure 2.14. Even the baseline (and this being the IMF it means it has zero chance of happening) scenario is not much better, at a revised $2.8 (7.3%) trillion in deleveraging. The reason for the increase is due to "lower expected earnings, higher losses linked to worsened economic conditions, and greater funding pressures on banks."

Ironically as Figure 2.15 indicates, one of the primary drivers for deleveraging is none other than the central banks, whose "financial repression" regime is crushing not only savers, but banks as well, who are now forced to dump hundreds of billions in debt for which they get no economic benefit. The only real question left is: just who will buy all this debt. And the only real answer is, of course, the ECB, which is why all those devising 2013 EURUSD forecasts, model an ECB balance sheet that will be about 100% larger than it is currently (a move which the Fed will not idly stand by and watch without taking corresponding action).

Breakdown of IMF deleveraging forecasts for the three scenarios, of which the realistic one is highlighted:

How does the IMF define the three set of underlying policies:

  • Under baseline policies, foreign investors' share of the total debt stock is assumed to continue to decline at the same pace as seen during 2009–11. For periphery countries, the share of foreign debt holdings is assumed to move halfway toward pre-euro era levels. The assumptions on sovereign spreads reflect positive market developments following the announcements by the European Central Bank on July 26 and September 6 launching the Outright Monetary Transactions program. Periphery sovereign spreads are assumed to stabilize and/or gradually decline by end-2013
  • Under complete policies, by contrast, confidence returns and foreign investors increase their share of the total debt stock as funds flow back to the periphery. Periphery spreads tighten by one to two standard deviations below the baseline.
  • Under weak policies, the withdrawal of foreign investors accelerates to twice the pace seen since 2009. Periphery spreads widen by about one standard deviation above the baseline.

One can easily see why with the situation in Europe deteriorating ever faster courtesy precisely to the ECB, which has now taken over all credit formation, leaving no reason for foreigners to suffer the same pain and suffering as Greek bondholders did initially, and as Spanish, and all other PIIGS private holders will go through soon.

Some further color from the IMF:

  • The deterioration in financial and economic conditions entails greater pressure on bank asset quality and capital. The scarcity and higher costs of bank funding, sovereign stress, and a weaker economy are adding to the pressure on bank profits, while weakening economic conditions have led to a deterioration in the quality of bank loans, as indicated by a rise in nonperforming loan (NPL) ratios. Among the four factors analyzed here—capital, funding, financial repression, and financial fragmentation— capital emerges as one of the key factors, particularly for weaker periphery banks (Figure 2.15). This means, for example, that even if funding gaps are closed, bank deleveraging pressures will remain.
  • The periphery bears the brunt of shrinking credit supply. The cutbacks in the supply of credit to the periphery countries are much larger than in the core euro area (Figure 2.16). The supply of total credit in the periphery (including cross-border lending) is expected to decline 9 percent under the baseline  policies scenario and almost 18 percent under the weak policies scenario.
  • EU banks cut back the supply of credit outside the euro area as well, notably in emerging Europe, Latin America, and the United States. In some cases, however, domestic banks and foreign banks operating in these three regions are expected to step in and offset the impact that the EU banks' pullback will have on credit supply (Figure 2.17). For example, recent European asset sales in the United States and Latin America have so far been orderly.
  • A rapid move to the complete policies scenario would avoid additional economic damage to periphery economies due to the credit supply shock (Figures 2.18 and 2.19). The estimated impact on euro area credit supply under the baseline policies scenario is broadly in line with the WEO baseline. Under the weak policies scenario, the credit supply shock from the EU bank deleveraging would lower periphery euro area GDP by more than 4 percentage points relative to the WEO baseline in 2013. In the core euro area, GDP would contract much less, in line with the relatively moderate impact on credit, but still significantly—by 1.5 percentage points relative to the WEO baseline. In the complete policies scenario, GDP at end-2013 relative to the baseline policies scenario would be two-thirds of a percentage point higher in the core, and almost 2 percentage points higher in the periphery.

And while Greece is a goner, the jury is still (supposedly) out on Spain and Italy. What will not help them is that due to the unbreakable linkage between banks and sovereigns, absent massive deleveraging, the GDP of these two countries will continue to collapse.

It gets worse. As we have long discussed, one of the key topics that everyone loves to ignore when talking Europe is the trillions in contingent liabilities, which just because they are not directly held on the books, does not mean they do not exist. In Europe's case not only do they exist, but are rising, as the IMF warns.

The slow pace of crisis resolution has pushed up the size of contingent liabilities for economies in the core of the euro area. Contingent liabilities reflect the  size of potential ultimate fiscal transfers, or the costs of potential defaults in the periphery under a breakup scenario, should the crisis deepen. Under the assumption that the ECB provides unlimited support to fill in the funding gap left by capital flight from the periphery, one measure of the size of contingent liabilities is given by the estimated size of payment system (Target 2) balances, the commitments on bilateral loans, and support for domestic banks with exposure to the periphery. Under the assumption of unlimited support from the Eurosystem, Target 2 liabilities could be expected to continue to rise for the periphery (Figures 2.25 and 2.26). In the baseline policies scenario, capital flows from the periphery to the core would continue, marked by further financial fragmentation and consolidation of bank balance sheets within national borders. The weak policies scenario would result in stronger outflows from the periphery and net outflows from the euro area as investors seek to evade the impact of a potential breakup of the euro area. Roll-offs by foreign investors would climb, the pace of overall outflows would rise further still, and the euro would likely come under substantial depreciation pressure. Under the complete policies scenario, confidence returns and foreign investors increase their share of outstanding debt.

The biggest loser here, as in every other category: Germany, which will end up seeing €2 trillion in TARGET2 claims which in turn will never be satisfied as the system merely accelerates its collapse into a debt supernova.

The big picture, of course, is that even the IMF now concedes Europe is in a closed loop Catch 22: unless European countries manage to restore "foreign" confidence which in turn would mean putting their fiscal houses in order, something which has proven absolutely impossible in Europe absent such one-time gimmicks as LTROs and otherwise hollow confidence boosters as ECB warnings to not fight the ECB (which work until they are tested, but first need to be activated, ahem Mariano Rajoy), the banks will be forced to delever even more, which would mean the ECB would have to "onboard" even more of their debt as nobody else will, which means even more foreign creditor flight, which means greater deposit outflows, which means more ECB intervention, until finally, the ECB is the only player in town, a process which can be visualized (in progress) in the following capital flow image, especially Figure 1.7:

At the point when the ECB is the sole owner of all European financial debt (and sovereign debt via repo), the endgame for the fiat system will finally be here, as the only thing more dangerous than the ECB will be all other central banks which will have no choice but to follow suit and monetize everything in the global race to debase currencies, and monetize ever more budget deficits in a world in which the rich increasingly preserve their wealth, and refuse to pay taxes (converting financial assets into hard ones), having finally grasped the endgame.

As for the immediate task at hand: how European banks will deleverage to the tune of $4.5 trillion over the next 14 months, Europe has our blessings.

Source: IMF Global Financial Stability Report

Printing Money – Price of Gold – Preservation of Wealth

Posted: 09 Oct 2012 06:20 PM PDT

My Dear Friends,

Egon has written a great piece here. I love the bullet points of an argument. It is so much better than a 5000 word tome.

Keep in mind when reading this that I have given you the definition of End Game. The End Game is "the negative impact on the US

Continue reading Printing Money – Price of Gold – Preservation of Wealth

Looking Toward A Post-Crash World

Posted: 09 Oct 2012 05:18 PM PDT

By Jeff Thomas, International Man [Editor's Note: Today we bring you a different type of article from Jeff Thomas. As International Man has grown, more and more readers have come to see Jeff as an interesting and insightful writer on what's coming round the bend from a geo-eco-political point of view. Following is a compilation of some of the questions he's received directly from our readers, formatted into an interview format. Enjoy.] International Man: Many people today are speculating the fate of the world in the next few years - what you term, "the Great Unraveling" - the crash of the markets, the devaluation of the dollar, etcetera. However, you also comment frequently on what will happen after the unraveling, which is not being discussed too much by others. Sinc...


The US Dollar October Mystery and Its Influence on Precious Metals

Posted: 09 Oct 2012 04:18 PM PDT

Right now all currencies on the planet are backed by debt. If you need a refresher course in why fiat money can become toast, here are some words published this week on the website of Texas Congressman Ron Paul about fiat money ... Read More...



Which Gold Stocks Should You Buy? Look at These Choices

Posted: 09 Oct 2012 04:02 PM PDT

Just because central bankers are printing money does not mean that…investors should just buy gold companies at random. They*still have to consider valuation [and this article does just that]. Words: 1017 So says Cris Frangold in edited excerpts from his article* posted on Seeking Alpha under the title Monetary Easing: 2 Gold Stocks To Buy, 3 To Avoid. [INDENT] Lorimer Wilson, editor of [B][COLOR=#0000ff]www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!), has edited the article below for length and clarity – see Editor's Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.[/COLOR][/B] [/INDENT] Frangold goes on to say, in part: The Historical Case for Gold Amid Monetary Easing and Inflation Since 1984, increases in the price of gold have correlated with increases in the money supply. If this phenomenon continues today...


Gold to Go Ballistic Causing the Dow-Gold Ratio to Ultimately Reach 1:1 ? Here?s Why

Posted: 09 Oct 2012 04:02 PM PDT

In an environment of ultra expansionary monetary policies…[B]the long-term trend for gold is higher and as inflation surges, gold will go ballistic resulting in the Dow-Gold ratio touching one. [Let me explain why that will indeed be the case.] [/B]Words: 760 So says the*Economics Fanatic ([url]www.economicsfanatic.com[/url]) in edited excerpts from an article* posted on Seeking Alpha entitled Is The Dow-Gold Ratio Heading Towards One? [INDENT] Lorimer Wilson, editor of [B][COLOR=#0000ff]www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!), has edited the article below for length and clarity – see Editor's Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.[/COLOR][/B] [/INDENT] The article goes on to say, in part: The word crash might be an understatement here, as the equity markets in the United States have slumped by 80% ...


The Gold Price is Correcting after it's Long Rally Watch for Buying Opportunities Coming Soon

Posted: 09 Oct 2012 03:59 PM PDT

Gold Price Close Today : 1765.40
Change from October 5: -13.20 or -0.74%

Silver Price Close Today : 33.700
Change from October 5: -0.816 or -2.36%

Gold Silver Ratio Today : 52.386
Change from October 5: 0.856 or 1.66%

Silver Gold Ratio Today : 0.01909
Change from October 5: -0.000317 or -1.63%

Platinum Price Close Today : 1693.50
Change from October 5: -9.80 or -0.58%

Palladium Price Close Today : 657.50
Change from October 5: -4.25 or -0.64%

S&P 500 : 1,441.48
Change from October 5: -14.40 or -0.99%

Dow In GOLD$ : $157.77
Change from October 5: $ -0.09 or -0.06%

Dow in GOLD oz : 7.632
Change from October 5: -0.004 or -0.06%

Dow in SILVER oz : 399.81
Change from October 5: 6.26 or 1.59%

Dow Industrial : 13,473.53
Change from October 5: -110.12 or -0.81%

US Dollar Index : 80.01
Change from October 5: 0.589 or 0.74%

Y'all outside the United States please note that yesterday was a US holiday, so the changes in prices shown above are calculated from Friday.

The silver and GOLD PRICE decayed more today, but without any definitive breakdown. Gold toppled $13.20 to $1,765.40 while silver backslid 81.6 cents to 3370c.

Particularly eye-catching was the GOLD/SILVER RATIO 0.856 point leap to 52.386 from 51.530 on Friday. Rising ratio points to falling silver and gold.

Today gold closed below its 20 day moving average, now $1,769.86. If $1,755 support holdeth not, then all will hinge on $1,738.30, the last low.

The GOLD PRICE has drawn a broadening top, and is breaking down from that pattern. It would have to close above $1,800 to reverse direction. Possible -- possible, not certain -- targets are $1,720, $1,690, and $1,650. Expect lower prices tomorrow.

The SILVER PRICE has also sketched out a broadening top and broken down from it. Losing 81.6c today was not good, but the low at 3357c almost touched the previous low at 3336c. Breaking that 3336c low would push silver back to its 300 DMA (3221) or lower, to 3200c or 3100c.

I ought to add that silver and gold must confirm these falls with lower closes tomorrow.

You are watching nothing more than a usual correction after a long rally. Stay calm, watch closely for a buying opportunity that ought to come soon.

German chancellor Ferkel visited Greek premier Samanas today and nobody had a good time. He wants austerity delayed to 2016, she won't budge, so Greece may not get its next bailout payment.

Needless to add, this didn't help the euro's exchange rate much. It dropped 0.69% to $1.2878. This move bleeds all sorts of bad juju. It leaves the euro below $1.2900 support, and way below the $1.3000 mile marker, and barely above its 20 DMA (129.63). It gets worse. The euro is hovering above its 200 DMA (128.30), and a fall through that will draw sellers like a three day ripe road-killed armadillo draws buzzards. Twice now the euro has assayed to breach its downtrend line, twice been driven back, starting an eyecatching chain of lower highs. The 200 DMA at 128.30 is a trap door. If the euro falls through that, count on it dropping 200 basis points fast.

US$1.00 = E0.7765 = Y78.22.

Yen today rose 0.1% to 127.84 US cents. That is dancing under the wing of the 20 DMA, but changes nothing. Both the yen and the euro have posted lower highs in series against the dollar, not a hopeful sign for these loser currencies.

The other loser currency, the US Dollar index, gained 58.9 basis points (0.74%) today and closed above 80 at 80.009. Daily chart shows a strong, determined move. Longer term chart shows the dollar index has recovered from last week's false downside breakdown AND pierced its downtrend line from July. 'Tisn't yet a sure thing, but this is a strong hint at a rally that could easily touch the 50 DMA at 80.98. Won't the stock markets, the euro, and silver and gold love that?

The S&P500 in gold has failed and dropped back at its 200 DMA, after the breakdown from a broadening top in mid-August. Dow in Gold briefly penetrated its 20 DMA (2 days) then fell back to it today, after a breakdown from a diamond top in mid-August. Translation? Stocks will begin losing value against gold even faster than they have been.

The market was not kind to stocks today in dollar terms, either. The Dow caved in 110.12 (0.81%) to 13,474.53, bringing reminders that the 13,300 level is the must hold for the Dow. Owch! That close also pulled the Dow below its 20 DMA (13,521), and left behind a double top about 13,650.

'Tain't that good for the S&P500. Not only did it close below its 20 DMA (1452.24), it also violated its uptrend line. It's critical to hold 1,425.

S&P500 today buckled 14.4 points (0.99%) to 1,441.48. Odds strongly favor lower stock prices. Soon.

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

- Franklin Sanders, The Moneychanger
The-MoneyChanger.com
1-888-218-9226
10:00am-5:00pm CST, Monday-Friday

© 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. No, I don't.

Silver Commercial Signal Failure in Progress?

Posted: 09 Oct 2012 03:39 PM PDT

Since early September, will all the huffing and puffing the cartel has directed towards silver, they've accomplished virtually nothing other than scaring the bejesus out of all but the most informed strong hand silver investors.  All the cartel has been … Continue reading →


Are oil price benchmarks rigged just like LIBOR?

Posted: 09 Oct 2012 03:16 PM PDT

Total Warns over 'Inaccurate' Benchmarks

By Javier Blas
Financial Times, London
Monday, October 8, 2012

http://www.ft.com/intl/cms/s/0/3c859a3c-1163-11e2-a637-00144feabdc0.html

One of the world's largest oil trading groups has warned of "inaccurate pricing" in the benchmarks for the energy market that underpin billions of dollars of trading each day in contracts such as Brent and West Texas Intermediate.

Total Oil Trading SA, the trading arm of Total of France, has told international regulators that "several times a year, estimates of market prices on key [energy] indices ... are out of line with our experience of the day."

The International Organisation of Securities Commissions, an umbrella group of financial regulators, last week backed away from its initial tough proposals for regulation of the benchmarks in the physical energy market.

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Prophecy Platinum Intercepts Best Pt+Pd+Au Grades Yet
at Wellgreen Project in Yukon Territory: 5.36 g/t

Company Press Release
Tuesday, September 11, 2012

VANCOUVER, British Columbia -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) announces more results of its 2012 drill program on the company's fully-owned Wellgreen platinum group metals, nickel, and copper project in southwestern Yukon Territory, Canada. Four surface holes and four underground holes all intercepted significant mineralized widths, ranging from 28.5 meters (WS12-201) and up to 459.5 metres (WS12-193). Highlights include WU12-540, which returned 8.9 metres of 5.36 grams per tonne platinum, palladium, and gold; 1.73 percent copper; and 1.01 percent nickel within 304.5 meters of 0.66 g/t platinum-palladium-gold, 0.20 percent copper, and 0.27 percent nickel.

The surface drill program started in June and has completed 16 holes (assays pending for 12 holes) with two rigs now on site. The surface program continues to progress at a steady pace.

Prophecy Chairman John Lee commented: "Wellgreen is a very large nickel, copper, and platinum group metals project with near-surface high-grade zones. High-grade intercepts will be incorporated into resource modeling and mine planning in the pre-feasibility study. We expect further positive drill results from Wellgreen shortly."

Wellgreen features a low 2.59-to-1 strip ratio, is situated at an altitude of 1,300 meters, and is only 15 kilometers from the two-lane paved Alaska Highway. Those factors significantly minimize the project's indirect costs.

For the complete company statement with full tabulation of the drilling results, please visit:

http://prophecyplat.com/news_2012_sep11_prophecy_platinum_drill_results....


However, in a letter to Iosco, Total Oil Trading SA said that the way the benchmarks were calculated sometimes did not assure "an accurate representation of the market and consequently deform the real price levels paid at every level of the price chain, including by the consumer."

The trader, which is based in Geneva, added that "inaccurate pricing" was not only affecting the price of private, bilateral over-the-counter derivatives, but that "end users are directly impacted by erroneous prices."

Oil executives said the discrepancies were in the order of cents per barrel, rather than dollars.

The unusually candid public comments by the trading arm of Total have broken the omertà of the energy physical trading industry, a close-knit community in London, Geneva, Singapore, and Houston where disputes are usually settled in private.

Scrutiny of pricing in the energy market comes after the discovery of widespread manipulation of Libor, the benchmark for borrowing in interbank lending

Total Oil Trading undertakes activities similar to the trading arms of BP and Royal Dutch Shell and independent traders including Vitol and Glencore.

The letter, dated August 24, was released late on Friday by Iosco as an annex to its report about the physical energy market and the price-reporting agencies that collect and publish benchmarks, which largely suggested retaining the current status quo. Other oil companies whose letters were released, including BP and Saudi Aramco, defended the current system.

Total on Monday said in a statement that while it was "satisfied with the majority of the work done" by the price reporting agencies, its objective was to "to support any initiative encouraging even more transparent methodologies." The company added: "The current methodology contains, in very few cases, a small part of subjective judgment. ... We believe that this part of judgment could be mitigated."

Iosco, which groups financial regulators including the UK Financial Services Authority and the US Commodity Futures Trade Commission, sought this year to regulate the market in which price-reporting agencies, including Platts, a unit of New York-based McGraw-Hill, gather data about bids, offers, and trades and using proprietary methodologies publishes prices in what are otherwise opaque markets.

* * *

Join GATA here:

New Orleans Investment Conference
Wednesday-Saturday, October 24-27, 2012
Hilton New Orleans Riverside Hotel
New Orleans, Louisiana
http://www.neworleansconference.com/

* * *

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

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16


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GoldMoney adds Toronto vaulting option


In addition to its precious metals storage facilities in Hong Kong, Switzerland, and the United Kingdom, GoldMoney customers now can store their gold and silver in a high-security vault operated by Brink's in Toronto, Ontario, Canada.

GoldMoney also has recently partnered with Rhenus Freight Logistics to offer another gold storage option in Switzerland. The Rhenus vault is in the secured zone of Zurich Airport and offers customers superb security as well as the ability to inspect their gold.

Storage at the new vaults in Canada and Switzerland is available at GoldMoney's lowest fees. Customers can select their storage location when placing their buy order.

GoldMoney customers can take delivery of any number of gold, silver, platinum, and palladium bars from any GoldMoney vault, as well as personally collect their bars stored in the Hong Kong, Switzerland, and U.K. vaults.

It's easy to open an account, add funds, and liquidate your investment. For more information, visit:

http://www.goldmoney.com/?gmrefcode=gata

CORPORATE WELFARE + SOCIAL WELFARE = COLLAPSE

Posted: 09 Oct 2012 02:48 PM PDT

Government Dependency Will End in Chaos By Ron Paul The media insists on characterizing statements about dependency on government handouts as controversial, but in truth such statements are absolutely correct. It's not that nearly half of Americans are dependent on government; it's actually more than half. If one includes not just people on food stamps and welfare, but also [...]


Steve Forbes: Gold can save us from disaster

Posted: 09 Oct 2012 02:31 PM PDT

4:27p ET Tuesday, October 9, 2012

Dear Friend of GATA and Gold:

In commentary published in the new edition of Forbes magazine, editor and publisher Steve Forbes endorses both a gold standard and U.S. Rep. Ron Paul's proposed legislation to facilitate competition in currencies. In support of the latter, Forbes cites the prosecution of Liberty Dollar founder Bernard von Not Haus. Forbes' commentary is headlined "Gold Can Save Us from Disaster" and it's posted at the Forbes Internet site here:

http://www.forbes.com/sites/steveforbes/2012/10/03/gold-can-save-us-from...

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


ADVERTISEMENT

Fred Goldstein and Tim Murphy open All Pro Gold

Longtime GATA supporters Fred Goldstein and Tim Murphy have brought their many years of experience in the precious metals and numismatic coins to All Pro Gold as metals brokers who specialize in the delivery of gold and silver bullion bars and coins as well as numismatic gold and silver coins. Fred and Tim follow these markets closely and are assisted by a team of consultants in monitoring market trends. All Pro Gold offers GATA supporters competitive pricing on all bullion products and welcomes inquiries. Tim can be reached at 602-299-2585 and Tim@allprogold.com, Fred at 602-799-8378 and Fred@allprogold.com. Ask about their ratio strategy and the relationship of generic $20 dollar gold pieces to 1-ounce gold bullion coins. Visit their Internet site at http://www.allprogold.com/.


Join GATA here:

New Orleans Investment Conference
Wednesday-Saturday, October 24-27, 2012
Hilton New Orleans Riverside Hotel
New Orleans, Louisiana
http://www.neworleansconference.com/

* * *

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

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16


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Opinion Around the World Is Changing
in Favor of Gold -- Find Out Why

When Deutschebank calls gold "good money" and paper "bad money". ...

http://www.gata.org/node/11765

When the president of the German central bank, the Bundesbank, pays tribute to gold as "a timeless classic". ...

http://www.forbes.com/sites/ralphbenko/2012/09/24/signs-of-the-gold-stan...

When a leading member of the policy committee of the People's Bank of China calls the gold standard "an excellent monetary system". ...

http://www.forbes.com/sites/ralphbenko/2012/10/01/signs-of-the-gold-stan...

When a CNN reporter writes in The China Post that the "gold commission" plank in the 2012 Republican platform will "reverberate around the world". ...

http://www.thegoldstandardnow.org/key-blogs/1563-china-post-the-gop-gold...

When the Subcommittee on Domestic Monetary Policy of the U.S. House of Representatives twice called on economist, historian, and gold standard advocate Lewis E. Lehrman to testify. ...

World opinion is changing in favor of gold.

How can you learn why and what it will mean to you?

Read the newly updated and expanded edition of Lehrman's book, "The True Gold Standard."

Financial journalist James Grant says of "The True Gold Standard": "If you have ever wondered how the world can get from here to there -- from the chaos of depreciating paper to a convertible currency worthy of our children and our grandchildren -- wonder no more. The answer, brilliantly expounded, is between these covers. America has long needed a modern Alexander Hamilton. In Lewis E. Lehrman she has finally found him."

To buy a copy of "The True Gold Standard," please visit:

http://www.thegoldstandardnow.com/publications/the-true-gold-standard

Gold Daily and Silver Weekly Charts - Commercials Vs. Specs

Posted: 09 Oct 2012 02:10 PM PDT


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

Jeffrey Lewis: Silver prices, priceless rumors

Posted: 09 Oct 2012 02:02 PM PDT

4p ET Tuesday, October 9, 2012

Dear Friend of GATA and Gold:

Physician and Silver-Coin-Investor.com proprietor Jeffrey Lewis gets to the heart of the issue of silver market manipulation in his new commentary, "Silver Prices, Priceless Rumors." Lewis writes: "Concentration is the issue, not hedging -- as silver analyst Ted Butler has been pointing out since the 1990s. Essentially it is the presence of just a few large players who make up the short holdings that are positioned against a much more diverse group of longs that is the primary issue."

Lewis' commentary is posted at GoldSeek's companion site, SilverSeek, here:

http://www.silverseek.com/commentary/silver-prices-priceless-rumors-6821

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


ADVERTISEMENT

Opinion Around the World Is Changing
in Favor of Gold -- Find Out Why

When Deutschebank calls gold "good money" and paper "bad money". ...

http://www.gata.org/node/11765

When the president of the German central bank, the Bundesbank, pays tribute to gold as "a timeless classic". ...

http://www.forbes.com/sites/ralphbenko/2012/09/24/signs-of-the-gold-stan...

When a leading member of the policy committee of the People's Bank of China calls the gold standard "an excellent monetary system". ...

http://www.forbes.com/sites/ralphbenko/2012/10/01/signs-of-the-gold-stan...

When a CNN reporter writes in The China Post that the "gold commission" plank in the 2012 Republican platform will "reverberate around the world". ...

http://www.thegoldstandardnow.org/key-blogs/1563-china-post-the-gop-gold...

When the Subcommittee on Domestic Monetary Policy of the U.S. House of Representatives twice called on economist, historian, and gold standard advocate Lewis E. Lehrman to testify. ...

World opinion is changing in favor of gold.

How can you learn why and what it will mean to you?

Read the newly updated and expanded edition of Lehrman's book, "The True Gold Standard."

Financial journalist James Grant says of "The True Gold Standard": "If you have ever wondered how the world can get from here to there -- from the chaos of depreciating paper to a convertible currency worthy of our children and our grandchildren -- wonder no more. The answer, brilliantly expounded, is between these covers. America has long needed a modern Alexander Hamilton. In Lewis E. Lehrman she has finally found him."

To buy a copy of "The True Gold Standard," please visit:

http://www.thegoldstandardnow.com/publications/the-true-gold-standard


Join GATA here:

New Orleans Investment Conference
Wednesday-Saturday, October 24-27, 2012
Hilton New Orleans Riverside Hotel
New Orleans, Louisiana
http://www.neworleansconference.com/

* * *

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

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16


ADVERTISEMENT

Fred Goldstein and Tim Murphy open All Pro Gold

Longtime GATA supporters Fred Goldstein and Tim Murphy have brought their many years of experience in the precious metals and numismatic coins to All Pro Gold as metals brokers who specialize in the delivery of gold and silver bullion bars and coins as well as numismatic gold and silver coins. Fred and Tim follow these markets closely and are assisted by a team of consultants in monitoring market trends. All Pro Gold offers GATA supporters competitive pricing on all bullion products and welcomes inquiries. Tim can be reached at 602-299-2585 and Tim@allprogold.com, Fred at 602-799-8378 and Fred@allprogold.com. Ask about their ratio strategy and the relationship of generic $20 dollar gold pieces to 1-ounce gold bullion coins. Visit their Internet site at http://www.allprogold.com/.

Securing Property Rights in the Absence of a State

Posted: 09 Oct 2012 01:50 PM PDT

Many Rothbardians are vowing not to vote in this or any election since voting only supports the State.  But I wonder if they could be persuaded otherwise if they knew one of the ballot choices were to dissolve the governments and replace them with voluntary market institutions.  Of course, we don't have that choice, and most people would either laugh or be scared to death if it were proposed.   But with sovereign nations riding the Keynesian sled into the Abyss, the dissolution might fall in our laps anyway.  Preposterous as it might sound, we might need to consider organizing society around something other than the coercive monopolies driving us to extinction.

Fortunately, we have both experience and theory to draw upon.  In this article I want to touch on two sources from each: The classic study by Terry L. Anderson and P. J. Hill, An American Experiment in Anarcho-Capitalism: The Not So Wild, Wild West and Robert P. Murphy's Chaos Theory.

Thanks to Hollywood and popular literature, the American West [1830-1900] is often portrayed as violent and lawless.  As long as you had a fast gun and were willing to use it, you could get away with anything.  The reason: weak or nonexistent government.  In their literature search, though, Anderson and Hill found ample evidence to the contrary.  For example, W. Eugene Hollon, in his book Frontier Violence: Another Look found that "the Western frontier was a far more civilized, more peaceful, and safer place than American society is today [the early 1970s]."  Another researcher, Frank Prassel, writing in the mid-1930s, found that
if any conclusion can be drawn from recent crime statistics, it must be that this last frontier [the West] left no significant heritage of offenses against the person, relative to other sections of the country.
In the early West people protected their property and lives with private agencies.  Significantly, these agencies understood that violence was a costly method of resolving disputes and usually employed lower-cost methods of settlement such as arbitration and courts.  Nor was there a universal idea of justice common to these agencies.  People had different ideas of what rules they wished to live under and were willing to pay for.  Competition among the agencies provided a choice. 

Anderson and Hill looked at four institutions in the early West that approximated anarcho-capitalism (AnCap): land claims clubs, cattlemen's associations, mining camps, and wagon trains.

Land Claims Clubs

Found throughout the Middle West, the land claims clubs or squatters' associations showed how newly arriving pioneers joined together for common purposes without government assistance. 
Each claims association adopted its own constitution and by-laws, elected officers for the operation of the organization, established rules for adjudicating disputes, and established the procedure for the registration and protection of claims.
Though violence was an option to be used against those who didn't follow the rules, at least one association used social ostracism to curtail or punish violators.  They formally resolved:
That we will not associate nor countenance those who do not respect the claims of settlers and further that we will neither neighbor with them . . . Trade barter deal with them in any way whatever.
Some claims associations were formed to oppose "speculators," while others encouraged speculation, exemplifying how the clubs "developed rules consistent with the preferences, goals, and endowments of the participants."

Cattlemen's Associations and Mining Camps

Like the claims groups, cattlemen's associations drew up formal rules governing their members, but their enforcement methods were often more violent.  As protection agencies, they hired gunfighters (stock detectives) to eliminate rustlers.  The mercenaries were not motivated by ethics, but by "the side which made them the first or best offer."

Did the gunslingers ever form criminal associations of their own, selling protection and violating property rights as they wished?  There were a few loose associations of this kind, but they were "dealt with more quickly and more severely under private property protective associations than under government organization."

The California gold rush of 1848 brought thousands of easterners west to seek their fortune, as did gold discoveries later in Colorado, Montana, and Idaho.  Many gold seekers organized before leaving home, and as with other private agencies the rules varied between organizations.  People had the choice of purchasing the set of rules they preferred.  Interestingly, many of the mining organizations prohibited lawyers from their districts and in one case specified no more than fifty nor less than twenty lashes for lawyers who were caught practicing law.

Anderson and Hill:
One early Californian writes, "We needed no law until the lawyers came," and another adds, "There were few crimes until the courts with their delays and technicalities took the place of miners' law."
Miners courts provided a system of justice, and a judge and jury were selected from among the members.  Any law-abiding miner might serve as prosecutor or defender of the accused. 
In Colorado there is some evidence of competition among the courts for business, and hence, an added guarantee that justice prevailed.
Wagon Trains

Wagon trains rolling west in search of gold provide perhaps the best example of anarcho-capitalism in the American frontier.  Realizing they would be passing beyond the pale of the law, the pioneers "created their own law-making and law- enforcing machinery before they started."  In many cases they created constitutions similar to the U.S. Constitution.  Once the travelers were beyond the jurisdiction of the federal government, they elected officers to enforce the rules laid out in the document. 
The constitutions also included eligibility for voting and decision rules for amendment, banishment of individuals from the group, and dissolution of the company. 
What made this arrangement work, according to the authors, was a profound respect for property rights.  Yet there was little mention of property rights in their constitutions.  The inviolability of property rights was so throughly ingrained that the pioneers rarely resorted to violence even when starvation was imminent.  Quoting John Phillip Reid from his study of the Overland Trail, the authors tell us:
While a few of those who were destitute may have employed tricks to obtain food, most begged, and those who were "too proud to beg" got along the best they could or employed someone to beg for them.
Certainly the transient nature of these rolling communities made them more adaptable to anarcho-capitalism.  The demand for "public goods" such as roads or schools never came up, for example, though they did have to protect themselves from Indian attacks without relying on the State.  For the most part, their arrangements worked.  People bought protection and justice, found competition among rules producers, and the result was an orderly society, unlike that generally associated with anarchy.

Murphy's Case for Anarcho-Capitalism

In Chaos Theory, Robert P. Murphy sketches how market forces would operate to support the private production of justice and defense -- two areas that are traditionally conceded to be the sole province of the State.  Murphy contends that not only would the market be able to provide these services, but would do so much more efficiently and equitably than the system we have now.

Here, we'll confine our discussion to a few key points he makes about the production of "justice" on the free market.

As with the western pioneers and the world today, no single set of laws or rules is needed to bind everyone.  People would enter into voluntary contracts that spell out the rules they agree to live by.   "All aspects of social intercourse would be 'regulated' by voluntary contracts." 

Who makes the rules?  Private legal experts, who would draft laws under open competition with rivals.  The market deals with "justice" as it does with other services.  As Murphy notes,
"the market" is just shorthand for the totality of economic interactions of freely acting individuals. To allow the market to set legal rules really means that no one uses violence to impose his own vision on everyone else.
In an advanced AnCap society, insurance companies would play a major role.  People would buy policies, for example, to indemnify their victims if they were ever found guilty of a crime.  As they do now, insurance companies would employ experts to determine the risks of insuring a given individual.  If a person were considered too great a risk he might be turned down, and this would be information others would use in deciding if and how they wished to interact with him.

Critics say this might work for peaceful, rational people but what about incorrigible thieves and ax murderers?  How would market anarchy deal with them?

All Property is Privately Owned

Murphy reminds us that "wherever someone is standing in a purely libertarian society, he would be on somebody's property."  This allows for force to be used against criminals without violating their natural rights.  He cites the example of a person entering a movie theater, with an implicit contract such as the following:
If I am judged guilty of a crime by a reputable arbitration agency [perhaps listed in an Appendix], I release the theater owner from any liability should armed men come to remove me from his property.
In this way the use of force would have been authorized by the recipient himself beforehand.

But where do these armed men take the criminal?  On a free market, a high-security analog to jails would evolve.  These jails, though, would resemble hotels because they would be competing with each other for business, which in AnCap means both pleasing the criminal and guaranteeing his secure detention.  Unlike government prisons there would be no undue cruelty and virtually no chance of escape.  If a dangerous criminal escaped and killed again the insurance company would be held liable.  And a prisoner who didn't like the way he was treated would have the option of switching to a different jail, as long as his insurance company was in agreement.

Would the Mafia Take Over?

People who support the State because they believe organized crime would take control of an AnCap society should consider that we're already living  under the "most 'organized' criminal association in human history."  Whatever crimes the Mafia has committed, they are nothing -- nothing -- compared to the wanton death and destruction states have perpetrated.   

We need to consider, too, that the mob gets its strength from the government, not the free market. 
All of the businesses traditionally associated with organized crime—gambling, prostitution, loan sharking, drug dealing—are prohibited or heavily regulated by the state. In market anarchy, true professionals would drive out such unscrupulous competitors.
Applying AnCap

Murphy discusses several applications of anarcho-capitalism in today's world, one of which is medical licensing.  Almost everyone believes that without government regulation we would all be at the mercy of quacks.  "Ignorant consumers would go to whatever brain surgeon charged the lowest price, and would be butchered on the operating table."  Therefore, we need the iron fist of government to restrict entry into the medical profession.

But this is pure fiction.  Since the demand for safe and effective medicine is universal, the market would respond accordingly with voluntary organizations that would allow only qualified doctors into their ranks.  Insurance companies, too, would only underwrite doctors who met their standards, since they would stand to lose millions in malpractice suits.

Regarding the ongoing controversy of gun control, Murphy sees legitimate points to both sides of the debate:
Certainly we cannot trust the government to protect us once it has disarmed us. But on the other hand, I feel a bit silly arguing that people should be able to stockpile atomic weapons in their basement.
How might AnCap resolve this?  Let's say Joe Smith wants an insurance company to agree to pay $10 million to the estate of anyone Smith happens to kill.  "The company will be very interested to know whether Smith keeps sawed off shotguns—let alone atomic weapons—in his basement."  In this way truly dangerous weapons would be restricted to those willing to pay the high premiums for owning them.

Though it's hard to imagine any company willing to issue a policy to a holder of nuclear weapons, nevertheless, if someone wanted to, there would be no agency with the authority to prohibit owning them.  But without a policy, a person would be unable to guarantee his contracts with others and would find it virtually impossible to function in society.

Getting there from here

Establishing an AnCap society depends heavily on the history of the region.  North Korean market anarchists, for example, might have to use violence to curtail that brutal regime, while in the United States, "a gradual and orderly erosion of the State is a wonderful possibility." 
The one thing all such revolutions would share is a commitment by the overwhelming majority to a total respect of property rights.
People already understand that rape and murder are crimes - even rapists and murderers.  The hard part is convincing people "that murder is wrong even when duly elected 'representatives' order it."

We can build on intuitive notions of justice, just as newly arriving miners in California respected the claims of earlier settlers. 
To take a more modern example, even inner city toughs unthinkingly obey the "rules" in a pickup game of basketball, despite the lack of a referee.
As he explains in a footnote, the players in a pickup game still recognize the existence of a foul (and other rules), even if the offending player denies he committed one. 
Now, the market solution to such ambiguity and bias, for games deemed important enough to warrant the extra cost and hassle, is to appoint official referees to apply the "law" (which they too unthinkingly respect). Notice that at no point is a violent monopoly needed to achieve this orderly outcome. 
 Conclusion

Those who defend the State as necessary to protect  property rights should brush up on their history, from day one to the present.  As Murphy wraps up,

I ask that the reader resist the temptation to dismiss my ideas as "unworkable," without first specifying in what sense the government legal system "works."

George Ford Smith is the author of The Flight of the Barbarous Relic and two other books.  Robert P. Murphy is Libby Gadsen's scheduled guest for her radio show Gadsen Rising on Tuesday, October 16, 2012 from 4:30-6:00 P.M. ET.   His topic will be anarcho-capitalism.  Gadsen Rising is a www.FreedomizerRadio.com production.  Call 347-324-3704 to listen or participate.


How Helicopter Ben Helps Jobs and, Inadvertently, Gold

Posted: 09 Oct 2012 01:18 PM PDT

The world's central bank leaders continue to spike the monetary punch bowl, with investors imbibing on gold once again. This flurry of gold buying prompts many curious investors and doubting media to ask me two questions ... Read More...



Ho Yo Silver!

Posted: 09 Oct 2012 01:16 PM PDT

The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio! October 09, 2012 09:45 AM Oh my God, TOUT-TV devoted 30 whole seconds to silver. [url]http://www.grandich.com/[/url] grandich.com...


The Gold Series: Gold as an Investment (Part 4) (Infographic)

Posted: 09 Oct 2012 12:39 PM PDT

Gold is the ultimate store of value. It has the tendency to stay strong in the face of inflation, uncertainty, or currency devaluation. As central banks continue to increase the money supply in today's economic climate, investors continue to turn to gold as a safe haven for their investments.


Rule: We Have Tight Gold Supplies & Future Supply Constraints

Posted: 09 Oct 2012 12:28 PM PDT

Today Rick Rule warned King World News about tight gold supplies and future supply constraints. This interview also discusses the frightening conditions that workers face in places like South Africa. At the bottom I also have a note about a video I sent Richard Russell a decade ago regarding the world's deepest gold mine.

But first, here is what Rule had to say: "One of the things that is interesting to me and it should be to all mining industry investors and speculators, is the social unrest in South Africa. It's a very, very complex situation, and I'm trying to understand it better. I'm lucky here to have a couple of South Africans who work for us with great ties to the country."


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

What Exactly Does "QE To Infinity" Mean?

Posted: 09 Oct 2012 11:54 AM PDT

Jim Sinclair's Mineset My Dear Extended Family, QE to infinity is Skier number three. Few have focused on what "to infinity" really means. It is best stated as Debt Monetization, public and private, with no end. To assume that means nothing is total non sense. Today the organized take down on the gold price is a pure raid at 18 days of holding the $1775-$1800 level. It is an operation of opportunity. It is pre-election politically involved. Gold is going to $3500 and there is no question about it. Skier #1 is absolutely correct. Skier #2 is absolutely correct. Skier #3 has been proven to be absolutely correct, and will without any doubt deliver you gold at $3500 and above. Stop quoting Gold every two minutes. Retreat to the hole you have used on every bear operation since $248. Read JSMineset and know I will tell you when to come out. Regards, Jim IMF Sees 'Alarmingly High' Risk of Deeper Global Slump By Sandrine Rastello ...


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