Gold World News Flash |
- GoldSeek.com Radio Gold Nugget: Bob Hoye & Chris Waltzek
- 18 Startling Quotes About The Incredible Destruction Caused By Hurricane Sandy
- Sell Your Euros, Hoard Your Gold
- Asian Metals Market Update
- What Hurricane Sandy Reveals About the Future of Preparedness
- Gold Confiscation Rumor Control
- HaPPY HaLLoWeen ZeRO HeDGe: Quoth The RaVeN!!!
- Is This The Black Swan That Will Make Gold Skyrocket
- Gold Seeker Closing Report: Gold and Silver End Slightly Higher
- Ned Naylor-Leyland: Gold Reserves at the BOE or NY Fed? No Chance of Getting Out With Any Metal!
- Personal Incomes Offset By Rise In Food & Energy
- The Game Is Up: US Financial System Is Heading Towards A Major Collapse As QE Bubble Created By The Fed Is About To Burst
- Hurricane Draws Out Political and Economic Fallacies
- Anticipating the Devolution of Big Government
- Jim Sinclair: Gold confiscation rumor control
- Guest Post: Debt And Deficits - Killing Economic Prosperity
- The Gold Price Must Close Above $1,725 to Confirm a Change Upward New York Markets Still Closed
- Der Spiegel snickers about Germany's gold but avoids the serious questions
- IN CASE YOU WERE GETTING OPTIMISTIC
- Are Visa's Days Numbered?
- Are Visa’s Days Numbered?
- A Critical Metals Mixed Bag: Chris Ecclestone
- Richard Russell - Big News For Silver & Frankenstorm In Stocks
- Why The Miners May Outperform Gold After The Election?
- Secessionist Movements: Another Layer of Complexity
- Jim's Mailbox
- Your Credit Card May Soon be Worthless, Visa's Days Are Numbered
- Peter Grant: Supply issues offer additional underpinnings to gold
- Bundesbank Yields Some Confidentiality...But Still Won't Answer Critical Questions
- LGMR: Trading "Pretty Quiet" with US Markets Closed Again, Japan Extends QE, President Romney "Would Be Bad News for Gold"
| GoldSeek.com Radio Gold Nugget: Bob Hoye & Chris Waltzek Posted: 31 Oct 2012 09:00 AM PDT GoldSeek.com Radio Gold Nugget: Bob Hoye & Chris Waltzek
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| 18 Startling Quotes About The Incredible Destruction Caused By Hurricane Sandy Posted: 31 Oct 2012 01:00 AM PDT from The Economic Collapse Blog:
Read More @ TheEconomicCollpaseBlog.com
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| Sell Your Euros, Hoard Your Gold Posted: 31 Oct 2012 12:51 AM PDT LewRockwell
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| Posted: 31 Oct 2012 12:06 AM PDT Gold and silver are consolidating at the moment due to lack of trading volumes from the USA. This consolidation phase will be broken and a new range will be formed soon. The real fight between bulls and bears now starts. At lower prices physical demand will prevent prices from a crash while technical traders will be cautious going long at current prices.
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| What Hurricane Sandy Reveals About the Future of Preparedness Posted: 30 Oct 2012 11:00 PM PDT by Anthony Gucciardi, Activist Post
Hurricane Sandy gives you a glimpse into not only how a collapse scenario will function, but what you will require. I encourage you to read our information on how to prepare for not just Hurricane Sandy but any disaster in addition to the article on how to preserve your food without electricity. But at a glance, the key items that will immediately disappear or become highly challenging to find in a real collapse scenario include: Fresh water: Water bottles, gallon jugs, and likely even access to nearby springs will be protected by certain groups. Water-containing beverages: All types of juice, soda, milk, just about anything to quench thirst.
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| Gold Confiscation Rumor Control Posted: 30 Oct 2012 10:30 PM PDT Jim Sinclair's Mineset My Dear Extended Family, This is major rumor control that I feel you must understand if you are to know gold. I am sick of all this confiscation talk of gold and even gold companies. It emanates from gold people who do not know or understand the history of gold. We condemn MSM for inaccurate, false and misleading news. I condemn gold writers who practice sensationalism, who offer their opinions as if they were facts and simply make things up out of thin air as if they were insiders privy to things that no one else is. Right now leaders of this community are printing stuff as misleading as MOPE or MSM ever have. Apparently the Scottish hedge fund manager Hendrey, who is by his own admission "short some gold shares," is warning about confiscation without remuneration of gold companies above gold $3000. Either he has never studied gold history, or totally misunderstood its role in the 1930s. Eric De Groot put what I have been tr...
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| HaPPY HaLLoWeen ZeRO HeDGe: Quoth The RaVeN!!! Posted: 30 Oct 2012 10:13 PM PDT
THE RAVEN (Debts No More) (Edgar Allen Poe, The Raven) WilliamBanzai7 |
| Is This The Black Swan That Will Make Gold Skyrocket Posted: 30 Oct 2012 10:02 PM PDT  King World News has put out a series of interviews demonstrating that large chunks central bank gold are missing from central bank vaults. Today KWN is releasing statements from two 40-year veterans, Bill Haynes, President of CMI Gold & Silver, and John Hathaway, the prolific manager of the Tocqueville Gold Fund.Remarkably, in 2001 Hathaway stated, "What is going on here? A decline equating to 227.7 million ounces, or 87% of the US gold reserve demands a more than perfunctory explanation ... The US government may have already expended considerable resources to hold the gold price in check." There is more from Hathaway below, but first, here is what Haynes had to say: "Eric, that is a black swan type of thing (if the entire German gold hoard is gone). The plan right now is for future currency debasement. But if it turns out that some official, some whistleblower comes forth from the Bundesbank and says the gold is gone. The bullion banks used it, they sold it into the market."
This posting includes an audio/video/photo media file: Download Now |
| Gold Seeker Closing Report: Gold and Silver End Slightly Higher Posted: 30 Oct 2012 10:00 PM PDT Gold climbed $6.17 to $1715.17 by about 7:30AM EST before it fell back off in New York, but it still ended with a gain of 0.03%. Silver rose to as high as $32.118 before it also fell back off, but it still ended with a gain of 0.06%.
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| Ned Naylor-Leyland: Gold Reserves at the BOE or NY Fed? No Chance of Getting Out With Any Metal! Posted: 30 Oct 2012 09:35 PM PDT from Silver Doctors:
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| Personal Incomes Offset By Rise In Food & Energy Posted: 30 Oct 2012 09:30 PM PDT by Lance Roberts, Financial Sense:
The Bureau Of Economic Analysis reported that Personal Incomes in September advanced 0.4 percent from August which had increased by only 0.1 percent. More importantly, wages & salaries gained 0.3 percent tacking onto the 0.1 percent increase in August. Real disposable incomes, after adjusting for inflationary pressures, declined for the month by 0.02%. This was the second month of decline after falling by -0.28% in August. However, digging down into the report revealed some other interesting issues as they relate to the financial state of the average American. The chart below shows the changes to personal income broken down by major subcategories. The most notable change from last month's report on personal incomes is that is that Government Social Benefits (welfare) jumped from a -1.8 billion dollar decrease in August to an increase of 12.6 billion dollars in September. This increase in social benefits accounted for more than 26% of the latest increase in personal incomes. Also, interesting is that personal dividend income rose less in September than August, presumably from stock liquidations, while personal interest income declined by 12.1 billion dollars again in September. Read More @ financialsense.com
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| Posted: 30 Oct 2012 09:11 PM PDT from Before Its News:
It seems the market – or the collection of pre-programmed heuristic biases that make up the equity investing public (and machines) – is slowly but surely realizing the confidence trick that is the Fed's Quantitative Easing programs. The following chart should clarify – to anyone placing their gambling chips on the hopes of another round of easing from the Fed – why the game is up. To wit, the reverse geometric progression of S&P 500
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| Hurricane Draws Out Political and Economic Fallacies Posted: 30 Oct 2012 08:41 PM PDT by Gary Gibson, Dollar Vigilante:
Throughout the next few days in the aftermath of Hurricane Sandy you will repeatedly hear two great untruths:
Regarding the first fallacy, let us consider today's New York Times op-ed commentary, which is predictably fawning about centralized political power. "Most Americans have never heard of the National Response Coordination Center, but they're lucky it exists on days of lethal winds and flood tides. The center is the war room of the Federal Emergency Management Agency [FEMA], where officials gather to decide where rescuers should go, where drinking water should be shipped, and how to assist hospitals that have to evacuate." Read More @ DollarVigilante.com
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| Anticipating the Devolution of Big Government Posted: 30 Oct 2012 08:01 PM PDT Authored by Charles Hugh-Smith via Peak Prosperity, With the US elections approaching next week, as well as the threat of another fiscal cliff showdown looming, we asked contributing editor Charles Hugh Smith to revisit his earlier work on how the expansive Central State has come to dominate both private society (i.e., the community) and the marketplace, to the detriment of the nation's social and economic stability. In this updated installment, we will examine six critical dynamics that will lead to the devolution of Peak Government. Massive BorrowingIn a misguided attempt to maintain an unsustainable Status Quo, the Federal government is borrowing unprecedented amounts of money that then must be serviced. And the Federal Reserve is expanding its balance sheet by trillions of dollars ("printing money") and intervening in stock, bond, and other markets for the purposes of managing perception ("the recovery is here!") These government funds are not just paying the government's bills – they are being used to guarantee loans and mortgages that subsequently enter default, transferring what was private debt to the public and subsidizing politically powerful special interests. Guarantees and subsidies both incentivize what is known as moral hazard: the separation of risk from consequence. This can be summarized very simply. People who are not exposed to risk act completely differently than those who are exposed to risk. When risk has been transferred to the taxpayers by guarantees, give-aways, and subsidies, then speculation and mal-investment are incentivized. If the bet pays off, I get to keep the gain, but if it loses, then I personally lose nothing, as the loss is transferred to the taxpayers. Institutionalized Mal-InvestmentThe net result of these policies – borrowing immense sums to prop up an unsustainable Status Quo and institutionalizing moral hazard – leads to misallocation of scarce capital on a grand scale. In effect, the money borrowed by the federal government and electronically printed by the Federal Reserve is mal-invested, because those receiving the funding are personally not at risk and face no consequence if the money is squandered on speculation or unproductive programs. Once moral hazard has been institutionalized, it becomes a positive feedback loop. Since everyone in the system faces little personal consequence from mal-investment, the institution loses the ability to police itself. Even worse, concentrations of private wealth readily influence public institutions via lobbying and political contributions, exacerbating moral hazard and mal-investment of the publicly borrowed money. Erosion of Trust in GovernmentMal-investment inevitably yields poor results, and just as inevitably, the government seeks to mask the dismal results of moral-hazard riddled policies and agencies. This "perception management" is driven by political expediency, as public outrage at failed policies and unproductive spending would eventually lead to a political price being paid by the leadership. So failed policies are declared great successes, negative data is massaged into positive data, and unflattering frauds involving public funds are buried or transformed into pseudo-realities. This institutionalization of mal-investing borrowed funds and the politically expedient falsification of fact to manage perceptions have a destabilizing consequence: The public loses faith in public institutions. Diminishing Returns on Public DebtMassive borrowing also has a consequence. Interest on the immense sums being borrowed squeezes out other government spending. This triggers two self-reinforcing feedbacks. Public spending that is not rewarding moral hazard is cut, as those in charge protect their perquisites, and taxes on what's left of the productive economy increase, reducing the private investment that is the bedrock of capitalist growth and innovation. This institutionalized mal-investment leads to diminishing return. Where each dollar of additional public debt generated nearly a dollar of additional GDP in the early 1960s, now borrowing a dollar generates negative growth, as the cost of servicing the debt exceeds the meager yield. Thus the Federal government borrowed and spent a staggering $6 trillion in a mere four years (2008-2011), while the GDP has yet to return to 2007 levels when measured in real (inflation-adjusted) dollars. All these forces reinforce each other in a death spiral. As trillions more are borrowed, interest payments crowd out spending, causing the Central State to borrow even more, which generates even more interest costs, and so on. As moral hazard infects the entire government and its numerous private contractors and beneficiaries, there are few constraints on rising public debt and mal-investment of public funds. As trust in institutions that increasingly depend on perception management rather than real solutions declines, public faith in government deteriorates further. The Hidden Tax of Inflation and the Institutionalization of FalsificationThe government has one trick to create the illusion that it is "keeping its promises." It prints money to meet its obligations, depreciating the nation's currency by expanding the money supply. Creating money out of thin air does not create wealth, productive assets, or prosperity. What it does is lower the purchasing power of money, which we call inflation. Inflation robs every holder of the currency and is effectively a form of government-sanctioned theft, or if you prefer, a hidden tax on productivity, as productive people and enterprises are taxed to support crony-capitalist, unproductive mal-investments and the rising interest on public debt. In effect, inflation is a way of transferring wealth from the productive to the unproductive, which then leaves the productive with less capital to invest in innovation. This starves the economy of capital while robbing purchasing power of every citizen, establishing a positive feedback loop of lower income, lower capital formation, and lower productivity. Since the government has obligated itself to adjust Social Security payments to inflation, the culture of understating inflation (i.e., falsifying data) has been institutionalized, for the Central State has the impossible dual mandate of increasing inflation so that it can meet its obligations with cheaper money while keeping the inflation-indexed cost-of-living adjustments low, lest program costs balloon out of control. A "modest" rate of 3% inflation will, in a decade's time, reduce the purchasing power of stagnating paychecks by a third, while setting the "official" rate of inflation at 2% or less will inexorably reduce the purchasing power of Social Security payments. If the rate of inflation was to rise at a rate similar to that of the late 1970s, i.e., 10% to 12% per year, while the "official" rate was held to half the real rate, all those whose incomes did not rise by 10% a year would be impoverished as the purchasing power of their incomes evaporated. Meanwhile, even as its policies impoverish most of its citizens, the Central State would assure everyone that it was meeting all of its obligations as promised. This is how trust in government is not just eroded but ultimately destroyed. Self-Reinforcing Feedback Loops of Self-InterestGovernment at all levels responds to shrinking tax revenues from a declining economy and budgets squeezed by higher interest payments by seeking additional revenues by whatever means are at hand. Tax rates are raised, junk fees are imposed, fees for minor infractions are jacked up, and deductions and exclusions are eliminated. The public that does not work for the government (that would be five-sixths of the workforce) increasingly resents what it perceives as predatory extortion in an economy where everyone's disposable income is falling. Unfortunately, there is a great divide between those who work (or worked) for the government and those who work in the private sector. Those in government service understandably view the promises made to them in good times, eras that we now understand were brief speculative bubbles, as sacrosanct. The promises were based on the abnormally high returns earned by pension funds in the brief windows of speculative frenzy, and even supposedly conservative pension funds based their projections on annual yields of 6% to 8%. As the Federal Reserve has attempted to reignite borrowing by lowering interest rates to near-zero, low-risk yields have fallen to 3%, less than half the expected returns. As a result, there is a massive and sustained shortfall of public-employee pension funding, a shortfall that must be paid out of general tax revenues at a time when those revenues are declining as employment and business activity stagnate. The net result in many communities is that schools and other local services are falling apart as budgets are slashed to meet skyrocketing pension obligations. From the point of view of parents, the pension promises that government employees hold as sacrosanct were unrealistic, and what should be sacrosanct (but is not) is the education of their children. Those of us in the private workforce with spouses, relatives, and friends in government service understand the frustration of those who work for government, but should the self-interest of the few dominate the public budget and chart the course for the many? The key difference is that the government holds the power of coercion and the citizens do not. Thus those in government who seek to serve the interests of their unions, colleagues, departments, and agencies can impose fees and taxes on all citizens to fund their own perquisites and power. From the point of view of those inside government, sharply rising parking tickets, higher property taxes, and so on are small prices to pay for essential services. But as citizens observe government services degrading even as fees and taxes increase, they see little value being added, even as self-service and moral hazard remain in institutionalized abundance. Two destructive feedback loops are generated by this divide: Governments, desperate for more revenues, ignore public resentment and loss of trust, which only deepens the disconnect between those in government and the public. And the private citizenry sees a lack of accountability, soaring public debt, accounting trickery, political dysfunction, and mal-investment of public funds as the hallmarks of their government. In Part II: Understanding the Economic Impact of Peak Government, we explore how these self-reinforcing feedbacks lead to the devolution and eventual collapse of government institutions. In particular, we analyze what the likely economic fallout will be, as there is simply not enough purchasing power to distribute between those in power and the needs of the general populace. Click here to read Part II of this report (free executive summary; paid enrollment required for full access).
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| Jim Sinclair: Gold confiscation rumor control Posted: 30 Oct 2012 07:54 PM PDT 9:52p ET Tuesday, October 30, 2012 Dear Friend of GATA and Gold: Jim Sinclair tonight dismisses concerns about gold confiscation and makes an important point about the confiscation undertaken by the U.S. government in 1933. Sinclair writes: "In the 1930s gold was to the monetary system what 'quantitative easing' is today -- a means of increasing the supply of money for Federal Reserve and Treasury Department discretionary use. The secretary of the treasury and President Roosevelt set the gold price higher arbitrarily at their daily breakfast -- higher because, to create money then, the system required a higher value of gold to have more money outstanding. This is why Roosevelt ordered the confiscation of gold -- to unfold his type of monetary stimulation, his QE. This is what confiscationphiles simply do not know." Indeed, some market analysts, like Stewart Thompson of the Graceland Updates letter -- -- and the economists and fund managers Paul Brodsky and Lee Quaintance of QB Asset Management in New York -- -- long have argued that central banks now are arranging a controlled ascent for gold to devalue their currencies for monetary stimulation, what GATA has called a controlled retreat with the longstanding gold price suppression scheme. Like Sinclair, GATA also has been skeptical about any new confiscation of gold insofar as the justification offered for it in 1933 simply doesn't apply today. That is, gold no longer constitutes a significant part of the money stock of the United States and the government already owns (or claims to own) the better part of the gold within the country's borders. But there is no absolute assurance about what the U.S. government will do as it grows more power-mad every day. As it confirmed officially to GATA in 2005, the Treasury Department claims the power, upon proclamation of an emergency by the president, to seize or freeze not only any gold or silver or gold- or silver-related asset but also to seize or freeze any financial asset. GATA's correspondence with the Treasury Department is posted in the "Confiscation" section of our Internet site here: Seize or free anything -- that's the land of the free and the home of the brave for you these days. Sinclair's commentary, "Gold Confiscation Rumor Control," is posted at JSMineSet here: http://www.jsmineset.com/2012/10/30/gold-confiscation-rumor-control/ CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Opinion Around the World Is Changing 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: Vancouver Resource Investment Conference * * * 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: 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: To contribute to GATA, please visit: 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/.
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| Guest Post: Debt And Deficits - Killing Economic Prosperity Posted: 30 Oct 2012 05:25 PM PDT Submitted by Lance Roberts of Street Talk Live, What is really causing the economic malaise that the U.S. faces today? Most economists believe that it is the lack of aggregate demand that is causing the problem which can be rectified by continued deficit spending. The current Administration believes that it is simply the lack of the "rich" not paying their "fair share" and that a redistribution of wealth will solve the issue. Romney believes that his 5-point plan will create 12 million jobs in the near future. All are wrong. Raising Taxes Ain't Gonna Do ItFirst of all, as we have discussed in the past, raising taxes and redistributing wealth will impede economic growth. Louis Woodhill put it best: "To 'tax' is to take away something from someone and give it to the government. 'The rich' are rich because they own a lot of assets. So, what it means to 'tax the rich' is to take assets away from rich people and transfer them to the government. So, what are the assets that the rich own? The rich don't have money bins full of cash, like Scrooge McDuck. Rather, they own things like factories, office buildings, and oil wells, either directly or indirectly via stocks and bonds. In other words, the rich own most of the 'nonresidential fixed assets' of the nation. These assets certainly count as 'wealth', but what they are physically are the tools that workers use to produce America's GDP." This is critically important to understand. By increasing taxes, to generate additional revenue for the government, you decrease the available capital that could be used for productive investments. Since the government doesn't want factories, office buildings, or oil wells, but rather cash, this forces the liquidation of productive investments thereby reducing capacity for economic growth. As Mr. Woodhill goes on to state: "The relationship between nonresidential fixed assets and GDP has been essentially constant for the past 60 years. One dollar of nonresidential fixed assets yields about $0.50 of GDP. Real GDP per worker has risen over the years as real nonresidential fixed assets per worker have increased. In 2009, according to BEA data, the average job was underpinned by about $200,000 in nonresidential fixed assets. So, if you tax away $200,000 from 'the rich', GDP goes down by about $100,000 per year, federal revenues go down by about $18,000 per year, and total employment goes down by one job. This is how 'spreading the wealth' actually works. This may account for why 'taxing the rich' is, inexplicably for Progressives, not popular with voters. Now, $200,000 is more than $18,000, so doesn't 'taxing the rich' at least leave the federal government better off? No, it does not. This is because to get the $200,000, the federal government has to give up $18,000 per year in tax revenue from then on. The present value of $18,000 per year is about $620,000. So, when the federal government taxes $200,000 away from 'the rich', it makes itself worse off by $420,000, the country as a whole becomes poorer by $3.4 million, and Joe Lunchbox loses his job." Now stop and think about all this for a moment. Small businesses are in no mood to hire because of the economic outlook and the fact that final demand from consumers is still not present, which is why "poor sales" ranks so high on their list of concerns. This is why the current Administration is failing once again to recognize that the problems that exist with this country, at this moment, does not lie with the "rich". Instead, the problem is a lack of ability to consumers to maintain a standard of living that is well beyond their earnings capability. While the two most recent Administrations have been heavily criticized for running burgeoning deficits - the reality is that the average American has been doing the same for the past thirty years. Therefore, it is not surprising that raising taxes suppresses economic growth. As shown in the chart if you want to increase revenue you need to produce economic growth. It will surprise most people that over the last 50+ years regardless of the level of tax rates - tax receipts as a percentage of GDP has remain mired between 16 and 21%. During recessions tax collections are at the lower end of the range. Not surprisingly, during periods of economic growth, tax collections are at their peak. So, while the current administration continues to believe that the solution to the nation's economic problems is a function of "people paying their fair share" – they keep ignoring the 800-lb economic killing gorilla in the room which is the deficit. It's The Deficit StupidTaxes are imposed on profits and earnings. Once taxes are paid on profits and earnings the net savings are left alone. This allows those dollars to be invested into productive investments which in turn generate more profits and earnings which will be taxed. As stated above, as the "rich" invest in productive investments it leads to higher employment, strong consumer demand and economic growth. In turn this leads to higher tax revenue. However, deficits, and deficit spending, are HIGHLY destructive to economic growth as it directly impacts gross receipts and saved capital equally. Like a cancer – running deficits, along with continued deficit spending, continues to destroy saved capital and damages capital formation. We discussed recently the economic impact of spiraling debt levels that have eroded economic growth. Debt is, by its very nature, a cancer on economic growth. As debt levels rise it consumes more capital by diverting it from productive investments into debt service. As debt levels spread through the system it consumes greater amounts of capital until it eventually kills the host. The chart below shows the rise of federal debt and its impact on economic growth. We stated: "From the 1950's through the late 1970's interest rates were in a generally rising trend with the Federal Funds rate at 0.8% in 1954 and rising to its peak of 19.1% in 1981. Of course, during this time the U.S. was the manufacturing and production powerhouse of the entire global economy post the wide spread devastation of Europe, Germany and Japan during WWII. The rebuilding of Europe and Japan, combined with the years of pent up demand for goods domestically, led to a strongly growing economy and increased personal savings. However, beginning in 1980 the world changed. The development of communications shrank the global marketplace while the rise of technology allowed the U.S. to embark upon a massive shift to export manufacturing to the lowest cost provider in order to import cheaper goods. The deregulation of the financial industry led to new innovations in financial engineering, easy money and wealth creation through the use of leverage which led to a financial boom unlike any seen in history. The 80-90's was a period of unrivaled prosperity and the envy of every nation on earth. Unfortunately - it was the greatest economic illusion ever witnessed. The reality is that the majority of the aggregate growth in the economy was financed by deficit spending, credit creation and a reduction in savings. In turn this reduced productive investment in the economy and the output of the economy slowed. As the economy slowed, and wages fell, the consumer was forced to take on more leverage to maintain their standard of living which in turn decreased savings. As a result of the increased leverage more of their income was needed to service the debt - and with that the "debt cancer" engulfed the system. The Austrian business cycle theory attempts to explain business cycles through a set of ideas. The theory views business cycles "as the inevitable consequence of excessive growth in bank credit, exacerbated by inherently damaging and ineffective central bank policies, which cause interest rates to remain too low for too long, resulting in excessive credit creation, speculative economic bubbles and lowered savings." However, it wasn't just the consumer leveraging themselves up to the hilt to offset their decline in economic prosperity. Likewise the government, in order to offset ballooning spending with lower rates of revenue of growth, indulged heavily into deficit spending. As stated above, deficit spending, like debt, is very prohibitive to capital formation and impedes future economic growth. The chart below shows GDP year over year growth rates versus the deficit. As you can clearly see the economy was able to grow rather strongly as long as the government wasn't significantly living beyond their means. However, beginning in 1980, as the use of deficit spending became an accepted government practice, economic prosperity began to erode. Not surprisingly, the bigger the deficit has become the lower the rate of economic growth. 4% Economic Growth – A Distant MemoryThis is the problem with all of the deficit reduction, and tax plans, that have been proposed by various parties – they all assume much higher rates of economic growth. This is also the problem that is currently faced by the Federal Reserve. In "The Fed And Goldilocks Economic Forecasting" we wrote: "When it comes to the economy the Fed has consistently overstated economic strength. In January of 2011 the Fed was predicting GDP growth for 2011 at 3.7%. Actual real GDP (inflation adjusted) was 1.6% or a negative 56% difference. The estimate at that time for 2012 was almost 4% versus 2.0% currently. We have been stating repeatedly over the last 2 years that we are in for a low growth economy due to the debt deleveraging, deficits and continued fiscal and monetary policies that are retardants for economic prosperity. The simple fact is that when an economy requires nearly $5 of debt to provide $1 of economic growth the engine of prosperity is broken. The chart below shows current real GDP as reported by the Bureau of Economic analysis versus that from the Congressional Budget Office which is used by the Administration for budgetary planning. As you will see, while the CBO expects there to be a strong economic recovery in 2013, which is VERY unlikely to occur given the current recession in Europe and slowdown in China, growth then tapers back off to 2% through 2018. In other words, even the CBO is saying that the economy cannot achieve escape velocity as the drag from debt and deficits continue to retard growth. The problem that is yet not recognized by the current Administration and mainstream economists is that the excessive deficits and exponential credit creation can no longer be sustained. The process of a "credit contraction" which will continue to occur in fits and starts over a long period of time as consumers, and the government, are ultimately forced to deal with the leverage and deficits. The good news is that process of "clearing" the market will eventually allow resources to be reallocated back towards more efficient uses and the economy will begin to grow again at more sustainable and organic rates. Today, however, expectations of a return to economic growth rates of the past are most likely just a fairy tale. The past 3 years of stock market returns have been fueled by trillions of dollars of support and direct injections into the financial system - that support is not sustainable in the long run. While the injections have kept the economy from falling into a depression in the short term - the unwinding of that support will suppress economic growth for many years to come. There is no way to achieve the necessary goals "pain-free." The time to implement austerity measures is when the economy is running a budget surplus and is close to full employment. That time was two Administrations ago when the economy would have slowed but could have absorbed and adjusted to the restrictive measures. However, when things are good, no one wants to "fix what isn't broken". The problem today is that with a high dependency on government support, high unemployment and near record budget deficits implementing austerity measures will only deter future economic growth, which is dependent on the very things that need to be "fixed". Furthermore, the impact on the psyche of the consumer will continue to be impaired much to the same degree as those that survived the depression era. The mantras for frugality and conservatism are very hard to reverse and have economic consequences. With the economy mired at lower growth rates likewise the stock market, which is ultimately a reflection of the economy and not vice versa, will remain mired at lower rates of growth. The processes that fueled the economic growth over the last 30 years are now beginning to run in reverse, and when combined with the demographic shifts in the U.S., the impact could be far more immediate and prolonged than the media, economists and analysts are currently expecting. Sacrifices will have to be made, the economic will drag an subpar rates of growth, individuals will be working far into their retirement years and the next generation of Americans will lead a far different life that what the currently retiring generation enjoyed. It is simply a function of the math.
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| The Gold Price Must Close Above $1,725 to Confirm a Change Upward New York Markets Still Closed Posted: 30 Oct 2012 05:16 PM PDT Gold Price Close Today : 1710.50 Change : 2.80 or 0.16% Silver Price Close Today : 31.788 Change : 0.062 or 0.20% Gold Silver Ratio Today : 53.810 Change : -0.017 or -0.03% Silver Gold Ratio Today : 0.01858 Change : 0.000006 or 0.03% Platinum Price Close Today : 1552.60 Change : 19.70 or 1.29% Palladium Price Close Today : 595.35 Change : 6.40 or 1.09% S&P 500 : 1,411.94 Change : -1.03 or -0.07% Dow In GOLD$ : $158.40 Change : $ (0.20) or -0.13% Dow in GOLD oz : 7.663 Change : -0.010 or -0.13% Dow in SILVER oz : 412.33 Change : -0.69 or -0.17% Dow Industrial : 13,107.21 Change : 3.53 or 0.03% US Dollar Index : 79.94 Change : -0.292 or -0.36% Also, in case some of y'all record prices, they changed yesterday's settlements to GOLD PRICE down $3.20 at $1,707.70; silver down 28.4c at 3172.6c; platinum down 12.40 at $1,532.90, and palladium down $7.45 to $588.95. Remember, those are YESTERDAY'S closes. Yet again today Hurricane Sandy closed down New York markets, first time that's happened since the 1888 blizzard. Yet the CME Globex computerized market is running, but trading has been light. Stock markets remained closed. So what little drop of information can we squeeze out of today's trading? The SILVER PRICE rose 6.2 cents to 3178.8c while the GOLD PRICE rose $2.80 to $1,710.50. Platinum had a good day, rising $19.70 to $1,552.60. Palladium was pretty peppy, too, up $6.40 to $595.35. This offers the appearance that it's the shorts who got flooded out. After all, when SOMEbody was taken out of the game, prices rose. Now I wouldn't swing over hell using THAT for a rope, but it's a plausible guess. Range on the SILVER PRICE today was 3165 to 3212.4c, and that range has widened out (gone higher) since the afternoon Globex market opened. The GOLD PRICE is down $1.50, after a squeenchy daily range of $1,715 - $1,708.25. US dollar index today lost its grip above 80 and fell 29.2 basis points (0.38) to 79.939. No certain signal there yet. Here's another little hint of strength in the market: the premiums on US 90% silver coin and Krugerrands have risen. Usually that presages higher prices. Here are the bounds silver and gold face. Gold must close above $1,725, really $1,730 to confirm a change to upward. Silver needs to close above 3250c. Underneath gold will signal lower prices by closing below $1,790. Silver below 3100c will beg for lower prices. In truth, though, these partly open markets don't tell us much at all. Let's wait until they open fully and see what happens. By the way, gold above $1,725 would persuade me to buy. Many of you sent condolences on the death of my daughter-in-law, and I deeply appreciate your generous sympathy and your prayers. Thank you. We have to fly to Colorado Thursday for the Saturday funeral, so I will not publish commentaries on those days. God willing, I will return on Monday, 5 November. 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.  
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| Der Spiegel snickers about Germany's gold but avoids the serious questions Posted: 30 Oct 2012 03:23 PM PDT 5:16p ET Tuesday, October 30, 2012 Dear Friend of GATA and Gold: In the commentary appended here, the German magazine Der Spiegel today snickered a lot about concerns for the security of Germany's gold reserves vaulted abroad without ever posing the crucial questions: 1) Does the Bundesbank have gold swap arrangements with any agency of the United States government or any other government? 2) Have such gold swap arrangements ever been implemented and, if so, how and why? 3) Exactly what are the "strategic activities" facilitated by the Bundesbank's placement of the German gold reserves abroad, "strategic activities" admitted by the Bundesbank to GATA consultant Rob Kirby in August 2009 and to the German journalist Lars Schall in December 2010?: Maybe our German friends can force-feed these questions to Der Spiegel, other German news organizations, and members of the Bundestag. CHRIS POWELL, Secretary/Treasurer * * * Why Germany Wants to See its U.S. Gold By Sven Boll and Anne Seith http://www.spiegel.de/international/germany/german-politicians-demand-to... Bundesbank President Jens Weidmann wanted to personally convince Peter Gauweiler that the German gold was still where it should be. Early this summer the head of Germany's central bank took the obstinate politician from the conservative Christian Social Union (CSU), a party that is a member of the government coalition in Berlin, and a number of his colleagues into the Bundesbank's inner sanctum: the gold vault. There 6,000 gold bars are stacked on industrial-strength shelves in a purpose-built building in Frankfurt. An additional 76,000 bars of bullion are stored in four safe boxes, in sealed containers. But even this personal inspection wasn't enough to reassure the visiting member of parliament -- on the contrary: "The Bundesbank monitors its domestic gold in an exemplary fashion," Gauweiler says, "and this makes it all the more incomprehensible that the bank doesn't look after its reserves abroad." ... Dispatch continues below ... ADVERTISEMENT Prophecy Platinum Intercepts Best Pt+Pd+Au Grades Yet Company Press Release 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.... For quite some time now Gauweiler has been pestering the government and the Bundesbank with questions concerning where and how the country's reserves are stored and how often they are checked. He has submitted requests and commissioned reports on the topic. Last week Gauweiler celebrated his greatest triumph to date in his gold campaign, which has been a source of some amusement for many fellow German politicians: A secret report by the Federal Audit Office had been made public -- and it contained stern criticism of the German central bank in Frankfurt. The Bonn-based auditors urged a better inventory system, including quality checks. This demand, which even the bank's inspectors saw as nothing more than routine, alarmed the Berlin political establishment. Indeed, the partially blacked-out report read like the prologue to an espionage thriller in which the stunned central bankers could end up standing in front of empty vaults in the United States. For decades German central bankers have contented themselves with written affirmations from their American colleagues that the gold still remains where it is said to be stored. According to the report, the bar list from New York stems from "1979/1980." The report also noted that the Federal Reserve Bank of New York refuses to allow the gold's owners to view their own reserves. Not surprisingly this prompted strong reactions in Berlin: The relevant Bundesbank board member Carl-Ludwig Thiele was summoned to Berlin to provide an explanation to the parliamentary budget committee. Heinz-Peter Haustein of the business-friendly Free Democratic Party (FDP) was even quoted by Germany's mass-circulation Bild newspaper as saying that "all the gold has to be shipped back." The Bundesbank's otherwise reserved Thiele said that he found at least "part of the debate" to be "rather grotesque." His financial institution currently has more pressing problems. Bundesbank head Weidmann, for example, is desperately fighting the European Central Bank (ECB) decision to buy unlimited quantities of sovereign bonds from crisis-ridden countries as a way of lowering their borrowing costs. In addition, the Bundesbank has already pumped nearly E700 billion ($906 billion) into primarily southern European countries as part of the euro-zone central bank transfers known as Target II. Germany's gold reserves are currently worth some E144 billion and are not stored "with dubious business partners," as Thiele stresses, but rather with "highly respected central bankers." There is in fact nothing unusual about how Germany deals with the precious metal. Many other central banks store a portion of their gold reserves abroad. The Netherlands, for example, places its trust in its colleagues in Ottawa, New York, and London. But the relationship Germans have with their gold is a special one. Germany hoards nearly 3,600 metric tons of the precious metal -- only the US has more. Much of this gold treasure was amassed under the Bretton Woods international monetary system, in which the dollar served as the world's key currency and was directly convertible to fixed quantities of gold. Before the gold standard was terminated in 1971, the current account surpluses generated by Germany's "economic miracle" were partially balanced out in gold. Thousands of U.S. bars of gold alone were transferred to German ownership. Since the euro is not backed by gold, such vast reserves are actually no longer necessary. Nevertheless, the Germans continue to resolutely defend them -- and every attempt to use this treasure has been met with dismay. There has been no lack of proposals: Former German President Roman Herzog wanted to sell the gold to form the basis for a capital-based nursing care insurance scheme. In 2002 FDP parliamentary floor leader Rainer Bruderle proposed a fund for natural disasters. Former Bundesbank head Ernst Welteke added to the debate by suggesting the foundation of a national educational fund. But none of these ideas were ever taken seriously. Most recently German Chancellor Angela Merkel of the conservative Christian Democratic Union (CDU) shot down an idea by the euro partners to use the reserves as collateral for euro bonds. As a result, in addition to safeguarding the reserves of over 60 countries, the Federal Reserve Bank of New York continues to hold 1,536 metric tons of German gold -- or nearly half of Berlin's reserves. This enormous hoard of gold is stored in the fifth subfloor of the bank's building on Liberty Street, 25 meters (80 feet) below street level, and 15 meters below sea level. According to the bank's website, the vault rests on the bedrock of Manhattan Island. Tourists are allowed to venture below street level to see the vault. After descending in an elevator, they stand in front of an enormous steel cylinder that pivots like a door in a 140-ton steel-and-concrete frame. But not even the owners are allowed to view their own gold. According to the Federal Audit Office report, the Fed explained that "in the interest of security and of the control process" no "viewings" are possible. Finally, in 2007, "following numerous enquiries," Bundesbank staff members were allowed to see the facility, but they reportedly made it only to the anteroom of the German reserves. In fact, auditors from the Bundesbank made a second visit in May 2011. This time one of the nine compartments was also opened, in which the German gold bars are densely stacked. A few were pulled out and weighed. But this part of the report has been blacked out -- out of consideration for the Federal Reserve Bank of New York. "I would like more transparency on the issue," says Bundesbank board member Thiele. The Americans are very sensitive, though, when it comes to security procedures in their gold storage facilities. In their second major depository, the legendary Fort Knox, practically no one in recent decades has been allowed to view the gold reserves. Such intense secrecy fuels legends. Many conspiracy theorists have suspected for decades that the German gold has long since disappeared. Others believe that it has been lent out. They contend that there are only promissory notes of little worth stored in the bank's vaults. Another myth that has been making the rounds in nationalist-oriented German circles is that the United States refused to hand over the treasure and threatened during the Cold War to withdraw its troops from Germany if the Germans demanded their gold back. Former Bundesbank head Karl Blessing, according to the theory, had to provide the United States with written confirmation that he would never do such a thing. This letter, as it happens, actually exists, as Blessing confirmed in his last interview with Spiegel in 1971 -- except it doesn't concern the German gold but rather U.S. gold reserves. Until 1971 every dollar could be exchanged for the precious metal. Blessing thus promised the U.S. Federal Reserve that he would no longer convert the colossal German dollar reserves to gold because this would have caused the currency's value to plummet. Today this historic document is even available online. ----- GATA EDITOR'S NOTE: Yes, the Blessing letter was obtained by the German freelance journalist Lars Schall in January 2011 and published at GATA's Internet site here: ----- But that hasn't silenced those who oppose stockpiling German gold abroad. Instead, the debate over a collapse of strictly paper-based currency is experiencing a renaissance -- as is the dispute over the gold reserves. Even Green Party financial expert Gerhard Schick has joined the fray: "I think the question of how much gold is available in an emergency is a valid concern." From a purely logistical perspective, though, returning the reserves seems outlandish. One cannot simply pack 1,500 tons of gold into an Airbus A380 super-jumbo jet and fly it back to Germany. The Bundesbank also objects to this notion for another reason. It says the gold is supposed to act as an emergency buffer. In the extreme situation of a currency collapse, the bankers say that the gold bars could easily and quickly be exchanged on location for pounds or dollars to pay urgent bills. In a bid to calm the debate, the Bundesbank has pledged to bring back and inspect 150 tons of gold from abroad over the next three years. Furthermore, there are plans to count and weigh the gold bars stored in one of the nine chambers at the Fed in New York -- although no date has been set for this. Bundesbank board member Thiele was also recently in New York where he took a look behind one of the vault doors. He had good news for the members of the parliamentary budget committee: "There was no paper in there, just gold." But that's not enough for CSU politician Gauweiler. He is prepared to put the matter to rest only when the central bank has thoroughly inspected all the German reserves throughout the entire world. His credo: "The Bundesbank is independent, but it can't do what it wants." ----- Translated from the German by Paul Cohen. 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| IN CASE YOU WERE GETTING OPTIMISTIC Posted: 30 Oct 2012 02:37 PM PDT Just in case you were having a good day and feeling good about tomorrow, here are 9 reasons to worry. 9 scenarios and all lead to stock plungeCommentary: Death of 'Growth Economics' spells dangerBy Paul B. Farrell, MarketWatch SAN LUIS OBISPO, Calif. (MarketWatch) — "Is the U.S. Condemned by History to Slow Growth?" asks Bloomberg BusinessWeek. Yes. But for traders and investors, it's far worse than just bearish slow growth. Plan for no growth or zero growth. Why? Wall Street, America and the world economy are in the early stages of a long era of "de-growth," a reversal of economic growth and reduction in market growth as population growth adds new stresses on commodities resources, creates unrest, disasters and wars. Big problems ahead.  Reuters Our nine economic scenarios all lead to a stock plunge. Please listen: Earnings growth is in a long slowdown in all of the following nine scenarios. Economy down. Earnings down. Stocks down. Trading down. Focus on the long term, on history, look past the noise about elections and fiscal cliffs. Why? This is an economic "perfect storm." All nine scenarios end in bad news for all markets, spell danger for your future income, your family's security. Start planning now. 1. 800-year growth trend: Back to pre-Industrial Revolution levelsYes, BusinessWeek says America is condemned by history to slow growth. They open with an "IMF warning that global growth would slip below 2% in 2013." Then a review of Richard Gordon's provocative National Bureau of Economic Research study: "Is U.S. Economic Growth Over?" Yes. History tells us for five long centuries before the 18th century, a "capita rate of just 0.2 percent per year." Then, the Industrial Revolution. A few centuries as U.S. "growth shot up" to 2.5% by 1930. Driven by endless innovations: Steam engine. Railroads. Electricity. More. But "it's been downhill since 1950, with annual growth averaging just 2.1 percent per capita through 2007." NBER's Gordon warns: "If the U.S. continues on its current trajectory, by 2100 the world's biggest economy will wind up back where it started, at 0.2 percent growth per annum." 2. 'Less Than Zero Growth:' Long decade of decline: 2013-2022Markets now totally irrational: Read economist Gary Shilling's Forbes warning: The "Bad-News-Is-Good-News Effect Can't Last, Expect Markets to Nose-Dive." The bulls can't hear, will get caught exposed. Listen: "There's a 'grand disconnect' currently going on in global markets. Suddenly weakening economies worldwide are driving optimism in markets." Why? Global "dependency on monetary and fiscal bailouts." Everyone wants more stimulus, more bailouts. "Conditions are so bad, they're good." Dead ahead, a nosedive into Shilling's prediction of a long decade of "less than zero growth," high-stress chronic unemployment, accelerating global unrest, regional conflicts, higher Pentagon budgets," because "much of the excesses and financial leverage built up in past decades, especially in the financial sector globally and among U.S consumers, remain to be worked off." Whether bull or bear, optimist or pessimist, you better prepare of the coming Age of Austerity. 3. 'Hyper-Growth' traders: New bubble repeats 2008 meltdownThis is a trader's ultra short-term global reality: Their brains focus on "The Moment" like a New Age Guru meditating on the "Eternal Now." Today's closing prices, quarterly earnings, even annual returns may be of interest to Main Street investors. But as BusinessWeek once put it, 15 minutes is an "eternity" for traders. Forbes tells the high-frequency traders brain narrows to the "20 milliseconds it can take quotes to travel from Chicago to Nasdaq's market site in New Jersey." Traders leave stuff like long-term global population growth up to some higher power. Unfortunately, the trader's myopic view of the world will ultimately backfire, repeating the 2008 meltdown. 4. 'Perpetual Growth:' Economic theory now self-destructive fantasyPerpetual Growth is the basic theory for all business economists in Wall Street banks, Corporate America, Big Oil, Billionaires, the Fed. Economic growth parallels population. Supply is infinite: The Chamber of Commerce CEO says the world has "1.4 trillion barrels of oil, enough to last at least 200 years," natural gas for 120 years, coal for 450 years." At least five times what we need. These classical business economists ignore environmental economists as just liberals. But the real reason: stock profits would fall if corporations had to factor in the rising public costs of their damages to the environment. Environmental economist Bill McKibben also knows the planet has a five-times supply of energy. But that's the big problem. If we use more than 20% of the supply, we'll be dumping so much excess carbon dioxide into the atmosphere we'll soon kill the planet. Big Oil doesn't care, warns McKibben: Big Oil is a "rogue industry, reckless like no other force on Earth … Public Enemy No. 1 to the survival of our planetary civilization." Big-Oil dismisses environmentalists as a left-wing anti-capitalist conspiracy plot. 5. Population Growth out of control: Planet can't feed 10 billionMoney manager Jeremy Grantham's warns: It is "impossible to feed the 10 billion people" on Planet Earth. Impossible. But that is the United Nations forecast, creating an "inevitable mismatch between finite resources and exponential population growth … a bubble-like explosion of prices for raw materials." Commodity shortages will be a huge "threat to the long-term viability of our species when we reach a population level of 10 billion" in 2050. Mismatches will trigger disasters: "As the population continues to grow, we will be stressed by recurrent shortages of hydrocarbons, metals, water, and, especially, fertilizer. Our global agriculture, though, will clearly bear the greatest stresses," and more wars. 6. Gates, 'Cap population growth at 8.3 billion:' But still too manyA few years ago Bill Gates and his billionaire friends all agreed, overpopulation was the world's number one problem. The Wall Street Journal said Gates, Buffett, Turner and other billionaires had long been worrying about population problems. Gates outlined a plan to scale back and "cap the world's population at 8.3 billion people, rather than the projected peak population of 9.3 billion," less than the U.N.'s forecasts. Since then Gates has been funding research to develop cheap contraceptions for low-income nations, in an effort to reduce infant mortality, slow population. Other environmental economists warn Earth can't support 8.3 billion. But, can we realistically halt growth fast enough? 7. 'End World Poverty' to end growth on our 'Crowded Planet'Economist Jeffrey Sachs is director of Columbia University's Earth Institute. In his "Common Wealth: Economics for a Crowded Planet," Sachs says our planet can actually support only 5 billion people. Today we have 7 billion, two billion too many. Plus we're consuming natural resources as if we have "1.5 Earths" says the Global Footprint Network group of scientists and economists. Sachs solution: End world poverty. And less than 1% of the GDP of developed countries would do it. America could increase foreign aid from 0.14% to just 0.7% of GDP, less than the 4% GDP spent by the Pentagon. Doing nothing is the worse case scenario. Why? Growth means billions demanding better lifestyles adding greater stress on scarce resources by 300% per person, the equivalent of 6 Earths. But with 7 billion today, 10 billion by 2050, is cutting back to 5 billion just another fantasy? 8. 'De-Growth' scenario: WorldWatch's solution to global disastersDe-Growth is a scary scenario. A recent Worldwatch Institute report, "De-growth Offers Alternative to Global Consumer Culture," warns that "if everyone lived like the average American, according to the Global Footprint Network, the Earth could sustain only 1.7 billion people — a quarter of today's population." WorldWatch also warns: "The window to prevent runaway climate change is closing," and "mitigating global warming will be all but impossible without dramatic reductions in consumption and fossil fuel use." After the tipping point WorldWatch sees coming: "Large population shifts due to natural disasters, such as coastal flooding, prolonged drought, and the introduction of disease" we expect "a future scenario not only incompatible with perpetual economic growth but likely to lead to economic and societal decline." Get it? Perpetual growth is dead. Global De-Growth Conferences are well intentioned, but their solutions will be socialist to American capitalists, as well as too weak and too late to be effective. Worse, De-Growth activists lack the resources to beat global capitalists billionaires. 9. 'War and Disaster scenarios:' Bad endings are inevitableA decade ago the Pentagon warned that "by 2020 warfare would define human life" on the planet." A few years ago InvestmentNews warned that commodity price inflation not only raises "bubble fears" but also increases war threats. More recently, a USA Today editorial warned that a "silent tsunami of hunger washes over poor nations" triggering food riots and political unrest worldwide. Prices are spiraling out of control in fuel, energy and food … Global grain prices were up 250% since 2002, starvation threatens millions living on as little as a dollar a day." Euphemisms aside, war is our history. Yes, whether you like it or not, America is already edging toward a newer, bigger, costlier war: No lessons learned after two exhausting wars the past 11 years, 2.3 million boots in Iraq and Afghanistan, at an estimated cost of $29.7 trillion new debt. Are Americans addicted to war? Bigger budgets? More debt? Austerity? Yes, all scenarios are growth killers. And yet like an addict, we won't stop this insanity, without a disaster. Warning to all you investors, the stage is set. The economic growth trajectory of the last 300 years is ending. You must take action, protect your family. A collapse can happen sooner than you think, spread fast, wide … these nine scenarios are now a perfect storm.
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| Posted: 30 Oct 2012 01:38 PM PDT "Your credit card may soon be worthless." That's the notion being promoted by many in the investment industry these days. They are referring to a new technology that is supposedly Visa's worst nightmare and a threat to the status quo of the credit-card industry worth billions. And they are positioning one small company as the holder of the secret keys to cash in on what is promised to be a multibillion-dollar shift in the way we pay for everything from a candy bar to an oil change. But is it really true? Will this technology really turn the credit-card industry on its head?
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| Posted: 30 Oct 2012 01:33 PM PDT "Your credit card may soon be worthless." That's the notion being promoted by many in the investment industry these days. They are referring to a new technology that is supposedly Visa's worst nightmare and a threat to the status quo of the credit-card industry worth billions. And they are positioning one small company as the holder of the secret keys to cash in on what is promised to be a multibillion-dollar shift in the way we pay for everything from a candy bar to an oil change. But is it really true? Will this technology really turn the credit-card industry on its head? Doubtful. That's because all the popular analysis on the nascent new technology ignores the fundamental underpinnings of all successful technologies. In fact, it ignores basic economics. The supposedly revolutionary technology involves a specialized chip in your cellphone that communicates wirelessly with other devices within very close proximity, in order to pass data between two devices. This "Near Field Communication" (NFC) chip could pass the equivalent of digital business cards between devices – especially smartphones, where it makes the most sense to be deployed – by simply holding them up to each other. Your phone or tablet could be used to identify you when entering a secure business or even your home, as well as to connect to a rental car's speakerphone or access the local Starbucks Wi-Fi, just by waving it near a device that activates the link. Pass two devices within a few centimeters of each other, and voilà , data is moved between them. Thus, the theory goes, you can simply wave your phone by a payment terminal at the gas station, grocery store, or other location where credit cards are accepted. This weekend, I encountered a situation where NFC would have been useful. I was boarding a United Airlines plane, and the passenger in front of me went to swipe her virtual boarding pass across the bar-code reader, only to have it not work. In the time she'd been waiting in line, her screen had timed out. Thus, she was trying to swipe a blank screen over a bar-code reader. Near Field Communication would have alleviated that problem and made it so we were not all held up while the well-meaning woman tried to type in her phone's passcode and bring the browser back up (only to find she had to refresh the page and re-enter her ticket number… leaving us all waiting while the gate agent assisted her). So NFC could be a major improvement for the ticketing and access control industry, given that it works wirelessly and can be completely non-interactive when desired. But does that make it a logical choice for contactless payment, the promised multibillion-dollar opportunity? Many seem to think so, and not just our fellow stock pickers. Germany, Austria, Finland, and New Zealand are among the nations that have trialed NFC ticketing for public transport, allowing users to swipe their phones or NFC-enabled payment cards to grab a ride and get billed later. It's basically EZ Pass without the car, and like EZ Pass, it works well in some closely defined scenarios. But outside of those circumstances, things get messier. Markets dislike messy. So, in order for a new technology to hit the mainstream, it is critically important that one of the players in the value chain today has an overwhelming reason to support the technology. Is that the case here? Today, the overwhelming majority of electronic payments – I'm talking 99% plus – are processed by the credit- and debit-card providers of the world. That's Visa – the 800-lb. gorilla of the industry – MasterCard, and American Express, along with lesser known names like Novus, Star, Maestro, and others from the debit/ATM world. These companies already have well-established networks of equipment, merchants who accept their cards, and businesses and consumers who use them. NFC promises to bring two changes to the industry:
But the consequences of these changes may not be as straightforward as they first seem. Is NFC Another PayPal?The first of those two changes is most unwelcome for the industry's leaders. However, it's one that they've faced in the past, with PayPal and other direct-payment providers. When PayPal began life, it was meant to facilitate direct consumer-to-consumer transfers of money. I sell a trinket on eBay, you buy it, and PayPal moves the money from your bank account to mine for a small fee. Essentially, that's the same business Visa is in. Luckily for Visa, eBay soon experienced a large rise in fraud. The credit-card companies saw a massive opportunity there to put their considerable financial assets and longtime experience dealing with fraudsters to use, and chose to increase the amount of indemnity they provided customers against fraud. They marketed this heavily and drove demand for users to use credit cards instead of PayPal-type accounts online. At the same time, PayPal's potential users also frequently griped about not wanting to sign up for an account and provide a bunch of banking info, just to buy something. So PayPal caved to pressure from sellers on eBay who were losing business to the requirement and made it easy for buyers to just check out with a credit card. While through their website checking accounts are still the default, most of PayPal's business today is as a plain old credit-card merchant-services provider, behind the scenes and unseen, processing credit and debit cards. It also meant that the fees to sellers included both credit-card fees and PayPal fees on most transactions, a double dip that put a serious dent into PayPal's attractiveness to merchants. Other than on sites like eBay (which basically forced sellers to use PayPal), there was little reason for broad adoption. This cut seriously into the account growth at PayPal and reduced its threat as an end run around Visa. Instead, PayPal's success outside of eBay came from making it simple for someone to become a merchant. Signing up for a PayPal account was faster and easier than getting set up with a traditional merchant account. For Visa and company, that was a win, as they had a firm that would get paid to reach a market filled with merchants too small to be reached individually. PayPal transformed from an end run around the payment providers into the world's most popular payment gateway, funneling the overwhelming majority of that traffic right through to the credit-card providers. Threat averted. But providers of NFC-equipped phones, such as Google, are gearing up to provide services similar to PayPal. Google's Wallet software lets a user store multiple cards in a single account and choose the appropriate one to use when checking out. One of the potential options for payment is Google's own Checkout service, which works just like PayPal and does it for less than typical charge-card fees – something merchants could get excited about much the way they did with cheaper debit-card payments. Just swipe your phone and choose the card on your screen (or vice versa), and you are using Google's services to pay and get paid, whether that service is from Visa or directly through Google. This sudden entry into the space by big, powerful, connected companies like Google or Apple (which has yet to load NFC into any of its phones, but has long been rumored to be looking at such an option) – with their preexisting relationships with hundreds of millions of global consumers – into the payment chain is a far more pressing threat than PayPal ever was. These companies don't face the "cold start" problem on registrations, have rabidly loyal fan bases, and reach into nearly every home and business in the industrialized world. On the other hand, they also don't have the expertise to combat fraud, putting them into a potentially risky situation if they fail to do their job effectively. The phone companies – the other potential middlemen which could support putting NFC in the hands of millions of consumers if they thought they could get value out of it – have seen this movie before:
Many times in the past, telephone network operators have tried to insert themselves into the billing relationships of their clients and other parties, and nearly every time it has ended in disaster. Fraud was rampant. Client complaints skyrocketed, boosting costs of keeping customers happy and problem-free. Overall, it was a series of giant headaches, and one would assume that not only did they learn their lesson, but that maybe Apple and Google would learn it from them as well. Payment-card providers have every incentive in the world to prevent adding another middleman – especially one with big influence on consumers – into the equation. They'll do that with a combination of marketing, lobbying, and threatening behind the scenes, doing everything in their power to stop the technology from taking off, unless they control its use and dictate its terms. And those middlemen may just find themselves treading over treacherous paths that their business models have not prepared them for. Wireless SecurityThe other argument for NFC is a technical one. Proponents of the technology say that NFC will be far more secure than the traditional magnetic-stripe card. They point to examples of widespread adoption of "chip + pin" technology in Canada, Europe, and Latin America as evidence that magnetic-stripe cards are faced with fraud problems and that technology can overcome them. NFC is pitched as something far more convenient than the traditional credit card, without the security holes associated with previous wireless payment technologies. Thanks to the interaction between the NFC device and its host (a phone in most cases), layers of security can be added to require passwords, PIN codes, and other protections prior to the credit-card data being sent across to the merchant's payment terminal. Unlike previous wireless technology, the data stream between the merchant and the consumer is encrypted for extra security. However, all this security becomes moot when a device simply transmits that data to an unsecured machine or network. Over the past few years, the overwhelming majority of credit-card theft has happened at the system level. Hackers have done everything from cloning cards – something NFC theoretically could prevent, but more on that below – to hacking hundreds of readers that broadcast card info wirelessly; to breaking into websites, telephone networks, and corporate intranets to steal cards; and even to hacking the networks of large credit-card-transaction aggregators to steal thousands or millions of cards at a time. NFC does nothing to deal with the latter, a far more pressing and larger-ticket fraud than consumer-level security issues today. With consumers educated to protect their cards and indemnified from damages, and lower-level credit-card fraud a well understood and easily policed threat, Visa and company have little reason to get behind NFC, even if it does offer some minor security benefits. This is why only a single bank, CitiBank, and a single card company, the distant third-place MasterCard, have signed on for using the technology. And even they are hedging their bets. "NFC may become really important in the future," says, Ed Olebe, head of PayPass Wallet services for MasterCard. But "we are waiting to see how the industry works out its issues." Enter the MerchantsEven if credit-card companies don't want to see that middleman, won't their direct customers – the merchants who accept their cards – be willing to jump on the bandwagon and push the card providers to support it? Probably not. In order to add NFC, they would need to upgrade their payment terminals. For small businesses leasing the terminals, the account provider would have to foot the bill for the new technology. And with that, they would have to take on more technical support calls for any issues that creep up from adopting NFC, a far more complex technology stack than a magnetic-card reader, or even than a traditional radio-frequency card. That dynamic has always ensured slow adoption of new payment technology for small retailers. For larger vendors – like market-leading retailers and restaurants – the ultimate decision point is checkout time. A busy Starbucks or crowded Target will quickly lose money from frustrated customers who walk away from long lines. So they do whatever they can to optimize the checkout process. Checks are discouraged heavily, as they are the slowest. Cash isn't too bad. But cards – especially now that they have lobbied card companies to do away with signatures on small purchases – are king. NFC potentially complicates the payment chain – especially if advanced security features are used. The point is that the payment providers and most merchants have little real incentive to support this new technology. Their businesses are less complicated and quite secure enough already. Nor are mobile phone companies in the United States apt to jump into this space. Visa and company will firmly protect their turf, squeezing margins from any attempt by mobile providers to insert themselves into the existing payment chain. The AT&Ts and Verizons, with their teams of lawyers, accountants, and economists, will recognize the magnitude of the challenge and are likely to take a pass. Consumer DemandAll of this leaves only consumer demand to drive adoption. If there is enough of that, carriers will have no choice but to accept the technology, and payment-services providers to support it. Sure, carriers will drag their feet. And payment providers may even attempt to fight it, by making it less convenient still than the current system. But if the technology is well designed, widely implemented, and serves a need for the consumer, no matter the business model behind it, it will prevail in the market. Is there any reason why consumers would demand the use of NFC? We are adopting smartphones at an astounding rate, after all. More than 50% of all phones sold in the US are smartphones now, up from low single-digit percentages just five years ago. That's a clear sign that a simple fear of technology is not holding back consumer demand. And we sure picked up on other convenient technologies quickly as well… like Wi-Fi. The reason of course for our adoption of these new devices, and these new wireless capabilities, is that they directly eliminated a pain point or provided an entirely new convenience. Before Wi-Fi, laptops were mostly tethered to a wall. You had to wire your laptop to an ethernet port to get access, rendering your portable computer a digital ball and chain. No sitting out on the porch to work from home on a sunny day. Before the smartphone or tablet, if you wanted to get an email, to see what your friends were up to online, or just to find some news or videos to pass the time, you were stuck flipping open a five-pound laptop. Now it's all in the palm of our hands. Consumers are quick to embrace any technology that makes their life easier. Credit and debit do, and they now comprise nearly 50% of all transactions per person per month, as this pie chart shows: Does NFC similarly provide a benefit or solve a problem? Maybe taking a look at its failed predecessor – RFID – will give us some insight into how high the bar to supplant the credit card actually is. These small Radio-Frequency ID chips – which can transmit a signal from an otherwise inert little device (like a plastic card) when passed near enough to a reader – were the last hot new invention that was supposed to end the supremacy of the magnetic-stripe credit card. You would be freed from the terrible, awful, painful hassle of removing a credit card from your wallet, thanks to RFID. Heck, they didn't even have to be cards. Instead, companies like Mobil gas stations created keychain versions of the same and gave them useful sounding names like "SpeedPass." However, there was a simple logistical problem: most people carry more than one card. If you wanted to simply swipe your wallet or purse by a machine, or even walk through an EZ Pass-for-people-style gateway, how would it tell which card to use? Interference problems from multiple cards notwithstanding, if a reader could get a clear list of all the cards, then it would still have to prompt a customer for their choice of cards… Quick, which of your cards is AMEX …6057 versus AMEX …7221? Again, you have customers reaching into their wallets to avoid confusion and adding to checkout delays. Visit any Target or Starbucks during prime hours and tell me if you think another 30 seconds per transaction would be no big deal. Then pile on the security problems. In theory, anyone with a relatively cheap reader could pass by you on a sidewalk and read your card(s) from the outside. RFID would have all but put pickpockets out of business… at least, the less technically savvy ones. In either event, the answer was to make the devices so low-power that they had to be held up next to the reader to work (still not alleviating the wallet issue, meaning you have to get out a specific card). Needless to say, after one simple look at the problems, merchants weren't exactly beating down the door to install costly new RFID readers in place of their current equipment. It was no better at speeding customers through checkout during busy times, and it was no more convenient. Customers weren't exactly complaining about the failures of their credit cards, and with all the potential problems coming from RFID, the bandwagon for consumers, for merchants, or for payment providers never really filled up. So let's tally up the scorecard for RFID:
Enter NFC to save the day! First, let's tackle those pesky duplicate reads. Few people carry more than one cellphone. Even if they did, chances are they are not going to turn on the NFC features of both, and load them up with payment details. A problem affecting 99% of customers just became one affecting less than 1%. Then there is security. Unlike RFID, NFC transmissions can be encrypted. The two devices that talk – up to a maximum of 20 centimeters apart from each other (a nominal distance intended to limit the chance of accidental cross signals and make spying harder), establish their connection in a few milliseconds, and then set up an encrypted channel to talk through before exchanging any sensitive information, like your credit card number – further reducing the likelihood of that data being intercepted. In addition, NFC Forum, the industry trade group pushing the technology (similar to the Wi-Fi alliance and the Bluetooth working group, each of which helped popularize their respective protocols and create huge businesses in the process), made sure NFC was fully compatible with old RFID tags and reading infrastructure, to accommodate that small number of merchants already invested in RFID readers, like McDonalds. Thanks to the fact that the NFC hardware can store multiple potential payment methods in its secure vault, choice in payment to match the good old-fashioned wallet is restored. And it can do this trick with just one device, prompting you on screen to choose your account of choice (or simply defaulting to a standard payment method until you choose differently). So what's not to like with NFC then? Well, let me ask you a quick question: Has your cellphone battery ever died? Yeah, that's what I thought. After I was done waiting in that United line, I was greeted on the plane by another interesting situation courtesy of the cellphone boarding passes. Once seated, I noted a man being asked again and again by the people around me to leave his seat. He'd sit down, the next person on would tell him it was their seat, and he'd move back a row. Again and again. After some discussion, it turned out that his cellphone battery had gotten him only as far as the door to the plane and then died. He had no idea what seat he was supposed to be in. Upon asking the flight attendant for help, she told him that he would have to wait until everyone was boarded and she could get a copy of the manifest. In the meantime, he was to sit down "anywhere" until everyone else was on board. NFC is intended to address this problem, of course. The electronics in the phone for the NFC are activated not by the phone's battery but by the actual reader, wirelessly. In this regard it works much like RFID. In fact, any NFC reader can read a standards-compliant RFID tag too. Problem solved, right? For the ticketing industry, maybe. But for payments, not so much. More than just transmitting a device ID, the NFC system has to transmit credit-card data. If a phone is dead, that means the NFC system will have to make a choice: transmit the data RFID-style, to any application that requests it without prompting the user; or stop functioning. That's either a pretty big security hole or a pain-in-the-butt inconvenience. Further, have you ever had a hard time getting a program on your computer or phone to work reliably? Or just fumbled trying to find the notification or popup for an application that needs your attention? Now imagine the kind, older woman in front of you in line at Kohl's selecting her payment method on the touchscreen of her iPhone, tapping in the specific PIN code for that card, then swiping her phone across the reader in the time provided. Sure, the workflow can be altered a little. Enter that PIN after swiping, maybe. Or have the PIN entry on the payment terminal like they do today with debit cards – just don't move the phone out of range when you do. The practical implementation of NFC leaves a lot of open questions about security, about complexity, about who ultimately controls the experience – credit-card provider, hardware maker, mobile-network operator, or merchant – and about who handles all the support calls that will result. After all of that, the result is no faster or more convenient than a simple magnetic-stripe card reader. And you introduce the complexities of battery life and other mobile-phone-specific issues to a process that otherwise works great as is. Credit cards took off because they were infinitely safer, more convenient, and faster than cash – all valuable benefits in these harried lives we lead. The debit card made small leaps from there, in cost for merchants and in convenience for the many Americans who have no credit or prefer to use it more cautiously. But NFC – just like RFID before it – provides no real improvement in any part of the credit/debit-card value chain. Almost no one is demonstrably better off for adopting NFC, and thus chances are very low that it will find wide success in the payments industry. There may be other reasons it comes into massive scale adoption – another "killer app" as they say – and that will change the equation down the line. But until then, Visa has little to nothing to fear from NFC. And those other investors hopping on the supposedly multibillion-dollar bandwagon should think long and hard about whether their investment is likely to succeed in the long run. Like many other "revolutionary" technologies before it, NFC just may be a solution in search of a problem. That's precisely the wrong approach to creating a tech breakthrough… but it's one overeager or ill-informed tech investors may fall for repeatedly. But there are big tech breakthroughs on the brink of going mainstream, especially in health care. Learn about one development now, and get in on a great opportunity for expert guidance at prices you likely won't see again. Get all the details now, while this offer is good.
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| A Critical Metals Mixed Bag: Chris Ecclestone Posted: 30 Oct 2012 01:30 PM PDT The Critical Metals Report: With so many players entering the rare earth elements race, you've said it's gone from the Kentucky Derby to something akin to the Gypsy Horse Fair. How can investors make sense of it? Chris Ecclestone: Well, the next phase after the Gypsy Horse Fair is the glue factory. There are more than 300 rare earth companies listed on the Toronto Stock Exchange. Even 200 would be too many. This space should really have 30 public companies, with probably five in production in the next five or six years, while the rest fiddle around exploring. I think there will be a rush of these companies tacking "Gold" onto the end of their names and saying, "Hey, look! We're a gold story now." All the better, too, because the space is overcrowded with non-serious people with very mediocre properties. The amount of capital that was sucked into the vast number of rare earth stocks that have gone nowhere has detracted from the few that are serious players and that are going to get i...
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| Richard Russell - Big News For Silver & Frankenstorm In Stocks Posted: 30 Oct 2012 01:02 PM PDT  Today the Godfather of newsletter writers, Richard Russell, writes about a Frankenstorm in stocks, and the action in gold, but Russell also takes a hard look at what is happening with silver, "... look at the silver stocks now. Something BIG could be brewing." In his latest note to subscribers, here are Russell's thoughts: "OK, I'm ready to turn to the market. It looks to me as though some kind of a large top has formed during late-September and October. But the mystery (there's always a mystery) -- what could this "top" mean? We see the breakdown to 13,039. Ah, and here's the fascinating part of it. What could the market be telling us?"
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| Why The Miners May Outperform Gold After The Election? Posted: 30 Oct 2012 12:50 PM PDT Regardless of who wins the election, we believe that precious metals and especially the undervalued junior miners should be included in one's portfolio. We are living in volatile times, where we see possibly many catalysts to cause a breakout in precious metals. The world has chosen a Keynesian approach which may cause gut wrenching hyper-inflation. Remember Central Banks all over the world are adding to their gold reserves especially emerging nations. Countries such as China is overweight in U.S. dollars and treasuries and have already began buying undervalued natural resource assets and early stage precious metal miners. They are opening banks in Canada and the U.S. to finance natural resource development. The miners are already beginning to outperform both bullion and the S&P 500 and we believe this trend will continue due to favorable fundamentals and seasonality. For the past six months, the silver miners (SIL) and gold miners (GDX) have outperformed. We expect this trend to continue as investors see possible weaker earnings and slowing growth in the large caps yet rising inflation and commodity prices, which benefit the miners. Notice that even during this pause in the rally both the gold and silver miners are holding up well versus the S&P500 and are outperforming bullion. The miners may be forecasting a coming breakout in gold at $1800 or a rotation from large caps to miners. After this breakout look for the large miners with rising share prices to make deals with the cheap junior gold miners for large premiums. Want to read more? Subscribe to my premium service by clicking here…
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| Secessionist Movements: Another Layer of Complexity Posted: 30 Oct 2012 12:40 PM PDT One of the lessons of medieval history (I'm listening to one of those recorded lecture series on the subject this week) is that Europe wasn't always made up of today's familiar countries. Italy, Germany, and Spain in particular started out as a patchwork of smaller kingdoms and principalities that were eventually rolled up by the monarchs with the best armies. This cultural memory of independence lives on in many places, resurfacing in hard times and complicating already complex situations. Spain, for instance, includes several distinct populations, in many cases with their own languages and a sense that, as Texans like to say, they were a country once and might be again. Most Americans have heard of Spain's Basque separatists because they've tended to express their feelings with explosives. But now Catalonia, the country's richest region, is wondering if perhaps it would be better off on its own:
Speaking of northern and southern Europe, the "euro-skeptics" continue to gain ground in national elections:
Some thoughts The question then becomes how far central governments will allow this kind of movement to go. Will Catalonia actually be allowed to leave, or will it be bought off or prevented by force? Will the process encourage the rise of radical parties (like the neo-Nazis in Greece) that may or may not care about autonomy but want other extreme changes in governance? Who knows? Europe is in uncharted waters. The US, meanwhile, has been spared this kind of unrest because the dollar is still functioning as the world's reserve currency. The Treasury can borrow as much as it needs to finance Social Security and Medicare payments and keep defense plants running, which takes enough pressure off of state budgets to avoid eurozone-style financial chaos. But a reserve currency is not a perpetual motion machine. It's a privilege that can be revoked by the market if abused. So our funding crisis is coming (see China, Russia, and the End of the Petrodollar) and once it begins to dawn on Texas and Montana that their hard-won savings are being siphoned off by profligates like Illinois, the idea of just saying no (nullification) or leaving altogether (secession) will start to poll in double digits. And another layer of complexity will be added to an already chaotic decade.
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| Posted: 30 Oct 2012 11:52 AM PDT Jim, Here is a good recap of the countries that have abandoned the dollar as the world's currency in the last few months. CIGA Yahn The Invisible Hand Is A Master of What the Public Ignores CIGA Eric Those frustrated by timing gold have two choices. Remove opinion and emotion by (1) turning Continue reading Jim's Mailbox
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| Your Credit Card May Soon be Worthless, Visa's Days Are Numbered Posted: 30 Oct 2012 11:50 AM PDT Alex Daley, Chief Technology Investment Strategist: "Your credit card may soon be worthless." That's the notion being promoted by many in the investment industry these days. They are referring to a new technology that is supposedly Visa's worst nightmare and a threat to the status quo of the credit-card industry worth billions. And they are positioning one small company as the holder of the secret keys to cash in on what is promised to be a multibillion-dollar shift in the way we pay for everything from a candy bar to an oil change. But is it really true? Will this technology really turn the credit-card industry on its head?
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| Peter Grant: Supply issues offer additional underpinnings to gold Posted: 30 Oct 2012 11:36 AM PDT 1:32p ET Tuesday, October 30, 2012 Dear Friend of GATA and Gold: Peter Grant, market analyst for Centennial Precious Metals in Denver, today notes the production and supply constraints for gold that are likely to support the price. Perhaps his most fascinating detail comes when he quotes geopolitical analyst Jim Rickards as saying that China, which is commandeering the entire production of domestic gold mines, is buying gold mines in Western Australia "faster than lawyers can write the contracts." Grant's commentary is headlined "Supply Issues Offer Additional Underpinnings to Gold" and it's posted at Centennial's Internet site, USAGold.com, here: http://www.usagold.com/publications/2012octsp2.html CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT 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 Join GATA here: New Orleans Investment Conference * * * 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: 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: To contribute to GATA, please visit: ADVERTISEMENT Prophecy Platinum Intercepts Best Pt+Pd+Au Grades Yet Company Press Release 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....
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| Bundesbank Yields Some Confidentiality...But Still Won't Answer Critical Questions Posted: 30 Oct 2012 11:36 AM PDT "We're still sitting here with nothing resolved...especially with the hideous and grotesque short positions in both gold and silver still in place." [COLOR=#7f4028] Yesterday in Gold and Silver It was pretty quiet during Far East trading on their Monday. The high of the day was in shortly after 2:00 p.m. Hong Kong time...about fifty minutes before the London open...and it was all down hill until fifteen minutes after the Comex open in New York. The subsequent rally got capped...and then got sold off once the London p.m. gold fix was in at 3:00 p.m. BST...10:00 a.m. in New York.. Gold closed at $1,709.80 spot...down $1.30 from Friday...and volume was anemic at 60,000 contracts, as most traders stayed home in advance of mega-hurricane Sandy. The silver chart looked identical to the gold chart. Silver's high tick came minutes after 10:00 a.m. Hong Kong time...but after that, silver's price path was a carbon copy of gold's. Silver finished the M...
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| Posted: 30 Oct 2012 11:34 AM PDT London Gold Market Report from Ben Traynor BullionVault Tuesday 30 October 2012, 06:45 EDT THE SPOT MARKET gold price traded just below $1715 an ounce during Tuesday morning's London session, little changed from last week's close, while European stock markets recovered their losses from a day earlier and UK and German government bond prices fell. "Downside targets will be in focus while the gold price stays below the 17 October high at $1753.86," says Commerzbank senior technical analyst Axel Rudolph. The silver price climbed above $32 an ounce shortly after London opened, holding above that level for most of the morning, while other commodities were broadly flat. Markets in the US are due to remain closed for the second day running as a result of Hurricane Sandy. Monday's trading saw gold futures volumes "far below normal", one analyst said, with another adding the market remained "pretty quiet" on Tuesday morning. Press reports suggest that this Friday's US ...
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It is hard to put into words the absolute devastation that we are seeing along many areas of the east coast right now. Boats have been washed ashore, homes have been razed, some coastal roads have been essentially destroyed, and large numbers of people are still trapped in their homes by flood waters. It is being reported that at least 39 people are dead and more than 8 million people along the east coast have lost power. Those without power might not get it back for a week or more. In New York City, an all-time record storm surge of almost 14 feet caused incredible destruction. It is going to take months for New York City to recover, and along the Jersey coast things are even worse. Hurricane Sandy really did turn out to be "
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