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Wednesday, October 31, 2012

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Santilli: Obama Connected to Benghazi; Fake Hurricanes; Rigged Elections

Posted: 31 Oct 2012 09:51 AM PDT

Tonight on the Pete Santilli Show: Pete discusses the $43 trillion dollar law suit that he says is the biggest crime leveled against the American people of all time.В 

He explains the difference between the Dragon Family lawsuit that claims a $1 trillion punitive damage suit and the new lawsuit that is claimingВ  $43 trillion dollars in damages. Pete also states he still strongly believes there is connection between the posting of the Article by CNBC's Vice President Kevin Krim and the murder of his 2 children ….В 

Please tune in tomorrow for special guest Gretchin Cooper a Rochester MinnesotaВ  woman who drove for the Saudi Princess Nura.В  Gretchin tells a tale of decadent spending sprees, lavish living and just how much influence the Saudi's have over local law and politics when they come to America.В  It is a story you won't want to miss.

from petersantillitv:

~TVR

ECB : increase of oz752,24 in gold and gold receivables

Posted: 31 Oct 2012 09:46 AM PDT

Is This The Black Swan That Will Make Gold Skyrocket

Posted: 31 Oct 2012 09:44 AM PDT

from kingworldnews.com:

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."

Keep on reading @ kingworldnews.com

Richard Russell – Big News For Silver & Frankenstorm In Stocks

Posted: 31 Oct 2012 09:40 AM PDT

from kingworldnews.com:

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?"

Keep on reading @ kingworldnews.com

Surprise: Canadian Economy Shrinks

Posted: 31 Oct 2012 09:39 AM PDT

By MarketPulse FX:

By Dean Popplewell

The Canadian economy unexpectedly shrank by 0.1 percent in August from July, pointing to slower growth in the third quarter than in the first half of the year and supporting a Bank of Canada message that interest rate hikes are less imminent.

The surprisingly poor performance prompted economists to mark down their forecasts and sent the Canadian dollar skidding to a session low against its U.S. counterpart.

The Canadian economy recovered more quickly than most from the global recession, and is set to grow at slightly more than 2 percent this year despite uncertainty from the choppy U.S. recovery and the European debt crisis.

The dip was the first monthly fall in GDP since February, and was largely caused by decreased production in the natural resources sector – oil and gas extraction and mining – as well as in manufacturing, Statistics Canada said on Wednesday.

Maintenance work


Complete Story »

Turk – 2nd Time Germany’s Gold Has Gone Missing From Fed

Posted: 31 Oct 2012 09:33 AM PDT

from kingworldnews.com:

This is the fourth and final of a series of blockbuster interviews with James Turk covering missing central bank gold. Turk spoke with King World News about a rather stunning event which took place at the Federal Reserve gold vault in the 1920s, and yes, it once again involved Germany's missing gold.

Here is what Turk had to say: "There is an interesting thing I read a few months ago. It was an autobiography of the President of the Reichsbank, who was President (of the Reichsbank) back in the 1920s. His name was Hjalmar Horace Greeley Schacht."

Keep on reading @ kingworldnews.com

Euro Loses Momentum As Wall Street Reopens

Posted: 31 Oct 2012 09:14 AM PDT

By FXstreet:

A spike of risk appetite took the euro and stocks higher on Wednesday as U.S. markets reopened after 2 days of inactivity due to the storm Sandy. The euro rose above 1.3000 against the dollar to a 6-day high of 1.3020, also helped by relatively benign eurozone data. However, as North American investors rejoin, the optimism started to fade with U.S. stocks retreating after a positive open.

Euro fails to hold above 1.3000

So another day and the same rangebound, directionless pattern persist for the shared-currency. Even though the short-term outlook turned more positive, the bigger picture remains unclear: EUR/USD continues to trade inside its 1.2800/1.3170 range since mid-September while Europe struggles to put an end to the crisis and U.S. is headed toward presidential elections. EUR/USD was last at the 1.2970 zone, still up 0.1% on the day.

The Rabobank analyst team notes that while risk appetite has lifted


Complete Story »

Sinclair Calls Confiscation at $3,000 Rumor Nonsense

Posted: 31 Oct 2012 08:48 AM PDT

The "Mr Gold" of the 1970s and former adviser to the Hunt Brothers, Jim Sinclair is hopping mad over rumors that gold might be subject to confiscation above $3,000, something that happened in the US in the 1930s but would be totally impossible in the modern world.

PIMCO Says Don't Forget Emerging Market Bonds In Your Portfolio

Posted: 31 Oct 2012 08:45 AM PDT

By Emerging Money:

Pacific Investment Management Company (PIMCO) is out with a very compelling call on emerging market corporate bonds. The rationale goes that, since the economic crisis in the developed world four years ago, the fiscal and economic strength of emerging markets is looking extremely attractive to big money managers.The problem is that, due to record low rates around the globe and increased demand, bonds issued by emerging market governments are not yielding as much as they have historically. Further, because of their new relative strength compared with developed nations, more emerging market governments are issuing debt in local currencies. Money managers typically favor dollar-denominated debt for its security against inflation and devaluations in emerging markets.

Enter emerging market dollar-denominated corporate debt

As late as 2000, emerging market sovereign debt made up approximately 80% of total issuance. Since 2003, emerging market corporations have issued the majority of debt and the forecast for


Complete Story »

U.S. of A(sia) - United to Weaken the Dollar?!

Posted: 31 Oct 2012 08:42 AM PDT

Merk Fund

Gold confiscation rumor, by Jim Sinclair

Posted: 31 Oct 2012 08:41 AM PDT

“If Obama Gets Re-elected Gold Is Going To Go Through The Roof”

Posted: 31 Oct 2012 08:25 AM PDT

Stephen Flood's GoldCore writes this morning:

Gold inched up on Wednesday but traders remain cautious ahead of the nonfarm payrolls report and the imminent US presidential election.

The devastation of Hurricane Sandy will be a further blow to the already fragile U.S. economy. The destruction of property and vital infrastructure - two of the vital components in the wealth of a nation is negative for the economy. The last thing the over indebted families and close to default U.S. government needs are more very expensive reconstruction works. Reconstruction and 'stimulus' has to be paid for either by the tax payer in the form of taxes or a further increase in the money supply and inflation. 

Event risk is high with the aforementioned issues including a change of power in China and multiple policy meetings at various central banks.

Today, the September eurozone unemployment figures released were 11.6% up from 11.5% in August. 

The US fiscal cliff involving steep government spending cuts and tax hikes looms in January and is likely to support gold at these levels and lead to higher gold prices in the coming weeks.

Violence in South Africa's mining industry continues.  The police fired tear gas and rubber bullets on strikers and protesters at top platinum producer Amplats today.

The Financial Times had an interesting article that suggested that Mitt Romney is a "threat to the gold price" (see news) and quoted an executive in a jewellery group who said that "if Obama gets re-elected gold is going to go through the roof."

The truth is that, gold is likely to go much higher in the course of the 45th President's 4 year term - whether there is a President Obama or a President Romney.

The article suggested that gold investors would vote for Mitt Romney due to concerns about "potential" currency debasement and the US government's indebtedness and that the Republican Party's rhetoric of deficit reduction appeals to them:


Gold Spot $/oz, 20 Days – 30 Minutes – (Bloomberg)

"It is therefore ironic that the single greatest risk to gold at the moment is probably a Romney victory in next Tuesday's presidential elections.

"A win by Romney is generally seen by investors as a downside risk for gold," says Joni Teves of UBS. "Nobody wants to do anything until the elections are out of the way." 

A surprise win by Romney could lead to very short term gold weakness but the scale of the fiscal and monetary challenges facing the White House and Federal Reserve mean that the down side risk is short term and limited and investors should continue to fade the noise and focus on the long term diversification benefits of gold.

The FT continues

"History supports the case. As James Steel of HSBC notes, gold's most dramatic rallies – in 1980 and 2011 – have occurred with Democrats in the White House (Jimmy Carter and Barack Obama). And if Mr Romney can succeed in bringing down the deficit, that could lead to a stronger dollar and therefore weaker gold."

History supports the case somewhat. It is important to point out that gold rose for the 8 years of George Bush's Republican Presidency. Many gold buyers would be concerned that Republican rhetoric regarding deficits is just that - rhetoric.

"But the real "Romney risk" for the yellow metal has nothing to do with fiscal policy. Instead, traders and investors are focusing on the likelihood that if Mr Romney wins the November 6 election, he would replace Ben Bernanke with a more hawkish chairman of the Federal Reserve when the latter's term expires in January 2014.

If that means a change in direction from the Fed's current experimental and super-accommodative monetary policy, gold could suffer. Recall the sharp sell-offs earlier this year when expectations of quantitative easing were deferred."


Gold Spot $/oz, 01 November 2010-31 October 2012 – (Bloomberg)

Gold will not suffer when there is a change and a move away from ultra, ultra loose monetary policies. As was seen in 1980, gold's secular bull market is likely to end if the Federal Reserve again achieves positive real interest rates.

As was seen in 1980, gold will only fall towards the end of the interest rate tightening cycle - this could take many years. 

"Likewise, an Obama victory may be the green flag gold bulls have been waiting for."

The 45th U.S. President is less relevant to the gold price than the wider global monetary, macroeconomic, systemic and geopolitical fundamentals - all of which remain extremely positive for gold.

October 31, 2012 (Source: GoldCore)

http://www.goldcore.com/goldcore_blog/%E2%80%9Cif-obama-gets-re-elected-gold-going-go-through-roof%E2%80%9D

Vegas Reconnaissance, Plus, Looking for a Few Good Mercenaries

Posted: 31 Oct 2012 07:45 AM PDT

We received a nice note recently from Live Feed member Chip M. Here is the gist:

 Glad I found Mercenary Trader although I can't remember how I did… You guys have made a lot of money for me and although I don't track such things 100% you have never lost me MUCH money. Your approach to risk is the same as mine — you manage losses well and keep them small.

Yup, that's our modus operandi. It is very hard to take a Mercenary's money…

As general rule, we look for asymmetric risk/reward opportunities and keep a very tight rein on the downside, which in turn lets us take larger positions (in relative terms) and scale aggressively into winning trends.

These markets have been rough — no one has to be convinced of that. But we're proud to say a number of Live Feed members have been with us from the very beginning or close to it — going on two years now — and of course we're deeply appreciative of that loyalty (which comes in response to what we've delivered).

It's our plan to keep making the Feed better, stronger, and more powerful. We have been consistently rolling out "upgrades" and added features every few months or so and have no intention of stopping.

If you would like to test drive the Live Feed for 14 days — and lock in the current rate (which can only rise) for two years — you can do so here.

We recently took a trip to Las Vegas to attend the Alternative Asset Summit… and to play our fair share of poker while there. The Vegas poker landscape has definitely changed…

The new Aria poker room — and the Aria hotel where we stayed — was deserving of its strong reputation. Practically the whole room is devoted to No Limit, with 1-3, 2-5, and 5-10 games spread across two dozen tables.

While there, we saw name brand poker pros like Tom "Durrr" Dwan and Phil "poker brat" Hellmuth on multiple occasions. (If you don't know these players, their exploits are worth checking out on youtube. Dwan is known for bluffing hundreds of thousands of dollars in high stakes cash game pots. Hellmuth is an entertaining crybaby who just won his 13th WSOP bracelet.)

But can Aria lay claim to being the best poker room in Vegas? Nope. Although it was close on some measures, we give that distinction to the Wynn.

The Wynn poker room edged ahead on a couple measures:

~ While every room had reliable free wifi — important when you are doing research at the table — the Wynn's was blazing fast.

~ In addition to $3 per hour comp rates for 2-5 and up, the Wynn has installed electric plug charging docks for every seat at the table. (Talk about catering to gadget junkies!)

~ More importantly, the buy-in cap on the Wynn 2-5 game is $1,500 whereas the Aria 2-5 cap is $1,000… and the Wynn 5-10 buy-in has no cap at all (whereas Aria 5-10 is capped at $3,000).  These larger buy-ins are far more advantageous for experienced players.

What about the Venetian and the Bellagio? Truth be told, they weren't even in the running (for best poker room title)… the Venetian is no longer a destination for serious no limit cash game players. Word is that the Venetian has really "tightened up" on the no limit side, as a function of action players gravitating to Aria and the Wynn. (A nice example of self-reinforcing trend: The more the Venetian develops a reputation for being "nitty," the more it becomes so.)

The Venetian also did something strange with the lights. They turned the brightness way, way up — almost to the feel of a bus terminal or a nightclub after closing time.

And as for the Bellagio: As broad-shouldered guys both above six feet tall,  we refuse to play there on general principle… they pack you in at the Bellagio like sardines.

The Venetian does still have excellent tournaments multiple times per year (with structures far more attractive than most World Series events)… but as for No Limit, the Wynn comes out on top.

Sticking with poker for another round or two, Stephen Y. writes:

I used to play a fair bit of 5/10 poker (for the usual buyin of $500-$1000). But occasionally if the game looked good, I would step up to 10/25 or 25/50 (Fallsview Casino on Canadian side of Niagara Falls) and buyin for the min which was around $1500.

The thing I noticed was that I could play this stack quite effectively and profitably, but that if I had a good run of cards and built this stack up (to say $8000) that my game would deteriorate.

I knew that my game was deteriorating, and I knew that fear and uncertainty were the source of the deterioration, the difficult challenge (as you have written about in other articles) is trying to understand and change yourself and overcome the fear.

Again, I love your website, just wish I had more time to devote to it (and poker)…

Ah yes, the issue of relative bet size, and a tendency to anchor on absolute dollar amounts. Many poker players and traders face it. Below a certain threshold, it's all Fonzie (cool). But go much above that, and Fonzie leaves the diner…

We would argue it is much more than fear, though, that constrains a short-stacked player in a high variance game.

Having written at length about the connections between trading and poker, another connection, which winds up being a source of great irony, is as follows:

The average poker player, like the average trader, is dramatically undercapitalized.

This undercapitalization creates significant opportunity for other, more deeply capitalized players who can exploit it.

When 8 or 9 grossly undercapitalized players sit down at a table (a common occurrence), the mutual disadvantage is neutralized, as such that none of them really see it.

But when a deep stacked player comes along — equipped with the knowledge of how to use that stack — it is like a tomcat sitting down with mice…

It is astonishing, but also understandable, why so many players sit down with buy-in amounts way too small for the games they play. From a casual perspective, we would estimate the average 2-5 player sits down with $600 or so and the average 5-10 player with $1,000 to $1,500 (right in line with what Stephen suggested).

To engage in theoretically correct play, we estimate these amounts should be, literally, four to eight times bigger. (Even if a game is capped, one can play the capped stack like a much larger stack, with the money in one's pocket effectively considered in play. It is the size of your average bet that matters. A $1,000 stack can be played like a $5,000 stack if one makes $200 and $500 bets and casually replenishes, and so on.)

There are multiple reasons for this capitalization gap. We could give a two-hour lecture (literally) on poker theory and capitalization, and why the average poker player is at a great disadvantage mentally and logistically due to not having enough chips (and willingness to play them).

To condense the argument, perhaps the key problem with undercapitalization is as follows:

  • Proper bet sizing is a function of pot size first and foremost.
  • The majority of players size their bets far too small.
  • They do this, as a general rule, because their stacks are too small.

The smaller your stack in relation to the average pot, the less ability you have to bet properly, and comfortably, as a matter of strategic habit.

Consider, for example, a moderately active 2-5 game where the average pot size (for a healthy pot) is $250.

If you want to win a pot with a river bluff against a medium-strong opponent– and believe he can be pushed off — what is a good sized bluff to get the job done?

Betting half the pot won't do it, because a 50% pot bet gives your opponent 3 to 1 odds.

If you bet $125 into a $250 pot, he only has to call $125 to win $325. That is easy enough to do with top pair, as the breakeven rate on the call is just 25%.

A 100% pot bet is much more likely to push your opponent off the hand, especially if he has a weak kicker, fears two pair or a set, or has an extra fear aversion to larger dollar-amount bets (as many players do).

But a 100% pot bet for a $250 pot is, drum roll please, $250. If you are only playing $600, that is more than 40% of your stack! And this is for a move that should be casual… that you only need to work 55% of the time or so (as anywhere above +50% it is profitable)… given this, how in the world does anyone sit 2-5 for just $600?

Answer: They play badly, in terms of betting too small… or missing numerous positive expectation opportunities to bluff… or getting themselves "all in" committed prematurely… or all of the above, all of which reduces net profit over time.

At 5-10 the math gets even worse, because the typical 5-10 game is not twice as big as the typical 2-5 game… it is often four times as big.

When you bump to 5-10 the blinds double, but the aggression level more than doubles. In a 5-10 game, a healthy pot can run $1,000 or so. And sometimes the best move is not just to 75-100% bet a pot, but to overbet it – to bet 25 or 50% more than the pot. (Most players never do this — except with the nuts — but nor do most players win long-term, so what does that tell you?)

That means that, at 5-10, to play for optimal EV, or max profit, you have to have the ability to make $500, $1,000, and even $1,500 bets — single bets mind you, not shoves, just theoretically correct value bets and bluffs — as a matter of course if you are going to implement optimal play.

If you limit your ability to do this, you are playing too small (relative to profit potential)… but of course this is what most players do… they bet suboptimal amounts on a constant basis because they are always significantly short-stacked (relative to max EV play).

Nor does the above even touch on the implied power of having a deep stack behind you, or the volatility pressure one can place on opponents via routinely large bets… when a player with a $500 stack makes a $200 bet, the attitude of the deep-stacked player is "why not call, it's only $300 more." But when a player with a $5,000 stack makes a $200 bet, there is a possibility that thousands more could be coming.

And then of course there is variance… just this past weekend yours truly (Jack) had a $1,000 swing in a 2-5 game — down $1,000 in the first three hours, making it all back in the next three.

Nothing extraordinary or exceptional about this, just a normal outlier in an active game… but you must have the ability to withstand fluctuations like this without losing your cool, without losing your weapons, and without losing access to theoretically correct play (which means not being undercapitalized!).

It's no surprise that Mercenary Trader caters to a somewhat exclusive audience… most traders, let alone most investors, don't have time for all this theoretical stuff. We love it, though — and we plan to develop a lot more material on position sizing and trade management in future — because this is the stuff that makes a difference.

Academic theory, as we are fond of pointing out, is all too often pointless. But theory intertwined with practice, and tempered by real world result, can be very, very powerful.

This is why, at some point in the next 12-18 months, Mercenary headquarters may relocate to Las Vegas…

As you have likely guessed, poker has been very good to us. But poker's potential remains barely tapped… this is in part thanks to the competitive nature of today's card rooms. The majority of poker rooms today (and all the big ones in Vegas) have excellent free wifi, with speeds matching what is available at one's home or office, and are open to iPads and mini-laptops at the tables.

This enables us, as Mercenaries, to double dip at the tables — doing research and staying on top of markets and publishing duties in between hands. (Guess where this piece is being written?)

We mentioned lack of capitalization as a poker epidemic. Lack of understanding in respect to theoretically correct play is also an epidemic. By our casual estimate, ninety percent of players — and that includes those who consider themselves "grinders" and "pros" — do not actually understand the theoretical underpinnings of the game.

The poker books out there don't help. Most of them are garbage. The good ones provide hints and clues, but don't crystallize the whole picture. And one of the biggest problems — capitalization — can't be addressed by the poker books anyway. If you told the average player how big of a bankroll they actually needed to handle 2-5 or 5-10 right, they would choke.

There is a tremendous amount of "dead money" in Vegas, just waiting for the properly capitalized (and properly trained) player to scoop it up. This also includes many of the young internet players who think they are god's gift to poker. But they fail to realize that getting lucky and winning a $25,000 or $50,000 bankroll in a single lightning strike poker tournament has nothing to do with actual deep skill cultivation. Most of the would be "ballers" who move to Las Vegas with dreams of cash game domination will lose their entire stake in less than two years.

And we as Mercenaries, being Mercenaries, will be there to exploit this opportunity…

For the past year or so we have been actively developing a No Limit cash game methodology. Similar to a trading methodology, this cash game methodology is comprehensive. It covers all aspects of the game, and is rooted in foundational, theoretical principles that have been discovered and verified through countless hours of play.

The scope of this opportunity is tied to the reality of how unbelievably bad the typical undercapitalized, unaware player is… and this includes the vast majority of players at high stakes as well as small stakes games. (Those players who have money tend not to have theory, and tend to play rife with mistakes, which makes them even juicier targets.)

Quite frankly, if we had heard secondhand about the scope of profit potential in cash game poker, we would not have believed it. The "too good to be true" result had to be empirically tested, and verified, again and again…

We call the methodology "Maker 5.0″ — 5.0 is the current version number – with Maker being short for "Maker Taker," as certain aspects of the approach were inspired by the rebate nature of electronic trading networks.

The truly beautiful thing is, the Maker methodology has potential to dominate tournaments as well as cash games. After all, cash game players are known to be better than tournament players as a general rule… and if the cash game side is this bad, well…

Apart from anecdotal potential, we have reason to believe that Maker could cultivate a huge edge in tournaments (again in accordance with well developed theory). We have yet to really test drive Maker in tournament settings, largely because small buy-in events (below $1,000) are generally not worth our time.

But we will be putting Maker to the tournament test soon…

So here's where things get really crazy (circling back to the reason we are sharing this)… 

Legendary trend follower Richard Dennis, along with his partner William Eckhardt, conducted a famous experiment in which he taught a group of market beginners his trading methodology. They called this group "the turtles" because Dennis had seen baby turtles growing in vats in Singapore, and believed he could grow trend following traders in the same way.

The turtle experiment, of course, was a huge success. The turtles went on to book gargantuan profits — a handful still running hundreds of millions to this day.

We think we can grow poker players like this — not pure poker players, but full-time market analysts who become part of "team Mercenary" and fan out across the Vegas 2-5 and 5-10 tables, while simultaneously fulfilling their salaried research commitments.

The idea is to stake each member of "team Mercenary" with enough of a cash bankroll to start at 2-5… teach them the Maker methodology inside and out… and have them start generating $50 an hour (give or take) at the 2-5 tables, before moving up to $100-$200 an hour at the 5-10 tables.

Rather than get paid a percentage of cash game profits, however, these profits will then be rolled into major tournament buy-ins ($1,500… $2,500… 5K, 10K etc.), at which point large scale cashes will be split (on a pre-agreed ratio) between the Team Mercenary member and Mercenary itself.

Thus creating the potential for an analyst to earn hundreds of thousands within a reasonably short space of time… deploying Mercenary capital and the Mercenary methodology to poker as well as markets.

What kind of individual would it take, though, to pull off the above? If anything, our requirements for talent, drive and discipline will be higher than the original turtle requirements.

Such an individual would have to maintain all their duties as a top notch market research analyst — while simultaneously absorbing the distraction of the tables, executing the Maker methodology correctly, and avoiding the sins of excess so readily available in Vegas (or at least keeping them in check).

Another reason we like this program is because the temperament required for poker excellence is very similar to the temperament required for trading… to be a winning poker player you must be sharp, you must be observant and focused, you must be rational and logical, and you must be emotionally steeled in the face of variance. What's more, poker actually enhances these qualities, meaning, the more passion you put into playing optimally, the faster you cultivate such qualities, even if they did not previously exist in natural abundance.

So in this sense we are looking for a few good Mercenaries… it is our intent, over the next few years, to meaningfully expand the Mercenary analyst team… and to enroll those in "team Mercenary" who wish to participate.

Do you have what it takes to be a Mercenary analyst? Would you be okay with the idea of eventually working out of Las Vegas, reporting to work on the 25th floor of a luxury high rise, and doing a good portion of your work with the clink of chips around you, as you learn poker simultaneously with trading?

We don't have any formal hiring dates or an official number of spots available. Our basic goal at this point is to start building a dialogue with exceptionally talented individuals… and see where it goes from there.

To get an idea of the type of analytical capability we are looking for, read the chapter on Cornwall Capital in Hedge Fund Market Wizards. After reading that chapter specifically, contact us via Jack@ or Mike@ and we'll see what happens.

Does the above mean we are shifting our focus away from trading? Oh no, not in the least. The poker opportunity — scooping up tens of thousands per month in Vegas cash games, via "Team Mercenary", and parlaying it into six-figure tournament scores, with multiple team members to smooth the equity curve — is only one aspect of our long-run vision.

In terms of profit opportunity and capital structures, there is something we think of as a "liquidity pyramid."

The base of the pyramid represents the highest liquidity, highest turnover profit maximization strategies.

At each level up in the pyramid, opportunities grow less liquid, but larger in scope. And thus, ultimately, with all engines firing and team Mercenary built out to five or ten individuals, the potential annual profit generated by the liquidity pyramid looks like this:

  • Cash game opportunity and tournament parlays: single-digit millions.
  • Highly liquid trading strategies (as practiced in the Live Feed): 10 million plus.
  • Less liquid, longer term deep value and special situation opportunities: 100 million plus.
  • Large scale macro opportunities on the scale of the 2007 subprime crisis… who knows?

Yes, we're just a wee bit ambitious. But why not? It's all good as long as you're having a blast doing it… and you only live once, so why think small?

And of course, you don't have to become a Mercenary analyst to enjoy the ride with us… as our scope of opportunity expands, we look forward to ever more interaction with our fellow traders, investors, and Mercenary community members — sharing knowledge and ideas and research… sharing and cultivating new trading skills… and having an absolute blast while doing so, in beautiful locales all around the world.

Viva Las Vegas!

p.s. Like this article? For more, visit our Knowledge Center!

p.p.s. If you haven't already, check out the Mercenary Live Feed!


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Gold "Now in Consolidation Phase", US Markets Prepare to Open Again

Posted: 31 Oct 2012 07:42 AM PDT

Bullion Vault

Why do the Germans want their gold back?

Posted: 31 Oct 2012 07:02 AM PDT

Why do the Germans want their gold back?

Commentary: There's something reassuring about physical money

By Matthew Lynn

LONDON (MarketWatch) — Where does Germany keep its gold reserves? It might sound like a silly question. In Germany, of course. Probably in a very deep vault somewhere in Frankfurt, surrounded by the best security systems that Teutonic technical brilliance can create.

As it turns out, however, that is the wrong answer.

Much of the German gold, the second largest national reserves in the world, is held in New York, London and Paris. Now there is a campaign under way in Germany to bring the metal back home — and it is gathering strength all the time.

That tells us three things about the global monetary system, none of them especially reassuring.
The German gold reserves are among the most significant in the world. The country controls 3,396 tons of the stuff. That is a lot less than the United States' 8,133 tons, but then Germany is a smaller country, and it has never had the world's reserve currency. It is a lot more than the 2,451 tons held by the Italians or the 2,435 tons held by the French.

Much of it was built up under the old Bretton Woods system that operated from the end of World War II until 1971. Trade deficits and surpluses were settled by central banks in gold, and since Germany regularly ran big surpluses it ended up with a lot of the metal.

But most of it was not held in Germany itself. Much of it was held abroad, mostly in the U.S., U.K. or France. An estimated 66% is held at the New York Federal Reserve, 21% at the Bank of England, and 8% at the Bank of France. The old West Germany was on the front line of the Cold War and if the Russians had ever invaded their tanks would have headed straight for the bullion vaults. There was no point in leaving such a tempting target open to attack.

With the Cold War a distant memory, many Germans want the gold returned to their own country. A campaign called 'Bring Back Our Gold' has gathered significant support. Politicians and the popular press have jumped on the bandwagon.

Earlier this month the German Court of Auditors demanded that the Bundesbank audit its official gold holdings, and called for the repatriation of 150 tons in the next three years so that its quality can be inspected. As anyone who has ever bought some gold jewelry in a market will know, there are all kinds of tricks that an unscrupulous dealer can get up to — all that glitters is not necessarily gold.

And while it takes a fairly fevered imagination to speculate that staff at the Federal Reserve or the Bank of England have been nipping down to the vaults and replacing the German gold with some ingots they picked up at a souk in Cairo, the hysteria around the issue is growing so intense an audit is now judged necessary.

The Bundesbank doesn't usually give in to popular pressure – it is not that kind of institution — but last week it put out a statement attempting to reassure people the gold was safe and promising to check on the stocks held abroad.

The cargo planes are not quite being loaded yet. But within the next five years, it is a fair bet that some new vaults will be needed in Frankfurt and some space will be going spare in New York and London.

What does the campaign tell us about the state of the global economy? Three things.
One, this generation of Germans is far more assertive about their national interest than their parents were. For 50 years, most Germans were anxious to show they were citizens of the world. They dealt with post-war guilt by signing up for every international body available. Now they are quite happy to be citizens of Germany, and to stand up for their own interests.

Two, trust in financial institutions is dwindling all the time. Central banks built up a system of debits and credits because it was easier to move gold around on a ledger than to move it around on trucks. There are few more tempting targets for thieves, after all, than a cargo of ingots.

So it made sense for German gold to be stored elsewhere. But now people no longer trust those systems. They are increasingly unhappy with assets that are simply recorded on a bank's balance sheet somewhere; they want something physical they can see and touch. That is true of national gold reserves, but it is increasingly true of other assets as well.

Thirdly, and most importantly, German sentiment is hardening against the single currency with each month that passes. After all, what is a whole vault full of gold in the basement of your central bank good for exactly? Starting a new currency, of course. And, er ... that's about it.

There's nothing else you can do with it. In the most extreme circumstances, if the euro broke down chaotically, and national currencies were bought back overnight, one of the key things the foreign exchange markets would look at when putting a value on the new deutschemarks, lire or francs would be the amount of gold the central bank could back it with. That gold would seem a lot more valuable if it was held in your own country rather than a foreign one.

The campaign to bring back the German gold is in reality a campaign to bring back money that people can trust. The political establishment might not have caught up yet. But popular opinion believes it was sold a dog when it joined the euro /quotes/zigman/4867933/sampled EURUSD +0.23% , and is already looking forward to the day when it escapes responsibility for endless bailouts of its neighbors.

Yet it is hardly confined to Germany. Distrust of central banks rigging the monetary system is spreading from country to country. There will be many staging posts in the long road back to some form of gold-backed money — and the German campaign is just the beginning.

Matthew Lynn is a financial journalist based in London. He is the author of "Bust: Greece, the Euro and the Sovereign Debt Crisis," and he writes adventure thrillers under the name Matt Lynn

http://www.marketwatch.com/story/why...ack-2012-10-31

Gold 'Now in Consolidation Phase' as Markets Re-Open

Posted: 31 Oct 2012 06:39 AM PDT

Wholesale gold bullion prices rallied to a one-week high at $1,720 an ounce Wednesday morning in London, though they still looked set to record a loss on the month, while European stocks opened higher before losing some ground.

FT: Bullion 'Through the Roof' if Obama Wins

Posted: 31 Oct 2012 05:57 AM PDT

Gold inched up on Wednesday but traders remain cautious ahead of the nonfarm payrolls report and the imminent US presidential election. The devastation of Hurricane Sandy will be a further blow to the already fragile U.S. economy.

Where Should Gold Be Based On Inflation?

Posted: 31 Oct 2012 05:15 AM PDT

John Embry: The Gold Bull

Posted: 31 Oct 2012 05:13 AM PDT

John Embry discusses why:
Gold supply WILL NOT keep up with demand
The public entry into gold has not even started yet
Huge "paper gold" holdings are only about 1% real gold deliverable

from mcalvanyfinancial:

~TVR

Indian Festivals, Greece & Election Hold Keys to Gold

Posted: 31 Oct 2012 04:50 AM PDT

Some buying on dips was seen as gold futures bounced decidedly off the $1,700 handle. Gold-backed ETF holdings are still at a record high level while there are signs that physical demand has increased in India and China.

Metals, Crude Oil Aim Higher on Buoyant Sentiment

Posted: 31 Oct 2012 04:39 AM PDT

Commodity prices are on the upswing in European trade amid a broad-based advance in risk appetite. Sentiment-geared crude oil and copper prices are following stocks higher while gold and silver are finding de-facto support.

All the Gold in the World...

Posted: 31 Oct 2012 04:13 AM PDT

I have some bad news: Gold will never be the world's money again. For all the gold bugs out there hoping that we'll go back to a gold standard, this might come as a shock to you. But there's just not enough of the stuff.

Gold and Silver Market morning, October 31, 2012

Posted: 31 Oct 2012 04:00 AM PDT

Der Spiegel Snickers About Germany's Gold But Avoids the Serious Questions

Posted: 31 Oct 2012 03:10 AM PDT

¤ Yesterday in Gold and Silver

With New York closed for the second day in a row, there wasn't much price action yesterday, either.  But what there was is worth noting.

The low price tick came about 8:30 a.m. Tokyo time...and then began a sustained rally of sorts starting around noon in Hong Kong.  The high tick of the day came shortly after the Comex open...and it was, as they say, all down hill from there...despite the fact that the dollar index was only part way through its decline.

Gold closed at $1,709.00 spot at the 5:15 p.m. close of electronic trading...down 80 cents from Monday.  Volume was only 61,000 contracts...give or take.

It was pretty much the same story in silver, except the rally in that metal didn't begin in earnest until after the 8:00 a.m. BST London open.  The high tick came shortly after noon in London, which may have been a late silver fix.  From there, prices didn't begin to seriously decline until shortly after trading began in New York.  Then, like gold, silver got sold off into the close of electronic trading.

Silver closed at $31.75 spot...down a penny on the day.  Volume was also very light...only 16,500 contracts.

The dollar index opened at 80.23 and...by shortly after 1:00 p.m. Hong Kong time...had hit its zenith at 80.27.  From there, it went into a slow decline all the way down to its low of the day at 79.84...and that point came around 11:15 a.m. in New York.  From its nadir, the dollar gained back about 9 basis points going into the close...and finished the trading day at 79.93...back below the 80.00 mark once again.

The rallies in gold and silver pretty much followed the decline in the dollar index in lock step...but that happy state of affairs ended shortly after the Comex open...as an obvious not-for-profit seller showed up and sold the metals down for the rest of the day.  This despite the fact that the decline in the dollar index was not done until two hours later...and the subsequent recovery was anemic.

Once again there was no HUI or Silver Sentiment Index. The Toronto Stock Exchange gold index closed up less than a percent...and a quick peek at the silver stocks I track indicates that they basically finished in the plus column as well.

The CME's Daily Delivery Report showed that 126 gold and 2 silver contracts were posted for delivery within the Comex-approved depositories on Thursday, November 1st.  The biggest short/issuer in gold was the Bank of Nova Scotia with 124 contracts...and the biggest long/stopper was JPMorgan with 78.  The link to yesterday's Issuers and Stoppers Report is here.  November is not a traditional delivery month, so these small numbers for First Day Notice are no surprise.

Once again...and not surprisingly...there were no reported changes in either GLD or SLV...and the U.S. Mint had no sales report, either.  The Comex-approved depositories showed no change as well.

I have three new charts for you today...and all are courtesy of Nick Laird, for which I thank him on your behalf.  They show the Comex silver inventories of the 'Big 3' bullion banks.  I haven't posted the charts for the other three depositories, as they are privately owned...and are not part of the silver and gold price management scheme.  The charts are for HSBC USA, Bank of Nova Scotia/Scotia Mocatta...and JPMorgan Chase.  If you want to put names to the biggest of the short holders in both silver and gold, it's my opinion that these three banks are it...with Citigroup in a very distant fourth place.

(Click on image to enlarge)

(Click on image to enlarge)

(Click on image to enlarge)

Carefully note how fast JPMorgan Chase has built up their inventories since becoming an approved depository...particularly since the end of Q1/2012.  One has to wonder how much of that silver is being held for customers...and how much is being held in their proprietary trading account.

I don't have a lot of stories today...and I'm always happy when I'm in that situation.

Because of the situation in New York, it was very easy to push prices around...and that's what JPMorgan Chase et al did.
Jim Sinclair: Gold confiscation rumor control. Peter Grant: Supply issues offer additional underpinnings to gold. James Turk: This is the second time Germany's Gold has gone missing from the Fed.

¤ Critical Reads

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Hurricane Sandy "Frankenstorm" Photos

I had several readers sent me photos of the aftereffects of the super storm...but the ones that were in posted on the dailymail.co.uk Internet site yesterday were the best.  I thank Australian reader Nick Laird for sending me these photos that were posted in a British newspaper of the disaster in New York.  The World Wide Web is an amazing place!  The link is here.

View full GSD edition

S&P cuts Argentina deeper into junk territory

S&P lowered the country's rating to B- from B, deep into junk bond territory, and appended a negative outlook on the rating, a warning that another rating cut could come within a year if conditions in the Argentine economy worsen.

S&P said the New York appeals court ruling against Buenos Aires on the treatment of some of its debt, along with other recent debt-related actions by the Argentine government, "highlight the increasing challenges the government will likely continue to face to design its economic and debt management policy".

The agency also said it thought policies put in place since the October 2011 presidential election "could, over time, increase the risk of a deterioration in the country's macroeconomic framework, put pressure on its external liquidity, and weaken its medium-term growth prospects".

Another bond default is obviously in Argentina's future somewhere.  I thank Roy Stephens for sending it.  It's from the telegraph.co.uk Internet site...this one posted very late yesterday evening GMT...and the link is here.

View full GSD edition

UBS bankers in London head for the pub after being turned away at office door

UBS bankers in London were turned away from their offices on Tuesday and handed a letter putting them on "special leave", just hours after the Swiss bank unveiled a radical restructuring to axe 10,000 jobs.

It was only when the UBS bankers had their passes refused that they realised they could be out of a job. Instead of being allowed into the bank's City headquarters the traders were whisked to special offices on the fourth floor where they were handed an envelope containing details of the redundancy process.

"They said we would be getting two weeks paid leave and then we will be told what is to happen. I expect we'll just get a call from human resources or lawyers telling us how much we are worth. We won't be able to talk to our bosses."

This story was posted on the telegraph.co.uk Internet site early yesterday evening GMT...and I thank Donald Sinclair for sliding it into my in-box just minutes before I hit the 'send' button on today's column.  It's a must read in my opinion...and the link is here.

View full GSD edition

Spain's economy shrinks 0.3pc as VAT rise hits consumers

The economy, which only emerged from the last recession at the end of 2010, has now contracted for five straight quarters, data from the National Statistics Institute showed on Tuesday.

The downturn has had a devastating impact on the job market where the unemployment rate hit a new high of 25.1pc between July and September.

The fall in output in the three months to the end of September was slightly less than the central bank's estimate last week of a 0.4pc contraction, though Estefania Ponte at Cortal Consors said that any suggestion that that marked an upturn was "a mirage".

"It does not mean the economy is doing better, but only shows the families have brought forward purchases ahead of the VAT [Value Added Tax - Ed] hike," she added.

This story was posted on the telegraph.co.uk Internet site yesterday morning GMT...and I thank Roy Stephens for his second story in a row.  The link is here.

View full GSD edition

Amendment Alarms Opposition: Hungary's Orbán Cements His Power With New Voting Law

It rained blue paper in the Hungarian parliament in Budapest on Monday evening, when members of the green liberal party Politics Can Be Different (LMP) threw slips of paper at the government benches in a reference to the infamous "blue-ballot" rigged elections of August 1947. Back then, activists from the Hungarian Communist Party (MKP) exploited a system of blue chits to travel round casting votes in dozens of different places, allowing the MKP to gain a majority.

The Hungarian opposition fears a similar fraud might occur under Viktor Orbán's ultra-conservative nationalist government. His ruling Fidesz party (Alliance of Young Democrats) used its two-thirds majority in parliament to amend the constitution to allow citizens to vote in elections only if they register in advance either in person or electronically.

Opposition parties and activists see the move as an attempt to keep poorer voters who are unlikely to be Fidesz supporters away from the ballot boxes. They also accuse the government of paving the way for election fraud.

This story was posted on the German website spiegel.de yesterday...and I thank Roy Stephens for his third offering in a row in today's column.  The link is here.

View full GSD edition

Francois Hollande pushes for 160pc rise in beer taxes

President Francois Hollande is pushing through legislation to increase taxes on beer by 160pc to help fund struggling social programmes as France tries to contain a budget deficit hit hard by the economic crisis.

The tax would affect local brews and the 30pc of imported beer the French drink, AP reported.

The change means the price of a beer will increase by about 20pc in bars and supermarkets, said Jacqueline Lariven, spokeswoman for the French brewer's federation Brasseurs de France.

The Brewers of Europe trade group called the measure a "kick in the teeth", especially since brewers have seen beer production plummet by 6pc and consumption by 8pc in the EU since the region's economic crisis began in 2008.

This is Roy's fourth story in a row in today's column.  It was posted on The Telegraph's website early yesterday evening GMT...and the link is here.

View full GSD edition

India's Chidambaram Irked as Subbarao Defies Call for Rate Cut

India's central bank resisted calls from Finance Minister Palaniappan Chidambaram for lower interest rates, prompting him to say the government will revive economic expansion by itself if necessary.

Governor Duvvuri Subbarao kept the repurchase rate at 8 percent to damp price increases, while reducing the cash reserve ratio to 4.25 percent from 4.5 percent to support lending, the Reserve Bank of India said in Mumbai yesterday. Borrowing costs have remained unchanged since a 50 basis-point cut in April.

Chidambaram called for cheaper credit earlier this month to back a government push to spur growth, and pledged on Oct. 29 to contain the budget deficit as officials try to increase scope for a rate cut. While the monetary authority signaled it may ease policy in January-to-March as inflation cools, the finance minister said boosting the economy is already a key task.

"Growth is as much a challenge as inflation," Chidambaram told reporters in New Delhi after the Reserve Bank's decision. "If government has to walk alone to face the challenge of growth, then we'll walk alone."

This Bloomberg story, filed from Mumbai and New Delhi, was posted on their website during the lunch hour Mountain time yesterday...and I thank West Virginia reader Elliot Simon for sharing it with us.  The link is here.

View full GSD edition

Hong Kong Intervenes for Peg for Fifth Time in Two Weeks

The Hong Kong Monetary Authority sold its own currency for the fifth time in less than two weeks to preserve a 29-year-old peg to the U.S. dollar.

The central bank added HK$2.71 billion ($350 million) to the banking system in Hong Kong yesterday as the currency reached the upper limit of its trading band, according to a spokeswoman for the HKMA, who declined to be identified because of her organization's policy. That followed a $603 million intervention on Oct. 19, the first time since 2009, and a combined $1.25 billion on Oct. 23. 

Funds are flowing into Hong Kong after the U.S., Europe and Japan introduced policies to stimulate their economies and data signal China's growth slowdown is abating. Last month, the Federal Reserve unveiled a third round of quantitative easing and Europe announced bond-buying plans, spurring capital inflows into emerging markets. The Bank of Japan (8301) expanded its asset- purchase program for the second time in two months yesterday.

The HKMA said it expects net inflows into the currency will continue "for a period of time," according to an e-mailed statement yesterday. "We will remain closely vigilant of the situation and to maintain the exchange rate stability in accordance with the currency board mechanism," it said.

This Bloomberg story was filed from Hong Kong on Monday...and was posted on their website late last night Mountain time.  It's Elliot Simon's second story in a row...and the link is here.

Four King World News Blogs/Audio Interviews

Posted: 31 Oct 2012 03:10 AM PDT

Four King World News Blogs/Audio Interviews

The first is with James Turk...and it's headlined "2nd time Germany's Gold has Gone Missing from the Fed".  Next is Richard Russell...and it bears the title "Big News for Silver, But a Frankenstorm in Stocks".  And lastly is the blog with John Hathaway and Bill Haines that's entitled "read more

Hong Kong Intervenes for Peg for Fifth Time in Two Weeks

Posted: 31 Oct 2012 03:10 AM PDT

Hong Kong Intervenes for Peg for Fifth Time in Two Weeks

The Hong Kong Monetary Authority sold its own currency for the fifth time in less than two weeks to preserve a 29-year-old peg to the U.S. dollar.

The central bank added HK$2.71 billion ($350 million) to the banking system in Hong Kong yesterday as the currency reached the upper limit of its trading band, according to a spokeswoman for the HKMA, who declined to be identified because of her organization's policy. That followed a $603 million intervention on Oct. 19, the first time since 2009, and a combined $1.25 billion on Oct. 23. 

read more
at

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