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Saturday, November 3, 2012

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Renminbi Relentlessly Replacing Dollar As Reserve Currency

Posted: 03 Nov 2012 11:40 AM PDT

It is no secret that China is replacing the U.S. dollar with its own currency in more and more of its bilateral trading. It's apparent to all that the renminbi will soon have (at least) a co-equal status with the dollar as the global "reserve currency". Yet what is rarely if ever discussed in the mainstream media are the enormous economic repercussions of a world suddenly awash with a massive glut of surplus dollars.

In most respects economics mirrors one of the basic principles of physics: for every action there is an equal-and-opposite reaction. If farmers produce a bumper-crop of wheat and supply soars, then the price falls. Similarly, if (for some reason) the demand for wheat suddenly collapsed, the price would also fall – as both a jump in supply and/or a plunge in demand result in the same state: abundant/excessive supply. And the consequence of excessive supply is always a fall in price.

This economic "physics" applies in an identical manner to the world of currencies…eventually. In a global economy ever more corrupted by serial market-rigging; nowhere is this manipulation more blatant than in the world's forex markets. Indeed, the world's nations have openly declared that they are all competitively engaged in currency-manipulation; as denoted by the euphemistic term "competitive devaluation."

For new readers, let me quickly summarize the (for lack of a better word) "principle" behind competitive devaluation. Through destroying the value of one's own currency, the wages of workers (in real dollars) are driven steadily toward zero, and so (supposedly) this will allow a nation to under-cut its trade partners and export more goods.

The sick joke here is that with all nations destroying the value of their currencies (and the wages of their workers) simultaneously, no nation gains any "advantage" and the wages of workers are being destroyed for no reason whatsoever. This does, however, produce the paradigm of all currencies simultaneously falling in value, only the rate of decline of this paper-destruction varies.

This is why any time we see some talking-head refer to a currency as "rising in value", it is an implicit admission that the person has no understanding of the global economy. If two people jump off the roof of a 100-storey building at the same time, and (while on the way down) one individual climbs on top of the shoulders of the other; that person hasn't "risen", he will merely go "splat" on the pavement a millisecond later.

The collapse in value of our paper currencies is accomplished through our morally/intellectually bankrupt central banks flooding the world with this (un-backed) paper. In other words, the entire global economy is already drowning in an ocean of these paper currencies. It is thus little surprise that these same central banks are now swapping their own paper for gold at the fastest rate on record.

It is in this context that we see a shift taking place where the U.S. dollar as (current) reserve currency is being steadily replaced by the renminbi. Some numbers here are in order. A recent article in China Daily noted that for much of Asia the renminbi is already the reserve currency.

A "renminbi bloc" has been formed in East Asia, as nations in the region abandon the U.S. dollar and peg their currency to the Chinese yuan…

And now seven out of 10 economies in the region – including South Korea, Indonesia, Malaysia, Singapore and Thailand – track the renminbi more closely than they do the U.S. dollar…

According to the latest report by the Society for Worldwide Interbank Financial Telecommunication, or SWIFT, renminbi-denominated trade accounted for 10 percent of China's total foreign trade in July. The figure was zero just two years ago.

From July 1 to August 31, global payments in the renminbi rose 15.6 percent, according to Swift as payment in other currencies fell 0.9 percent on the average… [emphasis mine]

Top 5 Stocks With Insider Buys Filed During The Week Ending November 2

Posted: 03 Nov 2012 08:10 AM PDT

By Markus Aarnio:

I screened with Open Insider for insider buy transactions filed during the week ending November 2. From this list, I chose the top five stocks with insider buying in dollar terms. Here is a look at these five stocks:

1. Regis Corporation (RGS) is the beauty industry's global leader in beauty salons, hair restoration centers and cosmetology education. As of September 30, 2012, the company owned, franchised or held ownership interests in approximately 10,000 worldwide locations. Regis' corporate and franchised locations operate under concepts such as Supercuts, Sassoon Salon, Regis Salons, MasterCuts, SmartStyle, Cost Cutters, Cool Cuts 4 Kids and Hair Club for Men and Women. Regis maintains ownership interests in Empire Education Group in the U.S. and the MY Style concepts in Japan.

(click to enlarge)

Insider buys

Birch Run Capital purchased 1,975,002 shares on October 31 - November 2 and 551,883 shares on August 30 - September 4.


Complete Story »

Is a Central Bank Gold Run at Hand?

Posted: 03 Nov 2012 06:42 AM PDT

Is a Central Bank Gold Run at Hand?
On learning that French gold was being held by the U.S. Federal Reserve, French President Charles de Gaulle is reported to have said, "I could hardly sleep easily with such an arrangement." So in 1965 he ordered French navy ships to cross the Atlantic to pick up $150 million in gold held in the Fed's New York vaults and deliver it to the Banque de France in Paris.

It was a prudent move by de Gaulle. And it was consistent with the advice I have long given: Do not leave your gold in the care of somebody else. Take physical possession of your gold.

De Gaulle realized the United States was running an international con. It had promised that holders of U.S. dollars would always be able to redeem them for gold at the official rate of $35 per ounce. But like someone writing bad checks, it was clear that the U.S. was printing more dollars than it could possibly redeem at that rate.

De Gaulle was ahead of the pack. But before long other nations figured out the same thing and began demanding gold for the dollars they held. Soon Washington began to hemorrhage gold as it faced demands to redeem tens of billions of its paper dollars.

It was nothing less than a run on the U.S. gold bank …

On a single day in March 1971, 400 tons of gold were taken from the exchange mechanism, the London Gold Pool, forcing it to close. By August, President Nixon closed the gold window entirely, essentially defaulting on America's explicit promise of dollar convertibility.

Germany Demands Accountability
Like France, Germany has had bitter national experience with the hyperinflation of fiat currency. It should not be surprising if both nations are sensitive bellwethers when funny money business is afoot. Now we are beginning to learn about steps Germany has been taking consistent with troubling questions today about the world's central banks and the gold entrusted to their vaults.

In the (U.K.) Telegraph, Ambrose Evans-Pritchard reports a German court has ordered an inquiry into gold purportedly held for Germany in London, Paris, and New York:
The German Court of Auditors told legislators in a redacted report that the gold had "never been verified physically" and ordered the Bundesbank to secure access to the storage sites.
It called for repatriation of 150 tons over the next three years to test the quality and weight of the gold bars. It said Frankfurt has no register of numbered gold bars.
The report also claimed that the Bundesbank had slashed its holdings in London from 1,440 tons to 500 tons in 2000 and 2001, allegedly because storage costs were too high. The metal was flown to Frankfurt by air freight.
It may be that an audit will prove all of Germany's gold in foreign central banks can be accounted for. It may have been that France's gold would have been safe for decades in the hands of the Federal Reserve. But an environment like ours, toxic with monetary risk, demands good stewardship.

What Have Central Banks Done with the People's Gold?
Recently I wrote an article questioning whether or not central banks have the gold they say they do. Even if the bullion is in inventory, there are pressing questions about who may hold actual title to the gold, whether it has been loaned, pledged, swapped, or sold.

The Telegraph alludes to the issue of title as well, reporting the German court's action "follows claims by the German civic campaign group 'Bring Back our Gold' and its U.S. allies in the Gold Anti-Trust Committee that official data cannot be trusted. They allege central banks have loaned out or 'sold short' much of their gold."

Asking if gold bars are actually in place is a question of inventory. Questions about title are issues that should be answered by a thorough audit. But there remain equally justifiable concerns about the authenticity of the gold held by central banks, and other depositories for that matter.

Another concerning topic is fake gold. It is by no means a marginal issue, but one that is serious enough that this year, for the first time, some of the U.S. gold held by the New York Fed has been subjected to being drilled for assay samples to test for purity. No results have been released.

Closing Thoughts
Those who showed up after August 15, 1971 with U.S. dollars they hoped to exchange for gold were too late. But de Gaulle knew there was something fishy about U.S. monetary practices well before Nixon defaulted on America's gold promises. In today's troubled environment, Germany is acting like its monetary senses are tingling.

There are warning signs aplenty for Americans that monetary conditions are growing more fragile by the day and that the fiat dollar will not last. It would be nice to know that at least the people's gold assets are secure.

In any case, remember this lesson:

Do not leave your gold in the care of somebody else.
Take physical possession of your gold.

Another farce of a jobs report/Massive raid on silver and gold/

Posted: 03 Nov 2012 06:34 AM PDT

Bundesbank Official Assures NY Fed That Gold Issue Will Go Away

Posted: 03 Nov 2012 06:15 AM PDT

¤ Yesterday in Gold and Silver

It was pretty quiet during Far East and early London trading...and by the time the jobs numbers were posted at 8:30 a.m. Eastern time, the gold price was down about eight bucks or so.

The initial hit at that point was only a bit over ten bucks, but the real engineered sell-off began about 10:15 a.m...about fifteen minutes after a very quiet London p.m. gold fix...and it was all down hill from there until the 1:30 p.m. Comex close.  The low tick of $1,673.80 spot came right at that moment.

There wasn't a lot price activity after that...and the gold price closed at $1,676.90 spot...just off its low, down $38.10 from Thursday's close.  Net volume was just over 201,000 contracts...a big number, but I was hoping for bigger than that.

The silver price chart looks like the gold price chart...and requires no further embellishment from me.  The low tick, also at the Comex close, checked in at 30.73 spot.

Silver closed the Friday trading session at $30.91 spot...down 1.35 on the day.  Net volume was pretty chunky at around 54,000 contracts but, like gold, I was expecting a bigger number than this.

Here's the 5-day dollar index chart.  As you can see, the low for this 'rally' came on Wednesday morning...11:20 a.m. GMT in London, 7:20 a.m. in New York, to be precise.  There was no net change in the dollar during the Wednesday trading day...and the dollar index only rose 8 basis points on Thursday.  On Wednesday and Thursday, the gold price barely moved.

The dollar index opened in Tokyo on their Friday morning at 84.04...and closed yesterday at 80.55...up 51 basis points.  Between the Tokyo open and the 8:30 a.m. New York jobs numbers, the dollar index was up about 26 points...and gold was down about eight bucks.  From 8:30 a.m. until the 1:30 p.m. Comex close, the dollar rose another 19 basis points...and gold got hit for another thirty-three bucks.

I'd guess that pretty much all of yesterday's price action in all four precious metals was an engineered event, including what happened at 8:30 a.m. in New York.  The dollar index and the jobs number were just fig leafs for "da boyz" in New York to hide behind as they did the dirty.

The gold stocks got hit pretty hard...gapping down about two percent at the open...and then worked their way lower for the rest of the day.  The HUI closed on its absolute low, down 4.50%.

The silver stocks didn't do well, either.  But, with silver down a bit over 4 percent on the day, it could have been worse...much worse.  Nick Laird's Silver Sentiment Index was only down 3.60%.  But note what's really important here...despite the fact that silver is down almost five bucks from its October 1st spike high...the shares have traded flat over the same period...as you can tell by the tiny insert graph in Nick's SSI chart labeled "Latest Month".  Strong hands are buying every share that weak hands are selling.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that 9 gold and 8 silver contracts were posted for delivery within the Comex-approved depositories on Tuesday.  I'd guess that the rest of the November delivery month will be pretty quiet.

There was no reported change in GLD...but there was a small withdrawal of 137,275 troy ounces out of SLV, which may or may not have been a fee payment of some kind.

The U.S. Mint had a somewhat more substantial sales report yesterday.  They sold 13,000 ounces of gold eagles...and 200,000 silver eagles.

The Comex-approved depository did not receive any silver on Thursday...but reported shipping 377,884 troy ounces out the door.  The link to that activity is here.

The Commitment of Traders Report for positions held at the close of Comex trading on Tuesday was another big surprise.  Both gold and silver showed increases in their respective Commercial net short positions...something I wasn't expecting.

Because it was so busy in the bullion store on Friday, I only had a few seconds to talk to Ted Butler...but he mentioned that the headline numbers were deceiving...and it was what was going on 'under the hood' that mattered.  I'll buy that...but I'll be more than interested in how Ted explains it in his commentary later today.

In a nutshell, the Commercial net short position in silver increased by 1,767 contracts, or almost 9 million ounces...and the net short position in gold increased by a fairly large 9,901 contracts...almost a million ounces.  Yesterday I mentioned that, based on the price action, both Ted and I were expecting a smallish decline in the Commercial net short positions.  That obviously did not happen.  But why?  I'll let you know when I find out from Ted, as he's the only real expert in these matters.

But no matter what he has to say, this sell off that began during the first week of October, is not shaping up like the 'normal' engineered price decline that preceded it...at least not from a COT perspective, especially silver.

I had a reader from Croatia send me a little something yesterday...and I thought it worth sharing.  This is what he had to say in his covering e-mail..."Dear Ed, I found "the most important graph" (KWN discussion with Egon von Greyerz, GSD, Nov. 2) slightly inaccurate in terms of proportion. Therefore, I constructed my own graph, by using Egon's data."

My too-cute-for-words photo of a sleeping ocelot kitten in this space last Saturday brought a response from Calgary, Alberta reader Russ Gerrish.  He and his family are very proud of their Bengal cats...both mom and 4-month old kitten...and here are three photos.  I'd never heard of this breed before...and their markings are quite smashing, but not surprising considering the source animal.

Since this is my Saturday column I have more stories than normal, so I hope you have the time over what's left of your weekend to at least skim them all.

Are we done yet? I doubt it, but a bottom is near...it just remains to be seen how long JPMorgan et al drag this out.
Jeffrey Lewis: The great precious metals managed retreat. Is a Central Bank Gold Run at Hand? Kazakhstan National Bank's gold reserves increased by 30 percent. The Ultimate Credit Card? Solid gold, with 26 diamonds!

¤ Critical Reads

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Con Ed Says 'Vast Majority' Will Have Power Restored By Next Weekend, Nov. 10-11

The effort to restore power to those impacted by mega-storm Sandy will apparently take longer than initially hoped.

Con Edison said Thursday that it expects to "restore the vast majority of customers who lost power by the weekend of Nov. 10 and 11. The remaining customer restorations could take an additional week more."

As a reminder, a Con Ed "customer" is not necessarily an individual – it can be an entire building.  That said, Con Ed said it anticipated having power restored to customers in Lower Manhattan by Saturday.

Con Ed said some 900,000 customers lost power due to the storm in New York City and Westchester County.  Some 250,000 customers have had power restored, with roughly 650,000 to go.

This story was posted on the CBS New York website on Thursday afternoon...and I borrowed it from yesterday's King Report.  The link is here.

View full GSD edition

Stock certificates feared damaged by Sandy

Trillions of dollars worth of stock certificates and other paper securities that were stored in a vault in lower Manhattan may have suffered water damage from Super-storm Sandy.

The Depository Trust & Clearing Corp., an industry-run clearing house for Wall Street, said the contents of its vault "are likely damaged," after its building at 55 Water Street "sustained significant water damage" from the storm that battered New York City's financial district earlier this week.

The vault contains certificates registered to Cede & Co., a subsidiary of DTCC, as well as "custody certificates" in sealed envelopes that belong to clients.

The DTCC provides "custody and asset servicing" for more than 3.6 million securities worth an estimated $36.5 trillion, according to its website.

This story was posted on the CNN website just before lunch on the East Coast yesterday...and I thank reader "David in California" for sending it.  It's worth reading...and the link is here.

View full GSD edition

Former Goldman Sachs man say GFC lessons not learned

Once a high flyer for Goldman Sachs, Greg Smith now says the company's culture has turned for the worse while the industry issues that led to the Global Financial Crisis are unchanged.

This 7:03 minute video interview come courtesy of the Australian Broadcasting Corporation...and I thank Australian reader Wesley Legrand for sharing it with us. The link is here.

View full GSD edition

Country Club Sopranos

You wouldn't know it by watching the news or reading the paper, but America's banks are on the largest crime spree the country has ever known. Let's go to the highlight reel, shall we?

In July, Wells Fargo paid a $175 million settlement after the feds caught its brokers systematically pushing minority customers into mortgages with higher rates and fees, even though they posed the same credit risks as whites.

One study found that Wells Fargo charged Hispanics $2,000 more in what the Justice Department called a "racial surtax." The bank docked blacks nearly $3,000 extra for their own improper pigmentation.

But despite a colossal civil-rights fraud perpetrated against 30,000 customers, the settlement amounted to just .011 percent of the San Francisco bank's annual income. It was like forcing a $30,000-a-year working stiff to pay a $240 fine.

This longish article, posted on the houstonpress.com Internet site on Thursday, would certainly meet with the approval of Matt Taibbi over at Rolling Stone magazine.  There are no punches pulled in this 4-page article that I consider a must read.  I thank Washington state reader S.A. for bringing it to our attention...and the link is here.

View full GSD edition

U.S. Elections: Will the Dead Vote...and Voting Machines be Hacked

In a fascinating article in Harper's Magazine (October 26, 2012) Victoria Collier notes that in the old technology, election theft depended on the power of machine politicians, such as Louisiana Senator Huey Long, to prevent exposure. 

With the advent of modern technology, Collier writes that "a brave new world of election rigging emerged." The brave new world of election theft was created by "the mass adoption of computerized voting technology and the outsourcing of our elections to a handful of corporations that operate in the shadows, with little oversight or accountability. This privatization of our elections has occurred without public knowledge or consent, leading to one of the most dangerous and least understood crisis in the history of American democracy. We have actually lost the ability to verify election results."

The old ballot-box fraud was localized and limited in its reach. Electronic voting allows elections to be rigged on a statewide and national scale. Moreover, with electronic voting there are no missing ballot boxes to recover from the Louisiana bayous. Using proprietary corporate software, the vote count is what the software specifies. 

This article is a must read for all American voters before they cast their ballot on Tuesday.  Dr. Paul Craig Roberts is always controversial but, in my opinion, just about always right on the money as well.  I consider this essay to be no exception.  I thank reader William Gebhardt for sending it along...and the link is here.

View full GSD edition

Doug Noland: Sandy, Bernanke and Money

We're today in the midst of the manic financial Bubble phase.  Especially here in the U.S., the markets will finance virtually anything.  There's hardly a junk bond the market doesn't love.  CDOs are back.  Relatively higher-yielding municipal debt induces salivation.  There are, then, no worries regarding the ability to finance Sandy recovery and rebuilding efforts.  Costs really don't matter.  Wealth destruction is basically irrelevant.  If it's "money" that's needed, well, we've got the Bernanke Fed.  And why not just rebuild on the water's edge and buy cheap federal flood insurance.  "Broken windows," broken subways, broken transformers, broken communication hubs, and broken neighborhoods are sure to incite a borrowing and spending boom.  Dr. Bernanke's "mopping up" strategy in action.

Yet caution is in order.  There will be more storms, some weather-related.  And there will come a post-Bubble environment and a profoundly altered backdrop.  Previous Credit excesses, suspect debt and market revulsion will make it profoundly more difficult to finance all types of spending.  Deeply entrenched structural shortcomings will have surfaced conspicuously.  And, importantly, I would expect previous consumption-based borrowing and spending excesses to restrict the system's ability to finance needed investment and infrastructure projects.  Along with economic structure, market confidence really matters.

Doug spends most of Friday's column discussing Hurricane Sandy and its effect on high finance, credit...and risk.  As always, Doug's weekly Credit Bubble Bulletin posted over at the prudentbear.com Internet site is worth reading if you have the time.  I thank reader U.D. for sending it along...and the link is here.

View full GSD edition

Doug Casey vs. James Carville vs. Charles Krauthammer

This video debate took place at the 2012 New Orleans Investment Conference about ten days ago.  It runs for a bit over an hour...and I thank Atlanta, Georgia reader Ken Hurt for sharing it with us.  It's posted over at

Jeffrey Lewis: The great precious metals managed retreat

Posted: 03 Nov 2012 06:15 AM PDT

Jeffrey Lewis: The great precious metals managed retreat

Writing today for Resource Investor, Jeffrey Lewis of Silver-Coin-Investor.com notes the irony that even though we're "in the age of the LIBOR scandal, Financial Accounting Standards Board mark-to-market rule changes, high-frequency trading programs front-running retail investors, MF Global's dramatic demise, and Bernie Madoff's outrageous Ponzi scheme ... it continues to be taboo to even entertain the idea that the precious metals markets could actually be managed."

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The Ultimate Credit Card? Solid gold, with 26 diamonds!

Posted: 03 Nov 2012 06:15 AM PDT

The Ultimate Credit Card? Solid gold, with 26 diamonds!

A Visa card produced in Russia is now available for some of Kazakhstan's richest clients. It is made from solid gold and is encrusted with 26 diamonds.

Wow, you just know that the world's money and power base is shifting from Europe and the U.S. when you read stories like this.  Thirty years ago, this would have been unheard of.  I thank Washington state reader S.A. for sending me this 26 second video clip from Bloomberg yesterday...and the link is here.

Kazakhstan National Bank's gold reserves increased by 30 percent

Posted: 03 Nov 2012 06:15 AM PDT

Kazakhstan National Bank's gold reserves increased by 30 percent

Share of gold in the gold and currency reserves of Kazakhstan's central bank has increased by 30 percent from the beginning of the year, Tengri News reports citing deputy chairman of Kazakhstan National Bank Bissengali Tadzhiyakov as saying at the plenary meeting of Majilis (lower chamber of the Parliament).

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Italy loses gold jewellery exporter top spot

Posted: 03 Nov 2012 06:15 AM PDT

Italy loses gold jewellery exporter top spot

Italy has lost its position as the world's premier gold jewellery exporter, overtaken by India and the United States, and risks slipping further due to its high cost base and tariff barriers.

For years Italy was the world's biggest manufacturer and exporter of mass-produced and crafted gold jewellery. Bulgari, Damiani and Roberto Coin are Italian luxury brands celebrated worldwide for their opulent use of gold and precious gemstones and cutting-edge designs.

But the Italian goldsmith sector is fighting an uphill battle against punitive import duties imposed by markets such as China, and competition from lower cost producers benefiting from improving design skills and the latest technology.

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2 Attempts At Finding The Silver Lining In The Midst Of Weak Earnings From The Energy Sector

Posted: 03 Nov 2012 05:04 AM PDT

By Matt Schilling:

When a company in any sector is downgraded, such an action tends to result in a sell-off unless there is significant news countering such behavior. On Friday, November 2nd, two companies within the energy sector were downgraded and, as a result, I wanted to examine each firm a bit further in an attempt to find the proverbial silver lining for long-term investors.

Fluor (FLR) - The Irving, Texas-based firm which "provides engineering, procurement, construction, maintenance, and project management services worldwide," reported pretty dismal Q3 Earnings ($0.86/share vs. estimates of $0.96/share) on Thursday and as a result was downgraded from 'Outperform' to 'Neutral' by Robert W. Baird on Friday. The firm noted, "in addition to FLR's disappointing Q3 the expected pick-up in activity levels appears to have been pushed to the right, with backlog likely to trend lower as mining projects burn off."

Is there a silver lining in terms of


Complete Story »

Chris Ecclestone Picks Latin American Gold Plays

Posted: 03 Nov 2012 02:23 AM PDT

By The Gold Report:

Who better to guide investors through the often tumultuous and politically charged jurisdiction of Latin America than Chris Ecclestone? A mining strategist with Hallgarten & Co. in London, Ecclestone founded the Argentina-based equity research firm Buenos Aires Trust Company, which he ran for nearly 10 years. In this interview with The Gold Report, Ecclestone details the potential and pitfalls of different provinces for gold miners.

The Gold Report: The Hallgarten website says, "Over the years, the team has successfully picked trends using our macroeconomic underpinnings to guide investors through the treacherous waters of the markets." Could you give us a couple of trends that retail investors could take advantage of?

Chris Ecclestone: The chief trend I see is a change in the nature of this gold market recovery. Production is going to be king. In 2009, cash was king after the economic crash. Now it's production. If a company doesn't


Complete Story »

Cosmos Chiu Finds Mining Opportunities Around The World

Posted: 03 Nov 2012 01:41 AM PDT

By The Gold Report:

Cosmos Chiu, a director and research analyst with CIBC in Toronto, focuses on midtier gold producers, but his coverage gives him a leg up on truly understanding royalty companies' assets. In this interview with The Gold Report, Chiu talks about how much longer royalty companies could continue to outperform the rest of the market, while also discussing companies he follows in some of his favorite jurisdictions.

The Gold Report: Gold spiked to about $1,800/ounce [oz] after the latest round of quantitative easing was announced. It was at about $1,700/oz recently. What's responsible for gold's recent price weakness?

Cosmos Chiu: If you look back, the month of October is usually the weakest month of the year. Because investors look at it as a seasonably weaker month, there's less demand. That has held true this year as well.

TGR: Could gold finish the year higher than where it is now?

CC: Different


Complete Story »

Priceline And TripAdvisor - Great Companies, Not Great Values

Posted: 03 Nov 2012 01:29 AM PDT

By George Kesarios:

Priceline (PCLN) and TripAdvisor (TRIP) both announced earnings Thursday and Friday, respectively, and both stocks were on the move. Priceline was up about 9% and TripAdvisor up by 20% Friday.

Before we proceed, I want to remind readers that not all companies, no matter how good they are, make investors money. In order to make money, you have to buy at the right price and many times at the correct time. And also, many times you have to go against the herd.

Let's start with Priceline. As per the company's Q3 release:

Third quarter gross travel bookings for the Group, which refers to the total dollar value, generally inclusive of all taxes and fees, of all travel services purchased by consumers, were $7.8 billion, an increase of 25.2% over a year ago (approximately 34% on a local currency basis).

The Group had revenues in the 3rd quarter of $1.7 billion,


Complete Story »

2 Discount Stores To Strengthen Your Portfolio

Posted: 03 Nov 2012 01:15 AM PDT

By BH News Wire:

Over the next six months, there is a lot of potential for high volatility in the market. Factors like the election, the fiscal cliff, the sovereign debt crisis, and looming inflation have many analysts and investors worried. As many writers have advised, the best ways to directly be long market volatility are to buy VIX or buy a combination of long, out of the money puts and long, out of the money calls on the S&P 500. Although these derivative plays are good fundamental strategies, I am a big believer that for many investors, a better strategy may be an indirect approach. This approach involves taking long positions in equities and ETFs that aren't zero sum games or contain short positions, but still protect investors against potential volatility in the market. In this article, I make a bull case for two very strong discount retailers, Dollar General (DG) and Family


Complete Story »

Cathy O’Neil: Glen Hubbard, the Economic Whore

Posted: 02 Nov 2012 11:44 PM PDT

By Cathy O'Neil, a data scientist who lives in New York City and member of the Occupy Wall Street Alternative Banking Groups. Cross posted from mathbabe.org

As a loudmouthed data scientist/blogger/activist, I go on record regularly complaining about quants and data scientists who sacrifice their integrity to put out crappy or misleading or exploitative or destructive models because they want to make their bosses happy, or rake in big bonuses, or because they're afraid to speak up and get fired, or because they don't bother to think through the consequences of their actions.

Recently I've even started asking the mathematical community to come together and start some kind of modeling panel which studies and writes up analyses of current high-impact, far-reaching models that affect public workers or the general public, to make sure those models are using the authority of mathematics in a reasonable and credible way. I think that could really help.

Note: I'm not asking mathematicians to come down on one side or another on political issues. I'm instead asking for people to use mathematics appropriately. It's akin to asking people to wear a mask when they're in a lab with bunsen burners. I think we can do this in mathematics, and I think mathematicians care enough about this to make it happen.

But here's the thing, I'm not sure what anyone can do about economists.

Not every economist is bought, of course, and there are large swaths of economics and econometrics that seems to be genuinely trying to understand how the world works and how they can, say, make healthcare genuinely more affordable or at least create better forecasts.

But then you have people like Glen Hubbard who give economics such a terrible name, it makes you want to cry.

I have been intending to research Hubbard's record ever since the New York Times published a rather frustrating piece on him a few weeks ago, insinuating that Columbia's president Bollinger wanted him fired but not explaining why. But then I reread the article, and I was struck by two passages. Here's the first:

As Mr. Hubbard has moved seamlessly through the Republican upper echelons of Washington, he has also cultivated relationships in corporate suites. He serves on three corporate boards, which collectively paid him $785,000 last year. One of those is the board of KKR Financial, a finance firm affiliated with Kohlberg Kravis Roberts, the private equity firm of which Henry R. Kravis was a co-founder. In 2010, Mr. Kravis pledged $100 million to the Columbia Business School, his alma mater, for the construction of a new building. It was the largest gift in the school's history.

That gift seems to have quieted down Bollinger on his quest to get rid of Hubbard. Next, the article says:

Mr. Hubbard has helped to draft many of Mr. Romney's economic and tax policies, and, at least implicitly, lent his imprimatur to others he did not conceive. The benefits are potentially mutual. If Mr. Romney is elected, Mr. Hubbard is considered a strong candidate for the job of Treasury secretary and even, after Ben S. Bernanke's term expires, chairman of the Federal Reserve. (Robert Zoellick, former president of the World Bank, is another possible contender for the Treasury job.)

Taking this all in, we have a picture of someone who has enough power to pull $100 million dollar strings to get out of trouble (whatever that trouble was) and, moreover, someone who can use the authority of economics, and implicitly of mathematical modeling, to assign himself a job running our country (in the economic sense, but then again what else is there and has there been recently?). Readers, I'd like to ask you this:

Why are we not outraged by this?

How have we become so used to this kind of behavior from elite economists and businessmen?

Charles Ferguson, who absolutely skewered Hubbard in his documentary Inside Job, has recently written more about Hubbard and how much of a shill he is for industry and Republican politics in this Huffington Post article. From the article:

Let's start with tax cuts, since Romney claims that he can cut tax rates sharply without increasing the deficit, and without benefiting the rich. Mr. Romney claims that tax cuts will be fully paid for by closing loopholes and deductions, and will not add to the deficit; Hubbard has publicly supported Romney's claims. Interestingly, Mr. Hubbard has quite a record on this very issue. Shortly after becoming chairman of the Council of Economic Advisors in 2001, he spearheaded the Bush administration's tax cuts, and he said lots about them.

How did that work out? First, we now know that over half of the benefits of the Bush-Hubbard tax cuts went to the top 1% of the population. In part to benefit the wealthy, the tax cuts were also structured to reward investment in financial assets, rather than either consumer spending or real capital investment. As a result, the tax cuts caused huge budget deficits, yet did little to stimulate growth or job creation: There were basically no new jobs created during the Bush administration, despite adding trillions to the national debt.

That is not, however, what Hubbard said would happen. On August 22, 2001, he published an article in the Wall Street Journal entitled "Tax Cuts Won't Hurt the Surplus." Oops. In the article, Hubbard also predicts that his tax cuts would preserve the Clinton budget surpluses by causing GNP to grow 0.3% per year faster.

Now, there's nothing wrong with being wrong. We're all wrong sometimes. I'm wrong sometimes too.

But here's the thing about economists like Hubbard. They don't give errorbars with their opinions. There's no acknowledged error in titles like "Tax Cuts Won't Hurt the Surplus."

And while that was in 2001, Hubbard more recently came out with a paper with three other "esteemed" economists which is called "The Romney Program for Economic Recovery, Growth, and Jobs" and, after describing what a useless windbag Obama has been, contains plenty of tasty tidbits like this one:

Governor Romney's economic plan will completely change the direction of economic policy. It will emphasize the long-term changes that will increase GDP and job creation, both going forward and now. It will put growth and recovery first.

Here's what really gets me, as a mathematician and a citizen of this country who wants the public to be informed with clear and unbiased information: Hubbard not only has no errorbars, but he makes full use of the imprimatur of economic theory and mathematics with every sentence in this paper – it's the equivalent of the line "you wouldn't understand it, it's math". It gives economics a bad name.

But wait a minute! Perhaps I'm being too harsh. After all, there are copious references to academic papers which support their projected growth estimates of Romney's suggested policies (which are never actually spelled out, and there are no models, and there are no admitted assumptions).

What do the authors of those papers say about being cited in Hubbard's whore-rag of an academic paper?

Ezra Klein wrote a fantastic response blog post in the Washington Post called "Economists to Romney campaign: That's not what our research says". From Klein's blog:

Each of these sections include supporting documents from independent economists. And so I contacted some of the named economists to ask what they thought of the Romney campaign's interpretation of their research. In every case, they responded with a polite version of Marshall McLuhan's famous riposte. The Romney campaign, they said, knows little of their work. Or of their policy proposals.

I mean, the least Hubbard could have done when he sacrificed the integrity of economic research for Tim Geithner's job is to refer to his own work rather than other people.

People! Can we think of a way to demand more than this from our thought leaders?

Or, barring that, can Bollinger grow some balls and kick this guy out of his job of leading Columbia's Business School for being so shamelessly willing to sell the remaining authority of economics to the Romney campaign for a job?

Or, for whatever other dirt Bollinger has on Hubbard (readers: please speculate what said dirt could be)?

When Central Banks Re-build Silver Reserves

Posted: 02 Nov 2012 11:30 PM PDT

The Saga of the Naked Boogieman

Posted: 02 Nov 2012 11:00 PM PDT

Gold University

S7: Silver & Drinking Da Kool-Aid

Posted: 02 Nov 2012 05:43 PM PDT

Silver & drinking da kool-aid
Flash news (rumor):
1) They need Obama to lose the election
2) The plunge-protection-teams computers are soggy, so they are using their I-Pods to hold up the markets (too slow) :)

from syyenergy7:

Silver, RawDog, Cory C vs. Silver Sharks

~TVR

By the Numbers for the Week Ending November 2

Posted: 02 Nov 2012 05:00 PM PDT

This week's closing table is just below. 

20121102-table


If the image is too small click on it for a larger version.

TIME TO BUY, BUY, BUY

Posted: 02 Nov 2012 03:51 PM PDT

If you aren't already in, Monday or Tuesday should represent an exceptional buying opportunity as gold moves into its final intermediate cycle bottom.

Now that the 38% retracement has been breached I would look for a final exhaustion move to test the 50% level early next week as we move into the elections.


At that point sentiment should be completely washed out and gold will be set up for an explosive move to test the all-time highs by the end of the year or early January.

Miners should deliver even bigger gains as I expect them to break out of the bull flag that's been forming over the last 4 weeks and generate a 25-30% rally to test their all-time highs.



We are moving into one of those rare buying opportunities that only come around once or twice a year. This is that point I warned about in my last post where one has to ignore the media and nonsense about QE3 not working. It is going to work, and it is going to work extremely well. I fully expect it to drive gold to $4000 by mid 2014. 

This is purely a profit taking event, nothing more. These situations happen like clock work about every 20-25 weeks, as you can see in the chart below. Gold is now very late in the timing band for that major cycle bottom. 



I'll have more in the weekend report and I think the odds are very high we get a final bottom by mid week. 

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Vote Obama to help the gold price!

Posted: 02 Nov 2012 02:24 PM PDT

Why voting Obama will mean higher gold prices

Who will you vote for next week? Romney or Obama? Democrat or Republican? It's not a great choice, we admit, but someone will have to win and one sure thing is it will either be Romney or Obama, Republican or Democrat.

Luckily, most of us here at The Real Asset Company don't have to vote next Tuesday but we have been thinking about who we would prefer. We could have thought about foreign relations, national security or even which had the nicest smile, but considering we're in the business of gold investment we've been making our judgements based on the gold price and how the next US Presidency will affect it.

The statistics on Presidents and gold prices since Richard Nixon make for some interesting reading; some surprising and some not so surprising trends exist. Our main findings show that voting Obama next week is best for the gold price.

Democrats and Obama worst for the US dollar

Obama is just the man for the job if you're hoping for a significant increase in the gold price. He has seen a bigger percentage increase in the gold price than Bush did in his first term, but there are bigger trends he'll find hard to avoid.

The evidence showing Democrats destroying the dollar more than Republicans, and second-term Presidents benefitting gold prices even more during their second innings, is over-whelming.

Even though Democrats prove to be the best party for gold investors worried about the gold price, the Republicans don't do too badly themselves – accounting for a net increase of 121.27% across their terms in office since Nixon, versus 358.68% for the Democrats.

A recent YouGov poll found 90 per cent of Northern Europeans would vote for Obama, whilst I'd like to think that's because they invest in gold, apparently Romney is just 'too Right Wing'. The European's main gripe is that 'Mitt Romney style' doesn't like too much reliance on the State– something Northern Europeans could be described as eve more guilty of at the moment.

Obama isn't guaranteed to drive up the gold price just because he's a nice Democrat and spends lots of money on taking responsibility away from people, our research also found Presidents granted a second-term have a marvellous time showing everyone just how much money they can spend, devaluing the currency further and making that precious metal glister even more.

It seems that during their first terms Presidents are more tempered than in their second.

Is this because they decide to blow the doors off and show everyone what a great person they are, leaving the next guy to pick up the mess? Either way the chart below makes for interesting reading.

second term helps gold price

Give Obama another shot at 'change'

George Bush Jr, has seen the largest percentage increase in the gold price for Presidential second terms – 88.81%, compared to 24.63% in his first term. Obama has already contributed an additional 74.2% to the gold price; imagine the endless possibilities if he's allowed another shot at 'change'.

Which president was worst for the dollar measured by gold price

Whoever wins, buy gold

We have sifted through a lot of data, we have made a lot of calculations (a small part of me will always be an economist) and Excel has we have created many graphs.

You can look at the minutiae in the data as long as you wish, I'm sure we could even have some more graphs made, but it doesn't change that all governments in the sample period are inherently inflationary, something which is clear in the gold price since Clinton's first term.

If the Republican gets in then theoretically the gold price won't increase by as much, it may even drop slightly in the first year or so, but look at it as an excellent buying opportunity. Who sits in the White House is not something which fits in gold price fundamentals these days, gold is going up, just how quickly depends on the President.

Buy gold whatever the outcome in the US elections. Buy gold online in minutes…

Please Note: Information published here is provided to aid your thinking and investment decisions, not lead them. You should independently decide the best place for your money, and any investment decision you make is done so at your own risk. Data included here within may already be out of date.

Gold, Silver Down Ahead of Jobs Data, Gold in India Hits One-Month Low

Posted: 02 Nov 2012 02:12 PM PDT

SPOT MARKET prices to buy gold in Dollars dropped to below $1710 an ounce Friday morning, reversing gains from earlier in the week, while stocks and commodities fell and the US Dollar rallied ahead of the release of key US jobs data.

The Bureau of Labor Statistics is due to publish its monthly 'Employment Situation' report at 08.30 EDT, which will include the official nonfarm payrolls estimate for the number of private sector jobs added in October. Consensus forecast among analysts is for 125,000 jobs added, while the unemployment rate is expected to tick higher to 7.9%, up from 7.8% in September.

Silver prices meantime fell below $32 an ounce this morning, extending losses from the day before.

"[Silver] bulls tried for a breakout [on Thursday] but were met with selling pressure," said a technical analysis note from bullion-dealing Scotiabank.

"Despite the disappointing close, downside momentum appears to have waned somewhat."

Like gold, silver traded lower Thursday following the release of a better-than-expected ADP Employment Report, a release that is widely regarded as an indicator for the official nonfarms release.

Over in India meantime, traditionally the world's biggest gold buying nation, Rupee prices to buy gold fell to their lowest in nearly a month, following gains this week for the Rupee against the Dollar.

"We are hoping for good Diwali sales," one jeweler told newswire Reuters, although trader noted that demand could dry up ahead of the November 13 festival should gold prices climb higher.

Heading into the weekend, gold and silver were little changed on the week by Friday lunchtime in London, although analysts say they expect the nonfarm payrolls release could impact on prices.

"If the nonfarm payrolls data is very good, it will be bearish for gold, as it will cut expectations for any additional quantitative easing, and it will be fairly positive for the Dollar as well," says Nick Trevethan, Singapore-based senior strategist at ANZ.

"If the payroll data is much above the 125,000 [jobs] consensus the Dollar is likely to go down," disagrees Standard Bank analyst Steve Barrow.

"The Fed is not going to respond to stronger-than-expected data with tighter policy and, more importantly, the interest rate markets are not going to expect the Fed to change course…instead, the focus clearly seems to be on the fact that firm data lifts stocks, lowers risk aversion and so tends to lift 'riskier' currencies against the 'safe-haven' Dollar."

A note from Swiss bank UBS this morning said funds tracking the DJ-UBS Commodity Index will need to buy gold and silver, since the precious metals are due to form a bigger part of the index when it is reweighted at the start of next year.

"In gold's case, its weight will be raised to 10.82% from 9.79% and silver will increase to 3.90% from 2.77%," UBS said.

"The settlement prices on the fourth business day of January will determine the final amounts to be bought."

Here in Europe, Eurozone manufacturing activity continued to contract last month, with the pace of contraction accelerating from September, according to purchasing managers index data published Friday. The single currency areas four biggest economies – Germany, France, Italy and Spain – all published PMIs below 50.

The Bank of England meantime said it welcomes three independent reviews into its operations, forecasting ability and handling of the financial crisis that were published Friday.

One review, that looked at the Bank's framework for providing liquidity to the banking system, concluded the Bank is "centralized and hierarchical…with a large decision-making burden  residing with the Governor and senior management."

The review of the Bank's forecasting capability meantime said that "recent forecast performance has been noticeably worse than prior to the crisis, and marginally worse than that of outside forecasters."

In South Africa, AngloGold Ashanti, the world's third-largest gold mining producer, has suspended operations at the TauTona mine, with 300 protesting workers conducting a sit-in.

Earlier this week two striking coal miners were shot dead by security guards at South Africa's Magdalena mine, with reports saying the two men tried to break into the mine's armory.

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

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

(c) BullionVault 2012

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

Gold and Silver Disaggregated COT Report (DCOT) for November 2

Posted: 02 Nov 2012 12:53 PM PDT

HOUSTON -- This week's Commodity Futures Trading Commission (CFTC) disaggregated commitments of traders (DCOT) report was released at 15:30 ET Friday.  Our recap of the changes in weekly positioning by the disaggregated trader classes, as compiled by the CFTC, is just below.

20121102-DCOT

(DCOT Table for Friday, November 2, 2012, for data as of the close on Tuesday, October 30.   Source CFTC for COT data, Cash Market for gold and silver.) 

In the DCOT table above a net short position shows as a negative figure in red. A net long position shows in black. In the Change column, a negative number indicates either an increase to an existing net short position or a reduction of a net long position. A black figure in the Change column indicates an increase to an existing long position or a reduction of an existing net short position. The way to think of it is that black figures in the Change column are traders getting "longer" and red figures are traders getting less long or shorter.

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

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

Coin show report - Chattanooga, TN

Posted: 02 Nov 2012 12:31 PM PDT

Today is the first day of the Tennessee State Numismatic Society fall coin show and I decided to go today since I took a day off of work. I got there at about 10 minutes before it started and while I waiting for the show to open, I checked my phone to see where the spot prices were at that time. Spot gold was $1695.30 and spot silver was $31.76. I looked around the parking lot and I noticed that it was not as crowded as it was last year but then again, I probably got their earlier than normal. Hard to say. Once the show started, I decided to start looking for silver art bars since that is what I usually do when I go to a coin show. As I was searching for them, I did observe some prices on a select few gold and silver items and they are as follows:

.999 generic silver = $32 to $35 - Not bad but I did not see when spot took a nose dive so some of those prices might have gone down.

Silver Art Bars - Not many '70's silver art bars present at this show and most of the ones that I saw where holiday-themed bars that I was not interested in getting. Lowest prices on those were $32.00.

10-oz silver bars = $327.00. Silvertowne and Engelhard were the main brands that I saw. Some might have been lower than $327 but I did not check those out.

100-oz silver bars = Lowest was spot + 0.50 - Engelhard and JM brands.

90% silver = 23X face

SAE's = spot + $5.00

Silver Maples = $33.50 to $37.00

Engelhard Prospectors = $34.50

Peace Dollars = $32.00

Overall, the coin show for me was so-so and I did find a couple of silver art bars that I liked and added to my collection but nothing of special interest IMO but got at a decent .999 generic silver price. They did also have some slabbed bullion and coins as well as some Lunar gold and silver.

EDIT: The show continues tomorrow and the last day is Sunday. I plan to go back to the coin show tomorrow.

EDIT2: Since I was concentrating on finding silver art bars, I did not pay attention to the premiums on the 1-oz gold coins and fractional gold coins at this show but since I plan to go back tomorrow, then I will pay more attention to the gold premiums.
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