Gold World News Flash |
- Da#n the Banks!
- Nigel Farage On The Queen’s Tour of Britain’s Gold Vault
- Gold Seeker Weekly Wrap-Up: Gold and Silver Fall Almost 1% and 3% on the Week
- Fed Hawks Warn on QE4, Inflation, Fiscal Policy
- U.S. Dollar Index Continues to Drop Lower and Lower ? How Low Will It Go?
- Gold Watch 12/14/12 Update: Gold Remains Very Weak With No Sign of a Turnaround ? Yet
- QE 4: Folks, This Ain't Normal
- The US Continues Along an Alarming Continuum
- No Way Out
- In The News Today
- By the Numbers for the Week Ending December 14
- Jim Grant: Honey, I Shrunk the Yield Curve!! – YouTube
- Gold and Silver Disaggregated COT Report (DCOT) for December 14
- QE 4: Folks, This Ain't Normal - What You Need To Know About The Fed's Latest Move
- Precious Metals Market Report – December 13
- The Old Normal: Presenting 140 Years Of Market Cycles
- The Gold Price Closed Down for the Week but Rose Today Remaining in its Primary Uptrend
- Golden Points To Ponder
- Silver’s Young Upleg
- It Is Just A Matter of Time Before Gold is Either Confiscated, Outlawed or Severely Restricted ? Here?s Why & What to Do
- Check It Out: Gold Stock Manias in 79/80, 82/83 & 95/96 Saw 2,000 ? 4,000% Returns ? and It Could Happen Again
- Nigel Farage: The clever governments are buying gold, the idiots are selling it
- Gold Daily and Silver Weekly Charts - Going Home
- Trannies Soar, Rest Hit Floor With USD Down 1%
- Fiscal Falls - The Acceleration Effect
- Guest Post: The Investment Everybody Loves to Hate
- Egon von Greyerz: Two important charts for gold and silver investors
- COT Gold, Silver and US Dollar Index Report - December 14, 2012
- Silver's Young Upleg
- LGMR: Market's Fed Reaction "Could Be Worrying Sign for Gold" as "Bear Stance Supported by Price Move"
- Gold and Silver: Of Cartels, Algorithms and Artificial Prices
- Harvesting Profits From Weak Hands in the Silver Market
- Silver’s Strong Upleg
- Orange Alert!
- Euro Flag, Reversal Candlestick in Stocks and Gold
- It's a Trap!
| Posted: 14 Dec 2012 11:30 PM PST by Andy Hoffman, MilesFranklin.com:
"Europe and America will not allow deflation to take root" …but NONE more so than the following; of how 'poor little banks' are victims of a simple business cycle – unfairly restrained when they should be unleashed… You will not solve the global economic problem by cracking down on banks. I'm sorry; the opposite is the case right now. One of the reasons we are not recovering from this slow motion depression is because banks are being forced to boost their capital ratios. The EU regulations are forcing them to put aside more and more capital –and these amounts are going up and up and up. This means they have to shrink lending, sell assets, and de-leverage. I'm all in favour of doing that, but you do it during a boom, not a bust. You should be counter cyclical, not pro cyclical. This is a fundamental error. |
| Nigel Farage On The Queen’s Tour of Britain’s Gold Vault Posted: 14 Dec 2012 11:00 PM PST from KingWorldNews:
We are now talking about having spy-drones, unmanned planes that will go up and down our borders and see where we go and see what we do. Everything from George Orwell's 1984 is coming into being. In fact there is a city in the United Kingdom, Oxford, where they've actually put listening devices into taxis. I mean it's just totally extraordinary. The liberties and essential freedoms are just eroding at such a rapid pace." |
| Gold Seeker Weekly Wrap-Up: Gold and Silver Fall Almost 1% and 3% on the Week Posted: 14 Dec 2012 10:00 PM PST Gold edged up to $1700.42 in Asia before it fell back to $1693.32 by a little after 9AM EST, but it then bounced back higher into the close and ended with a loss of just 0.17%. Silver slipped to as low as $32.16 and ended with a loss of 1.17%. |
| Fed Hawks Warn on QE4, Inflation, Fiscal Policy Posted: 14 Dec 2012 09:30 PM PST from Gold Alert:
Lacker, a current voting member of the Federal Open Market Committee (FOMC), has cast a dissenting vote at each Fed meeting this year against various facets of the central bank's easy monetary policies. In a statement explaining his most recent dissent, Lacker noted that "I do not believe that tying the federal funds rate to a specific numerical threshold for unemployment is an appropriate and balanced approach to the FOMC's price stability and maximum employment mandates." |
| U.S. Dollar Index Continues to Drop Lower and Lower ? How Low Will It Go? Posted: 14 Dec 2012 08:31 PM PST Weakness in the*U.S. Dollar Index continues to get closer and closer to its support line of 79.0 closing the week of Dec. 13th at 79.58 down marginally from the previous day’s close of**79.82 remaining below its 50 day moving average which is not a good sign. Given the aforementioned, we could well see*a much*lower U.S. Dollar Index*in the near future. So says Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!). Daily Closes The U.S. Dollar Index remains weak but*it continues to trade above its support line of 79.0.* The index closed out the week at 79.58 DOWN from*79.82 Thursday and*DOWN from 80.42 on the previous*Friday. Intraday Lows If that wasn’t bad enough, the intraday low on Friday, Dec. 13th was also DOWN to 79.50 from 79.71 the previous day*which was the lowest in the past week. 50 Day Moving Average In addition, the U.S. Dollar Index, which*moved belo... |
| Gold Watch 12/14/12 Update: Gold Remains Very Weak With No Sign of a Turnaround ? Yet Posted: 14 Dec 2012 08:31 PM PST Gold’s performance at week’s end suggests that gold has not yet bottomed out.*Hopefully next week will provide some evidence that the long-awaited*turnaround in gold has finally taken hold. Time will tell.* So says Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com*(A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!). Gold closed on 12/14/12 at $1,697.50 – with an intraday low of $1,694.00 – which were*both the lows for the week (and DOWN from*$1,712.80 – with an intraday low of $1,708.50 – the previous day) but, thankfully, still slightly above the 11-year channel*support line of $1,690. Earlier in the week I*had commented that some marginal upticks suggested that the long-awaited continuance of the bull run in gold was about to happen but it appears we will have to wait and see what next week brings. Check out this chart*for a look at gold’s performance over the past few days and the*lo... |
| QE 4: Folks, This Ain't Normal Posted: 14 Dec 2012 08:00 PM PST What you need to know about the Fed's latest move by Chris Martenson, Peak Prosperity: Okay, the Fed's recent decision to boost its monetary stimulus (a.k.a. "money printing," "quantitative easing," or simply "QE") by another $45 billion a month to a combined $85 billion per month demonstrates an almost complete departure from what a normal person might consider sensible. To borrow a phrase from Joel Salatin: Folks, this ain't normal. To this I will add …and it will end badly. If you had stopped me on the street a few years ago and asked me what I thought would have happened in the stock, bond, foreign currency, and commodity markets on the day the Fed announced an $85 billion per month thin-air money printing program directed at government bonds, I never would have predicted what has actually come to pass. |
| The US Continues Along an Alarming Continuum Posted: 14 Dec 2012 07:38 PM PST Late at night on November 6, along with John Mauldin, Doug Casey and a group of partygoers in a café here in Cafayate, we watched on a small television as Obama's contract was renewed by a majority of the mob. As was the case with many readers, I suspect, my initial reaction was disbelief. While I try not to pay a lot of attention to the careers of individual politicians, but rather prefer to monitor the carnage they inflict on the world in the collective, I sincerely believed that Obama's steady transgressions against commonsense economics, individual liberty and the rule of law would see him unceremoniously turned out. So much did I believe this that I even put money on the outcome. Upon waking the next morning, I reflected on what had come to pass and felt doubly stupid in having expected a different outcome. It was, in hindsight, so obvious. You see, if Mitt Romney had been elected, it would have been a pause in the continuum that we here at Casey Research have been warning dear readers about for years. Specifically, the continuum that has remained intact for the better part of a century now is for the devolvement of power from the individual to the state. There's no question that that has been the case with President Obama, but it was equally true with his predecessor. And, with a few brief periods of slowing, it has been the case all the way back to before the US Civil War. In the specific case of the Obama administration, my expectation that the public would vote him out and by so doing risk a repeal of "free" medical care or otherwise curb the government's elevated level of public largess was in hindsight misguided in the extreme, as it would be a break in the continuum. Which begs the question, "What government actions are consistent with the continuum of growing state power, and so are likely to either continue or occur in the future?" Some thoughts… Continued Deficit SpendingNo matter how you slice it, curbing government spending by any significant amount – and by "significant," I mean "enough to make a positive difference" – is approaching the point of impossibility, or at least serious improbability. That's because someone's ox has to get gored, and gored hard, in order to turn the deficits around. So, whose ox is it going to be… oldsters? The military? Everyone's? Not likely, not in a degraded democracy where votes are the only currency that counts to the politicians. And, mind you, when the punditry talk about the deficits, they refer only to the $1.3 to $1.5 trillion the government claims to be spending in excess of its incoming. But the government and the useful idiots in the nation's media are obfuscating the inconvenient truth about the true scale of the problem. A clear-eyed analysis would show that the true extent of the deficit problem – and that of its parent, the national debt – is probably 7 to 10 times worse. To keep the continuum intact, the governments of the US and most of the large economies must continue the spending. Otherwise they risk the serious social consequences of a public that has been studiously trained to look for its well-being and sustenance in public coffers. Unfortunately, the piling of debt on top of debt can't continue to infinity. We have the locked-in, demographically driven cost increases associated with supporting the large entitlement programs of Social Security and Medicare. Then there's the hundreds of billions of dollars in bad debt bulging under the carpets in the Pension Benefit Guaranty Corporation (PBGC), the FHA, in student loans, the FDIC, etc., etc. And sooner or later interest rates must begin to return to more normal levels (and probably well beyond). At which point the cost of servicing all the debt – currently about 6% of the US federal government's expenditures – will soar. Simply, there is no denying that government is firmly caught in a trap from which there is no politically acceptable way to free itself. Thus, for the continuum to remain intact, expect the excess spending to continue and, in all likelihood, get worse. Tax Increases – The Fun Is About to BeginSome people were aghast when Hollande, the new president of France, jacked the tax rates on high-income earners to as much as 75%. Given the continuum, I suspect that won't even cause eyebrows to be raised a couple of years down the road. As far as the masses are concerned, the polls and Obama's reelection confirm that individuals with an above-average net worth, along with evil corporations (e.g., any company not involved with burning through public money on the false promise of baseload "green" energy) are due their just deserts. On that general topic, this morning I came across the following gem from the International Monetary Fund, which is increasingly assuming a role as the "thought leader" for governmental schemes designed to keep the de facto sovereign bankrupts from becoming actual bankrupts. Quoting from the Washington Post… (emphasis mine): A new study by the International Monetary Fund raises a further warning flag for fiscal cliff negotiators in the U.S. In what it bills as the first-ever study of its kind, the fund analyzed decades of data on the world's major industrialized countries to estimate how changes in government spending or revenue affect economic output. The news isn't good. Given current circumstances, with a U.S. economy that is growing but still trying to make up lost ground from the 2008 crisis, a one dollar change in government spending could knock as much as $1.80 in output from the economy – what fund researchers called a "statistically significant…and sizeable" outcome. One brighter spot that could also influence negotiators: the growth impact of a tax hike is estimated to be negligible. The list of measures that automatically become law absent an agreement include both spending reductions and tax increases. While the spending cuts would comprise a heavy drag on growth, the fund paper suggests that a one percent rise in tax revenue would knock just 0.1 percent from gross domestic product. In other words, according to the ivory-tower intellectuals at the IMF (none of whom are rabid socialists, I am sure), cutting government spending even a little is verboten, but raising taxes is two thumbs up. Of course, both of those notions are entirely in sync with the continuum. Those of you dear readers with a solid net worth no longer need to wonder who's for dinner – it is you. Tougher Tax EnforcementGiven the entirely natural trait of us humans to try to avoid being tapped out for unworthy causes (and what could be more unworthy than bailing out the politicians?), it is only logical that the state in all its various permutations will begin to clamp down on potential tax dodgers. This, too, is solidly within the continuum. Unfortunately, in this particular case technology is a one-edged sword, and that edge is very sharp and aimed at the necks of higher-net-worth individuals and businesses. A recent article in the Telegraph of London pretty much says all you need to know. Here's a relevant quote from the article, accurately titled Tax Hitmen to Track Your Spending… Credit reference agencies will cross-check details of the income people declare on their tax returns against their spending patterns to identify "high" and "medium" risks of both illegal and legal tax avoidance. People identified to HM Revenue and Customs will then be subject to more detailed investigations. About two million people are expected to be scrutinised under the programme, which may lead to privacy concerns. HMRC will today unveil the "successful" results of a pilot programme involving about 20,000 people which will now be extended nationally. Many of those who are expected to be identified are likely to be self-employed workers who have under-declared their income to the authorities. However, those who have benefited from secret windfalls – such as an inheritance or a bonus – and people with secret offshore accounts could also be highlighted. Underscoring the coming squeeze, here's yet another sparkler from the IMF, which is fast becoming my least favorite meddlesome international organization. As reported by Bloomberg… The International Monetary Fund endorsed nations' use of capital controls in certain circumstances, making official a shift in the works for almost three years that will guide the fund's advice to member countries. In a reversal of its historic support for unrestricted flows of money across borders, the Washington-based IMF said controls can be useful when countries have little room for economic policies such as lowering interest rates or when surging capital inflows threaten financial stability. Still, it said the measures should be targeted, temporary and not discriminate between residents and non-residents. IMF Managing Director Christine Lagarde has cited the shift on capital controls as an illustration of the fund's attempts to modernize. "Capital flows can have important benefits for individual countries across the fund membership and the global economy," the IMF staff wrote in a report discussed by the board on Nov. 16 and published today. They "also carry risks, however, as they can be volatile and large relative to the size of domestic markets." The danger, of course, is that once governments around the world see that "everyone" is doing it, they will ratchet up their efforts to trap their citizens' money within their political borders, then squeeze the productive members of society until they bleed. While there will still be pockets of civilization where people can go to escape the heavy hand, in this world of interconnected governments, those pockets will be few and far between. That last point brings to mind a conversation I had not so long ago with a successful Argentine businessman, in which he lamented his country's misguided government, saying, "We only need a little better government, and the economy of this country will take off like a rocket." With a knowing smile and a wink, he then added, "But we need it to only be a 'little' better, because an inefficient government is better than an efficient one, yes?" Wagging the DogNot so long ago, Rick Maybury told the audience at one of our Casey Research Summits that, based on his interpretation of things, the US government is "war shopping." On the surface, this makes no sense. After all, getting embroiled in yet another war will only result in hardening politically motivated resistance to cutting the bloated military budget… which now closes in on about 20% of the federal budget. In my view, this is the canary in the coal mine. If the US government under a liberal administration can't muster the political will to reduce the military budget, and by a substantial amount, then there really is less than zero hope of getting the country's fiscal house in order. You can draw your own conclusions as to why the US might be war shopping, but the phrase, "War is the health of the state," penned by Randolph Bourne during WWI, sums it up pretty well for me. Simply, the military-industrial complex and its many allies within government have a huge vested interest in seeing the wars continue, damn the consequences to society at large. At this point, the most likely candidates for the next war remain Iran and Syria, where the potentially demented Mrs. Clinton recently escalated the rhetoric by drawing a firm line in the sand over chemical weapons. All that's needed now is for something appearing to be a chemical weapon to be unleashed, if not by the al-Assad regime, then maybe by the rebels or even another anti-Syrian regime in the region. It won't matter who the actual perpetrator is, as long as it provides the cover needed to get the show on the road. Public Apathy DeepensThanks to the continuum, the US government has become akin to a mosquito on the body of a comatose patient – free to suck as much blood as it wants with no danger of being slapped. This is possible because it serves the self-interest of so many people who pretend not to notice how broke the country is or how far down the path to socialism we have traveled. And I'm not just talking about the large army of direct government workers – about 3 million people in the federal government's non-military workforce alone, and the 2.5 million or so in the US military – but tens of millions who rely on government assistance for a substantial part of their daily feed. On the latter category, here's one of many anecdotes about the public's increasing reliance on the state – and the state's increasing willingness to be relied on (perhaps to reduce the unemployment numbers?). Here's an excerpt from an article by Michael Barone on the RealClearPolitics website. In 1960, some 455,000 workers were receiving disability payments. In 2011, the number was 8,600,000. In 1960, the percentage of the economically active 18-to-64 population receiving disability benefits was 0.65 percent. In 2010, it was 5.6 percent. Some four decades ago, when I was a law clerk to a federal judge, I had occasion to read briefs in cases appealing denial of disability benefits. The Social Security Administration then seemed pretty strict in denying benefits in dubious cases. The courts were not much more openhanded. Things have changed. Americans have grown healthier, and significantly lower numbers die before 65 than was the case a half-century ago. Nevertheless, the disability rolls have ballooned. One reason is that the government seems to have gotten more openhanded with those claiming vague ailments. Eberstadt points out that in 1960, only one-fifth of disability benefits went to those with "mood disorders" and "musculoskeletal" problems. In 2011, nearly half of those on disability voiced such complaints. "It is exceptionally difficult – for all practical purposes, impossible," writes Eberstadt, "for a medical professional to disprove a patient's claim that he or she is suffering from sad feelings or back pain." In other words, many people are gaming or defrauding the system. This includes not only disability recipients but health care professionals, lawyers and others who run ads promising to get you disability benefits. Between 1996 and 2011, the private sector generated 8.8 million new jobs, and 4.1 million people entered the disability rolls. The ratio of disability cases to new jobs has been even worse during the sluggish recovery from the 2007-09 recession. Between January 2010 and December 2011, there were 1,730,000 new jobs and 790,000 new people collecting disability. This is not just a matter of laid-off workers in their 50s or early 60s qualifying for disability in the years before they become eligible for Social Security old age benefits. In 2011, 15 percent of disability recipients were in their 30s or early 40s. Concludes Eberstadt, "Collecting disability is an increasingly important profession in America these days." Disability insurance is no longer a small program. The government transfers some $130 billion obtained from taxpayers or borrowed from purchasers of Treasury bonds to disability beneficiaries every year." Then, of course, there are the constituents relying on Social Security and Medicare, programs that between them suck up about 42% of the federal budget… and that are growing at roughly the same brisk pace as the aging population. Sure, you and I might be paying attention to the scale of the problems – but trust me on this one, we're the exceptions. Interest Rates Are Likely to Remain Low… Until They Can'tTellingly, even the so-called "bond vigilantes" have grown apathetic at the fiscal and monetary madness. For the simple reason that they know the government is going to keep shifting the problems into the next election cycle until it becomes physically impossible. The following excerpt is from an article on Bloomberg earlier this week, about the fiscal-cliff follies now being staged in Washington… While lawmakers are making deficit reduction a rallying cry, the bond market shows nowhere near the same level of concern. As the national debt exceeded $16 trillion from less than $9 trillion in 2007, U.S. borrowing costs tumbled. The yield on the 10-year note touched a record low 1.379 percent July 25, down from more than 5 percent in mid-2007. Treasury 10-year yields were little changed at 1.62 percent at 5 p.m. New York time, according to Bloomberg Bond Trader data. The rate fell eight basis points last week and reached 1.59 percent on Nov. 30, the lowest level since Nov. 19. In Europe, the ECB is currently considering moving nominal interest rates into negative territory. Of course, real interest rates in the US and elsewhere are already in negative territory – to wit, the meager yields you are now earning on your cash are well below the actual rate of inflation, and even that of the CPI (Consumer Pretend Inflation) rate published by the government. In the end, though, as governments continue to print money and otherwise engage in a race to the bottom, investors are going to demand higher interest rates, which will be devastating to the larger debtor nations. It is clear, however, that the precarious state of the global economy has investors placing a premium on safety over returns, so interest rates will stay low for some time to come. There will be fortunes made by speculating on a reversal in interest rates in the US and the other damaged economies – because the duration of interest-rate moves tend to be very long. That said, as long as it is in the government's interest to keep interest rates low, that trade remains extremely risky. Not to worry – when the trend changes, you'll know about it and have plenty of time to reposition your portfolio to profit. Some Conclusions"Make the trend your friend" is an oft-used adage in investment circles, and one that we here at Casey Research are fond of as well. In the case of the continuum, however, one may want to keep in mind the admonition, "Don't forget to duck!" Are there opportunities to profit? Sure. Any time a government makes a firm policy decision, figuring out how to profit by getting ahead of the policy isn't all that hard. But at this point your primary focus should probably be how to avoid an asset stripping. That's because if you earn a decent wage or have built up a respectable net worth, you have a target on your back. And not just from the government and its minions, but from the army of potential litigants who would love to own what you own. Unfortunately, there are fewer and fewer ways left to protect yourself. Especially with the legal precedents in the financial industry that, á la MF Global, establish that the money you have in any bank or brokerage firm is subject to looting without recourse. Personally, I have come to the conclusion that the only real protection comes from fairly broad diversification… between financial firms, between asset classes and especially between political jurisdictions. On that latter point, a group of us were recently chatting about this and that when the subject of inflation came up. At which point I made a comment to the effect of, "Inflation doesn't have to be a problem. Consider that we are in the middle of an inflationary crisis here in Argentina – a crisis that if it happened in the US would be catastrophic. Yet here we sit enjoying an excellent wine at a cost of around $10 a bottle. Later, we'll eat a fantastic dinner for around that same $10. So where's the problem?" The problem, of course, is if you are an Argentine with your assets and income denominated in pesos – in which case the 25%+ inflation is devastating. On the other hand, as an individual with assets denominated in stronger currency units or, for that matter, assets that appreciate with inflation, inflation is at worst neutral but, as is the case just now in Argentina for US-dollar-based investors, can be a real boon. I sincerely believe that investors need to step back and see the continuum for what it is – and take steps to diversify before the capital controls get slapped on, the taxes rise and the asset seizures (including your retirement plans) begin in earnest. Failure to do so will leave you as little more than a victim and a target for the masses as the continuum leads to a world where the entity of government controls all the important levers of the economy and of society at large. Unfortunately, for most dear readers, that is a world they either already live in or soon will. Don't be complacent. I should also tell you that the latest book by my dear friend and business partner, Doug Casey, is nearly ready to hit the stores. It's titled Totally Incorrect, and if you haven't guessed, it is filled to the brim with Doug's inimitable, irreverent and thought-provoking musings on the US government's shenanigans… how to make corruption your friend… the folly of Obamacare… the domestic brand of terrorists called TSA… and much more. If you want a good read (and a good laugh) for the holidays, you should take a look. For another few days, you can get Totally Incorrect for 46% off the retail price if you preorder now. You'll find all the details here. |
| Posted: 14 Dec 2012 07:30 PM PST by Peter Schiff, Gold Seek:
Now that those moves have failed to deliver economic health, the Fed has doubled the size of its open-ended money printing and has announced a program of data flexibility that virtually insures that they will never bump into limitations, until it's too late. Although their new policies will create numerous long-term challenges for the economy, the biggest near-term challenge for the Fed will be how to keep the momentum going by upping the ante even higher their next meeting. |
| Posted: 14 Dec 2012 07:08 PM PST Jim Sinclair's Commentary A very interesting chart to play with this weekend. 1.3161 +0.0074 (+0.57%) Jim Sinclair's Commentary Gold is going to be fine. The consequences of over the top debt and legalizing blatant acts of financial theft cannot be prevented by illegal market manipulation. The thesis that overcoming the Continue reading In The News Today |
| By the Numbers for the Week Ending December 14 Posted: 14 Dec 2012 07:04 PM PST This week's closing table is just below. |
| Jim Grant: Honey, I Shrunk the Yield Curve!! – YouTube Posted: 14 Dec 2012 06:05 PM PST Jim Grant Jim Grant Jim Grant Double Whammy!... [[ This is a content summary only. Visit my website http://goldbasics.blogspot.com for full Content ]]  |
| Gold and Silver Disaggregated COT Report (DCOT) for December 14 Posted: 14 Dec 2012 05:38 PM PST 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. 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. |
| QE 4: Folks, This Ain't Normal - What You Need To Know About The Fed's Latest Move Posted: 14 Dec 2012 05:14 PM PST Submitted by Chris Martenson of Peak Prosperity QE 4: Folks, This Ain't Normal What you need to know about the Fed's latest move Okay, the Fed's recent decision to boost its monetary stimulus (a.k.a. "money printing," "quantitative easing," or simply "QE") by another $45 billion a month to a combined $85 billion per month demonstrates an almost complete departure from what a normal person might consider sensible. To borrow a phrase from Joel Salatin: Folks, this ain't normal. To this I will add ...and it will end badly. If you had stopped me on the street a few years ago and asked me what I thought would have happened in the stock, bond, foreign currency, and commodity markets on the day the Fed announced an $85 billion per month thin-air money printing program directed at government bonds, I never would have predicted what has actually come to pass. I would have predicted soaring stock prices on the expectation that all this money would have to end up in the stock market eventually. I would have predicted the dollar to fall because who in their right mind would want to hold the currency of a country that is borrowing 46 cents (!) out of every dollar that it is spending while its central bank monetizes 100% of that craziness? Further, I would have expected additional strength in the government bond market, because $85 billion pretty much covers all of the expected new issuance going forward, plus many entities still need to buy U.S. bonds for a variety of fiduciary reasons. With little product for sale and lots of bids by various players, one of which – the Fed – has a magic printing press and is not just price insensitive but actually seeking to drive prices higher (and yields lower), that's a recipe for rising prices. Then I would have called for sharply rising commodity markets because nothing correlates quite so well with thin-air money printing as commodities. That's what should have happened. But it's not what we're seeing. Instead, stocks initially climbed but then closed red. Gold was mysteriously sold in the thinly-traded overnight markets and again right after the announcement in large, rapid HFT blocks that swamped the bids. U.S. Treasury bonds actually sold off on the news. The dollar hardly budged. Commodities were mixed across the board but more or less flat on the day, with the exception of the metals, and especially the precious metals, which were sold vigorously. The markets are now well and truly broken. Not because they don't conform to my predictions, but because they are no longer sending useful price signals. Instead, my hypothesis here is that the markets are now just a giant and rigged casino, where a relative handful of big firms and other tightly coupled players are gaming their orders to take advantage of this flood of money. When your central bank badly misprices money and then bids up everything related to bonds, nothing can be reasonably priced. Risk is mispriced; the few remaining investors (as distinct from speculators, which are now the majority) are forced to accept both poor yields and higher risk – so we know the price of everything, but the value of nothing. QE4So what exactly is this new thin-air money printing program all about? Well, unlike any prior Quantitative Easing (QE) announcement, this one was tied to a fuzzy and quirky government statistic: the unemployment rate.
The key point here is that the Fed is now actively running both monetary and fiscal policy because it will now be in the business of funding nearly 100% of all the new government deficit spending in 2013. And it is pumping a bit more than $1 trillion of hot, thin-air money into the economy as it does so. The odd thing here is that by tying their policy to the unemployment rate, we could be in for a very long wait for the stimulus to end. The reason is that the unemployment rate has a couple of moving pieces, one being the number of people who are unemployed, and the second consisting of people who have given up looking for work, which is tracked in something called the 'participation rate.' As more people leave the labor force and the participation rate goes down, the unemployment rate goes down, too. Somewhat confusingly, as more jobs are created, the unemployment rate goes down, too. As you can see, these numbers work in opposition to each other because as more jobs become available, more people re-enter the work force. Before the crisis struck, the participation rate was around 66.5%. But now it sits at just 63.6%, meaning that, at roughly 1.4 million jobs for each percent, a bit more than 4 million jobs would have to be created just to absorb the folks who left the labor force but presumably would like to work again. As those 4 million folks come back to work, the unemployment rate will not budge at all. It will require two full years of 150,000 jobs per month just to absorb the 4 million missing workers, which means that this QE effort will be with us for a very long time. Three to four years is my best guess, and that's only if the economy magically recovers. And I have very strong doubts about that. This means that the Fed is most likely on track to increase its balance sheet by another $3-4 trillion. Ugh. That's 300% to 400% more money created in the next year than was created than during the entire 200 years following the signing of the Declaration of Independence. The other part of this new QE policy is that they will continue this as long as inflation remains below 2.5%. Again, this is a very fuzzy government statistic subject compared to the usual massaging and political biases, but it has top billing as the one that is most likely to force an early termination of the thin-air money printing efforts. However, I remain convinced that the Fed will change any rules and move any goalposts it needs to in order to continue its mad money printing experiment. Because there really isn't any other alternative at this point. Secretly in the OpenOnce upon a time, it would have been considered in bad taste to suggest that the world was being centrally managed in secret by a small-ish cabal of bankers whose actions served to either prop up the excessive spending habits of the very governments that conferred upon them the power to print money, or to bolster the health and profits of the banks they mainly serve. That was then. Today you can just read about it in the Wall Street Journal:
If it feels like you are part of a very grand, high-stakes experiment, congratulations! You're exactly right. We are all collectively prisoner to whatever outcomes are in store. The rather politely ignored truth right now, at least by most news outlets and politicians, is that the world's central banks have wandered very far off the reservation and are running an experiment that really has only two possible outcomes. One is a return to what we all might call 'normal and stable' economic growth. The second is the complete collapse of the fiat money and their attendant financial systems and markets. While it is technically possible to achieve some other middling outcome, that possibility has been receding to ever more remote territory with every passing month and new round of money printing. The basic predicament here is that more and more money is being printed while the world economy, predictably for those who follow the net energy story, has been entirely stagnant and constantly threatening to slip back into economic retreat. Of course, more money + the same amount of (or even less) hard assets = the perfect recipe for inflation. So the rise of inflation will signal the beginning of the end of this slow-motion tragedy. I use the term 'tragedy' here because it doesn't have to end this way. We have other options; we could make other choices and use our time and resources to try and do something other than maintain a broken financial system that desperately needs to be changed. In Part II: It's Better to Be a Year Early Than a Day Late, I explain the facts behind why I am more convinced than ever that this all ends in one of the most disruptive financial and currency events ever seen on this planet. And while the repercussions will be felt by all, taking prudent action while there is still time can greatly improve our individual odds of weathering them safely. |
| Precious Metals Market Report – December 13 Posted: 14 Dec 2012 04:49 PM PST |
| The Old Normal: Presenting 140 Years Of Market Cycles Posted: 14 Dec 2012 04:36 PM PST Edson Gould, deceased author of the once-famous Findings & Forecasts investment newsletter often said that "History always repeats, only the details change". This insight, a handful of carefully chosen technical indicators, and a deep understanding of crowd psychology enabled him to make some remarkable calls during his career. The graphic below, courtesy of Addogram, plots Gould's "Sentimeter" ("the market price of $1 of dividends") the inverse of the US 10-year Treasury yield, the gold price and an index of commodity prices. Needless to say he was quite right; "History always repeats, only the details change".
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| The Gold Price Closed Down for the Week but Rose Today Remaining in its Primary Uptrend Posted: 14 Dec 2012 03:54 PM PST Gold Price Close Today : 1,695.80 Gold Price Close 7-Dec : 1,704.00 Change : -8.20 or -0.5% Silver Price Close Today : 32.23 Silver Price Close 7-Dec : 33.053 Change : -0.823 or -2.5% Gold Silver Ratio Today : 52.616 Gold Silver Ratio 7-Dec : 51.554 Change : 1.06 or 2.1% Silver Gold Ratio : 0.01901 Silver Gold Ratio 7-Dec : 0.01940 Change : -0.00039 or -2.0% Dow in Gold Dollars : $ 160.12 Dow in Gold Dollars 7-Dec : $ 159.59 Change : $ 0.53 or 0.3% Dow in Gold Ounces : 7.746 Dow in Gold Ounces 7-Dec : 7.720 Change : 0.03 or 0.3% Dow in Silver Ounces : 407.54 Dow in Silver Ounces 7-Dec : 398.00 Change : 9.54 or 2.4% Dow Industrial : 13,135.01 Dow Industrial 7-Dec : 13,155.13 Change : -20.12 or -0.2% S&P 500 : 1,413.58 S&P 500 7-Dec : 1,418.07 Change : -4.49 or -0.3% US Dollar Index : 79.567 US Dollar Index 7-Dec : 80.425 Change : -0.858 or -1.1% Platinum Price Close Today : 1,613.60 Platinum Price Close 7-Dec : 1,605.50 Change : 8.10 or 0.5% Palladium Price Close Today : 700.80 Palladium Price Close 7-Dec : 696.50 Change : 4.30 or 0.6% The silver and GOLD PRICE took a hard whupping with a big club this week. Well, it hurt a lot but didn't do any permanent damage. Today silver lost 5.7 cents while the GOLD PRICE gained twenty cents to $1,695.80. One of two scripts is playing out. (1) Gold has support at a line touching the recent bottoms at $1,672.50 and $1,684.10, today about $1,688, OR, (2) gold will breach that line and stop at the 150 and 200 DMAs (now $1,667 and $1,663.5) or even fall to the uptrend line from the June low, about bout $1,650. Nope, I don't know which, but don't reckon this indecision or weakness will last more than December. This week the SILVER PRICE fell out of a little even-sided triangle with a target of about 3150 (300 DMA, 3136c (200 DMA), or the rising trend line from the June 2012 low about 3090c. Like gold, we'll probably have to endure this torment till year end, unless silver could climb back above 3350c in one great bound. At the risk of repeating myself repeatedly, silver and gold remain in a PRIMARY UPTREND (BULL MARKET) which will run several more years and carry prices to heights it now seems ridiculous, risible, and feverish to utter. Yet happen it will. Keep calm, keep buying when they drop. Much higher prices coming next year, gold over $2,300 and silver over $50 by end-May, most likely. I want to explain Lurch-o-nomics to y'all. Lurch-o-nomics is what your government and your central bank practice. Luther said that mankind is like a drunk: he falls off the horse on one side, climbs back up, and then trying to keep from falling off on that same side, he falls off on the other. Sort of like Ben Bernanke (and every central banker's) recipe for economic intervention, he lurches from one stupidity-spawned catastrophe to the next by trying to clean up the last. Consider mighty Alan Greenspan -- not many have the gall to call him mighty today, after a couple of years' perspective -- lurching from side to side. He lurched to prevent a depression in the early 1990s, and spewed out so much liquidity he created a tech-stock bubble and fueled a stock market blow-off. Sensing that he might have made a tee-tiny mistake, he then lurched into a bond-bubble, and when that blew up he lurched into a real estate bubble, which burst in 2006 and ain't over till now and may abide unhurt the rest of my born days. Lurch-o-nomics: it's what central banks do! Now in lurching from side to side, like a drunken fireman spraying his flopping nozzle off a speeding truck, Ben has managed to create a truly gigantical bubble in the bond market. He has accomplished this either out of disingenuous stupidity, ignorance, or manic Keynesian brainwashing. The whole WORLD has bought US treasury bonds, because Ben has launched tsunami after tsunami of new money across the Seas of Finance, while keeping interest rates near zero. Here's what will happen, and put down that crystal ball, Louise, you don't need THAT to make this forecast! One day the realizers will realize. One day one of them will awaken, and say to himself, "Wow. Those interest rates have been zero for a coon's age. Why, there's no direction for them to go but up from here, which means my bonds will go down. And Bernanke is spinning dollars like a cotton candy machine, which means the dollars the bonds promise to pay are going to sink like your wedding ring in a running garbage disposal. I'm selling those bonds." Trouble is, realizers travel in herds, like lemmings, and one of 'em selling will spook others, and pretty soon the bond bubble will have burst. Lurch-o-nomics: it's what they do. Watch out for the inevitable snap-back when interest rates rise. 'Twill rank right up there with the real estate bubble. Oh, and about that myth the Fed propagates that it "controls" interest rates? Fed controls nothing but the measly Fed Funds rate, and if the market stampedes over it the Fed will no more be able to command interest rates than King Canute could command the tide. And y'all know, it MIGHT be necessary for the Nice Government Men to strike gold with a little manipulation if it rises too fast, cause fast-rising gold makes realizers REALLY twitchy. Fact is, they might have done that this week. US DOLLAR INDEX has seen better weeks. I couldn't understand why, after the Fed's announcement they were going to increase the US money supply by $1.02 trillion (about 11%) next year the dollar didn't sink like a fat frog in a deep well, but it floated instead. Today then it broke 79.70 support and fell 36.2 basis points (0.47%) to 79.5467 now. Standeth right on the last low, and if it falls through that floor, will fall toward 78.90. Much further to fall. Better shuck them dollars while ye may! Euro at last made it past resistance of that downtrend line, gaining 0.64% to $1.3161. Will hit $1.3200, no doubt, and might head for $1.3400. Thus the euro draws near the end of this rally. European economy remains rotten, European banks are rotten, European politics and politicians and central bankers are rotten. What's left to help them? Well, they make great wine and cheese in Italy. Japanese Yen has fallen just about as low as the Fed and other central bankers will tolerate. Rose today 0.23% to 119.81. Y'all go look at a 15 year S&P500 chart. You'll see the most bodacious Head and Shoulders top you ever saw in your life, and it's just about now completing that right shoulder. Mercy! That's gonna wreck the party like three carloads of liverish cops when that comes down! Today the Dow chiseled off 35.71 (0.27% to close at 13,135.01. S&P500 appeared just as raggedy, lost 5.87 (0.14%) to 1,413.58. It's likely only correcting to continue its rally. Hitting on the 50 DMA today, often the target of corrections. Real challenge for the Dow is to beat through the fence at 13,300. Ought to rally for the rest of the year, maybe into January, maybe up to 13,750. It will be the last Kiss of Death. Get out of mutual funds and stocks while there are still buyers. On 16 December 1967, today just shy of 45 years ago, I married Susan Askew in Memphis. It stuck, and am I glad. Don't know why she has stuck with me, but I am most heartily glad, seven children and 45 years later. By the way, her wedding dress still fits her, and I believe she is immune to gravity. Still pretty enough to stop heavy traffic in a rainstorm. Y'all enjoy your weekend. Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com 1-888-218-9226 10:00am-5:00pm CST, Monday-Friday © 2012, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose. No, I don't.   |
| Posted: 14 Dec 2012 03:40 PM PST Investors seeking leverage to precious metals should focus on junior resource companies who own the world's undeveloped gold and silver deposits as they provide the best exposure to a rising precious metals price environment. Read More...  |
| Posted: 14 Dec 2012 03:03 PM PST Although you wouldn't know it from listening to all the bearish commentary out there, silver is actually enjoying a strong young upleg. Its technicals are very bullish, contradicting the prevailing pessimism gripping traders. This glaring disconnect between price action and sentiment won't last forever. It has hammered silver stocks to depressed levels that offer a smorgasbord of opportunity for brave contrarians. As a hyper-volatile speculators' playground, silver has always been exceptionally sensitive to prevailing sentiment. While all prices are affected by their traders' collective greed and fear, silver's emotional roller coaster has higher peaks and deeper valleys. Silver can skyrocket on greed like no other commodity, but the other end of the sentiment pendulum's arc is equally extreme. Fear can depress silver for a long time. And lingering fear is what is plaguing silver sentiment today. For over a year leading into this past summer, silver suffered a massive correction following a near-parabolic surge to dazzling new secular-bull highs. Such a long period of crumbling prices naturally spawned incredible fear. So even after silver bottomed and birthed a major new upleg, traders remain depressed and skeptical of its potential. But despite today's rampant silver pessimism, this metal's technicals are crystal-clear in showing a strong young upleg now underway. Gradually this bullish price action will bleed away the correction's residual bearishness, and fear will eventually yield to greed. Corrections' fear shadows always linger into the initial months of their subsequent uplegs, and are a huge boon to contrarian speculators and investors. The mission of trading is to buy low and sell high, and the only times prices are low within ongoing bull markets is when they are deeply out of favor following corrections. But it is risky to buy before technicals confirm a correction has almost certainly ended. As the bottom is reached, fear and pessimism peak so no one believes a new upleg is being born. That bearishness persists into the subsequent young upleg. This fear shadow creates a sweet spot for contrarians. As new uplegs stealthily gather steam with little fanfare, price action eventually confirms these major trend changes. But the great majority of traders still remain bearish, their minds staying clouded by the sentiment paradigm of the preceding correction. This leaves a window where excessively-cheap silver-stock prices don't yet reflect silver's bullish technicals. And silver's latest young upleg has already been confirmed by a variety of major technicals as this chart reveals. Its price action since its summer low has been very bullish. While it amazes me more silver traders don't pay attention to longer-term charts, sentiment always remains poor as new uplegs first start advancing. But as silver continues to power higher on balance, residual bearishness fades away. The seeds for today's price action were sown in early 2011. As silver rocketed higher in its secular bull's last massive upleg, greed waxed euphoric. I warned about that coming topping in advance in March 2011 as silver grew overbought, and we realized big silver-stock profits. With the largest upleg by far of silver's entire bull still screaming higher, the inevitable correction following it promised to be ugly. And it was, in spades. When prices advance too far too fast, one consequence is they suck in all near-term buying like black holes. Surging prices put tremendous pressure on non-contrarian traders to buy immediately or miss the boat. This pulls forward months' worth of buying that would have happened in the future into the topping. And once all the buyers are in, only sellers remain so a price starts falling. Silver's correction began with a brutal near-crash, killing greed and ramping up fear very rapidly. Many of the new buyers who had foolishly succumbed to the euphoria to buy high as silver was topping started to panic. They wanted out immediately at any price, spawning fear that continued to snowball and trap more traders. The ultimate result was a massive 45.5% silver correction over the subsequent 14 months! That correction formed a giant technical formation known as a descending triangle, shaded yellow above. Silver couldn't break above this descending triangle's sharply-downward-sloping resistance line no matter how bullish conditions grew. Not even the summer of 2011's last US debt-ceiling debate, which ignited a massive summer rally in gold, could break silver free from its correction's sentiment chains. And descending triangles are bearish formations, heralding even lower prices ahead. So the technicians understandably wanted nothing to do with silver. But no matter how intense the fear and selling got, this metal refused to fall below $27 or so. New buyers emerged around these levels to create a multi-year support line that formed the triangle's base. But silver still remained trapped in this bearish formation. Until this past August. After hitting its usual summer-doldrums lows, silver surged sharply. The start of its biggest seasonal rally of the year corresponded with widespread expectations that both the European Central Bank and US Federal Reserve would launch major new bond-buying programs. These would be highly inflationary, the central banks creating money out of thin air to directly monetize government debt. This August surge accelerated into September when the ECB and Fed indeed announced major new debt-monetization campaigns as expected. The result was silver utterly shattered the correction resistance line of its huge descending triangle! And provocatively in technical lore, if a descending triangle is resolved in a major upside breakout (instead of a downside failure) the outlook is very bullish. Another big clue silver's intermediate trend was reversing from correction to upleg came through its 200-day moving average. During the massive correction following that massive upleg, silver's 200dma nosed over to head south and became overhead resistance. Not even last spring's strong seasonals could overcome this. But soon after silver's triangle breakout in August, a decisive 200dma breakout followed. Silver rocketed well above its 200dma as the ECB pledged to buy sovereign bonds and the Fed launched its unprecedented open-ended third quantitative-easing campaign. In just over a month, silver had gained nearly a third which is a fantastic early-upleg gain. But like a smaller version of an upleg topping, this sharp initial advance proved too far too fast. So silver needed to pull back to rebalance sentiment. Pullbacks within ongoing uplegs are healthy and common. The faster and higher prices rise, the more greedy traders as a group become. Unchecked greed threatens to pull forward too much buying, which has the potential to kill uplegs prematurely. So once all near-term buyers have been sucked in, sellers gain control sparking a pullback. And silver obliged right on schedule, during a normal seasonal lull. But this pullback was very telling technically as it bounced right at silver's critical 200-day moving average. What was resistance during the correction had become support during the subsequent upleg! This was another major technical confirmation that silver's intermediate trend had stealthily reversed from correction to upleg. And since then silver has continued to advance on balance, even ignoring gold. Silver traders have always looked to gold, so its price action dominates their sentiment. When gold is up big, they rush into silver. And when gold falls sharply, they dump silver aggressively. Provocatively last month when gold slipped 0.4%, silver ignored its primary driver to rally 3.7%! This big upside divergence is an impressive show of strength, and really emphasizes that silver has fully transitioned into upleg mode. And this is crystal-clear on silver's chart. As you can see above, since early August this metal has enjoyed its longest advance since its last upleg. And this recent months' rally has also been very upleg-like in character. Despite the new ECB and Fed inflation that ignited some excitement, silver's latest run has been measured. This contrasts with sharp and short-lived short-covering rallies in corrections. Taken together, all this technical evidence virtually guarantees that silver is indeed in a young new upleg. The lingering bearish commentary arguing for silver's correction to reassert itself is simply wrong. Gradually it will abate as the correction's fear shadow fades and silver's bullish technicals win over new converts to the young-upleg thesis. And boy, a young silver upleg offers vast opportunities for traders. At best so far, silver's latest advance is 32.6% over 3.2 months. This would sound impressive for most commodities and stocks, but silver is in a league of its own. The reason silver perpetually fascinates speculators and investors despite its extreme volatility is the sheer size of its uplegs. As this next chart shows, silver uplegs tend to accelerate and mushroom to enormous size in fairly short periods of time. Silver's last upleg that nearly went parabolic before cresting in spring 2011 was gargantuan. We are talking about a mind-boggling 176.6% gain in just 9.0 months! Of course that was atypically large, so the subsequent reckoning led to the massive correction we just weathered that ultimately nearly cut silver in half. But even silver's normal uplegs are quite big, showing the huge potential silver has today. Its secular bull's first four major uplegs before that colossal fifth one saw gains of 71.5% in 6.0m, 124.0% in 8.5m, 80.5% in 6.5m, and 115.4% in 12.4m. These first four that ignore the recent outsized beast average out to gains of 97.9% over 8.4 months each. So you can see why I call today's 32.6% over 3.2m young. If silver's new upleg merely proves average, we have only seen a third of its gains so far! And despite silver's sharp surge in late August and early September on the anticipation of and then realization of new central-bank inflation campaigns, it was nowhere near hitting upleg-ending levels of overboughtness. Remember that the reason uplegs ultimately die is greed grows too extreme. While this emotion can't be measured, it can be inferred from how fast a price advances beyond an established baseline. Many years ago I developed a powerful and profitable trading tool to quantity whether a price was oversold (the time to buy low) or overbought (the time to sell high). It is called Relativity, and simply looks at a price as a multiple of its own 200-day moving average. Over time in ongoing bull markets these multiples form horizontal trading ranges. Read my latest essay on Relativity Trading to learn the theory. The chart above shows Relative Silver, or rSilver, in light red. Since the early days of its secular bull way back in 2003, the rSilver trading range has run between 0.95x to 1.40x. At the support end when silver is trading near or under 95% of its 200dma, it is oversold and a fantastic buy. Note above on the chart how silver surged in new uplegs soon after such low oversold extremes were reached. Silver was too cheap. Provocatively the last time rSilver fell down under support was this past summer, when silver's current upleg was stealthily born. This is yet another technical confirmation that its huge correction ended and the intermediate downtrend has reversed into an uptrend. For those of you keeping score, I wrote about how undervalued silver was at the time. So we started buying and recommending cheap silver stocks. The upper resistance of silver's relative trading range has been 1.40x. Once silver rallies far enough fast enough to surge 40%+ above its 200dma, there is a high probability of an imminent major topping. You can see the rSilver levels of past major toppings in this chart. They range from 1.29x on the low side (a weak upleg) to 1.75x on the high side (a massive one). Uplegs don't fail until silver gets too overbought. Silver's young new upleg indeed had a sharp initial advance in August and September thanks to the big new inflationary central-bank bond-monetization campaigns. But despite this surge silver came nowhere near being overbought in upleg-killing context. The best rSilver levels seen at silver's latest interim highs were only 1.14x. This is less than half the overboughtness that ended even silver's weakest upleg! So not only do silver's technicals currently argue overwhelmingly that a young new upleg is underway, this metal's bull-to-date upleg precedent shows it is nowhere near being mature. Silver's newest upleg has lots of room to run yet just to grow to average proportions. And there are plenty of reasons to expect silver investment demand to surge so dramatically in the months ahead that merely average is unlikely. This week just 3 months after the Fed launched QE3, it already felt compelled to more than double the size of its new open-ended debt-monetization campaign! It just added $45b per month of longer-term Treasury buying to QE3's existing $40b per month of mortgage-backed-securities purchases. This is not only highly inflationary, which is very bullish for silver, but it is directly monetizing Obama's epic deficits. Last week I wrote a popular and highly-praised essay explaining the US debt crisis. In his first term, Obama averaged annual deficit spending of $1274b. This fiscal year's deficit is expected to be at least $1100b. Incredibly this week the goofy Fed committed to buying $540b worth of Treasuries over the next year. This means Bernanke is directly monetizing half of Obama's record overspending going forward! Our out-of-control government is borrowing such insane amounts of money in order to spend it immediately, so all the new dollars the Fed will create out of thin air to monetize Treasuries will be injected directly into our economy. Big inflation is coming, which makes silver incredibly attractive to investors. The implications of this crazy QE3 expansion (QE3X) will drive major silver demand as 2013 wears on. For many smaller investors who feel priced out of the gold market, silver is the only option for a physical inflation hedge. Provocatively silver's last upleg, that massive 177% one, really started accelerating in late 2010 right after the Fed announced QE2. And QE2 was merely $900b in Treasury monetizations, compared to QE3X's $540b per year for what looks like at least several years to come. Talk about inflation! And all of this overlays strong silver seasonals between now and spring, which ought to really amplify this new upleg's advance. As I ponder all of this, it is hard to imagine all the silver bears today not soon changing their tune to bullish. And of course bullishness quickly feeds on itself, leading to more buying and higher prices which entice in still more capital. Silver is enjoying one heck of a bullish setup today! At Zeal we've been anticipating this upleg since summer, so we've spent many hundreds of hours since then digging into silver stocks. Our goal was to uncover the silver companies with the best fundamentals to soar in silver's new upleg. Just this week, we finished the latest stage of this project. Due to popular demand, we undertook our first-ever deep-research look into the high-potential realm of silver juniors. We investigated nearly 100 silver juniors trading in the US and Canada, and gradually whittled this universe down to our dozen fundamental favorites. Each is profiled in a fascinating new 23-page report just published this week. With silver sentiment poor, most of these elite silver juniors are trading at dirt-cheap levels. So it's a heck of a time to deploy new capital with silver's new upleg underway. Our new silver-juniors report is now on sale for just $95 ($75 for subscribers), a steal for the fruits of hundreds of hours of expert world-class research. Buy yours today! We also publish acclaimed weekly and monthly subscription newsletters long loved by speculators and investors worldwide. They draw on our vast experience, knowledge, wisdom, and ongoing research to help you understand what is going on in the markets, why, and how to trade it with specific stock trades as opportunities arise. Since 2001, all 634 stock trades recommended in our newsletters have averaged annualized realized gains of +34.8%! Subscribe today and start thriving! The bottom line is silver is almost certainly in the early months of a major new upleg today. The correction technicals that spawned all the recent bearishness have all reversed. And after correcting by half, all the greed that necessitated that massive correction has long since been eradicated. This past summer's fear was the perfect birthing ground for a major new upleg, and silver's bullish technicals indicate one is underway. This is all happening heading into a seasonally-strong time when central banks are ramping money creation dramatically. Big inflation is coming, and as awareness of this grows among investors silver will be a prime go-to destination as always. The last time the Fed aggressively monetized Treasuries, silver enjoyed its biggest upleg of its secular bull by far. And this latest QE3X will dwarf the QE2 monetizations. Adam Hamilton, CPA
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| Posted: 14 Dec 2012 02:23 PM PST I'm starting to believe that we're heading down a path where precious metals are once again confiscated, outlawed, or at least severely restricted in many countries. [Here's how I think such might well unfold.] Words: 783 So writes Simon Black ([url]www.sovereignman.com[/url]) in edited excerpts from his original article* entitled How bankrupt governments will confiscate your gold. [INDENT]Lorimer Wilson, editor of [B][COLOR=#0000ff][COLOR=#ff0000]www.FinancialArticleSummariesToday.com[/COLOR] (A site for sore eyes and inquisitive minds) and [COLOR=#ff0000]www.munKNEE.com[/COLOR] (Your Key to Making Money!), may have further edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) the article below for the sake of clarity and brevity to ensure a fast and easy read. The author's views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be inclu... |
| Posted: 14 Dec 2012 02:23 PM PST The timing of this article may seem incongruous given the current weak performance of gold and gold stocks but that was the identical situation in each of the past manias – both the metal and the equities didn’t excel until the frenzy kicked in. The following documentation (exact returns from specific companies during this era are identified) is actually a fresh reminder of why we think you should hold on to your positions – or start accumulating them, if you haven’t already. (Words: 1987; Tables: 7) So writes Jeff Clark ([url]www.caseyresearch.com[/url]) in edited excerpts from an article* entitled What ‘To The Moon’ Will Look Like. [INDENT]Lorimer Wilson, editor of [B][COLOR=#0000ff][COLOR=#ff0000]www.FinancialArticleSummariesToday.com[/COLOR]*(A site for sore eyes and inquisitive minds) and [COLOR=#ff0000]www.munKNEE.com[/COLOR] (Your Key to Making Money!), may have further edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italic... |
| Nigel Farage: The clever governments are buying gold, the idiots are selling it Posted: 14 Dec 2012 02:19 PM PST 4:15p ET Friday, December 14, 2012 Dear Friend of GATA and Gold: Nigel Farage, leader of the United Kingdom Independence Party and a member of the European Parliament, was interviewed today by King World News and remarked on Queen Elizabeth's visit this week to the Bank of England's gold vault. "If you look over the last 10 to 15 years," Farage says, "the clever governments have been buying gold and the idiots have been selling gold. And those that buy gold don't just buy paper -- they make sure they've physically got the stuff." An excerpt from the interview is posted at the King World News blog here: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/12/14_N... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT GoldMoney adds Toronto vaulting option In addition to its precious metals storage facilities in Hong Kong, Switzerland, and the United Kingdom, GoldMoney customers now can store their gold and silver in a high-security vault operated by Brink's in Toronto, Ontario, Canada. GoldMoney also has recently partnered with Rhenus Freight Logistics to offer another gold storage option in Switzerland. The Rhenus vault is in the secured zone of Zurich Airport and offers customers superb security as well as the ability to inspect their gold. Storage at the new vaults in Canada and Switzerland is available at GoldMoney's lowest fees. Customers can select their storage location when placing their buy order. GoldMoney customers can take delivery of any number of gold, silver, platinum, and palladium bars from any GoldMoney vault, as well as personally collect their bars stored in the Hong Kong, Switzerland, and U.K. vaults. It's easy to open an account, add funds, and liquidate your investment. For more information, visit: http://www.goldmoney.com/?gmrefcode=gata Join GATA here: Vancouver Resource Investment Conference * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: |
| Gold Daily and Silver Weekly Charts - Going Home Posted: 14 Dec 2012 02:19 PM PST  This posting includes an audio/video/photo media file: Download Now |
| Trannies Soar, Rest Hit Floor With USD Down 1% Posted: 14 Dec 2012 02:16 PM PST The last time the USD closed down (DXY -1%) on the week, and so did stocks (Dow/S&P/Nasdaq -0.25%), was the week heading into QE3 which marked the top of the US equity market for the year. With contracts rolling, the futures were roiling into the close as they were ping-ponged between new week lows and VWAP. The Dow Transports stood alone in their outperformance +1.1% (but were sliding rapidly into the close) and while most sectors were weak (Discretionary worst -1.2%), Materials outperformed (+1.66%) in a world of their own today. Silver slumped 2.4% on the week while Oil added 1% with gold flatlining since yesterday morning down around 0.5% on the week. AAPL, obviously, was the story today -7.75% in last 3 days to 10 month lows on huge volume today. EUR strength (+1.75%) dragged USD lower but was stymied by JPY weakness (-1.25%) as Treasury yields came off the week's highs to end 7-9bps higher on the week. VIX at two-week highs closed above Europe for the first time this year. Some peculiar volume and behavior in bond ETFs to note also (HYG saw biggest 2-day drop in a month) - markets feel very brittle up here.
The last 28 hours in S&P 500 futures land...bwuahahaha
Dow Transports seemed all excited today as the rest of the major indices plunged off mid week highs to end down around 0.25%...
Materials outperformed, Discretionary underperformed...
AAPL is still +25% YTD (as compared to 15% YTD for NDX) but AAPL and Nasdaq are now both up only 2.5% from 02/09/12 - so basically unless the manager bought in January, AAPL is weighing on his performance (still).
Away from the equity markets, credit saw some extremes today. A massive spike in LQD (investment grade credit) volume followed shortly by HYG (high yield credit) volume suggested (by the market action) that there was duration-weighted rotation from risky-credit into 'less' risky credit...
Decent USD weakness (via EUR strength) was stymied a little by the weakness in JPY this week
Commodities diverged quite notably in the face of USD weakness...
and long-dated Treasuries have almost retraced the losses from post-FOMC...
Charts: Bloomberg and Capital Context
Guest Post: SWHC plunged on the dreadful news of the CT shooting then dumped again on major volume as Obama spoke... |
| Fiscal Falls - The Acceleration Effect Posted: 14 Dec 2012 01:51 PM PST [COLOR=#3d85c6]For the larger internet audience, an article entitled "Fiscal Falls - The Acceleration Effect" has been published here.[/COLOR] Please also review the "The Christmas Clocks" below. Currently, there is no change in the outlook as TDI technical downtrends remain in effect in all time frames. The usual weekly charts will be posted tomorrow. Patience is required as tax loss selling, political gridlock and supply/demand/value issues are prominent features, particularly in the XAU. [COLOR=#3d85c6][B][FONT=Arial]These downtrends are understandably discouraging for some but are also another opportunity to obtain Gold, Silver and mining shares (in that order) at discounted "on sale" prices, for those with vision. It is really a matter of perspective.[/FONT][/B][/COLOR] [COLOR=#3d85c6][B][FONT=Arial]Invest wisely. [/FONT][/B][/COLOR] 12/14/12 ... |
| Guest Post: The Investment Everybody Loves to Hate Posted: 14 Dec 2012 01:49 PM PST Via Pater Tenebrarum of Acting-Man blog, If Wishes Were Horses …Imagine a stock - best for the hypothetical exercise is probably a tech stock - rising for 12 years without interruption. A net gain every year, sometimes a small one, sometimes a bigger one, but nicely compounding at an annual yield of more than 17.13% (that's a devilish 666.67% in 12 years). What would people say about this stock? Would there be a steady stream of negative press trying to dissuade people from buying it? We somehow doubt it, although almost every investment that has seen a great deal of appreciation has its detractors (and sometimes they are right). When it comes to gold, one could certainly debate the merits of buying it at what appears at least on the surface as a high price. Gold bulls can only profit from examining bearish arguments, in order to see if they have merit. So we always take a look around to see if any tenable bearish argument is put forward, but so far we very often get to see what might be termed 'tortured logic'. When the gold market sold off a little in the wake of the helicopter pilot announcing even more money printing, one of the bears seized the moment to opine as follows:
We'll take this step by step. First of all, any 'long term gold investor' who 'gets rattled' by a $26 move lower should probably go on vacation or think twice about investing in anything at all. Just saying. Contrary to Mr. Landesmann we don't purport to know whether gold is 'set to correct dramatically'. It might, but then again, it might not. The fact that we hear this every year and it has yet to happen is of course no guarantee that it won't happen this time around. So why is it supposed to happen? Landesmann says gold is 'overvalued', but since he doesn't supply any reasoning with that statement, we'll have to just let it slide. Still, one wonders how he has determined what the 'correct' value is. But then we are getting to the 'tortured logic' part. "The Fed is pretty much saying that we're going to backstop the stock market forever," Landesmann avers. The stress really should be on 'pretty much' here, since the Fed has said no such thing anywhere. If it has, we must have missed it (it was neither in the FOMC statement nor in Heli-Ben's press conference). This is basically where the 'wishes and horses' come in (for detailed advice on how to become a horse, see here. Blücher!) One could perhaps say that one suspects the Fed of wanting a rising stock market, and one would probably be correct about that. In fact, it is a good bet that it wanted a rising stock market for the past four years, and it actually got one. Already nearly two years ago, on occasion of 'QE2', Ben Bernanke let it slip that he regarded the rise in the Russel index as one of the marks of the success of his policy. Rising commodity prices by contrast of course had absolutely nothing to do with his money printing; that's always been China's fault, similar to all other bad things, such as the US housing bubble. That was also China's fault, natch, because these evil people save too much. The reality of the matter is though that the central bank cannot control where the money it creates ultimately goes and which asset classes will be preferred by investors. Imagine someone pondering whether to invest in a few shares or a bar of gold. The following thought is highly unlikely to be first and foremost on his mind: "Wait a minute! Before I push that buy button let me think about what Bernanke wants me to buy! Wouldn't want to do anything overly hasty here!" Again, the only thing the Fed admits to wanting to 'prop up' are not equities, nor gold, or any other specific investment asset besides bonds (obviously it is buying bonds with the aim of artificially suppressing interest rates); its declared aim is to prop up 'economic activity' in the hope that this will lower the rate of unemployment. It does so by trashing the currency it issues, which has been a time-honored method since the time of Roman emperor Diocletian and has never worked in all of history, which evidently hasn't kept people from attempting it over and over again (a form of insanity, if you will). So the only thing we can really say is: "The people in charge of monetary policy are either extremely misguided or downright insane. Place your bets accordingly". It is not for nothing that Dr. Faber has a picture of Ben Bernanke hung in his bathroom. When he frequents this marble-quiet place of contemplation, the picture reminds him of why he shouldn't sell his gold.
A More Balanced DiscussionIt was perhaps unfortunate timing to publish an article entitled "Gold Surges in Popularity, but Is It Stuck Without an Ever-Easing Fed?" within a day or two of the FOMC announcing 'QE4' (the numbering may be superfluous, as it seems to be part of 'QE-Forever'). However, the article by Michael Santoli at least adopts a neutral tone and seems mainly to be concerned with discussing the metal's investment merits dispassionately. It seemingly takes no position on the question whether gold is, or rather should be, money, although it cannot keep from adding a few barbs with regard to that point. After all 'gold bugs' apparently stand forever accused of pining for a 'barbaric relic' to be reinstated as money, which is clearly a no-no, since we have this much better 'flexible' and 'scientific' monetary system in place today that works so well that it produces major bubbles and system-threatening crashes with unwavering regularity. Who would want to do without all that excitement? Anyway, Santoli makes a few interesting points that are worth pondering. He notes for instance that e-bay is getting in on the act:
(emphasis added) It is certainly true that one should keep an eye out for anecdotal evidence that something is becoming 'too popular' (on the theory that this would be a contrary indicator). However, thinking about this a bit, it does not appear to us that gold is already at what deserves to be called a peak of popularity. The percentage of investment assets dedicated to gold remains at a paltry level, far below of what it once was. Estimates range from 0.2% to 0.8% of all investable assets being dedicated to gold and gold-related investments. These are not exactly numbers likely to raise alarm among contrarians. As to the question of whether the 'key drivers' of gold have peaked, a 'peak' by definition can only occur once, so it is always difficult to judge in real time. Let us just say that the fundamentals as they currently stand continue to look bullish. Since there are not only no signs whatsoever that the above mentioned global race to currency oblivion (the Fed is not the only central bank issuing money by the truckload) is over – rather the opposite in fact – there seems to be no reason as of yet to ruminate about whether this 'peak' has occurred. Besides, by the time the bull market does near its end, gold probably will be extremely popular. Santoli then makes a valid point, namely that gold is no longer a bargain. Of course, back when it still was a bargain, very little was written about that fact either, but that doesn't change the fact that it no longer is one. He writes:
The first paragraph is correct – gold has risen against an entire array of assets, it has outperformed just about everything. It should be pointed out though that this is what tends to happen during secular downturns. Gold reflects an increase in the demand for money, even if it is not used as a medium of exchange today. However, one can still save in gold – in the knowledge that it cannot be printed by any central bank. That remains its chief attraction. How far the increase in gold's value relative to other assets will go is unknowable. We can at best try to come to conclusions from looking at the history of e.g. the Dow-gold ratio to name a popular yardstick, but obviously this does not amount to a guarantee that things will play out on a similar manner again. Gold may rise less than last time around, but it may also rise even more. This will depend on the value scales and states of knowledge possessed by investors in the future, which are inherently uncertain. As to the remark about there having been 'little market expectations of more assertive Fed easing', if those were indeed evident, then they were obviously mistaken, because 'more assertive Fed easing' is precisely what was delivered. Santoli concludes along similar lines:
(emphasis added) Now, we already know that 'incremental' Fed moves are out of the window as completely as they could be at this juncture (we think that eventually, things will become even more crazy. If you want to know more about Bernanke's future shopping list, consult his 2002 speech on 'deflation'). That leaves the question Santoli poses above: namely whether "the crisis-spawned money printing will escalate and produce more inflation and financial instability than is already anticipated." To this one need only keep one thing in mind: it is not just the case that the 'money printing' has been 'crisis spawned', but that the money printing (unless stopped very credibly and forcefully before things get out of hand) by itself is absolutely certain to spawn yet another crisis. After all, the initial crisis was also the result of too much money printing. In the 2001-2002 recession, the annual growth rate of the broad US money supply measure TMS-2 at one point exceeded 21%. Why would anyone assume that even bigger doses of the very same policy will have more beneficial effects? There is neither a credible theoretical nor a historical case to be made that argues in favor of holding such a belief. It is also very important to keep in mind in this context that there can be enormous lag times between the implementation of such a policy and the inevitable appearance of its negative effects in a manner that makes them obvious to all and sundry. We regularly quote a passage from Human Action here in which Mises points out that an inflationary policy can go on for many years without anyone suspecting harm – but it cannot go on forever. Finally, there is a historical datum of interest in the context of major secular bull markets (a bull market that has been in force for 12 years qualifies as such): they neither end with a whimper, nor do they end while the fundamentals remain supportive. The final phase of almost every major bull market is characterized by two essential features: 1. the rate of the price increase accelerates (prices 'go parabolic') and 2. the supportive fundamentals disappear (usually, interest rates are rising. To name a few prominent examples: this happened with the Nikkei in the late 80's, with gold in 1979/80, with the Nasdaq in 1999/2000). It is of course possible, even likely, that there will be a major correction in the gold price before this phase commences. In fact this is also something that has also been observed in the examples we have listed (the Nikkei's final major pre-blow-off correction was in 1987, the Nasdaq's in 1998, gold's in 1975/6). Richard Russell briefly talks about this phenomenon here.
Technical ConditionsThe fund manager quoted above also mentioned technical evidence that allegedly indicates a growing likelihood of a bigger correction. We don't see it, at least not yet. Rather, it looks like gold remains in a normal consolidation. On the weekly chart depicted below, we have indicated the major areas of lateral support (blue dotted lines) and resistance (red dotted lines). As long as prices are between these levels, the chart remains neutral. Should one of these levels be broken, then one can reasonably argue that a technically significant change has occurred, but not before. To us the chart actually looks bullish, since most of the time, drawn out multi-month consolidations of this type turn out to be continuation formations. However, there can obviously be no guarantee of that – we will have to wait and see. What we can say though is that should the indicated support level break, then obviously a deeper correction will be underway and one would have to take a look at lower support levels (there are several price congestion areas that are candidates for such). Conversely, a break-out above resistance would likely lead to a rally the size of which correlates in some manner with the length and breadth of the preceding consolidation.
Gold remains stuck between support and resistance |
| Egon von Greyerz: Two important charts for gold and silver investors Posted: 14 Dec 2012 01:40 PM PST 3:35p ET Friday, December 14, 2012 Dear Friend of GATA and Gold: Writing for King World News, Swiss gold fund manager Egon von Greyerz argues that Western currencies are following the downward path of the Roman Empire's silver denarius. "Although gold (and silver) didn't go up in the last couple of days," von Greyerz writes, "it is guaranteed that the continued destruction of paper money will lead to substantially higher prices in the precious metals. But remember: You have to hold physical metals and store them outside the banking system." Von Greyerz's commentary is headlined "Two Important Charts for Gold and Silver Investors" and it's posted at the King World News blog here: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/12/14_T... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Fred Goldstein and Tim Murphy open All Pro Gold Longtime GATA supporters Fred Goldstein and Tim Murphy have brought their many years of experience in the precious metals and numismatic coins to All Pro Gold as metals brokers who specialize in the delivery of gold and silver bullion bars and coins as well as numismatic gold and silver coins. Fred and Tim follow these markets closely and are assisted by a team of consultants in monitoring market trends. All Pro Gold offers GATA supporters competitive pricing on all bullion products and welcomes inquiries. Tim can be reached at 602-299-2585 and Tim@allprogold.com, Fred at 602-799-8378 and Fred@allprogold.com. Ask about their ratio strategy and the relationship of generic $20 dollar gold pieces to 1-ounce gold bullion coins. Visit their Internet site at http://www.allprogold.com/. Join GATA here: Vancouver Resource Investment Conference * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Opinion Around the World Is Changing When Deutschebank calls gold "good money" and paper "bad money". ... http://www.gata.org/node/11765 When the president of the German central bank, the Bundesbank, pays tribute to gold as "a timeless classic". ... http://www.forbes.com/sites/ralphbenko/2012/09/24/signs-of-the-gold-stan... When a leading member of the policy committee of the People's Bank of China calls the gold standard "an excellent monetary system". ... http://www.forbes.com/sites/ralphbenko/2012/10/01/signs-of-the-gold-stan... When a CNN reporter writes in The China Post that the "gold commission" plank in the 2012 Republican platform will "reverberate around the world". ... http://www.thegoldstandardnow.org/key-blogs/1563-china-post-the-gop-gold... When the Subcommittee on Domestic Monetary Policy of the U.S. House of Representatives twice called on economist, historian, and gold standard advocate Lewis E. Lehrman to testify. ... World opinion is changing in favor of gold. How can you learn why and what it will mean to you? Read the newly updated and expanded edition of Lehrman's book, "The True Gold Standard." Financial journalist James Grant says of "The True Gold Standard": "If you have ever wondered how the world can get from here to there -- from the chaos of depreciating paper to a convertible currency worthy of our children and our grandchildren -- wonder no more. The answer, brilliantly expounded, is between these covers. America has long needed a modern Alexander Hamilton. In Lewis E. Lehrman she has finally found him." To buy a copy of "The True Gold Standard," please visit: http://www.thegoldstandardnow.com/publications/the-true-gold-standard |
| COT Gold, Silver and US Dollar Index Report - December 14, 2012 Posted: 14 Dec 2012 01:32 PM PST COT Gold, Silver and US Dollar Index Report - December 14, 2012 |
| Posted: 14 Dec 2012 01:26 PM PST Although you wouldn't know it from listening to all the bearish commentary out there, silver is actually enjoying a strong young upleg. Its technicals are very bullish, contradicting the prevailing pessimism gripping traders. Read More...  |
| Posted: 14 Dec 2012 12:12 PM PST London Gold Market Report from Ben Traynor BullionVault Friday 14 December 2012, 07:45 EST SPOT MARKET gold prices looked to be headed for a third weekly loss in a row Friday lunchtime in London, after failing to break above $1700 an ounce, while stocks and US Treasuries were little changed on the day, with no signs of progress from Washington on the so-called fiscal cliff. Silver was also headed for a third losing week in a row, trading around $32.60 an ounce for most of this morning, as other commodity prices gained slightly. "A lack of activity has kept precious metals largely unchanged this morning," says today's commodities note from Standard Bank. A day earlier, gold dropped back below $1700 an ounce Thursday, despite the US Federal Reserve committing to $45 billion a month in Treasury purchases the day before. "The bulls were making the argument that the central bank would remain easy, at least until 2015, helping provide an element of support for gold," says ... |
| Gold and Silver: Of Cartels, Algorithms and Artificial Prices Posted: 14 Dec 2012 12:11 PM PST Those who follow the day to day developments in the gold and silver markets have typically seen rampant market manipulation by large traders and bullion banks. Although supposedly against the rules — and even being subjected to an ongoing investigation by the CFTC that now reaches into its fifth year — this market bullying is nevertheless allowed to happen over and over again without effective regulatory intervention. Some of these big players even employ algorithmic trading systems to move into and out of the market faster than any human can. The transactions initiated by these computerized trading programs happen rapidly and often in huge size. Algorithmic Trading Contributes to Manipulation Despite these challenges, both precious metals have been able to rise over the last decade, so the real question is how high the prices of silver and gold would be if the market had not been subjected to recent downside price volatility? The bullion banks typically need only... |
| Harvesting Profits From Weak Hands in the Silver Market Posted: 14 Dec 2012 12:10 PM PST In financial market jargon, those investors described as having "weak hands" typically means that they cannot hold onto a position they have established for very long if it goes against them substantially. This term is often used to contrast such investors to those with "deep pockets" who can instead afford to take deeper drawdowns in their portfolio before they feel the need to exit their positions. Weak Hands Make for Easy Profits The participation of individuals with weak hands in a market like silver's are sometimes seen by the larger and more unscrupulous traders as providing the opportunity to make quick and easy profits. This is especially effective if the weak handed traders' stop loss levels can be reasonably deduced by having an understanding of how trading systems tend to operate based on technical analysis, for example. Their large trading size and deeper pockets often allows the big market makers and players to temporarily push the market through ke... |
| Posted: 14 Dec 2012 11:48 AM PST Although you wouldn’t know it from listening to all the bearish commentary out there, silver is actually enjoying a strong young upleg. Its technicals are very bullish, contradicting the prevailing pessimism gripping traders. This glaring disconnect between price action and sentiment won’t last forever. It has hammered silver stocks to depressed levels that offer a smorgasbord of opportunity for brave contrarians. |
| Posted: 14 Dec 2012 11:46 AM PST December 14, 2012
Should the U.S. send troops to aid Syrian rebels? How the heck should we know? Following the release of Empire of Debt, we were invited to join a group of foreign policy journalists who meet every six weeks or so at an event they call the Empire Salon. Whatever we know about the happenings in D.C. related to defense spending and military strategy comes by virtue of their internal listserv — a private email through which they keep each other apprised of their latest work. A flurry of headlines from the listserv this morning urged and/or speculated intervention in Gaz… no… Ira… wait… Egy… hmmn… Syria, yeah that's it, intervention in Syria: "Can Lebanon Survive the Syrian Crisis?" asks one. "Is NATO Planning an Intervention in Syria?" implores another. "$100 Million New Saudi Aid to Bolster Syrian Revolution," declares a third. "Despite U.S. aid," reads a fourth about the effectiveness of another U.S. engagement overseas, "Little Progress in Monitoring Kabul Airport Cash Flow."
(We wonder the same thing. The U.S. military still has issues in Afghanistan, the most enduring war in the nation's history… there's ongoing speculation of Israel and Iran, which we try — but mostly fail — to keep up with. Now Syria? It's a neocon's wet dream!) The fear among Republicans, at least, appears to be that "sequestration" — the process by which automatic spending cuts would take place across the federal balance sheet — would mean an unsafe reduction in defense spending. Seriously. "Even if 'sequestration' happens," counters the Cato Institute's Justin Logan, "military spending would wind up at 2007 levels in 2013 — 2007 was hardly a lean year at the Pentagon." House Speaker John Boehner's proposal for averting the "fiscal cliff" doesn't get specific on defense spending. However, it appears the recent purge of "Tea Party" candidates from committee leadership positions has something to do with support for cuts on everything… but defense. "I think they [Republican leaders]," Justin Amash (R-Mich.), one of those recently purged, charges, "are willing to raise taxes to avoid any defense cuts and I think they're willing to take any deals, even bad ones, to avoid defense cuts." Yeah. So much for the Tea Party revolution.
Ha! There was a time when Republicans represented fiscal responsibility in government. Heh. That idea left the building in the 1980s. (Our working premise: Imperial logic now puts these events largely beyond your control… So what do you do now? Hold that thought. We'll be returning to this theme much more aggressively in the new year. Stay tuned…)
As Fed governors go, Mr. Fisher isn't completely insane. Well, maybe he is. Last March, we found ourselves largely agreeing with him on the folly of bailouts. Now he's invoking the vastly overplayed Eagles song (sorry if we've put it in your head for the rest of the day) in saying the accelerating pace of "QE" announced on Wednesday will prove hard to reverse. "You can check out anytime you want," Fisher channels Henley and Frey, "but you can never leave." Here again, we can't argue. But we much prefer the lodging analogy invoked by our macro strategist Dan Amoss 18 months ago on the day the Fed nominally exited QE2: "QE2 (and 3, 4 and 5) will be like a roach motel: easy to enter and impossible to exit in a practical manner." Prescient, no? In the meantime, we've run across two other penetrating analyses of Fed policy this week… in the form of flowcharts:
After performing its substitutions, geometric weightings and hedonic adjustments, the Bureau of Labor Statistics pulled the November number from its posterior this morning — a drop of 0.3%, owing mostly to falling gasoline prices. The year-over-year increase works out to 1.8%.
Gold has moved little in the last 24 hours, the spot price $1,696. [Ed note: The market action of late has been very kind to readers who took us up on the 21-Day Trading Challenge. Jonas Elmerraji and Greg Guenthner told them on Wednesday to book 16% gains on First Solar -- yes, a solar stock! -- after only six trading days. "I am very happy," writes a reader from Atlanta "to say that the very first trade you recommended (FSLR) as part of the trading challenge has made me just over 15% and $1,200. This very first trade has paid back my subscription multiple times over!!" "FSLR was my first trade with you," writes another reader. "I bought 100 shares at $28.34 and sold it at $32.45. My cost to buy and sell was $10.00 total. I made $401 on a $2,844 investment in eight days... Of the several finance organizations that I have tried investments with, you are the first one to make me money." "Yippee! WOW!" says a third, excitedly. With his gains, "I can now help make this Christmas even better with all of us together (seven children and 12 grandkids, 25 people in all) for the first time in four years." Jonas and Greg are monitoring literally dozens of charts, waiting to pounce on the next trading opportunity. And we won't make you watch a "long-winded" presentation: You can get started right here.
If the sky was once the limit for graphene... it just high-tailed to megacosmic. "Smart walls," bendy phones, paper-thin solar panels... Only a few short weeks ago, it was thought graphene could dominate only the 2-D world. Now even that's changed. By using a method called "freeze casting," professor Li's team at Monash University was able to modify graphene into imitating the structure of cork, creating a once highly unlikely 3-D object. Lighter than air... yet able to support more than 50,000 times its weight "The graphene blocks produced were lighter than air," researchers at Monash University report, "able to support over 50,000 times their own weight, good conductors of electricity and highly elastic -- able to recover from over 80% deformation." [Ed. note: With the advent of 3-D printing upon us, we're confident someone is already connecting the dots. Our resource man Byron King has identified a few good ways to play them. We've updated his "technology metals" report and put it back online. If you missed it before, it's once again worth a look.]
"There are significant mitigating circumstances," he avers. "I've gone to reading articles — anything you want is available on the Internet. Although reading books is part of my mental self-image, what I wind up reading most of the time these days is a wide variety of articles online. "I read articles about books mostly from dreadfully left-wing magazines like The New York Review of Books, The New Yorker, The Atlantic and such. But by the time you finish all these articles, you don't have time to actually sit down and read a book. Talk about perverse… although at this moment on my bed stand, there's a book on the Dowager Empress, and I'm reading that for about a half-hour every night." But online media consumption requires discipline, Doug says: "Pareto's principle operates online, as everywhere: 80% of everything is crap, and the other 20% breaks down ad infinitum with a repetition of the 80-20 rule." Twitter and Facebook? "These things consume huge amounts of time, usually only to transmit trivial information; they just serve to clutter your mind. "The Kindle revolution, on the other hand, offers huge advantages — you can read almost any book you want, anywhere, and never have to remember to take the right one with you. But I still don't cotton to Kindles, as much as I appreciate the concept. Maybe I'm just a dinosaur, but I prefer reading words printed on paper." You can read Doug's new book — his first in 15 years — in either paperback or e-book format. Totally Incorrect is a rollicking collection of 43 conversations with his colleague Louis James. For some choice excerpts and an order form, click here.
As the auspicious date approaches, we realize we've been remiss. Glenn Beck's curious online enterprise, TheBlaze, points out that the Tea Party, the event some folks consider a seminal event in the nation's founding, is now labeled an "act of terrorism" in the classroom. Background: A suggested lesson plan by CSCOPE — a nonprofit that develops curricula for Texas schools — instructs "social studies" teachers to read this story to students as if it were breaking news: "A local militia, believed to be a terrorist organization, attacked the property of private citizens today at our nation's busiest port. Although no one was injured in the attack, a large quantity of merchandise, considered to be valuable to its owners and loathsome to the perpetrators, was destroyed…" Then teachers are meant to open the class up for discussion — described as such in a screengrab from the CSCOPE website:
But… why? If it quacks like a duck… it's a duck. Rhetoric through the ages doesn't change much, anyway. Rather than scrub the exercise from the website… the exercise should be introduced to the curriculum in top-down form from the Department of Education — then maybe folks would see that imperial roles have simply evolved.
[Darn, how did we miss that? Note to research department: Get off your asses!] "In the big picture," our conscientious reader continues "all social programs are intended to help people; the military on the other hand, except for those garnering a paycheck, have a more sinister set of marching orders. [Ibid. reiterate note to research department. Damn it!] "If America wants to prosper in the world, we need to give serious consideration to the humanitarian potential of the United States military — so that roses will actually been thrown into the streets before the brigades of the 101st, 82nd or USMC. "This approach would provide the basis for a new world outlook: that when an American carrier or nuclear sub arrives in a foreign port, it is a cause for celebration in a poor and depressed country seeking help — not subjugation — and that the United States of America is there to help, without expecting anything in return. "Too bad nobody in your organization [ha, ha, ha] or in Washington, D.C., can actually think about this approach. "As such, I'll give you an idea to run with [sweet, we're saved]: Let's spend some money to convert the SS United States into a world-class hospital ship, which can be deployed to help in places like earthquake-ravaged Haiti or Indonesian/Japanese tsunami-damaged areas. "Lord knows even the Japanese are very unhappy about permanent American bases. Let's change the perception of America one country at a time. " The 5: Amen. Get on it. Let us know how your well-spent time gets… well, spent.
The 5: Heh.
"I should apply for a policy job in D.C.," the reader then whispers to the audience, "I could double my income." The 5: [Polite applause.] Warm regards, Addison Wiggin P.S. Before day's end, a report may be posted on an obscure federal website that could change the way every American thinks about money. If you act soon enough, you could pocket a tidy sum — up to a 238% gain, in fact. Check out the details at this link — while there's still time.        |
| Euro Flag, Reversal Candlestick in Stocks and Gold Posted: 14 Dec 2012 11:43 AM PST Yesterday we saw substantial declines in the whole precious metals sector (the only important exception was palladium that actually managed to close higher after a huge price drop earlier during the day) even though the Fed announced Wednesday that it would continue its monthly purchases of $85 billion in Treasury bonds and mortgage-backed securities. This makes it probable that the Fed announcement was already priced into the market, hence the lack of its reaction. |
| Posted: 14 Dec 2012 11:30 AM PST Synopsis: Despite the new QE4EVA, gold is slumping and the VIX volatility index is snoozing – which should make you more than a little wary. Dear Readers, My apologies if I fumble about a bit today. If I do, it is thanks to a couple of rather large firecrackers set off on a nearby street in the middle of the night. Here in the Argentine outback, they still sell what used to be called M-80s when I was a kid and America was a place where the careless were free to blow off the tips of their fingers. It wasn't actually the fireworks going off that woke me, but the after-effect. For reasons beyond my ken, the top half of my pillow has become the "safe place" for Dexter Woo, our micro-sized rat terrier. As a consequence, for the better part of an hour in the middle of the night, I was essentially wearing a toupee made out of a shaking, loudly panting dog, shown here in full panic mode. Yet one must forge ahead, and so I do, b... |
In yesterday's RANT – "
Today Nigel Farage made some absolutely fascinating statements to King World News regarding the Queen's tour of Britain's gold vault. Farage, who is Britain's very popular MEP, also spoke about the future price of gold and warned King World News, "Everything from George Orwell's 1984 is coming into being.
Two of the most prominent central bankers opposed to the Federal Reserve's decision this week to launch a fourth round of quantitative easing (QE4) let their opinions be heard on Friday. Jeffrey Lacker and Richard Fisher – Presidents of the Richmond and Dallas Federal Reserve Banks, respectively – made public comments warning that QE4 could lead to escalating inflationary risks and more uncertainty for an already-fragile U.S. economy.
By upping the ante once again in its gamble to revive the lethargic economy through monetary action, the Federal Reserve's Open Market Committee is now compelling the rest of us to buy into a game that we may not be able to afford. At his press conference this week, Fed Chairman Bernanke explained how the easiest policy stance in Fed history has just gotten that much easier. First it gave us zero interest rates, then QEs I and II, Operation Twist, and finally "unlimited" QE3. 
Terror Alert Orange:
Back to Fisher: "I'm a little bit worried we are getting tangled up in our own knickers here," he says, regarding the practice of tying the fed funds rate to unemployment. Again, because it's Friday, and for the sake of propriety, we'll let you evoke your own imagery here…
Surprise, surprise. Since TheBlaze's observation, CSCOPE has clammed up. The lesson plan has been scrubbed from its website.
The Mobius strip, no obvious resemblance to emerging market guru Mark Mobius."This single continuous curve demonstrates that the Möbius strip has only one boundary. Just like the White House, it covers all sides of the equation!"
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