What would you do if all the lights went out and they never came back on? That is a question that the new NBC series "Revolution" asks, but most people have no idea that a similar thing could happen in real life at any moment. A single gigantic electromagnetic pulse over the central United States could potentially fry most of the electronics from coast to coast if it was powerful enough. This could occur in a couple of different ways. If a powerful nuclear weapon was exploded at a high enough altitude, it could produce an electromagnetic pulse powerful enough to knock out electronics all over the country. Alternatively, a massive solar storm could potentially cause a similar phenomenon to happen just about anywhere on the planet without much warning. Of course not all EMP events are created equal. An electromagnetic pulse can range from a minor inconvenience to a civilization-killing event. It just depends on how powerful it is. But in the worst case scenario, we could be facing a situation where our electrical grids have been fried, there is no heat for our homes, our computers don't work, the Internet does not work, our cell phones do not work, there are no more banking records, nobody can use credit cards anymore, hospitals are unable to function, nobody can pump gas, and supermarkets cannot operate because there is no power and no refrigeration. Basically, we would witness the complete and total collapse of the economy. According to a government commission that looked into these things, approximately two-thirds of the U.S. population would die from starvation, disease and societal chaos within one year of a massive EMP attack.
Gold rose, capping the longest annual gain since at least 1920, on renewed concern that central banks from Europe to China will take steps to spur economic growth and as U.S. leaders near a budget deal.
Gold futures for February delivery gained 1.2 percent to settle at $1,675.80 at 1:41 p.m. on the Comex in New York, while prices for immediate delivery jumped as much as 1.5 percent. Through Dec. 28, the metal had slumped for five straight weeks as the deadline for the so-called fiscal cliff of automatic tax increases and spending cuts due to take effect tomorrow loomed. President Obama said today at a White House event that an agreement was "within sight."
"All that money printing across the globe put a bid under gold," Matt Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. "There is overall optimism about the fiscal deal so we are seeing buying across the counter."
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With 2013 now upon us, the Godfather of newsletter writers, Richard Russell, told his subscribers they are now living through the greatest bubble in history. Russell also discussed gold and the important breakout in the closely-watched VIX. Here is what Russell had to say in a note to subscribers: "You and I are watching, or I should say living through, the greatest bubble in world history. What could it be? Is it the world population growth? Is it the explosion of world communication? Is it the progress in health?"
This posting includes an audio/video/photo media file: Download Now
The president of one of America's oldest precious bullion dealers says retail investors purchased gold and silver in unprecedented volumes during the Christmas holiday period.
Bill Haynes, president of CMI Gold & Silver told King World News that the Arizona bullion veteran did more business during the 3 day holiday week than during any single week in years, with one purchaser spending $6.8 million on a single transaction.
Haynes says fear of economic upheaval in the Western world is augmenting, leading to an "unimaginable" buying of physical gold and silver, and foresees further price breakouts to the upside.
Gold climbed $11.56 to $1668.76 by a little before 4AM EST before it fell back to $1656.69 in London, but it then jumped to as high as $1679.90 in New York and ended with a gain of 0.96%. Silver slipped to $29.87 in London, but it then rose to as high as $30.46 in New York and ended with a gain of 0.97%.
Seeking Alpha has only 3 entries under the 'Gold & Precious Metals' section of its most recent 'Macro View' email notice:
Silver: Another Decade of 500% Returns is Possible Silver: Are We Ready Yet for the Rally to $60+? Silver is Set to Explode in 2013
To be fair, the second article highlights lower near-term targets prior to a rally to $60+ and this brings me to my point; silver is in a bear flag. I too am bullish on Ag and Au in 2013, but the charts are the charts and silver's daily chart targets 27-28 first, which we have been noting in the newsletter despite a recent change to a bullish risk vs. reward stance on the precious metals complex.
Obviously, over the past couple years gold has completely collapsed relative to Bitcoin; gold's performance relative to Bitcoin is worse than the Argentina Peso against the USD.
The currency collapse has continued unabated. Once again all major fiat currencies have fallen relative to gold. And once again Bitcoin's performance absolutely crushes gold and silver.
With Bitcoin now entering its fourth year the numbers speak for themselves. All major currencies are rapidly collapsing against Bitcoin. Ominously, under International Accounting Standard 29 there is a case that even gold is in hyperinflation relative to Bitcoin as the presentation currency under IAS 1, 19.9 and IAS 21. And Bitcoin is just getting started.
With Bitcoin performing so well many are probably wondering: "Bitcoin is still around, what the hell is going on?" So let's take a look at where the money is being made.
Bitcoin users incur about US$400 of daily transaction fees to send approximately 50,000 daily Bitcoin transactions.
BITCOIN MARKET CAPITALIZATION
This chart displays the 200 day moving average of Bitcoin's market capitalization. This is important to discern the long-term secular trend with regard to Bitcoin and effectively filter out the daily noise. The Bitcoin market capitalization is a function of (1) the number of bitcoins in circulation multiplied by (2) the exchange rate which depends purely on the demand for bitcoins because supply is publicly known.
The number of bitcoins in circulation is constantly expanding but at a predetermined rate. During the first four years the rate was 50 bitcoins every 10 minutes. But then in late November 2012 at block 210,000 the block reward was slashed to 25 bitcoins every 10 minutes. Thus the supply of bitcoins is known and any future expansion has already been discounted by an efficient market into the current exchange rate.
BITCOIN DEMAND
Thus, with supply known the exchange rate of Bitcoins is composed of (1)transactional demand and (2)speculative demand.
Transactional demand is very interesting because bitcoins are a medium of exchange vehicle resulting in an oddly positive elasticity of demand because there are lower embedded costs in terms of time, fees and privacy relative to substitutes or alternatives such as bank wires, checks, Visa, Mastercard, Paypal and etc. Consequently, the price of bitcoins is irrelevant to the transactional demand component. Whether bitcoins are $0.05 or $1,000,000 and because they are divisible without cost to 21 quadrillion atomic units therefore they perform and deliver equally to the user the value of transaction value exchange services.
Speculative demand is from individuals who desire to hold bitcoins in anticipation of a rise in price relative to other assets. Because bitcoins are a sterile asset, like gold, any rise in price functions as a wealth transfer from other assets in the economy to holders of bitcoins.
Make no mistake about it, Bitcoins add incredible value to users because it is censorship-resistant or in other words non-politicized currency. It allow users to send any amount of money to any other person instantly without a fee to anywhere in the world without any restrictions whatsoever. E-Gold, GoldMoney (payments have been restricted to only among Jersey based holdings), Liberty Dollar and even gold through confiscation by FDR, Stalin, Hitler and Mao were all censored.
But Bitcoin is a completely different and wholly new rapidly metastasizing beast: the censorship-resistant digital financial honey badger.
WHAT ARE BITCOIN TRANSACTION FEES
As many who invested during the Internet bubble of the early 21st century came to understand many metrics can be 'puffed up' or faked. This is certainly true with regards to the Bitcoin economy and one reason I like to monitor total transaction fees.
When bitcoins are sent the sender can optionally include transaction fees to benefit from faster processing and confirming by the Bitcoin network, the largest distributed computing network in the world. Transactions without fees will still be confirmed it just may take extra time and really is not a big deal at all. By including a fee then hungry Bitcoin miners prioritize the transaction and include it in a block resulting in faster confirmations of around ten minutes at most.
The prioritizing of Bitcoin transactions takes place automatically in an auction type market. If Bitcoin ever grows in scale to a size like Visa with 12 billion transactions in Q2 resulting in $2.2B of net operating revenue then this is how scarce resources would be rationed. But currently that is not a concern because there is a ginormous amount of excess mining capacity for current usage levels.
Thus, the current average transaction fee of 0.0005 BTC, with a cost of about $0.00675 or a little more than half a penny, will result in the highest priority and extremely quick confirmations.
WHY BITCOIN TRANSACTION FEES ARE IMPORTANT
The above chart shows the total transaction fees Bitcoin miners received on a daily basis and is normalized to a 200 day moving average to filter out the daily noise. As the chart plainly reveals Bitcoin is rapidly being adopted and used on a daily basis.
Bitcoin users incur about US$400 of daily transaction fees to send approximately 50,000 daily Bitcoin transactions with optionally included fees. And that is just transactions where people are actually sending Bitcoins and want priority processing. From my own experience I pay for priority processing in less than 10% of transactions and I do not engage in many Bitcoin transactions because Bitcoin is used merely as a settlement currency and is not yet widely adopted by all the merchants who I purchase goods and services from.
For example, I only need to buy VPN services from Private Internet Access once per year (tip: always use a VPN and never trust a VPN that does not accept bitcoins).
So, despite the usage base still being relatively small and niche there is obviously a significant amount of actual economic activity going on under the hood of Bitcoin. As adoption increases beyond the currently niche base the network effects will really start to take hold making it even more useful and valued.
PAYPAL – THE INTERNET CURRENCY KING
The current King of the Internet payments ecosystem is Paypal. It has 117 million activity registered accounts in 190 markets, had $1.37B of revenues in Q3 2012, represnts 40% of eBay's revenues which has a $67B market capitalization (40% would be $26.8B), had '$4,423 in Total Payment Volume every second in Q3′ in 6.4 million payments per day. Paypal expects to process $10 billion in mobile payments in 2012.
One of these large file upload sites recently integrated Bitcoin as a payment option and the effect on new wallets being created has been noticeable adding more users in two weeks than GoldMoney has in total.
And the market has a way of financially rewarding the solutions, instead of refuges, because they add more value to society.
POTENTIAL BITCOIN PRICES
Where could Bitcoin prices go? Really, really high. Or they could become worthless overnight. After all, even though Bitcoins are tangible and therefore immune to counter-party risk like gold they are illusions because they are non-corporeal. Perhaps there needs to be a new category of currency as discussed in The Great Credit Contraction; illusory tangible money. But how high is really, really high?
First, let's put into perspective how the past performance of gold's complete collapse relative to Bitcoin could affect your net worth.
Taking the current price of $4.00, the 200 day moving average of about $8.50 and extrapolating this upleg with a 12x 200dma top we could see a price of around $80.00 per BitCoin. Is this speculative? Yes. Would I bet on seeing $80 per BitCoin by around June or July? Maybe if the odds are around 5%. But I would take a bet for BitCoins to hit $7.50 by June or July at around a 50-70% probability.
If you had traded one ounce of gold for bitcoins then today you could trade those bitcoins for 3.25 ounces of gold.
Obviously, over the past couple years gold has completely collapsed relative to Bitcoin; gold's performance relative to Bitcoin is worse than the Argentina Peso against the USD.
Second, Bitcoin is still in beta version 0.7.2. This is still experimental software. As more features get built and released it will be even more powerful and network effects will take even greater hold.
Third, buying a Bitcoin (Money Over Internet Protocol) is like buying stock in the Internet, Email or VOIP. Imagine if you could have bought stock in HTTP (Hyper Text Transfer Protocol), SMTP (Simple Mail Transfer Protocol) or VOIP (Voice Over Internet Protocol) and you received value every time every website is ever visited, every email ever sent or every call ever made over the Internet whether through Vonage, Skype, etc. and just like there are businesses built completely around HTTP, like Google or Yahoo, or VOIP like Skype (founded in 2003) so likewise there are companies built completely around Bitcoin. Microsoft purchased Skype in May 2011 for $8.5B.
Fourth, Bitcoin makes payment of taxes more voluntary because the probability of being caught is decreased and even if caught it is impossible to seize the bitcoins without the private key. Plus, their flexibility allows them to be used in many creative ways by estate and tax planners or asset protection specialists. Bitcoins have not been made illegal in any jurisdiction and some jurisdictions like Sweden or France have granted significant protections to Bitcoin entrepreneurs. Plus, there are no silly FBAR or FACTA reporting requirements for bitcoins held in a bitcoin address not held with a third party.
Fifth, the 22nd largest site on the Internet, WordPress, which creates the open-source software that powers over 100 million blogs, announced on 15 November 2012:
PayPal alone blocks access from over 60 countries, and many credit card companies have similar restrictions. Some are blocked for political reasons, some because of higher fraud rates, and some for other financial reasons. Whatever the reason, we don't think an individual blogger from Haiti, Ethiopia, or Kenya should have diminished access to the blogosphere because of payment issues they can't control. Our goal is to enable people, not block them.
Bitcoin is a digital currency that enables instant payments over the internet. Unlike credit cards and PayPal, Bitcoin has no central authority and no way to lock entire countries out of the network. Merchants who accept Bitcoin payments can do business with anyone. …
With Bitcoin we join a new digital economy that doesn't leave anyone behind, essentially making financial transactions open source — something WordPress.com is behind 100%. We're proud to support bloggers from all over the world by providing a Bitcoin option.
A McKinsey Research report found that the Internet accounted for about 3.4% of total GDP, contributed to 20% of GDP in mature countries and 'The Internet economy, now larger than that of Spain, surpasses global industry sectors such as agriculture and energy.'
It would be ironic if the massive wealth transfer the gold bugs have predicted goes not to holders of gold but to holders of bitcoins.
Seventh, a significant portion of the price paid for many collectibles, like the $120m Scream or diamonds, is largely due to the scarcity, ease of transportability and general censorship-resistance and immunity to counter-party risk characteristics that are shared with Bitcoin.
Eighth, companies can drastically reduce their expenses by accepting Bitcoin. According to the National Retail Federation 'Credit and debit-card fees have tripled over the past 10 years, to about $50 billion a year. That money comes straight out of retailers' profits' and in this economy both consumers and merchants are looking to cut costs anywhere they can. Think about it, every gallon of gasoline has embedded a $0.25 fee to the credit card company.
For example, Amazon had net income of $631M on $48.1B of revenue. Assuming they pay 0.5% transaction fee to accept credit cards, which would be extremely low compared to the 2-4% most small businesses pay, then that would add $240.5M to the bottom line; an increase of 38%! And Amazon is just one potential company to accept Bitcoin.
Plus, many of the small businesses that currently accept bitcoins keep those proceeds stored in Bitcoin instead of exchanging them for fiat currencies. This increased demand for bitcoins and decreased demand for fiat currencies has a tremendous leveraged effect on the fractional reserve banking.
Ninth, a significant amount of capital is held by corporations on their balance sheets as working capital and generally classified as current assets. For example, on 16 December 2008 I wrote about how Oil Majors Should Just Buy Real Gold and revisited the topic on 28 November 2009 in Gold And The Oil Majors Revisited.
On 8 December 2008 gold closed at $772.25 and by 27 November 2009 gold closed at $1,177, a 52.4% gain. …
In 2008 the five oil majors repurchased about $54.2B of stock. Exxon with $35.4B, Chevron with $6.8B, Total with $1.3B, British Petroleum with $2.6 and Conoco Phillips with $8.1B. The average price of gold in 2009 through October was about $941.
So let me get this right. Instead of holding increasingly worthless colored coupons the oil majors could have diversified their currency holdings to ensure they could make payroll and with about a third of what was spent on the share repurchases could have bought the entire annual production of platinum and the entire above ground stockpile of silver. Or assuming the average price of gold they could have bought about 1,791 metric tons of gold.
Ice Servers is a pround Icelandic company that sells webhosting services, accepts bitcoins and takes advantage of these three competitive advantages: (1) better legal protections for website owners, (2) cheaper power and (3) great geographic location for US and European markets. This is a prime example how the Icelandic economy which is currently about twice the size of the Bitcoin economy can integrate with it.
So, Bitcoin is cheaper, faster and more private that fiat currencies, bank wires and credit or debit card payment systems. Bitcoins are not subject to counter-party risk so holders do not need to worry about their bank or financial institution failing like Wachovia, Fanny Mae, Bear Stearns, Lehman Brothers, MF Global, etc. and need a bailout that comes from printing fiat currency out of nothing.
So, really, there is no limit to the upside potential of Bitcoin as it continues to suck in capital resulting in an expanding financial event horizon. Gold, with no counter-party risk, is a refuge from the current unstable and failing fiat currency fractional reserve banking and financial system. But Bitcoin is not just a refuge but also a solution to that zombified system. It would be ironic if the massive wealth transfer the gold bugs have predicted goes not to holders of gold but to holders of bitcoins.
And the market has a way of financially rewarding the solutions, instead of refuges, because they add more value to society. And that is what gold's currency collapse relative to Bitcoin is signaling; a massive wealth transfer has started from holders of assets in the traditional fiat currency system, gold, silver, etc. and other assets to holders of bitcoins.
Keeping those thoughts in mind then let's consider some potential bitcoin prices in comparison to other data points within the worldwide economy.
Silver prices have corrected meaningfully after peaking out at near USD50 levels. A correction of over 20% is generally considered bearish and can weaken investors' interest in the metal. If investors consider the long-term picture, silver has given returns of 584% in the last ten years.
This article discusses the reasons for believing that silver can produce another decade of over 500% returns. In line with this expectation, investors can consider fresh exposure to the precious metal on every weakness.
Before discussing the industry specific factors which are bullish for silver, I would focus on the current macro-economic scenario and its impact on the precious metal. The global economy (especially the developed markets) is in a phase of prolonged sluggish economic growth. GDP growth has been volatile since 2007, and recession seems very likely for the U.S. without government support. Further, the eurozone is already in a recession. This scenario necessitates continued expansionary monetary policies by Central bankers globally, and is positive for hard assets like gold and silver.
The violent crackdown on Occupy [which was protesting the SAME THING as the Tea Party ... and the Boston Tea Party] last fall … was not just coordinated at the level of the FBI, the Department of Homeland Security, and local police. The crackdown, which involved, as you may recall, violent arrests, group disruption, canister missiles to the skulls of protesters, people held in handcuffs so tight they were injured, people held in bondage till they were forced to wet or soil themselves –was coordinated with the big banks themselves.
[A newly-released document] shows a terrifying network of coordinated DHS, FBI, police, regional fusion center, and private-sector activity so completely merged into one another that the monstrous whole is, in fact, one entity: in some cases, bearing a single name, the Domestic Security Alliance Council. And it reveals this merged entity to have one centrally planned, locally executed mission. The documents, in short, show the cops and DHS working for and with banks to target, arrest, and politically disable peaceful American citizens. ….
Plans to crush Occupy events, planned for a month down the road, were made by the FBI – and offered to the representatives of the same organizations that the protests would target ….
The FBI – though it acknowledges Occupy movement as being, in fact, a peaceful organization – nonetheless designated OWS repeatedly as a "terrorist threat"….
[The executive Director of The Partnership for Civil Justice Fund - the group which obtained the document] points out the close partnering of banks, the New York Stock Exchange and at least one local Federal Reserve with the FBI and DHS, and calls it "police-statism":
"This production [of documents], which we believe is just the tip of the iceberg, is a window into the nationwide scope of the FBI's surveillance, monitoring, and reporting on peaceful protestors organizing with the Occupy movement … These documents also show these federal agencies functioning as a de facto intelligence arm of Wall Street and Corporate America."
The documents show stunning range: in Denver, Colorado, that branch of the FBI and a "Bank Fraud Working Group" met in November 2011 – during the Occupy protests – to surveil the group. The Federal Reserve of Richmond, Virginia had its own private security surveilling Occupy Tampa and Tampa Veterans for Peace and passing privately-collected information on activists back to the Richmond FBI, which, in turn, categorized OWS activities under its "domestic terrorism" unit. The Anchorage, Alaska "terrorism task force" was watching Occupy Anchorage. The Jackson, Michigan "joint terrorism task force" was issuing a "counterterrorism preparedness alert" about the ill-organized grandmas and college sophomores in Occupy there. Also in Jackson, Michigan, the FBI and the "Bank Security Group" – multiple private banks – met to discuss the reaction to "National Bad Bank Sit-in Day" (the response was violent, as you may recall). The Virginia FBI sent that state's Occupy members' details to the Virginia terrorism fusion center. The Memphis FBI tracked OWS under its "joint terrorism task force" aegis, too. And so on, for over 100 pages.
The FBI was organizing against the OWS movement even before it was known to the general public, and they kept on their campaign against it, until it was dead.
***
The FBI's police-state snooping and tracking of Occupy Wall Street … had begun even before most Americans knew that there was any such movement for the FBI to snoop against.
In other words, the reason why Barack Obama's "Justice" Department refuses to prosecute even a single one of the mega-bank executives who profited so enormously from having defrauded both mortgagees and the investors in mortgage-backed securities, and who were bailed out by future U.S. taxpayers whose government purchased those remaining "toxic assets" at 100 cents on the dollar, is clear: we live in a police state, and these elite crooks control it. This is not real democracy.
Voters were given a choice in November between a President like that but whose liberal rhetoric is condemnatory of "Wall Street," versus a professional stripper of corporations, whose rhetoric was overtly supportive of Wall Street. And voters chose the former. But this nonetheless is a police state, not
It seems we came within 1 foot of our very own Fukishima during Hurricane Sandy. If the sea level had been 1.2 feet higher it would have breached the Oyster Creek nuclear power plant's flood defenses and shut down their diesel powered generators that were required to cool the plant. This is exactly what happened at Fukushima. Oyster Creek is an identical design to Fukushima. How come we haven't heard about this in the MSM? I'm no expert, but when a category 1 hurricane surge can come within 1 or 2 feet of breaching a nuclear power plant, someone should be worried. Are you?
Nuclear Power Plant Flood Risk: Sandy Was Just a Warm-Up
As Hurricane Sandy approached the East Coast late last October, more than a dozen nuclear power plants from North Carolina stretching up to New England were in its wide-ranging path. On Oct. 29, the night that the eye of the storm made landfall near Atlantic City, New Jersey, five nuclear plants were forced to either reduce power or make emergency shutdowns.
The most serious event was at the Oyster Creek Generating Station located in Lacey Township, near Barnegat Bay, New Jersey, about 40 miles north of Atlantic City. Amid 75-mile-an-hour winds, power to the region was knocked out, including at the Oyster Creek plant, just before 7 p.m. The plant's backup diesel generators kicked on to keep its crucial cooling equipment functioning. Nevertheless, by 9 p.m. the plant's pumps were facing another danger: rising floodwaters. Nuclear Regulatory Commission (NRC) spokesperson Neil Sheehan said that Sandy brought a surge of 7.4 feet to Oyster Creek. The plant is obligated to prepare for the consequences of flooding at 8.5 feet, he said, and, at 9.0 or 9.5 feet — Sheehan wasn't sure — the plant's pump motors would begin to be flooded.
David Tillman, spokesperson for Exelon, the utility company that owns Oyster Creek, would not answer specific questions about the evening Sandy hit the plant (such as the height to which the water level rose, the height of the pump motors, or the actions taken by the plant in response to the alert). Characteristically for the industry, he insisted that everything worked perfectly and that there were no problems.
The buffer that existed this time may be of little comfort in the future. For all the damage it caused, Sandy was only a Category 1 hurricane — Hurricane Katrina, by comparison, was a Category 3. Given the challenges even Sandy brought to the Northeast's nuclear power plants, Remapping Debate decided to investigate the extent to which these facilities are prepared to deal with the flood risks widely expected to increase as a result of global warming.
What would be the consequences were a nuclear power plant to flood?
To grasp what a flood at a coastal nuclear power plant such as Oyster Creek would mean, Dave Lochbaum, director of the Nuclear Safety Project at the Union for Concerned Scientists, told Remapping Debate it is worth reflecting on Japan's Fukushima Dai-Ichi nuclear power plant disaster in 2011. First, the plant — which ran on General Electric Mark I reactors, the same design as at Oyster Creek and 22 other nuclear plants in the U.S.— lost outside power due to the earthquake. Its backup generators switched on, and "the plant weathered [the earthquake] pretty well," Lochbaum said. But then the floodwaters arrived, exceeding the facility's sea wall. "That plant wasn't unaware of the flooding potential, but the magnitude of the challenge they faced was just more than they could handle," he said. Because the backup generators and pumps were flooded, there was no means by which to keep the reactors and spent fuel pools cooled.
In the case of a natural disaster like a hurricane, the direct impact on a single nuclear power station would likely be exacerbated by a cascade of indirect effects: a range of emergencies and failures unfolding throughout the surrounding area.
Once that happens, explained Michael J. Reilly, director of the Division of Planning and Response at the National Center for Disaster Preparedness at Columbia University, "it's just a matter of time before the heat and the pressure build up and then you have a reactor accident."
In the worst-case scenario, overheating in the reactor can trigger a hydrogen explosion, which can in turn lead to a breach of the containment structure, the reinforced building in which the reactor core is housed. This would lead to an uncontrolled release of radiation into the atmosphere.
Without an adequate flow of coolant to the spent fuel pool, the heat from the rods would begin to boil the water that remained, which would then evaporate, leaving the rods exposed to the air. At that point, the spent fuel could catch fire and explode, also leading to an unchecked release of radioactive material.
These explosions and fires can damage containment structures, as occurred at the Fukushima Dai-Ichi plant, with some of its buildings reduced to shattered cement and twisted rebar. Ultimately, all of its six reactors were damaged, and three reactor cores melted down, dumping a massive amount of radioactivity into both the water and air. This release led to significant food-chain contamination and the evacuation of 70,000 people. Among the contaminants emitted from the plant was Cesium-137, a radioactive isotope with a long half-life that continues to be found in fish as far away as California.
In the case of a natural disaster like a hurricane, the direct impact on a single nuclear power station would likely be exacerbated by a cascade of indirect effects: a range of emergencies and failures unfolding throughout the surrounding area. As during Sandy, transportation would be radically curtailed with roads, bridges, tunnels, trains, and airports shut, as well as some roads blocked by floodwaters, felled trees, and large-scale debris. There could also be widespread power and water outages, fuel shortages, and downed communication lines.
The indirect effects would likely impair the response to a nuclear power plant disaster. When Hurricane Sandy hit, for example, almost a third of the sirens surrounding Pennsylvania's Peach Bottom Generating Station near Chesapeake Bay that would warn residents within 10 miles of an emergency were inoperable. The NRC-required backup plan for this situation is for first responders to drive around the area with a loudspeaker announcing the emergency. When Remapping Debate asked the NRC's Sheehan how this would happen if roads were flooded and blocked, he said the plant could send out text messages and announcements on television. What if there was no power and cell reception was down? "That's always a concern," he said.
Attempting to evacuate in the midst of a hurricane, Reilly said, is "trying to get out when the window for evacuation is over."
Dr. Andrew S. Kanter, president of Physicians for Social Responsibility and an associate professor at Columbia University, said that it is not realistic in today's circumstances to assume that all key emergency facilities would be fully operational during a severe storm. During Sandy, for example, three major New York City hospitals lost power and were forced to evacuate.
"If there was a significant [nuclear] accident that took out all the hospitals in New York City, there's not enough hospital beds in the entire region to relocate all of those people," Kanter explained. "We're running at maximum efficiency right now [in hospitals] and there isn't a lot of excess reserve."
The likelihood and level of such calamities depends on the intensity and scope of the storm. As Reilly pointed out, for all the havoc it wreaked, Sandy was a mere Category 1 hurricane. "This wasn't the level of a Hurricane Katrina; it wasn't that devastating of a natural disaster — this was a very basic hurricane," Reilly said. "But the fact that it affected so many [nuclear power] facilities in that they seemed to have to shut reactors down, or de-power reactors, or the pumps failed, or they had to go onto generator power, or whatever the specific incident was, I think points to vulnerabilities," he said. "That says to me that these facilities need to be hardened more because if they were faced with a Category 2 or a Category 3, it makes me concerned about whether or not they'd be able to safely shut down."
Are nuclear power plants becoming more exposed to flood risks?
While climate scientists, including Dr. Michael Oppenheimer, the director of the Program in Science, Technology and Environmental Policy at Princeton University, currently project that the frequency of tropical cyclones such as hurricanes will stay the same, or even decrease, the severity of these storms is expected to rise. This is the result of warming ocean surface temperature, due to increasing atmospheric temperatures. "There will be a shift from less intense, say, Category 1 and 2 hurricanes, toward more intense hurricanes," Oppenheimer said.
Amplifying the effect of these more powerful storms will be a rise in sea level. "So there are two things expected to happen simultaneously which will increase surge levels in the future," explained Oppenheimer. Consequently, he said, "Planning for any [nuclear] installations along the coast needs to keep that in mind."
Does the NRC currently factor increased flooding risk due to climate change into its safety requirements?
Sheehan, the NRC spokesperson, said that the agency has not factored in the effects of climate change on nuclear plants' flood safety.
According to Sheehan, the new NRC chief, Allison M. MacFarlane, recently told the agency's staff that she wants to start taking into account climate change in nuclear plant safety. However, she has issued no official call, schedule, or process to include it in the NRC's current or future regulations.
What's more, the NRC has yet to even conduct a study focused on the risks to coastal plants of rising sea levels and storm surges caused by global warming. "We're not at that point yet," Sheehan said.
Nevertheless, Sheehan claimed that Oyster Creek and all the other nuclear power plants in Sandy's path would have been fine if they had been directly hit by the storm.
Does the NRC have plans to close any nuclear power plants because of increased vulnerability to flooding?
No.
What is the NRC doing to require nuclear power plants to better withstand flooding and its consequences?
In March 2012, the NRC issued updated flood-safety "recommendations" in response to the disaster at the Fukushima Dai-Ichi plant. The recommendations require the country's 65 nuclear power plants — which operate 104 reactors — to conduct internal assessments to ensure their facilities meet updated flood- and seismic-risk guidelines. If these reevaluations reveal inadequacies, then the facilities are required to develop remedial plans for NRC approval, and, when approved, implement those plans. But, as of now, the post-Fukushima recommendations issued by the NRC do notrequire the country's nuclear power plants to assess their facilities in light of projected future consequences of global warming, such as a rise in sea level and more extreme storms.
The NRC is enacting its post-Fukushima recommendations in three tiers, the first of which has a deadline of 2017. However, the remaining two rounds currently have no due dates, and none of the rounds requires planning for current and future effects of global warming.
To some people, the NRC's timeline of five years for the completion of Tier 1 reassessments and changes, and the lack of deadlines for Tiers 2 and 3 is unacceptable. Among the critics is Gregory P. Jaczko, former chairman of the NRC, under whose tenure the recommendations were studied, written and issued. (Jaczko left the agency in July of this year.) He would have preferred all recommendations be carried out in a single phase as opposed to divided into three tiers, and he thinks all of the changes could and should be made quickly.
"I still think the right answer would have been to shoot for five years," Jaczko told Remapping Debate. It would be a lot of work, he said, noting that plants would have to bring in outside engineers, hydrogeologists, and other experts to conduct analyses and plan improvements, not to mention construction crews to make the changes. Doing so, he added, would be expensive. But neither point justifies delay, he said. "Make the metric not 'How long is this going to take us?' but 'What do we need to do in order to get it done in five years?'"
One factor impeding faster upgrades, as Jaczko sees it, is that the NRCtends to accept the claims of many plants that assessments, analyses, and improvements can only be done when a plant shuts down a reactor for regularly scheduled refueling and maintenance, which happens every 18 to 24 months.
Indeed, Sheehan, the NRC spokesperson, takes the schedule defined by the plants' refueling windows as a given when explaining the five-year time frame for the completion of Tier 1.
Jaczko had a different view. "Changes can be made at any time if they're necessary for safety," he said. "There's no law that prevents the NRC from requiring changes during the period between scheduled outages."
What are some basic flood mitigation strategies that could be implemented quickly?
Arnie Gundersen, a former nuclear industry executive and current chief engineer at Fairewinds Energy Education, a non-profit organization critical of the nuclear industry, offered ideas for what could be done in the near future to safeguard against flooding at coastal nuclear plants.
He suggested protecting each nuclear plant's pump motors against floodwaters by reinforcing them. First, that means locating the motor in a watertight room — with no windows and a sealed flood door — as some plants have already done. But, Gundersen said, that's not enough, because although the room is sealed, it is not designed to accommodate a surge that puts continued pressure on the structure. If the water reaches high enough levels, it can begin to undermine the room's integrity. Because of the pressure "you'll still get the water squirting in, so you have to make a sealed pump in a sealed room," he said.
Reilly of the National Center for Disaster Preparedness said that upgrades like those suggested by Gundersen, as well as higher flood walls, could and should be put in place at relevant sites immediately.
Above and beyond the physical changes at plants to mitigate flooding, there are important questions about the culture of nuclear regulation that some say need to be addressed.
Reilly thinks the NRC should take a more active role, either itself or through an independent third party, in auditing plants and formulating their upgrade plans instead of the plants doing those tasks themselves, as is currently the practice.
Lochbaum of the Union of Concerned Scientists discounted the utility of deploying independent third parties, saying that the NRC itself should be held accountable for regulating plant safety. One way to do that would be for Congress to hold the agency to safety deadlines in the same way that it now holds the agency accountable for meeting deadlines regarding "business items," such as plant-owner requests to extend the period for which a reactor is licensed, and to increase the amount of power the reactor is permitted to generate. Currently, Lochbaum said, the agency allocates far fewer staff and resources to its safety work than to those business items, and rarely sets safety deadlines that it keeps.
The GOLD PRICE probably made its ultimate low for this move on December 20 with a low at $1,636.00, silver the same day with a 2964c low. But we'll see. Rest of the year should prove spectacular for silver and gold, with gold reaching $2,300 by June and silver $51 or higher.
Long term situation is this: from 2008 through April and August 2011 silver and gold rallied, from 880 cents to 4850c and from $705 to $1,880. After a rally that long, a correction follows, so do go wringing out your hankies on me. It's nature. Both the SILVER PRICE and GOLD PRICE broke through the downtrend lines from those 2011 highs in August 2012, and rallied to 3450c and $1,800, then -- no surprise, folks -- corrected. It now appears they corrected almost al the way back to those downtrend lines for a Final Kiss Good-Bye, with no intention of coming back.
But don't pay no 'tention to me! I'm just a natural born fool from Tennessee who didn't know no more in 2001 than to trade them good Wall Street stocks for that ol' silver and gold. What do you expect from a fool like that?
The silver and GOLD PRICE could make one deeper strike down, but daily that grows less likely. If so, bottoms are 2900c and $1,620 or so.
Today gold gained an astonishing $19.90 to close at $1,674.80, above the November low close but not quite to the December low at $1,684.20. Also closed above the 200 ($1,662.70) and 150 ($1,6783.71) day moving averages. Good, good, good. First tripwire of an upmove, the 20 DMA stands only about $10 above at $1,685.80.
We may have seen the bottom. Regardless, I'm buying. I'll take some chance.
The SILVER PRICE today gained 25.3 cents to 3017.3c, not as enthusiastic as gold. Gold was very perky, silver just dragged along.
That's okay. Silver often lags as rallies begin. Silver stands below its 200 DMA (3075c) and 150 DMA (3075C), but the big barrier now is first 3100c and then 3200c. Needs to punch through those to make itself respected.
Whether we have already seen the lows for this silver and gold correction or not, by mid-January they should be behind us. A very fast rise will signal no more downside coming any time soon.
It's time to buy more silver and gold. The monetary and economic problems that are driving monetary demand into silver and gold have not been cured, not lessened, and will return with a vengeance to drive them much, much higher. Don't get stuck holding stocks or dollars -- or euros or yen, for that matter.
I'm not too high on these year-end comparisons, since I am cynical enough to believe (from past evidence) that the Nice Government Men manipulate these figures to create a Potemkin economic performance. Yet some crave them, so I basely comply, slave to the public mood that I am.
For the year, the Dow appeared to do very well, up 5.7% and the S&P500 up 11.7%. Appeared, that is, to do well until you remember than valued against gold, the Dow gained only 1% and against silver only 3.5%. And you remember that silver and gold spent most of the year correcting a preceding THREE YEAR rise. Whoops -- tacky of me to mention that, wasn't it?
Big gainers among the metals, thanks to strikes in supply-rich Africa, were Platinum (up 7.2%) and palladium (up 5.3%). Both are just too quirky for me to parse.
But how about that US dollar index, Currency Fans? Stayed within 0.2% of where it began the year. Oh, yeah, that's a "natural" market. Naw, no NGM fiddling around in THAT market, no, sir!
What about next year?
Big open garbage can in the living room is the bond market, where the Fed hath so long suppressed interest rates. One day bond buyers will catch on that the Fed can only suppress rates by printing money, and the Fed's bond bubble will burst and interest rates will scream like New Year's rockets to the sky. Good chance that will happen next year.
Fed is busy buying maggoty Mortgage Backed Securities from the banks trying to clean up their balance sheets, but there are more corpses in those closets than in Fibber McGee's. Same holds for European banks, only worse. And don't even talk about Japanese banks. So we're beginning the year carrying the same slimy load of bad banks we carried into last year.
Fiscal cliff? Well, Quarterback O'Bama slammed down the football, but unfortunately he was still a few yards shy of the goal line. 'Twill turn out no more than a mouse-burp. Federal government will keep spending and borrowing, and Fed will keep monetizing the debt. They can do no other, they are made to do that. They inflate, or die. Course, in the end they will inflate AND die, but as long as that comes "tomorrow," who cares?
US dollar index has range-traded since 2008 between 71.33 and 89.11, more narrowly (last half 2010 - 2012) 84 - 72.7. Long term the trend is down, but clearly the Fed is trying to maintain a range with the yen and euro of about US$1=Y85=E0.85 to US$1=Y74=E0.74 (or think of it as Y74 on the low side and Y135 on the high side, or E118 low and E135 high). As long as they depreciate in unison, no destructive competitive devaluation takes place. And make no mistakes, central banks work together as closely as pickpockets at a Yankees ball game, and for the same reason.
US$=Y86.75=E0.7578=0.033 142 oz Ag=0.000 597 oz Au.
Euro may rise as high as $1.3500 early in the year, before the corpses come floating to the top of the pond again. Closed today $1.3196, down 0.17%.
Japanese politicians have run their "depreciate the yen" game about as far as the Fed and ECB can tolerate. Yen hit a new low for the move today at 115.28c/Y100 (US$1=Y86.75). That can't last much longer, but it helps Japanese imports while it does. Of course, if Abe gets his way, the inflation will wreck the Japanese economy, already the most over-indebted of the three big ones.
God bless y'all in 2013 and always!
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
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.
The violent crackdown on Occupy [which was protesting the SAME THING as the Tea Party ... and the Boston Tea Party] last fall … was not just coordinated at the level of the FBI, the Department of Homeland Security, and local police. The crackdown, which involved, as you may recall, violent arrests, group disruption, canister missiles to the skulls of protesters, people held in handcuffs so tight they were injured, people held in bondage till they were forced to wet or soil themselves –was coordinated with the big banks themselves.
[A newly-released document] shows a terrifying network of coordinated DHS, FBI, police, regional fusion center, and private-sector activity so completely merged into one another that the monstrous whole is, in fact, one entity: in some cases, bearing a single name, the Domestic Security Alliance Council. And it reveals this merged entity to have one centrally planned, locally executed mission. The documents, in short, show the cops and DHS working for and with banks to target, arrest, and politically disable peaceful American citizens. ….
Plans to crush Occupy events, planned for a month down the road, were made by the FBI – and offered to the representatives of the same organizations that the protests would target ….
The FBI – though it acknowledges Occupy movement as being, in fact, a peaceful organization – nonetheless designated OWS repeatedly as a “terrorist threat”….
[The executive Director of The Partnership for Civil Justice Fund - the group which obtained the document] points out the close partnering of banks, the New York Stock Exchange and at least one local Federal Reserve with the FBI and DHS, and calls it “police-statism”:
“This production [of documents], which we believe is just the tip of the iceberg, is a window into the nationwide scope of the FBI’s surveillance, monitoring, and reporting on peaceful protestors organizing with the Occupy movement … These documents also show these federal agencies functioning as a de facto intelligence arm of Wall Street and Corporate America.”
The documents show stunning range: in Denver, Colorado, that branch of the FBI and a “Bank Fraud Working Group” met in November 2011 – during the Occupy protests – to surveil the group. The Federal Reserve of Richmond, Virginia had its own private security surveilling Occupy Tampa and Tampa Veterans for Peace and passing privately-collected information on activists back to the Richmond FBI, which, in turn, categorized OWS activities under its “domestic terrorism” unit. The Anchorage, Alaska “terrorism task force” was watching Occupy Anchorage. The Jackson, Michigan “joint terrorism task force” was issuing a “counterterrorism preparedness alert” about the ill-organized grandmas and college sophomores in Occupy there. Also in Jackson, Michigan, the FBI and the “Bank Security Group” – multiple private banks – met to discuss the reaction to “National Bad Bank Sit-in Day” (the response was violent, as you may recall). The Virginia FBI sent that state’s Occupy members’ details to the Virginia terrorism fusion center. The Memphis FBI tracked OWS under its “joint terrorism task force” aegis, too. And so on, for over 100 pages.
The FBI was organizing against the OWS movement even before it was known to the general public, and they kept on their campaign against it, until it was dead.
***
The FBI’s police-state snooping and tracking of Occupy Wall Street … had begun even before most Americans knew that there was any such movement for the FBI to snoop against.
In other words, the reason why Barack Obama’s “Justice” Department refuses to prosecute even a single one of the mega-bank executives who profited so enormously from having defrauded both mortgagees and the investors in mortgage-backed securities, and who were bailed out by future U.S. taxpayers whose government purchased those remaining “toxic assets” at 100 cents on the dollar, is clear: we live in a police state, and these elite crooks control it. This is not real democracy.
Voters were given a choice in November between a President like that but whose liberal rhetoric is condemnatory of “Wall Street,” versus a professional stripper of corporations, whose rhetoric was overtly supportive of Wall Street. And voters chose the former. But this nonetheless is a police state, not an authentic democracy.
Yves Smith notes that newly-declassified documents prove that the federal government treated peaceful protesters as terrorists:
The FBI deemed OWS [Occupy Wall Street] to be a terrorist organization and went into “guilty until proven innocent” mode. Many of the FBI descriptions of possible OWS actions or those of affiliated organizations like Adbusters consistently look to have taken the most inflammatory snippets and presented them out of context.
The FBI also seems to believe that there is no such thing as peaceful protest, that any non-violent activity has the potential to turn violent and therefore should be treated as violent.
In his outlook for 2013, Mike Kosares of Centennial Precious Metals in Denver sees an acceleration of "a sea change in investor psychology" resulting from the inability of major governments to bring order to their finances. That sea change, Kosares writes, is already manifesting itself in large volumes of gold purchases. Kosares' commentary is headlined "The Gold Owner's Guide to 2013" and it's posted at Centennial's Internet site, USAGold.com, here:
CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc.
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There are countless articles available for free suggesting what to expect short- and long-term in the markets but what are those analysts who charge a fee for their insights and recommendations saying these days? Same old, same old or unique and actionable? One such subscription market timing service has pulled back the veil to give us a peek at what could well be unfolding. Words: 906; Charts: 8 links
Mark Hubbartt (www.superforcesignals.com) posted the following excerpts from a recent Weekly Market Update on 321Gold along with a special free introductory offer (visit site for details) to their services for anyone so interested. (I do not subscribe to, will not receive any financial compensation from, or have any monetary interest in, Super Force Signals and am providing this post only as a matter of possible investor interest.)
This article is presented by www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!) and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) 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 included in any article re-posting to avoid copyright infringement.
I want to focus your attention on the Dow, because most investors believe that resolution of the fiscal cliff could give stocks a lift. Unfortunately, this chart suggests that after a tiny rally towards 14,000, there could be an enormous correction that takes the Dow to as low as 11,800.
The sell-off could begin very quickly, so the next rally should be used to lighten up on long positions. Risk takers should short the market as it moves towards 14,000.
Note the enormous wedge pattern in play. My minimum downside target is the outer Fibonacci arc, which is "near" 12,200.
On the charts of numerous precious metals sectors, the CCI spike indicator is in bullish play. I use it to measure the intensity of upward or downward movement. Typically, spike movements indicate the end of a bearish move, rather than the beginning of a new bullish one.
Once the spike has formed, investors should look for RSI to confirm the CCI spike, by moving higher.
Still, no system is perfect. Investors should strictly limit the amount of capital deployed when buy signals are generated.
Accumulating gold may not sound "sexy" at this point, but it is a very solid strategy.
Watching price go lower, as indicators offer positive divergences, is a small consolation to most gold stock investors today. It's important to remember that entire farm crops begin with the planting of a seed, and so does the growth of a portfolio.
If you're low on cash, simply hold your positions.
The latest CCI spike occurred in mid-November. Now, RSI is beginning to confirm that spike, and there is a significant bullish divergence with the price of GDX in play. The size of the divergence suggests that a major bull leg is beginning, for most gold stocks.
I allocate 30% of my GDX risk capital to swing trading. Note the positive divergences on the slow "Stokes" and the Ultimate Oscillator.
I'm very excited about a volume pattern that is now in play, and I've highlighted what I believe are two key "transitional" bars. The tide is slowly turning, in favor of the bulls!
I've highlighted five examples of the CCI buy spike signal on this chart. Four of them were followed by decent rallies, but no trading system is perfect. Note the red circles on the chart. That's one example of a signal that was a "dud".
I am projecting a solid rally occurs soon. GDXJ should acquire my $24.72 target early in January, after a brief rest near resistance at $22.22.
70% of the capital earmarked for investment in the juniors sector should be held as core positions. The other 30% can be used for swing trading.
There are important bullish technical divergences in play now. Both the slow "Stokes" and the Ultimate Oscillator are predicting much higher prices are coming soon! Swing traders can book light profits near $21.50.
This is a ratio chart of silver versus gold, and it suggests silver is set to dramatically outperform gold, in the intermediate term. RSI is close to confirming the latest CCI spike, and the Stokes oscillator at the bottom of the chart is flashing a significant buy signal.
A bullish Doji candle recently occurred, just outside of the lower Bollinger band. No technical pattern has a 100% success rate, but a Doji is highly dependable. The silver bears are treading on thin ice here, and the bulls are looking good.
The best trade for 2013 could turn out to be buying silver now.
Physical silver bullion is one of my favorite places to put new investment capital. On this chart, the RSI oscillator has just poked above the oversold line at 30, producing a nice buy signal.
CCI, MACD, and the slow Stokes are also in a position to fuel a big rally, almost immediately. A substantial move higher by silver would be a great start to the new year, for the entire precious metals sector!"
About Super Force Signals: Our Surge Index Signals are created thru our proprietary blend of the highest quality technical analysis and many years of successful business building. We are two business owners with excellent synergy. We understand risk and reward. Our subscribers are generally successfully business owners, people like yourself with speculative funds, looking for serious management of your risk and reward in the market. Frank Johnson: Executive Editor, Macro Risk Manager. Morris Hubbartt: Chief Market Analyst, Trading Risk Specialist.
[In spite of the fact that my proprietary] Leading-Wave Index does not support the current general bearish market sentiment the broad market is testing whether it has reached the "First Floor" phase of the speculated "Three Peaks and a Domed House" pattern. A consolidation is expected in the "First Floor" phase. Any significant directional movement could be washed out this week by the expectations of both the "Santa Claus Rally" and the "Fiscal Cliff". [Below are charts to illustrate exactly where the S&P 500 is in this "Three Peaks and a Domed House" pattern. Most interesting!] Words: 463; Charts: 2
[In spite of all that is seemingly wrong with the U.S. economy] I think we are on the verge of entering the euphoria stage of this cyclical bull market where traders become convinced that QE3 is a magic elexir with no unintended consequesnces. [As such,] I see a strong acceleration and a significant and sustained breakout above the S&P 500 September high of 1475. (Words: 264 + 3 charts)
It is impossible not to read some source…touting the "fact" that the price of gold and silver will be…["$x", "$y", etc.] in the "coming months" or in the "next year or two," etc. The market, however, does not echo those…sentiments because that is exactly what they are, sentiments. When it comes to sentiments or opinions, regardless of how close to source or how well reasoned, the market does not care. The charts are all-knowing, and they present everything known about the price, sans any opinion(s). Just deal with the facts and plan accordingly. Trust the markets – they never lie – [and this is what they are saying about the price of gold and silver in 2013]. Words: 1889; Charts: 6
Our subscription service provides detailed technical analysis of where the price of gold, silver and precious metal stocks are going short term (in the next week or two), intermediate term (within the next 3-6 months) and long term (the ultimate top) in each stage of their respective bull runs. This service comes with detailed charting based on conventional technical analysis and our proprietary fractal analysis based on the '70s. Below are some of our latest comments and rationale for expected price movements in gold without illustative charts which are only available to subscribers. Words: 1000
We've been surprised at the recent action in the precious metals complex. During the recent correction the shares were showing quite a bit more strength than the metals. Then the shares took a dive below support yet the metals maintained their recent lows! How do we interpret this wild volatility in the relationship between the shares and the metals? Quite often we look at daily and weekly charts. Now is the time to take a look at the monthly charts which can help us get a better read on the larger trends at hand. Words: 636
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)
What is developing in the markets is not the beginning of another leg down in gold, but a second chance to get positioned for what should be a very profitable intermediate degree rally over the next 2-3 months. [Let me explain further with a number of charts to support my position.] Words: 460
By the time we get to the end of 2013, we will forget much of what shaped 2012. Yet, as we look back at 2012, there are some fundamentally disheartening, if not disturbing, trends that are likely to play a determining role in all financial markets for some time to come, including the gold market.
– The first is the inability of the political sector to deal with the "economic problem" on a global basis. From Jinping's Beijing flowing west to Putin's Moscow, from Merkel's Berlin to Hollande's Paris, from Cameron's London to Obama's D.C. and finally Abe's Tokyo, the world's great nation states are locked in a web of acute and alarming political disarray. The question is no longer whether or not stability can be achieved. It is to what degree the instability can be restrained – a circumstance not unfamiliar to the student of history, but one for which the modern investor is generally unprepared and lacking in defenses.
- The second is the global predisposition to print money. Complements of the disastrous events following the 2008 financial meltdown, vote-buying politicians globally have defeated usually conservative central bankers in the battle of the printing press. Ben Bernanke's stewardship of the Federal Reserve has not only been emblematic of the trend, it has served as a bad example and dangerous precedent for other central bankers. You cannot slide a sheet of paper between the monetary policies of the Ben Bernanke, Mario Draghi and Mervyn King (soon to be replaced with the even more dovish Mark Carney). Shinzo Abe, who was just elected Japan's prime minister, has threatened to nationalize the Bank of Japan if it refuses to print money. It is as if John Law were reincarnated simultaneously in every major nation state in the world.
- The third comes to us via Raoul Pal, the highly-regarded hedge fund manager who once co-managed one of the world's largest hedge fund groups, GLG Global Macro Fund in London. It has to do with the persistent nature of the debt crisis that began in 2007 and never really went away. Pal outlined the problem at a seminar in Shanghai this past summer for other hedge fund managers — a presentation ZeroHedge called one of the "scariest ever." In it he predicted a cascading sovereign debt collapse and default that would begin in Europe, jump the Channel to London, then move progressively through Japan, South Korea and even China. Finally, it would envelope the United States. The problem, he says, is that $70 trillion in G-10 sovereign debt is collateral for $700 trillion in derivatives.
"You have to understand," he explains, "that a global banking collapse and massive defaults would bring about the biggest economic shock the world has ever seen. There would be no trade finance, no shipping finance, no finance for farmers, no leasing, no bond market no nothing. The markets are at the frankly terrifying point of realizing that LTRO (long term financing operations), EFSF (European Finance Stability Facility) and QE (quantitative easing) etc. are not going to prevent this collapse."
(Note: A synopsis of Mr. Pal's seminar was the most popular post for 2012, and all-time, at the widely-read ZeroHedge website. Recommended.)
I do not know if Raoul Pal is correct. I don't know if he's even close. I can tell you that he was successful enough as a hedge fund manager to retire to Spain's Valencia coast at 36 years of age and that he's one of those guys like in the old commercial: When he speaks, people listen. I can also tell you that something is in the air — a sea change in investor psychology of which we should take note. I pass this along as someone who has experienced several similar shifts in investor sentiment over the course of a forty-year career in the gold business.
In the last two months of 2012, we experienced volumes at USAGOLD not unlike those of 2008 and 2009 — and those were record volume years. The U.S. Mint confirmed our own experience by reporting U.S. gold Eagle sales in November and December hitting their highest levels in two years. Too, demand for historic, pre-1933 gold coins surged — an important indicator because it tells us the safe haven investor is back in the market. Since safe-haven investors tend to run ahead of the herd, this bodes well for gold demand as we move into 2013. Wholesalers tell us that the market for British sovereigns, Dutch 10 guilders, Swiss 20 francs, etc. is running very strong both in the United States and Europe. In particular, British sovereign supply has dried up. If I am reading the signs correctly (and I am big believer in letting the market speak for itself), 2013 could turn out to be a very good year for gold.
_________
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News, Commentary & Analysis is the contemporary, web-based version of our client letter, which traces its beginnings to the early 1990s under the News & Views banner. Its principle objectives have always been to keep our clients informed on important developments in the gold market; condense the available gold-based news and opinion into a brief, readable digest; and, counter the traditional anti-gold bias in the mainstream media. That formula has won it a five-figure subscription base. In addition to our regular newsletters, we occasionally publish in-depth special reports that focus on events and developments of interest to gold owners. Valued for their insight, accuracy and reliability, our publications are linked and reprinted by a large number of websites both in the United States and around the globe.
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S&P 500 futures staged a 3% rally off their overnight lows - taking them back to 3-day highs as headline after headline triggered another round of stop-runs. VIX compression led the way as hedges were pushed off to March and higher levels enabled better exits above Friday's plunge VWAP levels. The year ends with the Dow beating Gold for the first time in nine years (just). The USD fell 0.5% on the year (and the JPY -12.8%!!). European stocks beat US stocks (EuroStoxx50 almost doubling the Dow's performance). US Treasuries and US stocks both rallied. Financials gained 26% on the year. The Treasury curve flattened with the front-end selling off modestly and the belly rallying 10-15bps. VIX was unchanged from the start of the year at the open today - but thanks to the epic compression and steepening we have fallen back (VIX lower on the year).
Of course, today's epic ramp really dislocated from risk-asset reality as soon as Bonds closed...
Epic rampathon - to 3-day highs...
Basically ES has roundtripped from the open on Boxing Day - just look at the distribution...
Which rescued the S&P from a fate worse than death - a December in the red!!
Treasury Curve from 12/30/11 to 12/31/12...
VIX on the year...
US Equity Indices YTD (and AAPL)...
Sectors YTD...
Financials YTD!!
Asset Classes YTD - Dow beats Gold by 0.3% for first time in nine years...
and in FX land - the USD ended down a measly 0.5% as JPY slumped almost 13% against the USD...
Bonus Bonus Chart: What is going on in HY credit - notably bid as Advancers far beyond Decliners relative to IG credit - very unusual pattern...
Bonus Bonus Bonus Chart: The S&P 500 and its JPY and EUR relationship this year - The Year of the Central Bank Ramp hand off... ECB prints into New Year (LTRO); BoJ prints into LTRO2, then market left alone - turns chaotic; ECB told to print to QE3 and OMT - market turns chaotic; BoJ steps back in to print - market ramps...
A final feature of the Fed’s decision to implement QE 4 will be greater inflationary pressures. This will result in lower economic growth (in real terms) as well as higher operational costs, which will eat into corporate profit margins.
As an example, consider Brazil.
As the largest exporter of most commodities in the world, few economies benefit from higher commodity prices like Brazil. However, in spite of this supposedly strong backdrop, Brazilian stocks actually peaked back in early 2011 and have been languishing ever since:
Few analysts understand that much of the boom in emerging markets over the last 10 years was the result of the Fed’s easy monetary policies post 2003. With money flooding the system and interest rates low, capital flowed into higher growth projects in the emerging market space. As a result, virtually every emerging market rallied strongly from 2003 until the 2008 Crash.
Indeed, Ruchir Sharma of Mortgan Stanley notes that only 50 countries grew their GDPs at a rate greater than 5% a year during the ‘80s and ‘90s. However, from 2003-2007, more than double this number (114) saw growth of greater than 5% per year. This is out of just 183 countries in the world.
You can this in Brazil’s action in the chart above as well as Russia’s in the chart below: both charts show explosive growth going into 2003 followed by pronounced weakness since 2008.
This era ended with a bang in 2008. And it’s not coming back. The Fed and other Central Banks continue to flood the system with money, but they’re not pushing economic growth anymore. Instead, what we’re seeing is higher inflation, which is resulting in higher costs of loving and occasional outbreaks of civil unrest.
With QE 4 and QE 3 now in effect we’re going to be seeing more of this as the below articles show:
Farmworkers demanding higher wages in South Africa’s biggest table grape-growing region resumed protests today in the absence of new talks between the government, labor unions and the main farmers organization.
About 150 people protested peacefully near a shanty town outside Worcester in the Western Cape province, demanding that the minimum wage be increased to 150 rand a day ($16.92) from 70 rand. In Stofland, on the outskirts of De Doorns, about 50 people marched through the streets of the settlement singing songs and carrying banners of the United Democratic Front, a civil rights group.
Spreading protests and escalating demands from Indonesia's labor groups could delay or even derail spending on the country's overburdened infrastructure, industry leaders warned.
Jakarta's governor agreed to increase the minimum wage in the capital by 44% this week. As other regions are expected to follow suit, the populist move could trigger higher wages and inflation and discourage investment in Southeast Asia's largest economy, say some analysts and executives. Unions say workers deserve higher wages, better benefits and better job protection as the country's economy blossoms.
Nearly half of the bus drivers from China who were involved in a dispute over salaries on Monday did not show up for work on Tuesday morning.
SMRT said 88 of the 171 drivers who refused to work on Monday did not report for work again on Tuesday.
SMRT said it takes a serious view of the bus service delays that were brought about by the irresponsible behavior of the bus drivers who did not report for work as scheduled.
It said SMRT's priority is to ensure that bus services are restored to normal as soon as possible.
There is no indication this trend will be ending. Once wages begin to rise aggressively is when inflation really begins to take hold in the system. This process has begun and will accelerate in the coming months.
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It's been said there's no such thing as a controlled experiment in the social sciences, including economics. But we had something close to a laboratory experiment back in 1920-1921 and 1930-1931.*
In each of these periods there was a depression. Unemployment was high - for awhile, it was higher in the 1920s than in the 1930s. Prices were falling in both periods.
In the 1920-21 depression, the Federal Reserve Bank of New York crashed the monetary base, thereby reducing the money stock, and jacked interest rates to record highs.
In the 1930-1931 depression, the federal reserve gradually increased the monetary base and lowered the interest rate.
In the 1920-21 period the government slashed spending and allowed nominal wages to fall.
In the 1930-31 depression the government increased spending and deficits while pressuring industrial leaders to maintain wage rates.
Tax Policies
Coming out of World War I the highest marginal income tax rate was 77%. First Harding, then Coolidge (following Treasury secretary Andrew Mellon's advice) lowered tax rates steadily in the early 1920s. By 1925 the highest tax rate was around 25%. Tax receipts began to climb, as people stopped playing defense and looked for ways to grow their income. As incomes increased, so did tax revenue in spite of the lower rates.
In 1932, Hoover pushed through one of the highest peacetime tax increases in U.S. history. A person making above a million dollars in 1931 could keep 75 cents on the dollar; a year later the amount plunged to 37 cents on the dollar. In the lowest bracket, rates more than doubled. Along with this were countless taxes on items that had never been taxed. From 1931 - 1933, revenue from the individual income tax dropped by more than half. By 1933, the economy was at the depth of the Depression.
Roosevelt went further. The top income tax rate had spiked from 24 to 63 percent under Hoover, and then to 78 percent in 1935 under FDR. Capital gains taxes more than doubled, going from 12.5 percent during the 1920s and early 1930s to 32 percent by 1934-1935. In 1936, the New Dealers decided to tax corporate savings, imposing a severe penalty on businesses that depended on profits to expand operations. Called the Undistributed Profits Tax, it entrenched the bigger firms by keeping their smaller competitors from expanding. It also pressured firms to use debt instead of equity to finance expansion.
Throughout the 1920s, the Coolidge administration ran a budget surplus every year. Throughout the 1930s, first Hoover, then Roosevelt ran budget deficits every year.
Keynesians such as Christina Romer tell us Hoover tried to balance the budget, and then FDR ran deficits but they weren't big enough. It took the huge deficits of World War II to break the back of the Depression. Whether fighting the war overseas or on the home front, Americans were anything but prosperous during this period.
Monetarists such as Milton Friedman tell us the Fed didn't inflate enough after the Crash to offset the fall in the money supply. People were pulling their money out of the banks, and the Fed failed to offset the deflationary effect this was creating.
During previous crises in the 19th and early 20th centuries the Fed was subject to the same criticism. The Fed really didn't inflate enough before it existed, as economist Robert Murphy puts it. Yet we recovered from those crises in two years, on average. Gold takes the blame
Both Keynesians and monetarists blame the gold standard for restricting policy options. When FDR confiscated the people's gold in 1933 and outlawed contracts denominated in gold, the Fed went on a printing spree and the government stepped up its spending. From 1933-1936, unemployment declined steadily while GDP increased.
But the gold standard in some form had existed for centuries prior to the the 1930s. Why did it suddenly cause a massive depression? It existed during the depression of 1920-21, yet that crisis was over in two years and was followed by one of the most prosperous periods in U.S. history.
And if the gold standard of 1929 did cause the depression, why didn't going off gold end it? Fed monetary inflation and government spending improved the statistics somewhat but the economy remained in a depressed state throughout the 1930s and beyond.
Critics of gold rarely mention that the gold standard that failed was not the classical gold standard of the 19th century. European governments ordered their banks to stop redeeming gold in 1914 so they could use the printing press to pay for the Great War. The "gold standard" abandoned in the 1930s had been erected in 1922 at a conference attended by 34 countries in Genoa, Italy. Called the gold exchange standard, its purpose was to keep gold "in the vaults" by redeeming currencies not in coins but in large bars. Most European citizens were thereby disarmed of their means for keeping government spending under control. U.S. citizens could still legally redeem bank notes for gold coins, but in practice it was rare. The gold exchange standard collapsed in 1931 when England went off gold completely because it couldn't redeem France's sterling holdings. The monetarists' slam-dunk: The double-dip of 1937-1938
According to monetarists, the Fed interrupted the New Deal's recovery in 1936-1937 when it doubled the reserve requirements of its member banks, thus contracting the money stock and producing a double-dip or a "depression within a depression" in 1937-1938. Unemployment spiked and GDP fell off.
Let's take a closer look at this period and the years preceding it. Following passage of the Gold Reserve Act of 1934, the U.S. Treasury was under a legal mandate to purchase all the gold offered to it at the rate of $35 an ounce, a 69 percent increase over the classical rate of $20.67. The Treasury was in effect mimicking the Fed's inflationary open market operations by freely purchasing demonetized gold instead of government securities. Gold flowed into the U.S. from abroad, increasing bank reserves and inflating the money supply by over 10% annually from 1934-1936.
When in 1937 the Treasury began sterilizing their purchases (i.e., selling securities to pay for the gold instead of printing money) it slowed the growth of the money supply. Doubling the reserve requirements brought interest rates up a notch but they were still very low. Cheap loans were still available for businesses that wanted them.
So what caused the plunging economic indicators?
As economist Joseph Salerno points out, money wages shot up 13.7% in the first three quarters of 1937. The Supreme Court had recently upheld the National Labor Relations Act of 1935, and unions were cashing in. With labor productivity remaining constant, unemployment began to rise.
As business profits were squeezed by the run-up of labor costs and the economy slipped into recession, banks prudently began to contract their loans and pile up liquid reserves to protect themselves against prospective loan defaults and bank runs. To offset this uncontrolled decline of the money supply, beginning in mid-1938 the Fed (and the Treasury) once again resorted to an inflationary policy, reversing the reserve requirement increase and allowing gold inflows to once again pump up bank reserves.
Between June 30, 1937 and June 30, 1938 the money supply did in fact decrease, but this was a result, rather than a cause, of the recession, Salerno concludes.
And the winner?
Experts from the leading schools of economics today - the Keynesian and monetarist - tell us the Great Depression could've been avoided. They know the depression of 1920-21 was followed by the Roaring Twenties. They know the depression of 1930-31 turned into the Great Depression and is one of the reasons the world went to war in the 1940s. So, do these experts take the government/Fed response to the 1920-21 depression as their model?
Perhaps because it would put them out of work, their answer is a resounding No.
That these same experts never see a crisis on the horizon should not dissuade us from trusting them.
[url]http://www.traderdannorcini.blogspot.com/[/url] [url]http://www.fortwealth.com/[/url] Comex gold had a nice day to finish out the year as it moved sharply higher around mid morning and pushed right into strong resistance at $1680 on the price chart. The move enabled gold to put in yet another good performance on a yearly basis as it added 6.9% in 2011. More later... ...
Sprott Asset Management's John Embry today gives King World News his outlook for the new year. While he is surprised that Western central banks managed to keep gold under as much control as they did this year, he sees that coming to an end in 2013, as well as a rocket launch for silver. An excerpt from the interview is posted at the King World News blog here:
CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc.
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In Part I, readers were again reminded of two of the primary reasons we should all be converting our decaying paper currencies to gold and silver. Currency dilution and price-suppression are realities which don't merely suggest that bullion prices might rise in the future, but rather indicate why they must rise substantially.
However, precious metals investors don't have to limit themselves to just those two reasons why bullion prices must rise dramatically over the longer term. There is a "third leg" to this argument which is an equally powerful dynamic, and also unequivocally certain to lead to much higher gold and silver prices.
Demographics:
I refer to the third leg of the precious metals bull as "demographics", but in actuality this is just a reference to some of the extremely potent supply/demand fundamentals which are certain to drive bullion prices much higher.
In the global economy, it is common knowledge that there is a relentless transfer of wealth (and economic power) from West to East, as the thriving economies of Asia have real economic growth and real income growth amongst their populations.
In China, per capita income was only around $1,000/year (USD) in 2003. By 2011, that figure had exploded to nearly $3,500 (USD) per person, and China's government is expecting a further doubling of that total by 2020. Given the explicit recommendation by official (i.e. government) media for the Chinese people to invest those rising incomes in bullion, we don't simply suspect that Chinese bullion demand will continue to increase; we can be certain of it.
In India, per capita income finally crossed the $1,000/year threshold in 2011, which has already unleashed a wave of discretionary consumption; as low debt-levels/high savings and a low cost of living mean that Indian households are already rising above a subsistence existence at even these modest income levels.
However, Indians were voracious consumers of bullion even before they rose above this subsistence level, as their peasantry (who lack access to banking services) use their bullion holdings (generally in the form of jewelry) as their means of saving their wealth. This deep, cultural affinity for bullion is obviously unlikely to diminish as incomes rise further.
Instead, as indicated in a recent commentary; India has a huge, national gold-deficit – requiring the importation of hundreds of tons of bullion per year to satisfy domestic demand. With silver also widely held among the populace, there is a large silver deficit as well.
Meanwhile, in Indonesia – another very large Asian population with rising incomes and a growing economy – gold currency has already been introduced into the economy several years ago. And the appetite for gold in the Middle East petro-economies is nothing short of legendary. This is still another demonstration of the general understanding in Asia of a principle which is (as of yet) beyond the ken of Western Sheep: gold is money; paper is merely currency.
The Fiscal Cliff farce will be "fixed" one way or another. All you have to do is look at where the carrots are hanging in front of the Asses and Elephants. In fact, Obama just gave the children in Congress a nice pay raise, but they won't get any pay if the "Cliff" kicks in and the debt ceiling limit isn't raised/eliminated.
In the meantime, most serious students of value/fundamental investing like to focus on long term trends. The long term trend for gold has been 12 years in a row of gains. And we all know the fundamentals become stronger by the day to support several more years of gains.
With that in mind, I recently went to the Van Gogh exhibition at the Denver Art Museum. It is probably one of the best art exhibitions I've ever seen (after spending time in museums in NYC, Chicago, Paris, Italy, etc). The exhibit uniquely spans Van Gogh's entire artistic career and I learned aspects of his artwork and its development about which I had no prior knowledge (like a heavy influence of Japanese art underlying his color scheme and strokes). The exhibition truly blew me away in depth, scope AND the fact that it was assembled in Denver (not exactly an art mecca).
In honor of one of the greatest master artists of all time, I have to say that I don't think even Van Gogh could reproduce this 12-year, weekly visual of a raging bull market in process:
(click on chart to enlarge)
Not much to say about that chart - it's pretty much self-explanatory.
Have a safe and happy New Year celebration. I suspect that the 2013 will be a very happy year for precious metals and mining stock investors.
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Today John Embry told King World News that he believes that the price of silver will go ballistic in 2013. He also spoke about what to expect in other key markets in 2013. Here is what Embry, who is chief investment strategist at Sprott Asset Management, had to say: "There have been a few periods in the past when people (investors) got detached, but this one is probably the worst in the sense that we've never had monetary creation like we are having (now). It has no place to go. It's not getting into the real economy."
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Trends forecaster Gerald Celente predicts the global financial system will continue to be propped up. Celente says, "The scheme continues to go, the scheme being dumping cheap money into the system to perpetuate an economy that should have crashed in 2008. So, for 2013, our best shot is
Economists are either captured by their failed theories or captured by the Wall Street shysters who pay them to lie to the public on CNBC and the rest of the corporate MSM. We are in recession. We've been in recession. We're going deeper into recession. Don't expect an economist to tell you the truth.
Are we already in a recession?
Commentary: Economists are almost always slow to spot key trouble signs
By Brett Arends
Many people are warning that if the government goes over the "fiscal cliff" next week, as seems increasingly likely, the U.S. economy could tumble back into recession.
But what if we already have?
Despite some misleading headlines, and some cheerleading in certain quarters, there are plenty of reasons to be worried that the economy could already be shrinking again, even before the wave of tax hikes and spending cuts scheduled for January.
Money manager John Hussman, chairman of Hussman Funds, is among those who think it is. "We continue to believe that the U.S. economy joined a global economic downturn during the third quarter of the year," he wrote to investors recently.
He notes that most of the forward-looking indicators, including "industrial production, capacity utilization, real disposable income, real personal consumption, real sales, retail and food service sales, and real manufacturing and trades sales" are all pointing down.
The Economic Cycle Research Institute agrees, and recently announced that a recession may have begun as long ago as July. The combined economic signal coming from industrial production and personal income, noted ECRI in a recent report, "has never occurred outside a recessionary context in over half a century – but it's occurred in every recession."
Walk around the mall this week: You'll see a lot of terrific sales, and probably not that many customers. Retailers have been forced to slash prices to unload their inventory after what looks like a weak Christmas.
MasterCard reports that holiday spending was up just 0.7% this year, a fraction of the 4.1% predicted by the National Retail Federation. MasterCard's report, based on spending on its cards, is only the first on the topic and it is not the final word, but it is ominous.
No wonder retail stocks on Wall Street are rolling over. Stocks like Target and Macy's have fallen about 10% since the week before Thanksgiving. Tiffany & Co. has lost 15% since the start of November.
The holiday season is vital to the economy: 70% of the U.S. economy is based around personal consumption.
Many businesses came into the final two months of the year loaded up with inventory. According to the U.S. government, retail inventories in October were 8.2% higher than a year earlier, lead by a stunning 21% rise in the inventories of new cars and parts. (This may be a terrific moment to shop around for a new car). Retail inventories are the highest on record, and the ratio of inventories to sales has spiked to the highest levels since 2009.
The economic recovery of the past few years has been based on three things: Loan defaults by households, massive deficit spending by the government and enormous money printing by the Federal Reserve. It is hard to see how any of these, let alone all three, can continue indefinitely.
Missed in most recent jobless reports was the news that the number of employed people in the United States, age 25 to 54, actually fell by half a million – before seasonal adjustments – from October to November.
Charles Biderman, chief executive of economic research group TrimTabs, says December payroll figures may be flattered by a rush to recognize income ahead of January 1 tax hikes, but even if this happens it may inevitably lead to a dismal January as the true picture becomes clearer.
The most positive news recently has been the continued improvement in the housing market. I happen to think this is real, and sustainable. I think Sunbelt real estate has bottomed out (I'm writing this in a Miami condo whose value is up about 50% over the past year). But we can't just assume that a housing recovery will filter through dollar-for-dollar into the economy. A lot of that real estate was underwater on its mortgage. The rise in price may reduce the shortfall, but it does not increase personal wealth or income.
Naturally, we will have to wait and see what happens next. I am not surprised that we are likely to head over the fiscal cliff. Our unhappy binational state, in which Red and Blue America are forced to try to get along, has produced complete dysfunction in Washington. I am only surprised that so many people are surprised.
As for the economy: Don't think that if we were already back in recession "someone would have told us." It doesn't work like that. Because of the lag-time involved in collecting the data they track, economists don't tend to know we're going into a recession until we are halfway back out again.
Remember the Great Recession that began in December, 2007? The economists at the National Bureau of Economic Research, who are basically the official scorekeepers of recessions, didn't discover the recession until December, 2008 – a year late, and only a few months before the episode (officially) ended.
Indeed I distinctly remember any number of economists, financial gurus and money managers during the first half of 2008 telling me (and every other reporter) that we were already "past the worst" and that the economy was going to pick up in the second half of the year.
The previous recession began in March, 2001 – but the NBER didn't call it a recession until November 26 of that year. By amazing coincidence, that was actually the month it ended (as they told us many months later).
The recession that began in July, 1990 wasn't called until April the following year. The recession that began in July, 1981 wasn't recognized until January of 1982. And so it goes.
Economists, it seems, are like the old joke about husbands. They're always the last to know.
(My late friend Stephen Rousseas, an economics professor at Vassar and elsewhere, used to tell me that economists "are very good at predicting the past." How right he was).
No one will tell us we're in a recession until we've been in it for months. Are we there now?
It is impossible not to read some source, informed or otherwise, touting the “fact” that the price of gold and silver will be [insert whatever amount you wish, here], “in the coming months”, or safer, “in the next year or two,” etc. Yet, the market does not echo those almost universally held sentiments. Why not? Because that is exactly what they are, sentiments. When it comes to sentiments or opinions, regardless of how close to source or how well reasoned, the market does not care. One of the better “resolutions” one can make going into 2013 and beyond it to follow the market’s lead, stop trying to lead it, waiting for it to catch up to your trading acumen.
The only way to win, unless you live high up in the power and greed pyramid, is not to play the paper game. At this point in the deficit spending, unpayable debt, and political gridlock process, there is little choice, so The Fed is destroying the purchasing power of the dollar. Gold has risen about 15% per year since 1/1/2000 – thirteen years. Do you trust gold or central bank paper? The Chinese and Russian Central Banks are aggressively accumulating gold. Are you?
31-Dec (ZeroHedge) — For the past eight years-in-a-row, that worthless yellow barbarous relic that some call 'Gold' has outperformed the 'precious' Dow Jones Industrial Average (even with the constant DJIA re-indexing where the losers are quietly taken out back and shot). As we enter the last day of trading in 2012, Gold still holds a slight edge +6.3% on the year vs the Dow's +5.9%. Will 2012 break the record-breaking run? Or will Warren Buffett's nemesis once again outperform equities and with lower volatility – just a few more hours to find out…
With 2013 now upon us, the Godfather of newsletter writers, Richard Russell, told his subscribers they are now living through the greatest bubble in history. Russell also discussed gold and the important breakout in the closely-watched VIX. Here is what Russell had to say in a note to subscribers: "You and I are watching, or I should say living through, the greatest bubble in world history. What could it be? Is it the world population growth? Is it the explosion of world communication? Is it the progress in health?"
What would you do if all the lights went out and they never came back on? That is a question that the new NBC series "
Gold rose, capping the longest annual gain since at least 1920, on renewed concern that central banks from Europe to China will take steps to spur economic growth and as U.S. leaders near a budget deal.
The Trivium represents Grammar, Logic and Rhetoric; Where Knowledge, Understanding and Wisdom Begin.
Seeking Alpha has only 3 entries under the 'Gold & Precious Metals' section of its most recent 'Macro View' email notice:
Silver prices have corrected meaningfully after peaking out at near USD50 levels. A correction of over 20% is generally considered bearish and can weaken investors' interest in the metal. If investors consider the long-term picture, silver has given returns of 584% in the last ten years.
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