Gold World News Flash |
- Professor Polleit explains why fiat currency systems produce ‘collective corruption'
- Buying Gold Bullion – YouTube
- Popular Gold Bars – YouTube
- Fake Silver Warning – YouTube
- How Silver is Mined – YouTube
- Gold & Silver Miners Prospects Reverse Of Economic Downturn – YouTube
- Erskine Bowles: Accurate on Urgency and Timing of Washington’s Fiscal Deal – YouTube
- GoldSeek Radio – Jan 4, 2013 – Robert Ian’s Conquer Change – YouTube
- GoldSeek Radio interviews CEO PATRICK DOWNEY – Jan 4, 2013 – YouTube
- The Banking Elite Are Not Only Stealing Our Wealth, But They Are Also Stealing Our Minds
- Magic Trillion Dollar Coin May Be Used To Pay Off The National Debt – YouTube
- THe TRiLLioN DoLLaR TuNa IDea...
- NY Times: trashing the Constitution for fun and profit
- Spain On Life Support: Pension funds “run out of room” to buy Spanish bonds — Huge sales in gold from US Mint in January
- Your 2013 Silver Goal Setting – Spreadsheet preview
- Celente Talks 2013: The Coming Collapse & How to Prepare
- Guest Post: The US Debt Crisis - How High Will It Go?
- Fed deceives as it runs Ponzi scheme, Sprott tells King World News
- Sprott And Biderman On Paper Vs. Physical Gold
- Why We’re Ungovernable, Part 6: Here Comes the Debt Ceiling
- Eric Sprott - We Are In The Biggest Ponzi Scheme Of All-Time
- 2013 - The Year of the Gold Bull?
- Here Comes The Student Loan Bailout
- Bill Gross: Fed Claims To Own Billions in Fort Knox Gold; “With Nothing In The Vault To Back It Up—Amazing!”
- Is This The Future Of World "Growth"? (Or The iPad vs Indoor Plumbing)
- This Past Week in Gold
- A Massive Electromagnetic Pulse Could Collapse The Economy In A Single Moment
- Swiss Firm Introduces Divisible Gold Card For “A Scary New World”
- Two Spaniards Self-Immolate Due To Financial Problems
- Jim's Mailbox
- Bernanke's Legacy Problem
- US Mint Bullion Coin Sales
- Gold and Silver Hit by the Usual Jobs Report Shenanigans
- Major Gold Move You're Not Hearing About
- Currency Positioning and Technical Outlook: Underlying Trend Intact
| Professor Polleit explains why fiat currency systems produce ‘collective corruption' Posted: 05 Jan 2013 11:00 PM PST by Chris Powell, GATA:
Dear Friend of GATA and Gold: An interview done this week by GoldMoney's Andy Duncan with the German economics professor Thorsten Polleit, in which the professor explains why fiat currency systems lead to "collective corruption," delighted your secretary/treasurer because it reminded him of something a high school graduate said at GATA's Washington conference in 2008 (http://www.gata.org/node/6242): "The problem with central banking has been mainly the old problem of power — it corrupts. "Central bankers are supposed to be more capable of restraint than ordinary politicians, and maybe some are, but they are not always or even often capable of the necessary restraint. One market intervention encourages another and another and increases the political pressure to keep intervening to benefit special interests rather than the general interest — to benefit especially the financial interests, the banking and investment banking industries. These interventions, subsidies to special interests, increasingly are needed to prevent the previous imbalances from imploding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 05 Jan 2013 10:54 PM PST Check our website daily at... [[ This is a content summary only. Visit http://www.figanews.com for full Content ]]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 05 Jan 2013 10:50 PM PST Check our website daily at... [[ This is a content summary only. Visit http://www.figanews.com for full Content ]]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 05 Jan 2013 10:40 PM PST Check our website daily at... [[ This is a content summary only. Visit http://www.figanews.com for full Content ]]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 05 Jan 2013 10:35 PM PST Check our website daily at... [[ This is a content summary only. Visit http://www.figanews.com for full Content ]]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gold & Silver Miners Prospects Reverse Of Economic Downturn – YouTube Posted: 05 Jan 2013 10:32 PM PST Check our website daily at... [[ This is a content summary only. Visit http://www.figanews.com for full Content ]]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Erskine Bowles: Accurate on Urgency and Timing of Washington’s Fiscal Deal – YouTube Posted: 05 Jan 2013 10:13 PM PST Check our website daily at... [[ This is a content summary only. Visit http://www.figanews.com for full Content ]]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GoldSeek Radio – Jan 4, 2013 – Robert Ian’s Conquer Change – YouTube Posted: 05 Jan 2013 09:53 PM PST Check our website daily at... [[ This is a content summary only. Visit http://www.figanews.com for full Content ]]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GoldSeek Radio interviews CEO PATRICK DOWNEY – Jan 4, 2013 – YouTube Posted: 05 Jan 2013 09:46 PM PST Check our website daily at... [[ This is a content summary only. Visit http://www.figanews.com for full Content ]]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Banking Elite Are Not Only Stealing Our Wealth, But They Are Also Stealing Our Minds Posted: 05 Jan 2013 09:40 PM PST by JS Kim, SilverBearCafe.com:
"I wish someone would give me one shred of neutral evidence that financial innovation has led to economic growth — one shred of evidence." He then followed up this declaration by stating that the most positive contribution bankers had produced for society in the past 20 years was the ATM machine. Of course since that time, we have learned that Wachovia Bank laundered $378,400,000,000 of drug cartel money, HSBC Bank failed to monitor £38,000,000,000,000 of money with potentially dirty criminal ties, United Bank of Switzerland illegally manipulated LIBOR interest rates on a regular basis for purposes of profiteering, and though they have yet to be prosecuted, JP Morgan bank, Goldman Sachs bank, & ScotiaMocatta bank are all regularly accused of manipulating gold and silver prices on nearly a daily basis by many veteran gold and silver traders. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Magic Trillion Dollar Coin May Be Used To Pay Off The National Debt – YouTube Posted: 05 Jan 2013 08:54 PM PST Check our website daily at... [[ This is a content summary only. Visit http://www.figanews.com for full Content ]]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| THe TRiLLioN DoLLaR TuNa IDea... Posted: 05 Jan 2013 08:29 PM PST BANZAI7 NEWS---Irashaimasen! This is really thrilling for PhD morons, fiscal deadbeats, connoisseurs of fine sashimi and tuna noodle casseroles . An arcane idea that started on sushi chef blogs in the summer of 2011-- that Tim Geithner should catch a trillion dollar tuna to avert the debt ceiling -- is now seriously taking off following this week's haul of a record breaking million dollar tuna. The premise of the idea is this: Although the Treasury, with the assistance of the Federal Reserve Bank, already just creates money out of thin air to pay its bills, there is a technicality in the law that says the Treasury has special discretion to can tunas of any denomination, and the thinking is that Tim Geithner could catch a record breaking giant tuna like the million dollar tuna caught just this past week, attach a price tag of one trillion dollars and walk it over to the Federal Reserve and deposit it in the Gold vault next to the Venezuelan bananas and German bratwursts. The first blog to really promote the idea was Master Chef Ushi o Kao's (as in I grow cows) Monetaro Sushinomics. Business Outsider jumped on it soon thereafter, as did PhD sliced bullshit chef Paul Klugman. Of course, once the debt ceiling problem was miraculously solved by the clever creation of a debt politburo and fiscal cliff, people forgot about it. But there's a new debt ceiling looming, and this time, LOTS more people are tired of using food stamps to purchase cheap sushi boxes at the supermarket. Now it's going more viral than Christmas photos of the Zuckerberg family!
Concerning Tim Geither's next destination, Banzai7 news has obtained this...
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| NY Times: trashing the Constitution for fun and profit Posted: 05 Jan 2013 08:20 PM PST by Jon Rappoport, Natural News:
The Constitution might impede that. Much better to have a central government that knows what its business and obligations really are: guarding the fortunes of the rich. The Times editorial, of course, doesn't say that. It merely leaves the founding document to wave in the breeze, its every pronouncement up for grabs. The editorial is a test run to gauge the reaction. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 05 Jan 2013 07:30 PM PST by Harvey Organ, HarveyOrgan.Blogspot.ca:
However in the access market both precious metals recovered: Gold:$1656.80 — Silver: $30.18 The trading in gold and silver are manipulated most of the time. The crooks will allow gold and silver to rise on a slow upward projection as the bankers manage their huge shortfall in both gold and silver derivatives. It would be wasteful to spend hours analyzing trading patterns when you have this massive manipulation on your shoulders and the regulators do nothing to correct. In European news, we learned that Spain's pension funds have loaded up on Spanish bonds and this vehicle has run out of room to purchase more Spanish bonds. Spain will need to raise at least 270 billion euros on the bond market this year with few takers. The Spanish banks are already broke and cannot take on any more Spanish debt. Expect Spain to finally go to the begging trough. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Your 2013 Silver Goal Setting – Spreadsheet preview Posted: 05 Jan 2013 07:20 PM PST [Ed. Note: This is a cool idea. As we've always advocated, dollar cost averaging into silver on a regular basis is the best way to build a stack. I know if some of our SGTreport regulars joined silverfish's 2013 silver tracking sheet, it'd be even more fun to see how the year plays out.] from silverfish VT: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Celente Talks 2013: The Coming Collapse & How to Prepare Posted: 05 Jan 2013 06:42 PM PST from Trendsjournal: Gerald Celente joins Alex Jones us to break down the looming financial crisis and how to prepare for what's to come. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Guest Post: The US Debt Crisis - How High Will It Go? Posted: 05 Jan 2013 05:31 PM PST Authored by Chris Ferreira, originally posted at Economic Reason blog, The implications of the US debt crisis are not well understood in most circles, and it is not widely spoken about in the media and during important political debates. The irony is that the US debt is so significant that it plays a monumental role in finance and modern political strategy. The debt poses great risks moving forward, and yet it is referred to in only the vaguest of terms. Here is why the US debt must grow every year and why it is mathematically impossible for it to continue forever. Before we can understand why the debt must grow every year, here is is a visual representation, to scale, of how much the current debt is standing at. Each tall uniform column in the background of the picture below refers to a pile of $100 bills stacked one on top of another. Each “tower of debt” consists of 10 x 10 fork-lift palettes that reach out into the sky and are higher than the old World Trade Center buildings. These towers of debt represent $US 16.394 trillion. However, by the time you wake up to read this, it will be larger than that. DemonOcracy does great work on visual representation of the US debt levels. Why did the US debt grow to these proportions?Short answer: the US government spends more than what it receives in revenue. In 2012, the US federal government expects to receive $2.5 trillion in revenue, while the total spending carried out by the federal government is $3.8 trillion. The difference ($1.3 trillion) is debt piled onto of the previous debt. To put $1.3 trillion into context, it is approximately $3,56 billion a day. To make matters worse, the current debt does not take into consideration federal obligations such as social security, Medicare, pension, and retiree health promises. According to David Walker, former controller of the US, when these unfunded programs are added to the enormous debt, it stands at $70 trillion and growing–that is $10 million per minute! Seventy trillion dollars is over four times the debt in the picture on your left, dwarfing the current US GDP; in fact, it is approximately the world’s annual GDP in 2011. For a current view of the US debt, see the debt clock here. The government allows for the debt to continue to grow by adding new debt on top of old debt plus compounded interest. Instead of paying back the debt, the government just borrows more to cover previous interest. The interest payments on the debt is over $1 billion a day. When “Uncle Sam” takes out a loan, it is called a bond (I.O.U.). These bonds are purchased by investors, banks, and foreigners. These bonds are a promise to pay capital plus interest. What “Uncle Sam” does, essentially, is pay his investors with his credit card and create new loans to cover interest. Talk about short-sighted finances with no discipline. Compounded interest has allowed the debt to grow exponentially, and has reached, in my opinion, unsustainable levels where the debt is reaching at the vertical portion of the “hockey stick” formation.
Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it. - Albert Einstein How does the US government allow the US debt to grow?Doing the “right thing” is usually political suicide for politicians. Cutting expenditure to pay its bills to pay down the debt will make the economy implode. Instead, the government in power continues its daily activities and promotes new social programs to promote reelection. Almost half of the spending done by the US government goes to entitlements (Medicare, Medicaid, social security). If any cuts are carried out in this sector, you can expect riots on the street (approximately 28% of the US population are baby boomers and 80% of investments and laws are carried out by this powerful demographic.) Cuts to entitlements are highly unlikely!
The continuous debate on raising the debt ceiling is all about a government mismanaging its money and not being able to control it–much like a child with no discipline. Since debt is being mismanaged, it has caused many distortions in the markets, and yet the debt is allowed to grow because of the US Congress. The debt ceiling has been increased 10 times since 2001. If the debt ceiling were actually a ceiling, the market and debt distortions would have imploded the economy–an implosion necessary for the economy to restore its equilibrium and liquidate all inefficiencies. “Too big too fail” is absolute nonsense. Paying back investors, costly wars, entitlements and bailing out the “financial terrorists” (who caused the crisis) all add to the national debt and to the dysfunctional economy that continues to operate until its debt will cease to grow. The problem with this system is that it created significantly more credit (someone is the creditor to all the debt) than “cash” money (money in your wallet). Every time debt expands, the credit supply also expands. (Read Fractional Reserve Lending on how money is created.) According to the FED, the Total Credit Market Debt Owed (TCMDO) is approximately 53$ trillion and 2.4$ trillion in the true money supply (M1). In other words, cash money is approximately 4.5% of credit (TCMDO/M1). The result to our economy is that “boom” periods are hardly driven by cash money, as cash money is insignificant in relation to credit. Credit is what drives the markets, and it is this same credit that “busts” the markets as well, in times of credit contraction. In order for debt to expand, someone must be lending the US this money. At the moment, the lenders are China, Japan, and the OPEC countries. But why do they continue to buy this debt? Because they have too. The US Dollar is the reserve currency of the world. You need it to buy oil, a vital component of any economy. Since other countries like China cannot print US dollars at their leisure, they have to get it from somewhere. They get it from trade with the US. The US buys products in Asia and the rest of the world with US dollars, and in turn these same dollar surpluses are used to buy oil and US bonds, creating a much needed artificial demand for US dollars. This is also how the enormous US 558$ billion trade deficit in 2011 was financed. The US has been in a trade deficit since the 1980&rime;s and it continues the grow as jobs and manufacturing are being lost to more competitive nations. The trade deficit also accounts for the national debt. The financing of the debt creates artificial demand for US bonds which helps lower the interest rate and coincidentally helps to raise the debt levels even higher. The table below shows the leading foreign holders of US debt, which are China and Japan, followed by the OPEC countries. These are the main financiers of the US trade deficit.
But here is the Achilles’s heel for the US debt scheme: In order to maintain and continually expand the debt, the US dollar needs to remain the reserve currency. In order for there to be continuous demand for these dollars and debt instruments, the US dollar needs to maintain a hegemony over competing currencies. Any threat to the dollar needs to corrected immediately. or else confidence in the US dollar will be quickly eroded and the subsequent tsunami of US dollars abroad rushing into the US will cause hyperinflation as never seen before. William R. Clark’s excellent book, Petrodollar Warfare, treats this issue precisely, going in depth into the Petrodollar collapse and how the US maintains its dollar supremacy with its current imperialistic foreign policy. This gem of a book is a definite read for anyone wanting to know how the US truly maintains its power on the world stage. Undoubtedly, the extent of US debt would never have been possible had the US dollar not been the reserve currency and had there been less favourable global trade policies to provide a channel for the distribution of dollars. (You can also read more about the Petrodollar here.) Why must the debt grow every year?To keep the debt-servitude paradigm going. To increase economic activity in a country operating in this type of system, you need to increase the level of credit and thus debt grows in tandem. This is self serving: if debt is the “fuel” to increase economic activity, interest payments will become larger and larger, until eventually it reaches a point where debt can no longer be increased. This point is known as the Minsky moment–when there is no net benefit to extra debt. Adding debt, both public and private, creates an environment of servitude among the population while the banks are generating extra profits. Through their lobbyist groups, the financial terrorists create favourable laws to keep people enslaved with debt. Real estate, for instance, is a heavily subsidized investment; such subsidies entice people to purchase real estate and as a result, people are unwittingly working for the banks. In a real free market, people save money for a purchase. The word “save” is becoming archaic in this debt servitude paradigm, a paradigm that was build on sand and cards and that can and will eventually collapse. The foundation, of course, is confidence in the US dollar. So there we have it, in our “creditopia” world, if debt does not expand, the economy cannot grow and jobs cannot be created. In order to increase debt, foreigners have to continually finance the ever growing debt by purchasing government bonds and selling consumer products to the US. In turn, the US must increase the level of consumption, decrease savings, and eliminate the threat of any nation posing a risk to the US dollar hegemony. Is this a symbiotic or a parasitic relationship? Is is certainly a relationship that cannot grow forever. It poses an economic risk for ALL nations due to the interconnectedness of the global economy. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fed deceives as it runs Ponzi scheme, Sprott tells King World News Posted: 05 Jan 2013 03:21 PM PST 5:17p ET Saturday, January 5, 2013 Dear Friend of GATA and Gold (and Silver): Sprott Asset Management CEO Eric Sprott today tells King World News that the Federal Reserve is putting out deceptive signals as it participates in "the biggest Ponzi scheme of all time." An excerpt from the interview is posted at the King World News blog here: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/1/5_Eri... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Fred Goldstein and Tim Murphy open All Pro Gold All-Pro Gold, run by long-time GATA supporters Fred Goldstein and Tim Murphy, offers its services to GATA supporters and anyone else interested in precious metals. The company brokers a full line of precious metals and numismatic coins. It aims to inform prospective clients about the importance of the monetary metals as part of a diversified financial portfolio and to keep prospective clients current with market trends. All-Pro Gold has competitive pricing and ships promptly to clients so they may have physical possession. Learn more by e-mailing Fred@allprogold.com or Tim@allprogold.com or telephone 1-855-377-4653 or visit www.allprogold.com. Join GATA here: Vancouver Resource Investment Conference * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Opinion Around the World Is Changing When Deutschebank calls gold "good money" and paper "bad money". ... http://www.gata.org/node/11765 When the president of the German central bank, the Bundesbank, pays tribute to gold as "a timeless classic". ... http://www.forbes.com/sites/ralphbenko/2012/09/24/signs-of-the-gold-stan... When a leading member of the policy committee of the People's Bank of China calls the gold standard "an excellent monetary system". ... http://www.forbes.com/sites/ralphbenko/2012/10/01/signs-of-the-gold-stan... When a CNN reporter writes in The China Post that the "gold commission" plank in the 2012 Republican platform will "reverberate around the world". ... http://www.thegoldstandardnow.org/key-blogs/1563-china-post-the-gop-gold... When the Subcommittee on Domestic Monetary Policy of the U.S. House of Representatives twice called on economist, historian, and gold standard advocate Lewis E. Lehrman to testify. ... World opinion is changing in favor of gold. How can you learn why and what it will mean to you? Read the newly updated and expanded edition of Lehrman's book, "The True Gold Standard." Financial journalist James Grant says of "The True Gold Standard": "If you have ever wondered how the world can get from here to there -- from the chaos of depreciating paper to a convertible currency worthy of our children and our grandchildren -- wonder no more. The answer, brilliantly expounded, is between these covers. America has long needed a modern Alexander Hamilton. In Lewis E. Lehrman she has finally found him." To buy a copy of "The True Gold Standard," please visit: http://www.thegoldstandardnow.com/publications/the-true-gold-standard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sprott And Biderman On Paper Vs. Physical Gold Posted: 05 Jan 2013 02:38 PM PST With gold prices dropping (notably divergent from the ever expanding global central bank balance sheets) but record-breaking levels of physical gold being purchased, we continue to reflect on the other 'Great Rotation' that we suspect is occurring as the New Year begins - that from paper gold to physical gold. Who better to discuss the nuances of this dilemma than Eric Sprott as he outlines to TrimTabs' Charles Biderman the relative strengths and weaknesses of ETFs like GLD and SLV, physical-based ETFs such as PHYS and PSLV, and physical holdings themselves. While the new meme is that the Fed may be considering pulling back (on its 'flow') sooner than expected, reality is far different (as Bill Gross recently agreed with us) and that fact makes the following brief clip even more compelling.
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| Why We’re Ungovernable, Part 6: Here Comes the Debt Ceiling Posted: 05 Jan 2013 02:21 PM PST The fiscal cliff was always going to end with a whimper because that was the obvious path of least resistance. In the end, simply avoiding big tax increases and spending cuts while adding a few more trillion to the coming decade's deficit was rewarded by the markets with a huge rally. Everybody went home happy, or at least still in possession of their political office. Now we move on to the debt ceiling, which on the surface looks just like the fiscal cliff: A self-imposed set of penalties that can be finessed with the stroke of a pen. But it's likely to be far messier, for a couple of reasons. First, the republicans got rolled in the fiscal cliff deal because they couldn't stomach middle class tax increases and defense cuts. They were forced to raise taxes on their main contributors without cutting spending on the democrat base. This was a massive defeat for the supposed party of small government that cannot be repeated short of intra-party civil war. The other reason is that simply raising the debt limit (for the umpteenth time) might actually have some political downside this time around because it requires admitting that Washington's debt will rise by another $2 trillion in the next year or two, to around $18 trillion. The human mind doesn't grasp "trillion" very easily, but it does get round numbers like 20, which is now rapidly approaching. Put that new handle in front of something incomprehensible but ominous like trillion – and then note that a decade ago it was below 10 — and you have, as they say within the Beltway, an optics problem. The republicans can exploit this to demand spending cuts. The democrats will refuse on principal and counter with tax increases, and both sides will see a reasonable chance of blaming the other if the thing goes sour. So nothing will get done until checks actually stop being sent out. Here is the Wall Street Journal's Kimberley Strassel on the republicans' situation:
Some thoughts As a result both sides, left and right, see the other as having won. The left sees rapacious banks and corporations (the 1%) devastating broad sections of society while vacuuming up an ever-larger share of national wealth. The right sees ever-expanding entitlements and public sector unions crowding out wealth creators and turning the US into a socialist dictatorship (read France). Thanks to the magic of the printing press, they're both right. So here we are. Each side is so disgusted with the other that bipartisan compromise – which requires a degree of respect – is impossible. And even if it suddenly became possible, the imbalances are so huge that actually fixing the system by gutting both the military empire and the welfare state could never be sold to voters. Fiscal policy, in short, is on auto pilot and the "off" button is disabled. Defense spending growth can be slowed a bit, but only a bit since the right still views the US as the world's hyperpower and is willing to borrow whatever it takes to maintain this illusion. Entitlement spending can't even be slowed, given the fact that baby boomers are retiring and have the political clout to guarantee free health care and nice monthly social security payments for the next three decades. No one, left or right, is brave enough to explain to my generation that its demands will bankrupt their grandkids. Add it all up, and US federal spending will rise by 8% a year until the market, not the voters, decides otherwise. This puts all the pressure on monetary policy, the last relatively-pain free disaster-management tool. So here's a prediction for the near future: After a few weeks of entertaining political theater, the debt ceiling will rise enough to get through the next congressional election. The Fed will continue to buy up most newly-issued Treasury paper but at some point will begin making noises about ending QE. The markets will recoil (stocks will fall, revealing the massive underfunding of state and local pensions, among other things), and politicians will threaten the Fed's independence. Ben Bernanke or his successor will see no choice but to oblige with more QE. See Japan in late 2012 for a template.
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| Eric Sprott - We Are In The Biggest Ponzi Scheme Of All-Time Posted: 05 Jan 2013 01:49 PM PST  Today billionaire Eric Sprott warned King World News, "... we are in the biggest Ponzi scheme of all-time." This is the second in a series of interviews with Sprott that will be released which reveals the increasingly desperate situation Western central planners face as we head into 2013.Here is what Sprott, who is Chairman of Sprott Asset Management, had to say: "As I've already said, there was only one purpose for those (Fed) minutes and that was to keep the real indicators of inflation at bay. As you know, oil was starting to move up again, and gold and silver were acting well." This posting includes an audio/video/photo media file: Download Now | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2013 - The Year of the Gold Bull? Posted: 05 Jan 2013 01:22 PM PST Gold: The bigger picture hasn't changed and isn't going to for some time: a major private sector secular economic contraction in the West being fought with manufactured money/credit units by governments and central bankstaz. Read More...  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Here Comes The Student Loan Bailout Posted: 05 Jan 2013 12:59 PM PST 2012 is the year the student loan bubble finally popped. While on one hand the relentlessly rising total Federal student debt crossed $956 billion as of September 30, and was growing at a pace that will have put it over $1 trillion by the end of 2012, the one data point confirming the size, severity and ultimately bursting of this latest debt bubble was the disclosure in late November by the Fed that the percentage of 90+ day delinquent loans soared from under 9% to 11% in one quarter. Which is why we were not surprised to learn that the Federal government has now delivered yet another bailout program: this time focusing not on banks, or homeowners who bought McMansions and decided to not pay their mortgage, but on those millions of Americans, aged 18 to 80, that are drowning in student debt - debt, incidentally, which has been used to pay for drugs, motorcycles, games, tattoos, not to mention countless iProducts. Which also means that since there is no free lunch, all that will happen is that even more Federal Debt will be tacked on to replace discharged student debt loans, up to the total $1 trillion which will promptly soar far higher as more Americans take advantage of this latest government handout. But when the US will already have $22 trillion in debt this time in four years, who really is counting? After all, "it is only fair" that the taxpayer funded "free for all" bonanza must go on. The latest debt bailout, not surprisingly is not titled "Yet another taxpayer funded bailout for those who bought things they can't afford on credit" as that would not be very politically prudent, especially for those politicians who still have taxpaying citizens as their voters. Instead, its name is the much more PC: "Pay as You Earn Repayment Plan." Alas, it really should be called the former, because what it does is it incentivizes Americans to borrow even more Federal student loans, well aware that there will now always be a cap on the associated monthly interest payment which will never leave a mark regardless what the full underlying loan notional is. It also provides for full debt discharge should the borrowers end up with cushy Federal jobs - because the one thing the US government needs afford is more debt-saddled government workers. What is the "Pay as You Earn Repayment Plan"? The WSJ explains:
Which in the New Normal, means everyone with a student loan will benefit. It also means, that courtesy of knowing this safety net is there, more and more people will take advantage of the government's latest generosity with other taxpayer's money. What are the terms of this new bailout?
So much for student debt being non-dischargeable: borrow hundreds of thousands, but make your monthly payment of a hundred or so bucks, and in 20 years you will be debt free, courtesy of US taxpayers. Actually, scratch that: one doesn't even have to make a payment!
For those who think getting full debt forgiveness in 20 years is far too long, why there's a loophole for that too: just go "work" for Uncle Sam:
As for eligibility "constraints":
In other words, virtually all people who were responsible for the diagonal take off in the Federal student loan total in the current depression are now eligible for what will eventually be full debt discharge. So let's get this straight:
And there it is: incentives for the common, and very much broke, man in the New Normal. If there is anyone out there who thinks this will not result in a "charge it" feeding frenzy and that the Federal student loan total will not go absolutely parabolic going forward, please raise your hand. Of course, what is not discussed, is who is on the other side of all those forgiven loans. And the answer, dear taxpaying US readers, is starting at you in the mirror. Because all the Federal government will do is transfer the unfunded obligation, which has already been used to satisfy the purchase of goods and services, from one individual to the whole group. But when one is dealing with the government of a country that is no longer even fit to be defined as "banana", what is adding one more trillion between already insolvent counterparties. Finally, yes, this means the Fed just tacked on one more year of QE to its $1 trillion/year in US debt monetization, which also means the Fed's balance sheet will now also be used for to fund student loan forgiveness, among so many other things. Insolvent students of the world, unite! | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 05 Jan 2013 11:37 AM PST Bill Gross, founder of Pimco, the world's largest bond fund with over $1.92 trillion under management, penned a new piece entitled, "Money for Nothin' Writing Checks for Free." In his editorial, he called attention to the near $10 trillion explosion in global central bank money issuance since 2006, and the impending doom historically associated with a "money for nothing" monetary policy. His conclusion: The whole charade will soon hit a brick wall. Of particular interest were his comments on gold, commodities, and the "Fort Knox Fairy Tale"…ie. Fed gold certificate claims on Fort Knox bullion holdings which may or may not actually exist. Says Gross, "Supposedly they [the US Fed] own a few billion dollars of "gold certificates" that represent a fairy-tale claim on Ft. Knox's secret stash, but there's essentially nothing there but trust…$54 trillion of credit in the U.S. financial system based upon trusting a central bank with nothing in the vault to back it up. Amazing!" Gross comments on the end-game picture in saying, "…[G]overnment financing schemes such as today's QE's or England's early 1700s South Sea Bubble end badly…The future price tag of printing six trillion dollars' worth of checks comes in the form of inflation and devaluation of currencies either relative to each other, or to commodities in less limitless supply such as oil or gold." Bottom Line: Pimco's $1.9 trillion in wealth is closely watching gold. When "inflationary dragons" reemerge (as he puts it), what impact might a percentage of that $1.9 trillion have on the metals and commodity markets? Thoughts are welcomed. Photo source. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Is This The Future Of World "Growth"? (Or The iPad vs Indoor Plumbing) Posted: 05 Jan 2013 10:56 AM PST Back on December 23, we presented one of the past year's most disturbing reports, the BCG's "Ending the Era of Ponzi Finance" which explained, quite succinctly, why the economy of the developed world, which is nothing but one big ponzi scheme, is approaching its inevitable end, in which existing principles will no longer be applicable nor available to kick the can down the road. The drivers for this are numerous (and all listed in the report), with soaring public and private debt only one of the main forces behind the coming collapse into a Keynesian singularity. Yet perhaps the biggest threat of all has nothing to do with the world's balance sheet, but its income statement, and specifically the category for Research and Development, or, as it is better known in refined economic circles, "productivity" - it is here that things are rapidly turning from bad to worse, and why the chart below (which we felt a need to emphasize, hence the repost) is probably the best summation of what the world has to look forward to, or, as the case may be, not. Why is productivity important? Simple - without major reinvestments in growth, be it capitalized or expensed, which serve to promote the betterment of all mankind, and not just fatten the bottom line of some mega multinational corporations, and their shareholders, the world's glory days are sadly and certainly behind us. And with more and more spending allocated to basic welfare programs and debt interest satisfaction at both the public and private ledger, there is increasingly less capital available to promote productivity improvement or boost corporate capital expenditures (a topic long discussed on Zero Hedge, and now even picked up by Bill Gross). As for productivity, this also goes back to a long discussed topic: namely not the quantity of a given nation's labor pool, but more importantly its quality. And with America rapidly becoming a workforce consisting of gerontocratic, part-time workers, one can give up on all hope for future step-wise productivity improvements. Sadly jobs are now, more than ever, a political ploy by those bounded by a 4 year career horizon to preserve their grasp on power, which means that ever more job quality will be sacrificed to preserve the illusion that America is keeping up with its "trendline" growth of 100-200K jobs added each month. Which is also why the chart above may in fact be an optimistic assessment of what truly awaits the world as it mean reverts to a long-term growth trendlline, somewhere below the 0.5% GDP grpwth per year area. This is BCG's brief and concise assessment on the issue:
But not to those companies' handful of shareholders, which is precisely what happens in a world in which sovereign growth and stability is a needed sacrifice and trade off to perpetuate the corporate model of earnings above all. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 05 Jan 2013 10:28 AM PST Summary: Long term - on major sell signal. Short term - on mixed signals. Gold sector cycle - down as of Oct 13. Read More...  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| A Massive Electromagnetic Pulse Could Collapse The Economy In A Single Moment Posted: 05 Jan 2013 10:06 AM PST  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. It would be a disaster unlike anything we have ever seen before in U.S. history. Most Americans are totally clueless about what an EMP attack could do to this nation, but the threat is very real. There was even a congressional commission that studied the potential effects of an EMP attack on the United States for eight years…Read more.... This posting includes an audio/video/photo media file: Download Now | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Swiss Firm Introduces Divisible Gold Card For “A Scary New World” Posted: 05 Jan 2013 10:01 AM PST  Though often described as "the money of last resort," one gripe from potential investors about owning gold is that it is costly, currently running around $1700 an ounce, and not feasible as an emergency exchange mechanism in the event of financial and economic catastrophe that may disrupt food supplies and the normal flow of commerce. The problem with one ounce gold coins, or even 1/10th of an ounce fractional coins, is that if you needed to buy a few loaves of bread, medicine, clothing or supplies in an emergency it would be difficult to do so with a gold coin as opposed to something like silver, which can be more easily traded for smaller value goods. Enter the "Combibar" Gold Card – designed for "a scary new world." Introduced by Swiss precious metals firm Valcambi, the 50 gram (~ 1.6 Troy Ounces) card is fabricated with 99.9% fine gold and can easily be broken into 1 gram pieces and used as payment during an emergency. Each gram is worth approximately the same as an ounce of silver – about $34 – making it an almost perfect emergency barter item. Read more.... This posting includes an audio/video/photo media file: Download Now | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Two Spaniards Self-Immolate Due To Financial Problems Posted: 05 Jan 2013 09:39 AM PST First it was a German, then an Italian, and now, two months, later, the European self-immolation wave has spread to the country that many expect will be the next one to follow Greece into effective debt default. El Pais reports that an impoverished 57-year-old man who set himself on fire in Málaga Thursday, and subsequently died of his injuries at Carlos Haya hospital. He had third-degree burns on 80 percent of his body and suffered a multi-organ failure. The victim, thought to be of Moroccan origin, had worked in construction for years but was out of a job now, said people who knew him. In the last few months he had been scraping a living with the small change he made guiding cars into parking spaces near the hospital, an illegal practice that is usually overlooked by authorities. The police, who have not yet located his relatives, are not ruling out the possibility of an accident just as the man was lighting up a cigarette. Just two minutes before the event, he bought a pack of cigarettes from a local newsstand whose owner asked him how he was doing. "I don't even have enough money for food," he replied. The man is thought to have been homeless at the present time, and seemed even more depressed than on other occasions, said the stand owner. Several taxi drivers came to the rescue with their vehicles' fire extinguishers when they saw the man go up in flames on a side street from the hospital. A few hours after being admitted into the emergency room there, he was transferred to a specialized burn unit in Seville, where doctors were unable to save his life. He was the unlucky one - as BBC follows, another Spaniard also lit himself on fire on Thursday night, in the same city, but lived.
Considering it was an identical act of self-immolation in Tunisia that set off the Arab Spring in the winter of 2011, Europe has for shown far more resiliency to socio-economic collapse than many had expected, although this is not unexpected: after all, Europeans, and especially Spaniards, still have more to lose than gain by rising up against a reverse Robin Hood globalist system bent on taking from what's left of the middle class and giving to the status quo banking oligarchy. Or so they think: the big strawman, is and for the past 150 years has been the welfare state myth. Then again, now that Spain has almost drained its entire social security fund, and replaced it with worthless ECB repo material, i.e., Spanish bonds, will Spaniards finally wake up and realize that while they were snoozing, their government spent 90% of their pension and retirement money to prop up the Ponzi for one more year. And instead of committing suicide, or even patching up various symptomps, shouldn't the people of Spain, and all of Europe, finally address the real underlying cause of their misery: a dysfunctional government, which contrary to indication, is merely a puppet in a banker-led globalist system? If not, how many more people have to burn themselves to death before it becomes clear? | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 05 Jan 2013 08:43 AM PST Dear CIGAs, Markets are from day to day only exercises in human behavior. The gold market is a supreme exercise in how even a professional public works. Last week someone yelled, "Fire in Gold's theater," and then in the middle of the stampede, someone looked back saying, "There is no fire." His words were Continue reading Jim's Mailbox | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bernanke's Legacy Problem Posted: 05 Jan 2013 08:29 AM PST
The surprise of the week was not the goofy ending to the cliff. It was the minutes from the Fed.
The meeting in question took place on 12/12, just 23 days ago. Some very major announcements came as a result of that meeting. A new, and much more aggressive Fed policy was revealed. For the first time ever, the Fed set a target for when monetary policy would change.
The Fed said it would keep its foot on the monetary gas pedal until unemployment fell to 6.5%, and maybe even lower than that. The economic forecasts that the Fed released showed a consensus estimate for unemployment staying above the magic 6.5% until at least 2015. So that set a bar for any changes in monetary policy years into the future.
The Fed backed up its new long-term commitment to boost the economy by doubling up with QE4 – another $45b a month of POMO buys. In December the Fed set the “needle” for monetary steam at the same level that existed during the dark days of 2009. All in, the last Fed meeting was a precedent setting commitment to extended monetary easing. At least that is how I read it.
And then we get the minutes from the meeting where all these dramatic steps were taken. The minutes read completely different. What the hell happened? I have the sense that there was a conversation that might have gone like this:
Bernanke: Okay, we will go forward with QE4. This is our last chance to do anything for a long time to come. There will be no more QE on my watch as head of the Fed.
Yellen: But, but Ben…..We just promised…..
Bullard: You’re kidding? I love it! But I don’t understand. What’s up?
Bernanke: I’m looking at the calendar. I’m outta here it 18 months. Before I leave, and turn the keys over to the next guy, I have to “regularize” monetary policy. So that means we end the LSAP’s this year.
Yellen: But, but, Ben, the markets will be disappointed. The S&P could fall, interest rates might rise. We wouldn’t want that, would we?
Evans: Yeah Ben, we don’t want to upset the apple cart just at the time we have it righted. Remember 1937?
Bernanke: I’ve made up my mind. I will not leave the Fed with a policy that is still in an extreme position. I want to give the new guy a fighting chance. Greenspan did the same thing for me before he handed over the reins.
Yellen: I’m very sad. I thought we would be able to have fun goosing markets for another two years. Now you’re taking away the punchbowl much earlier than anyone has thought. How will we be able to communicate this to the market? It will be a big shock if we just come out and say that QE is over.
Bernanke: We can control the markets; I’m not worried about that. We’ve being doing it for years now, we should have no trouble doing it for another year.
Evans: Gee! What happened to my plan to target monetary policy to unemployment? I thought we agreed to that! Now you’re doing a 180 on us.
Bernanke: I'm not suggesting a 180. We will not reverse any QE. I'll leave that up to who ever sits in this chair next. I would like to bring policy closer to neutral. We will just have to manage the news flow. We can, and will, control that. We will use our usual sources, guys like Hilsenrath, to help introduce this slowly. After all, we don’t want any knee jerk reactions.
We will sanitize the minutes of this meeting. We can introduce the possibility of a change in policy with the words we use. We just have to vague about it...plant a seed. Yes, we will cause some confusion, but that can’t be helped. Most analysts are so confused at this point, I doubt that too many will take the suggestion we are changing direction seriously.
Yellen: But, but Ben….this is all coming as a surprise. I’m very disappointed.
Evans: (Sobbing) So am I!
Bernanke: Well, all I can say is tough! I have a legacy at the Fed, and I want to preserve that legacy. I will not allow my term at the Fed to end with a policy that must be reversed by someone else on the first day he takes over.
Unless something very significant happens over the next half year, "my" Fed is going to move toward a neutral monetary policy by 2014.
We will continue to drop hints for the next few months, and I will make my final speech in August, at Jackson Hole. I will use that opportunity to confirm what we have agreed to today.
Yellen: But, but, but Ben….
Bernanke: Drop it Janet. My mind is made up. Meeting over.
Okay, I’m kidding a bit. But this is not so far fetched. Why would the Fed send one signal on December 12 and quite a different one on January 4? When it comes to the Fed, there is always a motive for its actions. The motives are not always clear.
I do believe this development is connected to the “legacy” issue. Bernanke’s term at the Fed will set many historical precedents. To a significant extent, history will judge Bernanke on what he did while chairman of the Fed. But the books will also look at what happened after he left.
I believe that Bernanke would very much like to leave his successor with a Fed that had policy choices. As of today there are no options left. Just more useless QE. I doubt that Bernanke wants to exit with the Fed’s foot planted firmly on the gas pedal. The next guy does deserve a cleaner plate than now exists.
Is the Legacy factor influencing Bernanke? I think it has some sway in his thinking. Consider what Greenspan did before he left. After years of soft monetary policy he ratcheted up the Federal Funds rate 17 times in 22 months. He took the funds rate from 1% all the way up to 6%. Part of that rapid increase was driven to get monetary policy "neutral", so that Bernanke could do as he wished. Not long after Bernanke took over, he took the funds rate down to zero.
Clearly, Greenspan tried to get monetary policy back to neutral before he left, I don’t see any reason why Bernanke would think differently. Are we watching a repeat of history? At a minimum, his legacy, and where he wants the Fed to be when he leaves, is part of Ben's thinking today.
Readers may conclude that I’m all wet with this. That Bernanke’s Fed will never end the easy money policies. And the idea that his legacy has anything to do with current policy is just gas. Readers might be right in that observation. But those who think that the legacy issue is not a factor, have to answer the question, “What the hell happened at that meeting? Why are we getting hints of a change in policy at this time?” If there is another excuse for the Fed’s apparent change of heart, I would love to hear about it. I can’t come up with anything else. Something has changed, and it isn't the economy. So what is the motivation?
++ Reading the Fed’s tealeaves is a bit of a fool’s game. The chances of being right are about 50-50. But for the sake of discussion, assume that the Fed was telling the truth this past week. Monetary policy will change over the course of the year. It will go from 4th gear and full gas, to “neutral”.
When I say neutral, I mean that the monthly QE programs would come to a gradual end. It’s even possible that there could be some very small backup in the Federal Funds rate early in 2014. To me, this sets up a very interesting scenario.
There are two schools of thought on the Fed’s QE activity:
- All of the Fed Governors (specifically, Bernanke and Yellen) have stated their belief that it is the size of the Fed’s balance sheet that matters when it comes to measuring monetary stimulus. The vast number of folks who opine on the Fed, also believe this is the case. So the markets, and the Fed believe that “neutral” means that the Fed’s balance sheet remains static.
- A small, but vocal minority, lead by Tyler Durden at Zero Hedge, see it differently. This group believes that it is not the size of the Fed’s balance sheet that is the issue. It is the daily, weekly, monthly flows that the Fed creates with QE that is the critical metric when measuring monetary policy.
The two different views are remarkably divergent in their conclusions. And only one camp will be proven right.
I happen to agree with Durden. It’s the flow, not the size. We have a capital market that has a $20B “bid” in it every week. With each POMO buy, the primary dealers have cash money in their pockets, and they have to spend it. So they buy “stuff”. The stuff they buy with the loot from QE ranges from Treasuries, to junk, to equities. I believe that the constant demand from the Fed is the gas that makes these transactions happen. I believe that when POMO stops, so does the merry-go-round.
The Fed will not stop QE abruptly. There will be a 3-6 month wind-down of the POMO buys. We have been here before, with QE1. Well before the Fed stopped buying, markets started to react to what was then perceived to be the end of the QE party.
To a significant extent, this question, and how the markets answer it, will resolve the fate of the markets, the broader economy and Bernanke’s legacy. So this is a very big deal.
The view of the Fed, that it is balance sheet size not flow that matters, is supported by 95% of the market today. So when Steve Liesman tells you that the Fed is moving to “neutral”, and that’s not a big deal, be wary. The "consensus view" is rarely right in these matters. I think the Fed’s neutral is going to feel as if we are in reverse, and moving backwards pretty fast.
Note: I have long felt that Greenspan's rapid reversal of the Funds rate in 2006 led to the collapse in 2008. Alan tried to "regularize" what he did after the Dotcom bust. Bust went to bust as a result.
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| Posted: 05 Jan 2013 07:36 AM PST Gold and silver come in multiple forms, each with their own unique yet interrelated supply-and-demand profiles. Among the most popular in the US physical market are the bullion coins produced by the US Mint. Investor demand for these beautiful coins has been robust in recent months despite all the unrelated fund selling weighing on gold. US Mint bullion-coin sales offer great insights into physical demand. The US Mint's bullion coins are called American Eagles. The "bullion" distinction means their value is based solely on the spot prices of gold and silver, with no special premium for rarity. So they offer investors far more physical metal per dollar spent than expensive collectible coins. I've always believed maximizing one's total gold and silver holdings is far more prudent than playing the scarcity game. The American Eagles were born in the Gold Bullion Coin Act of 1985, which Ronald Reagan signed into law. Back in the early 1980s, foreign bullion coins like the famous South African Krugerrand were soaring in popularity. The US Congress wanted the US to compete in this prestigious national market, so it directed the US Mint to start producing gold coins exclusively with gold mined in the US within the past year. This program has proved wildly successful, although not without controversy. My last essay in this series discussed an episode where the US Mint couldn't meet soaring demand and was forced to temporarily suspend sales. Conspiracy theorists went apoplectic, enraged because the Gold Bullion Coin Act legally obligated the US Mint to "mint and issue the gold coins … in quantities sufficient to meet public demand". But overall, the American Eagles have been a huge success. They are a fantastic way to get into physical gold and silver investing. They are beautiful, portable, and easy to buy and sell since they are instantly recognized globally. They are also easy to hide at home, where no bank shutdown can threaten access to them and no government can confiscate them. I started amassing my own hoard in 1998. Besides promoting the obvious virtues of owning physical gold and silver held in your own immediate physical control, American Eagles offer unique insights into physical bullion supply-and-demand trends. The US Mint has been very transparent about publishing detailed sales data, which is very interesting to take a look at from time to time. It reflects grassroots physical precious-metals sentiment like nothing else can. There are some caveats though. First, the US Mint bullion-coin sales are only of new coins. But Eagles are never destroyed. So there is a large supply out there of past years' coins trading hands that dwarfs the annual new supply. If you go into a typical coin shop, they will almost always try to sell you past years' coins they have bought back from other investors. So new-sales data is only the tip of the coin iceberg. Second, there are plenty of other forms of physical gold and silver for individual investors to buy. These include foreign national coins, bars, privately-minted coins, rare coins, old currency, etc. And some of these other forms offer considerably lower premiums over spot prices than Eagles, particularly on the silver side. So realize the US Mint's sales data is merely a small sample of the total physical market. Still, the US Mint's production is based on real-world demand from coin dealers. When these guys have enough inventory from existing investors selling, they don't need to order new Eagles from the Mint. So the Mint ramping up production is always a response to rising coin-dealer demand, which is in turn the result of rising investor demand for physical gold and silver. Thus the Mint's sales data is valuable. It is made available on a monthly basis for both gold and silver Eagles. The charts in this essay superimpose these coin sales over the daily gold and silver price action over the course of their entire secular bulls. Despite the perception of 2012 being a weak year for the precious metals, new physical demand from investors for American Eagles is actually robust to strong. This is certainly a bullish omen. The red line here is the gold price, the blue line is the monthly US Mint gold Eagle sales in ounces, and the yellow lines are the annual averages of these monthly sales. Back in the early years of gold's secular bull, this metal remained a hardcore contrarian play. Not many investors would touch it, so I'm proud that we started recommending 1-ounce gold bullion coins to our newsletter subscribers at $264 in May 2001. Average monthly volumes of new gold Eagle production ranged between about 22k to 45k ozs from 2001 to 2006. The supply was much lower than recent years because widespread investor demand simply hadn't materialized yet. After an odd lull in late 2006 and 2007, the stock panic proved to be the catalyst that awakened investors. That once-in-a-lifetime fear superstorm, despite hitting gold too, sparked big physical demand. 2008's average monthly sales of 72k ozs of gold Eagles dwarfed anything that came before it, and 2009's staggering 120k was far better still. 2009 was a great year for gold, it surged 24%. It also happened to be the first year of the Obama Administration, which frightened many conservative investors who believe in limited Constitutional federal government. Whatever the reasons, gold Eagle demand was massive. But ever since then it has tapered off. 2010's average monthly sales of new Eagles were 101k ozs, 2011's 83k ozs, and 2012's slumped to 63k ozs. Though new investment demand in terms of gold ounces has been cut in half since 2009, it still remains double average pre-panic levels of 30k ozs. And of course gold is worth far more now than it was back in 2009, so this ounces comparison is understated. Back at the 2009 peak year for sales of freshly-minted gold Eagles, the average gold price was $974. Multiply this by the 119.5k average of monthly sales, and the actual capital volume ran around $116m per month (or $1.4b per year). Meanwhile in 2012 the average gold price was $1669, 71% higher. So the average capital volume last year was $104m per month ($1.3b per year). Real demand remains healthy. Instead of being cut in half as the ounces sold indicates, in terms of money investors are plowing into physical gold Eagles demand in 2012 was only down around 10% from its peak in 2009! So gold investment demand remains robust despite this metal's high consolidation in 2012 and odd fund selling last month. And remember that the supply of Eagles is cumulative, all older ones remain in existence. So either the great majority of earlier investors aren't selling their gold Eagles back to dealers, or there is so much new demand from existing and new investors that dealers can't get enough inventory from buying back earlier years' coins. Dealers are seeing big investor demand they can't meet through trading, so they continue to consistently order large quantities of new American Eagles directly from their source. Interestingly monthly sales indicate physical demand has improved dramatically since early 2012, from 21k ozs in February to 137k in November. November 2012 happened to be the strongest November for new gold Eagle sales in 14 years, since 1998! And back then the gold price only averaged $294, a far cry from the $1722 in November 2012. So this latest November's gold demand in dollars was just staggering. Why? Obama winning reelection. After talking with countless gold investors over the last dozen years, I have a pretty good understanding of our demographic. We tend to be hardworking conservatives, living within our means so we can save surplus income to invest. We believe government must live within its means just like we do. And we love freedom and generally distrust government and its paper money. So half of the Americans who bothered voting rewarding Obama for his disastrous first term was dumbfounding. He ran the biggest deficits in US history, driving the biggest debt growth in US history. His spending and deficits as a percentage of GDP were staggering, truly Greece-like. He presided over the worst employment record since the Great Depression, and poverty surged to record levels under him. So Obama's win really scared the conservative backbone of American investors. After all the vast damage done by this man's horrendous philosophies and policies in his first four years, what would America look like after four more years? And Obama was stepping up his Marxist class-warfare rhetoric, attacking successful Americans who worked hard and made wise decisions. So investors flocked to physical gold. I fully expect this trend to continue. The only reason Obama can run his mind-boggling record deficits is because the US Federal Reserve is directly monetizing half of them going forward. Its December expansion of QE3 is wildly bullish for gold and silver in 2013. We've never seen such a gigantic surge of pure inflation, so it should absolutely ignite huge investment demand for all forms of gold and silver. If all this is true, you may be wondering why the US Mint's new gold Eagle sales plunged from 137k ozs in November to just 76k in December. Odds are this has nothing to do with investor demand. In early December, the US Mint winds down current-year coin production so it can start up the following year's which are released in January. The new year's date stamp is highly prized, often driving large demand spikes. So this month's sales data ought to prove very interesting once released. Will the US Mint have the production bandwidth "to meet public demand" for 2013 gold Eagles? We have QE3X's new Treasury monetizations spinning up, a terrible fiscal-cliff deal with no spending cuts, more brazen attacks on our Constitutional freedoms coming from the Obama Administration, and festering market uncertainty. Gold bullion-coin demand is already robust in capital-volume terms, and has been rising dramatically in ounces terms since Obama's odds of winning the 2012 election started growing. Investors want to own physical gold held in their own immediate physical custody, which is the ultimate insurance policy for every conceivable market, political, or personal hardship or calamity. This trend should only accelerate. And boy, if gold Eagle demand is looking robust then silver Eagle demand is astounding! Silver Eagles occupy a strange niche. Though they are universally loved and highly-prized for their beauty, they are far from the cheapest way to buy silver bullion. That prize falls to junk coins (old everyday-use currency like quarters that had some silver content), generic "rounds" (privately-minted silver coins), and bulk bars. So most experienced silver investors don't bother with silver Eagles unless they are going to be used for gifts. This implies that the massive silver Eagle demand in recent years is from newer investors. They are also probably smaller too, implying silver investing is starting to catch on with the masses. The fact that silver bullion-coin demand is dwarfing gold bullion-coin demand also supports this smaller thesis. Like the gold Eagles, silver Eagles' demand was remarkably consistent early in this secular bull before 2008's epic stock panic. That year silver Eagle demand doubled, and it has continued rising every year since until last year. But with average monthly demand of 2.8m ozs of silver Eagles in 2012, that was still the third-best year of this bull and very high in absolute terms. Much of this was from a colossal January spike. When investors want silver Eagles, they often prefer the current year's date for their coins to commemorate their investment. So in January 2012, coin dealers purchased an astounding 6.1m ozs of silver Eagles! Given the still-strong demand for the rest of last year, generally well above panic levels, odds are January 2013 will prove similar. So we may really see some blowout silver demand with everything going on. And once again, last year's silver bullion-coin demand is far more impressive when considered in capital-volume terms. Back in 2010 when monthly demand averaged 2.9m ozs of silver Eagles, the silver price averaged just $20.24. This implies monthly capital volume of $58m, or $699m per year. But in 2012 when a similar monthly average of 2.8m ozs of new silver Eagles were sold, silver averaged $31.19. This works out to a much larger average monthly dollar value of $88m in silver Eagles being purchased, or $1.1b per year. So investor demand for physical silver as represented by new silver Eagle sales remains incredibly strong. I imagine it will skyrocket again once silver's young upleg regains steam soon. Silver demand in 2011 was incredible after its last massive upleg ignited by the Fed's QE2 peaked. So despite the headline weakness in gold and silver in recent months, grassroots physical investment demand remains robust to strong. Buying gold and silver bullion coins takes a high level of commitment and motivation. Investors have to find a coin dealer, go there or order the coins, and take delivery. This is far more time-consuming than spending a few seconds adding the GLD or SLV ETFs to one's portfolio. And investors buy physical coins for great reasons, usually as the ultimate insurance policy for the unexpected. Physical coins can't be frozen like a bank account, can't be stolen or confiscated if hidden well enough (and kept secret), and are the ultimate portable and liquid form of storing wealth. For a dozen years now, I've zealously recommended every investor have a physical-coin portfolio foundation. These should be hidden on your own property, not stored with some third party. The only gold coins confiscated in the infamous 1933 seizure by Democratic President Franklin Roosevelt were ones stored in bank safe-deposit boxes. The government never bothered going door-to-door, a politically-risky, dangerous, and expensive strategy. It's sad, as earlier in this bull I thought a new gold confiscation was all but impossible. But the Obama Administration is now making lots of noise about going after our guns, taking away our Constitutional right to defend our families from criminals and the government with effective firearms. Obama already stole our right to choose whether or not we want medical insurance, a private product. So under this power-drunk profligate autocrat, I'm no longer so certain that private gold won't be targeted again someday. So if you've never bought gold and silver bullion coins, now is a great time to get started and stockpiling. It's easy, just find a reputable local coin dealer who has been in business a long time and stop by to chat with him. He'll help you understand what coins are available, what kinds of premiums over spot they command, and how to make your purchase. Then take your coins home, hide them, and forget about them. At Zeal we've long since laid in physical bullion-coin foundations for our portfolios, so we are looking for higher returns for new capital. Thus we remain really excited about the beaten-down gold and silver stocks today, which are incredibly undervalued relative to prevailing gold and silver prices. As the precious metals continue higher in their young uplegs, the stocks of their miners are overdue to soar dramatically. We recently finished a new deep-research project digging into the universe of silver juniors trading in the US and Canada. We spent several months researching nearly 100, gradually whittling them down to our dozen fundamental favorites. Each is profiled in depth in a fascinating new 23-page report. One was already bought out at an epic 72% premium! Buy your silver-juniors report today and get deployed soon! We also publish acclaimed weekly and monthly subscription newsletters loved by speculators and investors worldwide. In them I apply our vast experience, knowledge, wisdom, and ongoing research to explain what is going on in the markets, why, and how to trade it with specific high-potential stocks as opportunities arise. We are now recommending plenty of amazing gold and silver stocks that remain cheap. Subscribe today! The bottom line is grassroots physical gold and silver investment demand remains robust to strong. This is despite the recent months' atypical weakness in the precious metals. The US Mint continues to sell lots of gold and silver Eagles to coin dealers, who would only be ordering them if they had demand from investors. Actual coin volumes look fine, but the capital being poured in at today's prices is quite impressive. And as the recent surge in gold Eagle demand indicates, the political environment can be a big driver of investment demand. We are now stuck with four more years of out-of-control federal spending and the resulting ruinous deficits. The Fed is aggressively monetizing this new debt, which is highly inflationary. As gold and silver start powering higher again, investment demand is only going to continue growing. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gold and Silver Hit by the Usual Jobs Report Shenanigans Posted: 05 Jan 2013 07:28 AM PST The metals were hit Thursday and yesterday after a weak jobs report and an uptick in unemployment made a bit of a canard out of the Fed minutes suggesting that they will be able to cease their monetary easing and bond buying anytime soon. They may shift to some other mechanism, but they will continue to expand the money supply. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Major Gold Move You're Not Hearing About Posted: 05 Jan 2013 07:20 AM PST Brian Hunt writes: You didn't hear about it in the mainstream press, but gold just "broke out" to an important all-time high... Longtime readers know that since we started publishing DailyWealth in 2005, we've been outspoken bulls on gold. (We were gold owners and gold bulls years before that.) Since then, we've published hundreds of essays on the right ways to own it. We even published a book on the stuff. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Currency Positioning and Technical Outlook: Underlying Trend Intact Posted: 05 Jan 2013 06:02 AM PST
One of the most important decisions participants in the foreign exchange must make is whether to view the dramatic pullback in most of the major foreign currencies seen in the early days of the new year as a reversal of the trend or as simply an overdue correction. Our technical analysis sides with the latter and we anticipate renewed dollar weakness in the period ahead. We would be forced to reconsider if the euro fell through the $1.2980 area or if sterling fell below $1.60. Although the dollar's sharp gains against the yen have left it over-extended, we see no compelling technical sign that a reversal is at hand. Just like ECB's Draghi wielding Outright Market Transaction scheme drove down Spanish and Italian yields, Japan's Abe's rhetoric has been sufficient to drive the yen down without lifting a finger or spending cent. Reports indicate the new Japanese government wants to see the dollar firm to JPY90. The market seems quite happy to deliver it. However, perhaps, like a dog chasing a car that doesn't know what to do when it catches it, so to0 will Abe find that success is not all that it is cracked up to be. Japan will likely still be experiencing deflation, a weak economy and corporate governance challenges with the dollar at JPY90 as it did with the dollar at JPY80. Moreover, the export stimulus of a weaker yen may be more apparent than real. Ministry of Finance data shows that Japanese companies, like US multinationals, service foreign demand more through local production than from exports. Euro: We think the fact that the euro held the $1.2980-$1.3000 area is important. It corresponds to retracement objectives and the 50-day moving average. It is also where the trend line drawn off the late July, Draghi-inspired, low and the early Nov low comes in. The recover on before the weekend was also constructive. It is true that the 5-day moving average has moved below the 20-day average for the first time since the third week in Nov. However, we suspect that it is giving a false sell signal, generated by the sharp losses in a few days. A move back above $1.3115 would strengthen our confidence and a move above $1.3150 would set up for another test on the $1.33 area. Yen: The JPY88.80 area is the next immediate dollar target. As the JPY90 area is approached, it may be increasingly important to watch how the yen performs in Asia and whether Japanese corporates try to lock in profits or hedges. Buying dollars on modest dips is likely to be the preferred strategy of the trend following and momentum traders. We anticipate pullbacks to be limited to the JPY86.80-JPY87.30 range. Sterling: The recovery before the weekend was not as impressive as the euro, but sterling did manage to hold above the $1.60 level. This is where the trend line drawn off the July and Nov lows comes in. A convincing break of it warns of potential for another 1% or so decline. On the other hand, a move above $1.6150 help confirm that a low is in place and push through $1.62 would encourage another run at $1.6400. Swiss franc: The technical outlook is similar to the euro. The dollar did fray is downtrend line against the Swiss franc, but it did close poorly--near the session lows, setting up what appears to be a potential hammer in candlestick terms. Initial dollar support is seen near CHF0.9190. A break there could signal a retest on the recent lows just below CHF0.9100. Canadian dollar: The technical considerations are not generating strong signals. Our bias is for a higher Canadian dollar. However, there are more effective ways to express a negative view of the US dollar, and we note that often in a weak US dollar environment, the Canadian dollar lags on the crosses. Australian dollar: The huge rally on Wednesday was nearly completely retraced by Friday morning, confusing the near-term technical outlook. However, the strong close before the weekend and the fact that the $1.04 area largely held on the pullback, inclines us to look for follow through gains in the days ahead. The $1.0530 area may offer resistance on the way back to test $1.06. Mexican peso: The technical outlook is constructive for the peso. However, the dollar is approaching the lower end of its 15-month trading range against the peso, which is found in the MXN12.55-65 area. This still gives the peso bulls some room to play. The MXN12.85 area looks to provide the near-term cap. Turning to the Commitment of Traders, we recognize that the participation has slackened over the holiday period and most positions were only marginally changed. Still, we share the following four observations: 1. In the latest CFTC reporting period, speculative participants in the futures market generally added to long futures positions (except for sterling and Mexican peso), while reducing short positions (except in the Swiss franc). 2. For the first time since August 2011 the net speculative euro position is long. That said, the gross euro short position is still substantial and is the second largest behind the gross short yen position. 3. For the third week in a row, the net short yen position was reduced. It is interesting to now why. It is more a reflection of trying to pick a bottom in the yen (gross longs have increased from 16.3k to 30.4k in the past three weeks) than taking profits on short yen positions (gross shorts have slipped from 117k to 111k). 4. The speculative community remains substantially long Canadian and Australian dollar and especially, Mexican peso positions. We think these large currency futures positions should be noted, but not acted upon, without other considerations. The foreign exchange market is more a cash than a futures market. As we have discussed, there are no compelling technical indications that a reversal is at hand.
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In the past several years, people worldwide are slowly beginning to shed the web of deceit woven by the banking elite and learning that many topics that were mocked by the mainstream media as conspiracy theories of the tin-foil hat community have now been proven to be true beyond a shadow of a doubt. First there was the myth that bankers were upstanding members of the community that contributed positively to society. Then in 2009, one of their own, Paul Volcker, in a rare momentary lapse of sanity, stated:
It doesn't surprise me that the NY Times has decided the Constitution is merely a reference document now. The paper's loyal readership, what's left of it, lives huddled on the upper east side of New York, behind their hundred-million-dollar front doors, where wealth must be protected through any and all means.
Gold closed down on Friday $25.90 to finish the comex session at $1648.30. Silver followed gold down by 78 cents to $29.89.
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