Gold World News Flash |
- Harry Dent -- The Fake Casino Economy Bubble Is About To Burst: Financial Expert Predicts
- Harry Dent -- CHINA IS THE GREATEST ECONOMIC BUBBLE IN HISTORY
- The End (of the Silver Fix) Is Nigh
- LONDON SILVER FIX OFFICIALLY DEAD — Chris Duane
- JIM WILLIE: Europe is the ‘Grand Prize’, But The Ukraine Will Be The Dollar’s Waterloo Event
- The Beginning Of The End Of Precious Metals Manipulation — The London Silver Fix Is Officially Dead
- Lost U.S. Gold & The ECB Money Printing Machine
- Silver and Gold Prices Are Rallying, All Indicators are Pointing Up
- Silver and Gold Prices Are Rallying, All Indicators are Pointing Up
- From Rothschild To Koch Industries — Meet The People Who “Fix” The Price Of Gold
- Andy Hoffman: Speck-tacular analysis
- How The Debt Trap Swallowed Asia In Three Charts
- What has the Swiss National Bank been doing with the country's gold reserves?
- In The News Today
- Jim’s Mailbox
- ELITE AGENDA for a GLOBAL RESET - An Ecomomic Collapse and WORLD WAR 3
- Gold Discovery of the Decade Is Now On Sale
- Physical Silver Demand At All Time Highs in 2013
- Why Silver Has Not Been In a Bubble In 2011
- Gold Daily and Silver Weekly Charts - O Brave New World
- Gold Daily and Silver Weekly Charts - O Brave New World
- Gold Price Doesn’t Fall Despite Dollar Rally – Finally a Show of Strength?
- Get Ready for the Gold Mining Comeback
- FATCA Causing Chaos Worldwide For Americans
- China's Gold Trade Financing "Only Small Part" of Leasing Boom
- China's Gold Trade Financing "Only Small Part" of Leasing Boom
- Gold Price Long-term Forecast Using Statistics & Technical Analysis
- Surviving the Coming Collapse w/ Jeff Berwick of the Dollar Vigilante
- Lost U.S. Gold & Here Comes The ECB Money Printing Machine
- Gold Prices Rise as London Silver Fix Gives 3 Months' Notice, Euro & GBP Prices Hit 5-Week Highs
- 10 Reasons Why The US Economy is COLLAPSING
- Silver Was Not In a Bubble in 2011!
- Osisko Bidding War Proves Gold is Underrated
- London silver fix to end in August, with Deutsche Bank sticking around until then
- Investor Focus in Gold Mining Juniors
- Investor Focus in Gold Mining Juniors
- Junior Gold ETFs: Riskiest Stocks in the World
- Junior Gold ETFs: Riskiest Stocks in the World
- EUR/USD A Gift for Currency Bears
- The Scary Deflation Monster: The Fed vs. Prosperity
- Why the Fed Loves Housing Booms
- Why the Fed Loves Housing Booms
- Michael Curran's Three-Pronged Approach to Selecting Gold Equities
- Michael Curran's Three-Pronged Approach to Selecting Gold Equities
- Michael Curran's Three-Pronged Approach to Selecting Gold Equities
| Harry Dent -- The Fake Casino Economy Bubble Is About To Burst: Financial Expert Predicts Posted: 15 May 2014 12:30 AM PDT Alex is joined by economic forecaster and author Harry Dent on what people can do to protect themselves from a future economic collapse. On this Wednesday, May 14 edition of the Alex Jones Show, Alex breaks down the latest Obama scandal after thousands of immigrant murderers, rapists,... [[ This is a content summary only. Visit http://www.GoldSilverNewsBlog.com or http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Harry Dent -- CHINA IS THE GREATEST ECONOMIC BUBBLE IN HISTORY Posted: 14 May 2014 11:56 PM PDT Alex is joined by economic forecaster and author Harry Dent on what people can do to protect themselves from a future economic collapse. On this Wednesday, May 14 edition of the Alex Jones Show, Alex breaks down the latest Obama scandal after thousands of immigrant murderers, rapists,... [[ This is a content summary only. Visit http://www.GoldSilverNewsBlog.com or http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| The End (of the Silver Fix) Is Nigh Posted: 14 May 2014 11:16 PM PDT by Keith Weiner
For a long time, many in the gold and silver communities have been say that the prices of the monetary metals are manipulated. Recently, one particular allegation came to prominence because it was asserted by the German regulator BaFin. This allegation is that the members of the London Fixes for gold and silver are using their position to manipulate the price. This would seem to be confirmation of widely held longstanding belief that the markets are rigged, the long-sought smoking gun. Not so fast. If you dig through the numerous articles that have been published on this topic, you get a slightly more nuanced picture. The allegation is not that the banks who run the Fix are keeping the price suppressed. The allegation is rather less earth shattering. They are allegedly front-running their clients. Skimming money from client order flow may or may not be illegal in London. I don't know. It may be unethical, but that's not my point today. Skimming is not the same as suppressing the price. Let's take a step back. What is the "Fix"? Some suggest that the very name means that there is something crooked, that nefarious forces are rigging the game. That's just a misunderstanding. The Fix is an institution born in an earlier era, before the Internet and even before the telephone was widely used. The Fix is when the big brokers sit down and find the price at which the largest volume of metal will clear. How do they know how much volume will clear at any given price? They all look at their own order books. Back in 1897 when it began, the silver Fix certainly made the bid-ask spread narrower. This is to say it made silver more liquid, and, as a result, costs were lower for those who produced or consumed the metal. Perhaps, today the Fix does not narrow the spread. It may be like High Frequency Trading. HFT claims to narrow the spread, but I recently wrote an article discussing how HFT may be nothing more than profiteering on regulations that distort the market beyond recognition. However, I doubt this is true for the silver Fix. Those who want to buy shares of Apple have to do it on the NASDAQ. NASDAQ has to comply with all of the regulations, including Regulation National Market System. The regulators have the exchange, and all traders of all shares listed on the exchange, by the throat. No such chokehold exists in silver. Therefore, if silver miners, bullion dealers, or other firms are choosing to do business with the banks that run the Fix, there must be an advantage to them. If the members of the Fix are providing an advantage, then they are adding value and thereby earning the profit they make. In any case, it's history. The silver Fix will be ended in August, after 117 years. The silver community is excited. Many believe that the Fix is part of the apparatus that is suppressing the silver price. Without suppression, the price will shoot up to $100 or $250 or whatever number. Dismantling this very visible operation of the silver suppression cartel is a step on the road towards $100. Maybe. I write about the silver price and silver market conditions every week, so I don't want to get distracted with that discussion here. Instead, I want to make another prediction. If the silver Fix is adding liquidity to the market, as I believe, then when it disappears the bid-ask spread will widen. The silver price will become more volatile, as will the silver basis. Higher volatility is a boon to one group of people. Traders, especially the ones who are nimble to change positions quickly, and clever enough to understand the shifts that drive the price moves, stand to make a fortune. For everyone else, volatility is all downside. There is little on this earth more frustrating to make a decision to buy, and then in the time until your order is executed, the price goes up 5%. So you have to pay 5% more. The one thing that's even more frustrating is watching the price drop by 6% the next day. Do you have investments in any silver mining companies? To them, wider bid-ask spreads mean greater frictional costs. It will cut into their profit margins. When you go to your local coin shop, you will pay more when you buy and you will get less when you sell. As in a mechanical system, if friction increases then motion decreases. Some parts may seize up altogether. In recent years, pressure from regulators and litigation has pushed a number of companies out of the commodities business. The latest victim of this trend is the silver Fix. It's ironic that some of the people who push for this say they want free markets. It is not a free market when the government pushes company after company out of business, picking winners and (mostly) losers. It is not a free market when everyone can benefit from the provision of a service, but it becomes impossible to provide, so people are forced to incur higher costs or do without products. It's one or another flavor of socialism. Socialists insist that government can deliver better outcomes than the free market. Not once have this ever turned out to be true. What government interference causes is a collapse in coordination between people in the economy. The bid-ask spread is an obstacle to doing business. The narrower the spread, the more people can satisfy their need to buy or sell. The wider it is, the more people are blocked by the higher cost. The end of the silver Fix may or may not push up the price of silver. Either way, it will have unintended consequences. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| LONDON SILVER FIX OFFICIALLY DEAD — Chris Duane Posted: 14 May 2014 10:15 PM PDT THIS has To Be The Beginning Of The End Of Precious Metals Manipulation: The London Silver Fix Is Officially Dead — Chris Duane joins me to discuss. According to the press release: The London Silver Market Fixing Limited (the ‘Company’) announces that it will cease to administer the London Silver Fixing with effect from close of business on 14 August 2014. Until then, Deutsche Bank AG, HSBC Bank USA N.A. and The Bank of Nova Scotia will remain members of the Company and the Company will administer the London Silver Fixing and continue to liaise with the FCA and other stakeholders. The period to 14 August 2014 will provide an opportunity for market-led adjustment with consultation between clients and market participants. Check out Chris’ new site: TheSilverShieldXchange.com This posting includes an audio/video/photo media file: Download Now | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| JIM WILLIE: Europe is the ‘Grand Prize’, But The Ukraine Will Be The Dollar’s Waterloo Event Posted: 14 May 2014 10:05 PM PDT from Sprott Money: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Beginning Of The End Of Precious Metals Manipulation — The London Silver Fix Is Officially Dead Posted: 14 May 2014 09:45 PM PDT from ZeroHedge:
A. With effect from the close of business on 14 August 2014, the Company will cease to administer a Silver Fixing, and a daily Silver Fixing Price will no longer be published by the Company. Following a crackdown on precious metal manipulation by various European regulators (mostly Germany’s BaFin, recall “Precious Metals Manipulation Worse Than Libor Scandal, German Regulator Says“), which led to the shocking outcome that Deutsche Bank would pull out of the London gold and silver fixing committees, the London Silver Market Fixing company ended up with a most curious outcome: it would have just two members: HSBC and Bank of Nova Scotia. And, as an even more shocking result, overnight the London Silver Fix announced that after August 14, 2014 it will no longer exist - the first of many victories for all those who have fought for fair and unmanipulated precious metal markets. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lost U.S. Gold & The ECB Money Printing Machine Posted: 14 May 2014 09:40 PM PDT from KingWorldNews:
So I suspect within a month or so the ECB will print money because they are upset at how strong the euro has been. It's not so much the Germans who are upset at the strength of the euro, it's the French, Italians, Spaniards, etc., who have been upset. So the ECB expanded its balance sheet up to a year and a half ago, up until Mario Draghi said, 'We will do whatever it takes.' Shortly after that statement Draghi didn't have to do anything because investors started buying Spanish bonds and the bonds of other distressed countries. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Silver and Gold Prices Are Rallying, All Indicators are Pointing Up Posted: 14 May 2014 07:48 PM PDT
Today the GOLD PRICE broke through the $1,295 barrier to race $11.10 (0.86%) up to the next resistance at $1,305. Closed $1,305.70. Silver jumped 23.1 cents (1.2%) to 1973.5c, through the 1950c level that has so long stymied it. The SILVER PRICE now stands above its 20 DMA & today at its 2000c high punched into the 50 DMA (1999c). It is clean broken out above its downtrend line from the February 2218c high. Y'all are catching this, right? Broke out upside. MACD indicator positive, ROC positive, RSI positive, Full Stochastics positive. I'm positive it's positive. The GOLD PRICE finally punctured its 200 DMA ($1,299.76) & at its $1,309.20 high bumped the upper boundary of its even-sided triangle. Okay, take stock: Above 20 DMA ($1,294.86)? check. Above 200 DMA? Check. Thrice bounced off lower triangle boundary line? Check. Ready to smash through 50 dma ($1,311.75)? Check. Volume rise today? Check. Other indicators pointing up? Check. There it is, indicators all lined up and pointing skyward for silver & gold prices. Up above gold needs to better the last high at $1,315.80. Silver bettered its last high today ('twas 1977c) but didn't close there. Friends, it looks like the next rally has begun. Whoops, one more little fact: PALLADIUM PRICE & PLATINUM PRICE both rose strongly, up $11.15 and $30.20. Today's breakout takes platinum over its downtrend line from it 2011 high. Palladium has been above that line since 1 March. So the white metals are agreeing with the silver & gold price rally. Surprise, surprise, the London Silver Fix Company announced today it will cease operations as of 14 August, after 117 years. No doubt this comes from heat stocked by the LIBOR interest rate fixing scandal. You have to wonder what sort of goofs or toadies government regulators must be if they don't get that "fix" means price fixing. If you and I conspired to fix the price of arm garters, regulators would be all over us like ugly on an ape, but you let gigantic corporations in London do it and acute regulatory blindness sets in. After LIBOR exploded the London Gold Fix came under investigation. Durn! You mean -- nahh, it couldn't be -- that those venerable institutions might be manipulating the gold price in the gold FIX? To their own PROFIT? Deutsche Bank, under fire for its role in the LIBOR scandal, withdrew from the Gold Fix and has withdrawn from the silver fix, leaving only two participants. Britain's regulators have asked DB to stay on until the August cessation. This doesn't mark the end of government attempts to manipulate silver & gold prices, but it will make it more difficult, and it does bring us one small step closer to unfettered markets where the participants actually discover the price, rather than the government setting it. Stocks today fell like your granddad's upper plate into a well, leaving behind that little stalk-thingey -- okay, "tower" -- formation that often marks a reversal. Dow dropped 101.47 points (0.61%) to 16,613.97. SP500 lost 8.92 (0.47%) to 1,888.53. Don't count stocks out yet, but they have fulfilled my time expectations. Might still make one higher high in the next few days. NEVERTHELESS, LISTEN: It is time y'all ought to swap stocks for silver & gold. I know it seems a mite early, but today the Dow in Silver broke down through its 20 DMA and through its uptrend line, after a lower high last week than the May 1 high. Closed today down 1.69% at 840.15 oz (S$1,086.25). Dow in gold also fell through its 20 DMA (12.76 oz). Fell 1.5% to 12.72 oz (G$262.95 gold dollars). Why rush things? Why not wait for further confirmation? Because stocks are running out of time to make new highs, and because silver & gold MAY have begun their next leg up today. US dollar index stumbled back 7 basis points (0.09%) to 80.12. Needs yet to close above 80.40 to confirm a rally. Euro looks sick as a hound eating rat poison. Rose a pitiful 0.09% to $1.3715 today, but only after it has left two gaps behind. Euro's throat has been cut. Yen rose 0.36% but that still doesn't change much. It needs to close above 98.5 to punch through the upper boundary of its downtrending trading channel. Today's most interesting development was the gap-down plunge of the 10 year treasury note index to its lowest level since November. This can't be good news for stocks. Generally lower rates help the gold price. My wife Susan had her pacemaker re-programmed in Columbia this morning, then travelled on to Nashville with my daughter Liberty. She went shopping and reported, "I actually walked swiftly through Whole Foods while waiting for Liberty to finish up her doctor's appointment. Walked to car and not nearly so out of breath as yesterday. Can you imagine it's changing already?" I hope so. We are praying that this pacemaker reprogramming would put a stop to Susan's atrial fibrillation. Thank you most kindly for your prayers. Aurum et argentum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com © 2014, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold or 18 ounces of silver. or 18 ounces of silver. US $ and 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.  | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Silver and Gold Prices Are Rallying, All Indicators are Pointing Up Posted: 14 May 2014 07:48 PM PDT
Today the GOLD PRICE broke through the $1,295 barrier to race $11.10 (0.86%) up to the next resistance at $1,305. Closed $1,305.70. Silver jumped 23.1 cents (1.2%) to 1973.5c, through the 1950c level that has so long stymied it. The SILVER PRICE now stands above its 20 DMA & today at its 2000c high punched into the 50 DMA (1999c). It is clean broken out above its downtrend line from the February 2218c high. Y'all are catching this, right? Broke out upside. MACD indicator positive, ROC positive, RSI positive, Full Stochastics positive. I'm positive it's positive. The GOLD PRICE finally punctured its 200 DMA ($1,299.76) & at its $1,309.20 high bumped the upper boundary of its even-sided triangle. Okay, take stock: Above 20 DMA ($1,294.86)? check. Above 200 DMA? Check. Thrice bounced off lower triangle boundary line? Check. Ready to smash through 50 dma ($1,311.75)? Check. Volume rise today? Check. Other indicators pointing up? Check. There it is, indicators all lined up and pointing skyward for silver & gold prices. Up above gold needs to better the last high at $1,315.80. Silver bettered its last high today ('twas 1977c) but didn't close there. Friends, it looks like the next rally has begun. Whoops, one more little fact: PALLADIUM PRICE & PLATINUM PRICE both rose strongly, up $11.15 and $30.20. Today's breakout takes platinum over its downtrend line from it 2011 high. Palladium has been above that line since 1 March. So the white metals are agreeing with the silver & gold price rally. Surprise, surprise, the London Silver Fix Company announced today it will cease operations as of 14 August, after 117 years. No doubt this comes from heat stocked by the LIBOR interest rate fixing scandal. You have to wonder what sort of goofs or toadies government regulators must be if they don't get that "fix" means price fixing. If you and I conspired to fix the price of arm garters, regulators would be all over us like ugly on an ape, but you let gigantic corporations in London do it and acute regulatory blindness sets in. After LIBOR exploded the London Gold Fix came under investigation. Durn! You mean -- nahh, it couldn't be -- that those venerable institutions might be manipulating the gold price in the gold FIX? To their own PROFIT? Deutsche Bank, under fire for its role in the LIBOR scandal, withdrew from the Gold Fix and has withdrawn from the silver fix, leaving only two participants. Britain's regulators have asked DB to stay on until the August cessation. This doesn't mark the end of government attempts to manipulate silver & gold prices, but it will make it more difficult, and it does bring us one small step closer to unfettered markets where the participants actually discover the price, rather than the government setting it. Stocks today fell like your granddad's upper plate into a well, leaving behind that little stalk-thingey -- okay, "tower" -- formation that often marks a reversal. Dow dropped 101.47 points (0.61%) to 16,613.97. SP500 lost 8.92 (0.47%) to 1,888.53. Don't count stocks out yet, but they have fulfilled my time expectations. Might still make one higher high in the next few days. NEVERTHELESS, LISTEN: It is time y'all ought to swap stocks for silver & gold. I know it seems a mite early, but today the Dow in Silver broke down through its 20 DMA and through its uptrend line, after a lower high last week than the May 1 high. Closed today down 1.69% at 840.15 oz (S$1,086.25). Dow in gold also fell through its 20 DMA (12.76 oz). Fell 1.5% to 12.72 oz (G$262.95 gold dollars). Why rush things? Why not wait for further confirmation? Because stocks are running out of time to make new highs, and because silver & gold MAY have begun their next leg up today. US dollar index stumbled back 7 basis points (0.09%) to 80.12. Needs yet to close above 80.40 to confirm a rally. Euro looks sick as a hound eating rat poison. Rose a pitiful 0.09% to $1.3715 today, but only after it has left two gaps behind. Euro's throat has been cut. Yen rose 0.36% but that still doesn't change much. It needs to close above 98.5 to punch through the upper boundary of its downtrending trading channel. Today's most interesting development was the gap-down plunge of the 10 year treasury note index to its lowest level since November. This can't be good news for stocks. Generally lower rates help the gold price. My wife Susan had her pacemaker re-programmed in Columbia this morning, then travelled on to Nashville with my daughter Liberty. She went shopping and reported, "I actually walked swiftly through Whole Foods while waiting for Liberty to finish up her doctor's appointment. Walked to car and not nearly so out of breath as yesterday. Can you imagine it's changing already?" I hope so. We are praying that this pacemaker reprogramming would put a stop to Susan's atrial fibrillation. Thank you most kindly for your prayers. Aurum et argentum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com © 2014, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold or 18 ounces of silver. or 18 ounces of silver. US $ and 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| From Rothschild To Koch Industries — Meet The People Who “Fix” The Price Of Gold Posted: 14 May 2014 07:45 PM PDT from ZeroHedge:
Earlier today many were stunned when the historic, 117-year old, London Silver Fix announced that in three months it would no longer exist. However, silver is only one half of the world’s two best known precious metals. Which is why we decided to take a long, hard look at that other fix: gold. The reason for this particular inquiry is because in the aftermath of the rapid and dramatic departure of the world’s largest bank by outstanding notional derivatives, and Europe’s biggest bank by any metric, Deutsche Bank, from the precious metal fix, something felt out of place: almost as if the participants of the “fixing” process which for so many years took place in the office of none other than Rothschild on St. Swithin’s Lane in London, were suddenly scrambling to disappear without a trace. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Andy Hoffman: Speck-tacular analysis Posted: 14 May 2014 07:45 PM PDT 10:40p ET Wednesday, May 14, 2014 Dear Friend of GATA and Gold: Andy Hoffman, market analyst for the Miles Franklin coin and bullion dealership in Minnesota, today commented enthusiastically about GATA consultant Dimitri Speck's book, "The Gold Cartel." Hoffman's commentary is headlined "Speck-tacular Analysis" at it's posted at the Miles Franklin Internet site here: http://blog.milesfranklin.com/speck-tacular-analysis "The Gold Cartel" can be ordered here: http://us.macmillan.com/thegoldcartel/DimitriSpeck CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Silver mining stock report comes with 1-ounce silver round Future Money Trends is offering a special 18-page silver mining stock report about how to profit with the monetary and industrial metal in 2014, and it comes with a free 1-ounce silver round. Proceeds from the report's sales are shared with the Gold Anti-Trust Action Committee to support its efforts to expose manipulation in the monetary metals markets. To learn about this report, please visit: Join GATA here: Committee for Monetary Research and Education http://www.cmre.org/news/spring-meeting-2014/ Porter Stansberry Natural Resources Conference Canadian Investor Conference 2014 http://cambridgehouse.com/event/25/canadian-investor-conference-2014-inc... New Orleans Investment Conference https://jeffersoncompanies.com/new-orleans-investment-conference/home * * * 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 Buy metals at GoldMoney and enjoy international storage GoldMoney was established in 2001 by James and Geoff Turk and is safeguarding more than $1.7 billion in metals and currencies. Buy gold, silver, platinum, and palladium from GoldMoney over the Internet and store them in vaults in Canada, Hong Kong, Singapore, Switzerland, and the United Kingdom, taking advantage of GoldMoney's low storage rates, among the most competitive in the industry. GoldMoney also offers delivery of 100-gram and 1-kilogram gold bars and 1-kilogram silver bars. To learn more, please visit: http://www.goldmoney.com/?gmrefcode=gata | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| How The Debt Trap Swallowed Asia In Three Charts Posted: 14 May 2014 07:09 PM PDT When it comes to the topic of the marginal utility of debt, or how much GDP does a dollar of debt buy (an example of which can be seen here), most people are aware that the developed world is facing ruin: with debt across the west already at record, nosebleed levels, and with GDP growth slowing down (due to capital misallocation, thank you Fed, demographic and productivity reasons), it is only a matter of time before it doesn't matter how many trillions in debt a given treasury will issue (and a given central bank will monetize) - the credit impulse will simply not translate into incremental economic growth. But did those same people also know that Asia is almost as bad if not worse as the west when it comes to the marginal utility of debt, or as the FT calls, it credit intensity. Here, in three simple charts, is a visual summary of Asia's debt trap: Asian economies have experienced a surge in credit intensity – a measure of the borrowing required to generate a unit of growth
Rising consumer and corporate debt – some infrastructure and construction-related – has helped growth at a time of weak exports
The low cost of credit has helped growth, delaying structural reforms in countries including China, India and Indonesia Some further thoughts from the FT:
Reforms or not, all of the above is well-known to Zero Hedge readers who first, before anyone else, saw what in our opinion is perhaps the most important, and most underappreciated chart of the New Normal (one which has since been used by everyone from the WSJ to FT to NYT to Fitch): the comparison of bank asset growth in China vs the US. One doesn't need fancy formulas or long paragraphs to explain that a situation in which $1 trillion in credit creation per month leads to ever smaller GDP growth is absolutely unsustainable, and it won't matter if and when the Politburo decides the time for a hard landing has come, as very soon the decision will be made for it. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| What has the Swiss National Bank been doing with the country's gold reserves? Posted: 14 May 2014 06:58 PM PDT 10p ET Wednesday, May 14, 2014 Dear Friend of GATA and Gold: Prompted by the research done this week by Turd Ferguson of the TF Metals Report showing that Switzerland's gold reserves probably were mobilized surreptitously for the smashing of the gold price in the last few years -- http://www.tfmetalsreport.com/blog/5731/turdville-love-open-letter-good-... -- your secretary/treasurer today wrote by e-mail to the communications office of the Swiss National Bank (communications@snb.ch) to pose six questions about that country's gold reserves and the central bank's involvement in the gold market. These questions are entirely appropriate for a country presuming to be a democracy with limited and accountable government. But since Switzerland is facing a referendum on requiring its central bank to hold a fixed portion of its reserves in gold and to vault all its gold in Switzerland proper -- http://www.bloomberg.com/news/2014-05-05/swiss-parliament-recommends-rej... -- these questions are pretty compelling as well. Your secretary/treasurer's e-mail is appended. Of course it would be very helpful if Swiss citizens who support GATA's work sent similar inquiries to their central bank and if they alerted GATA to any responses. It also would be helpful if the Swiss People's Party, leading advocate of the gold reserves referendum, began pressing these questions. Staid and stolid as the Swiss may be, even they might get agitated if their central bank had to disclose what it has been doing with the country's gold reserves and why. CHRIS POWELL, Secretary/Treasurer * * * Wednesday, May 14, 2014 Dear People: I write to call your attention to this week's commentary published by the TF Metals Report asserting the probability that Swiss gold reserves have been mobilized lately to suppress the price of gold -- http://www.tfmetalsreport.com/blog/5731/turdville-love-open-letter-good-... -- and to ask a few questions arising from it. 1) Does the Swiss National Bank have any response to that commentary? Is it true or false? 2) Has the bank been trading in gold or gold-related financial instruments in the last five years? 3) If so, what was the bank's objective with that trading? 4) Has the bank loaned or leased gold in the last five years and is it lending or leasing gold now? 5) If so, what is the bank's objective with that lending or leasing? 6) Will the bank disclose the amount of its gold reserves that is held in metal in the bank's own vaults, the amount of its gold reserves that is held in metal in the bank's accounts with other depositories, and the amount of its gold reserves that have been loaned or leased and that is not held in the bank's own vaults or in the bank's own accounts with other depositories? Thanks for whatever information you can provide. CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Buy precious metals free of value-added tax throughout Europe Europe Silver Bullion is a fast-growing dealer sourcing its products from renowned mints, refiners, and distributors. Because of a legal loophole that will close soon, you can acquire the world's most popular bullion coins free of value-added tax throughout the European Union. You can collect your order in person at our headquarters in Tallinn, Estonia, or have it delivered in any of the 28 EU countries. Europe Silver Bullion is owned and operated by North American and European experts in selling, storing, and transporting precious metals. We have an extensive product inventory of silver, gold, platinum, and palladium, and our network spans the world. Visit us at www.europesilverbullion.com. Join GATA here: Committee for Monetary Research and Education http://www.cmre.org/news/spring-meeting-2014/ Porter Stansberry Natural Resources Conference Canadian Investor Conference 2014 http://cambridgehouse.com/event/25/canadian-investor-conference-2014-inc... New Orleans Investment Conference https://jeffersoncompanies.com/new-orleans-investment-conference/home * * * 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 Safe and Private Allocated Bullion Storage In Singapore Given the increasing risks in financial markets, it is more important than ever to own physical bullion coins and bars and to store them in the safest vaults in the world in the safest jurisdictions in the world. Gold advocates Jim Sinclair and Marc Faber have recommended Singapore. Now, with GoldCore, you can own coins and bars in fully insured, segregated, and allocated accounts in Singapore with the ability to take delivery. Learn more by downloading GoldCore's Essential Guide To Storing Gold In Singapore: http://info.goldcore.com/essential-guide-to-storing-gold-in-singapore And for more information call Daniel or Sharon at +44 203 0869200 in the United Kingdom or at +1-302-635-1160 in the United States. Or email them at info@goldcore.com. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 14 May 2014 04:14 PM PDT My Dear Friends, A scent of inflation and the Indian elections experience were kind to gold today. I will be traveling tomorrow to Vancouver and retuning Friday evening on the red eye. That trip can easily consume the business day. I will do everything possible to post, but not every airline provides internet service. Please... Read more » The post In The News Today appeared first on Jim Sinclair's Mineset. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 14 May 2014 03:23 PM PDT Jim, This is certainly good news for the gold price. Increasing demand in a short supply market would definitely help. CIGA Larry Gold price likely to get a big hike from the new pro-business government in India Posted on 13 May 2014 Raising the gold price is unlikely to be the first priority of the... Read more » The post Jim’s Mailbox appeared first on Jim Sinclair's Mineset. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| ELITE AGENDA for a GLOBAL RESET - An Ecomomic Collapse and WORLD WAR 3 Posted: 14 May 2014 03:15 PM PDT Corpse of Cold War propaganda enthusiastically resurrected by mainstream mediahe establishment has begun a new mass marketing campaign for World War III, equating Vladimir Putin with Adolf Hitler.The fact that the current crisis in Ukraine was instigated by a US-backed coup which toppled a... [[ This is a content summary only. Visit http://www.GoldSilverNewsBlog.com or http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gold Discovery of the Decade Is Now On Sale Posted: 14 May 2014 02:42 PM PDT Sell in May and go away? Precious metals tend to exhibit a seasonal pattern to their price trends, with summer weakness that leads to strength in the fall. Add to this the fact that mineral exploration in the Northern Hemisphere, especially in Canada, enters a sort of hibernation during winter months and then reawakens in the spring. With winter drill programs already announced, we typically see less news flow starting about now until well into the summer. These variables combine to exacerbate the "sell in May and go away" conventional wisdom regarding the broader stock markets, as many brokers and promoters in our sector take their holidays during these relatively quiet months. Sometimes, even with stable or rising metals prices, shares in great companies can drop over the weeks and months just ahead, simply due to the lack of Push. Here at Casey Research, we call this Shopping Season, and it seems to have arrived early this year. It is never safe, however, for metals speculators to head for the Bahamas and ignore the market for months; there's always the possibility of a sudden black-swan event that kicks precious metals into a higher gear earlier than expected. Further, individual companies can and do buck the trends all the time. That's especially so if they're working on a discovery that could deliver game-changing results at any time, working in a country where water doesn't freeze in January, or working underground, where seasons are irrelevant. And I'd like to introduce you to one of those companies today. But What If Prices Go Lower?Imagine that you were offered a brand-new Ferrari 458 Italia at a 75% discount during an economic downturn. Even those not into high-maintenance cars would have to think about it—it could potentially be a very profitable trade. Now suppose you bought the car, garaged it, cared for it, waited for the car market to turn around—and then the market got even worse for a while, and you saw the same car offered for 50% less than you paid for it. While you might regret that you didn't time the bottom right, would you conclude that the Ferrari was worthless? I think you can see where I'm going here. Unless desperately short on cash for some extremely urgent need, nobody would sell our hypothetical Ferrari at a great loss; they'd simply wait out the downturn, no matter how long or painful. Whatever else might change, the Ferrari remains a Ferrari. Just as, whatever else happens in the economy, an ounce of gold remains an ounce of gold. And yet, when it comes to the best-of-the-best gold stocks in the junior mining sector, investors seem increasingly willing to make the mistake of dumping valuable companies, simply because they are on sale. The error here is confusing price and value—and recognizing such errors before the market does is the essence of successful speculation. Sales are for buying. A solid company with a deeply undervalued asset and all the cash needed to correct that mis-valuation is exactly the sort of bargain we like to buy during Shopping Season. That's the kind of opportunity I have for your consideration today. Regardless, and whether or not you buy the stock I recommend below, I hope you'll read the case and watch the story as it evolves, to see if I'm right about the company. Pretium Resources (PVG, US$7.24, PVG.TO, C$7.92, US$785.4 million market cap) The Pretium story is simple: a group of serially successful geologists have made an extraordinarily large and spectacularly high-grade discovery in an area called Valley of the Kings, which is part of the company's flagship Brucejack gold project in mining-friendly Canada. We're not talking about grams of gold per tonne (g/t) here, or even ounces, but kilos of gold per tonne in many drill intersections. And we're not talking about a small, rich "sweet spot," but a monster gold system with more than 6.6 million ounces of gold in Proven & Probable mining reserves, averaging 13.6 g/t gold, within 13.6 million ounces of gold in all resource categories, averaging 20.5 g/t gold. There are 1.7 million more ounces at the project's West Zone. Both zones are wide open for expansion—and are adjacent to 35 million ounces of bulk-grade gold in Pretium's Snowfield gold project (which itself is adjacent to Seabridge Gold's 63.9-million-ounce bulk-grade KSM deposit). To give you an idea how rare a bird this is, a recent report shows 26 gold deposits larger than one million ounces—just 26 in the entire world—that have more than 10 grams of gold per tonne of ore. There are only 11 such deposits above 15 g/t, which the Valley of the Kings zone beats, if you consider its 8.7 million ounces of Measured & Indicated gold averaging 17.6 g/t. To count publicly reported gold deposits that are both larger and higher grade than Pretium's Valley of the Kings, you only need one finger. That's right: just one. Pretium's Valley of the Kings is the richest gold discovery in the last 10 years, and one of the richest in recorded history. But that's just the beginning. A deposit this rich will pay for many faults and still make for a highly profitable mine, but there are many questions to answer before one can say so. Is there a lot of mercury, arsenic, or other toxic elements in the mix? Is there a national park or endangered species living on top of the deposit? Is the local government likely to steal the mine if one builds it? I don't have space in this column to deliver an entire "Casey 8 Ps" analysis of the company, but the questions above have been thoroughly addressed in the company's June 2013 feasibility study. That study is being updated in view of the company's late 2013 bulk sample, which produced almost 50% more gold than the company's estimates predicted. Pretium also discovered more gold veins when it went underground for the bulk sample, and is incorporating those and other new discoveries into its mine plan. Nevertheless, and despite what is a somewhat aggressive—at the moment—gold price assumption of $1,350 per ounce, the study yields some terrific results, including:
Critical point: even at an unrealistically low $800 gold price, the project still makes money (IRR of 13.7%). In short, this project has all the signs of a world-class, high-margin gold mine in the making, at a rate of production large enough to make Pretium of interest as an acquisition target for any of the world's major gold producers. That's particularly important today, because one of those major producers, Goldcorp (GG, G.TO), just lost out in a bidding war over Canada's Osisko Mining (OSK.TO). Goldcorp has shown its appetite for acquiring large, world-class assets while prices are down, and it has a good $3 billion in working capital to pursue them. It's hard to imagine a more attractive takeover target than Pretium—and if that happens, these shares could easily jump 20% to 30% in a day. That's no exaggeration; just look at Osisko's stock chart, and you'll see that it jumped more than 20% when Goldcorp made its offer last January and is close to doubling since then. But the beauty of the situation is that Pretium doesn't need to get bought out in order to hand us a major win; the company is fully funded for this year's work advancing the project, and even has a little cash flow coming from a small amount of (very high-grade) mining allowed under its exploration permit. Given the exceptionally high rate of return on investment the Brucejack project boasts, we think the company will be able to obtain bank and other financing to build the mine and become a highly profitable mid-tier gold mining company. Investors who buy now win either way, which is why this company is one of those listed in our special report, 7 Must-Own Mining Stocks for 2014, which you get free if you try a risk-free subscription to the International Speculator today. You can read all the details about Pretium in that report, but there's one more thing I should tell you, in case you decide not to subscribe; there's a reason besides gold's correction that these shares are selling for less than half of what they were a couple years ago. It's quite the drama, actually; last October, one of Pretium's consulting engineering firms (a highly respected firm in its field) quit the job abruptly. On the way out, they basically said that the Brucejack resource estimate was bogus—that the deposit wasn't really there! That's pretty extreme, but even more extreme was the consultants saying that, based on their statistical analysis, the Valley of the Kings bulk sample then under way should be stopped, being a waste of time and money. Management and a second consulting firm that made the resource estimate calculations (also highly respected) said they wanted to see the proof in the pudding of the bulk sample. And a good thing, too, because their view was fully validated by the bulk sample; instead of the 4,000 ounces the bulk sample was originally estimated to produce, the sample actually yielded 5,865 ounces of gold—and that in a toll mill in Montana, not optimized for Brucejack ore. Of course, that took time to show, and before the company could prove its point, a ridiculous number of ambulance-chasers announced class-action lawsuits on behalf of shareholders, and the whole circus took this formerly $17.92 stock all the way down to $3.10. Now, I have known management at Pretium for many years, and was dead certain they were not faking their deposit, so I doubled down. (Yes, I personally own shares in the company; I bought them after recommending the stock to subscribers, and I am not allowed to sell them before giving subscribers a chance to do so first.) Many International Speculator subscribers were able to buy shares close to the $3 mark and have more than doubled their money on those investments since then. Because I was right: the bulk sample results vindicated management—and added a significant amount of cash to the till. The company is back in the race today. But it's not too late to build a position in this great company with the discovery of the decade in hand. Due to gold's continuing fluctuations, the shares are still selling for not much more than they were at IPO—before the company made its record-smashing Valley of the Kings discovery. Remember; a Ferrari is a Ferrari, value is value, and when you can buy a high-margin $1.8 billion asset for $785 million (or US$7.24 or C$7.92 per share), that's a bargain. To find out more about Pretium and our six other 7 Must-Own Mining Stocks for 2014, I encourage you to subscribe to the International Speculator today. Remember that you have three full months to check out our newsletter, and if you're not happy with it, cancel any time within those three months for a full refund. Or, if you decide to just buy or watch the stock to test us out, that's fine too; I sincerely hope you'll make a bunch of money, and come back for more. The article Discovery of the Decade, On Sale was originally published at caseyresearch.com. By Louis James, Chief Metals & Mining Investment Strategist | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Physical Silver Demand At All Time Highs in 2013 Posted: 14 May 2014 02:35 PM PDT Today, The Silver Institute, in cooperation with Thomson Reuters GFMS, announced the results of the World Silver Survey. This annual report on the global silver market since 1990, to bring reliable supply and demand statistics to market participants and the general public. In particular, total physical silver demand rose by 13% in 2013 to an all-time high. This was primarily driven by the 76 percent increase in retail investment in bars and coins coupled with a sturdy recovery in jewelry and silverware fabrication. On the supply side, silver scrap fell by 24 percent, experiencing the largest drop on record to reach its lowest level since 2001. The silver price averaged $23.79 in 2013, the third highest nominal average price on record, in a particularly volatile year for the entire precious metals complex. More details are in this article. For a round up, we recommend listening to the interview on Kitco News which nicely sums up the findings of the survey. Silver Fabrication Demand Total physical demand for silver stood at a record 1,081 million ounces (Moz) last year. The largest component of physical silver demand, industrial applications, dipped by less than 1 percent to 586.6 Moz, to account for 54 percent of total physical silver demand. Asia, however, experienced a 3 percent increase in silver industrial demand, led by China, where a continued recovery in the electrical and electronics sector, along with gains in the Chinese ethylene oxide industry, took total Asian industrial offtake to a new high. Japan also experienced gains in silver industrial demand. Last year's recovery in jewelry fabrication was a reflection of the improved economic outlook in the industrialized world, which lifted consumer confidence and retail sales for a 10 percent increase in jewelry demand. Global silverware fabrication rose 12 percent to a three-year high, due to strong gains in India and China, while photography demand slipped by 7 percent in 2013, posting the slowest percentage decline in nine years. Silver Mine Supply and Costs Silver mine production grew by 3.4 percent to reach 819 Moz. A large portion of the growth is attributable to the primary silver mining sector, which experienced strong growth from the start, along with the ramp-up of operations that entered production in recent years. Primary silver mine production grew 6 percent, and accounted for 29 percent of global silver mine supply. Mexico was the world's leading silver producer, followed by Peru, China, Australia and Russia. Primary silver mine cash costs stood at US$9.27 an ounce, increasing 1 percent in dollar terms. The producer silver hedge book was aggressively reduced last year to stand at 15 Moz on a delta-adjusted basis. World Silver Supply and Demand (million ounces) Above-Ground Stocks Supply from above-ground stocks dropped by 23.2 percent to 199.7 Moz. Scrap supply to the market in 2013 experienced the largest year-on-year reduction since the 1980s and was due to a combination of softer silver prices and an exhaustion of "distressed" coin and jewelry recycling. As a proportion of total silver supply, scrap dropped to under 20 percent, after averaging 25 percent in total supply the previous two years, and this served as a substantial contributor to the physical market deficit posted in 2013. Government sales increased only slightly to 7.9 Moz, an extremely low level considering government disposals averaged 43 Moz per year from 2002-2011. Silver Investment Total identifiable investment demand, which includes physical bar investment, coins and exchange traded funds (ETF) inventories, rose by 27 percent to a three-year high at 247.2 Moz last year. The growth was driven principally by a strong rise in retail purchases of silver bars and coins. Demand for physical bullion bars more than doubled last year to reach a high of 127.2 Moz, while purchases of silver coins and medals rose 38 percent to a record 118.5 Moz. ETF holdings showed only modest growth in 2013. "Survey" Ordering Information Copies of "World Silver Survey 2014″ are available to the media upon request and can be purchased for US$225 from the Silver Institute, 1400 I Street NW, Suite 550, Washington, DC, 20005; by phone at 202/835-0185; or from the Institute's web site www.silverinstitute.org. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Why Silver Has Not Been In a Bubble In 2011 Posted: 14 May 2014 02:26 PM PDT Conclusions
The Data
Data ResultsUsing the 144 week moving average data, the peak (weekly closing data) in early 1980 was 10.4 standard deviations above the norm. The April 2011 peak was 4.12 standard deviations above the norm. The current price for May 2014 is about 0.75 standard deviations BELOW the norm. Current 144 week moving average of the weekly silver closes is about $27.50. One standard deviation is approximately 39% of the 144 week moving average. You may object to such a long moving average and think it exaggerated the number of standard deviations above the norm that occurred in 1980. Nope! The results were similar, regardless of the length of the moving average. The 1980 peak was 10.39 standard deviations above the norm using 100 week moving average, and 9.66 standard deviations above the norm using the 40 week moving average. Using the 40 week moving average the April 2011 peak was less than 4 standard deviations above the norm. April 2011 was NOT a bubble peak and was merely a spike high that will be repeated sometime in the next few years. Yes, I know that 10 standard deviations occurs with an infinitesimally small probability, assuming a normal distribution of statistical data. But most of us know that market data cannot be represented as a normal distribution at the extremes of the data – there are "fat tails" where the extremes occur far more often than a normal distribution would indicate. Real world examples – such as rogue waves off the southern coast of South America – are observed, relatively speaking, much more often than a normal distribution would predict. I have read that the interest rate spreads that sunk Long Term Capital Management in 1998 "should" have occurred less than once in the known age of the universe – assuming a normal statistical distribution. The important point, in my opinion, is that the bubble peak in 1980 was thousands of times more extreme and LESS probable than the price spike in April 2011, which was not, in my analysis, a blow-off bubble. Hence I expect that silver prices, along with national debt, congressional spending, health care expenses, and bankster graft and corruption, will increase substantially from here. Expect the blow-off bubble peak in silver and gold in a few years. Expect the current bubbles in sovereign debt, "printing money," and fiat currencies to pop at some time in the relatively near future. The following graph of smoothed silver prices correlates with national debt at about 0.75. Correlation is not causation, but massive deficits create a continually increasing national debt and that causes the money supply to increase. That "printed money" works its way into the economy causing higher prices. Every family knows food prices have increased, gasoline is nearly triple what it was 15 years ago, and, not surprisingly, the prices for silver and gold are also much higher. They are all connected.  silver vs national debt The bubble in silver and gold is coming – it did not occur in 2011. Expect stormy weather and higher silver and gold prices ahead. When? Ask the High-Frequency-Traders, JP Morgan, the Treasury department, or just wait for demand to overwhelm physical supply in the relatively near future. You might also find value in:
GE Christenson | aka Deviant Investor | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gold Daily and Silver Weekly Charts - O Brave New World Posted: 14 May 2014 01:30 PM PDT  | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gold Daily and Silver Weekly Charts - O Brave New World Posted: 14 May 2014 01:30 PM PDT | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gold Price Doesn’t Fall Despite Dollar Rally – Finally a Show of Strength? Posted: 14 May 2014 01:02 PM PDT Briefly: In our opinion speculative short positions (half) are justified from the risk/reward perspective in gold, silver, and mining stocks. Yesterday was another day during which the precious metals sector didn’t really decline (just a little) despite a move higher in the USD Index. Let’s check if the situation is bullish now (charts courtesy of http://stockcharts.com). | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Get Ready for the Gold Mining Comeback Posted: 14 May 2014 12:36 PM PDT I was in Toronto for a couple of days earlier this month. Among other things, I visited one of Canada's most successful, small-cap resource investors. Over the years, this gent has moved billions of dollars into early-stage mine and energy developers. Then, he has helped move many of them through periods of fortune building growth. In good times and bad, the guy seems to know how to find great companies — and to make money. What can we learn? Over green tea and organic health crackers, we commiserated over the share price crash of many gold miners — large and small — in the past two years; and despite many well-known issues, amidst investment ruins, we found reasons for hope. Let's start with a chart. Here's the five-year gold price fix, with 60- and 200-day moving averages. As the chart shows, gold prices moved upwards in 2009, 2010 and 2011; then found a trading range in 2012. Those were happy times, indeed. Miners enjoyed pricing in the range of $1,600 to $1,700 per ounce. "Gold had a really nice momentum to it," said the Canadian investor. Early last year, in the first quarter of 2013, gold miners started to experience a major sell-down in pricing. From former prices as high as $1,900, gold prices tumbled to the $1,200 range between January and July 2013. "Gold prices dropped over 30% in just a matter of months," said the Canadian. "All of a sudden, investors realized that most gold miners had thin, even miniscule margins. Or they were LOSING money, if you can believe that! It's because many management teams were doing a really piss-poor job of allocating capital." Thus, in 2013, the mining industry witnessed a mad scramble as companies cut costs. Their efforts included significant layoffs and project deferrals, as well as an ongoing, frantic search for operational efficiencies. What happened? "Look at the first quarter earnings of Goldcorp (NYSE:GG), Agnico-Eagle Mines (NYSE:AEM), New Gold Inc. and even Barrick Gold (NYSE:ABX)," said the Canadian investor. "They're all making progress on the cost side of the ledger." Indeed they are. Just this week, Goldcorp reported "all-in sustaining costs" of $840 an ounce for the first quarter. This number beat Goldcorp's previous forecast, and marks a major reduction from the $1,134 per ounce metric in the same quarter of 2013. Agnico Eagle did not break out quarterly all-in sustaining costs for recent months; however, management stated that costs for the full year 2014 should be below prior guidance of $990 per ounce. Barrick's costs were down by $100 per ounce, to an estimated $833. New Gold announced that all-in sustaining costs dropped $239 per ounce, year-over-year, to $908 an ounce. Eldorado Gold announced first quarter production costs of a remarkably low $786 per ounce. "Keep in mind," said the Canadian investor, "that not all of these cost reductions are due to brilliant management. I know most of these guys, and nobody is really that good, such that they can move their needle that fast. A lot of that so-called 'cost-improvement' has to do with changing the mix of ore grade that engineers run through the plants. That is, they opened up the usually-locked doors on those 'magic stopes' in the mines, and pulled out high grades that they normally keep under wraps for special occasions. Like now, when they need to impress Wall Street." "Lower internal costs are all well and good," he continued. "Share prices seem to have found a floor; the downside for investors is limited, I'd say. But lowering internal costs doesn't recreate the momentum of 2011 and earlier. That momentum is still lacking, I'd say. Looking ahead, for big share price moves, we need to see firm, upward, sustained movement in gold prices. That's probably a function of big, macro-economic issues, perhaps world politics and the broad investment cycle turning." I asked him about the investment cycle. "Look," he said the investor. "Right now, the market loves tech, tech and more tech. That, and biotech. Or dividend plays. Tech and yield, basically. But if enough people get burned? Another tech pullback or crash? A big, unexpected bankruptcy by a dividend payer that runs short of cash? Well, it'll be back to gold, which can go down, but never down to zero." What kind of mining plays have the best leverage? For example, there are small-cap plays with phenomenal potential. We discussed one small-cap miner that this investor has funded to develop a string of claims in the Precambrian "greenstone belt" of Manitoba. "It's a great company, with a super-strong exploration program," declared the investor. "They almost never drill a bad drill hole. Everything finds something, one way or another. They've scoped out a significant mineralization range, and a sizeable ore body. Plus, it's a very efficient discovery because we've got a stockpile of old cores from past work, which management is continually re-assaying. Every few months, like clockwork, they add gold and silver to the resource base. This small company is takeout bait for at least an intermediate-sized miner; but right now, the market just doesn't care. It's okay; we can afford to be patient with this one. Our time will come." I asked if he saw inflation lurking, which could drive gold prices. "Absolutely," he replied. "Inflation is baked into the cake. Heck, we're inside the bakery, there are so many cakes with inflation baked in. We already see inflation with food, and we're one bad harvest away from supermarket sticker-shock across the world. Energy could also explode upwards with just a few tweaks of the world production cycle." When it comes to government policies, the investor is depressingly sanguine. "It seems like most Western nations don't want to run themselves as long-term propositions," he said. "Live for today, the current political cycle and news cycle. The heck with tomorrow. But like I said with some of the gold miners, we can be patient; our time will come." Regards, Byron King Ed. Note: When the time comes and gold miners start seeing huge profit potential, you can be Byron will be right there to grab some huge gains for his readers. That’s why, in today’s Daily Reckoning email edition, readers were given a chance to discover his most in-depth research first-hand – and all of the potential profits that come with it. Don’t miss out on this and other great opportunities offered exclusively from The Daily Reckoning. Sign up for FREE, right here.       | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| FATCA Causing Chaos Worldwide For Americans Posted: 14 May 2014 11:18 AM PDT The Illegitimate Revenue Agency (IRS) has just announced that the Foreign Account Tax Compliance Act (FATCA) has been postponed from July 1, 2014 until January 1, 2016. This is good news in many ways for both those with assets that they wish to internationalize as well as for the dollar and US banking system itself but in many ways the damage has already been done. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| China's Gold Trade Financing "Only Small Part" of Leasing Boom Posted: 14 May 2014 11:11 AM PDT Gold bullion leasing surged in China in 2013. Bulk remains in the industry says new report... GOLD TRADE financing in China accounts for "only a small portion" of the country's recent surge in gold leasing, according to a leading precious metals consultancy. This counters claims from other analysts, notably Goldman Sachs, who believe gold bullion makes up a significant part of China's trade financing, where physical commodities are borrowed and sold to raise cash for other investments, or used as collateral to raise still more loans. "Imported gold is being used via gold loans and letters of credit to raise low cost funds for business investment and speculation," said market-development organization the World Gold Council in its recent report, China Gold Market: Progress & Prospects. "If bad debts lead to liquidation of collateral," says Scotia Mocatta, part of Canada-based Scotiabank, in its latest monthly analysis, "then distress selling of gold could be seen." But deregulation of China's gold market from 2010 invited a surge in gold leasing, says London-based consultancy Metals Focus. Because it allowed banks to lend gold to end-users such as manufacturers in a bid to improve the availability and flow of metal to the domestic industry. In 2013, "robust physical demand" from Chinese end-consumers – now the world's heaviest private buyers – then "led to a rapid expansion of gold leasing," says the consultancy's new Precious Metals Weekly. Because with gold's volatility jumping with Chinese demand during the spring 2013 price crash, fabricators grew "desperate to cut exposure to adverse price movements, with gold loans offered by commercial banks being an obvious solution." Metals Focus notes that gold bullion leasing via the Shanghai Gold Exchange reached over 1,100 tonnes in 2013, rising some 180% from the previous year. "The key question here," it says, "is what portion of this 1,103t borrowed gold is tied up by pure 'financing' flows." Citing field trips to Shanghai, plus other market intelligence, "Our understanding is this only accounts for a small share of the overall leasing market," the consultancy says, attributing China's "growing appetite" for gold leasing to supply-chain management by jewelry and investment bar manufacturers. Analysts at other leading banks have recently argued over quite how large the stock of gold bullion used as collateral to raise loans in China may be, with UBS rejecting Goldman Sachs' gold trade finance estimate as "far too large".
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
| China's Gold Trade Financing "Only Small Part" of Leasing Boom Posted: 14 May 2014 11:11 AM PDT Gold bullion leasing surged in China in 2013. Bulk remains in the industry says new report... GOLD TRADE financing in China accounts for "only a small portion" of the country's recent surge in gold leasing, according to a leading precious metals consultancy. This counters claims from other analysts, notably Goldman Sachs, who believe gold bullion makes up a significant part of China's trade financing, where physical commodities are borrowed and sold to raise cash for other investments, or used as collateral to raise still more loans. "Imported gold is being used via gold loans and letters of credit to raise low cost funds for business investment and speculation," said market-development organization the World Gold Council in its recent report, China Gold Market: Progress & Prospects. "If bad debts lead to liquidation of collateral," says Scotia Mocatta, part of Canada-based Scotiabank, in its latest monthly analysis, "then distress selling of gold could be seen." But deregulation of China's gold market from 2010 invited a surge in gold leasing, says London-based consultancy Metals Focus. Because it allowed banks to lend gold to end-users such as manufacturers in a bid to improve the availability and flow of metal to the domestic industry. In 2013, "robust physical demand" from Chinese end-consumers – now the world's heaviest private buyers – then "led to a rapid expansion of gold leasing," says the consultancy's new Precious Metals Weekly. Because with gold's volatility jumping with Chinese demand during the spring 2013 price crash, fabricators grew "desperate to cut exposure to adverse price movements, with gold loans offered by commercial banks being an obvious solution." Metals Focus notes that gold bullion leasing via the Shanghai Gold Exchange reached over 1,100 tonnes in 2013, rising some 180% from the previous year. "The key question here," it says, "is what portion of this 1,103t borrowed gold is tied up by pure 'financing' flows." Citing field trips to Shanghai, plus other market intelligence, "Our understanding is this only accounts for a small share of the overall leasing market," the consultancy says, attributing China's "growing appetite" for gold leasing to supply-chain management by jewelry and investment bar manufacturers. Analysts at other leading banks have recently argued over quite how large the stock of gold bullion used as collateral to raise loans in China may be, with UBS rejecting Goldman Sachs' gold trade finance estimate as "far too large".
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gold Price Long-term Forecast Using Statistics & Technical Analysis Posted: 14 May 2014 11:09 AM PDT Here is my gold prediction (silver and gold mining stocks, should be the same) looking forward 24 months. Since the top in gold in 2011 gold has selling off. Depending on how you analyze the market, this 3 year sell off could be seen as consolidation within a major cyclical bull market or that it’s in a bear market. But know this, either way, the outlook is bullish, and all gold has to do is find a bottom here and rally above the $1400 per ounce level. This would kick start a major feeding frenzy of gold buying. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Surviving the Coming Collapse w/ Jeff Berwick of the Dollar Vigilante Posted: 14 May 2014 09:49 AM PDT Liberty Machine News interviews Jeff Berwick is the founder of The Dollar Vigilante, and host of the popular video podcast, Anarchast. Jeff is a prominent speaker at many of the world's freedom, investment and gold conferences as well as regularly in the media including CNBC, CNN and Fox... [[ This is a content summary only. Visit http://www.GoldSilverNewsBlog.com or http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lost U.S. Gold & Here Comes The ECB Money Printing Machine Posted: 14 May 2014 08:58 AM PDT  Today a legendary value investor warned King World News that investors around the world should brace for the ECB money printing machine to kick into high gear. He also discussed the impact of excessive money creation and gold. Below is what the legendary investor, Jean-Marie Eveillard, who oversees $65 billion, had to say.This posting includes an audio/video/photo media file: Download Now | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gold Prices Rise as London Silver Fix Gives 3 Months' Notice, Euro & GBP Prices Hit 5-Week Highs Posted: 14 May 2014 08:43 AM PDT GOLD PRICES peaked at 1-week highs near $1309 per ounce Wednesday lunchtime in London, rising with silver as news spread that the 117-year old London Silver Fix will cease in August. Today's London Silver Fix was set at a 5-week high of $19.87 per ounce, more than 2.2% above Tuesday. Silver then rose within 2 cents of $20.00 before easing back with gold prices, which edged down to $1305. Having said it would leave just two other banks to meet for the daily Silver Fix – the global benchmark now running for 117 years in London – Deutsche Bank will delay its departure for 3 months until the entire process ends in mid-August. Deutsche has been unable to sell its membership after announcing last month it would also quit the Gold Fix (now with 4 members) following pressure from German regulator BaFin and a raft of US class-action lawsuits claiming damages for "manipulation". "Gold prices are stuck sideways, dips attract bargain hunting, but there is a lack of follow-through buying so the market remains vulnerable," says the latest Metal Matters monthly from bullion bank (and Silver Fixing member) Scotia Mocatta. "While we remain bearish on gold prices," says a note from US investment bank Goldman Sachs, "escalating geopolitical tensions in Ukraine have offset stronger US macro data." New US data said Wednesday that factory-gate prices rose much faster than analysts forecast last month, jumping 2.1% annually on the Producer Price Index. Ten-year US bond yields still fell hard however, dropping 6 basis-points to the lowest level since October at 2.55%. Tomorrow's official Consumer Price Index is expected to show US inflation at 2.0% per year. The Euro meantime rallied but held near 5-week lows – some 2% beneath last Thursday's 2.5-year peak – as Reuters reported anonymous sources saying that a June rate cut is "a done deal" for the European Central Bank. The ECB is "preparing a package of policy options" for policymakers to consider, claim the sources. Gold prices for both Euro and Sterling investors today hit 5-week highs. Bundesbank president, Jens Weidmann, was due to give a speech later on Wednesday, one day after the Wall Street Journal reported that the German central bank – a key block to looser monetary policy – is "willing" to back stimulus including QE-style asset purchases to boost lending to business. Over in India – the former No.1 gold consumer nation, overtaken by China amid a ban on gold imports in 2013 – "We are hopeful that the new government will help us," the Economic Times quotes Prithviraj Kothari, vice president of the Indian Bullion & Jewellers Association, speaking about the BJP's likely defeat of the ruling Congress Party in this month's national elections ending Monday. "We have asked for doing away with the 80:20 rule, which has reduced the availability of gold in the market. Consignments are not being cleared by customs authorities thus raising the premium making gold expensive." India's premiums over the benchmark London gold price slipped last week to $100 per ounce, down from record peaks above $160 hit when the anti-import rules bit – and world prices fell to 3-year lows – in mid-2013. Back in the UK meantime, the London Bullion Market Association said it has "launched a consultation in order to ensure the best way forward for a London silver daily price mechanism." UK regulator the FCA said last month that the gold and silver benchmarks "exist for the benefit of the market," and it would "step in" if too few banks were left at those daily events to seek a single market-clearing price. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 10 Reasons Why The US Economy is COLLAPSING Posted: 14 May 2014 07:29 AM PDT The US COLLAPSE will create a domino effect across the world. This will undoubtably occur because nothing has changed. These statistics prove that the economy is rapidly sinking yet the media will attempt to discredit it.The real economy is dead and what was left is being shipped overseas. #1... [[ This is a content summary only. Visit http://www.GoldSilverNewsBlog.com or http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Silver Was Not In a Bubble in 2011! Posted: 14 May 2014 06:25 AM PDT Conclusions The April 2011 silver price spike was NOT a bubble. The January 1980 silver price blow-off was a bubble, and it was materially different from the April 2011 price spike. I fully expect a bubble in silver – someday – but that day is months or years into the future. Prices for food, energy, silver, and gold are going up – broadly speaking – along with the national debt, money supply, and similar measures of debt and credit. Since we KNOW national debt will increase for the foreseeable future, plan on the prices for food, energy, silver, and gold increasing similarly. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Osisko Bidding War Proves Gold is Underrated Posted: 14 May 2014 06:00 AM PDT A bidding war irrupted over Osisko Mining (OSK), an emerging gold producer. Osisko owns the attractive, 9.4 million-ounce Canadian Malartic mine in Quebec, plus a few exploration-stage assets. Here's how the war began… In January, Goldcorp (GG) made a hostile offer to acquire Osisko for C$5.95 per share in cash and stock. Considering the great progress Osisko has made bringing the Canadian Malartic mine into production (and the fact that Osisko traded north of $15 per share in 2011), Goldcorp was offering a bargain-basement price. In early April, Yamana Gold (AUY, YRI), sensing the value Goldcorp was getting, joined the bidding with a complex (but shrewd) C$7.60 offer for Osisko. It was a friendly offer, so Osisko management clearly preferred merging with Yamana. Yamana's first offer involved financing from Canadian institutional investors through a loan and a gold stream. It also allowed Osisko shareholders to retain a much more concentrated ownership in the Canadian Malartic mine, rather than wind up with a fractional ownership in the Goldcorp empire. Yamana's offer prompted a C$7.60 counteroffer from Goldcorp. Finally, on April 16, Yamana responded with a new strategy: It found a bidding partner in Agnico Eagle Mines (AEM), one of our recommended gold stocks. Here are the details of what looks like the final winning offer: Agnico Eagle and Yamana will jointly acquire 100% of Osisko's shares' total consideration of C$3.9 billion, or C$8.15 per share — a 7% premium to Goldcorp's prior. The offer consists of C$1.0 billion in cash, approximately C$2.33 billion in Agnico Eagle and Yamana shares and shares of a new company ("Spinco") with an implied value of approximately C$575 million. Osisko shareholders who choose to hold on to the Spinco would receive the following: a 5% net smelter royalty (NSR) on the Canadian Malartic mine, C$155 million cash, a 2% NSR on the Kirkland Lake assets and Osisko's other development assets and liabilities. AEM stock fell sharply after the announcement, but the offer makes a lot of sense for its shareholders. With employees and assets already nearby the Malartic mine, AEM would bring a lot of expertise and mine-operating cost savings to the new partnership. Earlier this week, Goldcorp let its offer expire. So AUY and AEM have very likely won the bidding. The fight to acquire Osisko reveals the dichotomy between the gold mining stock views of a) the investing public and b) the executives and board members running these companies. Insiders — those in position to know the most about the assets they manage — are as bullish as they've ever been: They're buying shares at a brisk pace. Ted Dixon of INK Research publishes indicators of insider buying. Dixon's indicator for the TSX gold sector shows a ratio of insider buying to insider selling of 2.5:1 — one of the most bullish readings ever. Institutional investors seem to have abandoned the sector. For now, the consensus doesn't want to own gold because it expects the Fed will taper QE and then reverse QE by shrinking the money supply and everything will be dandy. I have my doubts. Since the 2008 crisis, several central banks, including the Fed, have encouraged the development of a highly unstable financial system. Real estate, the collateral for much of the banking system, is now priced on the assumption that low mortgage rates are permanent. And stocks have rallied on the assumption that future earnings should be discounted back to the present at very low rates. Take away the QE and low interest rates and we're supposed to believe these asset values would not fall violently? I don't think so. Asset values might stay high and keep rising if private-sector economies were robust. But they're not! In fact, since 2008, private-sector economies have become ever more intertwined with (and dependent upon) government and central bank stimulus. Investors expecting this Fed tightening cycle to be like the last one will be surprised at how rapidly the economy contracts in response to slight withdrawal of addictive monetary stimulus. Individuals, to the extent that they've held onto gold miners through the carnage (or bought recently), are not likely to sell these stocks anywhere near current prices. This state of affairs describes a sector that's bottomed and has a lot of upside potential. New investors, when they see central banks trapped in states of permanent stimulus, should migrate to gold miners. To acquire shares from strong hands, they'd have to bid aggressively, creating the conditions for a bull market. Best regards, Dan Amoss, CFA Ed. Note: If Dan is correct, the next few years could prove to be a real boon for the price of gold – and savvy gold investors. But there’s more than one way to play it than by simply buying the yellow metal. And readers of the FREE Daily Resource Hunter know that better than anyone. In every issue they’re treated to specific chances to discover real profit opportunities from across the resource and energy space. Some of them have likely already turned those opportunities into small fortunes. Don’t miss your chance to do the same. Sign up for Daily Resource Hunter for FREE, right here. This article originally appeared in Daily Resource Hunter.     | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| London silver fix to end in August, with Deutsche Bank sticking around until then Posted: 14 May 2014 05:21 AM PDT London Silver Fix to Be Scrapped from August By A. Ananthalakshmi and Veronica Brown The London silver "fix," a global benchmark for spot silver prices, will cease to operate after Aug. 14, the company that administers the process said today, amid rising regulatory scrutiny of price setting in bullion markets. Deutsche Bank AG, HSBC, and Bank of Nova Scotia will continue to participate in the fix until then, the London Silver Market Fixing Ltd. said. Last month, Deutsche Bank had resigned its seat on the London gold and silver fixes without finding a buyer after its decision to withdraw from the bulk of its commodities business. "Deutsche Bank has postponed its resignation from the London Silver Market Fixing from 29 April 2014 to 14 August 2014, at which point the benchmark will terminate," according to an emailed statement from the bank. The gold fix, along with other commodity benchmarks, has come under increasing scrutiny by regulators in Europe and the United States since the London Interbank Offered Rate (Libor) manipulation case last year. ... ... For the rest of the story: http://uk.reuters.com/article/2014/05/14/uk-silver-fix-idUKKBN0DU0IS2014... ADVERTISEMENT Safe and Private Allocated Bullion Storage In Singapore Given the increasing risks in financial markets, it is more important than ever to own physical bullion coins and bars and to store them in the safest vaults in the world in the safest jurisdictions in the world. Gold advocates Jim Sinclair and Marc Faber have recommended Singapore. Now, with GoldCore, you can own coins and bars in fully insured, segregated, and allocated accounts in Singapore with the ability to take delivery. Learn more by downloading GoldCore's Essential Guide To Storing Gold In Singapore: http://info.goldcore.com/essential-guide-to-storing-gold-in-singapore And for more information call Daniel or Sharon at +44 203 0869200 in the United Kingdom or at +1-302-635-1160 in the United States. Or email them at info@goldcore.com. Join GATA here: Committee for Monetary Research and Education http://www.cmre.org/news/spring-meeting-2014/ Porter Stansberry Natural Resources Conference Canadian Investor Conference 2014 http://cambridgehouse.com/event/25/canadian-investor-conference-2014-inc... New Orleans Investment Conference https://jeffersoncompanies.com/new-orleans-investment-conference/home * * * 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 Buy precious metals free of value-added tax throughout Europe Europe Silver Bullion is a fast-growing dealer sourcing its products from renowned mints, refiners, and distributors. Because of a legal loophole that will close soon, you can acquire the world's most popular bullion coins free of value-added tax throughout the European Union. You can collect your order in person at our headquarters in Tallinn, Estonia, or have it delivered in any of the 28 EU countries. Europe Silver Bullion is owned and operated by North American and European experts in selling, storing, and transporting precious metals. We have an extensive product inventory of silver, gold, platinum, and palladium, and our network spans the world. Visit us at www.europesilverbullion.com. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investor Focus in Gold Mining Juniors Posted: 14 May 2014 03:52 AM PDT How to ride out this gold price lull with strong management and balancesheets... ADRIAN DAY has spent years steering clients into and out of positions in precious metals equities. While higher commodity prices are always welcome, the founder of Adrian Day Asset Management says in this interview with The Gold Report that with gold prices where they are, he favors more telltale fundamentals like strong balance sheets and sound business plans... The Gold Report: In an interview with The Gold Report after the March Prospectors & Developers Association of Canada convention, you said that gold had bottomed and that it would be a mistake to sell it too soon. Since then the ongoing situation in the Ukraine and mixed buying and selling news from China has further blurred the gold picture. What is your near-term forecast for gold? Adrian Day: When you have a market that's declined the way gold has, it would be a mistake to imagine that it's going to bounce back quickly. There's little question that gold has bottomed. I think we're going to see higher prices for the rest of the year. TGR: Gold prices fell back in late March. What was behind that? Adrian Day: Two major items hurt gold in March. One was the Chinese economy. The manufacturing and export numbers have not been good. History tells us that recessions are bad for gold and if the Chinese economy went into a recession that would have a negative impact on gold. The second item was concern over monetary tightening, particularly in the United States. US Federal Reserve Chairman Janet Yellen initially made statements that focused on ending additional bond buying. That set a negative tone. More recently she and other Fed people have made it clear that monetary policy is going to remain easy for some time. I think the market grossly overacted. China is still growing at over 7% a year with under 2% inflation. That's real growth of more than 5%. Frankly, it's not that much different from when China was growing at 10% with 5% inflation. TGR: What's the trade in gold now? Adrian Day: At the early stage of a bull market or a recovery from a correction, we tend to see everything move. But the senior miners go first for obvious reasons: they have more liquidity and the names are well known. We saw that in the rally from December through March. Frankly, we can talk about everything that's wrong with the senior miners but they're very cheap and they're the ones producing. If the gold price moves up, the companies that actually produce gold should move up too. TGR: What is your prognosis for investors in the junior gold sector? Adrian Day: In May or June we'll probably see gold move up to $1350-1370 per ounce and I suspect we will begin to see some of the juniors move up more. The juniors move more rapidly as a recovery develops. TGR: With so many juniors out there, where should investors focus? Adrian Day: Investors should focus on companies that have good balance sheets because that enables them to move ahead with their plans without excessive dilution. They should also look for projects that could potentially be taken over. The senior gold producers are hungry for both reserves and mines. We've seen this recently with the takeover of Osisko Mining Corp. If you're Barrick producing 7 million ounces a year, that means each year you have to find another 7 million ounces. That's difficult. Juniors and exploration companies with coveted assets will be in the driver's seat. TGR: Investors want to know how they should manage their gold portfolios through the summer months. Refresh? Reload? Rebalance? What's your advice? Adrian Day: A little bit of everything. If there are stocks that have moved ahead of themselves, it would be a good idea to sell them and raise the cash for any additional market weakness, which I would expect to see over the summer. Another strategy, unless you are trading in an individual retirement account, is the opportunity to take tax losses. That's always a sound tactic in the gold space. TGR: Adrian Day Asset Management has had some success with the prospect generator model. These companies find economic deposits and then bring in partners to help or fully fund further exploration. Is that the biggest asset of these companies? Adrian Day: Prospect generators' biggest asset is their ability to preserve their balance sheet. The average exploration company has to spend a lot of money to find economic deposits. By its nature an exploration company constantly has to go to the market to raise more capital. The prospect generator model obviates that huge downside by using other people's money. The other big asset prospect generation gives these companies is exposure to multiple mining projects. A lot of exploration companies might only be able to drill one or two projects at a time. While the majority of a project likely belongs to someone else, some of these prospect generators have 5 or even 10 drill programs going on at the same time using other people's money. If investors buy a basket of prospect generators, they are getting exposed to perhaps 60 or 70 drill plays, which is a good thing. TGR: Parting thoughts for investors? Adrian Day: If gold goes to $1800 per ounce, others are all going to do well. But until then you need to stick with companies that have good people, good balance sheets, and strong business plans. Stick with the best whether it's the seniors, juniors or exploration companies. Don't be too quick to take profits, but keep an eye on companies that deviate from their business plan. TGR: Adrian, thank you for your insights. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investor Focus in Gold Mining Juniors Posted: 14 May 2014 03:52 AM PDT How to ride out this gold price lull with strong management and balancesheets... ADRIAN DAY has spent years steering clients into and out of positions in precious metals equities. While higher commodity prices are always welcome, the founder of Adrian Day Asset Management says in this interview with The Gold Report that with gold prices where they are, he favors more telltale fundamentals like strong balance sheets and sound business plans... The Gold Report: In an interview with The Gold Report after the March Prospectors & Developers Association of Canada convention, you said that gold had bottomed and that it would be a mistake to sell it too soon. Since then the ongoing situation in the Ukraine and mixed buying and selling news from China has further blurred the gold picture. What is your near-term forecast for gold? Adrian Day: When you have a market that's declined the way gold has, it would be a mistake to imagine that it's going to bounce back quickly. There's little question that gold has bottomed. I think we're going to see higher prices for the rest of the year. TGR: Gold prices fell back in late March. What was behind that? Adrian Day: Two major items hurt gold in March. One was the Chinese economy. The manufacturing and export numbers have not been good. History tells us that recessions are bad for gold and if the Chinese economy went into a recession that would have a negative impact on gold. The second item was concern over monetary tightening, particularly in the United States. US Federal Reserve Chairman Janet Yellen initially made statements that focused on ending additional bond buying. That set a negative tone. More recently she and other Fed people have made it clear that monetary policy is going to remain easy for some time. I think the market grossly overacted. China is still growing at over 7% a year with under 2% inflation. That's real growth of more than 5%. Frankly, it's not that much different from when China was growing at 10% with 5% inflation. TGR: What's the trade in gold now? Adrian Day: At the early stage of a bull market or a recovery from a correction, we tend to see everything move. But the senior miners go first for obvious reasons: they have more liquidity and the names are well known. We saw that in the rally from December through March. Frankly, we can talk about everything that's wrong with the senior miners but they're very cheap and they're the ones producing. If the gold price moves up, the companies that actually produce gold should move up too. TGR: What is your prognosis for investors in the junior gold sector? Adrian Day: In May or June we'll probably see gold move up to $1350-1370 per ounce and I suspect we will begin to see some of the juniors move up more. The juniors move more rapidly as a recovery develops. TGR: With so many juniors out there, where should investors focus? Adrian Day: Investors should focus on companies that have good balance sheets because that enables them to move ahead with their plans without excessive dilution. They should also look for projects that could potentially be taken over. The senior gold producers are hungry for both reserves and mines. We've seen this recently with the takeover of Osisko Mining Corp. If you're Barrick producing 7 million ounces a year, that means each year you have to find another 7 million ounces. That's difficult. Juniors and exploration companies with coveted assets will be in the driver's seat. TGR: Investors want to know how they should manage their gold portfolios through the summer months. Refresh? Reload? Rebalance? What's your advice? Adrian Day: A little bit of everything. If there are stocks that have moved ahead of themselves, it would be a good idea to sell them and raise the cash for any additional market weakness, which I would expect to see over the summer. Another strategy, unless you are trading in an individual retirement account, is the opportunity to take tax losses. That's always a sound tactic in the gold space. TGR: Adrian Day Asset Management has had some success with the prospect generator model. These companies find economic deposits and then bring in partners to help or fully fund further exploration. Is that the biggest asset of these companies? Adrian Day: Prospect generators' biggest asset is their ability to preserve their balance sheet. The average exploration company has to spend a lot of money to find economic deposits. By its nature an exploration company constantly has to go to the market to raise more capital. The prospect generator model obviates that huge downside by using other people's money. The other big asset prospect generation gives these companies is exposure to multiple mining projects. A lot of exploration companies might only be able to drill one or two projects at a time. While the majority of a project likely belongs to someone else, some of these prospect generators have 5 or even 10 drill programs going on at the same time using other people's money. If investors buy a basket of prospect generators, they are getting exposed to perhaps 60 or 70 drill plays, which is a good thing. TGR: Parting thoughts for investors? Adrian Day: If gold goes to $1800 per ounce, others are all going to do well. But until then you need to stick with companies that have good people, good balance sheets, and strong business plans. Stick with the best whether it's the seniors, juniors or exploration companies. Don't be too quick to take profits, but keep an eye on companies that deviate from their business plan. TGR: Adrian, thank you for your insights. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Junior Gold ETFs: Riskiest Stocks in the World Posted: 14 May 2014 02:55 AM PDT Looking to risk total wipe-out on a lottery-like junior gold mining ETF...? JUNIOR gold miners are one of the the riskiest equity investments one can make without a margin account, writes Scott Burley for Hard Assets Investor, in an article first published at ETF.com These small companies, armed with cash and a few unproven mining prospects, have the potential to quickly create or destroy fortunes for their investors in a literal search for buried treasure. Exchange-traded trust fund investors are lucky enough to have two options when it comes to junior gold miners, both global in scope. But strangely, the more popular of the two ETF funds doesn't provide the best exposure to the niche. The larger fund, Market Vectors Junior Gold Miners (GDXJ), is the little brother to popular total-market gold mining fund Market Vectors Gold Miners (GDX). It chooses its gold-mining stock holdings based on market cap, with the largest constituents currently about $1 billion in size. GDXJ has about $1.9 billion in assets. The smaller fund, with less than $50 million under management, is the Global X Gold Explorers (GLDX). It chooses companies that are primarily involved in searching for new gold deposits, resulting in an average market cap of less than half GDXJ's. What's the difference? The key is that GLDX only holds explorers, firms that seek out new claims and determine how much recoverable gold exists. GDXJ has those too, but it also holds producers – firms that actually extract gold ore from the ground. It's an important distinction because the risks of each activity are different. Both types of firms are exposed to gold prices. Gold is a notoriously speculative and volatile investment. And last year was not kind to the yellow stuff, which ended the year 37% below its 2011 peak. Production miners have historically hedged this risk away. While hedging is now uncommon among larger miners, some small producers still partially hedge production to shore up fragile balance sheets. But explorers don't have the option. It's hard to hedge the production of gold that may not be recoverable, or even exist. Then there's risk from operating leverage. If mining expenses are high, operating profit will be particularly sensitive to changes in gold price. This is a problem for all miners, but explorers in particular run the risk of sinking capital into developing a claim only to find it can no longer be profitably mined. Finally, there's the obvious risk of investing in a new mining claim: Is there anything down there? Can it be recovered at a reasonable cost? These things are almost impossible for the average investor to evaluate. All of these risk factors together make accurately valuing an explorer a nearly impossible task. Accordingly, even the faintest rumors about an exploration company can cause huge swings in its stock price. That risk is part of the appeal of these companies – the possibility of that one big win. And in that respect, GLDX delivers better than GDXJ. As a pure exploration fund, GLDX excludes small-production miners with relatively predictable future cash flows. Production miners make up about two-thirds of GDXJ. And despite GDXJ's market-cap focus, GLDX holds smaller companies overall. In the end, an ETF wrapper may not really be the best way to gain exposure to this area of the market, because the smallest – and most speculative – miners are just too small and illiquid to be practical in an ETF basket. Many trade on the pink sheets, or not at all. But GLDX manages to hold companies further down the market-cap spectrum, for an average market cap that's half of GDXJ's. Lastly, GLDX is less diversified. If you're hoping for a lotterylike payoff, your best bet is to hold – at most – a handful of miners, and hope that at least one of them makes a big find. GDXJ holds 70 names, while GLDX holds just 20. GLDX is therefore more volatile than both GDXJ and total-market mining fund GDX, and far more so than physical gold bullion prices or the broad equity market. That's the real value proposition of a junior gold mining fund. It's a highly volatile instrument, only loosely correlated to other equities, which can be used to add diversification to a portfolio of stocks and bonds. Unfortunately, neither of the two junior mining funds does its job extremely well. Both are fairly expensive – 0.55% annually for GDXJ, and 0.65% for GLDX. That's $55 and $65 respectively per $10,000 invested. They also track their indexes loosely. That said, it's surprising to see GDXJ has attracted so much more investor attention than GLDX. GDXJ mostly resembles its larger sibling, while GLDX provides a unique exposure and a wilder ride overall. And in this small corner of the equity universe, that could be a good thing. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Junior Gold ETFs: Riskiest Stocks in the World Posted: 14 May 2014 02:55 AM PDT Looking to risk total wipe-out on a lottery-like junior gold mining ETF...? JUNIOR gold miners are one of the the riskiest equity investments one can make without a margin account, writes Scott Burley for Hard Assets Investor, in an article first published at ETF.com These small companies, armed with cash and a few unproven mining prospects, have the potential to quickly create or destroy fortunes for their investors in a literal search for buried treasure. Exchange-traded trust fund investors are lucky enough to have two options when it comes to junior gold miners, both global in scope. But strangely, the more popular of the two ETF funds doesn't provide the best exposure to the niche. The larger fund, Market Vectors Junior Gold Miners (GDXJ), is the little brother to popular total-market gold mining fund Market Vectors Gold Miners (GDX). It chooses its gold-mining stock holdings based on market cap, with the largest constituents currently about $1 billion in size. GDXJ has about $1.9 billion in assets. The smaller fund, with less than $50 million under management, is the Global X Gold Explorers (GLDX). It chooses companies that are primarily involved in searching for new gold deposits, resulting in an average market cap of less than half GDXJ's. What's the difference? The key is that GLDX only holds explorers, firms that seek out new claims and determine how much recoverable gold exists. GDXJ has those too, but it also holds producers – firms that actually extract gold ore from the ground. It's an important distinction because the risks of each activity are different. Both types of firms are exposed to gold prices. Gold is a notoriously speculative and volatile investment. And last year was not kind to the yellow stuff, which ended the year 37% below its 2011 peak. Production miners have historically hedged this risk away. While hedging is now uncommon among larger miners, some small producers still partially hedge production to shore up fragile balance sheets. But explorers don't have the option. It's hard to hedge the production of gold that may not be recoverable, or even exist. Then there's risk from operating leverage. If mining expenses are high, operating profit will be particularly sensitive to changes in gold price. This is a problem for all miners, but explorers in particular run the risk of sinking capital into developing a claim only to find it can no longer be profitably mined. Finally, there's the obvious risk of investing in a new mining claim: Is there anything down there? Can it be recovered at a reasonable cost? These things are almost impossible for the average investor to evaluate. All of these risk factors together make accurately valuing an explorer a nearly impossible task. Accordingly, even the faintest rumors about an exploration company can cause huge swings in its stock price. That risk is part of the appeal of these companies – the possibility of that one big win. And in that respect, GLDX delivers better than GDXJ. As a pure exploration fund, GLDX excludes small-production miners with relatively predictable future cash flows. Production miners make up about two-thirds of GDXJ. And despite GDXJ's market-cap focus, GLDX holds smaller companies overall. In the end, an ETF wrapper may not really be the best way to gain exposure to this area of the market, because the smallest – and most speculative – miners are just too small and illiquid to be practical in an ETF basket. Many trade on the pink sheets, or not at all. But GLDX manages to hold companies further down the market-cap spectrum, for an average market cap that's half of GDXJ's. Lastly, GLDX is less diversified. If you're hoping for a lotterylike payoff, your best bet is to hold – at most – a handful of miners, and hope that at least one of them makes a big find. GDXJ holds 70 names, while GLDX holds just 20. GLDX is therefore more volatile than both GDXJ and total-market mining fund GDX, and far more so than physical gold bullion prices or the broad equity market. That's the real value proposition of a junior gold mining fund. It's a highly volatile instrument, only loosely correlated to other equities, which can be used to add diversification to a portfolio of stocks and bonds. Unfortunately, neither of the two junior mining funds does its job extremely well. Both are fairly expensive – 0.55% annually for GDXJ, and 0.65% for GLDX. That's $55 and $65 respectively per $10,000 invested. They also track their indexes loosely. That said, it's surprising to see GDXJ has attracted so much more investor attention than GLDX. GDXJ mostly resembles its larger sibling, while GLDX provides a unique exposure and a wilder ride overall. And in this small corner of the equity universe, that could be a good thing. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| EUR/USD A Gift for Currency Bears Posted: 14 May 2014 02:50 AM PDT Earlier today, the ZEW Institute showed that its index of German economic sentiment fell to a 16-month low this month. Additionally, the ZEW Institute reported that its economic sentiment index for the entire euro zone also moved down to 55.2 in May, from a reading of 61.2 the previous month. These disappointing numbers pushed the common currency to a 1-month low against the U.S. dollar. In this way, EUR/USD dropped to its downside target, but is it enough to trigger a corrective upswing? | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Scary Deflation Monster: The Fed vs. Prosperity Posted: 14 May 2014 02:13 AM PDT Janet Yellen may be the new monetary sheriff in town, but she harbors the same old phobias her predecessors had—a fear of the scary deflation monster. The new Fed chair told the Economics Club of New York, “The FOMC strives to avoid inflation slipping too far below its 2 percent objective because, at very low inflation rates, adverse economic developments could more easily push the economy into deflation. The limited historical experience with deflation shows that, once it starts, deflation can become entrenched and associated with prolonged periods of very weak economic performance.” This irrational fear that prices will fall and won’t be able to get up is repeated often by Keynesians, who believe consumers will destroy aggregate demand by waiting indefinitely to buy at lower prices. In turn, lower profits will cause companies to cut expenses by laying off employees. This all leads to a downward spiral impervious to central-bank machinations—think “pushing on a string” from your Econ 101 class. This mindset is wrongheaded at best and dangerous at worst. Profits are the difference between the price it costs to produce a good and the price that good is sold for. As economics professor Jörg Guido Hülsmann makes clear in his book Deflation and Liberty, “In a deflation, both sets of prices drop, and as a consequence for-profit production can go on.” Lower prices increase demand; they do not reduce or delay it. That’s why more and more people own flat-screen TVs, cellphones, and laptops: the prices of these goods have fallen, and people with lower incomes can afford them. And there are a lot more low-income people than high-income people. This is not something to avoid at all costs—it’s called prosperity. Lower prices don’t mean lower profits; nor do they mean employees will be laid off. More demand for a good or service means more employees are needed to produce those goods and services. “There is no reason why inflation should ever reduce rather than increase unemployment,” professor Hülsmann writes. He goes on to point out that only if workers underestimate the amount of money created by the central bank and therefore reduce their real wage-rate demands will unemployment be reduced. “All plans to reduce unemployment through inflation therefore boil down to fooling the workers—a childish strategy, to say the least.” “Deflation is one of the great scarecrows of present-day economic policy and monetary policy in particular,” Hülsmann says. It seems a nation will destroy its finances battling a non-threat. While the monetary mandarins lie awake at night worrying about lower prices, since 1971—when Richard Nixon cut the last tether of the dollar to gold—the effect of creating more money (inflation) has showed up in exponentially higher prices. A gallon of gas was 36 cents in 1971. New-home prices averaged $28,300 that year. A dozen eggs was 53 cents. The Dow Jones Industrial Average vacillated between 790 and 950. The average home price today is $334,000. Eggs cost $2.06 a dozen. Regular gas goes for $3.75 a gallon, and the DJIA is north of 16,700 as I write. However, Ms. Yellen is not only not alarmed by these price increases, she wishes them to be greater—to the detriment of the average person. The Fed’s reckless money creation has distorted the price of everything, especially in financial markets. Which brings us to Robert Prechter’s work provided by Elliott Wave International. A section of the March edition of the Elliott Wave Theorist is offered below to Casey readers. If the Dow at new highs doesn’t make you feel warm and fuzzy or wealthy, Prechter’s illuminating work will show you why. It’s a must-read. You’ll want to download the entire issue, which you can do here. Enjoy, Doug French, Contributing Editor | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Why the Fed Loves Housing Booms Posted: 14 May 2014 01:26 AM PDT How important is housing to the American economy? If a 2011 SMU paper entitled "Housing's Contribution to Gross Domestic Product (GDP)" is right, nothing moves the economic needle like housing, writes Doug French for Doug Casey's Daily Dispatch. Housing accounts for 17% to 18% of GDP. And don't forget that home buyers fill their homes with all manner of stuff – and that homeowners have more skin in insurance on what's likely to be their family's most important asset. All claims to the contrary, the disappointing first-quarter housing numbers expose the Federal Reserve as impotent at influencing GDP's most important component. No wonder every modern Fed chairman has lowered rates to try to crank up housing activity, rationalizing that low rates make mortgage payments more affordable. Back when he was chair, Ben Bernanke wrote in the Washington Post, "Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance." In her first public speech, new Fed Chair Janet Yellen said one of the benefits to keeping interest rates low is to "make homes more affordable and revive the housing market." As quick as they are to lower rates and increase prices, Fed chairs are notoriously slow at spotting their own bubble creation. In 2002, Alan Greenspan viewed the comparison of rising home prices to a stock market bubble as "imperfect." The Maestro concluded, "Even if a bubble were to develop in a local market, it would not necessarily have implications for the nation as a whole." Three years later – in 2005 – Ben Bernanke was asked about housing prices being out of control.
With never a bubble in sight, the Fed constantly supports housing while analysts and economists count on the housing stimulus trick to work. "There's more expansion ahead for the housing market in 2014, with starts and new-home sales continuing to rise at double-digit rates, thanks to tight inventory," writes Gillian B. White for Kiplinger. The "Timely, Trusted Personal Finance Advice and Business Forecast(er)" says GDP will bounce back. Fannie Mae Chief Economist Doug Duncan says, "Our full-year 2014 economic forecast accounts for three key growth drivers: an acceleration in spending activity from private-sector forces, waning fiscal drag from the federal government, and continued improvement in the housing market." We'll see about that last one. With the central bank flooding the markets with liquidity, holding short rates low, and buying long-term debt, mortgage rates have been consistently below 5% since the start of 2009. For all of 2012, the 30-year fixed mortgage rate stayed below 4%. In the post-gold-standard era (after 1971), rates have never been this low for this long. The Fed's unprecedented mortgage subsidy has helped the market make a dead-cat bounce since the crash of 2008. After peaking in July 2006 at 206.52, the Case-Shiller 20-City composite index bottomed in February 2012 at 134.06. It had recovered to 165.50 as of January. However, while low rates have propped up prices, sales of existing homes have fallen in seven of the last eight months. In March re-sales were down 7.5% from a year earlier. That's the fifth month in a row in which sales fell below the year-earlier level. David Stockman writes, "March sales volume remained the slowest since July 2012." He listed 13 major metro areas whose sales declined from a year ago, led by San Jose, down 18%. The three worst performers and 6 of the bottom 11 were California cities. Las Vegas and Phoenix were also in the bottom 10, with sales down double-digits from a year ago. This after housing guru Ivy Zelman told CNBC in February, "California is back to where it was in nirvana." Considering the entire nation, she said, "I think nirvana is not far around the corner...I think that I have to tell you, I'm probably the most bullish I've ever been fundamentally, and I'm dating myself, been around for over 20 years, so I've seen a lot of ups and downs." Housing is contributing less to overall growth than during both the days of 20% mortgage rates in the 1980s and the S&L crisis of the early 1990s. In Phoenix, where home prices have bounced back and Wall Street money has vacuumed up thousands of distressed properties, the market has gone flat. In Belfiore Real Estates' April market report, Jim Belfiore wrote, "The bad news for home builders is they have created a glut of supply in previously hot market areas...Potential buyers, as might be expected, feel no sense of urgency to buy because they believe this glut is going to exist indefinitely." Nick Timiraos points out in the Wall Street Journal that with a 4.5% mortgage rate and prices 20% below their peak, "...homes are still more affordable than in most periods between 1990 and 2008." So why is demand for new homes so tepid? And why have refinancings fallen 58% year-over-year in the first quarter? "Housing's rocky recovery could signal weakness more broadly in the economy," writes Timiraos, "reflecting the lingering damage from the bust that has left millions of households unable to participate in any housing recovery. Many still have properties worth less than the amount borrowers owe on their mortgages, while others have high levels of debt, low levels of savings, and patchy incomes." More specifically, "So far we have experienced 7 million foreclosures," David Stockman, former director of the Office of Management and Budget, writes. "Beyond that there are still nine million homeowners seriously underwater on their mortgages, and there are millions more who are stranded in place because they don't have enough positive equity to cover transactions costs and more stringent down payment requirements." Young people used to drive real estate growth, but not anymore. The percentage of young home buyers has been declining for years. Between 1980 and 2000, the percentage of homeowners among people in their late twenties fell from 43% to 38%. And after the crash, the downtrend continued. The percentage of young people who obtained mortgages between 2009 and 2011 was just half what it was ten years ago. Young people don't seem to view owning a home as the American dream, as was the case a generation ago. Plus, who has room to take on more debt when 7 in 10 students graduate college with an average $30k in student loan debt? "First-time home buyers are typically an important source of incremental housing demand, so their smaller presence in the market affects house prices and construction quite broadly," Fed chairman Ben Bernanke told homebuilders two years ago. There's not much good news for housing these days. For a little while, the Fed's suppression of interest rates juiced housing enough to distract Americans from weak job creation and stagnant real wages. Don't have a job? No problem! Just borrow against the appreciation of your house to feed your family. But Yellen's interest rate wand looks to be out of magic. The government had a pipe dream of white picket fences for everyone. But Americans can't refinance their way to wealth. Especially in the Greater Depression. Read more about the Fed's back-breaking economic shenanigans and the ways to protect your assets in our Casey Daily Dispatch – a free guide for gold, silver, energy, technology, and crisis investing. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Why the Fed Loves Housing Booms Posted: 14 May 2014 01:26 AM PDT How important is housing to the American economy? If a 2011 SMU paper entitled "Housing's Contribution to Gross Domestic Product (GDP)" is right, nothing moves the economic needle like housing, writes Doug French for Doug Casey's Daily Dispatch. Housing accounts for 17% to 18% of GDP. And don't forget that home buyers fill their homes with all manner of stuff – and that homeowners have more skin in insurance on what's likely to be their family's most important asset. All claims to the contrary, the disappointing first-quarter housing numbers expose the Federal Reserve as impotent at influencing GDP's most important component. No wonder every modern Fed chairman has lowered rates to try to crank up housing activity, rationalizing that low rates make mortgage payments more affordable. Back when he was chair, Ben Bernanke wrote in the Washington Post, "Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance." In her first public speech, new Fed Chair Janet Yellen said one of the benefits to keeping interest rates low is to "make homes more affordable and revive the housing market." As quick as they are to lower rates and increase prices, Fed chairs are notoriously slow at spotting their own bubble creation. In 2002, Alan Greenspan viewed the comparison of rising home prices to a stock market bubble as "imperfect." The Maestro concluded, "Even if a bubble were to develop in a local market, it would not necessarily have implications for the nation as a whole." Three years later – in 2005 – Ben Bernanke was asked about housing prices being out of control.
With never a bubble in sight, the Fed constantly supports housing while analysts and economists count on the housing stimulus trick to work. "There's more expansion ahead for the housing market in 2014, with starts and new-home sales continuing to rise at double-digit rates, thanks to tight inventory," writes Gillian B. White for Kiplinger. The "Timely, Trusted Personal Finance Advice and Business Forecast(er)" says GDP will bounce back. Fannie Mae Chief Economist Doug Duncan says, "Our full-year 2014 economic forecast accounts for three key growth drivers: an acceleration in spending activity from private-sector forces, waning fiscal drag from the federal government, and continued improvement in the housing market." We'll see about that last one. With the central bank flooding the markets with liquidity, holding short rates low, and buying long-term debt, mortgage rates have been consistently below 5% since the start of 2009. For all of 2012, the 30-year fixed mortgage rate stayed below 4%. In the post-gold-standard era (after 1971), rates have never been this low for this long. The Fed's unprecedented mortgage subsidy has helped the market make a dead-cat bounce since the crash of 2008. After peaking in July 2006 at 206.52, the Case-Shiller 20-City composite index bottomed in February 2012 at 134.06. It had recovered to 165.50 as of January. However, while low rates have propped up prices, sales of existing homes have fallen in seven of the last eight months. In March re-sales were down 7.5% from a year earlier. That's the fifth month in a row in which sales fell below the year-earlier level. David Stockman writes, "March sales volume remained the slowest since July 2012." He listed 13 major metro areas whose sales declined from a year ago, led by San Jose, down 18%. The three worst performers and 6 of the bottom 11 were California cities. Las Vegas and Phoenix were also in the bottom 10, with sales down double-digits from a year ago. This after housing guru Ivy Zelman told CNBC in February, "California is back to where it was in nirvana." Considering the entire nation, she said, "I think nirvana is not far around the corner...I think that I have to tell you, I'm probably the most bullish I've ever been fundamentally, and I'm dating myself, been around for over 20 years, so I've seen a lot of ups and downs." Housing is contributing less to overall growth than during both the days of 20% mortgage rates in the 1980s and the S&L crisis of the early 1990s. In Phoenix, where home prices have bounced back and Wall Street money has vacuumed up thousands of distressed properties, the market has gone flat. In Belfiore Real Estates' April market report, Jim Belfiore wrote, "The bad news for home builders is they have created a glut of supply in previously hot market areas...Potential buyers, as might be expected, feel no sense of urgency to buy because they believe this glut is going to exist indefinitely." Nick Timiraos points out in the Wall Street Journal that with a 4.5% mortgage rate and prices 20% below their peak, "...homes are still more affordable than in most periods between 1990 and 2008." So why is demand for new homes so tepid? And why have refinancings fallen 58% year-over-year in the first quarter? "Housing's rocky recovery could signal weakness more broadly in the economy," writes Timiraos, "reflecting the lingering damage from the bust that has left millions of households unable to participate in any housing recovery. Many still have properties worth less than the amount borrowers owe on their mortgages, while others have high levels of debt, low levels of savings, and patchy incomes." More specifically, "So far we have experienced 7 million foreclosures," David Stockman, former director of the Office of Management and Budget, writes. "Beyond that there are still nine million homeowners seriously underwater on their mortgages, and there are millions more who are stranded in place because they don't have enough positive equity to cover transactions costs and more stringent down payment requirements." Young people used to drive real estate growth, but not anymore. The percentage of young home buyers has been declining for years. Between 1980 and 2000, the percentage of homeowners among people in their late twenties fell from 43% to 38%. And after the crash, the downtrend continued. The percentage of young people who obtained mortgages between 2009 and 2011 was just half what it was ten years ago. Young people don't seem to view owning a home as the American dream, as was the case a generation ago. Plus, who has room to take on more debt when 7 in 10 students graduate college with an average $30k in student loan debt? "First-time home buyers are typically an important source of incremental housing demand, so their smaller presence in the market affects house prices and construction quite broadly," Fed chairman Ben Bernanke told homebuilders two years ago. There's not much good news for housing these days. For a little while, the Fed's suppression of interest rates juiced housing enough to distract Americans from weak job creation and stagnant real wages. Don't have a job? No problem! Just borrow against the appreciation of your house to feed your family. But Yellen's interest rate wand looks to be out of magic. The government had a pipe dream of white picket fences for everyone. But Americans can't refinance their way to wealth. Especially in the Greater Depression. Read more about the Fed's back-breaking economic shenanigans and the ways to protect your assets in our Casey Daily Dispatch – a free guide for gold, silver, energy, technology, and crisis investing. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Michael Curran's Three-Pronged Approach to Selecting Gold Equities Posted: 14 May 2014 01:00 AM PDT With more than 2,000 junior mining companies currently trading, it's often difficult to sort out the promising gold equities. That's why The Gold Report talked with Beacon Securities Managing Director and Analyst Michael Curran about some of his favorite ideas to unearth equities that add value and gold exposure to your portfolio. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Michael Curran's Three-Pronged Approach to Selecting Gold Equities Posted: 14 May 2014 01:00 AM PDT With more than 2,000 junior mining companies currently trading, it's often difficult to sort out the promising gold equities. That's why The Gold Report talked with Beacon Securities Managing Director and Analyst Michael Curran about some of his favorite ideas to unearth equities that add value and gold exposure to your portfolio. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Michael Curran's Three-Pronged Approach to Selecting Gold Equities Posted: 14 May 2014 01:00 AM PDT With more than 2,000 junior mining companies currently trading, it's often difficult to sort out the promising gold equities. That's why The Gold Report talked with Beacon Securities Managing... Visit the aureport.com for more information and for a free newsletter      |
Q. What will happen after 14 August 2014? Will the Silver Fixing cease to exist?
The balance sheet of the ECB, up until a year and a half ago, ballooned. So the ECB has a way to print money. It's just that since the ECB is under the surveillance of the German Bundesbank, they were more or less forced to stop. In any case, Mario Draghi had been successful by saying, 'We will do whatever it takes.' And a day or two ago, the Bundesbank apparently has agreed to let Mario Draghi and the ECB print money again.
We went down the ‘golden’ rabbit hole and we were stunned by some of the things we found…
| You are subscribed to email updates from Save Your ASSets First To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
| Google Inc., 20 West Kinzie, Chicago IL USA 60610 | |
No comments:
Post a Comment