Gold World News Flash |
- Are We Heading Into Deflation Accompanied By A Strong Dollar?
- Richard Russell - The Grim & Devastating Tragedy Of America
- Once Again Gold Price Artificially Pressured Down
- SILVER EXTREMELY UNDERVALUED | Duane & Hoffman (Part 2)
- GoldMoney's Turk tells KWN about a very telling bankruptcy
- Roberts and Kranzler: Gold price suppression is insider trading
- The Gold Price Gained $1.50 Closing Comex at $1,216.80
- Has The Gold Price Drop Run Its Course?
- Gold and Silver vs Debt and Taxes
- Gold Daily and Silver Weekly Charts - Unchanged
- Why Isn’t Housing A Bubble?
- How to Buy Your Own “Bread and Circuses”
- They Do Ring A Bell At The Top: Alibaba Proves Wall Street Is Off Its Rocker
- Two Shocking Charts Expose The Stunning Collapse In The US
- In The News Today
- Money printing will overwhelm any debt deflation, Embry tells KWN
- BofAML Repeats Art Cashin's Concerns Of A September Seasonal Slump
- Gold Mining "Hurt Long-Term", Output "Peaking in 2014"
- The Ancient Secret to Thriving in Any Environment
- John Embry On The Wild Action In Gold, Silver & Other Markets
- Tesco Super Market Giant Fast Disappearing Down a Financial Black Hole
- Gold Bullion "Seeking Base, Nears $1180 Double-Bottom" as Silver Bears Outweigh Physical Bulls at 4-Year Lows
- Faber: “A Bubble In Everything, Everywhere”
- Monday Morning Links
- U.S. Dollar: The Last Hurrah?
- Interest Rate Doves Don't Know History
- China Moves To Dominate Gold Market With Physical Exchange
- What Insider and Institutional Trading Are Telling Us
- The Millenial Cult Of Global Warming
- Tell Us, Christos Doulis, Can Gold Act as a Safe Haven Again?
- The Counter-Intuitive Rise of the U.S. Dollar
| Are We Heading Into Deflation Accompanied By A Strong Dollar? Posted: 22 Sep 2014 10:00 PM PDT by David Schectman, MilesFranklin.com:
The age-old debate rages on. Are we heading into deflation accompanied by a strong dollar, or hyperinflation and the demise of the dollar? I was writing about this issue, and taking the deflation side of the argument, in the late 1980s. At the time, the late great Murray Rothbard called the deflationist arguments "a veritable tissue of error." He maintained that as long as the Fed can create money out of thin air, they will never allow deflation to take over. That is the position Jim Rickards takes in the following video. I strongly urge you to watch it – he presents a logical and convincing argument. Then, check out the short video, which is a debate between Rickards (anti-dollar, inflationist) and Harry Dent (pro-dollar, deflationist). Who do I think is correct? Sorry, Harry, I have to go with Jim.
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| Richard Russell - The Grim & Devastating Tragedy Of America Posted: 22 Sep 2014 09:02 PM PDT  Today the Godfather of newsletter writers, 90-year old Richard Russell, exposed the grim and devastating tragedy of America. The 60-year market veteran also discussed what is happening with gold, the desperation of the Fed, and he also takes KWN readers on a trip down Memory Lane.This posting includes an audio/video/photo media file: Download Now | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Once Again Gold Price Artificially Pressured Down Posted: 22 Sep 2014 09:00 PM PDT by Léonard Sartoni, Gold Broker:
Thus paper gold was sold without end, combined with the now traditional suspicious moves occurring outside of the COMEX, in order to be able to break support levels more easily. Silver, though already quite oversold, but easier to manipulate, was hit by a powerful smash-down on Friday that broke its major support at $18. Usually, those violent attacks can last up to two or three days, so it is still possible to witness more hits. Sadly, for the "market regulators", gold could not be brought down near its $1,180 support… if it had been, we'd have witnessed the same avalanche of paper gold on the COMEX to break it! | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SILVER EXTREMELY UNDERVALUED | Duane & Hoffman (Part 2) Posted: 22 Sep 2014 08:00 PM PDT from FinanceAndLiberty: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GoldMoney's Turk tells KWN about a very telling bankruptcy Posted: 22 Sep 2014 06:50 PM PDT 9:50p ET Monday, September 22, 2014 Dear Friend of GATA and Gold: GoldMoney founder and GATA consultant James Turk today tells King World News about a very telling bankruptcy in the United States. "There is too much debt in the economy that cannot be serviced," Turk says. An excerpt from the interview is posted at the KWN blog here: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/9/22_Tw... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Free Storage with BullionStar in Singapore Until 2016 BullionStar is a Singapore-registered company with a one-stop bullion shop, showroom, and vault at 45 New Bridge Road in Singapore. BullionStar's solution for storing bullion in Singapore is called My Vault Storage. With My Vault Storage you can store bullion in BullionStar's bullion vault, which is integrated with BullionStar's shop and showroom, making it a convenient one-stop-shop for precious metals in Singapore. Customers can buy, store, sell, or request physical withdrawal of their bullion through My Vault Storage® online around the clock. Storage is FREE until 2016 and will have the most competitive rates in the industry thereafter. For more information, please visit Bullion Star here: Join GATA here: Canadian Investor Conference http://cambridgehouse.com/event/31/canadian-investor-conference-toronto-... New Orleans Investment Conference https://jeffersoncompanies.com/landing/noic2014?IDPromotion=614011014520... Mines and Money London http://www.minesandmoney.com/london/ * * * 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: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Roberts and Kranzler: Gold price suppression is insider trading Posted: 22 Sep 2014 06:44 PM PDT 9:40p ET Monday, September 22, 2014 Dear Friend of GATA and Gold: Former Assistant U.S. Treasury Secretary Paul Craig Roberts and market analyst Dave Kranzler write today that gold price suppression in the U.S. futures markets is likely illegal as insider trading because the bullion bank agents of the Federal Reserve, shorting gold, are also clearing members of the exchanges and have access to more trading position data than ordinary traders. The Fed's policy, Roberts and Kranzler write, is to save the big investment banks at the expense of the U.S. economy. Their commentary is headlined "Rigged Gold Price Distorts Perception of Economic Reality" and it's posted at Roberts' Internet site here: http://www.paulcraigroberts.org/2014/09/22/rigged-gold-price-distorts-pe... 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: Canadian Investor Conference http://cambridgehouse.com/event/31/canadian-investor-conference-toronto-... New Orleans Investment Conference https://jeffersoncompanies.com/landing/noic2014?IDPromotion=614011014520... Mines and Money London http://www.minesandmoney.com/london/ * * * 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: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Gold Price Gained $1.50 Closing Comex at $1,216.80 Posted: 22 Sep 2014 04:46 PM PDT
Gold's range was $1,208.80 to $1,221. Silver ranged from $17.33 to $17.86. GOLD/SILVER RATIO ended at 68.750:1. The SILVER PRICE has started another and predictable waterfall after it broke $18.60 support. It is badly oversold, but rising volume hints it hasn't stopped yet. The GOLD PRICE remains above its June 2013 and December 2013 $1,180 lows, unlike silver. Yet there is no sign, other than its severely oversold condition, that it has turned up or won't drop to that $1,180 level. The big long positions in the Commitments of Traders has been worked off, and that's a first harbinger they may turn. One other little cloud on the horizon: silver put in what might have been a V-bottom on the daily chart. Happened in the night between Sunday and Monday US time. In spite of the negative charts I can't get over the impression we are watching a peak in stocks and the dollar and low in silver and gold prices, although it may take until next week to work out. It will happen fast. Back in early July 2013 the US dollar index hit a high of 84.96, and was nothing like as bloatedly overbought as it is today. It's high today was 84.97, so that resistance threw it back for the time being. US dollar index dropped seven basis points or 0.8%. Today the Criminal-in-Charge at the European central bank, Mario "Bags under the Eyes" Draghi testified before a EU parliamentary committee. He complained that the European economy is slowing down, which fuels speculation that the ECB will soon metastasize into a bond buying program like the US Fed's Quantitative Easing. Anyhow, the Euro took heart and lifted 0.26% to $1.2849. MACD is trying to turn up. Also as excruciatingly oversold as the euro, the Japanese Yen rose 0.2% to 91.89. In this waterfall there are two breakaway gaps and what appears to be an exhaustion gap three days ago. All that argues for at least a temporary turnaround. US Ten Year treasury note yield fell today for the second day, down to 2.547%. It bounced off the 200 DMA three days ago. The Dow gave back 107.06 (0.62%) today to land at 17,172.68. The S&P500 felt even worse, and coughed up 16.11 (0.8%) to end below 2000 at 1,994.29. S&P500 closed below its 20 day moving average (1,998.80), although the Dow didn't quite drop that far. Both have put in that rocket nose cone sort of top, where a single high day is sandwiched between days below but of more or less the same range. Nasdaq, N-100, Russell 2000 all look the same, but closed further below their 20 DMAs today. Looking a mite peakéd. Dow in gold hooked sharply down to 14.10 oz (G$291.47 gold dollars), down 0.7%.. Is the move completed? It needs to close below the 20 DMA at 13.65 oz (G$282.17) to give a first signal. RSI shows the DiG at an overbought level only seen in the last four years, most of those in the rally since 2011 -- but this is overboughter still. Even though silver dropped a little today, stocks dropped more. Dow in Silver hooked down 0.53% to 966.17 oz. (S$1,249.19 silver dollars). The 20 DMA awaits below at 905.12. Dow in Silver is also at its most overbought level in 15 years, with few exceptions. 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.  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Has The Gold Price Drop Run Its Course? Posted: 22 Sep 2014 02:58 PM PDT The gold price dropped on Monday September 22nd to USD 1212 and EUR 942. Dollar gold is close to retest its bottom for the third time since mid-2013, a price level which was seen only in the summer of 2010. For readers seeking to understand what is going on, we are providing a comprehensive view on the gold market. We take all perspectives into account: price and chart patterns, the technical picture, sentiment, the fuures market, physical demand, gold miners, the influence of the dollar, correlation with commodities, monetary policy and inflation/deflation. We also compare several indicators with the low price points in April, June and December 2013. With 20 different charts, it should be clear that we have only used market data in our analysis. In other words, this article contains the necessary information for readers to put the current gold price decline in its right context and explain the most likely scenarios going forward. Gold price patternThe daily USD gold chart clearly shows a downtrend since its top in September 2011, with two large trading ranges. The current trading range, between USD 1180 and 1450, is about to undergo a serious test: the bottom of the trading range is being tested. In case the USD 1200 to 1180 price level does not hold, the gold market is heading (significantly) lower.
In case the gold price would trade in a lower trading range than the current one, would it mean that the bull market is over? The answer to that question primarily lies in the gold price chart of a larger timeframe. As the following chart shows, there are three long term trend uptrend lines at play, which primarily found their origin in the period between 2001 and 2004. The first of the three lines provides support at USD 1100. The price point at USD 1000 provides major support as it coincides with a local top in 2008 which was retested several times in 2009. It implies that USD 1000 – 1100 is a major support area within the secular bull market. It goes without saying that, if that area would be violated, it could invalidate the long term gold bull market.
Technical pictureFrom a technical point of view, it is quite obvious that the selling pressure is not over. Dan Norcini, professional trader for more than two decades, uses the average directional index (ADX) as a measure of a trend’s strength. The rising red ADX line and declining blue line point to a clear and strong trend. Norcini sees little in the way of further support until one gets back down to the former double bottom low near $1180. From his personal blog: “I suspect that will not hold if the Dollar index runs past 85.50. If gold does manage to get down to near $1200, Asian buying will no doubt be active but it will be insufficient to sustain the metal if Western interests become aggressive sellers. Along that line I am closing watching reported GLD holdings and to some extent, the action in the gold mining shares, which incidentally, look very heavy at the moment.” We will come back to the Dollar and the physical market later on.
As evidence on the next chart, gold’s move down to $1210/12 coincides with a couple of Fibonacci extension levels, based on gold’s rally from December 27th till the end of February. Gold’s momentum indicator shows a significantly oversold reading. However, “oversold” is not a valid timing indicator, as an asset can remain for several days or weeks oversold.
The bearish outlook would be invalidated with a closing break above USD 1240, the 78% Fibonacci level, according to Matthew Weller. Sentiment readingsAccording to Sentimentrader‘s analysis, gold has a reading of 20 on a scale to 100 and silver 30. That is low, but not as extreme as it possibly can get. Compare these readings with the bottoms of the last 18 months:
What we are trying to say is that this situation could become much worse than it is today. The gold sentiment (light blue line) over the last ten years which is shown on the following chart makes that point.
Along the same lines, is the newsletter sentiment index by Hulbert which measures gold sentiment. The red line shows that sentiment reading stands at minus 40.6%, which means that the typical gold timer is recommending that clients allocate nearly half their gold-oriented portfolios to going short the market. Marketwatch notes: “That's a particularly aggressive bet that gold will keep declining, and — at least according to contrarian analysis — these timers are unlikely to be right. As recently as last week, the HGNSI had not fallen below minus 21.9%. That was less than the lows to which this sentiment index fell last December (minus 36.7%) and in the summer of 2013 (minus 56.7%). And that, in turn, led me to conclude that contrarians were not yet ready to bet on even a short-term rally.”
Physical gold marketThe demand for physical gold is not the root cause for the drop in the gold price. We like to use the total physical gold holdings of the major gold ETF’s in the West as a proxy for the Western physical gold market. As the chart below shows, the total holdings are rather stable in 2014, even slightly increasing in Q2 of this year. So this is clearly not a catalyst for a gold price decline. Note that the GLD ETF is making up almost 40% of the holdings on the chart. Courtesy of Sharelynx.
Similar to the gold price drop of last year, the recent decline has attracted an increased number of buyers in Asia. Koos Jansen, analyst of the physical gold market in China, wrote this week: "The SGE 1 Kg Au9999 physical contract closed at 0.52 % above London spot; premiums are in an uptrend since July. This underlines strong demand for gold in China, in contrast to what western media report based on gold export from Hong Kong to the mainland, data that has lost its significance as China imports more gold directly, bypassing Hong Kong, since April."
In India, the former biggest consumer of physical gold in the world, gold demand is expected to pick up as the wedding season starts. Reuters reported that “gold demand is improving gradually and is expected to rise further in the coming months ahead of Diwali,” according to a Mumbai-based jeweller. “Sales during the first six months were weak but now it is likely to pick up,” he said. Meantime, according to Goldcore on Zerohedge, trade statistics for the month of August have shown a huge surge in gold imports compared to August of 2013. The value of gold officially imported into India in August totalled $2.04 billion, which was nearly three times more than the August 2013 figure of $739 million. The conclusion is that the ongoing gold transfer from the West to the East continues. Also, the West is not dumping its physical gold to the extent that it causes prices to decline. An equally important segment of the physical market is the wholesale gold market (think kilobars gold). As Bron Suchecki notes, premiums have come up off the floor and are moving up nicely. It caused Suchecki to have a look at the kilobar movements in COMEX warehouses which he documented in the chart below.
What the charts shows is “that deposits seem to line up with future price weakness, as bullion banks stockpile them when Asian demand is weak. The withdrawals of kilobars, certainly in January this year, foretold price strength but it is not as strong an indicator considering the late 2012/early 2013 ones. You can see that on the 2nd of September 5 tonnes came out of JP Morgan’s warehouse and that doesn’t surprise me considering the renewed interest we are seeing. Worth keeping an eye on the COMEX movements to see if more of the 26 tonnes that was deposited in August is pulled out.” COMEX gold futures market structureWithout any doubt, the most important driver of the gold price is the gold futures market at the COMEX. The volumes traded every day, calculated in ounces of gold, are huge compared to the real world of demand and supply. The latest COT report figures are displayed below, courtesy of GoldSeek. Ted Butler is the anlaysts who has brought the manipulation in the COMEX futures market to the surface. He is a student of the gold and silver futures markets for 4 decades. In his latest market commentary, Butler explains that “the total commercial net short position has declined by 21,700 contracts, to 76,200 contracts, the lowest (most bullish) level since June 10 (when gold began a $100 rally). All three commercial categories participated in the $35 orchestrated decline in the price of gold … Somewhat surprisingly, JPMorgan stood pat with 25,000 contracts net long. Interestingly, the concentrated short position of the 4 and 8 largest COMEX gold shorts is now lower than any time since May 2013 and may now be lower (since the cut-off) than any point in years. In time, good things always seem to happen to the price of gold when the largest COMEX commercial shorts hold record low short positions.” The technical funds hold more than 73,000 contracts in gross shorts, which coincides with the June extremes. After the sharp gold price decline of the last days, technical fund shorts in gold now may exceed the all-time managed money extreme short position of almost 83,000 contracts on Dec 24, 2013. On the short turn, new lows in gold are still possible if the technical funds continue to pile on new shorts; but these positions are considered as fundamentally bullish for the medium term by Ted Butler. Butler concludes: “A perfect COT set up must be defined as being comprised of the least amount of commercial shorts and the maximum amount of technical fund shorts. Unfortunately but realistically, it would be impossible to achieve such a perfect COT set up on anything other than a pronounced and persistent sell-off of the kind we've just experienced. There is simply no way for the commercials to reduce their overall net short position or for the technical funds to increase their gross short position on anything other than successively lower prices.” Another veteran of the gold futures market, Dan Norcini, points out that the hedge fund community (see “large speculators” in the COT report above) is still net long, even with the current price drop. It implies that there is still some room left to cut long positions, resulting in a continuation of declining prices. The key question for Norcini is what is the hedge funds’ threshold for tolerance of pain is. “Some will hold on until or unless $1180 is broken. Some will exit if psychological support near $1200 collapses and gold then changes handles once more from “12” to “11”.” The light blue line on the chart shows that hedge funds have been shorting more heavily on similar low prices in the last 18 months. Gold in other currenciesAnother way to look at the gold price is the strength or weakness in various currencies. Dollar gold is testing for the third time the lows of its 18-months old trading range. Gold in Brititsh Pounds and in Chinese Yuan is showing a similar picture. However, Euro gold and Yen gold are relatively better off, as evidenced by the first two charts in the collection below. This is not a huge strength, but it is a positive aspect in the overall picture. Gold minersThe gold miners are mostly leading the yellow metal higher or lower. When miners are accelerating in the same direction as the metal, it is proof of a strong trend. Up until Thursday September 18th, the miners were holding up remarkably well. Unfortunately, in the last two trading sessions they have accelerated their downward move. This is not a sign of (short term) strength for the metals.
On a more positive note, the chart at the bottom right shows the Gold Miner’s Bullish Percentage Index. Although the miners are heading south in the last two days, the Gold Miner’s Bullish Percentage Index has not broken down. Also, the GDX and GDXJ indexes are still above their lowest point of the year (first days of 2014). One should pay close attention to the evolution of these indexes. Intermarket analysis: commoditiesIt is not only the metals trading at long term support, at the bottom of a long term trading range. The commodities index is also under severe pressure and at a point where it could break down. The following chart, courtesy of Dan Norcini, makes clear how commodities have been trending down since their peak in 2011.
Metals and commodities are highly correlated, for sure in the last years. Their price pattern is comparable. Clearly, deflationary pressure is present in the economy. Is the commodities index about to break down and are we about to experience a deflationary collapse? Or will inflation pick up from here? The jury is out, and we have to monitor the market data very closely. Whichever direction it goes, the consequences can be significant. Dan Norcini sees this environment with low inflation and slow economic growth. In such market conditions, traders and investors have a preference for stocks; gold is expected to fall out of favor even further, and commodities are expected to move lower.
US Dollar strength and monetary policyUndoubtedly, the main catalyst of recent weakness in commodities and metals is US Dollar strength.
Gold and Silver vs Debt and Taxes Posted: 22 Sep 2014 02:20 PM PDT I'm convinced – we can't escape debt and taxes. Essentially all currency is created as debt, and our financial system creates more debt and more currency into circulation every day. Taxes are insufficient to pay the massive expenditures that our politicians deem essential, so our national, state and local governments fall deeper into debt every year. I think we can all agree – expect more debt and more taxes. What About Silver and Gold? National debt has increased from $3 Billion in 1913, to $398 Billion in 1971 to about $17,700 Billion ($17.7 Trillion). Debt and taxes – much more debt – are in our future. Plan on it. The population of the US slowly increases (203,984,000 in 1970, about 322,500,000 today). Take the national debt and divide by the population to calculate a per capita national debt. Now divide the annual price of gold (annual price is the average daily price for the year) by per capita national debt and graph it. The gold to population adjusted national debt ratio has increased, on average, for about the last 25 years. You can see the gold bear market (1981 – 2000) and the bull market (2001 – 2011) and the correction (some will call it a bear market) since 2011. But the point is:
Summary Population adjusted national debt is increasing – inexorably. The gold to population adjusted national debt ratio will decline only if gold falls more rapidly than the national debt grows. Will that ratio decline? It would take a further large decline in the price of gold to make the ratio decline. But will gold prices collapse even further? Look at the following graph of the ratio calculated back to 1971. Does the bubble in the gold to national debt ratio in 1980 look similar to the increase in the ratio into 2011? Clearly not! Gold bubbled up from about $100 to over $800 in about 3.5 years back in 1976 – 1980. The rally from the October 2008 lows in gold to the August 2011 high was impressive but not similar to the 1980 rally. You can see from the graph of the ratio that the 2011 high was barely a "blip" on the graph compared to the spike upward in 1980. CONCLUSION
Alternatively, congress could pass a budget that drastically cuts spending, reduces the military, slashes spending on Social Security, Medicare, presidential golf excursions, White House staff, congressional staff, CIA spending, and 1001 other governmental expenses. If you find that scenario unlikely, consider buying gold and silver while the prices have been smashed down by our favorite High Frequency Traders. For more information on gold, read my book: "Gold Value and Gold Prices From 1971 – 2021." It is available here and here.
Gary Christenson | The Deviant Investor
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| Gold Daily and Silver Weekly Charts - Unchanged Posted: 22 Sep 2014 01:44 PM PDT  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 22 Sep 2014 01:31 PM PDT In his book The Postcatastrophe Economy, iTulip’s Eric Janszen notes that financial bubbles don’t repeat. That is, yesterday’s bubble is never tomorrow’s because hot money likes to chase the next big thing, not the last big thing. Which explains how US equities, government bonds, fine art, and trophy properties like London penthouses can all be sizzling while US houses, the epicenter of the previous decade’s financial orgy, just sit there. Some charts from the National Association of Realtors illustrate just how boring the US housing market has become: To summarize the first three charts, overall sales have declined year-over-year for ten straight months, prices are barely up from a year ago, and near-term trends imply more of the same. The fourth chart explains why: All the positive action is in high-end properties while the entry level part of the market is imploding. There are several reasons for this: 1) Today’s college students are graduating with so much debt that many can’t even conceive of buying a house. Instead, their choice is between a cheap apartment or a bedroom in their parents’ home. 2) US consumers, after a few years of deleveraging, are once again borrowing, but in large part this is to pay for necessities like gas and food. When they buy something discretionary, it’s now likely to be a new car. Auto loans are rapidly approaching the $1 trillion milestone achieved by student loans a couple of years back. 3) Back in 2004-2007, banks handed out home equity lines of credit (HELOCs) to pretty much anyone with a house and a heartbeat (heartbeat frequently optional). Those loans generally require only interest payments for the first ten years and then begin demanding repayment of principal. So the loans made during the housing bubble are now starting to step up, hitting their owners with hundreds of dollars of extra monthly payments at a time when they’re already strapped. For more see Why the Real Estate Market Remains Fragile. Rich folks, meanwhile, own the stocks and bonds that have soared lately, so they’re ready and able to diversify out of financial assets and into real stuff like million-dollar houses. Take these extravagant buyers out of the equation and the housing market for the rest of us is contracting at what looks like a steady 5% per year, with no end in sight. So what does this mean for the overall economy? Specifically, can a country as dependent on consumer spending as the US generate sustained growth when the one major asset owned by most families isn’t participating? The answer is probably not. For the wealth effect (rising asset prices leading people to spend more) to really get going, all the pressure is now on the narrow shoulders of the stock market. And so is all the risk. If stock prices were to correct from their current record levels, the impact would be directly painful for the 1% who are now buying those mansions, and at least scary for the 99% who aren’t losing on the stocks they were never able to buy, but can’t escape the ubiquitous headlines about “crashes” and “crises” and such. The net effect would be to snuff out the recovery and leave a desperate government with only one remaining weapon: a high-profile monetary shock designed to replace the scary headlines with a perception that our bold, innovative leaders once again have our backs. Japan has already reached this point (see Abenomics Approaches Moment of Reckoning), Europe is getting there (Pressure Builds on ECB Chief) and the US, unless housing turns around or stocks double from here, will be there soon. Welcome to the brave new world of global coordinated monetary debasement. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| How to Buy Your Own “Bread and Circuses” Posted: 22 Sep 2014 12:41 PM PDT For several weeks, the tragic soul of The Mogambo has been troubled by subtle undertones in The Force, inexplicably using an old Star Wars metaphor, which brings up the interesting question as to how a Jedi light-saber would fare against a couple of belt-fed .50 caliber machineguns at point-blank range. Other than pondering those kinds of deeply philosophical questions, it was the old "It's quiet… Too quiet…" kind of thing, where you are always nervously looking over your shoulder, and seeing enemies lurking in every shadow, every nerve on the razor's edge. Trigger fingers twitching, too, which is difficult to say five times quickly, which only proves the point. For instance, I started sensing strange vibrations in what people were saying, such as Paul Krugman, Janet Yellen and others, as concerns monetary policy. And when I call them up to demand an explanation, and maybe helpfully explain how they are mere Earthling idiots who don't know squat about economics, they won't take my calls! It's bread and circuses, alright, in spades! "Here's some money to buy your own food and circus!" Wow! I mean, I clearly tell the receptionist that I am the Fabulous Mogambo Genius (FMG) on the line here, and I am calling to explain to them how their whole idiotic Keynesian idea of Quantitative Easing has been a big, fat, flatulent bust, and I want to find out what they are going to propose to do next, as concerns monetary policy, and it better NOT be any more of that stupid Quantitative Easing crap, as I am prepared to clearly and loudly detail how they must be the biggest idiots in the whole world to actually believe that the profound inflationary and bankrupting stupidity of vastly increasing the money-supply (and thus vastly increasing debt), and then committing that same incredible, suicidal folly over the long-term, could possibly, highly-improbably, one chance-in-a-million, one chance-in-a-zillion years, work! But, alas, I never get through to anyone. Ever! Even after I CLEARLY explained to the receptionist who I am and exactly why I, the Fabulous Mogambo Genius (FMG), am calling, so as to hopefully speed things along. Even parsing their oily remarks through a Junior Mogambo Ranger Secret Decoder Ring (JMRSDR) yielded, alas, nothing. Thus, I am left exhausted and confused, with an increased sense of dread, as actually befits the situation, but knowing little else about what's ahead, monetary-wise. Nonetheless, I instinctively knew something BIG was up, as my furrowed brow, exaggerated startle-reflex, and a frenzy of buying gold, silver, and defensive armaments so colorfully indicated. And, thinking about it, with your heart pounding, covered in a cold, clammy sweat, you suddenly realize that, alarmingly, the only thing it COULD be is a new, colossal attempt by the Federal Reserve and the government to somehow, some miraculous way, some fabulous way, some glorious deus ex machina way, please, please, please let this new version of massive Quantitative Easing work, even though 2,500 years of global economic history, a sad tale of one dirtball government after another bankrupting itself, with or without creating paper money in its death throes, proves that it can't, and it won't. Of course, since I am the aforementioned Fabulous Mogambo Genius (FMG) of story and song, I always knew that the ultimate fate of grotesquely expanding the money supply to expand the size of government was to inexorably have to, in one fashion or another, relive the infamous "bread and circuses" policies of ancient Rome, the government desperately placating the teeming, impoverished masses, suffering as they are from rising prices, a large, oppressive government and abysmal living conditions, by giving them food and entertainment, which is a disastrous policy that always leads to Bad Bad Things (BBT). So, was I more paranoid and cynical than usual, or was something actually, you know, up. But what? Who knew that it would be brought to my attention by Zerohedge, with the chilling title "It Begins"? When I saw it, I thought I heard banshees wailing, and ravenous wolves howling in the distance, growing frightfully closer. Ever closer. "It Begins", I am sorry to say, is not the title of a terrific new horror movie, a grand and glorious gore-fest of bloody, gun-happy shoot-'em-up action, fiery explosions, high-speed car chases and hordes of mutant zombies who mostly look like beautiful lingerie models, only less clothed. Instead, "It Begins" refers, even more horribly and tragically, to an article in Foreign Affairs magazine, written by Mark Blyth and Eric Lonergan, of the Council on Foreign Relations, which is spooky enough. Unbelievably, the essence is "Print Less but Transfer More: Why Central Banks Should Give Money Directly to the People." Yikes! To save you the trouble of rubbing your eyes in complete disbelief, it goes on that "Rather than trying to spur private-sector spending through asset purchases or interest-rate changes, central banks, such as the Fed, should hand consumers cash directly." Giving cash away! It's bread and circuses, alright, in spades! "Here's some money to buy your own food and circus!" Wow! The authors, who are so wrong about so many important things in the article, are nonetheless absolutely right when they say "In the short term, such cash transfers could jump-start the economy"!!! The three concluding exclamation points were added by me, as a clever and clearly dramatic emphasis, to make sure that you completely understood that millions of consumers suddenly spending lots of new, free cash will certainly make the economy go!! Wow! What a boom it would cause! The most laughable part is when they said that giving people cash "wouldn't cause damaging inflation, and few doubt that they would work. The only real question is why no government has tried them." Hahahaha! I told you they were wrong about some things, and here are three at once, because, firstly, it certainly WOULD cause inflation, however you define "damaging." And, contrary to the laughable conclusion of the authors, nobody doubts that it would work! Nobody! Lots and lots of new money continually pouring into an economy would NOT make a boom? Hahahaha! And the reason that no government has tried it is because it is Stupid Writ Large (SWL), as in "No government that tried giving away money to the population lasted long enough to write it down." The authors thought they were so smart to anticipate the Disagreeable Mogambo Naysayer (DMN) loudly objecting, "Because terrifying inflation is guaranteed to ensue, you morons, and poor people would be more and more poor and starved, and they will all get testy about their kids crying from hunger, and they can't stay warm in the winter, or get out of the rain, and everything goes downhill pretty fast when people are rioting in the streets, and pretty soon you can't get a good pizza anywhere within miles." Instead of wincing and slinking away in shame at my cruel scorn, they write, hilariously, "Other critics warn that such helicopter drops could cause inflation. The transfers, however, would be a flexible tool. Central bankers could ramp them up whenever they saw fit and raise interest rates to offset any inflationary effects." Hahahahahahaha! Central bankers could give away more and more cash "whenever they saw fit," and yet there will be some glorious time when the Fed sees "fit" to stop giving away money and thus cause an economic slowdown, risking asset-price deflation that is leveraged a 100-to-1? Hahahaha! As Monty Python would say, "Pull the other one!" And raising interest rates to somehow sterilize a tsunami of cash? I care about interest rates when I am receiving more and more cash and price inflation is roaring? Hahaha! I'm busting a gut here! But jocularity and complete stupidity aside, somebody must be expecting some new income, as Chuck Butler of Everbank reports that "July Consumer Credit (read debt) grew by $26 billion, and June’s number was revised upward to $18.8 billion from $17.2 billion. But, $26 billion!" He, as well as I, characterizes it as "off the charts folks, as if 2008 never happened! What the heck is going on around here? Doesn’t anyone ever learn lessons?" Dave Gonigam, editor of The 5 Min. Forecast, parses it down to, "Of that total, $5.4 billion came in credit cards — a surge previously unseen during the anemic 'economic recovery' these last five years." "Of the remaining $20.6 billion, most of that was in auto loans, very little in student loans." …five times as many U.S. workers are providing services as are employed manufacturing something. So do these people suddenly have jobs, explaining their spending spree? No. In fact, even fewer people have jobs. And if you want some bad news on the employment front besides the usual upsetting stories about high unemployment and how jobs are disappearing faster than a pizza at a Super Bowl party, the booklet titled "Pocket World in Figures," from The Economist magazine, has a table titled "Largest Manufacturing Output" which puts the United States at the top of the list, at $1,771 billion. This puts us a measly $14 billion ahead of China, which is bad enough, but when you look at the next chart down the page, under "Largest Services Output", the United States is again number one, at $10,574 billion, while the second place is held by Japan at a measly $3,904 billion, and China at a distant $3,172 billion. In short, five times as many U.S. workers are providing services as are employed manufacturing something. Probably has something to do with explaining our $40 billion-per-month trade deficit! Hahaha! But lamenting the gaping trade deficit aside, it is this terrifying kind of weird, economy-distorting "services" thing, and the bizarre thing about giving money away to people, that will almost certainly lead to new fiscal policy accommodating them both, since behavior that was once considered idiotic, suicidal desperation, is now the only way out. Probably connected with a new war, if history is any guide. And when the government starts doling out all that luscious cash, and calling it our patriotic duty to spend all this new cash, it's party time! Par-tay! And if this "give money directly to people" thing plays out even vaguely as proposed, then you will happily have some time left to accumulate lots of gold and silver during the Big Monetary Party (BMP) that will surely follow, and you will have some time to think and idly daydream of what their prices will be at the calamitously inflationary end of the aforementioned Big Monetary Party (BMP), when everything else is ashes and heartache. Astronomic! Whee! This investing stuff is easy! Regards, The Mogambo Guru P.S. I say, “Whee! This investing stuff is easy!” as a way to grab your attention because unless you’re investing in gold, silver and oil — in the face of so much monetary insanity from the damnable Federal Reserve — you might wrongly assume that “Boo! This investing stuff is hard!” which of course it’s not… Of course, you would have already known that if you’d been a subscriber to the FREE Daily Reckoning email edition. So before you make any further rash decisions with your money, you’d best sign up for FREE, right here, and learn how you can start discovering real, actionable ways to grow your wealth in any kind of market.       | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| They Do Ring A Bell At The Top: Alibaba Proves Wall Street Is Off Its Rocker Posted: 22 Sep 2014 12:11 PM PDT Submitted by David Stockman via Contra Corner blog, They do ring a bell at the top. On Friday Alibaba gained $65 billion of market cap in 5 minutes! And that was on top of the $170 billion IPO price - a valuation that was not all that shabby to begin with. In fact, BABA weighed in for the opening bell at 20X its $8.6 billion in sales. US $2.5-10 / Piece ( FOB Price) Well, the above red hot multiple was not actually with reference to the company's results, but to its drop-box financials. That is, before the day was over it was trading at 27X the LTM sales posted for a shell in the Cayman Islands - an entity on the word processor of a law office located there which may or may not receive actual cash dividends and honest accounting statements from a myriad of entities that do countless things in China. Ah, yes, in China - the most stupendous bubble of unsustainable construction, borrowing, speculation and corruption known to the pages of history. So with regards to BABA's $230 billion market cap at week's end, you can say this: None dare call it price discovery! What it shows is that Wall Street is well and truly off it rocker. The Chinese swindlers behind BABA didn't even have to tap their home market. These preposterously over-valued shares were sold overwhelmingly to Wall Street - to the gamblers, speculators and robo-traders that have occupied what was once a reasonably honest capital market. (Mr.Ma started the company in 1999 with $60,000 raised from around 80 friends in Hangzhou) Its not just that the $25 billion raised in the offering will go in part to insiders and in part to a blind pool for the acquisition of anything operating in China or not in China. That isn't the real red flag. The real one is, well, an actual red flag. Namely, the utterly unexamined idea that China is just another capitalist economy like the US, UK or even Italy, for crying out loud; and that it is galloping off into a glorious future and a middle class consumption orgy that will make what takes place daily in America's 3,800 Wal-Marts look diminutive. The Wall Street brokers thus threw up a storm of statistics about BABA's GMV(gross merchandise volume) of $300 billion being 3X that of Amazon. And that the number of customers at 279 million is more than the number of adult Americans. Then there are also 8.5 million sellers, 14.5 billion annual orders, and also customers that are eagerly adopting mobile purchasing—a metric that is up 38% to 188 million in the last six months yet still only a small fraction of China's 700 million internet users. In short, the pitch is a modern version of "a billion lamps to China". Well, I'm sorry kids. China is a monstrous house of economic cards and an inherently unstable polity that will blow sky high in a matter of time - and probably not that much more time. You can't capitalize what is nothing more than a proxy for everyday retail commerce in China's maniacal economy with a PE meant for real capitalist enterprises that have invented something of profoundly transformative significance, such Google—- or in their day, Microsoft, Intel, IBM and the Ford Motor Company. By contrast, Alibaba is a purely derivative mass merchant of e-commerce. It is a Chinese copy of Amazon, eBay, PayPal, YouTube, Twitter and the New York Yankees—-all rolled into an opaque and convoluted financial pyramid that would have made Goldman Sach's ill-fated schemes of 1929 look reasonable. Moreover, even its Cayman Island grade financials prove that there is absolutely nothing unique and non-replicable about the business model of this purveyor of stupendous volumes of cheap stuff to China's retail masses. Stated differently, there is no known capitalist market in which a mass merchandizer with no inventories, no stores, no warehouses, no patents, no state monopoly and virtually no fixed assets whatsoever is worth $230 billion. Indeed, BABA has virtually no working capital and the only assets visible on its balance sheet are cash, $300 million worth of un-depreciated computer software and equipment and $6 billion of intangibles and advances spread among the archipelago of entities that comprise the house which Jack (Ma) built. Yes, its all new age retail–that is, an internet based purveyor of e-commerce. But that's just the point - there are no barriers to entry and plenty of competition. In fact, Alibaba is just a cyberspace broker that even in a real capitalist economy would have an impossible time warding off competition and erosion of its currently super-fat first mover margins. And it surely does have rambunctious competition in China's essentially lawless internet space - such a Tencent Holdings and the 500 million users of its smartphone messaging apps services—potentially all of whom are being converted to on-line shopping. That's very different than Amazon, for example, which carries $8 billion of inventories and $12 billion of fixed PPE - mainly in its massive and virtually irreplicable warehousing and distribution system. That's not just a barrier to entry - its a veritable bricks and mortar wall. But here's the thing. BABA isn't remotely worth $230 billion because even in China its 40% broker's margins cannot possibly endure the tsunami of competition it is likely to face - even in the near future. But honest PE multiples and capitalization rates are driven by the longer-term future, and China's middle class doesn't have one! This is just another version of Japan Inc. - a state-built house of debt, export mercantilism and fabulous over-investment that eventually came to a dead stop 20 years ago. And Japan at least had some rudiments of true capitalism such as law, contracts and some vestiges of market discipline. As to the case of China's red capitalism, however, there is no place in the history books where can you find a booming economy that is so artificial, fragile and prone to cataclysmic accident. It has not grown organically from the grass roots owing to capitalist enterprise. Not in the slightest. Instead, it has been concocted from the center by communist party bureaucrats who discovered the miracle of an unhinged printing press; who adopted the economic arithmetic of Keynesian GDP accounting under the slogan "if you build it, we will count it"; who created a vast pyramidal apparatus of credit distribution down a cascade of corruption that is pleased to call itself a banking system; and which is now swamped in mindless, debt-fueled speculation and building without any semblance of economic discipline, efficiency or rationality. Folks, that is how a backward economy which was until recently run according to the precepts of Mao's little red book managed to balloon its total credit outstanding from $1 trillion to $25 trillion in just 14 years after the turn of the century. That is how an orgy of construction resulted in more cement production in China during 2012-2013 than in the USA during the entire 20th century—-a time which witnessed the building of the New York subway, the Hoover Dam, the vast expanse of Army Corps of Engineers waterways, the Interstate Highway system, the sprawl of American suburbia and its 13 billion square feet of mall space, among countless others. It is also how China ended up with upwards of 70 million empty apartments, thousands of miles of bridges and roads that are virtually unused, notorious and proliferating ghost cities, and thousands of miles of hastily built high speed railways that are unsafe and mired in corruption. It is also the well-spring of a precarious system of local government finance that is based on little more than monumental speculation and inflation of the price of the lands which were seized by the state 65 years ago. And the list goes on and on. That there will be a thundering collapse of China's stupendous borrowing and building spree is only a matter of if, not when. And in that event, the mirage of China's booming middle class will become painfully evident. Indeed, it is the very same frenetic buyers of stuff on BAMA websites who have jobs which will disappear when the building boom stops and who have asset ledgers which will violently deflate when China's towering debt bubble finally bursts. So why did Wall Street capitalize an opaque mass merchant operating in a precarious economy at 27X sales? The answer is that Wall Street is a momentum driven casino that is now over-valuing everything that moves and all that stands still. That's the ultimate evil of monetary central planning. Having destroyed honest price discovery in the financial markets, the Fed now "accommodates" the speculators one meeting at a time - in deathly fear of a hissy fit that will bring down the entire phony edifice of insensible asset inflation that it has midwifed since the last financial crisis. You would think that absurdities like the Alibaba IPO would finally get the attention of our clueless monetary politburo. But apparently not. As they watch the market climb the precarious chart pattern shown below, you wonder where they think it will all end. Unfortunately for the American people, the nirvana of Keynesian full employment does not suggest itself as one of the possibilities. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Two Shocking Charts Expose The Stunning Collapse In The US Posted: 22 Sep 2014 12:06 PM PDT  With the Dow still trading above 17,000 and the U.S. Dollar Index holding near 85, today James Turk sent King World News two shocking charts that expose the stunning collapse which has taken place in the United States. Turk also discussed how a bankrupt company fits into the puzzle and what is happening with gold and silver.This posting includes an audio/video/photo media file: Download Now | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 22 Sep 2014 11:23 AM PDT China Moves To Dominate Gold Market With Physical Exchange Posted Monday, 22 September 2014 Shanghai Gold Exchange International Board China is slowly moving to dominate the global gold market and it is important to join the dots regarding a few key recent developments in China relating to gold. When the International Board of the Shanghai... Read more » The post In The News Today appeared first on Jim Sinclair's Mineset. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Money printing will overwhelm any debt deflation, Embry tells KWN Posted: 22 Sep 2014 11:13 AM PDT 2:12p ET Monday, September 22, 2014 Dear Friend of GATA and Gold: There won't be any debt deflation in the United States, Sprott Asset Management's John Embry tells King World News today, because the central bank will print money to infinity to avoid it and end up instead with hyperinflation. Embry also remarks about the pounding gold and silver keep getting at illiquid moments in the markets. His interview is excerpted at the KWN blog here: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/9/22_Jo... 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: Canadian Investor Conference http://cambridgehouse.com/event/31/canadian-investor-conference-toronto-... New Orleans Investment Conference https://jeffersoncompanies.com/landing/noic2014?IDPromotion=614011014520... Mines and Money London http://www.minesandmoney.com/london/ * * * 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: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BofAML Repeats Art Cashin's Concerns Of A September Seasonal Slump Posted: 22 Sep 2014 10:29 AM PDT Having cautioned investors this morning of the historical tendency for market reversals on September 22nd after hitting all-time highs, UBS' Art Cashin's warning has been echoed by BofAML's Macneil Curry who notes risk assets are set to correct as negative seasonals dominate the S&P500 this week. This is bullish for Treasuries, Curry adds.
As BofAML notes,
And here is the even more ominous warning from UBS' Art Cashin that markets tend to crash on September 22 after all-time highs... based on a 2009 note from Barrons' Randall Forsyth (who cites work by Paul Macrae Montgomery)...
Cashin ends - "Crazy? Maybe, but forewarned is forearmed." | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gold Mining "Hurt Long-Term", Output "Peaking in 2014" Posted: 22 Sep 2014 10:08 AM PDT Gold mining producers cutting exploration, M&A spending as profit margins shrink... GOLD MINING output worldwide is set to peak and then "plateau" in 2014, according to the leading data analysts, as today's lower prices force producers to cut exploration spending in a bid to boost profit margins. "It seems inevitable," says the new Gold Survey 2014 Update from Thomson Reuters GFMS, that the mining industry's response to 2013's gold price crash "will be detrimental to mine supply levels in future years." Forecasting a 10% drop in the average market price to $1270 per ounce for full-year 2014 (currently at $1290), "The mining sector is increasing production this year," says the consultancy, "with a number of important projects coming into production and/or ramping up to full capacity, having benefited from investment flows in earlier years when prices were much higher." But new investment is now being cut back, meaning that "longer term, the production profile is likely to come under pressure" with 2014 marking what Thomson Reuters GFMS calls "a cyclical top for mine production." Over the first half of the year, global gold mining output rose 4% worldwide from January-June 2013, led by increases from China, Australia and Russia – the top 3 producer nations. Gold mining output fell however in the next 3 major producers – the United States, South Africa and, most sharply, Peru. There, the giant Yanacocha project, the world's biggest operational gold mine at its peak a decade ago, saw the quality of gold ore drop 65% from a year before. Better "husbandry" and falling energy prices mean the average cash cost of mining 1 ounce of gold fell 6% by mid-2014 from a year before, Thomson Reuters GFMS explains. But thanks to the slump in world market prices, the industry's basic profit margin has fallen 25% year-on-year, it says. Attempting to cut costs further, the gold mining industry's "closures or suspensions have so far been limited to small or ageing operations," the report says. But there have also been "deferrals of major development-stage projects", because the last "turbulent year" in precious metals at one point saw gold's market price dip below the mining industry's average cost of production when exploration and new development expenses are included. In the stock market this has also led to "a market sell-off that has severely depressed mining valuations." Mergers and takeovers remain "anemic", with no "blockbuster consolidation plays" despite continued approaches from Newmont – the world's No.2 gold mining company – to the world No.1 Barrick aimed at saving $1 billion per year across their operations in Nevada, USA. Today's lack of corporate activity in the gold mining sector, says Bernard Dahdah at French investment and bullion bank Natixis's London office, contrasts with the "mine acquisition frenzy" of the decade-long bull market in gold prices. Then major companies were "typically purchasing mines at the higher end of the cost curve." Miners also failed to protect themselves against any drop in prices, remaining "unhedged" after finally closing in 2009-2011 the huge forward sales made at prices 80% lower at the turn of the century. Gold producers, says Dahdah, "are now resorting to consolidation at the lower end of the cost curve. Exploration budgets are also being cut back." Cost-cutting across the base metals sector is being driven further by slowing global demand, reports specialist news and data provider Platts. "Companies are not only becoming leaner and meaner because the old regimes...became too profligate when commodity prices were high," writes Paul Bartholomew, Platts' managing editor for steel in Australia. "Rather, they are responding to a slowing China and subdued global economy." | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Ancient Secret to Thriving in Any Environment Posted: 22 Sep 2014 09:47 AM PDT "The wise man confines his operations to his own concerns, having his attention fixed on his own particular thread of the universal web." We've mentioned Marcus Aurelius once before in our digital leaves. Regarded as one of the greatest texts on philosophy, his Meditations is chock-full of timeless wisdom. We find ourselves returning to it at least a couple times a year. Author Ryan Holiday describes it best: It's "the definitive text on self-discipline, personal ethics, humility, self-actualization and strength." If you haven't read it, check out Gregory Hays' translation. Try not to be profoundly changed by it. By taking full responsibility for your own life, Aurelius explains, you'll make the maximum possible contribution to the greater good of the universe. "Does the sun," he asks, "think to do the rain's work?" On top of being awesome… Meditations is widely considered to be one of the greatest texts on Stoic philosophy. The modern-day thinker especially can benefit from Stoicism's perception: It emerged out of a present-day familiarity… Chaos. While Athenian city-states were crumbling before Greece's eyes, it was a way of coping with the constant upheaval. Over time, Stoicism refined itself into a way to master chaos… and even to thrive in it. It became a stalwart counter to the idea that chaos meant the end of the world. In fact, chaos was only the beginning… a way for nature to clear out the old and bring in the new. So profound were its ideas, Stoicism has influenced the likes of Shakespeare, Frederick the Great, Adam Smith, JD Salinger, Tom Wolfe, and… some would even say… modern-day libertarianism. And the sound still rings, calling to those with ears to hear it. In contrast to Plato and Aristotle's aristocratic airs, who mostly regarded the populace as swine to be shepherded… or a dangerous crowd to be tricked and enslaved… Zeno of Citium, Stoicism's beloved founder, spoke to the rich and poor as one, teaching that society was less functional when split into classes. Anyone who wants to become wise, wealthy, and happy, he taught, should have the opportunity to do so. And to find that wisdom, wealth and happiness? "Stoicism," says Zeno's Wiki page, "laid great emphasis on goodness and peace of mind gained from living a life of Virtue in accordance with Nature." In his The Economy of Mind, written in 1982, Warren Brookes seizes the spirit of Stoicism in one passage… "The natural ecosystem is so… remarkably interrelated that even the best-intentioned efforts to regulate this environment… invariably bring about reactions and distortions throughout the system. While these accommodations are frequently painful and difficult, they are usually better in their long-term result, because nature tends to preserve, protect, and strengthen its own creation." The Stoics taught that the world itself achieves a balance. And a natural balance always results in something better than a forced "solution" could bring. It has a similar scent, no? In light of current events, the Stoics crossed our minds… A five minute peruse of the headlines won't betray the truth: We suffer no shortage of impending chaos. Geopolitical dynamite with short wicks in Iraq… Syria… Ukraine… Libya… (And smaller, but no less erratic flames in others)… The constant pounding threat of cyber-attacks, cyber-terrorism (that could knock out essential services anywhere), cyber-espionage (someone could be watching you right now), cyber-warfare, and malevolent cyber-crimes. No matter what corner of the earth you're rubbing your chin from, we're all tethered enough to be screwed. And, let's not forget: The looming fallout from yet another economic collapse. Just one flick of the fingernail could send the house of cards toppling to the unkempt lawn below. And we're not just talking about the Western countries. No matter what corner of the earth you're rubbing your chin from, we're all tethered enough to be screwed. "China, believe it or not," our HQ leader Addison Wiggin says, "is in more of a credit bubble than the United States." And, he says, a collapse in China is just one of many potential catalysts. Addison has uncovered three of the most likely possibilities to trigger a global financial landslide worse than 2008. (Side note… To ensure you’re able to gain access to Addison’s full assessment of what’s to come, sign up for Laissez Faire Today, for FREE, right here.) The world is topsy turvy. The plates are wobbly… and losing more and more balance by the day. As individuals, you and I can't do much about these things. They're well beyond our control. The first step to sanity is recognizing this simple fact. All we can do is be aware of these dangers. And, like the Stoics would suggest, have our attention fixed on our own "particular thread of the universal web." All we can do is work to achieve that which we can contribute to ourselves, while avoiding being pulled by the world's ubiquitous drama. So, today's questions… Questions of the day: What constructive action can you take to enhance your own life? Is there something weighing you down that you have no control over? Can you accept it as such and simply shift your focus? Email us your answer, if you wish, here: Chris@lfb.org Whatever your answers, think about what the unintended results could bring: Often, they will mean enhancing others' lives along the way. Call us blessed… We're surrounded by illuminated minds here in our Baltimore HQ. And, each one, in one form or another, has devoted his or her life to enhancing the lives of others. When cast together, they can help provide us with actionable solutions and sharp knowledge to master nearly all our modern-day challenges. Over time, you'll get to know them all. Stay tuned. Regards, Chris Campbell Ed. Note: The themes in Chris’ FREE e-letter, Laissez Faire Today, center around three things: Freedom, self-reliance, and action. That means current subscribers to Laissez Faire Today receive daily tips, tricks, and insider secrets on how to live their best possible life — and unabashedly share their uniqueness with the world. And now you can join them, absolutely FREE. Don't miss a single episode. Sign up today, right here.     | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| John Embry On The Wild Action In Gold, Silver & Other Markets Posted: 22 Sep 2014 09:04 AM PDT  Today a man who has been involved in the financial markets for 50 years spoke with King World News about the wild action in the gold, silver, and other key markets. John Embry, who is business partners with billionaire Eric Sprott, also discussed the madness of Alibaba, the danger of Ebola, and more in this powerful interview.This posting includes an audio/video/photo media file: Download Now | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tesco Super Market Giant Fast Disappearing Down a Financial Black Hole Posted: 22 Sep 2014 07:51 AM PDT Tesco, Britain's giant supermarket chain continues in its death spiral trend towards eventually becoming a mere fraction of its former size as barely a few weeks after its latest profit warning of a 25% collapse, today we find out that its financial controllers (bankers) and accountants can't control or count anything as the management wakes up to find that £250 million of expected profits no longer exists the news of which wiped out £2 billion in market capitalisation as panicked stock holders belatedly start to jump ship as the mega-corp is literally disappearing down a financial black hole. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 22 Sep 2014 06:10 AM PDT GOLD BULLION prices sank and then rallied to unchanged in busy Asian and London trade Monday, recovering 0.6% from new 2014 lows as world stock markets fell and commodity prices sank. Iron ore joined soybeans and corn at new 4-year lows as Europe's Brent crude oil contract fell through $98 per barrel. Major government bond prices rose, nudging longer-term interest rates down ahead of Tuesday's latest Chinese manufacturing data. "Gold continues to search for a base, and the $1180 double bottom gets ever closer," says Mitsubishi's analyst Jonathan Butler, pointing to the 3-year lows hit at end-June and end-December 2013. "Friday saw the [precious metals] complex continue its collapse," says Marex Spectron's David Govett in London, "and find virtually no support. "Yes, there was some physical demand evident in gold at the lower levels, but this paled into insignificance with the amount of selling." Already by Tuesday last week, latest data from US regulators the CFTC show, speculative traders as a group had raised their bearish betting against gold on Comex futures and options to the largest level of 2014 to date. Speculative short positions in silver hit their second highest level since 1995, beaten only by start-June's record at four times the twenty-year average. The Shanghai Gold Exchange's new-look website today showed prices for gold bullion delivered in China dropping much closer to international quotes on Monday, cutting last week's $5 premium nearer $2 per ounce on strong trading volumes. The SGE's international bourse however – launched to much fanfare last week – failed to record a price for its key 995-fine gold contract after showing very quiet volume Friday. "Right on the Shanghai open," says a note from traders at Swiss refiner MKS, "some aggressive selling in silver came in, with [prices] trading in a straight line [down]." "It looks like we can see further long liquidation" for bullish silver derivatives contracts, Reuters quotes a trader based in Sydney, Australia. "The next key support is at $16.60...If we do trade under $17, there will be significant stop-loss orders around that level." Silver prices have now fallen in 9 of the last 10 weeks, notes a technical analysis from Scotia Mocatta, the London market-making division of Canada's Scotiabank. In gold, "Weekly momentum indicators are suggestive of further acceleration, and we anticipate further decline, expecting a test of the [New Year] low of $1182." Gold bullion held to back shares in the SPDR Gold Trust (NYSEArca:GLD) – the world's largest exchange-traded fund by value at its 2011 peak – shrank Friday to the smallest quantity since December 2008. Down almost 3% from the start of this year to 776 tonnes, the GLD's gold bullion backing has now shrunk 42% from its peak at 1,350 tonnes at the end of 2012. Silver holdings, in contrast, have risen to new all-time highs in the giant iShares trust (NYSEArca:SLV), reaching 10,589 tonnes and swelling almost 6% since this time in July. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Faber: “A Bubble In Everything, Everywhere” Posted: 22 Sep 2014 05:48 AM PDT Marc Faber, the purveyor of the Gloom, Boom, and Doom report, talks about the current course of asset prices and how things might end badly someday as the Federal Reserve contemplates raising interest rates and the U.S. dollar continues to strengthen. As detailed in Dr. Marc Faber's three bold predictions for 2014, his crystal ball gazing [...] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 22 Sep 2014 05:23 AM PDT MUST READS Alibaba IPO now the world’s biggest IPO – Reuters The market’s next Fed fear: The exit strategy – CNBC 10 warning signs of global financial meltdown – Telegraph G-20 Warns of Potential Market Risks Amid Uneven Growth – Bloomberg Joe Oliver says G20 sees 'significant economic challenges ahead' – Financial Post In Scotland and Beyond, a Crisis of Faith [...] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 22 Sep 2014 05:20 AM PDT End of empire is a difficult time for two groups, investors and patriots. A hundred years ago the U.S. took the economic baton from England to become the most important economy in the world. No doubt some loyalists refused to recognize the shift that was taking place. From then on the world began to denominate economic activity in U.S. dollars. Holding British pounds might have been the loyal thing to do, but it was not a wise investment decision. Today, a similar situation exists for the dollar. Dollar-based investors may now be facing the "last hurrah" for the dollar, and should not ignore that possibility. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest Rate Doves Don't Know History Posted: 22 Sep 2014 05:13 AM PDT A wise saying goes like this; "Those who do not remember history are condemned to repeat it." So ask yourself; what is the fate of those who seem to have absolutely no recollection of events that happened just a few years ago? We are nearing the end of 2014, and to the debt markets, it is almost as if the 2008 economic collapse never happened. It appears that borrowers and lenders are suffering from a severe case of collective amnesia. Yes, consumer debt levels took a slight breather in 2009-10. But today, total consumer credit in the U.S. has risen by 22 percent over the past three years, and at this point 56 percent of all Americans have a subprime credit rating. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| China Moves To Dominate Gold Market With Physical Exchange Posted: 22 Sep 2014 05:05 AM PDT Shanghai Gold Exchange International Board China is slowly moving to dominate the global gold market and it is important to join the dots regarding a few key recent developments in China relating to gold. When the International Board of the Shanghai Gold Exchange (SGE) was launched last Thursday September 18 during an evening trading session, it was notable that the first transactions were put through by a diverse group comprising HSBC, MKS (Switzerland), and the Chinese banks, ICBC, Bank of China and Bank of Communications. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| What Insider and Institutional Trading Are Telling Us Posted: 22 Sep 2014 04:14 AM PDT Dear Reader, I’m still in San Antonio, Texas, at the Casey Summit as we wrap up this issue of Metals & Mining Monday. The show has been a lot of fun—especially meeting many good friends among our readers—but it has also been extremely valuable. For just one example, I found the hard, independent data presented by Leland Miller of the China Beige Book to be quite eye-opening. I’ve long distrusted official figures but didn’t know where to get data free of political bias. Now I know. What did he tell us? Well, the short version is that China’s growth slowed much faster last quarter than the official numbers say, and several metrics are flashing never-seen-before warning signs. Given China’s importance in the global economy—and to the metals markets—this is well worth thinking about. If you were unable to attend the Summit, you can still benefit from Leland Miller’s insights, as well as those of all our other speakers, by ordering your own copy of the audio recordings of the entire Summit. You can even get the recordings via instant download, so you don’t have to wait for CDs in the mail. You don’t get to ask your own questions and shake hands, of course, but the essential data are all there. Bagging this content at a fraction of the cost of flying to Texas and hearing the material live is a no-brainer investment, in my view. Speaking of investment data, Casey metals team researcher Laurynas Vegys has a review of insider and institutional action in our markets for us this week. What and how these important players are buying and selling may surprise you. The article is well worth the time it takes to read. Sincerely, Louis James P.S. Trying to keep up with the 21st Century, I've just created a Twitter account, which you can follow for more real-time observations on metals and mining, broader markets, and the world at large. I welcome you to look me up: L @duediligenceguy
What Insider and Institutional Trading Are Telling UsLaurynas Vegys, Research Analyst When analyzing a company, we often look at shareholder ownership. Knowing how much of a company is owned by insiders helps us judge the level of support those who know the most about a company are willing to give its stock. Generally, if insiders own big chunks of the company’s share float—especially if they paid cash for them—we have greater confidence that management believes in the company’s power to deliver for shareholders. On the flip side, it speaks volumes if a company’s management has little or no skin in the game. Institutions are another important shareholder group, as they tend to have deeper pockets, greater trading volume, and promote what they own. So if institutions own a significant slice of a company’s shares, we take it as a vote of confidence. The third group, dubbed “public and other,” is largely the retail investor. So who owns our stocks now? The Bird’s-Eye ViewThe new year got our stocks off to a good start. Although the momentum wasn’t fully sustained down the road, the weakness in the resource sector has undoubtedly abated relative to 2013; the TSX and TSX-V Composite Indexes are up 13.7% and 3.6% year to date (YTD) respectively. Let’s see how the ownership structure has changed for the two major Canadian stock indices since last year. (Note: the percentages shown in the charts for the TSX and TSX-V do not total 100. A small fraction of the total ownership structure was excluded.) The bigger picture for the TSX-V has changed little over the last year. As one might expect given the bearish sentiment in our market, institutional ownership remains in a decline, down 1.8%. While not a major leap, it’s good to see that insider ownership has increased by 0.5%. Contrast that with the 0.1% drop in insider ownership for the S&P 500 (down to 2.7% in 2014 from 2.8% in 2013). That may seem tiny given the overall capitalization of the Index, but it speaks of millions worth of capital fleeing for greener pastures. The change for the TSX is much more pronounced, with institutional ownership up 13.5%, a whopping 45.7% increase from the prior year. Needless to say, this has more than offset the 9.3% fall in public ownership. Insider ownership has seen its share drop by 35.6% over last year. That large fall, however, reflects a mere 2.6% dip and is relatively modest when compared to the buying frenzy undertaken by institutions. Divergent PathsIn sum, the TSX has seen increased institutional support, though less insider buying. Conversely, the TSX-V has undergone a contraction in institutional purchases but has grown its share of insider buying. So how do we explain these diverging trends? First, when we last crunched the numbers in 2013, we found a considerable drop in institutional buying that year, shrinking by 11.8% (down from 41.3%) relative to 2012. This makes the 12.8% rebound now unsurprising, especially considering the TSX’s gradual but steady rise YTD. In contrast, TSX insider purchases pretty much ended up right back where they left off in 2012—at 4.7%—despite the upswing in 2013. This too could be due to the improving market sentiment this year; as stocks on the TSX rallied, insiders (or at least some of them) started to cut back on their holdings. The TSX-V, on the other hand, has clearly followed an inverse trend of shrinking institutional support yet steadily growing insider purchases. Our take is that as institutions scaled back their holdings, insiders tempted by low prices were the first to step in and pick up the slack. Remember that the TSX-V has trailed its older brother, the TSX Index, in terms of YTD growth by 10.1%. On average, that translated into better bargains for savvy investors. Ever since the first time we undertook a similar survey, this behavioral trend has proven to be more consistent than the changing patterns of institutional and insider buying (and selling) on the TSX—an upper-tier market, with larger and supposedly more stable companies. The PortfolioOn average, insider holdings of International Speculator portfolio stocks are 5.9%, up 0.4% from last year. Likewise, institutional ownership is up from 19.5% to 21.4%. The public (and “other”) controls 60.6% of shares outstanding, down 2.3% from 2013. In a nutshell, we like that management of a lot of our companies has been increasing its amount of skin in the game and demonstrating commitment to our investments. It’s worth noting, though, that of 31 companies we analyzed, three stood out as clear outliers, boasting insider holdings two or more times the portfolio average. Of more interest is the fact that all three companies have long been identified as International Speculator 10-bagger (viz., X and Z) and 5-bagger (Y) candidates by Louis James. Management increasing their own stakes while the market is down is pretty much as strong a vote of confidence as it gets. This confirms our views regarding the companies’ prospects, and shows management interests aligned with those of their shareholders. Out of fairness to paying subscribers, I can’t give away the names of these three companies. But you can find out all about them—plus gain access to our 5-bagger and 10-bagger lists—without any risk whatsoever. Take us up on our 100% satisfaction guarantee and try Casey International Speculator for 3 months. Love it or get your money back—it’s as simple as that; and even if you cancel, you get to keep all the newsletter issues and special reports you received. But act quickly: The current breather in the gold market could be the last great buying opportunity before it really takes off. Click here to get started. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Millenial Cult Of Global Warming Posted: 22 Sep 2014 01:19 AM PDT What is a Millenial Cult? Remember the Y2K hysteria in 2000? Or the Maya 13th Baktun of December 2012 after which the world would surely end? They threatened “potted disaster” but in those two cases the political handle was hard to spot, even by seasoned conspiracy theorists. Unconvincing attempts included claims that the 13th Baktun coincided with particularly intense experiments in the US HAARP (high frequency auroral research) program, which would cause complete collapse of all electric power grids, followed of course by the declaration of martial law and the start of the New World Order, which itself is an elite millenial cult – like global warming. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tell Us, Christos Doulis, Can Gold Act as a Safe Haven Again? Posted: 22 Sep 2014 01:00 AM PDT PI Financial mining analyst Christos Doulis says six years ago when the financial crisis was in full swing, safe-haven buying made gold skyrocket. Today, the fear component is down, as is the price of gold. That is why Doulis believes investors need to own bulletproof, low-cost names that can survive this environment. In this interview with The Gold Report, Doulis discusses some M&A possibilities and points to management teams getting the most out of their low-cost precious metals assets. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Counter-Intuitive Rise of the U.S. Dollar Posted: 21 Sep 2014 05:00 PM PDT As things get dicier globally, assets in periphery nations typically get dumped as mobile capital flees risk and migrates to lower risk core nations and currencies.              |
As expected, immediately following its Wednesday speech, the Fed went on with its market regulating policy in order to send positive signals to the markets and to maintain the trust of investors.
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