Saturday, December 31, 2011

Happy New Year to dear readers of this blog

Thank you for reading, and may this next year and future years be healthy and happy for you.  As always, live by the Boy Scouts motto:  Be Prepared.

Oil May Rise as Iran Threatens to Block Strait, Survey Shows

Thursday, December 29, 2011

U.S. Fifth Fleet says won't allow Hormuz disruption

Update On The "Non-Printing" ECB's Parabolically Rising Balance Sheet

This is just massive QE in disguise by the ECB.

Art Cashin Exposes The Behind The Scenes Panic In Europe

Former Fed VP Accuses Bernanke Of Bailing Out Europe Via Currency Swaps

Paper vs. Physical

Commodities prices are getting hammered--including precious metals, because the collapse of the Euro is becoming more apparent, causing the (transient) rise in the USDollar.  Spot prices for gold and silver are plummeting, yet the premiums for physical bullion and coins are widening, suggesting shortages still exist.

One has to ask oneself, why spot prices are dropping, yet supply is still tight, and prices for the physical metals haven't dropped accordingly.  The answer is the paper markets are being manipulated, even in the face of physical shortages.  The margined weak hands are liquidating.  Strong hands are holding and even adding via dollar cost-averaging.

Tuesday, December 27, 2011

Jim Sinclair on gold

"Let me tell you that when this year is over, the only hands left holding physical gold and gold shares are the strongest hands on the planet. Every possible weak hand has been shaken out. Every person with emotions even latently capable of overwhelming their intellect, overwhelming their judgement, will have already been overwhelmed. The people who are left are people who will never give up their positions.” — James Sinclair

IRAN: 'Not A Drop Of Oil Will Pass Through The Strait' If Sanctions Increase

Obama to ask for debt limit hike: Treasury official

Monday, December 26, 2011

COMEX: The March to Irrelevance

Exclusive – Mark Cutifani CEO of $16B AngloGold Ashanti: “Major Buyers Are Finding It’s Hard To Get Physical Gold”

Are the brokers broken?

Note the date of this analysis.

China, Japan to Back Direct Trade of Currencies

This is another nail in the coffin of USDollar hegemony.  The impact of the USDollar losing its global reserve currency status will be loss of purchasing power and lower standard of living for US citizens.  Need proof?  Look around.

China Insolvency Wave Begins As Nation's Biggest Provincial Borrowers "Defer" Loan Payments

The nightmare after Christmas

Friday, December 23, 2011

Are You Tempted to Sell, or Eager to Buy?

December 2011 – The Smiling Faces of Ben Bernanke & Marc Faber
Dr. Ben Bernanke went to school and never left. He is an academic who has never worked in the private sector yet controls the fate of trillions of Dollars, Euros, Yens and Pounds. Today he is smiling. Dr. Marc Faber also went to school, but he didn’t stick around. He has worked exclusively in the private sector and today is considered one of the most prescient investors on the planet. Today he is also smiling. To better appreciate all the smiling, one must understand exactly what happened or better still, what didn’t happen in Brussels last week. In the eyes of Dr. Bernanke and Dr. Faber, the historic 17th emergency summit meeting by the Europeans to solve their money problems went off without a hitch. Not only did the Euro-Elite fail to resolve their debt crisis, they failed miserably at even coming close to recognizing the problem. It’s this distinct lack of recognition that is turning frowns into smiles. Dr. Bernanke is smiling of course because he is a money printer. The continuing inability of the Euro-Elite to solve their problems virtually guarantees a 2012 recession in the Old World. In return, this will also create a recession in the US which will provide plenty of excuses for Mr. Bernanke to once again print money under the guise of QE3. Dr. Faber’s uncanny ability to understand the big picture and foresee the response from financial markets allowed him to predict the 1987 crash, the 2008-09 crash, and the resulting 2009 stock market rally. Dr. Faber is smiling today not because he agrees with Dr. Bernanke’s fondness for money printing, but rather because the global financial system is developing exactly as he has envisioned. This vision of course is a money maker for both him and his clients.

London Trader - There are Tremendous Silver Shortages

Thursday, December 22, 2011

What really caused the eurozone crisis?

Infographic - Are Guns And Ammo The New Gold?

ECB cash to give indirect boost via banks

This is EU-style QE without using the words quantitative easing.  Yet, precious metals fade as markets believe this will solve the euro zone debt crisis. Use this market misperception to your advantage.

Wednesday, December 21, 2011

The Corruption of America

The unpaid spies in the financial system

Gold Takes Out 200DMA...The Other Way

Roubini is wrong on calling a top on gold--again.

US Housing Market Was Artificially Inflated By 14% In 2007-2010 NAR Reports

It's Official: US Debt-To-GDP Passes 100%

As bad as our fiscal condition is in official terms, the unofficial debt including all obligations (entitlements, bailouts, etc.) is somewhere north of $200 trillion, according to Dr. Kotlikoff of Boston University.  Official US government debt calculations abuse GAAP accounting rules in order to obfuscate the true rot of its balance sheet.  In layman's terms, our government cooks its own accounting books.  See here.

Yes, it is that bad.  In fact, it is far worse than one could ever imagine.

Retail Investors Pull $132 Billion From Domestic Equity Funds In 2011, 33 Of 34 Sequential Weeks Of Outflows

Mark Faber: "I Am Convinced The Whole Derivatives Market Will Cease To Exist And Will Go To Zero"

London Trader - We are Witnessing a Historic Bottom in Gold
We are making a historic bottom right now.  The paper gold, or virtual gold market, has diverged so far from the physical market that it’s no longer a credible marketplace.  That’s the key thing that came out of a very important meeting I was in yesterday where we had some serious players.  The people I was meeting with are all on the buy side and have been since the lows last week.

There are massive physical orders, sitting, waiting for any more discounts, and yet everyone else seems to be short.  So you have huge fuel for a rally here. 

You have to keep in mind this recent plunge was orchestrated with borrowed gold and that borrowed gold is now gone.  That’s why gold can’t go much lower.  Any dips in price will be aggressively purchased.  As I said earlier, right now we are witnessing a historic bottom.”
What's in bold-face above is exactly what I've been forecasting for years:  the manipulated paper prices of precious metals will decouple from the physical markets due to shortages of the latter.

DSK Spoke in Beijing and Now His Black Book Has Replaced Mao’s Redbook

Tuesday, December 20, 2011

2011: The Last (Debt-Consumerist) Christmas in America

Goldman Takes Client Abuse To Next Level: Closes, And Reopens, Copper And Zinc Recommendations At Massive Losses
So far so good - as all our readers know by now, one should do what Goldman does (i.e., sells to "clients"), not what Goldman tells its clients to do. This is not surprising. What however, is hilarious is that in the same report that Goldman closes its June 2012 Cu/Zn longs, it also... opens Cu/Zn longs. That's right - "While we maintain our bullish views on copper and zinc into 2012, we close out our May 23 recommendations for these metals at a considerable loss, and resetting the recommendations at December 19 prices." So somehow, while losing clients up to a blended 15%, Goldman continues holding the feet of those who still listen to them to the fire. Because this time it will be different.

Morgan Stanley Deconstructs The Funding Crisis At The Heart Of The Recent Gold Sell Off, And Why The Gold Surge Can Resume

The LIBOR-Gold Forwards Pain Index - Gold Lease Rates Plunged - More Than Meets the Eye

Saturday, December 10, 2011

Rick Rule: We're Entering A Great Era For Resource Investing

Shadow Rehypothecation, Infinte Leverage, And Why Breaking The Tyrrany Of Ignorance Is The Only Solution
"Liquidity requires symmetric information, which is easiest to achieve when everyone is ignorant. This determines the design of many securities, including the design of debt and securitization. "Reread the last statement as it explains perhaps better than anything, the true functioning of modern capital markets and why they are terminally broken: in order to preserve the system, the banking cartel need to make everything of virtually infinite complexity so that no one has a clear understanding of what is going on!

Friday, December 9, 2011

Pullbacks in Perspective

BNP Paribas Sold $2 Billion French Swap, EBA Says
“Some of this is trading rather than pure hedging,” said Gary Jenkins, head of fixed income at Evolution Securities Ltd. in London. “If European counties [sic] the size of France or Italy actually defaulted and triggered CDS, there would be total carnage and meltdown. It would be the end of the world, and at that stage it’s likely your counterparty would be the least of your worries.”

When Things Fall Apart: Disorientation, Desperation, Chaos

The Gold "Rehypothecation" Unwind Begins: HSBC Sues MF Global Over Disputed Ownership Of Physical Gold

Gold "conspiracy theorists" 1, naive zombies 0.  Soon the scoreboard will read infinity to zero.

Embry - $2,500 to $3,000 Gold Could Send Silver to $250

Lakshman Achuthan of ECRI on forecasting the next recession

The Top 30 Global Geopolitical Hot Spots for 2012

Here's a chart for worrywarts:

Wednesday, December 7, 2011

How to Position Yourself for the Future: Step 1 - Financial Security

Attempt Made On Deutsche Bank Head's Life: Explosive Package Addressed To CEO Intercepted, ECB Return Address Given

Occupy Wall Street just got real.
From Reuters: "A suspected parcel bomb addressed to Deutsche Bank chief executive Josef Ackermann was intercepted at a Deutsche office in Frankfurt on Wednesday, a senior U.S. law enforcement official said. The package was discovered around 1 p.m. Frankfurt time (7 a.m. EST/1200 GMT) in a mailroom, the official said. Initial analyses by investigators confirmed that it contained explosives and extra shrapnel, he told Reuters.

The official said the suspected bomb carried a return address from the European Central Bank, which is also headquartered in Frankfurt."

Tuesday, December 6, 2011

UBS' Advice On What To Buy In Case Of Eurozone Breakup: "Precious Metals, Tinned Goods And Small Calibre Weapons"

MF Global fallout delays U.S. farm seed, land deals

So you zombie US citizens still think the collapse of MF Global and subsequent theft by its executives won't affect you?  Think again.  Expect higher food prices next year, courtesy of Corzine and Co. (hat tip to Biden and Obama).

The worst part is that legislators talk as if segregated client funds were mishandled.   Ummm, the funds were outright stolen.  Rule of law has completely vanished.  When a run on banks occurs, as clients withdraw funds from depository institutions they no longer trust, the experts will declare once again "no one saw the panic coming."  Right...

Iranian forces go on war alert,7340,L-4157486,00.html

A very subtle form of theft

Japan Offers Gold Coins to Bond Buyers

How ironic:  the icing (gold and silver coins) will end up being worth more than the cake (Japanese reconstruction bonds).


The transatlantic panic

Obama and Ben Commercials: "The Inflatocracy" by Swiss America

Wow, Pat Boone will soon receive a knock on his door by Homeland Security.  These commercials will not be aired on major TV networks, but thanks to Google TV, DishNet and DirecTV subscribers will start seeing these spots next week.

Monday, December 5, 2011

S&P Places 15 Euro Nations on Warning for Downgrade

Is the World Spinning Out of Control?

CFTC tightens limits on brokerages using customer funds

Um, laws against commingling and stealing from segregated client accounts are already in place.  Why doesn't the government worry about enforcing existing laws instead of ginning up new regulation, that will again--go unenforced?

Transcript for Ann Barnhardt Interview

Do some of you readers still think I'm exaggerating?  Or hyperbolic?  Or bullshitting you?  Take a deep breath--and read this interview transcript, from an industry insider.  She puts her money where her mouth is, shutting down her profitable operations in order to serve her fiduciary duties and protect her clients' funds.

Psychopathic Economics 101

Sunday, December 4, 2011

The Black Swan of Cairo

Ann Barnhardt: The Entire Futures/Options Market Has Been Destroyed by the MF Global Collapse

This is why the MF Global collapse and subsequent non-action by the regulators will lead to a run on banks.  Nothing is safe--unless you take physical possession.

Portugal raids pension funds to meet deficit targets

Don't think this is unprecedented--and don't think it can't happen again.  It will--here and in every bankrupt nation.

Direct Registration FAQ

Bernanke’s Forgotten Footnote

Eric Sprott - Silver Producers: A Call to Action

Tuesday, November 29, 2011

Is It Finally Japan's Turn?

Ron Paul Explains His Plan For "Monetary Freedom" And Returning To The Gold Standard

American Airlines Files For Bankruptcy

Pimco's 4 "Iran Invasion" Oil Price Scenarios: From $140 To "Doomsday"

It's Official: Obama Is Now The Worst American President As His Approval Rating Plunges Far Below Carter's

Banking System Rotten to the Core

How Paulson Gave Hedge Funds Advance Word

Thursday, November 24, 2011

Michael Pento - Failed German Auction Will Force ECB to Print

Gold GBP 1,092/oz, JPY 130,890/oz – IMF: Japan Debt Could "Quickly Become Unsustainable"

I've been pounding the table for years:  the finances of the Euro zone may be terrible, but they are equally bad, if not worse in Japan, the UK, and the US.

History often repeats itself:  first, there are currency wars, then trade wars, and then, military conflicts.

Pictures From A Latvian Bank Run As MF Global Commingling Comes To Town

This is what a run on a bank looks like.  Please don't underestimate the impact MF Global's bankruptcy and theft of client funds on crowd psychology.  At 99 Celsius, water may be hot, but it's below its boiling point.  However, at 100 Celsius, things boil over rapidly.

Wednesday, November 23, 2011

Aircraft Carrier CVN-77 Parks Next Door To Syria Just As US Urges Americans To Leave Country "Immediately"

Next target:  Syria.

Germany Sells 150,000 Troy Ounces Of Gold In October... But Not Why You Think

Thanksgiving Tally: Lunatics And Hacks Win As Gold Up 19.3% YTD; S&P Down 7.5%

I guess I'd rather be a lunatic and a hack--than to be wrong and lose money.

Jim Rickards - Who Will Bail Out the Fed & How High for Gold?

China media says US sitting on debt 'bomb'

The world's largest creditor just explicitly retaliated against accusations of currency manipulation by blasting the world's largest debtor for being reckless with their borrowing addiction.

Tuesday, November 22, 2011

News reporter shows middle finger live on tv

Can anybody translate this telecast? What does the middle finger mean in Russian?

Russia says new U.S. sanctions on Iran unacceptable

Iran supplies oil to Russia and China.  Any sanctions against Iran by the US, UK, and Canada will not be viewed in a good light.  And if military aggression is invoked on Iran by the US and/or Israel, don't expect Russia and China to stand idly by.  They need their energy.

Saturday, November 19, 2011

Jim Rickards audio interview

Must-hear interview with Jim Rickards.  Buy his book "Currency Wars."

Money Talks: James G. Rickards

VP Biden says he called Jon Corzine for advice

This crook, Jon Corzine, former CEO of bankrupt MF Global, former Governor and US Senator of New Jersey, former Goldman Sachs executive, and yes, due to be appointed by President Obama to be Treasury Secretary in 2013 (after all, he served in the Treasury under Clinton), is being investigated by the FBI for stealing $600 million of client funds right before MF Global's collapse.  Hey, if you're going to steal, do it big.

Do you think this is an isolated incident of the rich stealing from the rich?  Think again.  This is the first domino in a cascade of segregated client accounts being stolen from--with no recourse for the victims.  Visualize putting money down to purchase a home in an escrow account.  That money is safe, separated from the firm's own money.  Even if the broker somehow went broke, your money is still safe due to the separation.  It's the central tenet of our global banking system, the foundation of our trust in firms handling our money.

Apparently, that faith and trust is now broken, because if you believe your money in your bank account is safe from legalized theft, think again.  150,000 clients had their accounts zeroed out at MF Global:  clients including large pension funds, as well as individuals like you and me.   Gone.  Zilch.  Nada.

What was their crime?  They believed their funds inside MF Global were safe--safe from outsized illegal gambling by the custodian bank, safe from fraud, and safe from outright theft.  Because, after all, the regulatory agencies would monitor the bank, and even in the event of a cataclysmic collapse, would backstop and honor their deposits, right?  Wrong.

Jon Corzine just happened to be one of President Obama's biggest campaign fundraisers.  Which apparently makes it okay for him to steal $600 million dollars from clients right before his firm collapsed.

America, we allowed this happen to us.  We deserve everything we're about to get:  a $hit $andwich.

The Difference Between the U.S. Constitution and EU Constitution (Lisbon Treaty) - Dan Hannan

Blast From The Past: Kyle Bass Was Right About Everything... Again

Note when this letter from Kyle Bass was written:  May 11, 2010.  That's right:  it was in 2010 after the first Greek bailout, not 2011.

Friday, November 18, 2011

Jim Rickards - Gold Pullback Meaningless, It’s Headed Higher

More On Legal Stealing - The Infamous CFTC Rule 1.29

I don't think most people grasp the significance of how the bankruptcy of MF Global went down.  The sanctity of segregated client accounts is the foundation of our financial industry.  Trust and confidence in the safety of client funds in custodial accounts is a basic principle in our global banking system--even in the event said custodian goes bankrupt.  This author suggests the $600 million missing from client accounts was accosted by JPMorgan before they found out MF Global was about to collapse.

Why is this important?  Because if clients can no longer trust their banks for safekeeping of their funds, there will be a massive liquidation of accounts, causing a run on banks.  The mattress will be considered safer than the bank.

Thursday, November 17, 2011

Wells Fargo Says 80 May Be the New 65 for Retirees

This is how you solve the Social Security Ponzi scheme.  You don't pay out any benefits until after the person dies.  Which means of course, you don't have to pay them at all.

Paul Brodsky - Gold Trading at 80% Discount to Intrinsic Value

Gerald Celente - MF Global...What about Gold ETF GLD & HSBC?

The emperor behind the curtain has no clothes.  The level of institutional theft is no longer shrouded  in secrecy.  You know the system is about to collapse when the perps don't even hide their nefarious actions anymore.

"The Entire System Has Been Utterly Destroyed By The MF Global Collapse" - Presenting The First MF Global Casualty

Corzine allegedly stole hundreds of millions of client funds before his firm collapsed.  The FBI is investigating this "commingling" case, but we all know how this ends.  He was one of Obama's biggest fundraisers for his campaigns.  He was the former governor of New Jersey, a former US Senate, served in the US Treasury under Clinton, and co-authored the controversial Sarbane-Oxley in the aftermath of the Enron scandal.  And oh by the way, he was also a Goldman Sachs partner.

Farage: What gives you the right to dictate to the Italian people?

Central banks said to be buying the dips in gold

Percentage of Gold Holdings in a Typical Pension Fund is Minimal

Here's another bullish chart on gold which needs no further explanation.

Gold as a Percent of Global Financial Assets

This is why gold bugs are forecasting the price of gold will soar above $10,000/troy ounce.
Click on image to enlarge.

Wednesday, November 16, 2011

Michael Pento on Full-Blown Bond Market Crisis in 2012 & Gold

Part 8 - The Gold Rush Currency Wars

Those damn short sellers....

The title suggests hedgers like Kyle Bass are the culprits who caused the financial crisis.  It's actually the "profligate idiots" he's betting against who are to blame.
"Buying gold is just buying a put against the idiocy of the political cycle. It's That Simple"

Fed Now Largest Owner of U.S. Gov’t Debt—Surpassing China

It’s All About Gold Now

Gerald Celente hammers MF Global's "MF'ers" on Capital Account (11/14/11)

Trump’s Panama Ocean Club Misses Bond Amortization Payment

Another Trump property defaults on a bond interest payment.  You'd think suckers--er, investors would have learned by now.

The Future of Work

Analyst: Calif. Budget Gap Could Shorten School Year By One Week

Keynote Speech At Sydney Gold Symposium 14-15 November 2011 By Alf Field
The Moses Principle recognizes the fact that over any 40 year period, a generational change takes place.

What has this got to do with gold? Recently we passed the 40th anniversary of 15 August 1971, the date when the last link between currencies and gold was ended by President Nixon. This launched an era of floating “I owe you nothing” currencies. Money was what any government deemed it to be, generally something that the government could create in unlimited quantities. That system, plus the fractional reserve banking system, launched an era of ever increasing debt and credit. It was an era where debt was desirable and money lost its purchasing power.

Everyone in this room has spent their adult lives living under this system. Most have had no exposure to monetary history or what money really is. The new “Moses” generation will have to re-learn the lessons of monetary history before the world can enter a new era of sound money and stable economic growth.

  1. The slate needs to be wiped clean and a new sound monetary system introduced.
  2. That will require the elimination of all debt, deficits, unfunded social entitlements, the US Dollar as Reserve currency, and the big one, the $600 trillion of derivatives.
  3. To eliminate these problems by default and deflation will cause a banking collapse and untold economic pain, leading to riots and political change.
  4. Politicians are appointed for relatively short terms and opt for the easy solutions.
  5. While politicians continue to have the ability to create new money at will, they will do so in order to prevent a melt down on their watch.
  6. Consequently the odds point to governments wiping the slate clean by generating enough new money to eventually destroy their currencies.
  7. The new international monetary system is likely to involve precious metals. It will have to be money that people trust and that governments cannot create at will.

Middle-class areas shrink as America divides into 'two-tiered society' of rich and poor

Thanks to Biff for finding this article.

Tuesday, November 15, 2011

Debt crisis: live
14.00 An ECB member tells it like it is...

Governing Council member Yves Mersch has said that monetizing government debts "is tantamount to inflation" and "not feasible".

To use inflation to lower the fiscal burden "would reduce incentives for governments" to tackle their debt burdens and "would raise the risks of even higher future inflation and greater output volatility.

Uncontrollable wage-price spirals would be likely," Mersch said in a speech in Frankfurt.

He added that you cannot make the ECB as a "lender of last resort for governments" and that governments must live up to own responsibilities.

JP Morgan To Revive RTC-Style Commercial Mortgage Securities

For those who can't read the article (requires subscription), here is the first sentence: 
 J.P. Morgan Chase & Co. (JPM) next year plans to issue the first U.S. commercial mortgage-backed securities supported by defaulted loans since the 1990s as it revives a practice that regulators used to extricate the nation from the savings-and-loan crisis.
"Defaulted loan pool securitizations are probably going to be one of the bright spots in CMBS for 2012," Schwarz said.
I wish I was making this $hit up.
The key take-away: nuclear energy ain't going away.  Uranium share prices have been decimated, exacerbated by the Fukushima disaster.  Me thinks that presents a buying opportunity.

See disclaimers in the side bar.

Disclosure:  long select uranium shares.

'Only massive debt restructuring can save EU'

Sure, the preface to this video mentions Kyle Bass profited by betting on the subprime mortgage and Greek sovereign debt crises materializing, but what it doesn't mention is that Bass has also been long gold in preparation for these crises.  Go ahead and do a search in this blog, and read about his previous insightful commentaries.

Monday, November 14, 2011

European Debt Crisis Threatens the Dollar

Jim Rickards podcast interview

Must-hear interview with Jim Rickards.   I also bought his new best-seller, "Currency Wars."

Martin Armstrong - Gold Upside Take Off Only Months Away
“The politicians are not really willing to address the issues.  The real issue is the debt crisis and the politicians are hoping that everybody’s going to forget and they can get back to business as usual.  What this is really about is it’s the entire Western civilization that’s starting to crumble.”

Everything is falling apart and the politicians will not address it because it means having to change the system and that’s what they do not want to do.  The real big money that I speak to, they are really starting to look beyond Italy, Greece, Spain and Portugal.  They are starting to look at France and Germany.

“There is no plan B.  I can tell you, I was speaking to people in Congress who asked the Fed directly, ‘Do you have plan B if Europe falls apart?’  And the answer was, ‘We don’t think that’s going to happen, so, no, we don’t have plan B.’

On the US side, the talk is, ‘Let’s tax the rich and cut some social programs.  You can cut all of the social programs completely and you can take all of the money you want from the rich, but you still have to pay and service the debt.  And right now almost 70% of the entire national debt is interest.  

The way it’s going, eventually 100% of everything the government spends will go to interest and then how is it going to function?  This is a classic, historical moment.  I don’t want to get people scared because I don’t think we will get to that point, but this is like the fall of Rome.  That’s how serious things are.

They have borrowed year after year with no intention of paying it back.  The US had $1 trillion of debt when Ronald Reagan took office in 1980.  We are now pressing $15 trillion of debt.”

When asked about gold, Armstrong responded, “Basically what you are doing is you are building a sideways type of base.  Eventually gold is going to take off to the upside, but largely when people begin to see the Emperor has no clothes and we’re getting close to that.  I would only give it a few more months.”

Lawrence Summers: To fix the economy, fix the housing market

This is a re-post of why this country's economy and why the global banking system will collapse.  With leadership like this, who needs enemies?
The central irony of financial crisis is that while it is caused by too much confidence, too much borrowing and lending and too much spending, it can only be resolved with more confidence, more borrowing and lending, and more spending.

Goldman: "Stay Long Gold"

Main China Daily Xinhua Pens Epic Anti-US Tirade, Bashes America As Source Of All Global Financial Ills

Will China Label USA A Currency Manipulator?

Despite cage-rattling rhetoric from US politicians accusing the Chinese of currency manipulation, I've always posited it is the US government that is the world biggest currency manipulator, with the Fed and US Treasury acting as complicit agents.  The Chinese merely peg the yuan to the dollar, which is being mercilessly debased by the US.

Tax receipts are plunging while government spending is soaring, and that is causing the U.S. annual deficit to explode.  According to the government, the 2011 budget deficit came in at nearly $1.3 trillion, but the true deficit, according to economist John Williams of, was much higher.  In his latest report, Williams says, “. . . the 2011 GAAP-based U.S. deficit likely fell in the $5-trillion to $7-trillion range, a circumstance that is beyond control and appears to be uncontainable in the current political circumstance.  With the economy in ongoing crisis, with no prospect of a turnaround in the foreseeable future, the implications for the federal budget deficit, U.S. Treasury funding needs and prospective banking-system stability, in the year and years ahead, are horrendous.  The current, relatively happy forecasts for each of those areas are based on assumptions of solid economic growth going forward.  That growth simply will not be forthcoming.”

“The sovereign solvency crisis in the United States easily could move to the center of global financial-market attention in the weeks ahead, depending on how the federal deficit reduction negotiations evolve.   The systemic solvency crisis that continues to unfold in the U.S. is of a relative magnitude that eclipses the rolling financial crises in the euro area.”

China’s Dagong May Cut U.S. Credit Rating Again If It Adopts QE3 Program

Another step toward banana republic status is in the cards.

Sunday, November 13, 2011

Gold traders most bullish since 2004 on debt crisis

This actually worries me a bit that the big money is bullish on gold.  Even the big money gets it wrong sometimes.  Here's the normal sequence of bubbles:

1) the smart money buys the most despised asset nobody wants--usually at bottoms,
2) the big money moves in, driving prices up, setting up the masses for the slaughterhouse,
3) the dumb money drives prices further into the stratosphere.  This is the manic phase of the bubble.
4) when the bubble collapses, the dumb money is left holding the bag.  The dumb money always gets in last--at price peaks.  Don't be a bag holder.

But if this is house money (i.e., you're up big already), enjoy the ride (i.e. this decade-long secular bull market).  And if it dips in a big way, back up the truck, and accumulate.

See disclaimers in the side bar.

Disclosure:  long precious metals.

Friday, November 11, 2011

Jim Rickards - The US Won’t Give Germany its Gold

I have corresponded with Jim Rickards often in the last few years, as long-time readers of this blog can attest.  I also pre-ordered his new book, "Currency Wars."  Read his resume and you'll see he has institutional credibility, but more importantly, keen insight into geopolitical matters, capital markets, and possesses plain ol' horse sense.

Turd Ferguson: The Inexorable March Higher For Precious Metals

CNN Defends the Fed – Calls Ron Paul Economically Illiterate

IMF Warns Developed World May Fall Back Into Recession

Uuummm, we've been in a recession--for four years--and never emerged from it.

$99 Oil For 11/11/11

Wednesday, November 9, 2011

Ron Paul on gold and the USDollar

When asked how high the gold price would go and why, he [Ron Paul] responded:

well, the question is how much lower is the dollar going to go in purchasing power? and i said to infinity unless we change our ways. because if you look at the gold/dollar in 1913 when the fed started, we've lost about 98% of its value. so if we continue to do what we're doing, it could go to infinity. it's the best measurement of the value of the currency. there's no advantage to anybody to have a weak currency. the gold tells us that we have a weakening dollar and a weakening currency, but the whole world does, so it's hard to sort out. so it's going to go up a lot more, which is virtually saying the dollar has a long way to go down on purchasing power. that's why the middle class gets wiped out and that is why the standard of living is going. down for the people, they already know it, and that's why there's people very unhappy in this country and they'd like to blame a few people. for all of the problems rather than looking at the philosophy of government, the monetary system, and the spending. because that's where you can find the answers to our problems.”

Crony Capitalism, Christmas Trees, and the Stupidest Tax of All Time

Sovereign Debt is Everybody’s Problem

Michael Pento - Fed Members Think QE3 Absolutely Necessary

“Gold has for thousands of years been a wonderful store of wealth or you can own a Treasury or a sovereign note from an insolvent nation.  Let’s just take the case of the US ten year Treasury which is yielding 2%.  The government’s own figures show that inflation is running at 3.9%.  So you are losing 1.9%, at a bare minimum, of your purchasing power by holding a ten year note.  Real yields are negative.
So what’s happening now is that people are being forced to own gold as true and honest alternative currency, so they can keep pace with inflation.  You can’t even own the ‘safest‘ of all assets, sovereign debt, because you know if you own any of them you are going to lose money through inflation.”  

Nigel Farage - Where is Europe’s Gold?

China’s gold imports jump sixfold

U.S. Approaches $15 Trillion Debt Limit

Deutsche Bank on Europe: 'It's Not Inconceivable That We Could Be In Full Crisis Mode By The End Of This Week'

Welcome to the Third World, Part 3: Disappearing Pensions

Tuesday, November 8, 2011

Half of US Mortgages Are Effectively Underwater

The bankruptcy of the western world

By Giancarlo.
Helga is the proprietor of a bar. She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar. To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later. Helga keeps track of the drinks consumed on a ledger (thereby granting the customers’ loans).
Word gets around about Helga’s "drink now, pay later" marketing strategy and, as a result, increasing numbers of customers flood into Helga’s bar. Soon she has the largest sales volume for any bar in town.
By providing her customers freedom from immediate payment demands, Helga gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages.
Consequently, Helga’s gross sales volume increases massively.
A young and dynamic vice-president at the local bank recognizes that these customer debts constitute valuable future assets and increases Helga’s borrowing limit.
He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral!!!
At the bank’s corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into DRINKBONDS.
These "securities" then are bundled and traded on international securities markets.
Naive investors don’t really understand that the securities being sold to them as "AA"
"Secured Bonds" really are debts of unemployed alcoholics. Nevertheless, the bond prices continuously climb!!!, and the securities soon become the hottest-selling items for some of the nation’s leading brokerage houses.
One day, even though the bond prices still are climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Helga’s bar. He so informs Helga. Helga then demands payment from her alcoholic patrons, but being unemployed alcoholics they cannot pay back their drinking debts.
Since Helga cannot fulfil her loan obligations she is forced into bankruptcy. The bar closes and Helga’s 11 employees lose their jobs.
Overnight, DRINKBOND prices drop by 90%. The collapsed bond asset value destroys the bank’s liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community.
The suppliers of Helga’s bar had granted her generous payment extensions 
and had invested their firms’ pension funds in the BOND securities. They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed value of the bonds.
Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers. Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multibillion dollar no-strings attached cash infusion from the government.
The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who have never been in Helga’s bar.
Now do you understand?

Monday, November 7, 2011

Michael Pento - Central Banks Sending Clear Buy Signal on Gold

Whistleblower Maguire - Silver Manipulation Still Ongoing

Bart Chilton - There is Manipulation in the Silver Market

To the naysaying shills emanating from government agencies, here's one of your own saying there is illegal price manipulation in the silver markets.  And by the way, screw those who dismissed this as a conspiracy theory.  They deserve everything they're getting.

Bart Chilton is calling out his own agency for their inaction.  I would expand it further and state some of members of the regulatory agency are getting paid to look the other way on a crime in progress.  Chilton is a CFTC Commissioner, an agency whose charter is to regulate the commodities markets.  He is no conspiracy theorist, nut-job, bat-$hit crazy blogger.  And he's doing his job, unlike some of his counterparts who protect their constituents--the crooked bullion banks.

Denial, Delusion and MSM Disinformation
After the last financial meltdown, people in the MSM sat around and said, “Nobody saw this coming.”  I wonder what their excuse will be the next time.
That's what all the experts said.  The problem is the blogosphere saw it coming--but nobody listened.  And yes, the next financial crisis will be worse--much worse than in 2008, as the debt problems are now sovereign in nature, not just too-big-to-fail banks (which by the way, have gotten bigger since the crisis).

And I would also digress from the conclusion that "nobody saw the financial meltdown coming,"  A soaring gold price indicates that SOMEBODY or SOMEBODIES not only see it coming, they are betting on it.

German Gold Reserves ‘Untouchable’ for EFSF, Roesler Says

Here's to all my detractors who believe gold is worthless and a barbaric relic.  If it is worthless, why does every sovereign government spare no expense to protect their reserves?  It is the anti-gold crowd who has injured people who were unfortunate to have listened to them.  You're the a$$hole, not me.

And You Thought the Real Estate Bust Was Over

Friday, November 4, 2011

Central Banks Quietly Accumulating Gold - Declared Purchases of 206 Tons Through September 2011

Here's the thing:  official gold holdings are probably overstated.  The recent gold purchase by the Mexican government may be nothing more than a bookkeeping entry.  Are the gold bullion bars actually stored in HSBC vaults in London or New York--or is it merely a paper claim?  Even if the physical bullion exists, is it unencumbered?  Or are there other claims against said gold inventory?  Where are the official audits, complete with serial numbers?

None of these questions have been answered by central banks and the custodian banks.

Gold trading has historically been opaque.  We do know that for troy ounce of physical gold, there are 100 claims against it.  In other words, 99 out of 100 people who believe they own the physical gold, actually do not.  When the market comes to this realization, there will be a mad dash into the physical, while the paper and futures markets will collapse from the default.  Bullion banks selling inventory that doesn't exist will not end well.

US Needs To Generate 262,500 Jobs Monthly To Return To Pre-Depression Employment By End Of Obama Second Term

Gold: The hedge against political stupidity 

One correction in the article:  GLD is the ETF that attempts to track the price of spot gold (and allegedly is partially backed by physical gold bullion).  GDX is the ETF that is an index of gold mining company shares.  The article mistakenly says this about influential hedge fund manager David Einhorn:
He said his firm has shifted some money into the Market Vectors Gold Miners ETF (GLD), adding that he expected gold prices to continue to rise.
That can't be true.  He either bought GLD or GDX, which is the Market Vectors Gold Miners ETF.  See

So take it from me--your trusted source about everything related to precious metals.  Even the "experts" can get it wrong.

Thursday, November 3, 2011

Because Central Banks Just Aren't Enough: G-20 Will Ask IMF To Print Reserve Currency

As predicted years ago, the IMF is now being asked to print Special Drawing Rights in order to save the Euro zone from implosion.  The global financial system has reached the brink, and this is the last Hail Mary.

MF Global chief was major fundraiser for Obama

Will Meredith Whitney Be Proven Right In The End?

Beware the muni...

Our Fragile "Hothouse" Economy

Gee, you think this guy is bearish?

Did accounting help sink Corzine’s MF Global?
“Off balance sheet arrangements and risk”:  “At March 31, 2011, securities purchased under agreements to resell and securities sold under agreements to repurchase of $1,495.7 million and $14,520.3 million, respectively, at contract value, were de-recognized.” (“De-recognized” means moved off the balance sheet.) Of that $14.5 billion, 52.6% was collateralized with sovereign debt. One way to get a sense of the ramp-up of “repo to maturity” transactions is to compare the figures to those as of March 31, 2010:  The securities sold under agreements to repurchase increased by some $9 billion.
Sounds to me like the bankrupt MF Global cooked their books.  But then again, I'm just a hillbilly who fell off the turnip truck.

Gold Has Had Enough With Europe's Stupidity; Surges

Tuesday, November 1, 2011

Jon Corzine - Meet Bubba

MF Global execs should look up this word in the dictionary:

US Food Stamp Usage Hits New Record

This headline is getting old.

Fed Trapped By Inflation

And for some light post-midnight reading...

US Plans To Issue $846 Billion In Treasurys In The Next 6 Months, 35% More Than Previous Year

Question:  if QE ended last June, how in the world will the US Treasury sell 35% more debt this year than the previous year with the Fed no longer the (only) buyer of last resort?  Who else will buy all these US Treasury bonds if foreign buyers have already scaled back and are sitting on their hands?  The Russians and Chinese have not only implied diversifying their reserves away from US Treasuries, they have explicitly declared it as policy.

Will Martians step up to the plate?  As Jim Sinclair has stated many times:  QE to infinity.

Anybody who doesn't view this as bullish for tangible assets is either blind or in full denial.

Einhorn Bets Gold Mining Companies Will Beat Bullion

The Incurable European Mess

Poor MF Global.  They hedged correctly by purchasing insurance against their long Euro bond positions in the form of credit default swaps.  Problem is, the other banks who wrote the swaps determined the Greek haircut wasn't really a default--hence, there was no trigger event and no pay out for holders of said cds.

It's analogous to buying auto insurance in the event of an accident.  The problem occurs when the insurer doesn't acknowledge there's been a major accident.  Hence, the insurer doesn't pay off the insured, which eventually causes the insured's bankruptcy.  Credit default swaps are not traded on an exchange, but in unregulated, opaque over-the-counter markets.

The system is so rigged, even the riggers are getting smoked.

Inflation and German sensibilities
Angela Merkel told the German Bundestag last Wednesday that in the absence of a deal on the eurozone debt crisis, “Nobody should take for granted another fifty years of peace and prosperity in Europe: if the euro fails, Europe fails”.
The social consequences of printing money are entirely supported by economic theory of the Austrian School of economists and the lessons of history. It boils down to a simple fact: any electorate can be patriotically roused for war, so long as it doesn’t have to pay for it. And that is the lie behind monetary inflation. If you print money to finance a war instead of raising taxes, for a time, no one notices the cost.
Germany has been through this lesson twice in the last century, so her people instinctively understand the chaos that results. It is the rest of Europe, with the exception perhaps of Austria, which has forgotten it. So let us state it loud and clear: sound money is the best guarantee of peace, while fiat money is a precondition for chaos.

Monday, October 31, 2011

James Turk - Silver Formation Projects Spike to $60 - $75 Level

“Central banks everywhere are trying to debase their currencies and Japan is just the latest episode.  A few weeks ago it was the Swiss National Bank and we’ve seen continuous debasement by the Federal Reserve with it’s dollar money printing and artificially low interest rates.  This is exactly what happened in the Great Depression.  Back then they called it ‘Beggar thy neighbor.’
Each country was trying to seek a short-term solution to fundamental ills by manipulating their respective currencies.  Manipulation doesn’t solve underlying problems.  It doesn’t even offer a band-aid because it disrupts the market process.  The net result of this turmoil is hot money, which is constantly looking for a safe home.  The underlying chaos detracts from businessmen making sound investment decisions in plant and equipment which creates long-term growth, employment and wealth.
When all countries are aiming to debase their currency, the conclusion is quite obvious.  First, you will see money rushing from one currency to another, depending on what central banks are doing at that moment.  Second, and more importantly, all currencies are being debased against gold, so its price will rise.  The value of gold comes from the market and not from central banks.  Central banks can debase currencies, but they cannot debase gold.”

Europe Blowing Last Chance to End Crisis

I would amend the title to Europe never had a chance.

Dick Bove Goes For The Post-Lehman Twofer: MF Global Is Fine

Anybody who followed this clown Dick Bove's advice would have lost a fortune--3 times.  He fancies himself a banking analyst.

Full MF Global Bankruptcy Petition... In Which We Find That Corzine's Bankrupt Firm Owes CNBC $845,397?

In bankruptcy court filings, MF Global bank owes financial broadcaster CNBC almost $1 million.  I wonder how much Goldman Sachs owes CNBC?

John Williams of on GDP data
“. . .the widely-followed gross domestic product (GDP) nonetheless remains the most-heavily-biased, the most-heavily-guessed-at, the most-heavily politicized and the most-worthless major indicator of domestic business activity.  Today’s numbers out of the Bureau of Economic Analysis are outright nonsense.  Consider that latest numbers showed that the level of inflation-adjusted third-quarter 2011 GDP broke above the pre-recession high of fourth-quarter 2007: a full recovery.  That is absurd.  No other major economic indicator, including payrolls, real (inflation-adjusted) retail sales, industrial production, trade deficit or housing starts is showing that.”  - John Williams,, commenting on official 2011 Q3 GDP growth of 2.5%.

Buchanan: Credit-Default Swap Bomb Wired to Explode

Saturday, October 29, 2011

Europe at war 2018

And now, for some light weekend reading...

Norway’s Sovereign Wealth Fund Sold All U.S. Mortgage Bonds

There goes the Fed's plan to keep mortgage interest rates low.  As the Street floods the market with US Treasury and mortgage-backed paper, it will become increasingly difficult for the Fed to pin interest rates low.  Of course, they can extend the charade longer with more bouts of bond purchases, a.k.a., QE 3.0.

Friday, October 28, 2011

To fix the economy, fix the housing market
The central irony of financial crisis is that while it is caused by too much confidence, too much borrowing and lending and too much spending, it can only be resolved with more confidence, more borrowing and lending, and more spending.  
And people wonder why our economy is failing.  Lawrence Summers is acknowledged as an economics genius, serving as President Clinton's Treasury Secretary, head of President Obama's National Economic Council, and President of Harvard University.  Yet, this opening statement in this article clearly delineates why our global financial system is on the verge of collapse.  He aims to solve overconsumption and indebtedness with more consumption and piling on more debt.  Genius.

Eric Janszen: We Are Witnessing The Death of the Dollar

Carney: QE’s stealth effect is a weaker currency

Royal Canadian Mint Announces Offering of New Gold Investment Product

This Canadian ETF appears to carry less risk for two reasons:

1) the custodian is the Royal Canadian Mint
2) it is backed by physical gold.

See disclaimers in the side bar.

Disclosure:  I have no position in these ETR's.

Auguries — What’s Behind Door No. 3?

GATA Slays The Dragon

Want To Defeat The Banks? Stop Participating In The System!

What’s a young person supposed to do?

US fury as Karzai backs Pakistan


Wednesday, October 26, 2011

BlackRock Expects “Massive” Mining M&A

Raiffeisen Bank TV-Ad: Easy (sub-prime) loans in Hungary, 2007

I thought this video was a spoof, but I think it was a real ad from a bank offering subprime mortgage loans--back in 2007.

The Best Mistake You'll Ever Make

This conversation allegedly took place in 2006.
The Best Mistake You'll Ever Make
By Jeff Clark, BIG GOLD
The following conversation took place between a friend's son and I; he's a bright but relatively young investor. He had purchased some gold based on some things I'd told his father. Shortly afterward, the price dropped hard. As you'll see, he was not very happy with my advice and said so in an email to me. So I called him...
I: Sounds like you're upset.
Friend: Yeah, that's putting it mildly. What the hell am I supposed to do now?
I: Because the gold price has dropped?
Friend: Yes! It's down 15% in a month! I thought you said this was going to be a good investment.
I: It is. And it will be. You might even consider buying more here if you have the funds.
Friend: I have some other money, but why would I put it in gold? It's losing money.
I: Because it's on sale. Because it's cheaper now than when you bought it. And especially because none of the reasons for buying it have gone away.
Friend: That doesn't mean it's going to go back up.
I: As I told your dad, there are no guarantees, but I think it will have to go higher. Either way, it will hold its purchasing power over time. We're holding it as an alternate currency, a more sound form of money that can't be debased.
Friend: Yeah, well, my money just got debased, big time. It needs to go up 20% for me just to get back to even.
I: Five years from now your dollars will have lost at least 10% of their value, based just on current trends. There's a good chance it will lose more than that. And gold will probably rise more than 10% a year. At some point it''s likely to go into a bubble.
Friend: [silence.]
I: Look, I know you're upset, but I'd hate to see you bail. This is one of the best investments we can make this decade.
Friend [relenting a little bit]: You really believe that.
I: I can't promise you anything, but yes, I do.
Friend: And that's because you think inflation is coming.
I: It's for a lot of reasons, and that's one of them. Inflation is virtually baked in the cake; the dollar's long-term problems will be impractical to resolve; and the global economy is on high alert. This is exactly the kind of circumstances gold is for.
Friend: Then why is it falling?
I: Institutions need cash and liquidity, and gold offers a bid. Besides, nothing goes up in a straight line, and gold had just run up 35%. It was time for a break.
Friend: So this big drop really doesn't worry you.
I: It doesn't. I'm buying. In fact, I'll prove it to you - send me your gold and I'll buy it from you.
Friend: [Silence.]
I: I know it doesn't feel good right now, and it may take some time for it to make another new high, but gold is too important not to own here. It's a long-term trade, so plan on holding it for a while. In fact, if it helps, just forget about the fact that you own it - go do something fun and have a beer at the pub.
Friend: [a little chuckle].
I: I don't think you made a mistake buying at the price you did, in spite of it being lower now. Odds are high you'll be happy in a few years.
Friend: [pause] All right...
I'm glad my son's friend decided to hold on, because that conversation took place in June, 2006. He'd bought gold at around $700 and watched a month later as the price fell to as low as $567.
Gold ended up declining a total of 21% in just five weeks before bottoming, after a run-up of 35% (sound familiar?). And yes, it took over a year before it hit a new high.
Yet my son's friend - now older and wiser - wishes he could go back in time and make the same mistake again and buy gold at $700. His investment is sitting on more than a double, in spite of buying at a temporary peak.
I think that a few years from now we'll all wish we could go "back in time" and buy gold at $1,700. And I believe you'll still feel that way if gold falls to $1,500, as some writers are projecting.
I think this because circumstances now are worse - and hence more bullish for gold - than they were in 2006. Look at how much money we've printed (the monetary base now exceeds $2.6 trillion, a mind-boggling 200% increase since 2006). Look at the state of the global economy - highly vulnerable and propped up by governments. Consider the lingering and inescapable predicament of many European nations - scare tactics aside, how, exactly, will this be resolved in a healthy way? Ask yourself if the outlook for the US dollar is out of the woods (roughly 10% of federal revenue goes solely to debt payments, a figure that is projected to triple). Explain how the reckless path of deficit spending will shift without causing some kind of major impact on the economy (history shows abject deficit spending leads to economic downfall, virtually without exception). Tell me how we avoid massive inflation, an outcome that seems so certain at this point that about the only way to avoid it would be a massive global meltdown - and even then, the Fed would surely print to oblivion.

Like I told my son's friend, nothing is guaranteed. But until real interest rates are positive again, government leaders instigate honest solutions to our debts and deficits, the global economy becomes an engine of growth, the sovereign debt issues in Europe are genuinely resolved, and global currencies - especially the US dollar - are strong again, I'm buying gold.
Yes, there will be volatility. And yes, a short-term "solution" to what seems like certain default in Greece, for example, would cause some investors to sell gold. But like in the spring of 2006, these are temporary, short-term fixes only. For the tumult that is most likely ahead, there simply isn't any better currency protection than gold and silver.
Join me in calling your favorite bullion dealer and making the mistake of buying gold at $1,700.
[No one knows with any certainty the future's trajectory... but we at Casey Research know that contrarian investing will continue to be a profitable strategy as nations continue to meddle in markets.]