Friday, January 28, 2011

Meet The Man Behind The Liquidating Hedge Fund That Blew Up The Gold Market

Thanks to Dick for finding this article on gold's recent sell-off.  If a $10 million hedge fund manager can move the gold futures market so violently, imagine what a $10 billion hedge fund manager could do.

Wednesday, January 26, 2011

New Gold, Silver Rules, Little Change

The CFTC is at best, toothless, and at worst, corrupt.  Nothing here folks.  Forget about market transparency and fair price discovery mechanisms.  The markets are rigged, and will remain so, to the benefit of big bullion banks--and to the detriment of investors and industrial consumers.  The proposed position limits for commodities futures contracts in the Dodd-Frank Wall Street Reform and Consumer Protection Act are a smoke screen.  Investors will exit while the predators on Wall Street will feed upon each other.

Inflation’s Real Victims: Quality, Honesty, Character

Clinton Urges Restraint, Political Reform in Egypt

With all due respect, but how arrogant of Secretary of State Clinton.  She urges Egyptians to restrain themselves, like this is some form of demonstration against an oppressive government.  There is no doubt the Egyptian government may be corrupt, not respectful of human rights, and in need of political reform (speaking of glass houses), but citizens don't take to the streets because they feel oppressed.  They take to the streets because there are food shortages and they are one meal away from starvation.

And look no further for the root cause of all this exported food inflation to other countries, third-world, emerging or developed:  it's Blackhawk Ben Bernanke's loose monetary policy and quantitative easing which is the cause of soaring food prices.

What Does UK Stagflation Mean For US And Western Economies

"Stagflation" replaces "contagion" as the watchword for 2011.

Tunisia Wants Its Gold Back, Issues International Arrest Warrant For Runaway President Ben Ali

As Bankers Kill Off Mark-To-Market For Good, Former FDIC Chairman Gloats

My take away message?  Accounting fraud is now not only legalized, but institutionalized.  Banks cooking their books is now OK.  The wonderful world of high finance...

A decade of gaining 18% a year - some "relic"

First Nickel, Then Silver?

Does anybody think a default at the COMEX can't happen?  Read on.  Note:  The LME, unlike the COMEX, fixes daily prices for physical metals.  And yet, there was still a default.

To see how prices reacted after the default in nickel in 2006:

Note to self:  buy the physical bullion, not the paper futures contracts.

Tuesday, January 25, 2011

Debunking Steve Liesman's "What Inflation?" Theory

Marc Faber's Most Provocative Interview Ever: Compares Obama To A Prostitute, Goes Long Treasurys

Stunner: Gold Standard Fully Supported By... Alan Greenspan!? 
"We have at this particular stage a fiat money which is essentially money printed by a government and it's usually a central bank which is authorized to do so. Some mechanism has got to be in place that restricts the amount of money which is produced, either a gold standard or a currency board, because unless you do that all of history suggest that inflation will take hold with very deleterious effects on economic activity... There are numbers of us, myself included, who strongly believe that we did very well in the 1870 to 1914 period with an international gold standard." - Alan Greenspan, former Federal Reserve Bank Chairman

World needs $100 trillion more credit, says World Economic Forum

The world's elite financiers believe the world needs another $100 trillion to maintain the status quo.  And people wonder why I'm bullish tangible assets.

James Turk - Silver in Backwardation, Set to Explode

Agnico Eagle CEO Sean Boyd - $2,000 Gold This Year

Underfunded Illinois Pension Fund Under Investigation By The SEC For Accounting Fraud

As usual, the comments on Zero Hedge are as entertaining as the articles submitted.

New study shows that under-employment may be as high as 53% for Americans

Rioting Breaks Out In Egypt

Read the article to find the root cause of riots.  It's not just about oppression and lack of personal freedoms, but a product of poverty and food shortages.

Monday, January 24, 2011

Egypt Proactively Preparing For Tunisian-Style Rioting: Airport Intercepts 59 Outbound Gold Shipments Worth Tens Of Millions

Russia To Increase Gold Holdings By 13% In 2011, Will Buy 100 Tonnes Of Gold Each Year

Russia to Raise Gold Share in Reserves, Eyes Adding Yuan, Ulyukayev Says
Russia’s central bank will raise the share of gold in its international reserves, the world’s third largest, from about 8 percent, First Deputy Central Bank Chairman Alexei Ulyukayev said.

"We’ve increased our investment in gold during the last several years and we will continue to move in the same direction in the future," he said in an interview in London. "Gold is a natural part of reserves."

Russia, which aims to diversify its reserves, started adding the Canadian dollar and plans to invest in the Australian dollar. The central bank has almost doubled the share of gold in the past three or four years, according to Ulyukayev. The stockpile comprises 47 percent U.S. dollars, 41 percent euros, 9 percent British pounds, 2 percent Japanese yen and 1 percent Canadian dollars, according to the central bank.

The bank won’t begin to add the Australian dollar until the middle of the year, Ulyukayev said on Dec. 1. Policy makers may also add new currencies to the reserves, with the Chinese yuan a potential target once it becomes fully convertible.

"We are trying our best to diversify the reserves" and investing in managed currencies is difficult, Ulyukayev said today. "If the capital control regime will be changed, in the People’s Republic of China in this case, we can invest in that currency also."

Accounting Tweak Could Save Fed From Losses

China buys gold and the world follows

The Most Predictable Financial Calamity in History

GoldNomics - Cash or Gold Bullion?

Readers of my blog have been inundated for the last two years on my rants about the merits of sound monetary policy, and the role gold and silver play as part of that policy.  Viewing this 4-minute video would have saved you all that time.  Of course, this video was produced two years later...but better late than never.  Having said that, early adopters have made some sizable gains, and I expect, will continue to profit.  See disclaimers in the side bar.  See previous disclosures on precious metals.  Perform your own due diligence.

Friday, January 21, 2011

Thursday, January 20, 2011


"Creative Accounting" Makes Fed Insolvency Impossible

"The Fed remits most of its net earnings on a weekly basis. Prior to this accounting change, any unremitted earnings due to the Treasury would accrue in the "Other capital" account, but will now be shown in a separate liability line item called "Interest on Federal Reserve notes due to the Treasury.” As a  result, any future losses the Fed may incur will now show up as a negative liability (negative interest due to Treasury) as opposed to a reduction in Fed capital, thereby making a negative capital situation technically impossible regardless of the size of the Fed’s balance sheet or how the FOMC chooses to tighten policy." And there you have it: instead of reducing the left side of the balance sheet upon the incurrence of losses, the Fed has decided to fudge the right side. And presto. No more possibility of insolvency ever again.

Mike Krieger Explains Why Fiat Money is Immoral

Food Inflation Comes To America: General Mills, Kraft And Kellogg Hike Prices On Selected Food Products

Tuesday, January 18, 2011

Niall Ferguson On Whether The Financial Crisis Will Lead To America's Decline And A Glimpse Of The "Post-Pax Americana" Dark Ages
"Complex systems look like they are in equilibrium, but they are not: they are constantly adapting, highly decentralized, interdependent systems and this process of adaptation can continue for quite a long time. And you think to yourself when you look at it, that's in a wonderful equilibrium. That's how we think about the economy. That is how economists teach economics. They talk about it in terms of equilibrium. The bad news is that in fact we inhabit a complex system that has virtually nothing to do with the neoclassical model that you are taught in Econ 101. And that's why the economists failed to predict the financial crisis... For me American power if you generalize beyond the realm of finance through the geopolitical system is a perfect example of a highly complex system which looks like it is in equilibrium but like all the great empires of the past is quite close to the edge of chaos. And our nightmare scenario should be that something happens to us like happened to the Soviet Union... It suddenly just falls apart. And I think the trigger, the catalyst if you want to switch to chaos theory the butterfly in the tropical rainforest that flaps its wings and posits the distant thunderstorm is going to be the credibility of fiscal policy. That just seems to me like the obvious place where things can turn nasty, and they turn nasty with amazing speed."

African Food Riots Spread To Persian Gulf As Oman Is Next; Adverse Implications For Oil Prices?

When politicians and central bankers publicly declare inflation is in check, run to the hills--or better yet, run to your nearest Wal-Mart and load up on staples.

Tossing the Consumer Under the Bus
While our public debt is about 14 trillion our unfunded liabilities are much larger.
Unfunded (read: looted) Liabilities
Social Security 14.6 trillion
Prescription Drugs 19.2 trillion
Medicare 76 trillion
Total 109,800,000,000,000.00
109.8 trillion + 18 trillion (18 trillion includes GSE off balance sheet debt) = 127.8 trillion dollars.

US Mint Reports January Silver Sales Hit 26 Year High

States Warned of $2 Trillion Pensions Shortfall

Central Bank steps up its cash support to Irish banks financed by institution printing own money

The Irish Independent learnt last night that the Central Bank of Ireland is financing €51bn of an emergency loan programme by printing its own money.
Without the European Central Bank's approval, that sounds suspiciously like Ireland is resorting to counterfeiting its own currency.   Sure, it's only a "small" amount:  roughly 50 billion Euros.

By contrast, the Fed has created trillions of USDollars out of thin air in just the last 2 years.  With municipalities and states teetering in insolvency, one has to wonder when the madness will ever stop.

Monday, January 17, 2011

US national debt ceiling

Last year, Tim Geithner declared the US would never lose its AAA credit rating:
Treasury Secretary Timothy F. Geithner said the U.S. is in no danger of losing its Aaa debt rating even though the Obama administration has predicted a $1.6 trillion budget deficit in 2010.

“Absolutely not,” Geithner said, when asked in an ABC News interview broadcast yesterday whether a downgrade is a concern. “That will never happen to this country.”

Yet, in the last few days, Geithner has also said the US would default on its bond obligations if Congress doesn't raise the national debt ceiling.
In a letter to Congress, Geithner said the statutory debt ceiling of $14.3 trillion, set last year, may be reached by the end of March - and hit no later than May 16. He warned that holding it hostage to skirmishes over spending could lead the country to default on its obligations, "an event that has no precedent in American history." Debt-level brinkmanship doesn't wear a party label.
So the $64 trillion question is:  how can a country with the highest credit rating be at risk of defaulting on its debt?  A country defaulting on its bonds is usually a banana republic assigned junk-bond status.  So which is it, Tim?  Does the US deserve its AAA credit rating?  If so, how can the US be at risk of default?  When will the American public be told the truth?

Excerpts from Hu Jintao interview
4. What do you think will be the U.S. dollar's future role in the world? How do you see the issue of making the RMB an international currency? Some think that RMB appreciation may curb China's inflation. What's your view on that?

HU: The current international currency system is the product of the past. As a major reserve currency, the U.S. dollar is used in considerable amount of global trade in commodities as well as in most of the investment and financial transactions. The monetary policy of the United States has a major impact on global liquidity and capital flows and therefore, the liquidity of the U.S. dollar should be kept at a reasonable and stable level.

It takes a long time for a country's currency to be widely accepted in the world. China has made important contribution to the world economy in terms of total economic output and trade, and the RMB has played a role in the world economic development. But making the RMB an international currency will be a fairly long process. . . .
China has adopted a package plan to curb inflation, including interest rate adjustment. We have adopted a managed floating exchange rate regime based on market supply and demand with reference to a basket of currencies. Changes in exchange rate are a result of multiple factors, including the balance of international payment and market supply and demand. In this sense, inflation can hardly be the main factor in determining the exchange rate policy.

At Least 10 States Have Introduced Gold Coins-As-Currency Bills

Latest Inflation Riot Tally: Algeria, Tunisia, Morocco, Yemen And Jordan

Bernanke is not copying Keynes, he is copying Lenin

Part 3 - Silver Manipulation Explained

JP Morgan Wins: CFTC Position Limits Do Not Apply (To Them)

Saturday, January 15, 2011

BUSTED: Unsealed Docs Show The Fed Was Fully Warned Of A Housing Crisis
New minutes released today show Fed members were fully aware of the growing housing bubble in the U.S. in June of 2005.

The materials include several presentations made on the subject of the emerging housing bubble in the U.S. economy. They have titles like "Is Housing Overvalued?" by Joshua Gallin and "Monetary Policy Implications of a House Price Bubble" by John C. Williams of the San Francisco Fed.

In October of 2005, future Federal Reserve Chairman Ben Bernanke told Congress he didn't think we were in a housing bubble.

Wednesday, January 12, 2011

Housing Market Slips Into Depression Territory

Home values have fallen 26 percent since their peak in June 2006, worse than the 25.9-percent decline seen during the Depression years between 1928 and 1933, Zillow reported.

November marked the 53rd consecutive month (4 ½ years) that home values have fallen.

What’s worse, it’s not over yet: Home values are expected to continue to slide as inventories pile up, and likely won't recover until the job market improves.

Tuesday, January 11, 2011

C.banker urges China to cut U.S. debt holdings

Harry Schultz’s last testament
“Roughly speaking, the mess we are in is the worst since 17th century financial collapse. Comparisons with the 1930’s are ludicrous. We’ve gone far beyond that. And, alas, the courage & political will to recognize the mess & act wisely to reverse gears, is absent in U.S. leadership, where the problems were hatched & where the rot is by far the deepest.”

He writes favorably of investment advice given in a recent interview by former Reagan Office of Management and Budget Director David Stockman:

“Stockman replied (to my huge surprise, coming from a former top government official) ‘Get some gold, beans, water, anything that Bernanke can’t destroy. Ron Paul is right. We’re entering a global monetary conflagration. If a sell-off of U.S. bonds starts, it will be an Armageddon.’”

About gold, Schultz retains his long-term bullishness. He quotes the respected Seeking Alpha service:

“For gold to match the growth in US M1, M2, public debt & budget deficit, gold will have to reach $1,800, $2,400, $7,800 & $13,200, respectively. While I can’t imagine gold going to $13k, these numbers tell me that calling gold a bubble is a bit premature. In my view, money supply, public debt & the budget deficit are in a bubble, not gold, not yet.”

Schultz’s comment: “Wake me up at $2,400 gold.”

California's Brown proposes "painful" budget cuts

Thanks to Kitty for submitting this article.

Quotes from Harry Schultz and Ted Butler

Roughly speaking, the mess we are in is the worst since 17th century financial collapse. Comparisons with the 1930’s are ludicrous. We’ve gone far beyond that. And, alas, the courage and political will to recognize the mess and act wisely to reverse gears, is absent in U.S. leadership, where the problems were hatched and where the rot is by far the deepest. - Harry Schultz, in his last newsletter

"If my analysis is correct, and the era of silver pricing being dominated by a big Comex silver short is ending, what will the silver pricing landscape look like in the future? The answer is that the landscape will be radically different, in order to reflect such a radical structural change. Removing the dominant pricing force on the Comex is as radical a change as putting LeBron James on a high school basketball team. It changes everything." - Ted Butler, silver analyst

Judge orders Fed to deliver gold records for her review
GATA today scored a small but perhaps auspicious victory over the Federal Reserve in our lawsuit seeking access to the Fed's secret gold files. The judge presiding over GATA's federal freedom-of-information lawsuit in U.S. District Court for the District of Columbia, Ellen Segal Huvelle, granted GATA's motion to order the Fed to produce in complete form for the judge's private review 20 gold-related documents the Fed has sought to keep secret. The judge ordered the Fed to deliver the documents by Friday.

Those who are skeptical of GATA's complaint that the Federal Reserve is part of an international gold-price rigging scheme should reflect on the meaning of the Fed's refusal to disclose all its gold-related records, records that include gold swap arrangements with foreign banks:

If the U.S. gold reserves are just sitting somewhere, inert, unencumbered, and unused for surreptitious market intervention, what's the problem with full disclosure?

Financial journalists unafraid of aggravating the world's financial powers should start putting gold-related questions to the Fed and other central banks and stop simply assuming that secrecy should be the normal order of things with central banks and gold.

'Not Owning Gold is a Form of Insanity': Chartist
Gold will eventually rally exponentially and investors who don't own the precious metal are "insane," and may be showing "masochistic tendencies," Robin Griffiths, technical strategist at Cazenove Capital, told CNBC.

"I think not owning gold is a form of insanity, it may even show unhealthy masochistic tendencies, which might need medical attention," Griffiths said.

Gold, along with other metals such as copper, has been making new all time highs, which is a strong buying signal, according to Griffiths.

"Although it's been a top performer for each of the last ten years, it's still in a linear trend. Eventually it will go exponential and make more in the last little bit than the whole of the ten year trend," he said.
Griffiths said that any short-term declines in the price of gold represent a buying opportunity and the asset is still not an "over-owned trade".

"Real assets hedge paper money being printed into oblivion, so you've got to own gold and you've got to own other commodity-related investments still,"  he said.

As gold [XAU=X  1380.45    6.00  (+0.44%)   ] is likely to continue its rise, the value of the dollar [.DXY  80.93    0.05  (+0.06%)   ] is likely to remain in a long-term downtrend against other major currencies as the Federal Reserve maintains its policy of quantitative easing to stimulate the economy, according to Griffiths.

"The downward trend in the dollar is awesomely powerful. It's vital to get yourself out of the dollar long-term on any significant rally. Continuing to own a currency that is going to be printed virtually into oblivion … is crazy," he said.

December 2010 Employment ChartFest

The true story on employment (or lack thereof).

Virginia Creates Subcommittee To Study Monetary Alternatives In Case Of Terminal Fed "Breakdown", Considers Gold As Option

Quebec police help gold miners fight thieves
Recent gold mine robberies in Mexico and Brazil, coupled with soaring gold prices are prompting Quebec mining companies to ask for police help to prepare employees in case they become the targets of organized crime.

Officers from the Surete du Quebec met recently with dozens of miners and company officials in the the province's mineral-rich Abitibi-Temiscamingue region to outline steps workers should take if they are offered money in exchange for stealing gold or if they receive threats.

"We are asking people to be careful about who they talk to regarding the fact that they work in a gold mine or handle gold," said Surete du Quebec spokesman Sergeant Guy Lapointe. "It's important they be sensible about what kind of information they spread and not to talk about it in public areas, because ... they could be approached."

America the Beautiful Bullions Go to "Profiteers"

Illinois Governor Flees Capitol Through The Basement After Disastrous Meeting On State Budget

Things are getting unhinged inside the Illinois State Capitol.  The title of this article says it all.

Sarkozy takes G20 case to Obama as food prices soar

Inflation, specifically in food and energy prices, is exactly why the world is angry at the US for quantitative easing and loose monetary policy.  Yet, our government officials continue to induce fear into the American public about the ravages of deflation, in their drive to create inflation in order to stimulate the economy.  In my opinion, this will go down in history as one of the worst blunders in American financial and economic history.

When and if the USDollar loses its status as the global reserve currency, Americans will quickly find out currency debasement will be the dominant cause of their diminished purchasing power.

Food Agriculture Organization - Food Index

Click on image to enlarge.

Record-high food prices worldwide are here.

Monday, January 10, 2011

“Bring Us Sugar!” U.S. Inflation And the Rest of the World

Gold Outlook 2011: Irreversible Upward Pressures And The China Effect
TORONTO, Jan. 10 /CNW/ - Sprott Asset Management LP is pleased to provide investors with an update on the delivery status of silver bullion purchased by the Sprott Physical Silver Trust (NYSE ARCA: PSLV, TSX: PHS.U) ("Trust").
As of November 10, 2010, the Trust had contracted to purchase a total of 22,298,525 ounces of silver bullion. As of December 31, 2010 a total of 20,919,022 ounces of silver bullion had been delivered to the Trust. The Trust expects to take delivery of the final 1,379,503 ounces of silver bullion by January 12, 2011 and will subsequently publish the serial numbers of all bars held by the Trust on its website:
"Frankly, we are concerned about the illiquidity in the physical silver market," said Eric Sprott, Chief Investment Officer of Sprott Asset Management. "We believe the delays involved in the delivery of physical silver to the Trust highlight the disconnect that exists between the paper and physical markets for silver."

Newt Gingrich Pushing Bill To Allow States To File Bankruptcy Allowing Them To Renege On Pension And Benefit Obligations

India, Iran mull over gold-for-oil for now

What does the anti-gold crowd have to say now?  Do they still believe gold is a "barbaric relic"?  Do they still not believe gold is money--in fact, the soundest form of money?

NEW DELHI: India is determined to ensure steady crude oil supplies from Iran and is even considering settling payments with gold in the short term before the two countries agree on a mutually accepted currency and a bank to clear the transactions. 

Another official said India could settle crude oil import transaction using gold in the short term, while efforts to resolve the deadlock continue. An Indian delegation, including officials from ministries of external affairs, finance and petroleum, will visit Tehran next week to thrash out the payment issue, officials said.

Friday, January 7, 2011

Ron Paul: "The U.S. Government Must Admit It Is Bankrupt"

Wanted: Austro-Monetary Economist for Ron Paul

Ron Paul has been named chairman of the Domestic Monetary Policy subcommittee, and will have one committee staffer. Ron and his chief of staff Jeff Deist are looking for a smart, young economist, “thoroughly Austrian, and preferably with an advanced degree.  The candidate needs strong knowledge of the Fed and monetary policy generally, and must be an effective writer.  He or she will be responsible for organizing hearings; summarizing data and Fed actions for Dr. Paul; writing statements; dealing with Financial Services committee staff; and various other tasks.”

Ron and Jeff want an economist with a “strong personality to match their strong analytical skills.” The Fed and its shills are significant opponents, after all. The “salary will be respectable, a solid 5 figures, though depending on experience.”

Write me if you are that person, or can recommend someone. The preference, btw, is for someone with no Beltway experience. And probably you should be single. But what an opportunity to work hard, do good, and have fun. I will add, from personal experience, that Ron Paul is a great boss, too.

This can be a life-changing experience for the right young person. Imagine an 18th century classified: “Wanted, Economist-Assistant to Thomas Jefferson.” This is the equivalent, although Jefferson was not as principled in office as Ron Paul.

Fed's Hoenig Says Gold Standard "Legitimate" System

Thursday, January 6, 2011

Geithner Urges Congress to Raise Debt Limit

This is the same Tim Geithner who said the US would never default on its debt, and never lose its AAA credit rating.  When the Treasury Secretary of a country says something will never happen, count on it happening.  As for new readers who believe I am jumping on the national debt bandwagon, see the left sidebar for the running clock on the national debt I've had displayed for 3 years.

WASHINGTON (AP) — Treasury Secretary Timothy Geithner warned congressional leaders Thursday that the government could reach its borrowing limit by spring and failure to raise it could affect millions of American jobs.

The government will reach the limit between March 31 and May 16, Geithner said in a letter to congressional leaders. Not increasing the $14.3 trillion debt limit could lead to job losses, he said. 

Inaction could drive up interest rates and make it more costly for U.S. companies to borrow money.

Geithner's warning is directed chiefly at Republicans, who are vowing to block an increase in the debt limit and use the fight to restrain government spending.

House Speaker John Boehner said spending cuts and reforming a broken budget process must come first. Those are the top priorities for the new Republican majority in the House.

"While America cannot default on its debt, we also cannot continue to borrow recklessly, dig ourselves deeper into this hole and mortgage the future of our children and grandchildren," Boehner, an Ohio Republican, said in a statement.

Geithner warned that a failure to raise the debt limit would mean the government would not be able to make the payments on the current debt, which stands at $13.96 trillion.

Treasury debt is considered the safest investment in the world because the U.S. government has never defaulted. However, the effort to raise the debt limit is expected to be especially contentious this time. 

Many newly elected Republicans campaigned against the government's soaring deficits and debt.
"Even a very short-term or limited default would have catastrophic economic consequences that would last for decades," Geithner said. "For these reasons, I am requesting that Congress act to increase the limit early this year, well before the threat of default becomes imminent."

Byron Wien's Atrocious "Forecasting" May Have Cost Blackstone Hundreds Of Millions

A chief economist for a major hedge fund is 0 out of 10 for his 2010 forecasts.  For once, he gets one concept correct, and ultimately loses one of his firm's biggest clients as a result of speaking the truth.  This scenario is so wrong on so many levels.

Bad Money Drives Out The Good
Gresham’s law – “bad money drives out the good”, driven by the effects of currency devaluation, also know as inflation and hyperinflation, ensures that push for cashless society will grow as the existing monetary system continues to crumble.

It’s only a matter of time before denominations such as the penny and nickel are eliminated and recomposed, respectively.

The elimination of smaller denominations from circulation by market forces is a classic sign of hyperinflation.

Volcker resigns

As I expected, Volcker will step down as part of President Obama's Economic Recovery Advisory Board.  In my opinion, he was appointed merely as a figurehead to appease those desiring fiscal responsibility, and was considered a voice of reason.  But his views were becoming increasingly marginalized by the financial community who opposed regulation, and he became frustrated as his dire warnings were largely ignored. 

(Reuters) - Former Federal Reserve Chairman Paul Volcker plans to leave his role as head of a panel of experts advising President Barack Obama on the economy, sources familiar with the decision said on Wednesday.

The departure of Volcker, 83, from the President's Economic Recovery Advisory Board is among a series of changes Obama is planning to announce soon.
The decision to leave the board was Volcker's. A source close to him said he was ready to continue to advise Obama on an informal basis as often as the president would like.

Volcker became a legendary figure on Wall Street when as Fed chief he broke the back of double-digit U.S. inflation in the early 1980s by sharply raising interest rates.

He began advising Obama during his 2008 presidential campaign and has wielded clout on issues ranging from financial regulation to fiscal policy.

Unique among people who offer economic counsel to Obama from the outside, Volcker has a direct line to the president and does not need to go through the White House economic team to schedule a meeting or a phone call.

But there have been moments of awkwardness for him. Volcker frequently delivers speeches to policy and business audiences, and it has been frustrating for him that when he comments publicly on issues like a value-added tax, his presidential advisory board role has sometimes led people to mistakenly assume he is speaking on behalf of the White House.

The White House declined to comment on Volcker's exit. The formal announcement of Volcker's departure is likely to come on Friday when Obama will unveil a number of other changes to his economic team.

The former central banker was the driving force behind the "Volcker Rule," a provision in last year's financial reform bill that puts limits on proprietary trading by U.S. banks.
Many on Wall Street vigorously fought the Volcker Rule and some sought to portray Volcker as out of touch with the modern financial system. But he has also received credit for reining in financial industry excesses that helped prompt the global economic crisis.


"My feeling is job well done," said Thomas Russo, a partner in Gardner Russo & Gardner, a Pennsylvania investment manager with assets under management of $2.38 billion.

"He was a voice of reason as he addressed excesses that inevitably develop in Wall Street conduct when the guardrails are taken down from the financial superhighway."

Obama also plans to make an announcement on a replacement for Larry Summers, who stepped down as director of the National Economic Council to return to his role on the faculty of Harvard University.

Gene Sperling, a senior U.S. Treasury official, is the frontrunner to take the helm at the economic council, which coordinates advice to the president throughout the administration.
Obama created the economic recovery panel as a means of getting outside advice from experts in business, labor and academia when the economy was in a tailspin. Tax reform and economic competitiveness are among the issues it has weighed in on.

Obama, who has been trying to mend frayed ties with the business community, is considering whether to shift the focus of the economic panel to one that has a greater focus on business outreach.

Volcker will leave the panel in early February.

Some people viewed as possible replacements for Volcker include Yale University's Richard Levin and Jim Owens, who retired in October as chairman of Caterpillar Inc.

Wall Street is closely watching as regulators put more flesh on the bones of the curbs on proprietary trading that threaten billions of dollars in Street profits.

Bank of America (BAC.N), Morgan Stanley (MS.N), and Goldman Sachs (GS.N) have backed out of or scaled back their proprietary trading and private equity businesses in anticipation of the Volcker rule roll-out.

Gross Says Fear ‘Mindless’ U.S. Deficit Spending

PIMCO's Bill Gross is parroting what I've been ranting about for years.  PIMCO funds have over $1 trillion under management.  When the world's biggest bond fund manager says to stay away from US Treasury bonds, one may want to heed his advice.
“The problem is that politicians and citizens alike have no clear vision of the costs of a seemingly perpetual trillion dollar annual deficit,” Gross wrote in a note on Pimco’s website today. “As long as the stock market pulsates upward and job growth continues, there is an abiding conviction that all is well and that ‘old normal’ norms have returned. Not likely. There will be pain aplenty.”
 “All investors should fear the consequences of mindless U.S. deficit spending.” wrote Gross, a founder and co-chief investment officer at Pimco. Like a female mantis who eats the head of her mate while reproducing, policy makers are “munching on the theoretical heads of future generations, while paying no mind to the wretches that will eventually be called upon to pay the bills,” he wrote.
Bond investors will suffer once general prices start to rise, Gross wrote. He declined to be interviewed today. 

“The American answer to a bulging waistline is always ‘maƱana’” Gross wrote. “Eventually, as reflationary policies take hold, long-term bondholders lose their heads (and a portion of their principal as well), as yields rise to reflect higher future inflation.”

Quote on national debt

Guess who said this?
"The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better." - Senator Barack Obama, March 20, 2006

Wednesday, January 5, 2011

Gold Breaks 50-Day Moving Average

In order to be fair and balanced, this article is bearish on gold.  Readers should perform their own due diligence before deciding to invest.

Barron's: US Will See Run on Treasurys, Hyperinflation

Doug Casey on Surviving Financial Apocalypse Now

Alan Greenspan: The Age of Turbulence

Former Fed Chairman Alan Greenspan on Jon Stewart's The Daily Show, September, 2007:

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Alan Greenspan
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Ron Paul: Recipe for a Successful 2011

Race to Debase

John Embry - Gold Over $2,000, Silver Above $50 in 2011

Strong 2011 Expected for Gold Shares Despite Initial Weakness

Jim Rogers: I Would Rather Own Silver Than Gold

Rogers also likes rice, and other agriculture commodities.

Federal Reserve: Money-printing will continue at "full throttle"

That's an interesting take on rising interest rates--that the economy is recovering.  I believe the bond markets are starting to fear inflation more than anything else.  We shall see.

My belief is that hyperinflation is what we should guard against most, not deflation.  Americans don't complain when their heating and grocery bills decline.  Again, we shall see.

AGFLATION: World food prices surge to an all-time high

Inflation and food shortages:  unintended consequences of loose monetary policy, courtesy of the Fed.

KWN - World’s Richest Man Entering Silver Gaining Momentum

Monday, January 3, 2011

India to drop US buck in Iran oil dealing

The Scramble By Bank Of America To Negate Wikileaks Upcoming "Ecosystem Of Corruption" Disclosure
Last month, the bank bought up Web addresses that could prove embarrassing to the company or its top executives in the event of a large-scale public assault, but a spokesman for the bank said the move was unrelated to any possible leak.