Tuesday, July 31, 2012

The Central Banking Theater of the Absurd

http://www.oftwominds.com/blogjuly12/theater-of-absurd7-12.html

Why Big Banks Are Above the Law

http://www.usnews.com/opinion/blogs/economic-intelligence/2012/07/30/why-big-banks-are-above-the-law

Deutsche Bank Rats Out, Then Cuts JPMorgan

The collapse of the global banking system may occur quicker than expected.  The sharks are devouring the sharks.


http://www.thestreet.com/story/11643616/1/deutsche-bank-rats-out-then-cuts-jpmorgan.html

This Is What 670 Million People Without Power Look Like: Pictures From A Blacked Out India

http://www.zerohedge.com/news/what-670-million-people-without-power-look-pictures-blacked-out-india

Breaking News ENI 2Q ADJ NET EU1.46 BLN; ANALYST EST EU1.52 BLN Peregrine Trustee Seeks to Subpoena Banks on Transfers

JPMorgan is being investigated in Peregrine's bankruptcy and the vaporization of segregated accounts.  What a surprise.

http://www.bloomberg.com/news/2012-07-31/peregrine-trustee-seeks-to-subpoena-banks-on-transfers.html

Homeless Children


http://www.cbsnews.com/video/watch/?id=7416542n

Monday, July 30, 2012

The world’s gold is moving from West to East

http://www.sovereignman.com/correspondents/the-worlds-gold-is-moving-from-west-to-east-8164/

The Fed On Gold Price Manipulation

Another must-read re-post.

http://www.zerohedge.com/news/fed-gold-price-manipulation

The Justice Department’s MF Global Scandal Dates to 1932

There's an old saying in journalism that there are no new stories, only new reporters. The revelation that U.S. Attorney General Eric Holder's old law firm used to represent the bankrupt brokerage firm MF Global Holdings is a great example. 
"Those wondering why the Department of Justice has refused to go after Jon Corzine for the vaporization of $1.6 billion in MF Global client funds need look no further than the documents uncovered by the Government Accountability Institute that reveal that the now-defunct MF Global was a client of Attorney General Eric Holder and Assistant Attorney General Lanny Breuer’s former law firm, Covington & Burling." 
It's great fodder for the scandal mill. It's also not a surprise. Covington & Burling, a powerhouse Washington law firm that was founded in 1919 by former Representative James Harry Covington, in recent years has represented JPMorgan Chase, Wells Fargo, Citigroup, Bank of America, Morgan Stanley, Goldman Sachs and UBS, to name a few. It would have been more surprising if the firm had never represented MF Global. Corzine, for anyone who hasn't been paying attention, is the former New Jersey governor who was MF's chief executive when it collapsed.

Saturday, July 28, 2012

Austerity At The Olympics: Each "Gold" Medal Contains 1.34% Gold

http://www.zerohedge.com/news/austerity-olympics-each-gold-medal-contains-134-gold

As Assad teeters, Israel prepares for battle to secure chemical weapons

With the fall of Assad's regime imminent, Syria is about to become commando central.  Intelligence from many countries are rapidly descending on the civil war-torn country to ensure Syria's chemical weapons won't fall into the wrong hands.

Any entrepreneurs selling gas masks will make a fortune.

http://www.foxnews.com/world/2012/07/28/as-assad-teeters-israel-prepares-for-battle/


Friday, July 27, 2012

The Absurdity of Sandy Weill

http://azizonomics.com/2012/07/27/the-absurdity-of-sandy-weill/

IMF Lagarde: US Fiscal Cliff Key Global Risk; Oil A Worry

http://www.forexlive.com/blog/2012/07/26/imf-lagarde-us-fiscal-cliff-key-global-risk-oil-a-worry/

Zynga "analysts"

Zynga shares tanked 40% earlier this week after disappointing earnings, revenues and bookings.  21 Wall Street analysts follow Zynga, whose shares traded above $14 earlier this year, and were trading above $5 Wednesday, before plummeting to below $3 in the after-hours trading session.

Of the 21 analysts listed below, 20 had a Buy or Hold recommendation, with price targets ranging from $17 to $5.  In hindsight, all 20 were not just wrong--but outrageously wrong, presumably costing clients billions of dollars.  A few publicly apologized for their wrong calls.

But wait.  Of the 21 analysts, one got it right, giving a recommendation of "Underweight" for shares of ZNGA.  It must be some genius phenom analyst, right?

Sort of.  The 20 wrong-call analysts had another thing in common:  they were all human.  The lone "analyst" who got it right?  Why, "she" was a computer model: EVA Dimensions.  See for yourself.

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/07-2/20120725_znga_anr.png

Apparently, HAL has a girlfriend who's equally prescient.

As for the "smartest guys in the room" (and they are all guys), I'm sure their performance for analyzing Facebook will undoubtedly be scintillating.


Which Of These Facebook Analysts Is Not Like The Others?

http://www.zerohedge.com/news/which-these-facebook-analysts-not-others

Bernanke and Draghi Are Dangerous

http://www.oftwominds.com/blogjuly12/Draghi-is-dangerous7-12.html

Bankrupt Cities and Municipalities Map

http://www.governing.com/gov-data/other/municipal-cities-counties-bankruptcies-and-defaults.html

From Natural Resources to Currency Wars w/Rick Rule & Jim Rickards


http://youtu.be/OGyKtaeJbGE

Still Think That Money Market Fund Is “Cash”?

http://dollarcollapse.com/capital-controls/still-think-that-money-market-fund-is-cash/

Congressman Ron Paul on Bloomberg News July 25, 2012


http://youtu.be/y7ST35eXM4w

Wednesday, July 25, 2012

Gold Shorts Getting Torched, Don’t Lose Your Position

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/7/26_Gold_Shorts_Getting_Torched%2C_Dont_Lose_Your_Position.html

Kyle Bass Vindication Imminent? Largest Japanese Pension Fund Begins To Sell JGBs

The "short Japanese government bonds" trade has been dubbed the "widowmaker" because it has been a losing trade for more than 20 years.  Perhaps the shorts were just early.

http://www.zerohedge.com/news/kyle-bass-vindication-imminent-largest-japanese-pension-fund-begins-sell-jgbs

For grins, here's a re-posting of Japan's wtf chart:

http://www.zerohedge.com/news/japans-wtf-chart

Gerald Celente - Gold & The Greatest Bank Robbery In History

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/7/25_Gerald_Celente_-_Gold_%26_The_Greatest_Bank_Robbery_In_History.html

You Didn’t Build That

http://azizonomics.com/2012/07/25/you-didnt-build-that/

Riot police, protesters clash in Anaheim for 4th night over police shootings

http://www.cbsnews.com/8301-201_162-57479428/riot-police-protesters-clash-in-anaheim-for-4th-night-over-police-shootings/

Mainstream Media Recovery Hoax

http://usawatchdog.com/mainstream-media-recovery-hoax/

Study: One-Third Of Colleges, Universities In ‘Real Financial Trouble’

http://atlanta.cbslocal.com/2012/07/24/study-one-third-of-colleges-universities-in-real-financial-trouble/

Mississippi River so low, cargo barges run aground

Another reason why inflation may rear its ugly head.  Currency debasement is the biggest reason.  But official inflation statistics will reassure us that all is well, and that Mother Nature is the culprit.

http://www.msnbc.msn.com/id/48197693/ns/us_news-environment/t/mississippi-river-so-low-cargo-barges-run-aground/#.UBBl0KOJmSo

Food Inflation May Rise to 3% to 4% in 2013 After Drought

There a myriad of reasons why we will have food inflation, in addition to the current drought.  There are two other reasons few understand:  the bankruptcies of MF Global and Peregrine--and subsequent theft of client segregated funds.  Many of these clients included farmers hedging their crops and livestock.  With their funds dissipated from the fraud, the crop and feed shortages will become more acute going forward.  It takes money to grow crops:  for seed, fertilizer, labor, machinery, water, and land.  No money, no honey.


http://www.bloomberg.com/news/2012-07-25/food-inflation-may-rise-to-3-to-4-in-2013-after-drought-1-.html

Federal Reserve Audit Bill Overwhelmingly Passes The House

http://www.huffingtonpost.com/2012/07/25/federal-reserve-audit-bill_n_1702879.html?utm_hp_ref=mostpopular

Ron Paul: "Isn't the Fed manipulating interest rates?"

http://www.c-spanvideo.org/clip/3549622

War On All Fronts

http://www.paulcraigroberts.org/2012/07/16/war-on-all-fronts/

All Investment Avenues are Rigged

http://goldswitzerland.com/all-investment-avenues-are-rigged/
“I suspect that all markets, not only bonds, but also equity and bullion markets, are rigged in order to maintain the Fed’s low interest policy”, Roberts says.

In Defining Hypocrisy, Weill, Who Led Repeal Of Glass Steagall, Now Says Big Banks Should Be Broken Up

An example of another pos (former) banker.


http://www.zerohedge.com/news/defining-hypocricy-weill-who-led-repeal-glass-steagall-now-says-big-banks-should-be-broken

Global Crisis: the Convergence of Marx, Orwell and Kafka

http://www.oftwominds.com/blogjuly12/Marx-Orwell-Kafka7-12.html

Stephen Roach: “The Fed is flailing..."


http://bloom.bg/Mm5Cwu

Tuesday, July 24, 2012

Fed Leaning Closer to New Stimulus if No Growth Is Seen

More "foreshadowing" from the Fed on QE3.

http://www.nytimes.com/2012/07/25/business/economy/fed-leaning-closer-to-new-stimulus.html?_r=1

The New Economic Collapse Video: It makes uncomfortable but urgent viewing.

http://www.caseyresearch.com/articles/new-economic-collapse-video-it-makes-uncomfortable-urgent-viewing?ppref=ZHB459ED0712B

The Real Unemployment Numbers


http://video.foxbusiness.com/v/1748956928001/

50 Pounds Lighter, Reporter Still Belviq Fan

http://www.medpagetoday.com/primarycare/obesity/33723

Gold goes where The Money is

This is a must-read interview with Ronald Stoeferle, a commodity analyst.

http://goldswitzerland.com/gold-goes-where-the-money-is/

Euro crisis flowchart

Euro crisis flowchart, courtesy of David Einhorn of Greenlight Capital.

Click on image to enlarge.

CNBC's Rick Santelli rants--again

Rick Santelli's rants are pure entertainment for his honesty and conviction.  Meanwhile, the status quo resorts to tired cliches on "policy solutions."  "The Professor" is the distinguished Jeremy Siegel, the genius professor at Wharton Business School who proclaimed a target of 36,000 for the Dow Jones Industrial Average back in 1999--right before its ultimate peak, and the first of two crashes within a decade.  Great call, Dr. Siegel.  We really, really look forward to your next great prognostication.

As for CNBC host Steve Liesman, the shill for the Fed and US Treasury has a name which is descriptive--"Lies-man."





Lyndon B. Johnson - Remarks at the Signing of the Coinage Act

Boy, was President Lyndon Johnson wrong on silver coins.

http://www.presidency.ucsb.edu/ws/?pid=27108

Ted Butler: U.S. government is part of the war on silver

http://www.gata.org/node/11601

Why the idea of the Bank of England tampering with LIBOR isn’t as crazy as you think

http://www2.macleans.ca/2012/07/23/why-the-idea-of-the-bank-of-england-tampering-with-libor-isnt-as-crazy-as-you-think/

Monday, July 23, 2012

The War on Silver

http://www.silverseek.com/commentary/war-silver

CFTC’s Chilton Sees Silver Probe Concluding This Year

My guess is that this latest investigation into silver manipulation will yield nothing, similar to previous investigations.  Bart Chilton has been talking a good game, the only regulator who has joined the chorus of investors who allege that commodities markets have been illegally manipulated, but he keeps getting overruled.  He's nothing but a false flag to appease the angry mob.

The CFTC, CME, the bullion banks, the Fed and the Treasury are all in on it.  Banks, sovereign governments, and central banks do NOT want higher bullion prices, plain and simple.  A self-investigation will yield nothing.  The LIBOR scandal may produce some prosecutions and resignations, but all in all, a slap on the wrist in the form of fines will be the end result.

If you're going to steal, join a too-big-to-fail bank and steal big.  You'll not only get away with it, but even if you are caught red-handed, you'll also receive a multimillion dollar parachute for a "job well-done."

http://www.bloomberg.com/news/2012-07-23/cftc-s-chilton-sees-silver-probe-concluding-this-year.html

The Dawn of the Great California Energy Crash

http://www.peakprosperity.com/blog/79256/dawn-great-california-energy-crash

Know Your Money: Gold & Silver


http://youtu.be/PDVDoXUQRHo

Fed official highlights benefits of flexible QE

http://www.reuters.com/article/2012/07/23/us-fed-idUSBRE86M01E20120723

The New York Fed On The "Phenomenal Asset" That Is Gold

This goes against Fed Chairman Bernanke declaring the purpose of the US Treasury of holding gold is merely done for "tradition."  He should tell the New York Fed to modify their brochures.


http://www.zerohedge.com/news/new-york-fed-phenomenal-asset-gold

Why the U.S. Dollar Is Not Going to Zero Anytime Soon

http://www.oftwominds.com/blogjuly12/dollar-safe-haven7-12.html

You’ll love the new nickname they have for the dollar here…

http://www.sovereignman.com/expat/youll-love-the-new-nickname-they-have-for-the-dollar-here/

Desperate CME Tries To Regain Client Confidence In MFG, PFG Aftermath; Sends Letters To Customers

In other words, blah blah blah...

CME:
Congress, federal regulators, industry regulators, industry groups and CME are all working towards the same goal: to ensure that market users have confidence in all aspects of the industry, and that the appropriate protections are in place at every point in the system. Every link in the chain has to be as strong as the next. The businesses and individuals who rely on the futures markets to manage their risk rely on all of us to collectively manage their trust.
http://www.zerohedge.com/news/desperate-cme-tries-regain-client-confidence-mfg-pfg-aftermath-sends-out-letters-customers

Saturday, July 21, 2012

China Gold Scam Could Translate Into Higher Demand

http://www.forbes.com/sites/kitconews/2012/07/20/focus-china-gold-scam-could-translate-into-higher-demand/?partner=yahootix

HSBC Reminds Us Why Anger at Bankers Is the Norm

http://www.bloomberg.com/news/2012-07-19/hsbc-reminds-us-why-anger-at-bankers-is-the-norm.html

Timothy Geithner Peppered TARP Inspector General Barofsky With F-Bombs: Book

http://www.huffingtonpost.com/2012/07/19/timothy-geithner-neil-barofsky-tarp_n_1686047.html?utm_hp_ref=business

After Libor, where will the next scandal be?

http://www.independent.co.uk/news/business/analysis-and-features/special-report-after-libor-where-will-the-next-scandal-be-7946899.html

California Proposes Tax On Driving

http://autos.aol.com/article/california-proposes-tax-on-driving/

Still Think That Money Market Fund Is “Cash”?

http://dollarcollapse.com/capital-controls/still-think-that-money-market-fund-is-cash/

Sprott - The Frightening Black Swan Nobody Is Talking About

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/7/21_Sprott_-_The_Frightening_Black_Swan_Nobody_Is_Talking_About.html
“It’s beyond the ability of governments to deal with all of these weak countries.  There are only one of two answers:  Yes, someone could print as much money as they want.  Maybe they could print $5 trillion and say, ‘We’ll back up all of the banking systems.’”

“And then one could maybe say the problem is solved.  Of course the problem is, if they print $5 trillion, everyone knows they can’t back it up with anything.  Then you will lose confidence in the currency and you will go into hyperinflation because people will realize that real things are safer than paper things, including bonds and stocks and things like that.

So there are only two choices, they’ve got to print or there are going to be some defaults, which is the natural offspring of a Minsky moment...

“Sooner or later you have to write off the debt or you have to inflate it away.

If they inflate it away, then the reason for gold and silver to go higher will be incredible.  If they deflate it away, the need for people to take their money out of banks so the depositor doesn’t lose money becomes all that more apparent.  And where do you put that money you take out of the bank?  Well, the logical thing is to have it in gold and silver.”

“My biggest black swan, Eric, is that I think I’ll be right one day.  My worry is that one day they just shut everything down.”   They say, ‘You know what, we just can’t keep this up anymore, the whole Ponzie (scheme), we just can’t do it and we shut it down.’  All of the markets freeze, and the stocks that you are short are never allowed to go where they were. 

They might cease gold trading, in the normal sense, or maybe they will even outlaw gold trading.  But that’s my biggest worry.  Because everything else, everything that one would theorize and watch, in practical terms, all (of it) argues for gold and silver to win the day.


Huntsman Cable: China & US Trade War Heating Up

http://azizonomics.com/2011/09/15/huntsman-cable/
The United States no longer sits still; it frequently uses evil tricks to force China to buy U.S. bonds”
The Shanghai-based Shanghai Media Group (SMG) publication, China Business News: “This time the quick change of the U.S. policy (toward China) has surprised quite a few people.  The U.S. has almost used all deterring means, besides military means, against China.  China must be clear on discovering what the U.S. goals are behind its tough stances against China.  In fact, a fierce competition between the currencies of big countries has just started.  A crucial move for the U.S. is to shift its crisis to other countries – by coercing China to buy U.S. treasury bonds with foreign exchange reserves and doing everything possible to prevent China’s foreign reserve from buying gold. 

If we [China] use all of our foreign exchange reserves to buy U.S. Treasury bonds, then when someday the U.S. Federal Reserve suddenly announces that the original ten old U.S. dollars are now worth only one new U.S. dollar, and the new U.S. dollar is pegged to the gold – we will be dumbfounded.

Today when the United States is determined to beggar thy neighbor, shifting its crisis to China, the Chinese must be very clear what the key to victory is.  It is by no means to use new foreign exchange reserves to buy U.S. Treasury bonds.  The issues of Taiwan, Tibet, Xinjiang, trade and so on are all false tricks, while forcing China to buy U.S. bonds is the U.S.’s real intention.”

10 Spectacular Speculations from The Great Financial Adventures of the Past 300 Years

http://greshams-law.com/2012/07/21/10-spectacular-trades-from-the-best-financial-adventures-of-past-300-years/

Greyerz: $1.5 Quadrillion Bubble & Gold Into The Stratosphere

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/7/20_Greyerz__%241.5_Quadrillion_Bubble_%26_Gold_Into_The_Stratosphere.html
The world is simply drowning in debt.”  This is why it is guaranteed that governments will print money,” and that “Prices of hard assets will go into the stratosphere.”

"You now have a total worldwide debt of around $150 trillion.  If you add to that contingent liabilities, unfunded liabilities, pension funds, etc., you are talking about $500 trillion.”

“If you add to that the outstanding derivatives, which are around one quadrillion dollars, and there are no reserves for them.  These are issued without any real asset backing them.  If you combine the two figures you are at a staggering one and a half quadrillion dollars.  That’s against world GDP which is around $50 trillion.

So you are talking here about a leverage of 30 times global GDP...."

“How can anyone in the world invest in any government bond when they know that it can never be repaid?  The world is simply drowning in debt.  This is why it is guaranteed that governments will print money.

So the money printing will come and the hyperinflation will come because without that we have no banking system and no financial system left.  You are talking about hundreds of trillions of dollars that potentially need to be printed.  The effect of this on the global economy will be disastrous.

Prices of hard assets will go into the stratosphere, and this, of course, includes gold and silver.  Last time we talked about my target on gold of $3,500 to $5,000 over the next 12 to 18 months, and then over $10,000 in 3 years.  But with all of the money creation we are talking about, the world will experience massive inflation.  We already know that gold went from 100 marks to 100 trillion marks, from 1919 to 1923, during the Weimar Republic.

With world debt at much greater levels today vs that time period, the gold price will eventually have lots and lots of zeros after it.  But people who are still holding paper money may very well find it is worthless.  At least gold will protect your purchasing power.

What has to be said today to holders of government debt, which yields nothing, is when you have governments like the US, Spanish, Greek, and now even the German government with all of their ballooning commitments, there is no government that will ever be able to repay these debts.

This is why it’s so important for KWN readers to understand the consequences and be able to protect themselves.  Readers and listeners must understand the risks in the system here and take precautions.  We may be in the summer doldrums, but the next move will come.  It’s not far away at this point.”



London Trader - The LBMA Gold Price Fixing Scheme Is Over

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/7/20_London_Trader_-_The_LBMA_Gold_Price_Fixing_Scheme_Is_Over.html
It is now beginning to be discussed, openly, that the unallocated gold is not at the banks.  This is definitely the case with many of the allocated accounts as well.  The reason I’m pointing this out is you have a more ‘open’ disclosure that’s taking place with regards to this.

As this scandal is brought to light, that the unallocated gold and silver are not there, and much of the allocated gold and silver is not at these banks either, and as you see these naked short positions unwound, the world will witness a massive price rise in in both gold and silver.  The move in gold and silver, at that point, will literally frighten most people.  They simply won’t understand what is happening.

When someone goes to a bank and deposits money, if you look at the small print, you don’t actually own that money, you’ve simply loaned it to the bank.  The banks will then turn right around and lend ten to one or whatever leverage they determine to use with your cash.  Well, when there is a run on the banks, as there has been in Europe, the money is printed by governments and given to the customers to calm things down.

The underlying problem here is that when the run on physical gold and silver begins, how will the banks print the gold and silver?  It’s not possible.  So something is brewing here.  There’s no smoke without a fire.  The reason this information is beginning to be discussed more openly is because of legal reasons.  They need to be able to say, ‘We disclosed to people that the gold and silver wasn’t there.’ 

Yes, this will include a scandal at the LBMA in those unallocated accounts.  The paper leverage in the LBMA system is off the charts.  Investors believe their gold and silver is sitting in those unallocated accounts, and they will be in shock when they find out it isn’t there.

We are talking here about a run on the bullion bank.  As this unfolds there will be a failure.  These people will only receive the fixed price before trading is halted.  This will not be called a default.  Then there will be a massive gap in the price of gold and silver.  But the bullion banks will not be allowed to go bankrupt during this process.  There is a ring of counterparties here.  If one of them fails, the whole system can fail.  So they will not be allowed to fail.”

“I would also add that demand for gold from China is unceasing.  The Chinese not only want to diversify out of dollars, but now they also want to diversify out of the euro as well.  They are trying to do this in size.  They want out of those currencies, and what they are doing is exchanging them at the fixes in London for gold, and this will surprise some people, but we are beginning to see it in silver as well. 

Gold is the primary focus, but very recently, and on every dip, we are seeing significant purchases of silver in size.  So yes, demand from China, it’s unceasing.  They want out of these debasing currencies.  I would add that they are buying anything that’s tangible, land, timber, mines, art, etc.. 

It is absolute nonsense when people speculate the Chinese may stop buying gold and silver.  When you see 315 tons of gold was purchased by China in the first five months of the year, that’s just the tip of the iceberg.  That 315 ton figure that was recently reported is patently false.  That’s just what they can’t hide.  The actual amount of gold China has accumulated is many times that 315 ton figure.

The buying is relentless.  It’s every single fix, every single day.  The Chinese are eventually planning to have gold back their new currency, which is going to replace the dollar as the reserve currency.”

“It’s not just Chinese demand impacting the physical markets.  It’s the Middle-Eastern countries and Russia and so on.  Investment demand for silver is also picking up at these levels.  Demand is coming from the Middle-East, and India has also become a bigger buyer of silver.

I would also add that you see a great deal of negative press regarding gold.  Many are saying, ‘Look at 2008, they are going to sell gold along with everything else and it’s going to crash.’  What people don’t understand is gold is on its way back into the financial system.

We had the recent proposal to have gold categorized as a Tier-1 asset.  This moves the risk weighting from 50% to 0%.  Most people have not grasped the full significance of this proposal.  This will change the entire mechanics of the gold market when there is a time of stress, such as the one we witnessed in 2008.

This is one of the major reasons why those calling for a collapse in gold are going to be proven wrong.  Yes, in 2008/2009 we did see a significant correction in the price of gold, and that was a result of the liquidity drying up.  But in 2008, because gold was not considered a Tier-1 asset, it forced the banks to sell their only remaining liquid asset in order to raise cash.  This was done to meet margin requirements.

There was so much gold hitting the bid all at once that it was like a huge bottleneck.  This instigated a $200, waterfall-type decline, that amounted to a roughly 20% correction in gold in just 30 days.  This took place against tremendous fundamentals for gold.  In fact, the fundamentals for gold were so strong, that when gold bottomed in 2009, it only took just over 30 days for gold to break back above the level where the waterfall decline first began.

The difference this time around is that gold may be considered a Tier-1 asset, and what that means is that it will be equal to cash or Treasuries.  So there will be no need for banks to liquidate gold in order to meet margin requirements.  You may, instead, see fresh new money entering the gold market.  It’s going to provide a bid where there was no bid in 2008.”


This Is Why Central Banks Continue To Scramble For Gold

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/7/20_This_Is_Why_Central_Banks_Continue_To_Scramble_For_Gold.html
In the end we will have a new monetary system.  What emerges will probably be very unlike the system currently in place.  Instead of a global reserve currency and a single, powerful central bank, it will most likely devolve back to the country or trading bloc levels.


The wealth harvesters we described earlier in the week will have a rough go of it.  Now that more people understand their scheme and how extraordinarily profitable it can be, each country or bloc will likely want to run their own version for their own benefit.  This could be why central banks continue to scramble for gold.  If you are going to run your own fractional banking system, you need to start out by seeding it with something of unquestionable value such as gold, as they did centuries ago.

We do not wish to underestimate the wealth harvesters.  They have lasted kings, governments and countries for centuries.  However, in the Internet age, we wonder whether or not the old way of doing business can be maintained.  We will see.  It should be an epic struggle.

In our view, it is important to keep in mind that expanding commerce relies on the perception of sound money.  Sound money enables the division of labor and competitive advantage concepts that are a prerequisite for sustainable prosperity. 

The world has long since left the ancestral world of direct exchange of goods.  Returning to it will result in a dramatically lower standard of living for everyone.  We need some sort of system that encourages and does not impede commerce.  Paper and electronic money are not inherently evil, just the abuse of it.

History tells us that the current status of corruption, greed, unrealistic expectations and monetary abuse is coming to an end.  What kind of resolution lies ahead is impossible to handicap.  We do not know whether we will see a secular move up in inflation, hyper-inflation or even deflation.  It depends upon the choices that our leaders and our societies make.  What we do know is that real assets will survive and that paper and electrons will not.

As investors, the only path to safety is the transition to something that cannot be inflated away, such as solid companies, energy, collectibles and precious metals.”

Friday, July 20, 2012

Scandal At The IMF: Senior Economist Resigns, Says "Ashamed To Have Had Any Association With Fund At All"

http://www.zerohedge.com/news/scandal-imf-senior-economist-resigns-says-ashamed-have-had-any-association-fund-all

Global Plans to Replace the Dollar

http://www.voltairenet.org/Global-Plans-to-Replace-the-Dollar

Why the U.S. Is in an Invisible Depression


http://live.wsj.com/video/why-the-us-is-in-an-invisible-depression/

China to launch interbank gold market

The west is selling gold and the east is buying.

http://www.ft.com/intl/cms/s/0/9d707c16-d191-11e1-bb82-00144feabdc0.html#axzz21BVSMBGs

Qysmia Medication Guide

This medication guide will be given to every Qysmia patient.  This first page covers all the potential adverse side effects.  In other words, "good luck"--especially if you're an obese woman of child-bearing age.


MEDICATION GUIDE
QSYMIA™ (Kyoo sim ee’ uh)
(phentermine and topiramate extended-release)
Capsules

Read this Medication Guide before you start taking Qsymia and each time you get a refill. There may be new information. This information does not take the place of talking to your healthcare provider about your medical condition or treatment. If you have any questions about Qsymia, talk to your healthcare provider or pharmacist.
What is the most important information I should know about Qsymia?
(For other side effects, also see “What are the possible side effects of Qsymia?”)

Qsymia can cause serious side effects, including:
• Birth defects (cleft lip/cleft palate). If you take Qsymia during pregnancy, your baby has a higher risk for birth defects called cleft lip and cleft palate. These defects can begin early in pregnancy, even before you know you are pregnant.
Women who are pregnant must not take Qsymia.
Women who can become pregnant should:
1. Have a negative pregnancy test before taking Qsymia and every month while taking Qsymia.
2. Use effective birth control (contraception) consistently while taking Qsymia. Talk to your healthcare provider about how to prevent pregnancy.

If you become pregnant while taking Qsymia, stop taking Qsymia immediately, and tell your healthcare provider right away. Healthcare providers and patients should report all cases of pregnancy to:
 FDA MedWatch at 1-800-FDA-1088, and
 The Qsymia Pregnancy Surveillance Program at 1-888-998-4887

• Increases in heart rate. Qsymia can increase your heart rate at rest. Your healthcare provider should check your heart rate while you take Qsymia. Tell your healthcare provider if you experience, while at rest, a racing or pounding feeling in your chest lasting several minutes when taking Qsymia.
• Suicidal thoughts or actions. Topiramate, an ingredient in Qsymia, may cause you to have suicidal thoughts or actions. Call your healthcare provider right away if you have any of these symptoms, especially if they are new, worse, or worry you:
o thoughts about suicide or dying
o attempts to commit suicide
o new or worse depression
o new or worse anxiety
o feeling agitated or restless
o panic attacks
o trouble sleeping (insomnia)
o new or worse irritability
o acting aggressive, being angry, or violent
o acting on dangerous impulses
o an extreme increase in activity and talking (mania)
o other unusual changes in behavior or mood

• Serious eye problems which include:
o any sudden decrease in vision, with or without eye pain and redness,
o a blockage of fluid in the eye causing increased pressure in the eye
(secondary angle closure glaucoma).

These problems can lead to permanent vision loss if not treated. Tell your healthcare provider right away if you have any new eye symptoms.
(snip)
It is not known if Qsymia changes your risk of heart problems or stroke or of death due to heart problems or stroke.

(snip)
• Do not stop taking Qsymia without talking to your healthcare provider. Stopping Qsymia suddenly can cause serious problems, such as seizures. Your healthcare provider will tell you how to stop taking Qsymia slowly.

(snip)What should I avoid while taking Qsymia?
• Do not get pregnant while taking Qsymia.
See
“What is the most important information I should know about QSYMIA.”
• Do not drink alcohol while taking Qsymia.
Qsymia and alcohol can affect each other causing side effects such as sleepiness or dizziness.
• Do not drive a car or operate heavy machinery, or do other dangerous activities until you know how Qsymia affects you. Qsymia can slow your thinking and motor skills, and may affect vision.
What are the possible side effects of Qsymia?
• See “What is the most important information I should know about Qsymia?” at the beginning of this Medication Guide
• Mood changes and trouble sleeping. Qsymia may cause depression or mood problems, and trouble sleeping. Tell your healthcare provider if symptoms occur.
• Concentration, memory, and speech difficulties. Qsymia may affect how you think and cause confusion, problems with concentration, attention, memory or speech. Tell your healthcare provider if symptoms occur.
• Increases of acid in bloodstream (metabolic acidosis). If left untreated, metabolic acidosis can cause brittle or soft bones (osteoporosis, osteomalacia, osteopenia), kidney stones, can slow the rate of growth in children, and may possibly harm your baby if you are pregnant. Metabolic acidosis can happen with or without symptoms. Sometimes people with metabolic acidosis will:
feel tired
not feel hungry (loss of appetite)
feel changes in heartbeat
have trouble thinking clearly

Your healthcare provider should do a blood test to measure the level of acid in your blood before and during your treatment with Qsymia.
• Low blood sugar (hypoglycemia) in people with type 2 diabetes mellitus who also take medicines used to treat type 2 diabetes mellitus. Weight loss can cause low blood sugar in people with type 2 diabetes mellitus who also take medicines used to treat type 2 diabetes mellitus (such as insulin or sulfonylureas). You should check your blood sugar before you start taking Qsymia and while you take Qsymia.
• Possible seizures if you stop taking Qsymia too fast. Seizures may happen in people who may or may not have had seizures in the past if you stop Qsymia too fast. Your healthcare provider will tell you how to stop taking Qsymia slowly.
• Kidney stones. Drinking plenty of fluids when taking Qsymia to help decrease your chances of getting kidney stones. If you get severe side or back pain, and/or blood in your urine, call your healthcare provider.
• Decreased sweating and increased body temperature (fever). People should be watched for signs of decreased sweating and fever, especially in hot temperatures. Some people may need to be hospitalized for this condition.

Common side effects of Qsymia include:
• numbness or tingling in the hands, arms, feet, or face (paresthesia)
• dizziness
• change in the way foods taste or loss of taste (dysgeusia)
• trouble sleeping (insomnia)
• constipation
• dry mouth

Tell your healthcare provider if you have any side effect that bothers you or does not go away. These are not all of the possible side effects of Qsymia. For more information, ask your healthcare provider or pharmacist.

Thursday, July 19, 2012

A Message to the Deflationistas

http://www.alphavn.com/2012/07/13/a-message-to-the-deflationistas/

Scenarios for the Upcoming Naval Resource Wars

http://essential-intelligence-network.blogspot.co.il/2012/07/scenarios-for-upcoming-naval-resource.html

Trade Minister must face grilling in parliament over 'shocking' allegations of money laundering at HSBC

http://www.dailymail.co.uk/news/article-2175658/Former-boss-HSBC-warned-money-laundering-2005.html

City of Compton may declare bankruptcy by September: officials

http://news.yahoo.com/city-compton-may-declare-bankruptcy-september-officials-084555526.html?utm_source=twitterfeed&utm_medium=twitter

Brodsky On Gold, 'Credit Money', And Real Return Investing

http://www.zerohedge.com/news/brodsky-gold-credit-money-and-real-return-investing

Three US Aircraft Carriers Now In The Middle East With Fourth En Route

http://www.zerohedge.com/news/three-us-aircraft-carriers-now-middle-east-fourth-en-route

UBS: The Risk Of Hyperinflation Is Largest In The US And The UK

http://www.businessinsider.com/hyperinflation-risk-major-currency-2012-7

Radical gold bugs vindicated?

http://www.marketwatch.com/story/radical-gold-bugs-vindicated-2012-07-16

Peter Schiff - This Is My Single Greatest Fear

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/7/18_Peter_Schiff_-_This_Is_My_Single_Greatest_Fear.html

Tuesday, July 10, 2012

San Bernardino votes to file for bankruptcy protection

http://latimesblogs.latimes.com/lanow/2012/07/san-bernardino-files-for-bankruptcy-protection.html

Is 'Inept' CFTC "The Get-Away Driver" For PFG?


http://bloom.bg/NegIDA

JPMorgan To Clawback Bonuses, Will Announce CIO Loss Just Over $5 Billion

So JPMorgan's whale trade losses out of their CIO office in London "only" amounted to $5 billion, less than the feared $9 billion, but much more than the initial estimates of $2 billion.  All is well--move along.


http://www.zerohedge.com/news/jpmorgan-clawback-bonuses-will-announce-cio-loss-just-over-5-billion

Propping Up The Gold Price?

Well said by John Aziz.

http://azizonomics.com/2012/07/10/propping-up-the-gold-price/
Ultimately, the surge in demand for gold reflects one thing alone: distrust of the increasingly messy, interconnected, over-leveraged and fraudulent financial system. Whether it is China — fearful of dollar debasement — loading up on bullion, or retail investors in the United States or Europe — fearful of another MF Global (or PFG, or Lehman Brothers) — stacking Krugerrands in their basement, demand for gold reflects distrust in finance, distrust in the financial establishment, distrust in banks, distrust in regulators, distrust in government and distrust in the financial media. And it is that distrust — not (by any stretch of the imagination) central bank interventionism — that is the force moving demand for gold.

The distrust is not going anywhere because the system is still rotten. We all know — even Business Insider readers know deep down, I think — that there is something exceedingly rotten at the heart of the global financial system. We don’t know quite how rotten, how deep the rabbit hole goes, who will be implicated, or how fast. But with every LIBOR-rigging scandal (which the Fed, of course, was aware of), every raided segregated account, every devalued pension fund, every failed speculative “hedge”, every Facebook or Zynga pump-and-dump, we get closer to the truth.

There will be no bear market for physical gold until trust in the financial system and regulators is fixed, until markets trade fundamentals instead of the possibility of the NEW QE, until governments represent the interests of their people instead of the interests of tiny financial elites.

PFG's Chairman Was Forging Bank Documents For Years Even As The CFTC Gave An "All Clear"

http://www.zerohedge.com/news/pfgs-chairman-was-forging-bank-documents-years-even-cftc-gave-all-clear

ECRI's Achuthan: "The US Is In Recession Already"

http://www.zerohedge.com/news/ecris-achuthan-us-recession-already

China Imports More Gold From Hong Kong In Five Months Than All Of UK's Combined Gold Holdings

There are several reasons why US economic sanctions against Iran are backfiring.  The biggest being it is accelerating the demise of the USDollar as the global reserve currency, while at the same time, enriching its enemies' gold reserves.  And that list of enemies doesn't just consist of Iran--it also includes China and Russia.

http://www.zerohedge.com/news/china-imports-more-gold-hong-kong-five-months-all-uk-combined-gold-holdings

Expect More Chaos As The Elites Are Now Totally Discredited

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/7/10_Expect_More_Chaos_As_The_Elites_Are_Now_Totally_Discredited.html

The Global Economy: It's All About Increasing Leverage

http://www.oftwominds.com/blogjuly12/leverage7-12.html

Our Money Is Dying

http://www.peakprosperity.com/blog/79219/our-money-dying

‘Idiots' controlling the world's economies - gold in lockdown

http://www.mineweb.com/mineweb/view/mineweb/en/page72068?oid=154699&sn=Detail&pid=110649

Gold is manipulated just as LIBOR was and for same reason, Naylor-Leyland tells CNBC

http://www.gata.org/node/11554
Cheviot Asset Management Investment Director Ned Naylor-Leyland seemed to make his fellow panelists on CNBC Europe very uncomfortable today as he asserted that the gold and silver markets have been manipulated just as the LIBOR interest rate was manipulated, and for the same reason -- to disguise trouble in the world financial system. 

PFG Is Now MFG(lobal) Part 2 As $220 Million In Segregated Client Money Has Just Vaporized

That these financial scandals and outright fraud continue to happen again and again--despite government regulators' assurances they won't happen again should tell us the system is broken--and there is no fix on the horizon.  Yet, the distracted masses continue along, unable and unwilling to think beyond tomorrow's episodes of reality TV.

http://www.zerohedge.com/news/pfgbest-now-mf-global-part-2-220-million-segregated-client-money-has-just-vaporized

Monday, July 9, 2012

Top Fed officials set table for more easing

In the movie business, er...feature film industry, this is called "foreshadowing."

http://www.reuters.com/article/2012/07/09/us-usa-fed-idUSBRE86806020120709

Hang On Because The Chaos is Going to Accelerate

“The fact that this LIBOR scandal has come to the surface is interesting.  It’s an indication of the depth of the corruption in the system.  The LIBOR scandal is just one of the many manipulations going on in the world at this point.” 
“To me the biggest one and the longest running manipulation that no one will acknowledge is the gold and silver suppression scheme.  This has been carried out to keep interest rates at low levels, and to suggest that the monetary policy being invoked is correct. 
To me, the best thing about the LIBOR scandal is more people are going to start waking up to the fact that virtually everything in these markets is fake....

China Threatens With Furious Retaliation In Growing Trade Wars

It's kinda dumb to piss off your rich uncle.

http://www.zerohedge.com/news/china-threatens-furious-retaliation-growing-trade-wars

The Effects Of Increasing Global Money Supply On Gold

http://www.zerohedge.com/news/effects-increasing-global-money-supply-gold

The Perfect Storm - Santelli Meets Farage



ECONOMIC REPORT CARD – FAIL

http://www.theburningplatform.com/?p=36954

Sunday, July 8, 2012

Shhh... Don't Tell Anyone; Central Banks Manipulate Rates

http://www.zerohedge.com/news/shhh-dont-tell-anyone-central-banks-manipulate-rates

Japan Machinery Orders Implode As Global Economy Grinds To A Halt

The Japanese economy isn't falling off a cliff--it has already fallen.

http://www.zerohedge.com/news/japan-machinery-orders-implode-global-economy-grinds-halt

Things That Make You Go Hmmm - Such As The Transition From Conspiracy Theory To Conspiracy Fact

http://www.zerohedge.com/news/things-make-you-go-hmmm-such-transition-conspiracy-theory-conspiracy-fact

This Major Fed Move Is About To Cause Gold To Skyrocket

For you Economics students, watch the multiplier effect kick in while the huge monetary base transforms into an explosion of the money supply.  Sugar kills...but hey, ask, and they shall receive.

The question in my mind is not if--but when.  Some would argue it's been a crime in progress--ever since 1971 or 2001, take your pick.


http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/7/8_This_Major_Fed_Move_Is_About_To_Cause_Gold_To_Skyrocket.html

China Shuns US And Invests Direct In Iran Oil-Fields

Here is the fundamental question for China:  with more than $3 trillion in reserves, would they more likely invest in buying more USDollars, which despite its global reserve currency status, is a decrepit numeraire, or would China more likely investing in securing natural resources (e.g. oil, minerals) to sustain its industrial might today and into the future?  Gee, what a hard choice.


http://www.zerohedge.com/news/china-shuns-us-and-invests-direct-iran-oil-fields

Roubini On 2013's "Global Perfect Storm" And Greedy Bankers "Hanging In The Streets"

http://www.zerohedge.com/news/roubini-2013s-global-perfect-storm-and-greedy-bankers-hanging-streets

The Real Testosterone Junkies

To Noah Smith,

Until you know what you are talking about, and until you blame the deserving perps--and not the ones who expose the perps, here's some unsolicited advice:  STFU.

Kudos to Aziz and zero hedge.

http://azizonomics.com/2012/07/08/the-real-testosterone-junkies/


Bear raids, naked shorts, and high frequency trading

High frequency trading (HFT) isn't toxic by itself.  Ironically, it is the non-trades which distort markets. These algorithms destroy market pricing discovery mechanisms when they are utilized as empty millisecond bids/offers to manipulate prices in the intended direction.

For example, imagine if you were a trader, and all you saw were huge sell orders lined up on your computer screen.  Even if no one hits the offers, enough panicked sellers would hit all the bids, driving down prices.  Never mind that the sell orders were never intended to be executed--they were merely submitted to scare traders (i.e. buyers) out of their positions.

It's analogous to the mafia coming in and putting up For Sale signs on every front law in your neighborhood.  Pretty soon, all buyers would be scared off, and panicked sellers wanting out would sell first before their neighbors do, causing prices to fall further.  Shoot first--ask questions later.

And this is all done despite the mafia not owning a single home in the neighborhood--hence, the phrase "naked sale."  In this hypothetical example, the mafia never owned the homes, but the pervasive presence of the For Sale signs can induce a massive sell-off of homes in the neighborhood--at lower and lower prices.  Ergo, all the homeowners just experienced a bear raid, without knowing what hit them.

In the real world, since real estate is illiquid, transactions normally take weeks and months to consummate.  However, in an era of electronic equities trading, these bear raids can literally occur in a few seconds.  Hedge funds and institutions game the system by placing their servers closer to the electronic exchanges, giving them millisecond competitive advantages.

Line up enough sell orders at varying price points, and a collusion of several miscreants can induce a bear raid of massive proportions.  A naked short can crash the asset in question, and after prices plummet, can scoop up said asset at much lower prices before their competitors can.  In other words, by being more nimble, they make money on the way down--and on the way up with their manipulations.

It's an unfair advantage which the big players have opportunistically exploited, albeit at the expense of smaller investors who rightfully have abandoned the markets.  No one wants to gamble in a casino which is rigged.  With many investors exiting the rigged markets, it has now become a war between battling algorithms, where the sharks no longer have guppies to feed off, but are now devouring each other.

With recent investigations of Barclays rigging the LIBOR and other interest rate markets, their confessional includes pointing the finger at their accomplices in capital markets, including other banks, central banks, and governments.  The house of cards is crumbling, and with it being a glass house, all the perps are being exposed in their nakedness.

What Is Market "Certainty"?

http://www.zerohedge.com/news/what-market-certainty

How To Bring Back America

http://www.zerohedge.com/news/steve-forbes-how-bring-back-america

Switzerland defies US, EU ban on Iran oil

US economic sanctions against Iran may be hampering Iran's economy as intended, but they are also backfiring on the US.  Blockading Switzerland from global capital markets will prove to be misguided (duh!).  Given Zurich's money center status, it would be analogous to trying to remove Wimbledon from the UK.


http://presstv.com/detail/2012/07/06/249681/switzerland-defies-us-eu-ban-on-iran-oil/

Australia seeks to expand dollar-yuan trading

This is more evidence the USDollar is rapidly losing its global reserve currency status--with the Chinese yuan arriving as another currency option.  If China some day announces the yuan will be backed by gold, or institute some variant of a gold standard, the USDollar and Euro will be checkmated.

http://www.smh.com.au/business/markets/australia-seeks-to-expand-dollaryuan-trading-20120705-21j5v.html#ixzz1zrf1lCwR

Paul Brodsky: Central Banks are Nearing the 'Inflate or Die' Stage

http://www.peakprosperity.com/podcast/79208/paul-brodsky-central-banks-are-nearing-inflate-or-die-stage

Friday, July 6, 2012

“Russia and China Will Pay a Price” - Hillary Clinton


http://azizonomics.com/2012/07/06/russia-and-china-will-pay-a-price/

The Lengthy 10 Month Correction In Gold Is Over

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/7/6_Hathaway_-_The_Lengthy_10_Month_Correction_In_Gold_Is_Over.html

Border controls are back in Europe

http://www.sovereignman.com/expat/border-controls-are-back-in-europe/

Minister calls for control of Africa’s mines

The growing trend toward nationalization of strategic mining resources in many countries has the right intentions:  keeping the majority of the profits from at home, but it inevitably becomes counterproductive, as it discourages private sector investment (after all: no profits, no investment).  Nationalizing mineral and oil extraction industries become uneconomic pursuits due to bureaucratic inefficiencies and corruption, as the profits are diverted to the government and are not recycled to its citizens.  Eventually, these formerly economically sound mines and fields become depleted resources with dwindling output.

Lower output means higher prices for everybody.

http://www.businessday.co.za/articles/Content.aspx?id=175516

Thursday, July 5, 2012

Iran: We Can Hit 35 US Bases in 'Minutes'

http://news.yahoo.com/iran-hit-35-us-bases-minutes-151115760--abc-news-topstories.html

Guess who’s bailing out bankrupt western governments now…

Mr. President, learn some valuable lessons from your Indonesian roots.  Default, while painful, is also necessary, when debts are out of control.  This is not a partisan swipe at Democrats.  In fact, whomever gets elected/re-elected as President will eventually regret it when the ship sinks under his watch.  The debt will be repudiated--whether by default or by design. 

http://www.sovereignman.com/expat/guess-whos-bailing-out-bankrupt-western-governments-now/

We’re Dealing With Government Lies & Misinformation

I agree with the author's dystopian take on the debt burdens of Europe and the US, including the notional value of derivatives held by the largest banks in the US.  Of course, the market value of said derivatives are worth far less than the notional derivatives, but the point is still taken that the global economy is severely over-leveraged and over-indebted.  These huge debt burdens are like an anchor tied around the neck of these economies, choking the life out of them. 

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/7/5_Greyerz__Were_Dealing_With_Government_Lies_%26_Misinformation.html

The Real-World Middle Class Tax Rate: 75%

This author's analysis is flawed as he quotes top marginal income tax rates as effective rates, but his overall message is reasonable:  Americans are painfully over-taxed--more than they realize.


http://www.oftwominds.com/blogjuly12/real-world-tax-rate7-12.html

What's in a Name?

http://investments.pimco.com/insights/External%20Documents/Investment_Outlook_July_2012_Whats_in_a_Name.pdf

Rigged Rates, Rigged Markets

http://www.nytimes.com/2012/07/03/opinion/rigged-rates-rigged-markets.html?_r=1

Hinde Capital's Davies on Gold Prices, Outlook


http://bloom.bg/Lkaq9R

Wednesday, July 4, 2012

Arena: What Analysts Are Missing

http://seekingalpha.com/article/701311-arena-what-analysts-are-missing?source=yahoo

See disclaimers in the side bar.

Disclosure:  long shares of ARNA.

Insider Sales at Vivus: Sign of Things to Come?

http://beta.fool.com/beatlesforever/2012/07/04/insider-sales-vivus-sign-things-come/6605/?source=eogyholnk0000001

See disclaimers in the side bar.

Disclosure:  I have no position in VVUS.

Bill Buckler on gold

Asia is accumulating Gold. Russia is accumulating Gold. "Backward" nations all over the world are accumulating Gold – on both an individual and a government level. While the "developed" world has developed an idea of monetary safety which turns all history on its head, the rest of the world is not going along with them. We’ll leave it to you to decide which are the credulous and which are not. – Bill Buckler, Gold This Week, 30 June 2012

Byron Wien: I Spoke To The Smartest Man In Europe, And What He Had To Say Was Terrifying

http://www.businessinsider.com/byron-wien-smartest-man-in-the-world-2012-7#ixzz1zZLBVqAy

Central Bank Fireworks Are Just Around The Corner

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/7/4_Central_Bank_Fireworks_Are_Just_Around_The_Corner.html

If I show up at the grocery store to buy gallons of milk with counterfeit money and I tell the manager that the bills came from my printing press located in my home’s basement, he will call the police, not his suppliers to have them ramp up the milk production supply chain.

However, it is illegal not to accept a central bank’s money.  Therefore, prices increase because the market has lost faith in the currency’s purchasing power.  Unfortunately, the Fed is working very hard to destroy the global confidence in holding the world’s reserve currency.  But it now seems Bernanke isn’t alone in his quest to hold the title of ‘Counterfeiter in Chief.’

However, when a central bank prints money there are two sides to the equation.  On the positive side, money printing, when done on the margin, lowers interest rates and reduces borrowing costs in the economy.  That provides debt service relief to borrowers and can encourage people to take on even more debt—which isn’t such a good idea, but can boost short-term growth.

On the negative side of the equation, savers are punished and rising prices erode the purchasing power of the middle and lower classes.  That’s because they see the newly created money last—if they see it at all. 

When an economy is in a balance sheet recession—as the developed world finds itself today--the economy must deleverage and will not take on much more debt regardless of how low the cost of money falls.  If interest rates are already at zero percent, there can be no further relief on debt service payments that can be attained by more money printing.

It is clear that governments need to allow the deflationary deleveraging process to finally run its course, rather than continue to artificially prop up the economy by expanding public debt and having the central bank buy it all up.

New Particle Found, Consistent With Higgs Boson

And now, an article on the Higgs Boson, a subatomic particle with mass.

http://online.wsj.com/article/SB10001424052702304141204577506093497519860.html?mod=WSJ_hps_LEFTTopStories

The Fed and LIBOR – The Biggest Manipulator of them All

http://www.tfmarketadvisors.com/2012/07/04/the-fed-and-libor-the-biggest-manipulator-of-them-all/

Lamenting The Lost Legacy Of Independence Day

http://www.forbes.com/sites/billfrezza/2012/07/03/lamenting-the-lost-legacy-of-independence-day/

Revenge of a fallen titan: Ousted Barclays boss makes damning claims Bank of England and Labour ministers were involved in rigging interest rates

We are beyond sharks eating guppies.  It's sharks hunting other sharks.

http://www.dailymail.co.uk/news/article-2168449/Bob-Diamond-resignation-Ousted-Barclays-boss-makes-damning-claims-Bank-England-Labour-ministers-involved-rigging-rates.html

Tuesday, July 3, 2012

Fixes From The 70s Won’t Stop This Disaster

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/7/3_John_Embry_-_Fixes_From_The_70s_Wont_Stop_This_Disaster.html

We Are Seeing Dislocations In Many Financial Markets

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/7/3_Rule_-_We_Are_Seeing_Dislocations_In_Many_Financial_Markets.html

With specific regards to the gold trade, you are seeing a continuation of private buying of gold, and institutional selling of gold.  I think some of the institutional holders are credit-constrained, but there’s strong, strong underlying demand from individuals, wealthy people if you will.
So I think you are seeing a change in the holders of gold, away from the hot money, small hedge fund type of commodity speculator, who was buying gold in a momentum driven greed trade, to private holders who are buying gold as I have always bought gold, in the context of a fear trade.

The Rig Is Up

Let me be the first to say that I am no Jim Sinclair.  He's got loads more experience and prescience than I have had in previous decades.  What he called in 2001--the beginning of the great bull market in gold, I merely stumbled across and got lucky with.

However, his most recent prognostication exactly aligns with my timing--full valuation in gold won't be reached until 2013 - 2015.  My timeline is based on the knowledge that previous bull markets in gold lasted 14 years, from trough to peak.  Since gold made a double bottom in 1999 and 2001, my time frame accounts for that double bottom.  Others have a time window until 2020 before the dollar collapses due to the ending of its reserve currency status.  That fits neatly into generational cyclicality.  Generally speaking, defining price targets is one thing, and providing time frames is another.  Predicting both is a fool's game, so take either with caution.

I'm not sure how Sinclair came up with his "one- to three-year time frame" from today, but I'm not betting against him, given his precise timing of gold's peak in 1980 and its trough in 2001.  I do know he uses fundamental as well as technical analysis, with a heavy dose of Fibonacci numbers.  Here are his latest thoughts:

http://www.jsmineset.com/2012/07/03/the-rig-is-up/

I also would like to add a corollary.  Even if the previous bull market in gold ended in a waterfall decline, I'm not so sure this latest run up will end dramatically--if at all.  After all, when a currency collapses, the nominal value of any asset, tangible or otherwise, becomes meaningless.  It's one thing to forecast $6300 gold or $400 silver as I have, but if in that scenario, a loaf of bread costs $40, then no real wealth has been created.  Possession of precious metals is a means to maintain purchasing power--the intent isn't to become wealthy (even if wealth is created nominally).

However, the inverse is also true:  maintaining faith in a paper currency which has collapsed is a surefire way to have said purchasing power destroyed.

In other words, if the Euro collapses, who really cares what the prices of anything are, because they would cost millions, billions, or trillions of Euros--pending the severity of hyperinflation and Euro devaluation.  The same could be said of any paper currency--including the USDollar.

The irony of gold bashing is that the country who is first to adopt the gold standard--or some form of a gold standard, will be the most sought-after currency, as said currency would then be backed by gold.  According to Gresham's Law, bad money chases out good money, as sound money is hoarded, while the bad money is spent as soon as possible like a hot potato, as consumers correctly know that tomorrow's prices will be inevitably higher.  The good money goes under ground, much like pre-1965 US coins have, which had 90% silver content in them.  One would be a fool to spend those coins at face value buying consumable items.  Hence, those valuable coins are hoarded, black market-style.

Under further scrutiny, these admittedly lofty price targets for precious metals aren't nearly as preposterous as they appear to be at first glance.  Thirty years ago, tuition at a University of California campus was less than $1000 annually.  Today, tuition is between $15,000 and $20,000, depending on the campus.

The same could be said of skyrocketing healthcare costs.  A barrel of crude oil was under $10 pre-911.  So when people roll their eyes at these suggested prices of precious metals, they don't realize history is on my side.

I'll pose this hypothetical test to put to rest any doubts about the value of gold once and for all.  Say in 1971, your grandfather gave you a choice:  a one-ounce gold coin which cost $35 at the time, or $35 in cash.  Which one should you have chosen?

Well, if you had chosen the first option, that one-ounce gold coin is now worth north of $1600.  The latter choice would still be $35 of paper USDollars.  Clearly, the former is the much better option, as it has been for more than 5000 years.

Yet, the financial Establishment and sovereign governments continue to promote their impaired paper currencies, alleging owners of precious metals holdings as borderline unpatriotic.  Even billionaires Warren Buffett, Charlie Munger, Bill Gates and George Soros have joined the chorus of gold bashers.  The media has contributed to the mass negative propaganda.  I find this incredibly insidious and evil of the status quo, whom I can only guess want to maintain their power and in doing so, will continue to discourage the masses to unwittingly yield theirs.

Golden Cognitive Dissonance

http://azizonomics.com/2012/07/03/golden-cognitive-dissonance/

Congress Said To Consider Delaying Automatic Budget Cuts

Can-kicking now on auto-pilot.

http://www.bloomberg.com/news/2012-06-25/congress-said-to-delay-automatic-budget-cuts-until-march.html

U.S. Adds Forces in Persian Gulf, a Signal to Iran

...and here comes the US military response to Iran's threats of closing the Strait of Hormuz.

http://www.nytimes.com/2012/07/03/world/middleeast/us-adds-forces-in-persian-gulf-a-signal-to-iran.html?_r=2&nl=todaysheadlines&emc=edit_th_20120703

Barclays’ Libor Scandal: Prison Will Remedy

LIBOR rates were manipulate by bankers on both sides of the pond.

http://www.senseoncents.com/2012/07/barclays-libor-scandal-prison-will-remedy/#ixzz1zZCKmEC0

Iran drafts bill to close Strait of Hormuz

If true, crude oil prices will skyrocket.

http://www.digitaljournal.com/article/327858

John Paulson quote

Hedge fund manager John Paulson made his name (and a fortune) in 2007 shorting subprime mortgage bonds, but he had a rough 2011 betting on an economic recovery, specifically the housing industry.  Through it all, he's been on the long side of the gold trade.


“We view gold as a currency, not a commodity. Its importance as a currency will continue to increase as the major central banks around the world continue to print money.” He adds that as the market keeps shuddering, demand for gold will stay high, and soon enough all of his depressed gold holdings should shoot up. He also thinks that anyone in Greece, Italy, and France should pull all their money out of the banking system and purchase gold bars before the Continent collapses. –John Paulson, founder of Paulson & Co., in Business Week June 28, 2012

Mammoth Lakes files for bankruptcy

http://latimesblogs.latimes.com/lanow/2012/07/mammoth-lakes-bankruptcy.html

France Gives "Fairness Doctrine" Details; Will Tax Millionaires At 75%

How much do you want to be French financial assets are fleeing to Swiss vaults--and the rich French are flooding out of France to other domiciles?

http://youtu.be/UalY5dyhpHA

The Bank Of England Made Me Do It

http://www.zerohedge.com/news/bank-england-made-me-do-it

And Now The Fed Gets Dragged Into LiEborgate

http://www.zerohedge.com/news/and-now-fed-gets-dragged-lieborgate

This Will End In Inflation & Destruction of Paper Currencies

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/7/2_This_Will_End_In_Inflation_%26_Destruction_of_Paper_Currencies.html