30 December 2011
Iran raises anti-US threat level. Israel's C-of-S warns of potential for regional war
Thursday afternoon, Dec. 29, Tehran raised the pitch of its threats to the United States when Dep. Chief of the Revolutionary Guards Gen. Hossein Salami declared: "The United States is in no position to tell Tehran what to do in the Strait of Hormuz," adding, "Any threat will be responded [to] by threat… We will not relinquish our strategic moves in Iran's vital interests are undermined by any means."
The Iranian general spoke after the USS John C. Stennis aircraft carrier and its strike group passed through the Strait of Hormuz to the Sea of Oman and into the area where the big Iranian naval war game Veleyati 90 is taking place.
At around the same time, Israel's chief of staff Lt. Gen. Benny Gantz spoke of "the rising potential for a multi-arena event," i.e. a comprehensive armed conflict. Facing in several directions as we are "between terrorist organizations and Iran's progress toward a nuclear weapon… we can't afford to stay on the defensive and must come up with offensive measures," he said.
Earlier Thursday, Dec. 29, debkafile reported that an Iranian plan to mine the Strait of Hormuz had put US and NATO forces in the Persian Gulf on the alert.
US and NATO task forces in the Persian Gulf have been placed on alert after US intelligence warned that Iran's Revolutionary Guards are preparing Iranian marine commandos to sow mines in the strategic Strait of Hormuz.
The new deployment, debkafile's military sources report, consists of USS Combined Task Force 52 (CTF 52), which is trained and equipped for dismantling marine mines and NATO Maritime Mine Counter measures Group 2 (SNMCMG2). The American group is led by the USS Arden mine countermeasures ship; NATO's by the British HMS Pembroke minesweeper. Other vessels in the task forces are the Hunt-class destroyer HMS Middleton and the French mine warfare ships FS Croix du Sud and FS Var.
The Iranian general spoke after the USS John C. Stennis aircraft carrier and its strike group passed through the Strait of Hormuz to the Sea of Oman and into the area where the big Iranian naval war game Veleyati 90 is taking place.
At around the same time, Israel's chief of staff Lt. Gen. Benny Gantz spoke of "the rising potential for a multi-arena event," i.e. a comprehensive armed conflict. Facing in several directions as we are "between terrorist organizations and Iran's progress toward a nuclear weapon… we can't afford to stay on the defensive and must come up with offensive measures," he said.
Earlier Thursday, Dec. 29, debkafile reported that an Iranian plan to mine the Strait of Hormuz had put US and NATO forces in the Persian Gulf on the alert.
US and NATO task forces in the Persian Gulf have been placed on alert after US intelligence warned that Iran's Revolutionary Guards are preparing Iranian marine commandos to sow mines in the strategic Strait of Hormuz.
The new deployment, debkafile's military sources report, consists of USS Combined Task Force 52 (CTF 52), which is trained and equipped for dismantling marine mines and NATO Maritime Mine Counter measures Group 2 (SNMCMG2). The American group is led by the USS Arden mine countermeasures ship; NATO's by the British HMS Pembroke minesweeper. Other vessels in the task forces are the Hunt-class destroyer HMS Middleton and the French mine warfare ships FS Croix du Sud and FS Var.
The Depth Of Despair In The Gold Community
December 29, 2011, at 5:21 pm
by Jim Sinclair in the category General Editorial
My Dear Friends,
Today was the first day that we got some good action in the gold price. It will be very interesting to see if sellers appear as they have been during Asian hours. Just because the manipulators use the illiquid Asian hours to paint gold do not assume it reveals the nationality of the selling. The gold market as we all know on a day to day basis is totally rigged. In fact, find a market anywhere that is not bullied by some young buck who considers himself the Master of the Universe.
Gold is coming up on a tight group of four very major support areas that will hold the price from which the next advance is to take place. We have reached a point in terms of the depth of despair in the gold community that was never reached in the 1968 to 1980 reactions.
That is all this is. Just another reaction in a Gold price headed for Alf’s $4500.
I imagine when gold reacts off $2100 the stampede to the bath tub with their razor blades will be on again. Gold has in no way topped. The gold reaction per day in terms of percentage was nothing whatsoever. We have in no way reached the level called “thrilling with bullish bliss” common of a top. Every dollar we have won has been paid for in blood. All the short of gold wunderkin Masters of the Universe will have to be destroyed before gold is fully priced. The community, if you can still call it that, is in a psychotic episode that is soon to end.
Regards,
Jim
by Jim Sinclair in the category General Editorial
My Dear Friends,
Today was the first day that we got some good action in the gold price. It will be very interesting to see if sellers appear as they have been during Asian hours. Just because the manipulators use the illiquid Asian hours to paint gold do not assume it reveals the nationality of the selling. The gold market as we all know on a day to day basis is totally rigged. In fact, find a market anywhere that is not bullied by some young buck who considers himself the Master of the Universe.
Gold is coming up on a tight group of four very major support areas that will hold the price from which the next advance is to take place. We have reached a point in terms of the depth of despair in the gold community that was never reached in the 1968 to 1980 reactions.
That is all this is. Just another reaction in a Gold price headed for Alf’s $4500.
I imagine when gold reacts off $2100 the stampede to the bath tub with their razor blades will be on again. Gold has in no way topped. The gold reaction per day in terms of percentage was nothing whatsoever. We have in no way reached the level called “thrilling with bullish bliss” common of a top. Every dollar we have won has been paid for in blood. All the short of gold wunderkin Masters of the Universe will have to be destroyed before gold is fully priced. The community, if you can still call it that, is in a psychotic episode that is soon to end.
Regards,
Jim
Investigation Into MF Global Expected to Heat Up
By BEN PROTESS
When customer money disappeared from MF Global over Halloween weekend, it seemed implausible the cash would remain at large come New Year’s Day.
But two months later, the hunt for roughly $1.2 billion in client money continues. Some MF Global customers, including farmers and hedge funds, are still without about a third of the money in their accounts at MF Global, the brokerage firm once run by Jon S. Corzine, the former governor of New Jersey.
Against this backdrop, and as 2012 gets ready to begin, the investigation into the MF Global debacle is expected to heat up.
In the coming months, federal authorities are likely to answer crucial questions, including the exact whereabouts of the customer money and who at MF Global caused it to disappear. At some point next year, because MF Global violated rules prohibiting the mingling of customer money and the firm’s, authorities may also file enforcement actions.
The Federal Bureau of Investigation is exploring whether MF Global violated criminal laws, though no one has been accused of any wrongdoing.
Despite the lingering questions, federal investigators have made some strides in unraveling the mystery. Based on interviews with multiple people close to the case, here’s where things stand with the investigation into MF Global and the search for the missing money.
Summer 2011
MF Global, like other brokerage firms, was legally borrowing customer money to buy assets like corporate bonds. Under the law, the firm must put sufficient collateral, using assets like United States Treasury securities, in the place of the customer cash.
August 2011
MF Global may have borrowed customer money, even briefly, without providing sufficient collateral.
Oct. 21
Authorities suspect that MF Global was tapping customer accounts on Oct. 21, more than a week before the firm filed for bankruptcy. But these transfers may have been legitimate. Because brokerage firms often keep an extra cushion of their money in customer accounts, MF Global may have simply been drawing down that buffer.
Oct. 27
By Oct. 27, the firm had depleted that buffer. The firm was moving customer money from the futures side of the firm to the securities side. The firm may have then used the money to settle its securities trades.
At the time, MF Global was frantically closing out trades to generate liquidity ahead of a possible sale of the firm. Federal authorities are examining whether the firm began moving client money to the Depository Trust & Clearing Corporation, a clearinghouse that served as a middleman while MF Global unwound its trades.
It is unclear whether MF Global officials knowingly used customer money or believed the buffer was still intact. Sloppy record keeping may have obscured the fact that they were misusing customer money.
Nevertheless, the firm stopped backing the loans it took from customers. So in essence, the firm was receiving free loans from clients.
Oct. 28
On the morning of Oct. 28, the last business day before MF Global filed for bankruptcy, JPMorgan Chase alerted Mr. Corzine that the firm had overdrawn an account at the bank in London.
Chip Somodevilla/Getty ImagesJon S. Corzine, MF Global’s former chief executive, being sworn in at a Senate hearing on the firm’s demise.“At that time, I was trying to sell billions of dollars of securities to JPMorgan Chase in order to reduce our balance sheet and generate liquidity,” Mr. Corzine recently told a Congressional committee. “JPMorgan Chase told me that they would not engage in those transactions until overdrafts in London were cleaned up.”
Mr. Corzine said he passed along the request to his staff. Someone at MF Global then instructed Edith O’Brien, a treasurer at MF Global’s Chicago office, to replenish the overdrawn account.
Authorities suspect that MF Global, perhaps unwittingly, used roughly $200 million of client money to do so.
After the transfer, JPMorgan questioned Mr. Corzine about the source of the money. Ms. O’Brien, Mr. Corzine told a Congressional committee, assured him that MF Global was not improperly using customer cash.
Ms. O’Brien is now considered a “person of interest” in the investigation, according to two people close to the case. She has not been accused of any wrongdoing, and there is no indication that she knowingly transferred customer money.
Oct. 30
Later that weekend, MF Global was closing in on a deal to sell part of the firm to a rival brokerage house.
About 6 p.m. that day, MF Global’s general counsel, Laurie Ferber, notified the CME Group that there was an apparent shortfall. Ms. Ferber blamed an accounting error, according to CME, the exchange where MF Global did business and one of the firm’s main regulators.
But by 2 a.m., Ms. O’Brien and other MF Global officials told CME that $700 million was sent from customer accounts to the firm’s securities unit.
Oct. 31
By 10 a.m., MF Global filed for bankruptcy. Federal regulators, meanwhile, began the search for the missing customer money.
The week of Dec. 12
Mr. Corzine, a former United States senator from New Jersey, returned to Capitol Hill to face questioning from his former colleagues.
Andrew Harrer/Bloomberg NewsTerrence Duffy, executive chairman of the CME Group.“I don’t know of any loan that was backed by customer funds,” Mr. Corzine said. “I wouldn’t have authorized it.”
Terrence Duffy, executive chairman of the CME Group, told lawmakers that MF Global had used customer money to lend from one arm of the firm to another — and that Mr. Corzine had been aware of it.
Mr. Corzine rejected Mr. Duffy’s claims.
“I never gave any instructions to misuse customer money, never intended to give any instructions or authority to misuse customer funds, and I find it very hard to understand how anyone could misconstrue what I’ve said as a way to misuse customer money.”
When customer money disappeared from MF Global over Halloween weekend, it seemed implausible the cash would remain at large come New Year’s Day.
But two months later, the hunt for roughly $1.2 billion in client money continues. Some MF Global customers, including farmers and hedge funds, are still without about a third of the money in their accounts at MF Global, the brokerage firm once run by Jon S. Corzine, the former governor of New Jersey.
Against this backdrop, and as 2012 gets ready to begin, the investigation into the MF Global debacle is expected to heat up.
In the coming months, federal authorities are likely to answer crucial questions, including the exact whereabouts of the customer money and who at MF Global caused it to disappear. At some point next year, because MF Global violated rules prohibiting the mingling of customer money and the firm’s, authorities may also file enforcement actions.
The Federal Bureau of Investigation is exploring whether MF Global violated criminal laws, though no one has been accused of any wrongdoing.
Despite the lingering questions, federal investigators have made some strides in unraveling the mystery. Based on interviews with multiple people close to the case, here’s where things stand with the investigation into MF Global and the search for the missing money.
Summer 2011
MF Global, like other brokerage firms, was legally borrowing customer money to buy assets like corporate bonds. Under the law, the firm must put sufficient collateral, using assets like United States Treasury securities, in the place of the customer cash.
August 2011
MF Global may have borrowed customer money, even briefly, without providing sufficient collateral.
Oct. 21
Authorities suspect that MF Global was tapping customer accounts on Oct. 21, more than a week before the firm filed for bankruptcy. But these transfers may have been legitimate. Because brokerage firms often keep an extra cushion of their money in customer accounts, MF Global may have simply been drawing down that buffer.
Oct. 27
By Oct. 27, the firm had depleted that buffer. The firm was moving customer money from the futures side of the firm to the securities side. The firm may have then used the money to settle its securities trades.
At the time, MF Global was frantically closing out trades to generate liquidity ahead of a possible sale of the firm. Federal authorities are examining whether the firm began moving client money to the Depository Trust & Clearing Corporation, a clearinghouse that served as a middleman while MF Global unwound its trades.
It is unclear whether MF Global officials knowingly used customer money or believed the buffer was still intact. Sloppy record keeping may have obscured the fact that they were misusing customer money.
Nevertheless, the firm stopped backing the loans it took from customers. So in essence, the firm was receiving free loans from clients.
Oct. 28
On the morning of Oct. 28, the last business day before MF Global filed for bankruptcy, JPMorgan Chase alerted Mr. Corzine that the firm had overdrawn an account at the bank in London.
Chip Somodevilla/Getty ImagesJon S. Corzine, MF Global’s former chief executive, being sworn in at a Senate hearing on the firm’s demise.Mr. Corzine said he passed along the request to his staff. Someone at MF Global then instructed Edith O’Brien, a treasurer at MF Global’s Chicago office, to replenish the overdrawn account.
Authorities suspect that MF Global, perhaps unwittingly, used roughly $200 million of client money to do so.
After the transfer, JPMorgan questioned Mr. Corzine about the source of the money. Ms. O’Brien, Mr. Corzine told a Congressional committee, assured him that MF Global was not improperly using customer cash.
Ms. O’Brien is now considered a “person of interest” in the investigation, according to two people close to the case. She has not been accused of any wrongdoing, and there is no indication that she knowingly transferred customer money.
Oct. 30
Later that weekend, MF Global was closing in on a deal to sell part of the firm to a rival brokerage house.
About 6 p.m. that day, MF Global’s general counsel, Laurie Ferber, notified the CME Group that there was an apparent shortfall. Ms. Ferber blamed an accounting error, according to CME, the exchange where MF Global did business and one of the firm’s main regulators.
But by 2 a.m., Ms. O’Brien and other MF Global officials told CME that $700 million was sent from customer accounts to the firm’s securities unit.
Oct. 31
By 10 a.m., MF Global filed for bankruptcy. Federal regulators, meanwhile, began the search for the missing customer money.
The week of Dec. 12
Mr. Corzine, a former United States senator from New Jersey, returned to Capitol Hill to face questioning from his former colleagues.
Andrew Harrer/Bloomberg NewsTerrence Duffy, executive chairman of the CME Group.Terrence Duffy, executive chairman of the CME Group, told lawmakers that MF Global had used customer money to lend from one arm of the firm to another — and that Mr. Corzine had been aware of it.
Mr. Corzine rejected Mr. Duffy’s claims.
“I never gave any instructions to misuse customer money, never intended to give any instructions or authority to misuse customer funds, and I find it very hard to understand how anyone could misconstrue what I’ve said as a way to misuse customer money.”
Spain says deficit bigger than expected, hikes taxes
In its first decrees since sweeping to victory in November, the centre-right government said the public deficit for 2011 would come in at 8 percent of gross domestic product, well above an official target of 6 percent.
It announced initial public spending cuts of 8.9 billion euros ($11.5 billion) and tax hikes aimed at bringing in an additional 6 billion euros a year to tackle the shortfall.
"This is just the beginning ... We're facing an extraordinary and unexpected situation, forcing us to take extraordinary and unexpected measures," Deputy Prime Minister Soraya Saenz de Santamaria said.
Spain has been under market scrutiny over its ability to control its public finances, and Madrid has seen risk premiums soar to record highs on contagion fears as the euro zone debt crisis spread.
Ten days ago the Treasury said the central government budget deficit was on course to meet a full-year target of 4.8 percent of GDP, which analysts said would push Spain's overall public deficit above its 6 percent target for the year.
But the scale of the overshoot took some economists by surprise and led them to forecast a deeper recession, ending the year on a downbeat note for the euro zone as a whole.
"This is a strong shock. I didn't expect this kind of deficit increase. How can we achieve the objective using personal income taxes and capital taxes? This means making the recession much worse," economist at Barcelona ESADE university Robert Tornabell.
While Italy's debt mountain has been the biggest concern in financial markets in recent months, Spain had been seen as faring somewhat better. Measures taken by the previous Socialist government, while costing it the election, have kept the markets from pushing Spanish yields to unsustainable levels.
But as recession looms across the euro zone, the new government faces a rocky few years. After Friday's initial round of tax hikes and spending cuts, it plans to unveil a final 2012 budget by the end of March.
The Socialists cut the budget shortfall from 11.2 percent of gross domestic product in 2009, and the conservatives must take up the baton and bring the deficit down to 4.4 percent in 2012 and 3 percent in 2013.
If the final 2011 deficit hits the 8 percent mark, as the conservatives say, the government will need to make total savings worth more than 35 billion euros in 2012 to meet the official target.
TAX THE RICH
Spain's economy, the fourth-largest in the euro zone, is likely to have shrunk as much as 0.3 percent in the fourth quarter, Economy Minister Luis de Guindos said this week, and many economists expect output to keep shrinking in early 2012.
(Additional reporting, writing by Paul Day; Editing by Hugh Lawson)
Gold price going to $4,500: Here's why - Alf Field
Details of Alf Field's gold predictions at the Gold Symposium in Sydney which see gold going to $4,500 but the possibility of a big correction first.
Author: Lorimer WilsonPosted: Monday , 28 Nov 2011
TORONTO (www.munKNEE.com) -
The Elliott Wave Theory (EW) gives superb results in predicting the gold price. While it is a complicated system with many difficult rules which I explain in simple terms, I have determined that once this present correction in gold has been completed it should undergo the largest and strongest wave in the entire gold bull market. The target for this wave should be around $4,500 with only two 13% corrections on the way.
So said Alf Field in his 6,500 word speech that he came out of retirement to give at the recent Sydney Gold Symposium. The speech has been edited into this 2000 word article and an initial 1400 word article published here last week entitled The "Moses" generation and the future of gold - Alf Field.
The portion of the speech entitled "ADDENDUM: Update of the Elliott Wave Gold Analysis" has been edited ([ ]), abridged (...) and reformatted wherever deemed necessary to ensure a fast and easy read. Field's views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article
As Field said in his speech:
"On 31 December 1974 the largest and wealthiest nation on Earth allowed its citizens to buy and own gold...and the obvious conclusion was that it was necessary to resort to technical analysis to find a way to predict movements in the gold price. I experimented with a variety of technical systems and then got lucky. I discovered that the Elliott Wave Theory (EW) gave superb results in predicting the gold price [although] I couldn't get the same great results using EW in other commodities or markets."
HOW THE ELLIOTT WAVE THEORY WORKS
"EW is a complicated system with many difficult rules, but I will try and explain it in simple terms. The technique is to concentrate on the corrections. In terms of EW, the sequence in a bull market is as follows. The market rises, has a 4% correction, rises, has a 4% correction and rises again. At this point the next correction jumps from 4% to a larger degree of magnitude, say 8%. The market then repeats the sequence: a rise, a 4% correction, a rise, a 4% correction, a rise and another 8% correction. When the market is eventually due a third 8% correction, the magnitude of that correction jumps from 8% to 16%. This sequence is repeated until two 16% corrections have occurred when the size of the next big correction jumps to 32%".
APPLYING THE ELLIOTT WAVE THEORY TO THE PROGRESSION IN THE PRICE OF GOLD
"The beauty of EW is that the corrections in gold are remarkably regular and consistent. Early in 2002 I picked up the 4%, 4%, 8% rhythm in the gold market which convinced me that a new bull market had started in gold. Another feature of EW is that once one is confident that these percentages have been established and one has some idea of the approximate size of the up moves, simple arithmetic allows one to calculate a forecast of the future price trend.
"Using this method I calculated that the gold price should rise from the $300 ruling in 2002 to at least $750 without having anything worse than two 16% corrections on the way. That was valuable information at that time. Furthermore, from the $750 target a big 32% correction could be expected to about $500. Then the bull market would resume, rising to perhaps $2,500 before another 32% correction occurred. The final up-move would take the gold price to much higher levels, possibly $6,000. Once again, a valuable insight when gold was $300 in 2002."
"The gold price actually got to a shade over $1000 in March 2008, a four-fold increase instead of the expected three-fold rise to $750. That was the point at which the 32% correction was due. Over the next seven months the gold price in the spot market declined from $1003 to $680, an exact 32% correction. Using PM gold fixings, the numbers were slightly different. The high was $1011.0 and the low $712.5, making the correction slightly less than 30%, but quite adequate.
"The above chart depicts the monthly spot gold prices since the start of the gold bull market in April 2001 when gold was $255. The 32% correction in terms of spot gold is clearly shown. The high at $1003 and the low at $680 established the extremities of the first two major waves of the bull market, shown in the chart as Major ONE and Major TWO. The gold bull market is in the process of working its way upward through Major THREE, often the longest and strongest wave in the bull market. There have been a number of interesting and unusual developments in Major THREE which will be discussed later.
"[Below I] reveal some interesting things about the EW moves in gold since the $681 low in October 2008. That low was the start of the Major THREE wave. In Major ONE I mentioned that the corrections were 4%, 8%, 16% and then 32%. We know that Major THREE will likely be longer and stronger than the prior Major ONE up wave. It is logical to expect that the corrections in major THREE will be a larger percentage than those experienced in Major ONE.
"This is how the first Intermediate wave of Major THREE developed in terms of London PM fixings:"
"Intermediate Wave I in London PM fixings:
- Oct 08 to Feb 09 $712.5 to $989.0 + $276.5 +38.8%
- Feb 09 to Apl 09 $989.0 to $870.5 -$118.5 -12.0%
- Apl 09 to Dec 09 $870.5 to $1212.5 +$342.0 +39.3%
- Dec 09 to Feb 10 $1212.5 to $1058.0 -$154.5 -12.7%
- Feb 10 to Jun 2011 $1058.0 to $1549.0 +$491.0 +46.4%
"The analysis of the first extension, the extension of wave 5, is set out below:
*Alf Field's entire speech at The Gold Symposium in Sydney is available here
Lorimer Wilson is editor of www.munKNEE.com and www.FinancialArticleSummariesToday.com and publisher of a daily free Financial Intelligence Report which can be subscribed to here.
Further Moves Lower in Gold Seem Unlikely
By: P Radomski | Fri, Dec 30, 2011
We are on the cusp of a new year, and this is the time that we take a look at those brave (or foolhardy) financial analysts who take out their crystal ball and predict where precious metal prices will go in 2012.
But first let's see how last year's prognosticators (including Sunshine Profits) fared. We are talking about predictions for the very chaotic 2011.
Bank of America Merrill Lynch had forecast last year at around this time that gold would top at $1,500 in the near-term and that the second half of 2011 would be more challenging. Well, gold did a lot better than $1,500 this past year. It hit an all-time nominal high in August of $1,923.70 an ounce. Gold may be down about 16% from the August highs, but it's still up roughly 14% from the 2010 settlement of $1,421, which still makes it one of the best performers this year. Even with prices falling again this week, the metal is still the top performing commodity of 2011.
Peter Schiff said about gold prices: "You ain't seen nothing yet." He was overly optimistic and predicted that gold will go up to $2,000. He might yet be proved right, but not in 2011.
James West, publisher of the Midas Letter, said gold was likely break through $1,700 an ounce by the end of 2011 and silver will likely see $35, and may even go through $40 an ounce. Well, he was right. Gold definitely broke through the $1,700 an ounce range.
Nick Barisheff, president of Canada's Bullion Management Group Inc., was looking at $1700-to $2,000 per ounce gold in 2011; he was within the right range.
At Sunshine Profits we also went out on a limb and guesstimated gold's high for 2011 at $1,800 and $45 for silver.
A review of 2011 shows a chaotic picture for the precious metals. During the first few months of 2011 the price of silver sharply outperformed the price of gold and by the end of last April the price of silver rose by nearly 56%, while gold rose "only" 9% from the beginning of the year. With the sharp rise in silver prices the CME raised margins which caused silver prices to decline to 7% above the initial price level of 2011. The next rally came from May to the beginning of September for both metals due to uncertainty about the stability of the U.S. economy and the debate about raising the debt ceiling. The rally came to a halt in September due to the CME raising margins and also because the Fed did not come up with QE3. The decline of precious metal prices soon followed.
To predict how precious metals will behave in the short run, let's begin the technical part with the analysis of the USD Index. We will start with the very long-term chart (charts courtesy by http://stockcharts.com.)
Summing up, the situation in the USD Index is more bearish than not. The breakout above the declining long-term resistance line may be seen at some point, but until it is seen and verified, this situation here will not turn to bullish. The currently bearish outlook for the dollar translates into o rather bullish outlook for precious metals.
To make sure that you are notified once the new features are implemented, and get immediate access to my free thoughts on the market, including information not available publicly, we urge you to sign up for our free e-mail list. Gold & Silver Investors should definitely join us today and additionally get free, 7-day access to the Premium Sections on our website, including valuable tools and unique charts. It's free and you may unsubscribe at any time.
But first let's see how last year's prognosticators (including Sunshine Profits) fared. We are talking about predictions for the very chaotic 2011.
Bank of America Merrill Lynch had forecast last year at around this time that gold would top at $1,500 in the near-term and that the second half of 2011 would be more challenging. Well, gold did a lot better than $1,500 this past year. It hit an all-time nominal high in August of $1,923.70 an ounce. Gold may be down about 16% from the August highs, but it's still up roughly 14% from the 2010 settlement of $1,421, which still makes it one of the best performers this year. Even with prices falling again this week, the metal is still the top performing commodity of 2011.
Peter Schiff said about gold prices: "You ain't seen nothing yet." He was overly optimistic and predicted that gold will go up to $2,000. He might yet be proved right, but not in 2011.
James West, publisher of the Midas Letter, said gold was likely break through $1,700 an ounce by the end of 2011 and silver will likely see $35, and may even go through $40 an ounce. Well, he was right. Gold definitely broke through the $1,700 an ounce range.
Nick Barisheff, president of Canada's Bullion Management Group Inc., was looking at $1700-to $2,000 per ounce gold in 2011; he was within the right range.
At Sunshine Profits we also went out on a limb and guesstimated gold's high for 2011 at $1,800 and $45 for silver.
A review of 2011 shows a chaotic picture for the precious metals. During the first few months of 2011 the price of silver sharply outperformed the price of gold and by the end of last April the price of silver rose by nearly 56%, while gold rose "only" 9% from the beginning of the year. With the sharp rise in silver prices the CME raised margins which caused silver prices to decline to 7% above the initial price level of 2011. The next rally came from May to the beginning of September for both metals due to uncertainty about the stability of the U.S. economy and the debate about raising the debt ceiling. The rally came to a halt in September due to the CME raising margins and also because the Fed did not come up with QE3. The decline of precious metal prices soon followed.
To predict how precious metals will behave in the short run, let's begin the technical part with the analysis of the USD Index. We will start with the very long-term chart (charts courtesy by http://stockcharts.com.)
Summing up, the situation in the USD Index is more bearish than not. The breakout above the declining long-term resistance line may be seen at some point, but until it is seen and verified, this situation here will not turn to bullish. The currently bearish outlook for the dollar translates into o rather bullish outlook for precious metals.
To make sure that you are notified once the new features are implemented, and get immediate access to my free thoughts on the market, including information not available publicly, we urge you to sign up for our free e-mail list. Gold & Silver Investors should definitely join us today and additionally get free, 7-day access to the Premium Sections on our website, including valuable tools and unique charts. It's free and you may unsubscribe at any time.
Admit Nothing. Explain Nothing.
By: Richard Mills | Fri, Dec 30, 2011
As a general rule, the most successful man in life is the man who has the best information
Mayer Amschel Bauer Rothschild, founder of the International Banking House of Rothschild said:
"Let me issue and control a nation's money and I care not who writes the laws."
The Rothschild brothers, already laying the foundation for the Federal Reserve Act, wrote the following to New York associates in 1863:
"The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests."
In 1906, Senator Nelson Aldrich - known as the "General Manager of the Nation" because of his impact on national politics and position on the Senate Finance Committee - sold his interest in the Rhode Island street railway system to the New York, New Haven and Hartford Railroad, whose president was J. P. Morgan's loyal ally, Charles Sanger Mellen.
By 1906 the annual rate of US capital formation was running at $5 billion. This rapid expansion went hand in hand with the creation of enormous industrial and financial monopolies. By 1904, more than 1,800 companies had been consolidated into 93 corporations, a financial consolidation led by J Pierpont Morgan.
A few historians believe that J.P. Morgan published rumors that the Knickerbocker Trust Company (in the ten years up to 1907, trust companies had increased three and a half times, to $1.4bn, compared with state banks, which had doubled to $1.8bn. The Knickerbocker Trust was the third largest Trust in New York with $65mn in deposits and 18,000 depositors - Robert F Bruner and Sean D Carr, The panic of 1907) was insolvent, the widely spread rumors were followed by the *National Bank of Commerce announcing it would stop accepting checks for the Trust Company which triggered a run of depositors demanding their funds back - thus precipitating the Panic of 1907.
* The National Bank of Commerce was the principal correspondent bank for bank clearings in the area southwest of Chicago and St. Louis. Because of this role, Commerce was at one point among the 20 largest banks in the United States, as measured by assets. Wikipedia
The Knickerbocker's collapse caused banks and trust companies to hoard their funds. No loans were made, stocks slumped to their lowest level since December 1900 (the stock market fell 50%) and the crisis spread to the Trust Company of America.
In the Wednesday, October 23, edition of the New York Times was a headline describing the Trust Company of America, the second largest trust company in New York City, as the current "sore point" in the panic. JP Morgan summoned the Secretary of the US Treasury, George B Cortelyou, to New York. On being assured that the Trust Company of America was solvent with Federal backing, JP Morgan gathered together the presidents of all the key banks and organized an immediate $3 million loan to Trust Company.
J Pierpont Morgan had made his reputation and that of his bank. At this time Morgan started to slowly disengage from the day to day activities of his firm preferring to concentrate on his passion for touring Europe, collecting art and literature and sitting on the boards of charitable organizations.
"All this trouble could be averted if we appointed a committee of six or seven public-spirited men like J.P. Morgan to handle the affairs of our country." Woodrow Wilson talking about The Troubles of 1907
The Panic of 1907 led to the passage of the Aldrich-Vreeland Act in 1908, this act established the National Monetary Commission - sponsored and headed by Senator Aldrich.
Aldrich also co-authored the Payne-Aldrich Tariff Act of 1909 which removed restrictive import duties on fine art. This enabled Americans to bring in very expensive European artworks that became the foundation of many leading museums.
On the night of November 22, 1910 a delegation of the nation's leading financiers, led by Senator Nelson Aldrich, left New Jersey for a very secret ten day meeting on Jekyll Island, Georgia.
Aldrich had previously led the members of the National Monetary Commission on a two year banking tour of Europe. He had yet to write a report regarding the trip, nor had he yet offered any plans for banking reforms.
"Despite my views about the value to society of greater publicity for the affairs of corporations, there was an occasion near the close of 1910, when I was as secretive, indeed, as furtive, as any conspirator. . . . Since it would have been fatal to Senator Aldrich's plan to have it known that he was calling on anybody from Wall Street to help him in preparing his bill, precautions were taken that would have delighted the heart of James Stillman." Frank Vanderlip, the Saturday Evening Post, February 9, 1935
Accompanying Senator Aldrich to Jekyll Island were:
"In 1912 the National Monetary Association, under the chairmanship of the late Senator Nelson W. Aldrich, made a report and presented a vicious bill called the National Reserve Association bill. This bill is usually spoken of as the Aldrich bill. Senator Aldrich did not write the Aldrich bill. He was the tool, if not the accomplice, of the European bankers who for nearly twenty years had been scheming to set up a central bank in this Country and who in 1912 has spent and were continuing to spend vast sums of money to accomplish their purpose." Congressman Louis T. McFadden on the Federal Reserve Corporation: Remarks in Congress, 1934
After several failed attempts to push the Federal Reserve Act through Congress, a group of bankers funded and staffed Woodrow Wilson's campaign for President. He had committed to sign a slightly different version of the Federal Reserve Act than Aldrich's Plan.
In 1913, Senator Aldrich pushed the Federal Reserve Act through Congress just before Christmas when much of Congress was on vacation. When elected president Woodrow Wilson passed the FED.
"Our secret expedition to Jekyll Island was the occasion of the actual conception of what eventually became the Federal Reserve System. The essential points of the Aldrich Plan were all contained in the Federal Reserve Act as it was passed." Frank Vanderlip, autobiography, From Farmboy to Financier
"I have unwittingly ruined my country." Woodrow Wilson later said referring to the FED
"We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it." Congressman Louis T. McFadden in 1932
The Federal Reserve Bank (FED) is a privately owned company that controls, and profits immensely by printing money through the US Treasury and regulating its value.
"Some [most] people think the Federal Reserve Banks are U.S. government institutions. They are not ... they are private credit monopolies which prey upon the people of the U.S. for the benefit of themselves and their foreign and domestic swindlers, and rich and predatory money lenders. The sack of the United States by the Fed is the greatest crime in history. Every effort has been made by the Fed to conceal its powers, but the truth is the Fed has usurped the government. It controls everything here and it controls all our foreign relations. It makes and breaks governments at will." Congressional Record 12595-12603 -- Louis T. McFadden, Chairman of the Committee on Banking and Currency (12 years) June 10, 1932
"... we conclude that the [Federal] Reserve Banks are not federal ... but are independent, privately owned and locally controlled corporations ... without day-to-day direction from the federal government." 9th Circuit Court in Lewis vs. United States, 680 F. 2d 1239 June 24, 1982
The FED began with approximately 300 people, or banks, that became owners (stockholders purchased stock at $100 per share) of the Federal Reserve Banking System. The Fed is privately owned - 100% of its shareholders are private banks, the stock is not publicly traded and none of its stock is owned by the US government.
The FED banking system collects billions of dollars in interest annually and distributes the profits to its shareholders.
The US Congress gave the FED the right to print money at no interest to the FED. The FED creates money from nothing, loans it out through banks and charges interest. The FED also buys government debt with money from nothing, and charges U.S. taxpayers interest.
The interest on bonds acquired with its newly-issued Federal Reserve Notes pays the Fed's operating expenses plus a guaranteed 6% return to its banker shareholders.
Reuters reported on October 3 2008:
"The U.S. Federal Reserve gained a key tactical tool from the $700 billion financial rescue package signed into law on Friday that will help it channel funds into parched credit markets. Tucked into the 451-page bill is a provision that lets the Fed pay interest on the reserves banks are required to hold at the central bank."
So in addition to the FED's banker shareholders receiving a guaranteed 6%, banks also now get interest from the taxpayers on their 10 percent "reserves."
The reserve requirement set by the Federal Reserve is 10 percent - ie the ABC Fractional Bank has a billion dollars stashed at the FED, that's its reserve and its paid interest on it. That billion dollars can be fanned into ten times that sum in loans - $1,000,000,000 in reserves becomes $10,000,000,000 in loans.
The absolute amount of bank loans and leases outstanding was $6.80 trillion September 14, 2011. Ten percent of that is $680 billion. US taxpayers will be paying interest to the banks on at least $680 billion worth of reserves - so banks can accumulate interest from borrowers on ten times that sum in loans.
The FED is the only for profit corporation in America that is exempt from both federal and state taxes.
The FED's books are not open to the public, nor Congress apparently:
A first ever GAO (Government Accountability Office) semi-audit of the US Federal Reserve was recently carried out and a report was issued in July of 2011. What the audit revealed was incredible: between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the world's banks, corporations, and governments by giving them...
US$16,000,000,000,000.00 - that's 16 TRILLION dollars.
The GDP of the United States is $14.12 trillion, the entire national debt of the United States government spanning its 200 plus year history is $14.5 trillion.
The GAO report also determined that the Fed lacks a comprehensive system to deal with conflicts of interest:
Congress enacted a flat rate Federal income tax in 1894, but the Supreme Court ruled it unconstitutional the following year because it was a direct tax not apportioned according to the population of each state.
Senator Aldrich was instrumental in the re-structuring of the American financial system through a federal income tax amendment, the 16th - he had originally opposed an income tax as communistic a decade before. The 16th Amendment gave Congress the authority to tax the income of individuals without regard to the population of each State:
"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
In 1906 David Graham Phillips wrote a series of articles published in Cosmopolitan claiming that politicians were receiving huge payments from large corporation to argue their case in the Senate. Phillips claimed that the main figures in this scandal was Aldrich and Arthur P. Gorman of Maryland.
David Graham Phillips was murdered on 23rd January, 1911. Two months later Aldrich resigned from Congress.
Sir Josiah Stamp, president of the Rothschild Bank of England and the second richest man in Britain in the 1920s, said the following in 1927 at the University of Texas:
"The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in inequity and born in sin. Bankers own the Earth. Take it away from them but leave them the power to create money, and with a flick of a pen, they will create enough money to buy it back again. Take this great power away from them and all great fortunes like mine will disappear, for then this would be a better and happier world to live in. But if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit."
The Federal Reserve was conceived and given birth by an unholy alliance of American and British bankers. The FED buys U.S. debt with money printed from nothing, then charges U.S. taxpayers interest. The US government pushed through the federal income tax amendment, restarted an income tax on Americans to pay the interest to the FED and reorganized the IRS to collect the monies - the interest - "owed" to the FED from its citizens.
Since the Fed's creation in 1913 the dollar has lost more than 96% of its value.
Undoubtedly the greatest achievement of the FED has been to transform America from being the world's foremost creditor nation to the world's largest debtor nation.
Aldrich's motto, when questioned about his activities and the reasoning behind them, was to "Admit nothing. Explain nothing."
"Let me issue and control a nation's money and I care not who writes the laws." should be on every thinking person's radar screen. Is it on yours?
If not, maybe it should be.
Mayer Amschel Bauer Rothschild, founder of the International Banking House of Rothschild said:
"Let me issue and control a nation's money and I care not who writes the laws."
The Rothschild brothers, already laying the foundation for the Federal Reserve Act, wrote the following to New York associates in 1863:
"The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests."
In 1906, Senator Nelson Aldrich - known as the "General Manager of the Nation" because of his impact on national politics and position on the Senate Finance Committee - sold his interest in the Rhode Island street railway system to the New York, New Haven and Hartford Railroad, whose president was J. P. Morgan's loyal ally, Charles Sanger Mellen.
By 1906 the annual rate of US capital formation was running at $5 billion. This rapid expansion went hand in hand with the creation of enormous industrial and financial monopolies. By 1904, more than 1,800 companies had been consolidated into 93 corporations, a financial consolidation led by J Pierpont Morgan.
A few historians believe that J.P. Morgan published rumors that the Knickerbocker Trust Company (in the ten years up to 1907, trust companies had increased three and a half times, to $1.4bn, compared with state banks, which had doubled to $1.8bn. The Knickerbocker Trust was the third largest Trust in New York with $65mn in deposits and 18,000 depositors - Robert F Bruner and Sean D Carr, The panic of 1907) was insolvent, the widely spread rumors were followed by the *National Bank of Commerce announcing it would stop accepting checks for the Trust Company which triggered a run of depositors demanding their funds back - thus precipitating the Panic of 1907.
* The National Bank of Commerce was the principal correspondent bank for bank clearings in the area southwest of Chicago and St. Louis. Because of this role, Commerce was at one point among the 20 largest banks in the United States, as measured by assets. Wikipedia
The Knickerbocker's collapse caused banks and trust companies to hoard their funds. No loans were made, stocks slumped to their lowest level since December 1900 (the stock market fell 50%) and the crisis spread to the Trust Company of America.
In the Wednesday, October 23, edition of the New York Times was a headline describing the Trust Company of America, the second largest trust company in New York City, as the current "sore point" in the panic. JP Morgan summoned the Secretary of the US Treasury, George B Cortelyou, to New York. On being assured that the Trust Company of America was solvent with Federal backing, JP Morgan gathered together the presidents of all the key banks and organized an immediate $3 million loan to Trust Company.
J Pierpont Morgan had made his reputation and that of his bank. At this time Morgan started to slowly disengage from the day to day activities of his firm preferring to concentrate on his passion for touring Europe, collecting art and literature and sitting on the boards of charitable organizations.
"All this trouble could be averted if we appointed a committee of six or seven public-spirited men like J.P. Morgan to handle the affairs of our country." Woodrow Wilson talking about The Troubles of 1907
The Panic of 1907 led to the passage of the Aldrich-Vreeland Act in 1908, this act established the National Monetary Commission - sponsored and headed by Senator Aldrich.
Aldrich also co-authored the Payne-Aldrich Tariff Act of 1909 which removed restrictive import duties on fine art. This enabled Americans to bring in very expensive European artworks that became the foundation of many leading museums.
On the night of November 22, 1910 a delegation of the nation's leading financiers, led by Senator Nelson Aldrich, left New Jersey for a very secret ten day meeting on Jekyll Island, Georgia.
Aldrich had previously led the members of the National Monetary Commission on a two year banking tour of Europe. He had yet to write a report regarding the trip, nor had he yet offered any plans for banking reforms.
"Despite my views about the value to society of greater publicity for the affairs of corporations, there was an occasion near the close of 1910, when I was as secretive, indeed, as furtive, as any conspirator. . . . Since it would have been fatal to Senator Aldrich's plan to have it known that he was calling on anybody from Wall Street to help him in preparing his bill, precautions were taken that would have delighted the heart of James Stillman." Frank Vanderlip, the Saturday Evening Post, February 9, 1935
Accompanying Senator Aldrich to Jekyll Island were:
- Frank Vanderlip, president of the National City Bank of New York, associated with the Rockefellers
- Henry P. Davison, senior partner of J.P. Morgan Company, regarded as Morgan's personal emissary
- Charles D. Norton, president of the Morgan dominated First National Bank of New York
- Col. Edward House, who would later become President Woodrow Wilson's closest adviser and founder of the Council on Foreign Relations
- Benjamin Strong, a lieutenant of J.P. Morgan
- Paul Warburg, a recent immigrant from Germany who had joined the banking house of Kuhn, Loeb and Company, New York directed the proceedings and wrote the primary features of what would be called the Aldrich Plan. Warburg would later write that "The matter of a uniform discount rate (interest rate) was discussed and settled at Jekyll Island"
"In 1912 the National Monetary Association, under the chairmanship of the late Senator Nelson W. Aldrich, made a report and presented a vicious bill called the National Reserve Association bill. This bill is usually spoken of as the Aldrich bill. Senator Aldrich did not write the Aldrich bill. He was the tool, if not the accomplice, of the European bankers who for nearly twenty years had been scheming to set up a central bank in this Country and who in 1912 has spent and were continuing to spend vast sums of money to accomplish their purpose." Congressman Louis T. McFadden on the Federal Reserve Corporation: Remarks in Congress, 1934
After several failed attempts to push the Federal Reserve Act through Congress, a group of bankers funded and staffed Woodrow Wilson's campaign for President. He had committed to sign a slightly different version of the Federal Reserve Act than Aldrich's Plan.
In 1913, Senator Aldrich pushed the Federal Reserve Act through Congress just before Christmas when much of Congress was on vacation. When elected president Woodrow Wilson passed the FED.
"Our secret expedition to Jekyll Island was the occasion of the actual conception of what eventually became the Federal Reserve System. The essential points of the Aldrich Plan were all contained in the Federal Reserve Act as it was passed." Frank Vanderlip, autobiography, From Farmboy to Financier
"I have unwittingly ruined my country." Woodrow Wilson later said referring to the FED
"We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it." Congressman Louis T. McFadden in 1932
The Federal Reserve Bank (FED) is a privately owned company that controls, and profits immensely by printing money through the US Treasury and regulating its value.
"Some [most] people think the Federal Reserve Banks are U.S. government institutions. They are not ... they are private credit monopolies which prey upon the people of the U.S. for the benefit of themselves and their foreign and domestic swindlers, and rich and predatory money lenders. The sack of the United States by the Fed is the greatest crime in history. Every effort has been made by the Fed to conceal its powers, but the truth is the Fed has usurped the government. It controls everything here and it controls all our foreign relations. It makes and breaks governments at will." Congressional Record 12595-12603 -- Louis T. McFadden, Chairman of the Committee on Banking and Currency (12 years) June 10, 1932
"... we conclude that the [Federal] Reserve Banks are not federal ... but are independent, privately owned and locally controlled corporations ... without day-to-day direction from the federal government." 9th Circuit Court in Lewis vs. United States, 680 F. 2d 1239 June 24, 1982
The FED began with approximately 300 people, or banks, that became owners (stockholders purchased stock at $100 per share) of the Federal Reserve Banking System. The Fed is privately owned - 100% of its shareholders are private banks, the stock is not publicly traded and none of its stock is owned by the US government.
The FED banking system collects billions of dollars in interest annually and distributes the profits to its shareholders.
The US Congress gave the FED the right to print money at no interest to the FED. The FED creates money from nothing, loans it out through banks and charges interest. The FED also buys government debt with money from nothing, and charges U.S. taxpayers interest.
The interest on bonds acquired with its newly-issued Federal Reserve Notes pays the Fed's operating expenses plus a guaranteed 6% return to its banker shareholders.
Reuters reported on October 3 2008:
"The U.S. Federal Reserve gained a key tactical tool from the $700 billion financial rescue package signed into law on Friday that will help it channel funds into parched credit markets. Tucked into the 451-page bill is a provision that lets the Fed pay interest on the reserves banks are required to hold at the central bank."
So in addition to the FED's banker shareholders receiving a guaranteed 6%, banks also now get interest from the taxpayers on their 10 percent "reserves."
The reserve requirement set by the Federal Reserve is 10 percent - ie the ABC Fractional Bank has a billion dollars stashed at the FED, that's its reserve and its paid interest on it. That billion dollars can be fanned into ten times that sum in loans - $1,000,000,000 in reserves becomes $10,000,000,000 in loans.
The absolute amount of bank loans and leases outstanding was $6.80 trillion September 14, 2011. Ten percent of that is $680 billion. US taxpayers will be paying interest to the banks on at least $680 billion worth of reserves - so banks can accumulate interest from borrowers on ten times that sum in loans.
The FED is the only for profit corporation in America that is exempt from both federal and state taxes.
The FED's books are not open to the public, nor Congress apparently:
A first ever GAO (Government Accountability Office) semi-audit of the US Federal Reserve was recently carried out and a report was issued in July of 2011. What the audit revealed was incredible: between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the world's banks, corporations, and governments by giving them...
US$16,000,000,000,000.00 - that's 16 TRILLION dollars.
The GDP of the United States is $14.12 trillion, the entire national debt of the United States government spanning its 200 plus year history is $14.5 trillion.
The GAO report also determined that the Fed lacks a comprehensive system to deal with conflicts of interest:
- The CEO of JP Morgan Chase served on the New York Fed's board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed
- JP Morgan Chase served as one of the clearing banks for the Fed's emergency lending programs
- On Sept. 19, 2008, William Dudley - now the New York Fed president - was granted a conflict of interest waiver to let him keep investments in AIG and General Electric at the same time AIG and GE were given bailout funds.
- The Fed outsourced the operations of their emergency lending programs to private contractors ie JP Morgan Chase, Morgan Stanley, and Wells Fargo. These firms received trillions of dollars in Fed loans at near zero interest rates
- Two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts
Congress enacted a flat rate Federal income tax in 1894, but the Supreme Court ruled it unconstitutional the following year because it was a direct tax not apportioned according to the population of each state.
Senator Aldrich was instrumental in the re-structuring of the American financial system through a federal income tax amendment, the 16th - he had originally opposed an income tax as communistic a decade before. The 16th Amendment gave Congress the authority to tax the income of individuals without regard to the population of each State:
"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
Conclusion
In 1906 David Graham Phillips wrote a series of articles published in Cosmopolitan claiming that politicians were receiving huge payments from large corporation to argue their case in the Senate. Phillips claimed that the main figures in this scandal was Aldrich and Arthur P. Gorman of Maryland.David Graham Phillips was murdered on 23rd January, 1911. Two months later Aldrich resigned from Congress.
Sir Josiah Stamp, president of the Rothschild Bank of England and the second richest man in Britain in the 1920s, said the following in 1927 at the University of Texas:
"The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in inequity and born in sin. Bankers own the Earth. Take it away from them but leave them the power to create money, and with a flick of a pen, they will create enough money to buy it back again. Take this great power away from them and all great fortunes like mine will disappear, for then this would be a better and happier world to live in. But if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit."
The Federal Reserve was conceived and given birth by an unholy alliance of American and British bankers. The FED buys U.S. debt with money printed from nothing, then charges U.S. taxpayers interest. The US government pushed through the federal income tax amendment, restarted an income tax on Americans to pay the interest to the FED and reorganized the IRS to collect the monies - the interest - "owed" to the FED from its citizens.
Since the Fed's creation in 1913 the dollar has lost more than 96% of its value.
Undoubtedly the greatest achievement of the FED has been to transform America from being the world's foremost creditor nation to the world's largest debtor nation.
Aldrich's motto, when questioned about his activities and the reasoning behind them, was to "Admit nothing. Explain nothing."
"Let me issue and control a nation's money and I care not who writes the laws." should be on every thinking person's radar screen. Is it on yours?
If not, maybe it should be.
How Chinese Yuan will overtake the US dollar
Julian D W Phillips
Japan and China will promote direct trading of yen and yuan without using dollars and will encourage the development of a market for companies involved in the exchanges, the Japanese government said over the holiday weekend.
China is Japan's biggest trading partner with $340 billion in two-way transactions last year. The pacts between the world's second- and third-largest economies mirror attempts by fund managers to diversify as global, financial markets remain volatile and decaying. It marks a major leap forward of the internationalization of the Chinese currency, a step that has been developing for the last few years, from tiny beginnings.
It signals that the Chinese banking system has developed to the stage where they can handle international transactions of note. The development of the banking system is clearly far advanced, so expect the enlargement of the international Yuan market to pause, as this leap in size settles in and any teething problems eliminated.
The financial world may belittle the present moves as still very small in money terms in a global context, but structurally the move should make the developed financial world jump to attention.
Of considerably more importance is the impact on global foreign exchanges and the role of the U.S. dollar as the world's sole global reserve currency. For more than two years now Gold, Silver Forecaster have been predicting that the day would come when Chinese exporters/importers would offer and bid prices for goods in the Chinese Yuan. Well it has arrived, albeit confined to Asian trade at the moment.
As of now, $350 billion in global trade will disappear, replaced by Yuan/Yen trade. Where will these dollars go? Over time they will be sold off and head home through a falling exchange rate. That's why we'll see the Yuan appreciate, but only initially, as the Chinese ensure that demand is met by foreign sales of Yuan for non-U.S. currencies.
As time passes the process of the internationalization of the Yuan will primarily be at the expense of the dollar. At some point in this process, the rise of the Yuan and the fall of the dollar from its throne will become visible on foreign exchanges and in the financial picture inside the U.S.A. and Europe. At best, we'll see the Yuan join the world's current leading currencies in global trade, but rising in the future to potentially the prime global, reserve currency at worst.
Japan and China will promote direct trading of yen and yuan without using dollars and will encourage the development of a market for companies involved in the exchanges, the Japanese government said over the holiday weekend.
China is Japan's biggest trading partner with $340 billion in two-way transactions last year. The pacts between the world's second- and third-largest economies mirror attempts by fund managers to diversify as global, financial markets remain volatile and decaying. It marks a major leap forward of the internationalization of the Chinese currency, a step that has been developing for the last few years, from tiny beginnings.
It signals that the Chinese banking system has developed to the stage where they can handle international transactions of note. The development of the banking system is clearly far advanced, so expect the enlargement of the international Yuan market to pause, as this leap in size settles in and any teething problems eliminated.
The financial world may belittle the present moves as still very small in money terms in a global context, but structurally the move should make the developed financial world jump to attention.
Of considerably more importance is the impact on global foreign exchanges and the role of the U.S. dollar as the world's sole global reserve currency. For more than two years now Gold, Silver Forecaster have been predicting that the day would come when Chinese exporters/importers would offer and bid prices for goods in the Chinese Yuan. Well it has arrived, albeit confined to Asian trade at the moment.
As of now, $350 billion in global trade will disappear, replaced by Yuan/Yen trade. Where will these dollars go? Over time they will be sold off and head home through a falling exchange rate. That's why we'll see the Yuan appreciate, but only initially, as the Chinese ensure that demand is met by foreign sales of Yuan for non-U.S. currencies.
As time passes the process of the internationalization of the Yuan will primarily be at the expense of the dollar. At some point in this process, the rise of the Yuan and the fall of the dollar from its throne will become visible on foreign exchanges and in the financial picture inside the U.S.A. and Europe. At best, we'll see the Yuan join the world's current leading currencies in global trade, but rising in the future to potentially the prime global, reserve currency at worst.
Russian gold, currency reserves rise 4.92% to $503 billion
MOSCOW (Commodity Online): Russian Gold and currency reserves advanced 4.92% to $503.0 billion as compared to $479 billion during the previous year, the Russian Central Bank said.
This is an increase of $ 1.7 billion as compared to its previous week's reserve of $501.3. In the previous week, reserves had decreased by 11.7 billion to USD 501.3 billion.
On 1 January 2011, Russia’s total reserves amounted to $479.4billion. An year earlier, it stood at $439.5 billion.
The Central Bank of the Russian Federation is in charge of the country’s 926.9 tons of gold, which are valued at $54 billion and comprise 7.7 percent of the country’s foreign reserves. In 2009, Russia increased its gold production by 21 percent, due in part to the launch of several new mines. Last year, the country overtook Japan in total holdings, adding more than 140 tons to its stockpile in 2010 alone. Russia's buying of Gold continued in 2011, purchasing 4.9 tons in July, according to the IMF's August report.
Among BRIC nations, India's foreign exchange reserves increased by $2.48 billion to $306.84 billion for the week ended Dec 2, rising for the first time in five weeks due to an increase in the value of foreign currency assets and gold reserves. This is the first time in the last five weeks that India's forex reserves kitty has registered a gain. The reserves had dropped by over $16 billion in the previous four weeks.
A gold reserve is the gold held by a central bank or nation intended as a store of value and as a guarantee to redeem promises to pay depositors, note holders, or trading peers, or to secure a currency. Today, gold reserves are almost exclusively, albeit rarely, used in the settlement of international transactions.
This is an increase of $ 1.7 billion as compared to its previous week's reserve of $501.3. In the previous week, reserves had decreased by 11.7 billion to USD 501.3 billion.
On 1 January 2011, Russia’s total reserves amounted to $479.4billion. An year earlier, it stood at $439.5 billion.
The Central Bank of the Russian Federation is in charge of the country’s 926.9 tons of gold, which are valued at $54 billion and comprise 7.7 percent of the country’s foreign reserves. In 2009, Russia increased its gold production by 21 percent, due in part to the launch of several new mines. Last year, the country overtook Japan in total holdings, adding more than 140 tons to its stockpile in 2010 alone. Russia's buying of Gold continued in 2011, purchasing 4.9 tons in July, according to the IMF's August report.
Among BRIC nations, India's foreign exchange reserves increased by $2.48 billion to $306.84 billion for the week ended Dec 2, rising for the first time in five weeks due to an increase in the value of foreign currency assets and gold reserves. This is the first time in the last five weeks that India's forex reserves kitty has registered a gain. The reserves had dropped by over $16 billion in the previous four weeks.
A gold reserve is the gold held by a central bank or nation intended as a store of value and as a guarantee to redeem promises to pay depositors, note holders, or trading peers, or to secure a currency. Today, gold reserves are almost exclusively, albeit rarely, used in the settlement of international transactions.
Mad rush to sell gold in Japan despite lower prices
TOKYO (Commodity online): Lower Gold prices are not deterring Japanese investors from selling off their gold due to an impending bullion tax law.
The law, which comes into effect on Jan 1, will require bullion retailers to report gold and Platinum transactions over 2 million Yen to the tax authorities. As such, investors have been eager to liquidate their gold holdings even though prices are still over 15% below its record prices.
Bullion houses had even opened on Thursday to accommodate the selling public despite Thursday being a public holiday.
"The general public does not want to pay additional tax on their Gold investment. So even though prices dropped sharply overnight many are coming to bullion shops for liquidation”, Reuters quoted a Japanese bullion house official.
On Thursday, gold prices had briefly spiked below its September lows of around $1530/oz. With financial markets perceiving a higher risk in investments, gold prices may remain weak or even fall severely since gold is now seen as a risk asset.
The law, which comes into effect on Jan 1, will require bullion retailers to report gold and Platinum transactions over 2 million Yen to the tax authorities. As such, investors have been eager to liquidate their gold holdings even though prices are still over 15% below its record prices.
Bullion houses had even opened on Thursday to accommodate the selling public despite Thursday being a public holiday.
"The general public does not want to pay additional tax on their Gold investment. So even though prices dropped sharply overnight many are coming to bullion shops for liquidation”, Reuters quoted a Japanese bullion house official.
On Thursday, gold prices had briefly spiked below its September lows of around $1530/oz. With financial markets perceiving a higher risk in investments, gold prices may remain weak or even fall severely since gold is now seen as a risk asset.
Bonds signal crash, heads and shoulders in Euro, gold indicate potential uptrend
By Williem Weytjens
Are Bonds about to plunge? And if so (or if not), what are the implications for stocks, gold, Silver and other precious metals?
Let's have a look at TLT, which is the iShares Barclays 20+ Year Treasury Bond Fund.
Back in 2008, at the climax of the financial crisis, TLT was very stretched above the 200MA, and the RSI was very oversold on a weekly basis. Recently, we had a similar situation, although right now, RSI is not oversold anymore but instead is forming negative divergence, as it sets lower highs and lower lows on the weekly chart, while price recently set a potential double top.
When we look at TLT until 2010, we can see that price retraced exactly back to the 50% Fibonacci Level, where it found strong support. This level also happend to be a level where the long term trend line came in…
If bonds would top here, that would likely be caused by investors rushing out of this (perceived) risk-free asset class, and into more risky assets like stocks.
That would probably involve a more sustainable (or at least more sustainable as perceived by the market participants) way out of this Euro Crisis, which has been making headlines in recent months, causing investors to rush out of risky assets and into bonds.
We can see from the Commitment Of Traders (COT) reports that Commercials (usually seen as the "Smart Money") have taken on HUGE long positions in the EURO, while Speculators (usually seen as the "Dumb Money") have taken on HUGE Short positions:
However, Commercials have deep pockets and can stand the dips (which they usually keep buying)…
Are Bonds about to plunge? And if so (or if not), what are the implications for stocks, gold, Silver and other precious metals?
Let's have a look at TLT, which is the iShares Barclays 20+ Year Treasury Bond Fund.
Back in 2008, at the climax of the financial crisis, TLT was very stretched above the 200MA, and the RSI was very oversold on a weekly basis. Recently, we had a similar situation, although right now, RSI is not oversold anymore but instead is forming negative divergence, as it sets lower highs and lower lows on the weekly chart, while price recently set a potential double top.
When we look at TLT until 2010, we can see that price retraced exactly back to the 50% Fibonacci Level, where it found strong support. This level also happend to be a level where the long term trend line came in…
If bonds would top here, that would likely be caused by investors rushing out of this (perceived) risk-free asset class, and into more risky assets like stocks.
That would probably involve a more sustainable (or at least more sustainable as perceived by the market participants) way out of this Euro Crisis, which has been making headlines in recent months, causing investors to rush out of risky assets and into bonds.
We can see from the Commitment Of Traders (COT) reports that Commercials (usually seen as the "Smart Money") have taken on HUGE long positions in the EURO, while Speculators (usually seen as the "Dumb Money") have taken on HUGE Short positions:
However, Commercials have deep pockets and can stand the dips (which they usually keep buying)…
'2012: Silver is going to outperform gold'
James West,the editor of The Midas Letter and portfolio advisor of the Midas Letter Opportunity Fund, isn't interested in timing the precious metals market—that's a good way to end up butchering perfectly good investments. He believes Silver price is going to be one-sixteenth of the Gold price so it's already undervalued by at least two-thirds. Gold and silver are both going to continue to appreciate. Also he agree with Sprott when he says that silver is going to outperform gold.
Companies Mentioned: B2GOLD CORP. - CONFEDERATION MINERALS LTD. - CORAZON GOLD CORP. - FOUNDATION RESOURCES INC. - HUNTER BAY MINERALS PLC - MEADOW BAY GOLD CORP. - NEWSTRIKE CAPITAL INC. - PRODIGY GOLD INC. - SCORPIO GOLD CORP. - VENTANA GOLD CORP.
The Gold Report: Since you launched the Midas Letter Opportunity Fund earlier this year, some might suggest The Midas Letter is beholden to companies held by funds and is not as objective as it once was.
James West: It's definitely not as objective as it was once. I'm very biased toward the companies I choose to cover because I am invested in them, my retail subscribers are invested in them and now my institutional clients are invested in them. But the caveat is that the companies are now beholden to me—not vice versa—because if they don't deliver on what they represent, I will ensure that the whole world knows about that.
TGR: You're developing a Midas brand. Earlier this year, you were forming the Midas Letter Gold Capitalization Fund, which will lend companies capital to bring gold and silver projects into production.
JW: We are continuing to develop infrastructure and partnerships with other entities that can provide the financing-engineering component. For this fund, the money is not really the hard part. There are a lot of funds that are going from company to company and saying, "We'll lend you some money in exchange for a portion of your offtake." Everybody's trying to capitalize on the commodity-stream model.
The difficulty is in identifying the companies to extend those loans to. Companies don't want to do deals in these conditions because the terms are too onerous. The guy with the money is able to drive a hard bargain because the market is weak.
The fund continues to evolve, but it's still a ways off yet. The state of the market is such that there is a lot of wait-and-see going on.
TGR: The royalty model has worked well for Royal Gold Inc. (RGLD:NASDAQ), Franco-Nevada Corp. (FNV:TSX) and Silver Wheaton Corp. (SLW:NYSE). Sandstorm Gold Ltd. (SSL:TSX.V) is now taking the same path. Will too many companies in that space kill the model? If these companies start competing too much, the margins could disappear.
JW: That is largely why the fund is essentially on hold. There are all these firms trying to throw money at various gold deals. Most of the companies are saying, "No, your financing is attractive, but you're looking to encumber our asset." They want a portion of the offtake, a warrant kicker, a negotiable conversion rate and they want to be the first creditor on the asset. The gold in the ground is not going anywhere. It's only growing in value. But companies are going to start running out of money soon and there will be bargain-basement prices in equity financings. That is going to make debt financings more attractive.
TGR: Most pundits think gold is headed lower before it heads higher. The markets would seem to agree. What's your outlook for gold?
JW: I have unrestrained bullishness for the future of the gold price. I look at the 10-year picture: Gold has increased every year by 21%, and 2011 is no exception. Let's take the well-known pundit Dennis Gartman, who said on CNBC this week that he has completely exited his gold positions because he thinks gold is going to $1,450 an ounce (oz). If you were to look at all of the times that he has gone on CNBC and said that. . .anytime I hear Dennis Gartman say it's time to sell, that's when I start buying gold again! When he says he's bullish on gold, he's trying to catch a falling knife. He has done that repeatedly in the five years that I've been tracking those statements. He must have very bloody hands and no fingers left because he is consistently wrong.
TGR: You share Eric Sprott's perspective on silver, which is to say there is roughly 16 times more silver in the ground than gold, thus the silver price will eventually reach one-sixteenth the price of gold. Sprott recently said that silver-producing companies should withhold a portion of their production rather than sell it for cash that just sits in banks and depreciates. What do you make of his statement?
JW: Every company that produces silver should hold it on the balance sheet as opposed to cash. It's the smart thing to do. If you subscribe to the ideas that the gold:silver price is going to be 16:1 and precious metals have nowhere to go but up because of the debasement of currencies in growing numbers of sovereign jurisdictions, it makes perfect sense.
TGR: Nonetheless, Silver companies measure their profits in dollars.
JW: If a company has silver on its balance sheet, then it should be able to count that as part of a liquid-asset holding denominated in dollars.
TGR: There's not an analyst on the Street that wouldn't significantly discount a company's silver holdings given that if it liquidated them all at once that would drive the silver price down.
JW: I agree that there are few analysts who would not penalize a company for that. However, some analysts, and I think they're the most credible analysts, would actually give the company a premium for such thinking. What that demonstrates to me is a flaw in the thinking of most analysts. It's a deficiency in generally accepted accounting practices. In the future, we'll look back to this point in history and say, "Boy, were we ever dumb back then." We should be valuing Gold as money. It should be valued at a premium to cash on the balance sheet, as should silver. Analysts should value those companies accordingly. It's not conventional wisdom. However, I believe that one day it will be and that it's a superior analytical perspective.
TGR: What's your outlook for silver?
JW: Its price is going to be one-sixteenth of the gold price so it's already undervalued by at least two-thirds. Gold and silver are both going to continue to appreciate. I agree with Sprott when he says that silver is going to outperform gold.
TGR: What companies in northern Ontario's Red Lake gold camp do you find interesting right now?
JW: Confederation Minerals Ltd. (CFM:TSX.V), Prodigy Gold Inc. (PDG:TSX.V) and, just outside of Red Lake, Foundation Resources Inc. (FDN:TSX.V). Foundation has recently become a top pick in that region because it has 860,000 ounces (oz) gold and an NI 43-101 valued at $5.80/oz in the ground based on its share price. It's just a spectacular opportunity.
TGR: Prodigy put out a new resource estimate on its Magino project Nov. 2 that said there's about 55% more gold there than previously thought. What are your thoughts on that project?
JW: We hold Prodigy in the fund and I continue to follow it. That new resource certainly demonstrates the deposit is growing. It's still open in multiple directions. The company is aggressively developing it. The market hasn't been kind to Prodigy, but Prodigy is absolutely one to hold because it's an excellent opportunity at a great price.
TGR: What stands out about Confederation?
JW: Confederation is really interesting. Its joint-venture partner on the Newman Todd project is Redstar Gold Corp. (RGC:TSX.V), which holds 30%. Think about this: The company that owns 30% is valued at $50 million (M), but the company that owns 70% is valued at $17M. Redstar's other projects are not really interesting projects. I've got to assume that its share-price valuation is based on Newman Todd. There's very little risk of this not becoming a mine. We're headed toward an era similar to 2008 where the prices are astronomically low. Fortunes are going to be made in the years ahead by the people who were smart enough to pick up these high-caliber deals at super low prices.
TGR: Let's head to Nevada. You follow a couple of companies there, including Scorpio Gold Corp. (SGN:TSX.V) and Meadow Bay Gold Corp. (MAY:TSX.V; MAYGF:OTCQX). What's Scorpio's horoscope?
JW: Scorpio is going to be an absolute home run. Peter Hawley, who heads the company, has a great track record and is well regarded. If anyone can drive this thing forward, it's him. But really, all an investor needs to look at is the most recent intercepts: 24 meters (m) grading 5.9 grams per ton (g/t), 3m grading 15 g/t. It looks to be a major discovery—a winner.
TGR: What were your impressions of the recent drill results from Meadow Bay's Atlanta Gold Mine project where there was one intercept of roughly 20m of 3.5 grams gold equivalent?
JW: Meadow Bay is a fault-controlled system. Everywhere along the fault, which has been traced north to 5 kilometers (km), has 20–40m intercepts grading 1–3 g/t gold. That should take the company to more than 1 Moz in the near term. There are two giant porphyries, one of which was the 60m intercept grading just over 1 g/t gold and copper, as well as this new one. The potential for Meadow Bay with these two porphyries, as well as the fault-controlled system, which continues to be open to depth to the north and south, is very interesting. The potential is certainly multiple million ounces.
Companies Mentioned: B2GOLD CORP. - CONFEDERATION MINERALS LTD. - CORAZON GOLD CORP. - FOUNDATION RESOURCES INC. - HUNTER BAY MINERALS PLC - MEADOW BAY GOLD CORP. - NEWSTRIKE CAPITAL INC. - PRODIGY GOLD INC. - SCORPIO GOLD CORP. - VENTANA GOLD CORP.
The Gold Report: Since you launched the Midas Letter Opportunity Fund earlier this year, some might suggest The Midas Letter is beholden to companies held by funds and is not as objective as it once was.
James West: It's definitely not as objective as it was once. I'm very biased toward the companies I choose to cover because I am invested in them, my retail subscribers are invested in them and now my institutional clients are invested in them. But the caveat is that the companies are now beholden to me—not vice versa—because if they don't deliver on what they represent, I will ensure that the whole world knows about that.
TGR: You're developing a Midas brand. Earlier this year, you were forming the Midas Letter Gold Capitalization Fund, which will lend companies capital to bring gold and silver projects into production.
JW: We are continuing to develop infrastructure and partnerships with other entities that can provide the financing-engineering component. For this fund, the money is not really the hard part. There are a lot of funds that are going from company to company and saying, "We'll lend you some money in exchange for a portion of your offtake." Everybody's trying to capitalize on the commodity-stream model.
The difficulty is in identifying the companies to extend those loans to. Companies don't want to do deals in these conditions because the terms are too onerous. The guy with the money is able to drive a hard bargain because the market is weak.
The fund continues to evolve, but it's still a ways off yet. The state of the market is such that there is a lot of wait-and-see going on.
TGR: The royalty model has worked well for Royal Gold Inc. (RGLD:NASDAQ), Franco-Nevada Corp. (FNV:TSX) and Silver Wheaton Corp. (SLW:NYSE). Sandstorm Gold Ltd. (SSL:TSX.V) is now taking the same path. Will too many companies in that space kill the model? If these companies start competing too much, the margins could disappear.
JW: That is largely why the fund is essentially on hold. There are all these firms trying to throw money at various gold deals. Most of the companies are saying, "No, your financing is attractive, but you're looking to encumber our asset." They want a portion of the offtake, a warrant kicker, a negotiable conversion rate and they want to be the first creditor on the asset. The gold in the ground is not going anywhere. It's only growing in value. But companies are going to start running out of money soon and there will be bargain-basement prices in equity financings. That is going to make debt financings more attractive.
TGR: Most pundits think gold is headed lower before it heads higher. The markets would seem to agree. What's your outlook for gold?
JW: I have unrestrained bullishness for the future of the gold price. I look at the 10-year picture: Gold has increased every year by 21%, and 2011 is no exception. Let's take the well-known pundit Dennis Gartman, who said on CNBC this week that he has completely exited his gold positions because he thinks gold is going to $1,450 an ounce (oz). If you were to look at all of the times that he has gone on CNBC and said that. . .anytime I hear Dennis Gartman say it's time to sell, that's when I start buying gold again! When he says he's bullish on gold, he's trying to catch a falling knife. He has done that repeatedly in the five years that I've been tracking those statements. He must have very bloody hands and no fingers left because he is consistently wrong.
TGR: You share Eric Sprott's perspective on silver, which is to say there is roughly 16 times more silver in the ground than gold, thus the silver price will eventually reach one-sixteenth the price of gold. Sprott recently said that silver-producing companies should withhold a portion of their production rather than sell it for cash that just sits in banks and depreciates. What do you make of his statement?
JW: Every company that produces silver should hold it on the balance sheet as opposed to cash. It's the smart thing to do. If you subscribe to the ideas that the gold:silver price is going to be 16:1 and precious metals have nowhere to go but up because of the debasement of currencies in growing numbers of sovereign jurisdictions, it makes perfect sense.
TGR: Nonetheless, Silver companies measure their profits in dollars.
JW: If a company has silver on its balance sheet, then it should be able to count that as part of a liquid-asset holding denominated in dollars.
TGR: There's not an analyst on the Street that wouldn't significantly discount a company's silver holdings given that if it liquidated them all at once that would drive the silver price down.
JW: I agree that there are few analysts who would not penalize a company for that. However, some analysts, and I think they're the most credible analysts, would actually give the company a premium for such thinking. What that demonstrates to me is a flaw in the thinking of most analysts. It's a deficiency in generally accepted accounting practices. In the future, we'll look back to this point in history and say, "Boy, were we ever dumb back then." We should be valuing Gold as money. It should be valued at a premium to cash on the balance sheet, as should silver. Analysts should value those companies accordingly. It's not conventional wisdom. However, I believe that one day it will be and that it's a superior analytical perspective.
TGR: What's your outlook for silver?
JW: Its price is going to be one-sixteenth of the gold price so it's already undervalued by at least two-thirds. Gold and silver are both going to continue to appreciate. I agree with Sprott when he says that silver is going to outperform gold.
TGR: What companies in northern Ontario's Red Lake gold camp do you find interesting right now?
JW: Confederation Minerals Ltd. (CFM:TSX.V), Prodigy Gold Inc. (PDG:TSX.V) and, just outside of Red Lake, Foundation Resources Inc. (FDN:TSX.V). Foundation has recently become a top pick in that region because it has 860,000 ounces (oz) gold and an NI 43-101 valued at $5.80/oz in the ground based on its share price. It's just a spectacular opportunity.
TGR: Prodigy put out a new resource estimate on its Magino project Nov. 2 that said there's about 55% more gold there than previously thought. What are your thoughts on that project?
JW: We hold Prodigy in the fund and I continue to follow it. That new resource certainly demonstrates the deposit is growing. It's still open in multiple directions. The company is aggressively developing it. The market hasn't been kind to Prodigy, but Prodigy is absolutely one to hold because it's an excellent opportunity at a great price.
TGR: What stands out about Confederation?
JW: Confederation is really interesting. Its joint-venture partner on the Newman Todd project is Redstar Gold Corp. (RGC:TSX.V), which holds 30%. Think about this: The company that owns 30% is valued at $50 million (M), but the company that owns 70% is valued at $17M. Redstar's other projects are not really interesting projects. I've got to assume that its share-price valuation is based on Newman Todd. There's very little risk of this not becoming a mine. We're headed toward an era similar to 2008 where the prices are astronomically low. Fortunes are going to be made in the years ahead by the people who were smart enough to pick up these high-caliber deals at super low prices.
TGR: Let's head to Nevada. You follow a couple of companies there, including Scorpio Gold Corp. (SGN:TSX.V) and Meadow Bay Gold Corp. (MAY:TSX.V; MAYGF:OTCQX). What's Scorpio's horoscope?
JW: Scorpio is going to be an absolute home run. Peter Hawley, who heads the company, has a great track record and is well regarded. If anyone can drive this thing forward, it's him. But really, all an investor needs to look at is the most recent intercepts: 24 meters (m) grading 5.9 grams per ton (g/t), 3m grading 15 g/t. It looks to be a major discovery—a winner.
TGR: What were your impressions of the recent drill results from Meadow Bay's Atlanta Gold Mine project where there was one intercept of roughly 20m of 3.5 grams gold equivalent?
JW: Meadow Bay is a fault-controlled system. Everywhere along the fault, which has been traced north to 5 kilometers (km), has 20–40m intercepts grading 1–3 g/t gold. That should take the company to more than 1 Moz in the near term. There are two giant porphyries, one of which was the 60m intercept grading just over 1 g/t gold and copper, as well as this new one. The potential for Meadow Bay with these two porphyries, as well as the fault-controlled system, which continues to be open to depth to the north and south, is very interesting. The potential is certainly multiple million ounces.
'Financial repression' is gold price suppression
Submitted by cpowell on Fri, 2011-12-30 03:23. Section: Daily Dispatches
10:35p ET Thursday, December 29, 2011
Dear Friend of GATA and Gold:
Referring to Financial Times editor Gillian Tett's December 22 column, "Ties Between Sovereigns and Banks Set to Deepen," to which the GATA Dispatch called your attention the other night with the headline "Citing 'Financial Repression,' FT's Gillian Tett Sounds Like Jim Rickards and Rob Kirby" (http://www.gata.org/node/10828), a friend asks:
"Is the message here that governments have determined that the only way to stay in power is:
"-- To fund their excess through the banking system, at the expense of the private sector;
"-- And to go along with the gold price suppression scheme so that the only alternative to that system is not attractive either?
"If the Chinese, Indians, Japanese, and others buy into this power-preservation scheme, then it appears -- as you have long said -- there really is no true market left, and we're all screwed, no? This is not particularly what I want to believe, but if that's where we are, then I guess I need to deal with it."
Your secretary/treasurer replied: "Yes, that's how I construe the comments about 'financial repression' made by Rickards, Kirby, Tett, and others. It's a matter of government's making it impossible for investors to make money except in undertakings specifically approved and designed by the government itself, undertakings that get narrower and narrower as government intervention in markets grows more pervasive.
"Economic circumstances and markets will keep trying to find ways to assert themselves, and the different interests of some countries may cause them to act against the 'financial repression' other countries try to impose, what Rickards describes in his new book, "Currency Wars" (http://www.amazon.com/Currency-Wars-Making-Global-Portfolio/dp/159184449...), so there's no assurance about how things will end up, just assurance of less democracy and more totalitarianism. That's what GATA has been fighting all along."
"Financial repression" was perhaps first foreseen by the British economist Peter Warburton in his 2001 essay "The Debasement of World Currency: It Is Inflation, But Not as We Know It" (http://www.gata.org/node/8303).
Warburton wrote: "What we see at present is a battle between the central banks and the collapse of the financial system fought on two fronts. On one front, the central banks preside over the creation of additional liquidity for the financial system in order to hold back the tide of debt defaults that would otherwise occur. On the other, they incite investment banks and other willing parties to bet against a rise in the prices of gold, oil, base metals, soft commodities, or anything else that might be deemed an indicator of inherent value. Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the US dollar, but of all fiat currencies. Equally, they seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets." [Emphasis added.]
That is, "financial repression."
As the idea reached her this month, Tett wrote incisively: "To understand this, it is worth taking a look at a fascinating recent working paper by Carmen Reinhart and M. Belen Sbrancia, published by the Bank for International Settlements but drawing on earlier work for the International Monetary Fund. ...
"... What Reinhart and Sbrancia argue is that if you want to understand how the West cut its debts during the last great bout of deleveraging -- namely, after the Second World War -- then do not just focus on austerity or growth. Instead, the crucial issue is that during that period, the state engineered a situation where the yields on government bonds were kept slightly below the prevailing rate of inflation for many years. This gap was not vast. But since asset managers and banks continued to buy those bonds at unfavorable prices, this implicit, subtle subsidy from investors helped the government to cut its debt pile over several years. Indeed, Reinhart and Sbrancia calculate that such 'repression' accounted for half of the post-Second World War fiscal adjustment in the U.S. and U.K., due to the magic of compounding.
"Now these days it is hard to imagine any Western government overtly calling for a second wave of such 'repression.' After all, as Kevin Warsh, a former Fed governor, recently pointed out, the drawback of financial repression is that it curbs private-sector investment and credit growth. And in any case it is a moot point whether such repression could even be implemented today, given the globalized nature of markets.
"Nevertheless, the political incentives to flirt with this concept are clear. After all, the beauty of a stealth subsidy is precisely that: It is too subtle for most voters to understand. It is also arguably a more equitable form of burden sharing, and thus less politically divisive, than, say, state spending cuts.
"Moreover, governments do not necessarily need to be 'repressive' to achieve the 'repression' trick. As the economist Alan Taylor observes, if investors are so terrified that they cannot see alternative investment choices, they may end up buying government bonds by default -- even at unattractive prices. [Emphasis added.] Indeed, that is arguably what is already occurring today in the Treasuries market or the world of Japanese government bonds. And, perhaps, in the eurozone too. After all, when eurozone banks were given E442 billion of European Central Bank money two years ago, they used half of this to buy government bonds -- without compulsion at all.
"Whatever you want to call it, then, the state and private-sector finance are becoming more entwined by the day. It is a profound irony of 21st-century 'market' capitalism. And in 2012 it will only deepen."
Thus Tett, like Warburton long before her, expressed perfectly the rationale for the gold price suppression scheme even as she explained why there would be little point in questioning central bankers about their implementation of "public" policy. ("Now these days it is hard to imagine any Western government overtly calling for a second wave of such 'repression.'") In mainstream financial journalism it is simply taken for granted that the purposes and objectives of central banking are not to be learned from central banks themselves but rather from academics, market analysts, soothsayers, or whoever else might answer the telephone when a central banker won't.
As a practical matter, this assumption of mainstream financial journalism is probably correct. But the world might begin to change, however slowly, if journalists tried putting the questions to central bankers in public settings anyway and reported their evasions or refusals to answer. Eventually investors and even the public might come to understand that great power, the power to control the prices of all capital, labor, goods, and services in the world -- that is, the power to control the price of everything, absolute power -- was being exercised in secret so that the world more easily might be expropriated, that democracy had been crushed, and that, as a mere high school graduate remarked a few years ago, "There are no markets anymore, only interventions." (http://www.gata.org/node/6242.)
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
Join GATA here:
Vancouver Resource Investment Conference
Sunday-Monday, January 22-23, 2012
Vancouver Convention Centre West
Vancouver, British Columbia, Canada
10:35p ET Thursday, December 29, 2011
Dear Friend of GATA and Gold:
Referring to Financial Times editor Gillian Tett's December 22 column, "Ties Between Sovereigns and Banks Set to Deepen," to which the GATA Dispatch called your attention the other night with the headline "Citing 'Financial Repression,' FT's Gillian Tett Sounds Like Jim Rickards and Rob Kirby" (http://www.gata.org/node/10828), a friend asks:
"Is the message here that governments have determined that the only way to stay in power is:
"-- To fund their excess through the banking system, at the expense of the private sector;
"-- And to go along with the gold price suppression scheme so that the only alternative to that system is not attractive either?
"If the Chinese, Indians, Japanese, and others buy into this power-preservation scheme, then it appears -- as you have long said -- there really is no true market left, and we're all screwed, no? This is not particularly what I want to believe, but if that's where we are, then I guess I need to deal with it."
Your secretary/treasurer replied: "Yes, that's how I construe the comments about 'financial repression' made by Rickards, Kirby, Tett, and others. It's a matter of government's making it impossible for investors to make money except in undertakings specifically approved and designed by the government itself, undertakings that get narrower and narrower as government intervention in markets grows more pervasive.
"Economic circumstances and markets will keep trying to find ways to assert themselves, and the different interests of some countries may cause them to act against the 'financial repression' other countries try to impose, what Rickards describes in his new book, "Currency Wars" (http://www.amazon.com/Currency-Wars-Making-Global-Portfolio/dp/159184449...), so there's no assurance about how things will end up, just assurance of less democracy and more totalitarianism. That's what GATA has been fighting all along."
"Financial repression" was perhaps first foreseen by the British economist Peter Warburton in his 2001 essay "The Debasement of World Currency: It Is Inflation, But Not as We Know It" (http://www.gata.org/node/8303).
Warburton wrote: "What we see at present is a battle between the central banks and the collapse of the financial system fought on two fronts. On one front, the central banks preside over the creation of additional liquidity for the financial system in order to hold back the tide of debt defaults that would otherwise occur. On the other, they incite investment banks and other willing parties to bet against a rise in the prices of gold, oil, base metals, soft commodities, or anything else that might be deemed an indicator of inherent value. Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the US dollar, but of all fiat currencies. Equally, they seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets." [Emphasis added.]
That is, "financial repression."
As the idea reached her this month, Tett wrote incisively: "To understand this, it is worth taking a look at a fascinating recent working paper by Carmen Reinhart and M. Belen Sbrancia, published by the Bank for International Settlements but drawing on earlier work for the International Monetary Fund. ...
"... What Reinhart and Sbrancia argue is that if you want to understand how the West cut its debts during the last great bout of deleveraging -- namely, after the Second World War -- then do not just focus on austerity or growth. Instead, the crucial issue is that during that period, the state engineered a situation where the yields on government bonds were kept slightly below the prevailing rate of inflation for many years. This gap was not vast. But since asset managers and banks continued to buy those bonds at unfavorable prices, this implicit, subtle subsidy from investors helped the government to cut its debt pile over several years. Indeed, Reinhart and Sbrancia calculate that such 'repression' accounted for half of the post-Second World War fiscal adjustment in the U.S. and U.K., due to the magic of compounding.
"Now these days it is hard to imagine any Western government overtly calling for a second wave of such 'repression.' After all, as Kevin Warsh, a former Fed governor, recently pointed out, the drawback of financial repression is that it curbs private-sector investment and credit growth. And in any case it is a moot point whether such repression could even be implemented today, given the globalized nature of markets.
"Nevertheless, the political incentives to flirt with this concept are clear. After all, the beauty of a stealth subsidy is precisely that: It is too subtle for most voters to understand. It is also arguably a more equitable form of burden sharing, and thus less politically divisive, than, say, state spending cuts.
"Moreover, governments do not necessarily need to be 'repressive' to achieve the 'repression' trick. As the economist Alan Taylor observes, if investors are so terrified that they cannot see alternative investment choices, they may end up buying government bonds by default -- even at unattractive prices. [Emphasis added.] Indeed, that is arguably what is already occurring today in the Treasuries market or the world of Japanese government bonds. And, perhaps, in the eurozone too. After all, when eurozone banks were given E442 billion of European Central Bank money two years ago, they used half of this to buy government bonds -- without compulsion at all.
"Whatever you want to call it, then, the state and private-sector finance are becoming more entwined by the day. It is a profound irony of 21st-century 'market' capitalism. And in 2012 it will only deepen."
Thus Tett, like Warburton long before her, expressed perfectly the rationale for the gold price suppression scheme even as she explained why there would be little point in questioning central bankers about their implementation of "public" policy. ("Now these days it is hard to imagine any Western government overtly calling for a second wave of such 'repression.'") In mainstream financial journalism it is simply taken for granted that the purposes and objectives of central banking are not to be learned from central banks themselves but rather from academics, market analysts, soothsayers, or whoever else might answer the telephone when a central banker won't.
As a practical matter, this assumption of mainstream financial journalism is probably correct. But the world might begin to change, however slowly, if journalists tried putting the questions to central bankers in public settings anyway and reported their evasions or refusals to answer. Eventually investors and even the public might come to understand that great power, the power to control the prices of all capital, labor, goods, and services in the world -- that is, the power to control the price of everything, absolute power -- was being exercised in secret so that the world more easily might be expropriated, that democracy had been crushed, and that, as a mere high school graduate remarked a few years ago, "There are no markets anymore, only interventions." (http://www.gata.org/node/6242.)
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
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Sunday-Monday, January 22-23, 2012
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Raid on silver and gold fails/Poor Italian 10 yr auction/rumours of global QE to infinity.
Raid on silver and gold fails/Poor Italian 10 yr auction/rumours of global QE to infinity.
Good evening Ladies and Gentlemen:
The price of gold finished the comex session at $1539.90 down $23.00 dollars. The price of silver fared better finishing the session at $27.27 up 8 cents on the day. I have written to Bart Chilton and he is going to obtain for me the Dec 23.2011 data which somehow was released at 10 am the 27th of December. If any of you saw this release, please let me know and email to me the inventory movements so I can complete my data entries.
The price of gold trading right now at the comex: 1545.50 and silver: $27.77 as rumours started to surface that credit markets are in trouble and that a global QE infinity will be released on all markets. I will be detailing this to you in the body of the commentary. But first let's see how trading fared at the comex, inventory movements and delivery notices. Since tomorrow is first day notice, we will receive late tonight
those first deliveries for January. January is an extremely weak delivery month for both gold and silver so do not expect much. If I am up late tonight, I will give you that data on the comments section on my blog.
The total gold comex OI hardly budged falling only by 38 contracts from 418,945 to 418,907 as the bankers were basically trading with themselves as most of gold/silver investors have left the comex and seek their metal elsewhere. The front delivery month of December is now off the board. You will recall that we had 88 OI notices left to be served upon and that was exactly what we got late last night. The new front month for gold is February and here the OI dropped by only 800 contracts to 239,266 contracts. The estimated volume on the gold comex was very light at 136,112 with many rollovers. The confirmed volume yesterday was also very light at 123,088. The front January options exercised looks like we have 1,038 contracts standing but that may change by tomorrow which will really tell us how many contracts are standing.
The total silver comex OI surprisingly rose by 1300 contracts to 105,245. As you can see the raids now are having minimal damage in OI. The bankers have clear control on the price of paper gold (and silver). The front delivery month of December is now off the board. You will recall that we had 15 delivery notices yesterday and that is exactly what you got yesterday. That should have completed the month but lo and behold we got another 4 contracts served by the bankers as they must have needed some silver. Thus the number of silver oz standing will increase by 20,000 oz. The next front month is March and here the OI rose by over 1000 contracts to 58,999 contracts from 57,891. The estimated volume was very light at 35,962. The confirmed volume yesterday was also light at 33,887.
China’s ICBC Says It Joins London Bullion Market Association
By Bloomberg News
(Adds analyst quote in the fourth paragraph.)Dec. 16 (Bloomberg) -- The Industrial and Commercial Bank of China Ltd., the world’s largest bank by market value, has joined the London Bullion Market Association as a full member, as the country’s imports of the precious metal gained to a record.
The Beijing-based bank will use the opportunity to forge itself into a global precious metal investment and management bank, according to an e-mailed statement from the lender. The LBMA is the London-based trade association that represents the wholesale over-the-counter market for gold and silver in London. China is the world’s largest gold producer.
China’s bullion demand may be more than 750 tons this year, as the country overtook India in the third quarter as the world’s largest gold jewelry market, Albert Cheng, managing director for the World Gold Council’s Far East region at the Council, said on Nov. 17. Gold imports from Hong Kong surged 51 percent to a record in October as investors sought to hedge against turmoil in the financial markets.
“ICBC’s becoming a member of LBMA will help the two markets -- China and overseas -- become more related in the long term,” Jin Shuguang, analyst at Nanhua Futures Co., said by phone from Hangzhou today.
By selling more than 40 tons of gold in the first 10 months, ICBC became the largest retailer in China by volume, Cheng Binghai, chairman of the Shanghai Gold & Jewelry Trade Association, said in Shanghai on Dec. 1.
Gold is rallying for an 11th year, gaining 12 percent, as investors seek to protect their wealth from declining equities, depreciating currencies and the threat of inflation. Bullion for immediate-delivery in London climbed for the first time in five days to $1,590.15 an ounce, down 17 percent from the record $1,921.15 on Sept. 6.
--Feiwen Rong. Editors: Richard Dobson, Thomas Kutty AbrahamTo contact Bloomberg News staff for this story: Feiwen Rong in Beijing at frong2@bloomberg.net
To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net
GLD: A Great Set-Up!
thetechnicaltake's picture
Submitted by thetechnicaltake on 12/30/2011 11:41 -0500
Bond
Exchange Traded Fund
Precious Metals
Price Action
I am sure you have heard all of the pronouncements that the bull market in gold is over. All sorts of reasons have been given from strength in the Dollar to the "you better run for the hills" price is now under the 200 day moving average for the first time in 10 months. I am not going to "poo poo" the price action, because it has been ugly, but all of the data I can muster shows that the fundamental and technical picture remains bright for gold.
First, this downdraft still remains within in the realm of pullbacks for a gold bull market. Bull market dogma would suggest that a bull market will do its best to throw you off the bull, and I believe that is what we have in this case. Second, the fundamental picture remains bright for precious metals as bond yields appear to be going lower; there is still talk that economy (or stock market) needs a life line. Third, Dollar strength is the time to buy gold. Fourth, investors' sentiment towards gold has not changed. In other words, if gold was entering a bear phase, I contend that investors actions would suggest such a dynamic. Lastly, the longer term (monthly) charts continue to suggest that the bull market in gold is very much intact, and if anything, the recent tumult in prices is a buying opportunity as price is at the bottom of a rising price channel.
Despite all the good, I am not going to minimize the technical damage that has been done. This can be seen in the weekly chart of the SPDR Gold Trust ETF (symbol: GLD). See figure 1. The pink and red dots are key pivot points, which represent the best areas of buying (support) and selling (resistance). The wide range price bar (see red arrow on chart) that closed below the support level at 157.18 is the first sign of technical damage. Support levels should hold, but this one did not, and within the context of positive fundamentals, I would consider this a warning sign.
Figure 1. GLD/ weekly
[fig 2 12.30.11]
The next level of support (150.10) appears to be holding, and based upon the following daily chart of GLD, the price dynamics are turning bullish. See figure 2. Once again, the gold and black dots represent key pivot levels. This past week prices broke below the key pivot at 151.96, and with today's price action, price is likely to close back above this key pivot point level. Break below support leads to selling. Buyers step in taking prices higher leaving weak hands on the sidelines with remorse for having sold at the lows. Resistance (old support) coincides with the weekly levels at approximately 157.
Figure 2. GLD/ daily
[fig 3 12.30.11]
In sum, within the context of the fundamentals, the current technical set up in GLD is compelling. A weekly close above 157 would confirm the idiocy of the crowd, and a weekly close below 150-ish would be reason to step back again from gold.
TheTechnicalTake offers an e-newsletter: It's FREE!
Submitted by thetechnicaltake on 12/30/2011 11:41 -0500
Bond
Exchange Traded Fund
Precious Metals
Price Action
I am sure you have heard all of the pronouncements that the bull market in gold is over. All sorts of reasons have been given from strength in the Dollar to the "you better run for the hills" price is now under the 200 day moving average for the first time in 10 months. I am not going to "poo poo" the price action, because it has been ugly, but all of the data I can muster shows that the fundamental and technical picture remains bright for gold.
First, this downdraft still remains within in the realm of pullbacks for a gold bull market. Bull market dogma would suggest that a bull market will do its best to throw you off the bull, and I believe that is what we have in this case. Second, the fundamental picture remains bright for precious metals as bond yields appear to be going lower; there is still talk that economy (or stock market) needs a life line. Third, Dollar strength is the time to buy gold. Fourth, investors' sentiment towards gold has not changed. In other words, if gold was entering a bear phase, I contend that investors actions would suggest such a dynamic. Lastly, the longer term (monthly) charts continue to suggest that the bull market in gold is very much intact, and if anything, the recent tumult in prices is a buying opportunity as price is at the bottom of a rising price channel.
Despite all the good, I am not going to minimize the technical damage that has been done. This can be seen in the weekly chart of the SPDR Gold Trust ETF (symbol: GLD). See figure 1. The pink and red dots are key pivot points, which represent the best areas of buying (support) and selling (resistance). The wide range price bar (see red arrow on chart) that closed below the support level at 157.18 is the first sign of technical damage. Support levels should hold, but this one did not, and within the context of positive fundamentals, I would consider this a warning sign.
Figure 1. GLD/ weekly
[fig 2 12.30.11]
The next level of support (150.10) appears to be holding, and based upon the following daily chart of GLD, the price dynamics are turning bullish. See figure 2. Once again, the gold and black dots represent key pivot levels. This past week prices broke below the key pivot at 151.96, and with today's price action, price is likely to close back above this key pivot point level. Break below support leads to selling. Buyers step in taking prices higher leaving weak hands on the sidelines with remorse for having sold at the lows. Resistance (old support) coincides with the weekly levels at approximately 157.
Figure 2. GLD/ daily
[fig 3 12.30.11]
In sum, within the context of the fundamentals, the current technical set up in GLD is compelling. A weekly close above 157 would confirm the idiocy of the crowd, and a weekly close below 150-ish would be reason to step back again from gold.
TheTechnicalTake offers an e-newsletter: It's FREE!
Last Updated : 30 December 2011 at 19:35 IST Follow us on Facebook and Twitter for updates How Chinese Yuan will overtake the US dollar
Julian D W Phillips
Japan and China will promote direct trading of yen and yuan without using dollars and will encourage the development of a market for companies involved in the exchanges, the Japanese government said over the holiday weekend.
China is Japan's biggest trading partner with $340 billion in two-way transactions last year. The pacts between the world's second- and third-largest economies mirror attempts by fund managers to diversify as global, financial markets remain volatile and decaying. It marks a major leap forward of the internationalization of the Chinese currency, a step that has been developing for the last few years, from tiny beginnings.
It signals that the Chinese banking system has developed to the stage where they can handle international transactions of note. The development of the banking system is clearly far advanced, so expect the enlargement of the international Yuan market to pause, as this leap in size settles in and any teething problems eliminated.
The financial world may belittle the present moves as still very small in money terms in a global context, but structurally the move should make the developed financial world jump to attention.
Of considerably more importance is the impact on global foreign exchanges and the role of the U.S. dollar as the world's sole global reserve currency. For more than two years now Gold, Silver Forecaster have been predicting that the day would come when Chinese exporters/importers would offer and bid prices for goods in the Chinese Yuan. Well it has arrived, albeit confined to Asian trade at the moment.
As of now, $350 billion in global trade will disappear, replaced by Yuan/Yen trade. Where will these dollars go? Over time they will be sold off and head home through a falling exchange rate. That's why we'll see the Yuan appreciate, but only initially, as the Chinese ensure that demand is met by foreign sales of Yuan for non-U.S. currencies.
As time passes the process of the internationalization of the Yuan will primarily be at the expense of the dollar. At some point in this process, the rise of the Yuan and the fall of the dollar from its throne will become visible on foreign exchanges and in the financial picture inside the U.S.A. and Europe. At best, we'll see the Yuan join the world's current leading currencies in global trade, but rising in the future to potentially the prime global, reserve currency at worst.
Japan and China will promote direct trading of yen and yuan without using dollars and will encourage the development of a market for companies involved in the exchanges, the Japanese government said over the holiday weekend.
China is Japan's biggest trading partner with $340 billion in two-way transactions last year. The pacts between the world's second- and third-largest economies mirror attempts by fund managers to diversify as global, financial markets remain volatile and decaying. It marks a major leap forward of the internationalization of the Chinese currency, a step that has been developing for the last few years, from tiny beginnings.
It signals that the Chinese banking system has developed to the stage where they can handle international transactions of note. The development of the banking system is clearly far advanced, so expect the enlargement of the international Yuan market to pause, as this leap in size settles in and any teething problems eliminated.
The financial world may belittle the present moves as still very small in money terms in a global context, but structurally the move should make the developed financial world jump to attention.
Of considerably more importance is the impact on global foreign exchanges and the role of the U.S. dollar as the world's sole global reserve currency. For more than two years now Gold, Silver Forecaster have been predicting that the day would come when Chinese exporters/importers would offer and bid prices for goods in the Chinese Yuan. Well it has arrived, albeit confined to Asian trade at the moment.
As of now, $350 billion in global trade will disappear, replaced by Yuan/Yen trade. Where will these dollars go? Over time they will be sold off and head home through a falling exchange rate. That's why we'll see the Yuan appreciate, but only initially, as the Chinese ensure that demand is met by foreign sales of Yuan for non-U.S. currencies.
As time passes the process of the internationalization of the Yuan will primarily be at the expense of the dollar. At some point in this process, the rise of the Yuan and the fall of the dollar from its throne will become visible on foreign exchanges and in the financial picture inside the U.S.A. and Europe. At best, we'll see the Yuan join the world's current leading currencies in global trade, but rising in the future to potentially the prime global, reserve currency at worst.
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Morgan Stanley to Cut 580 Jobs in New York
By BEN PROTESS
Morgan Stanley will slash 580 jobs in New York as part of a broader wave of layoffs underway at the bank, according to a public filing.
In a notice filed with the New York State Department of Labor, Morgan Stanley cited “economic” woes as the cause of the layoffs. The cuts began Dec. 15 on a “rolling” basis, according to the filing, known as a WARN notice, or Worker Adjustment and Retraining Notification.
Earlier this month, Morgan Stanley said it would cut 1,600 jobs, or 2.6 percent of its work force, by the first quarter of 2012. The bank plans to spread the round of reductions across all divisions, including investment banking and trading.
The layoffs at Morgan Stanley are the latest round of severe cutbacks on Wall Street, which has suffered a year of humbling returns and massive cost-cutting. Citigroup recently announced it would shed 4,500 jobs. Bank of America and Goldman Sachs, too, have begun carrying out major staff reductions. In June, Goldman told the New York Department of Labor that it would layoff 230 New York workers through March 2012.
Morgan Stanley will slash 580 jobs in New York as part of a broader wave of layoffs underway at the bank, according to a public filing.
In a notice filed with the New York State Department of Labor, Morgan Stanley cited “economic” woes as the cause of the layoffs. The cuts began Dec. 15 on a “rolling” basis, according to the filing, known as a WARN notice, or Worker Adjustment and Retraining Notification.
Earlier this month, Morgan Stanley said it would cut 1,600 jobs, or 2.6 percent of its work force, by the first quarter of 2012. The bank plans to spread the round of reductions across all divisions, including investment banking and trading.
The layoffs at Morgan Stanley are the latest round of severe cutbacks on Wall Street, which has suffered a year of humbling returns and massive cost-cutting. Citigroup recently announced it would shed 4,500 jobs. Bank of America and Goldman Sachs, too, have begun carrying out major staff reductions. In June, Goldman told the New York Department of Labor that it would layoff 230 New York workers through March 2012.
'Buying silver is better than buying gold'
By Daniel Vundy
Silver can be purchased as easily as Gold can, but Silver is the better purchase. Both gold and silver are precious metals that have tangible value. The benefits of each metal have much in common, but there are also differences that must be understood before making an investment.
Both metals are a storehouse of value. Regardless of what happens in the world, a person who has a portion of their wealth invested in gold and silver will have a balance in their investment portfolio. If the world's stock markets and currencies drop significantly (which is very likely happen in the near future), gold and silver will hold their value and likely increase in value offsetting losses in other areas of investment. The more uncertain you feel about the future, the higher percentage of your wealth can be transferred to these precious metals.
Currencies are beginning to lose value all around the world. Due to budget deficits of governments on every continent, and weak economic growth, the future of many of the world's largest nations are coming into question. There is no longer a safe haven to keep your wealth. This is the main reason people have purchased precious metals. They have value and are tangible. Currencies are paper. Granted they are strongly related to a nation's economic output, but in a declining economic environment that is characterized by large deficits, the long term value of the currencies questionable.
Some have tried to move their wealth into gold, but it is silver that is the better investment. All of the reasons that Gold is considered valuable apply to silver. But there are additional demands for Silver in the world. It is true that gold is worth more on the open market, and certainly it is more glamorous, but much of the value of gold is dependent upon people's perception of its value. They believe that it is valuable and this is what makes it worth money. Outside of jewelry, gold doesn't have a lot of applications. It's scarcity combines with its cosmetic appeal is a large part of what creates the value of gold.
Silver on the other hand is also a metal that is deemed attractive and is also used to make jewelry. But there are many industrial uses for it as well. Silver is an excellent conductor and is needed in a variety of high quality and high performance electronic systems. It is also in demand with photography, optics, dentistry, and many other industrial and commercial applications. There will always be a demand for silver because of its variety of uses.
Silver can be purchased as easily as Gold can, but Silver is the better purchase. Both gold and silver are precious metals that have tangible value. The benefits of each metal have much in common, but there are also differences that must be understood before making an investment.
Both metals are a storehouse of value. Regardless of what happens in the world, a person who has a portion of their wealth invested in gold and silver will have a balance in their investment portfolio. If the world's stock markets and currencies drop significantly (which is very likely happen in the near future), gold and silver will hold their value and likely increase in value offsetting losses in other areas of investment. The more uncertain you feel about the future, the higher percentage of your wealth can be transferred to these precious metals.
Currencies are beginning to lose value all around the world. Due to budget deficits of governments on every continent, and weak economic growth, the future of many of the world's largest nations are coming into question. There is no longer a safe haven to keep your wealth. This is the main reason people have purchased precious metals. They have value and are tangible. Currencies are paper. Granted they are strongly related to a nation's economic output, but in a declining economic environment that is characterized by large deficits, the long term value of the currencies questionable.
Some have tried to move their wealth into gold, but it is silver that is the better investment. All of the reasons that Gold is considered valuable apply to silver. But there are additional demands for Silver in the world. It is true that gold is worth more on the open market, and certainly it is more glamorous, but much of the value of gold is dependent upon people's perception of its value. They believe that it is valuable and this is what makes it worth money. Outside of jewelry, gold doesn't have a lot of applications. It's scarcity combines with its cosmetic appeal is a large part of what creates the value of gold.
Silver on the other hand is also a metal that is deemed attractive and is also used to make jewelry. But there are many industrial uses for it as well. Silver is an excellent conductor and is needed in a variety of high quality and high performance electronic systems. It is also in demand with photography, optics, dentistry, and many other industrial and commercial applications. There will always be a demand for silver because of its variety of uses.
UK prepares emergency measures for euro collapse to prevent an influx of people and money
- Value of the Pound could surge if euro fails
- Britain's borders could be temporarily sealed against economic refugees
- Many experts believe the 17-member currency cannot survive the coming year
- Rich individuals from Greece and Portugal are already moving money into UK
- Italian bond auctions ease fears about eurozone debt crisis and help FTSE 100 to make cautious gains
Ministers are considering draconian plans to prevent a flood of money and people heading to Britain from Europe if the ailing single currency collapses.
Experts fear that the collapse of the euro would lead to the widespread movement of both people and money – with potentially damaging consequences for Britain if left unchecked.
The Treasury has drawn up contingency plans to prevent investors shifting huge sums of cash from the Eurozone to Britain – amid fears it could lead to a surge in the value of the Pound.
The Treasury has drawn up contingency plans to prevent investors shifting huge sums of cash from the Eurozone to Britain
The Foreign Office is also working on contingency plans for the emergency evacuation of thousands of British expats and holidaymakers from stricken countries.
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Tradition Analytics Asks The $64K Question: Has The Fed Run Out Of Options To "Grow" Credit Money?
Last week, we presented an equity "valuation" analysis based on Austrian economics, which concluded that the only thing that matters for the economy and for asset prices in general, is the amount of credit money moving one way or another at the margin, ie how active global central banker printers are. Unfortunately, in this economy of record correlations, and in which alpha creation is now impossible, this may well be the only approach to capital markets that works any more. Today, Tradition Analytics takes this analysis from the micro the macro level, explaining why the US, and global, economy is now like a shark - cash has to move (inward) or else the economy will suffocate. Naturally, nothing could make Bernanke happy- according to Tradition, "To sustain the up-cycle banks will have to pump out net new credit probably in the order of about $1 trillion in the coming 8-10 months, even larger than the $700 billion pumped out in the previous 8-10 months." Alas there is a problem with this, very much along the lines of what we discussed last week, which is that the new crude baseline is now a triple digit number, not one in the $30s or even $60s: "it is going to be difficult to sustain this level of credit expansion, not only due to the sheer gravity of the inflation problem that would follow, but also simply due to the fact that it is always increasingly difficult to extend more credit at the margin, and this time into an economy that is already steeped in credit."
Complicating matters is the long-discussed contraction of the business cycle, as volatility swings get ever wilder and with a greater amplitude, courtesy of record central planning encroachment which swings the global economy from one extreme to another with reckless abandon. To Tradition "it would suggest that cycles are getting progressively shorter in the great debt era and this in turn means the potential loss of monetary control, policy overreaction and misdirection, macroeconomic value destruction over time, and the risk of very deep, acute financial and banking crisis." In other words: the Fed is now boxed in a corner (and has been for years, maybe decades, in fact since its inception in 1913), and anything it does will push the pendulum to either one or another extreme. In this light, what consumer confidence does today (whereby consumers are confident because they are confident) is beyond ridiculous.
The bottom line from Tradition:
Complicating matters is the long-discussed contraction of the business cycle, as volatility swings get ever wilder and with a greater amplitude, courtesy of record central planning encroachment which swings the global economy from one extreme to another with reckless abandon. To Tradition "it would suggest that cycles are getting progressively shorter in the great debt era and this in turn means the potential loss of monetary control, policy overreaction and misdirection, macroeconomic value destruction over time, and the risk of very deep, acute financial and banking crisis." In other words: the Fed is now boxed in a corner (and has been for years, maybe decades, in fact since its inception in 1913), and anything it does will push the pendulum to either one or another extreme. In this light, what consumer confidence does today (whereby consumers are confident because they are confident) is beyond ridiculous.
The bottom line from Tradition:
- The US economy, using growth in M2 money supply as a cyclical measure, has now been in a boom phase since the start of 2010. This 2-year boom is coming to an end. Credit and money growth has been running at such breakneck speeds that in order for the banking system to sustain the boom it would need to pump out roughly $1 trillion dollars’ worth of loans in the coming 8-10 months.
- If that were to happen, inflation will quickly become the most import problem for the US economy and the boom would be extended to such a degree as to make not only the inflation threat enormous but the crash risk even bigger at a later date.
- However it is going to be difficult to sustain this level of credit expansion, not only due to the sheer gravity of the inflation problem that would follow, but also simply due to the fact that it is always increasingly difficult to extend more credit at the margin, and this time into an economy that is already steeped in credit.
- The resulting bust could be sharp as 2012 unfolds. By the middle of the year we expect that the slowdown in credit expansion will have forced the productive sector into another liquidative bust phase. Employment numbers will begin deteriorating and production data will likely suffer again.
- If we are correct in this outlook then the current US boom phase may last little past 2-2½ years. This means that since 1991 the three US boom cycles have roughly halved in length from 10 years (1991-2001), to 5 years (2003-2008), and 2-2 ½ years (2010-2012). The implication of this should not be underestimated. It would suggest that cycles are getting progressively shorter in the great debt era and this in turn means the potential loss of monetary control, policy overreaction and misdirection, macroeconomic value destruction over time, and the risk of very deep, acute financial and banking crisis.
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