JIM Willie/Gold and Silver mini Raid/

Harvey Organ's:

Good evening Ladies and Gentlemen:

Today's commentary will be a little short as I want all of you to concentrate on the Jim Willie article written this morning.

How Gold, Silver And Platinum Will Respond To ECB's Money Printing

Today, about 490 billion euros ($637 billion) worth of ultra-low interest "loans" will be delivered to European banks. This cash has been provided courtesy of the ECB, which denies that it will ever engage in printing money, like the Americans, Britons and Japanese have now done for many years. The "loans" are for a 3-year period. In return for the cash, the ECB accepts various forms of "collateral," which includes the debt of insolvent southern European sovereigns. This is the largest uptake of cash in the history of the European Union, including the cash given out by the ECB after the collapse of Lehman Brothers.

This is merely the first of a series of so-called long-term refinancing operations (LTRO) the ECB is going to undertake. These are unlimited tenders of cash. The banks call the shots. Any amount they ask for will be given to them, subject only to the availability of collateral. The next tender is scheduled for February 28, 2012, and many are predicting that it will generate an equal or greater demand for cash among euro-banks. The stated intent is to provide liquidity to banks at a time of great stress for the eurozone. The unstated expectation is that part of the cash will be used to shore up balance sheets, and another to replace or buy more bonds from troubled sovereigns of the eurozone, including, particularly, Italy and Spain.

The maturity time for the "loans" is long enough to cover banks until the maturity of many of the sovereign bonds banks might purchase. A bank can now borrow from the ECB at 1% per year for 3 years, invest in a 3-year Italian bond paying 6% plus, and pocket 5% each year in pure profit. That is an enticing proposition. But, the end game is much more lucrative than that. Today's cash delivery is only the first of many 3-year LTRO events that will happen every two months this year. The next one is scheduled for February 28, 2012. The income achieved from buying sovereign debt can, therefore, be leveraged each time a new LTRO takes place, until it reaches an astronomical level of profit. Remember, sovereign debt collateral, at the ECB, is in so-called "category I," and is the subject of a tiny 1.5% haircut

The tiny haircut means that a eurozone bank can post $1 billion in Italian bonds with the ECB on December 21, 2011. On December 22, it can take back $985 million and use that cash to buy more Italian bonds. On February 28, 2012, it will be able to take the newly purchased bonds back to the ECB, take out another 3-year loan, and walk away with $970 million in euros the very next day. It can use that money to buy more Italian bond. Every two months, it will be able to do this again and again, until such time as the ECB decides to stop the LTRO offerings. It is unlikely that the ECB will stop doing LTROs until sovereigns have sold all the bonds they would have liked to sell directly to the ECB if that institution were not prohibited from buying them directly.



Gold prices will eventually respond directly to monetary liquidity increases, no matter how much central bank price suppression intervention there may be right now. With huge euro injections, alongside significant quantitative easing in the UK and the USA, gold will rise stronger than ever, at least over the next three years. Silver, which responds both to monetary liquidity and to commercial demand, is going to rise even faster, especially as commercial demand increases in Europe, and those that "feed" Europe, like China. Platinum responds to monetary liquidity, commercial demand, and, particularly, auto and truck sales. Of all the precious metals, platinum has been the most deeply abused by Wall Street groupthink, which assumed the complete death of European auto sales. It may, therefore, rise most quickly, once reality catches up, especially considering the 27% drop in S. African production in October.

Capital Account: Jeffrey Tucker on how the Government is throwing us back into the Stone Age

Rating Action: Moody's downgrades Slovenia's credit ratings to A1, negative outlook

Global Credit Research - 22 Dec 2011

Frankfurt am Main, December 22, 2011 -- Moody's Investors Service has today downgraded Slovenia's local- and foreign-currency government bond ratings by one notch to A1 from Aa3 with a negative outlook. Today's rating action concludes Moody's review for downgrade of Slovenia's sovereign debt ratings, which was initiated on 23 September 2011.

The main drivers that prompted the downgrade are:

(1) Risks and uncertainties for the Slovenian government's balance sheet stemming from the potential need for further support to banks due to increasing pressure on asset quality, capitalisation and funding among the largest banks in the system.

(2) Increasing medium-term risks to economic growth for the small and very open Slovenian economy resulting from the need for ongoing deleveraging and fiscal restriction in the euro area. This is likely to add to the challenges of placing the country's public debt ratios on a downward trajectory.

(3) Heightened risks posed by the sustained deterioration in government funding conditions due to the euro area sovereign debt crisis.

Should I buy gold or sell gold? Definitely buy!

By Jeff Clark
It wasn't a fun week for gold. By the close on Friday, the metal was down 6.7% (based on London PM fix prices), the biggest weekly decline since September. It got downright irritating when the mainstream media seemingly rejoiced at gold's decline. Economist Nouriel Roubini poked fun at Gold bugs in a Tweet. Über investor Dennis Gartman said he sold his holdings. CNBC ran an article proclaiming gold was no longer a safe-haven asset (talk about an overreaction).

While the worry may have been real, let's focus on facts. Have the reasons for gold's bull market changed in any material way such that we should consider exiting? Instead of me providing an answer, ask yourself some basic questions: Is the current support for the US dollar an honest indication of its health? Are the sovereign debt problems in Europe solved? How will the US repay its $15 trillion debt load without some level of currency dilution? Is there likely to be more money printing in the future, or less? Are real interest rates positive yet? Has gold really lost its safe haven status as a result of one bad week?

And one more: What is the mainstream media's record on forecasting precious metals prices?

Our take won't surprise you: not one fact relating to the trend for gold changed last week. We remain strongly bullish.

So why did gold, silver, and related stocks fall so hard?

The reasons outlined in this month's BIG GOLD are still in play (the MF Global fallout, a rising dollar, year-end tax-loss selling, and the need for cash and liquidity to meet margin calls or redemption requests). Last Wednesday's 3.5% fall took on a life of its own, selling begetting selling, fear adding to fear (especially the case with gold stocks). None of these reasons, however, have anything to do with the fundamental factors that ultimately drive this market. Once those issues shift, then we'll talk about exiting.

Jim Sinclair - The Gold Panic & What to Expect in 2012

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SilverDoctors: Roberts Seeks Additional Answers on Gensler's Role...

SilverDoctors: Roberts Seeks Additional Answers on Gensler's Role...: U.S. Senator Pat Roberts (R-Kan.) today sent a letter to Gary Gensler, chairman of the Commodity Futures Trading Commission (CFTC), seeki...

SilverDoctors: Ned Naylor-Leyland's 2012 Gold Outlook

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http://www.cheviot.co.uk/media/press/outlook-gold-2012

If A Global Recession Is Not Looming, Then Why Are Bailouts Flying Around As If The End Of The World Is Coming?

I have learned that watching what people do is much more important than listening to what they say.  Back in 2008, financial authorities in the United States insisted that everything was gone to be okay.  But we all know now that was a lie.  Well, right now financial authorities in the U.S. and Europe are once again trying to assure us that everything is under control and that we are not headed for a global recession.  Unfortunately, their actions are telling a very different story.  All over the world, bailouts are flying around as if the end of the world is coming.  Governments and central banks are stepping in with gigantic mountains of money to prop up bond yields, major banks and even stock markets.  What we have seen over the past few months has been absolutely unprecedented.  So why are such desperate measures being taken if everything is going to be just fine?  Unfortunately, debt problems are never solved with more debt, so these bailouts really aren't solving anything.  We are still headed for a massive amount of financial pain.  It would just be nice if the authorities would quit lying to us and would actually admit how bad things really are.
Today it was announced that the European Central Bank has agreed to make $638 billion in 3 year loans to 523 different banks.  Never before (not even during the last financial crisis) has the ECB loaned so much cheap money to European banks at one time.
This move by the ECB made headlines all over the globe.  CNBC is calling them "ultra-long and ultra-cheap loans".
European authorities are hoping that European banks will use this money to make loans to businesses and to buy up the debt of troubled European governments.
But as we have seen in the United States, bailout money does not always get spent the way that the authorities intend for it to be spent.
The truth is that the banks could end up just sitting on the money.  That is what happened with a lot of bailout money in the United States during the last financial crisis.