By William Bancroft
As we enter the New Year only the firmest of Gold and Silver investors are holding with serene assurance, as the gold and silver prices have been trending down for a couple of months.
Gold has sold off by nearly 13% since it recovered to $1,800/ounce in early November. The mainstream media has been pronouncing the death of the gold bull market, and CNBC even suggested gold be re-rated as a risk asset.
Silver prices have also disappointed precious metal investors. Gold’s more volatile cousin has lost 20% in value from its own early November recovery to $35/ounce.
Such price drops do get us thinking, an investor can never fall idly in love with a position, but are they again part and parcel of silver investing this last 12 years?
Plenty of notable investors have made their voices heard beyond what we continue to urge are continuing bull markets for owners of gold and silver bullion. The silver price has undergone many corrections en route to gains of over 560% over the last ten years. The fundamentals driving the precious metals are stronger today than ever.
But what does this all mean for our two favourite ways to invest in gold and silver?
Averaging into gold and silver investment
Our favoured means of investing in gold and silver for most people, is for individuals to steadily buy a little each month in what would be called ‘averaging’ into a position.
Dollar cost averaging, or for UK investors, pound cost averaging, has been promoted as the best way of building a position for ages. We find the best advocacy of it by Benjamin Graham and David Dodd, the Godfathers of value investing, in their books ‘Security Analysis’ and ‘The Intelligent Investor’.
All this really means is that you invest a certain amount each month and buy gold and/or silver regardless of the current price.
05 January 2012
Dow/Gold ratio suggest a mega bull rally in gold is coming
By Hubert Moolman
For Gold to rise to levels significantly higher than the recent high of $1,920, a new impetus is needed. Without additional energy from such an impetus, gold could just trade sideways for a very long time, or even fall further. See the chart below.
There is only so much value in the world economy, and it is split between all the different instruments (like gold, silver, stocks bonds, etc.) where value resides.
For gold (and silver) to rise significantly, relative to other instruments of value, value will have to be diverted away from those other competing instruments. The printing of more money does benefit gold, but it does not necessarily benefit gold more than other assets-such as commodities, for example.
For Gold to rise to levels significantly higher than the recent high of $1,920, a new impetus is needed. Without additional energy from such an impetus, gold could just trade sideways for a very long time, or even fall further. See the chart below.
There is only so much value in the world economy, and it is split between all the different instruments (like gold, silver, stocks bonds, etc.) where value resides.
For gold (and silver) to rise significantly, relative to other instruments of value, value will have to be diverted away from those other competing instruments. The printing of more money does benefit gold, but it does not necessarily benefit gold more than other assets-such as commodities, for example.
'Four reasons why still to invest in silver'
By Joseph C Ford
Silver is like Gold because it has lots of uses. It can be used as jewelry, dental fillings, for making coins and etc. Since Silver is very useful in such industry, the idea of investing silver is one of the best ideas for starting and building a business. Because of its uses, there are some people who choose investing silver. But aside from many uses of silver, there are major reasons why there are lots of investors who are attracted to invest silver. Here are the common reasons why they choose silver for business:
Inflation
No one wants to encounter inflation! Especially in business! Since most of us want to avoid inflation, investing silver (and all precious metals) is a wise choice to protect against inflation. Silver and other precious metal are fairly rare and highly valued for jewelry and industrial practices, it will always be valuable, regardless of the economic climate.
When your country's market is at the middle of difficulty, expect that your government's currency tends to become less valuable compared to other governments. It will result in a devaluation of the currency. Other alternative of the government, they may issue more money. So if there more money in the general population, it means that the price of everything goes up, also resulting in inflation. If the currency (cash) becomes less valuable to inflation, it means that you can trade in your silver for more cash (the price of silver and other precious metals inflates just like the price of everything).
However, there is a little more than understanding inflation to learning why investing in silver is appealing for some investors.
Market Size
Gold is extremely popular today. That means that the typical investor tends to wish to use gold to drive back inflation rather than silver. Most investors only decide to buy silver if they suspect that the silver market in particular is going to move up. Why might this happen? It is because the size of the market of sterling Silver is small. Actually, gold's availability to invest is twice compared to silver, and over the final 20 years Gold has been 20-100 times more costly than silver.
This results in volatility. This could trigger amazing profits or losses. There are several primary things that drive the price of silver:
Supply and Needs. A lot of appearing out of mines today is used for industrial purposes rather than being changed into bullion. If silver manufacturing drops off below industrial demand, this could guide spike silver prices. You have to consider investment demand. Since there is a relatively small supply of silvers, a few powerful investors can really drive the amount up if they are bullish on this market.
Silver is like Gold because it has lots of uses. It can be used as jewelry, dental fillings, for making coins and etc. Since Silver is very useful in such industry, the idea of investing silver is one of the best ideas for starting and building a business. Because of its uses, there are some people who choose investing silver. But aside from many uses of silver, there are major reasons why there are lots of investors who are attracted to invest silver. Here are the common reasons why they choose silver for business:
Inflation
No one wants to encounter inflation! Especially in business! Since most of us want to avoid inflation, investing silver (and all precious metals) is a wise choice to protect against inflation. Silver and other precious metal are fairly rare and highly valued for jewelry and industrial practices, it will always be valuable, regardless of the economic climate.
When your country's market is at the middle of difficulty, expect that your government's currency tends to become less valuable compared to other governments. It will result in a devaluation of the currency. Other alternative of the government, they may issue more money. So if there more money in the general population, it means that the price of everything goes up, also resulting in inflation. If the currency (cash) becomes less valuable to inflation, it means that you can trade in your silver for more cash (the price of silver and other precious metals inflates just like the price of everything).
However, there is a little more than understanding inflation to learning why investing in silver is appealing for some investors.
Market Size
Gold is extremely popular today. That means that the typical investor tends to wish to use gold to drive back inflation rather than silver. Most investors only decide to buy silver if they suspect that the silver market in particular is going to move up. Why might this happen? It is because the size of the market of sterling Silver is small. Actually, gold's availability to invest is twice compared to silver, and over the final 20 years Gold has been 20-100 times more costly than silver.
This results in volatility. This could trigger amazing profits or losses. There are several primary things that drive the price of silver:
Supply and Needs. A lot of appearing out of mines today is used for industrial purposes rather than being changed into bullion. If silver manufacturing drops off below industrial demand, this could guide spike silver prices. You have to consider investment demand. Since there is a relatively small supply of silvers, a few powerful investors can really drive the amount up if they are bullish on this market.
Opening 2012 Gold and Silver Eagle Sales Top Prior Year Levels
January 4, 2012 By
The United States Mint began accepting orders for 2012-dated American Gold and Silver Eagle bullion coins on January 3, 2012. The opening sales numbers exceed the levels seen for the prior year.
Bullion coins produced by the US Mint are distributed through a network of authorized purchasers who are able to buy the coins in bulk quantities based on the market price of the precious metals plus a mark up. The bullion coins are then distributed to secondary dealers and the broader public.
On the opening day of availability, January 3, 2012, authorized purchasers ordered 3,197,000 of the one ounce Silver Eagle bullion coins. Through January 4, 2012, orders for Silver Eagle bullion coins have now reached 3,372,000. These amounts include both the 2012 Silver Eagles as well as some 2011-dated coins. Before the close of last year, the US Mint had indicated that there was a remaining inventory of 2011-dated coins. As long as this inventory remained, authorized purchasers would be required to order one 2011-dated coin for every four 2012-dated coins ordered.
This year’s opening sales for Silver Eagles surpass the numbers seen in the two prior years. The stronger sales may be the result of the lack of an allocation program imposed by the Mint. For the start of sales in 2010 and 2011, the US Mint rationed available quantities of the coins amongst authorized purchasers. This year, the Mint indicated that supplies would not be rationed as sufficient quantities of the coins would be available.
The United States Mint began accepting orders for 2012-dated American Gold and Silver Eagle bullion coins on January 3, 2012. The opening sales numbers exceed the levels seen for the prior year.
Bullion coins produced by the US Mint are distributed through a network of authorized purchasers who are able to buy the coins in bulk quantities based on the market price of the precious metals plus a mark up. The bullion coins are then distributed to secondary dealers and the broader public.
On the opening day of availability, January 3, 2012, authorized purchasers ordered 3,197,000 of the one ounce Silver Eagle bullion coins. Through January 4, 2012, orders for Silver Eagle bullion coins have now reached 3,372,000. These amounts include both the 2012 Silver Eagles as well as some 2011-dated coins. Before the close of last year, the US Mint had indicated that there was a remaining inventory of 2011-dated coins. As long as this inventory remained, authorized purchasers would be required to order one 2011-dated coin for every four 2012-dated coins ordered.
This year’s opening sales for Silver Eagles surpass the numbers seen in the two prior years. The stronger sales may be the result of the lack of an allocation program imposed by the Mint. For the start of sales in 2010 and 2011, the US Mint rationed available quantities of the coins amongst authorized purchasers. This year, the Mint indicated that supplies would not be rationed as sufficient quantities of the coins would be available.
SilverDoctors: Jim Sinclair's Outlook for 2012
SilverDoctors: Jim Sinclair's Outlook for 2012: The legendary Jim Sinclair offers his predictions for 2012 in his latest interview with the Ellis Martin report.
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04 January 2012
Israeli drone over Turkish-Syrian border. Battles in Syrian-Jordanian-Israeli border triangle
Israeli Eitan drone
A request by local Turkish officers to fire anti-air missiles to down the Israeli Eitan went unanswered by the Turkish general staff until the drone was gone. According to the Turkish sources, two Turkish F-16 fighter jets were scrambled from the Diyarbakir 2nd Air Force Command Strike Center and stayed overhead as long as the Israeli drone was present.
debkafile reports this is the first time Israeli UAV's have been reported monitoring events on the Turkish-Syrian border. On Dec. 16, our sources disclosed 21 Syrian Scud missile launchers had been stationed opposite Hatay province as a warning to Turkey, NATO and Arab forces to stay out of the Syrian uprising.
MF Global sold assets to Goldman before collapse: sources
By Lauren Tara LaCapra and Matthew Goldstein | Reuters
(Reuters) - MF Global unloaded hundreds of millions of dollars' worth of securities to Goldman Sachs in the days leading up to its collapse, according to two former MF Global employees with direct knowledge of the transactions. But it did not immediately receive payment from its clearing firm and lender, JPMorgan Chase & Co , one of the sources said.
The sale of securities to Goldman occurred on October 27, just days before MF Global Holdings Ltd filed for bankruptcy on October 31, the ex-employees said. One of the employees said the transaction was cleared with JPMorgan Chase.
At the same time MF Global, which was run by former Goldman Sachs head Jon Corzine, was selling securities to Goldman to raise badly needed cash, the futures firm was also drawing down a $1.2 billion revolving line of credit it had with JPMorgan, according to one of the former MF Global employees.
JPMorgan spokeswoman Mary Sedarat said the bank did not withold money because of the line of credit. She declined further comment on details of the transactions.
JPMorgan has fought aggressively in bankruptcy court to protect its interests, and received a lien on some of MF Global's assets in exchange for granting the firm $8 million to fund its bankruptcy costs. The lien puts JPMorgan's interests ahead of MF Global customers who have not yet received an estimated $900 million worth of money from their accounts, which remain frozen as regulators search for missing funds.
(Reuters) - MF Global unloaded hundreds of millions of dollars' worth of securities to Goldman Sachs in the days leading up to its collapse, according to two former MF Global employees with direct knowledge of the transactions. But it did not immediately receive payment from its clearing firm and lender, JPMorgan Chase & Co , one of the sources said.
The sale of securities to Goldman occurred on October 27, just days before MF Global Holdings Ltd filed for bankruptcy on October 31, the ex-employees said. One of the employees said the transaction was cleared with JPMorgan Chase.
At the same time MF Global, which was run by former Goldman Sachs head Jon Corzine, was selling securities to Goldman to raise badly needed cash, the futures firm was also drawing down a $1.2 billion revolving line of credit it had with JPMorgan, according to one of the former MF Global employees.
JPMorgan spokeswoman Mary Sedarat said the bank did not withold money because of the line of credit. She declined further comment on details of the transactions.
JPMorgan has fought aggressively in bankruptcy court to protect its interests, and received a lien on some of MF Global's assets in exchange for granting the firm $8 million to fund its bankruptcy costs. The lien puts JPMorgan's interests ahead of MF Global customers who have not yet received an estimated $900 million worth of money from their accounts, which remain frozen as regulators search for missing funds.
An Exercise In Futility (Thank you for contacting the New York Fed)
Part 4 of the exercise:
On November 24, 2011 I wrote to the same people:
I find it quite bizarre: you are several people working in press / public relations departments for the N.Y. Fed, the Board of Governors of the Federal Reserve, and the US Treasury / Exchange Stabilization Fund. I am a journalist for finance. I have asked each of you a very, very simple question. And not a single one of you can even reply to me with a single sentence?
Since it is now proved beyond doubt that a US/German gold agreement was reached in 1975 to “manage” the price of gold:
http://www.gata.org/node/10686,
I consider it a legitimate question that I have forwarded to you months ago.
Before I will ask it again, please be assured that this question will be raised more often in the future going forward. It won’t go away. You can’t be silent about it forever.
Here is the question one more time:
Does the United States of America and/or the US Treasury/ESF, N.Y. Fed, the Federal Reserve System have any kind of swap arrangement with the Deutsche Bundesbank and/or the Federal Republic of Germany related to that part of the souvereign German gold reserve that is held at the N.Y. Fed?
By the way, after I heard nothing from the New York Fed and Federal Reserve in Washington, I asked GATA Chairman Bill Murphy about it.
Murphy replied: “I think their lack of response and lack of denial — I mean, that’s pretty simple to deny, really simple — that they haven’t come back to you at all is indicative of the answer.”
Kind regards,
Lars Schall.
Of course, I received an automatic response from the New York Fed that said:
Thank you for contacting the New York Fed. We will respond to your e-mail as soon as possible. For more information, please visit our website at http://www.newyorkfed.org./
In response to your message:
Dear Ladies and Gentlemen,
as a financial journalist from Germany I try to get some specific answers to specific questions…
Part 5 of the exercise:
On December 30, 2011 I wrote to the same people:
Dear Ladies and Gentlemen,
at the end of the year, everyone is doing New Year resolutions. One of mine is that you’ll get in 2012 at the last day of every single month the same old question from me:
Does the United States of America and/or the US Treasury/ESF, N.Y. Fed, the Federal Reserve System have any kind of swap arrangement with the Deutsche Bundesbank and/or the Federal Republic of Germany related to that part of the souvereign German gold reserve that is held at the N.Y. Fed / within the United States?
This way a story will build up very naturally all by itself that will make you look foolish at the end.
All the best in 2012!,
Lars Schall.
On November 24, 2011 I wrote to the same people:
I find it quite bizarre: you are several people working in press / public relations departments for the N.Y. Fed, the Board of Governors of the Federal Reserve, and the US Treasury / Exchange Stabilization Fund. I am a journalist for finance. I have asked each of you a very, very simple question. And not a single one of you can even reply to me with a single sentence?
Since it is now proved beyond doubt that a US/German gold agreement was reached in 1975 to “manage” the price of gold:
http://www.gata.org/node/10686,
I consider it a legitimate question that I have forwarded to you months ago.
Before I will ask it again, please be assured that this question will be raised more often in the future going forward. It won’t go away. You can’t be silent about it forever.
Here is the question one more time:
Does the United States of America and/or the US Treasury/ESF, N.Y. Fed, the Federal Reserve System have any kind of swap arrangement with the Deutsche Bundesbank and/or the Federal Republic of Germany related to that part of the souvereign German gold reserve that is held at the N.Y. Fed?
By the way, after I heard nothing from the New York Fed and Federal Reserve in Washington, I asked GATA Chairman Bill Murphy about it.
Murphy replied: “I think their lack of response and lack of denial — I mean, that’s pretty simple to deny, really simple — that they haven’t come back to you at all is indicative of the answer.”
Kind regards,
Lars Schall.
Of course, I received an automatic response from the New York Fed that said:
Thank you for contacting the New York Fed. We will respond to your e-mail as soon as possible. For more information, please visit our website at http://www.newyorkfed.org./
In response to your message:
Dear Ladies and Gentlemen,
as a financial journalist from Germany I try to get some specific answers to specific questions…
Part 5 of the exercise:
On December 30, 2011 I wrote to the same people:
Dear Ladies and Gentlemen,
at the end of the year, everyone is doing New Year resolutions. One of mine is that you’ll get in 2012 at the last day of every single month the same old question from me:
Does the United States of America and/or the US Treasury/ESF, N.Y. Fed, the Federal Reserve System have any kind of swap arrangement with the Deutsche Bundesbank and/or the Federal Republic of Germany related to that part of the souvereign German gold reserve that is held at the N.Y. Fed / within the United States?
This way a story will build up very naturally all by itself that will make you look foolish at the end.
All the best in 2012!,
Lars Schall.
EXCLUSIVE-Big banks may line up to block sale of LME
* Potential bidders CME, ICE would entail U.S. regulation
* Tough regulator could curb holdings of dominant positions
* Blocking stake of 25.1 pct seen achievable
By Melanie Burton and Susan Thomas
LONDON, Jan 3 (Reuters) - Top bank stakeholders of the London Metal Exchange are likely to amass enough support to block a sale they fear would bring a more heavily regulated owner and hurt their lucrative warehousing businesses, senior industry sources say.
The LME said in September that at least 10 parties had expressed interest in buying it, and analysts estimate it could be worth as much as $1 billion. As a member-owned organisation, the exchange requires approval from members holding 75 percent of outstanding ordinary or "A" shares for any sale.
Potential buyers are likely to include CME Group Inc , IntercontinentalExchange and SGX Singapore Exchange. The first two in particular have stricter U.S. regulators, which could threaten members' businesses.
Big banks such as J.P. Morgan and Goldman Sachs have invested heavily in physical metals business since the economic downturn began by buying warehouses and beefing up their trading teams and financing operations.
Shunting metal around has been a money spinner for them as slowing global growth pulls down commodity prices and leads to stockpiles of surplus material.
* Tough regulator could curb holdings of dominant positions
* Blocking stake of 25.1 pct seen achievable
By Melanie Burton and Susan Thomas
LONDON, Jan 3 (Reuters) - Top bank stakeholders of the London Metal Exchange are likely to amass enough support to block a sale they fear would bring a more heavily regulated owner and hurt their lucrative warehousing businesses, senior industry sources say.
The LME said in September that at least 10 parties had expressed interest in buying it, and analysts estimate it could be worth as much as $1 billion. As a member-owned organisation, the exchange requires approval from members holding 75 percent of outstanding ordinary or "A" shares for any sale.
Potential buyers are likely to include CME Group Inc , IntercontinentalExchange and SGX Singapore Exchange. The first two in particular have stricter U.S. regulators, which could threaten members' businesses.
Big banks such as J.P. Morgan and Goldman Sachs have invested heavily in physical metals business since the economic downturn began by buying warehouses and beefing up their trading teams and financing operations.
Shunting metal around has been a money spinner for them as slowing global growth pulls down commodity prices and leads to stockpiles of surplus material.
The World from Berlin 'Iran Is Playing with Fire'
With international pressure mounting against Iran to end its nuclear ambitions, the country has begun ominously rattling its sabers in the Persian Gulf. German commentators on Monday urge caution on both sides.
Tensions between Iran and the West escalated again on Monday as Tehran announced it had test-fired two long-range missiles in international waters near the strategic Strait of Hormuz.
"We have successfully test-fired long-range shore-to-sea and surface-to-surface missiles, called Qader (capable) and Nour (Light) today," Deputy navy Commander Mahmoud Mousavi told state television.
Amid ongoing international criticism of Iran's nuclear program, the missile launches were Tehran's latest show of force in military exercises started in response to the pressure. Monday's maneuvers came after the country announced the launch of a medium range missile the day before.
The so-called war games could bring Iranian ships near US naval forces operating in the Persian Gulf. Both the US and Israel have not ruled out a military response in the conflict over Iran's nuclear ambitions, and US forces based in Bahrain have said they will not allow a closure of the important Strait of Hormuz -- through which 40 percent of the world's crude oil is transported.
Iranian officials have made conflicting statements about possibly blocking the passage if sanctions were imposed on its oil exports, which are vital to the country's economy. Despite threats to the contrary from Iranian officials last week, on Monday military officials insisted there were no plans to close the waterway. "No order has been given for the closure of the Strait of Hormuz. But we are prepared for various scenarios," navy chief Habibollah Sayyari told state television. Deputy navy Commander Mahmoud Mousavi called the military excercises a "tactical" expression of the country's ability to control the strait if necessary.
Fuel Rod Breakthrough
Tehran continues to deny that it is attempting to build nuclear weapons, insisting their program is for generating electricity alone. On Sunday, Iranian state television announced a breakthrough in their nuclear progress, reporting the country had produced uranium fuel rods for power plant use for the first time.
The conflict with the West over the program has intensified since US President Barack Obama approved new sanctions on Saturday against financial institutions that do business with Iran's central bank. Obama will have the option of applying the sanctions flexibly, and depending on how strictly they are enforced, the sanctions could block oil refiners from buying crude oil from Iran, the world's fourth largest producer of the crucial product.
The United Nations Security Council has already implemented four rounds of international sanctions against Iran in hopes of discouraging the country's nuclear ambitions. The European Union is now also considering a ban on Iranian crude oil imports. But on Saturday Iranian media reported that a nuclear negotiator would likely signal a new willingness to resume EU talks on the matter.
With international talks stalled for almost a year now, EU officials welcomed news of the offer. But Iran would not be allowed to impose any pre-conditions on such negotiations, a spokesperson for EU foreign affairs representative Catherine Ashton said on Sunday.
German Foreign Minister Guido Westerwelle's had a similar reaction, encouraging Iran to abandon vague proclamations and urging the country to undertake "concrete, verifiable action" in the matter.
German commentators on Monday warned both sides to exercise caution in the potentially explosive conflict.
Tensions between Iran and the West escalated again on Monday as Tehran announced it had test-fired two long-range missiles in international waters near the strategic Strait of Hormuz.
"We have successfully test-fired long-range shore-to-sea and surface-to-surface missiles, called Qader (capable) and Nour (Light) today," Deputy navy Commander Mahmoud Mousavi told state television.
Amid ongoing international criticism of Iran's nuclear program, the missile launches were Tehran's latest show of force in military exercises started in response to the pressure. Monday's maneuvers came after the country announced the launch of a medium range missile the day before.
The so-called war games could bring Iranian ships near US naval forces operating in the Persian Gulf. Both the US and Israel have not ruled out a military response in the conflict over Iran's nuclear ambitions, and US forces based in Bahrain have said they will not allow a closure of the important Strait of Hormuz -- through which 40 percent of the world's crude oil is transported.
Iranian officials have made conflicting statements about possibly blocking the passage if sanctions were imposed on its oil exports, which are vital to the country's economy. Despite threats to the contrary from Iranian officials last week, on Monday military officials insisted there were no plans to close the waterway. "No order has been given for the closure of the Strait of Hormuz. But we are prepared for various scenarios," navy chief Habibollah Sayyari told state television. Deputy navy Commander Mahmoud Mousavi called the military excercises a "tactical" expression of the country's ability to control the strait if necessary.
Fuel Rod Breakthrough
Tehran continues to deny that it is attempting to build nuclear weapons, insisting their program is for generating electricity alone. On Sunday, Iranian state television announced a breakthrough in their nuclear progress, reporting the country had produced uranium fuel rods for power plant use for the first time.
The conflict with the West over the program has intensified since US President Barack Obama approved new sanctions on Saturday against financial institutions that do business with Iran's central bank. Obama will have the option of applying the sanctions flexibly, and depending on how strictly they are enforced, the sanctions could block oil refiners from buying crude oil from Iran, the world's fourth largest producer of the crucial product.
The United Nations Security Council has already implemented four rounds of international sanctions against Iran in hopes of discouraging the country's nuclear ambitions. The European Union is now also considering a ban on Iranian crude oil imports. But on Saturday Iranian media reported that a nuclear negotiator would likely signal a new willingness to resume EU talks on the matter.
With international talks stalled for almost a year now, EU officials welcomed news of the offer. But Iran would not be allowed to impose any pre-conditions on such negotiations, a spokesperson for EU foreign affairs representative Catherine Ashton said on Sunday.
German Foreign Minister Guido Westerwelle's had a similar reaction, encouraging Iran to abandon vague proclamations and urging the country to undertake "concrete, verifiable action" in the matter.
German commentators on Monday warned both sides to exercise caution in the potentially explosive conflict.
Greece will leave euro if second bailout fails, says Kapsis
Greece will have to leave the eurozone if it fails to clinch a deal on a second, 130 billion euro bailout with its international lenders, a government spokesman said on Tuesday.
It was an unusually public stark warning from the embattled country, aimed at shoring up domestic support for tough measures and possibly also at the lenders themselves.
"The bailout agreement needs to be signed otherwise we will be out of the markets, out of the euro," spokesman Pantelis Kapsis told Skai TV. "The situation will be much worse."
Greece is racing against the clock to agree with the EU, the IMF and private bondholders on the details of the rescue plan before a major bond redemption in March. It risks a default if there is no deal by this date.
Athens and its EU partners have repeatedly ruled out a euro exit, which could drag the bloc even deeper into crisis, and usually avoid saying this is a possible scenario.
But top Greek officials, who need to push through unpopular reforms to clinch the bailout deal, have warned over the past few days that a return to the drachma would be "hell" and that the country must stick to austerity to avoid it.
It was an unusually public stark warning from the embattled country, aimed at shoring up domestic support for tough measures and possibly also at the lenders themselves.
"The bailout agreement needs to be signed otherwise we will be out of the markets, out of the euro," spokesman Pantelis Kapsis told Skai TV. "The situation will be much worse."
Greece is racing against the clock to agree with the EU, the IMF and private bondholders on the details of the rescue plan before a major bond redemption in March. It risks a default if there is no deal by this date.
Athens and its EU partners have repeatedly ruled out a euro exit, which could drag the bloc even deeper into crisis, and usually avoid saying this is a possible scenario.
But top Greek officials, who need to push through unpopular reforms to clinch the bailout deal, have warned over the past few days that a return to the drachma would be "hell" and that the country must stick to austerity to avoid it.
Eurozone is closer to break-up, warns Standard Chartered's Peter Sands
The chief executive of Standard Chartered has warned that there is an increasing likelihood of a country falling out of the eurozone because of the inability of politicians to resolve the crisis.
The head of one of Britain's "Big Five" banks warned that any break-up of the single currency would have dire consequences for the global economy because it would be difficult to judge how the contagion would unravel.
"Obviously we close 2011 with a huge amount of focus on the trials and tribulations of the eurozone," Mr Sands said.
"I actually think the big news of last month's summit was that unfortunately once again the eurozone political leadership didn't really produce something that was that compelling or credible as a plan to deal with the problems and to re-engergise growth in the eurozone.
"We enter 2012 with a very difficult outlook for the eurozone [and] with an increasing possibility of countries actually leaving the eurozone.
"Nobody should underestimate what a big deal that would be, because it would be very difficult to manage the contagion risk, even if it was only Greece. The disruption from that would really be quite significant.
The head of one of Britain's "Big Five" banks warned that any break-up of the single currency would have dire consequences for the global economy because it would be difficult to judge how the contagion would unravel.
"Obviously we close 2011 with a huge amount of focus on the trials and tribulations of the eurozone," Mr Sands said.
"I actually think the big news of last month's summit was that unfortunately once again the eurozone political leadership didn't really produce something that was that compelling or credible as a plan to deal with the problems and to re-engergise growth in the eurozone.
"We enter 2012 with a very difficult outlook for the eurozone [and] with an increasing possibility of countries actually leaving the eurozone.
"Nobody should underestimate what a big deal that would be, because it would be very difficult to manage the contagion risk, even if it was only Greece. The disruption from that would really be quite significant.
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03 January 2012
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The Possibility of $1,000 Silver before Hyperinflation
Global Investments Ltd
January 3, 2012 - 9:58am
2011 was both an amazing and disappointing year for silver investors. The most disappointed of all are those who bought in during the April highs, when silver almost reached $50. However, what these investors need to remember is that not too long ago, people were fretting over changes in prices of ten cents or less. Not too far down the road, the difference between $29 silver and $50 silver will also seem rather minimal.
A look at some of the fundamentals which underpin the silver market will help remind our readers why G.I. Metals DMCC holds that silver will ultimately outperform gold, and what type of highs we might eventually see in an inflationary - and not hyperinflationary - environment. With current levels of central bank intervention to solve sovereign debt problems, we expect to see more economic contraction for the first part of 2012, followed by even more excessive money printing which will lead to inflationary, and eventually hyperinflationary, conditions. This only requires a greater level of velocity to occur, along with a loss of confidence in the world reserve currency, which we expect will begin to happen when bond speculators' attention is moved from Europe to America.
A revision of these fundamentals will also help remind us that physical ownership of silver should not be viewed as much as a short-term investment, but rather, a mid-term form of wealth preservation and growth. We see these types of scenarios most likely playing out within the next 1 to 3 years.
Silver as a Hedge and Multiplier of Wealth
Silver, like gold, has historically been recognized as real money and a store of wealth. The opportunities expected to arise from investing in silver now, however, are even more pronounced than those of gold. Because silver has not received the same attention as gold in the media, fewer investors know about it. This is beginning to change, but silver is still very early on in its bull market as compared to gold, which has progressed further in the second phase of its bull market. Presently, the silver spot price is largely dictated by the movements of derivative-based vehicles such as ETFs, futures and options, which are highly leveraged and cannot accurately track the true value of their underlying asset. Expressed simply, lots of paper is being exchanged, but little physical silver is actually even held by these institutions responsible for distributing these paper promises.
January 3, 2012 - 9:58am
2011 was both an amazing and disappointing year for silver investors. The most disappointed of all are those who bought in during the April highs, when silver almost reached $50. However, what these investors need to remember is that not too long ago, people were fretting over changes in prices of ten cents or less. Not too far down the road, the difference between $29 silver and $50 silver will also seem rather minimal.
A look at some of the fundamentals which underpin the silver market will help remind our readers why G.I. Metals DMCC holds that silver will ultimately outperform gold, and what type of highs we might eventually see in an inflationary - and not hyperinflationary - environment. With current levels of central bank intervention to solve sovereign debt problems, we expect to see more economic contraction for the first part of 2012, followed by even more excessive money printing which will lead to inflationary, and eventually hyperinflationary, conditions. This only requires a greater level of velocity to occur, along with a loss of confidence in the world reserve currency, which we expect will begin to happen when bond speculators' attention is moved from Europe to America.
A revision of these fundamentals will also help remind us that physical ownership of silver should not be viewed as much as a short-term investment, but rather, a mid-term form of wealth preservation and growth. We see these types of scenarios most likely playing out within the next 1 to 3 years.
Silver as a Hedge and Multiplier of Wealth
Silver, like gold, has historically been recognized as real money and a store of wealth. The opportunities expected to arise from investing in silver now, however, are even more pronounced than those of gold. Because silver has not received the same attention as gold in the media, fewer investors know about it. This is beginning to change, but silver is still very early on in its bull market as compared to gold, which has progressed further in the second phase of its bull market. Presently, the silver spot price is largely dictated by the movements of derivative-based vehicles such as ETFs, futures and options, which are highly leveraged and cannot accurately track the true value of their underlying asset. Expressed simply, lots of paper is being exchanged, but little physical silver is actually even held by these institutions responsible for distributing these paper promises.
Iran provokes showdown, warns US carrier not to return to Persian Gulf
In another heated escalation over the strategic Strait of Hormuz, Iran Tuesday, Jan. 3, threatened to take action if the US aircraft carrier which "moved to the Sea of Oman because of our drill returns to the Persian Gulf." Army chief Lt. Gen. Ataolla Salehi said:" Iran will not repeat this warning."
He referred to the USS Stennis as "the enemy's carrier," which "I recommend and emphasize… not return to the Persian Gulf." He avoided naming the US vessel or the details of action Iran might take if it returned.
debkafile's military sources report that the Stennis transited the Strait of Hormus Wednesday, Dec. 28 and entered the Sea of Oman where Iran was staging a naval drill. Washington was demonstrating freedom of navigation in the international strait through which one-fifth of the worlds exported oil is shipped and underlining Iran's inability to close it to merchant shipping and US warships.
Iran said that its surveillance aircraft and warships tracked and filmed the US carrier's movements in and around Hormuz which it claims to fully control.
Saturday, Dec. 31, Iran announced a long-range missile test-fire would take place over the strait, thereby causing a five-hour stoppage of shipping traffic. Later, an Iranian general said the missile test was delayed. debkafile's Iranian and military sources reported that this was a trick to prove Iran capable of closing the Strait of Hormuz in defiance of strong warnings from Washington.
He referred to the USS Stennis as "the enemy's carrier," which "I recommend and emphasize… not return to the Persian Gulf." He avoided naming the US vessel or the details of action Iran might take if it returned.
debkafile's military sources report that the Stennis transited the Strait of Hormus Wednesday, Dec. 28 and entered the Sea of Oman where Iran was staging a naval drill. Washington was demonstrating freedom of navigation in the international strait through which one-fifth of the worlds exported oil is shipped and underlining Iran's inability to close it to merchant shipping and US warships.
Iran said that its surveillance aircraft and warships tracked and filmed the US carrier's movements in and around Hormuz which it claims to fully control.
Saturday, Dec. 31, Iran announced a long-range missile test-fire would take place over the strait, thereby causing a five-hour stoppage of shipping traffic. Later, an Iranian general said the missile test was delayed. debkafile's Iranian and military sources reported that this was a trick to prove Iran capable of closing the Strait of Hormuz in defiance of strong warnings from Washington.
Nominal GDP targeting: economic buzz phrase of 2012?
“We can expect more of the same – specifically, serial bailouts of governments and banks that, if not already insolvent are bordering on insolvency. It is a distressing prospect.”
So says James Turk, in his 2012 prediction piece for the GoldMoney website.
This comes as Friday bought confirmation that Greece’s budget deficit is heading into double digits, while the latest figures from the Federal Reserve show non-US investors dumped a record amount of US Treasuries over the past month. As ZeroHedge comments: “foreign holdings of US paper have been virtually flat in all of 2011, something which is in stark contrast with what the price of the 10 Year would indicate vis-à-vis investor demand.” The USA’s federal debt-to-GDP ratio now stands at 100%, while President Obama has made a new pro forma request for a $1.2 trillion increase in the US government’s debt ceiling.
Gold and silver prices enjoyed a nice bounce on Friday, with gold recovering back above $1,550 and silver briefly moving above $28; however, the white metal finished the day back under $28. $1,600 and $30 represent the price levels in the two metals that bulls will be looking to recapture quickly in order to avoid any further downside setbacks.
The bull’s cause will be greatly aid – particularly as far as silver is concerned – by any new weakness in the US dollar. The Dollar Index (USDX) fell 0.2% on Friday to 80.2, with that index struggling to break above 80. Ultimately, the dollar’s short-term fortunes are the inverse of the euro’s. If markets become more confident about the situation in Europe, then the dollar will weaken and the euro will rise, which should be bullish for precious metals and commodities. If on the other hand the situation in Europe deteriorates, then the dollar could strengthen further against the euro, which could cause further short-term difficulties for the metals (particularly silver and the platinum-group metals).
So says James Turk, in his 2012 prediction piece for the GoldMoney website.
This comes as Friday bought confirmation that Greece’s budget deficit is heading into double digits, while the latest figures from the Federal Reserve show non-US investors dumped a record amount of US Treasuries over the past month. As ZeroHedge comments: “foreign holdings of US paper have been virtually flat in all of 2011, something which is in stark contrast with what the price of the 10 Year would indicate vis-à-vis investor demand.” The USA’s federal debt-to-GDP ratio now stands at 100%, while President Obama has made a new pro forma request for a $1.2 trillion increase in the US government’s debt ceiling.
Gold and silver prices enjoyed a nice bounce on Friday, with gold recovering back above $1,550 and silver briefly moving above $28; however, the white metal finished the day back under $28. $1,600 and $30 represent the price levels in the two metals that bulls will be looking to recapture quickly in order to avoid any further downside setbacks.
The bull’s cause will be greatly aid – particularly as far as silver is concerned – by any new weakness in the US dollar. The Dollar Index (USDX) fell 0.2% on Friday to 80.2, with that index struggling to break above 80. Ultimately, the dollar’s short-term fortunes are the inverse of the euro’s. If markets become more confident about the situation in Europe, then the dollar will weaken and the euro will rise, which should be bullish for precious metals and commodities. If on the other hand the situation in Europe deteriorates, then the dollar could strengthen further against the euro, which could cause further short-term difficulties for the metals (particularly silver and the platinum-group metals).
Budget collapse: too much free money
By Lewis Lehrman, on 2 January 12
A view from America, previously published at The American Spectator.
The super-committee of Congress is the latest group to confess abject defeat by the Treasury budget deficit. Who can be surprised by this total failure? During the past generation Congress has made as many as fifteen legislative attempts to control government spending — aimed ultimately at a balanced budget. The most notable efforts were those sponsored by the all-time budget hawk, Senator Phil Gramm of Texas. But every administrative and legislative effort by the authorities, no matter how well-intentioned, has collapsed. Why is this so?
Nobel economist Milton Friedman believed the solution to the budget deficit problem was to deny Congress tax revenues. So he advised Congressmen and Presidents to oppose all tax increases — thereby denying bloated government the funds with which to increase spending. But Friedman’s advice has failed, too. We know this because marginal tax rates have been reduced from as high as 70% in 1964 to 15-20-39% in 2011 — depending on the type of income. But congressional spending has nevertheless increased every year — such that, today, only 60% of the Federal budget is financed by taxes, the remainder by Treasury debt. Total direct Federal debt is now about equal to total U.S. output.
The intractable budget deficit and the inexorable rise of government spending has a simpler explanation. Congress and the Treasury are in possession of several open-ended charge accounts — “permanent credit card financing” — with no limits. With its charge cards the Treasury can borrow new credit (money) from the banking system — much of what it needs every year to finance the ever-rising budget deficit.
A look at the current Federal Reserve Balance Sheet shows that the Fed has created about $1.7 trillion of new credit (money) with which to purchase Treasury debt. Foreign central banks have created about $2.7 trillion of new credit to purchase U.S. Treasury bonds. This global, electronic, money-printing exercise has financed almost 30% of the total direct debt of the U.S. Treasury. In 2002, Ben Bernanke, now Chairman of the Fed, did not mince words to describe this process:
[U]nder a fiat (that is, paper) money system, a government (in practice, the central bank in cooperation with other agencies) should always be able to generate increased nominal spending and inflation, even when the short-term nominal interest rate is at zero…. [T]he U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.
He might have added that these “no cost” dollars, printed by the Fed, are the enablers of the perennial U.S. budget deficit.
But the Fed is not the only credit card used by the Treasury to finance the budget deficit. Because the dollar is the world’s reserve currency, foreign central banks also finance U.S. budget deficits (as the custody account of the Fed balance sheet shows). Domestic and foreign commercial banks, too, supply vast amounts of new credit to the U.S. Treasury because domestic, foreign, and international bank regulators, such as the Basel authorities, define U.S. sovereign bonds as high quality assets for which bank reserves are not necessary. Therefore financial institutions can qualify their overleveraged balance sheets by loading up on Treasury Securities. Indeed, only 10-20% of the total direct debt of the U.S. Treasury is now owned by the non-bank, non-government private market. Given the reserve currency role of the dollar, the Federal Reserve and foreign central banks have been given every institutional incentive to finance the U.S. budget deficit. Beginning with World War I, every monetary discipline has been removed by domestic and international authorities, such that runaway government spending everywhere relies on the ultimate credit card — newly created money in the banking system.
A view from America, previously published at The American Spectator.
The super-committee of Congress is the latest group to confess abject defeat by the Treasury budget deficit. Who can be surprised by this total failure? During the past generation Congress has made as many as fifteen legislative attempts to control government spending — aimed ultimately at a balanced budget. The most notable efforts were those sponsored by the all-time budget hawk, Senator Phil Gramm of Texas. But every administrative and legislative effort by the authorities, no matter how well-intentioned, has collapsed. Why is this so?
Nobel economist Milton Friedman believed the solution to the budget deficit problem was to deny Congress tax revenues. So he advised Congressmen and Presidents to oppose all tax increases — thereby denying bloated government the funds with which to increase spending. But Friedman’s advice has failed, too. We know this because marginal tax rates have been reduced from as high as 70% in 1964 to 15-20-39% in 2011 — depending on the type of income. But congressional spending has nevertheless increased every year — such that, today, only 60% of the Federal budget is financed by taxes, the remainder by Treasury debt. Total direct Federal debt is now about equal to total U.S. output.
The intractable budget deficit and the inexorable rise of government spending has a simpler explanation. Congress and the Treasury are in possession of several open-ended charge accounts — “permanent credit card financing” — with no limits. With its charge cards the Treasury can borrow new credit (money) from the banking system — much of what it needs every year to finance the ever-rising budget deficit.
A look at the current Federal Reserve Balance Sheet shows that the Fed has created about $1.7 trillion of new credit (money) with which to purchase Treasury debt. Foreign central banks have created about $2.7 trillion of new credit to purchase U.S. Treasury bonds. This global, electronic, money-printing exercise has financed almost 30% of the total direct debt of the U.S. Treasury. In 2002, Ben Bernanke, now Chairman of the Fed, did not mince words to describe this process:
[U]nder a fiat (that is, paper) money system, a government (in practice, the central bank in cooperation with other agencies) should always be able to generate increased nominal spending and inflation, even when the short-term nominal interest rate is at zero…. [T]he U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.
He might have added that these “no cost” dollars, printed by the Fed, are the enablers of the perennial U.S. budget deficit.
But the Fed is not the only credit card used by the Treasury to finance the budget deficit. Because the dollar is the world’s reserve currency, foreign central banks also finance U.S. budget deficits (as the custody account of the Fed balance sheet shows). Domestic and foreign commercial banks, too, supply vast amounts of new credit to the U.S. Treasury because domestic, foreign, and international bank regulators, such as the Basel authorities, define U.S. sovereign bonds as high quality assets for which bank reserves are not necessary. Therefore financial institutions can qualify their overleveraged balance sheets by loading up on Treasury Securities. Indeed, only 10-20% of the total direct debt of the U.S. Treasury is now owned by the non-bank, non-government private market. Given the reserve currency role of the dollar, the Federal Reserve and foreign central banks have been given every institutional incentive to finance the U.S. budget deficit. Beginning with World War I, every monetary discipline has been removed by domestic and international authorities, such that runaway government spending everywhere relies on the ultimate credit card — newly created money in the banking system.
Gold and Silver Rise
By Paul A. Ebeling, Jnr. | January 3, 2012 3:15 AM EST
LiveTradingNews
Gold and Silver rise on safe haven demand
Gold and Silver gained after reports over the weekend that Iran produced its 1st nuclear fuel rod, causing investors to buy the precious metal as a safe haven.
Gold for immediate delivery advanced 0.2% to 1,566.27 oz, and Silver was + 0.1% at 27.8625 oz.
Gold rose 10% last year, the 11th straight annual gainer, and Silver fell 9.9% on the year..
Gold reserves increased in November in Belarus, Turkey, Tajikistan, Macedonia, Mauritius and Morocco, and declined in Mexico, according to data on the International Monetary Fund's website.
LiveTradingNews
Gold and Silver rise on safe haven demand
Gold and Silver gained after reports over the weekend that Iran produced its 1st nuclear fuel rod, causing investors to buy the precious metal as a safe haven.
Gold for immediate delivery advanced 0.2% to 1,566.27 oz, and Silver was + 0.1% at 27.8625 oz.
Gold rose 10% last year, the 11th straight annual gainer, and Silver fell 9.9% on the year..
Gold reserves increased in November in Belarus, Turkey, Tajikistan, Macedonia, Mauritius and Morocco, and declined in Mexico, according to data on the International Monetary Fund's website.
Iran threatens action if US carrier returns
Source: BI-ME with Reuters , Author: Posted by BI-ME staff
Posted: Tue January 3, 2012 11:57 am
INTERNATIONAL. Iran will take action if a US aircraft carrier which left the area because of Iranian naval exercises returns to the Gulf, the state news agency quoted army chief Ataollah Salehi as saying on Tuesday.
"Iran will not repeat its warning ... the enemy's carrier has been moved to the Sea of Oman because of our drill. I recommend and emphasize to the American carrier not to return to the Persian Gulf," Salehi told IRNA.
"I advise, recommend and warn them (the Americans) over the return of this carrier to the Persian Gulf because we are not in the habit of warning more than once," the semi-official Fars news agency quoted Salehi as saying.
Salehi did not name the aircraft carrier or give details of the action Iran might take if it returned.
Iran completed 10 days of naval exercises in the Gulf on Monday, and said during the drills that if foreign powers imposed sanctions on its crude exports it could shut the Strait of Hormuz, through which 40 percent of the world's traded oil is shipped.
The U.S. Fifth Fleet, which is based in Bahrain, said it would not allow shipping to be disrupted in the strait.
Iran said on Monday it had successfully test-fired two long-range missiles during its naval drill, flexing its military muscle in the face of mounting Western pressure over its controversial nuclear program.
Iran also said it had no intention of closing the Strait of Hormuz but had carried out "mock" exercises on shutting the strategic waterway.
Posted: Tue January 3, 2012 11:57 am
INTERNATIONAL. Iran will take action if a US aircraft carrier which left the area because of Iranian naval exercises returns to the Gulf, the state news agency quoted army chief Ataollah Salehi as saying on Tuesday.
"Iran will not repeat its warning ... the enemy's carrier has been moved to the Sea of Oman because of our drill. I recommend and emphasize to the American carrier not to return to the Persian Gulf," Salehi told IRNA.
"I advise, recommend and warn them (the Americans) over the return of this carrier to the Persian Gulf because we are not in the habit of warning more than once," the semi-official Fars news agency quoted Salehi as saying.
Salehi did not name the aircraft carrier or give details of the action Iran might take if it returned.
Iran completed 10 days of naval exercises in the Gulf on Monday, and said during the drills that if foreign powers imposed sanctions on its crude exports it could shut the Strait of Hormuz, through which 40 percent of the world's traded oil is shipped.
The U.S. Fifth Fleet, which is based in Bahrain, said it would not allow shipping to be disrupted in the strait.
Iran said on Monday it had successfully test-fired two long-range missiles during its naval drill, flexing its military muscle in the face of mounting Western pressure over its controversial nuclear program.
Iran also said it had no intention of closing the Strait of Hormuz but had carried out "mock" exercises on shutting the strategic waterway.
Could gold repeat another double digit rise in 2012?
In a word: sure. But much depends on the strength of the dollar, physical demand out of Asia and any new crises that may develop.
The forecast for gold to return to seeing a “two” as the front number in 2012 is shared by several investment banks. Morgan Stanley, TD Securities, Bank of America-Merrill Lynch and SEB Merchant Banking are among some of the banks who see gold either averaging above $2,000 or at least trading to that level at some time during next year.
Based on gold prices around $1,600, a move to $2,000 would be about a 23% rise.
Leibovit said he sees inflation coming down the road, the question is, “when does it kick in?” Gold could continue to weaken into January, but he said gold investors need to consider a longer term view than six months or even a year. They should be taking at least a three to five year perspective.
Tom Winmill, portfolio manager of the Midas Fund, said there’s a good chance for gold to see another strong year.
“It’s very possible that it can be very strong year after year after year. We think the key component to gold is that it’s denominated in dollars. How high it can go will be dependent on how much money is created. With the two QEs, $2.2 trillion was created. There will be more money created down the road…. We (the U.S.) will be adding more money because we are borrowing. The borrowing represents the future creation of new money,” he said.
For 2012, Winmill is forecasting $1,950 by the end of the year, with a high of $2,200 and a low of $1,650.
The low interest rate environment is important to the gold outlook, Winmill said. “You can’t view rates in a vacuum – at Midas we view inflation rate next to the real yield…. The two-year bonds yield is 25 basis points. The 12 month CPI is (3.2%), so the negative real rate is (3%). That is destroying savings. Our view is as people become more aware of the destruction of wealth they will there will be a stampede into hard assets – gold, diamonds, real estate,” he said.
The forecast for gold to return to seeing a “two” as the front number in 2012 is shared by several investment banks. Morgan Stanley, TD Securities, Bank of America-Merrill Lynch and SEB Merchant Banking are among some of the banks who see gold either averaging above $2,000 or at least trading to that level at some time during next year.
Based on gold prices around $1,600, a move to $2,000 would be about a 23% rise.
Leibovit said he sees inflation coming down the road, the question is, “when does it kick in?” Gold could continue to weaken into January, but he said gold investors need to consider a longer term view than six months or even a year. They should be taking at least a three to five year perspective.
Tom Winmill, portfolio manager of the Midas Fund, said there’s a good chance for gold to see another strong year.
“It’s very possible that it can be very strong year after year after year. We think the key component to gold is that it’s denominated in dollars. How high it can go will be dependent on how much money is created. With the two QEs, $2.2 trillion was created. There will be more money created down the road…. We (the U.S.) will be adding more money because we are borrowing. The borrowing represents the future creation of new money,” he said.
For 2012, Winmill is forecasting $1,950 by the end of the year, with a high of $2,200 and a low of $1,650.
The low interest rate environment is important to the gold outlook, Winmill said. “You can’t view rates in a vacuum – at Midas we view inflation rate next to the real yield…. The two-year bonds yield is 25 basis points. The 12 month CPI is (3.2%), so the negative real rate is (3%). That is destroying savings. Our view is as people become more aware of the destruction of wealth they will there will be a stampede into hard assets – gold, diamonds, real estate,” he said.
The biggest hedge fund is long gold in 2012, Jim Rogers says gold headed to $1200/oz
NEW YORK (Commodity Online): Bridgewater, the biggest hedge fund in the world with $125 billion in investments, is long Gold for 2012. The fund is also positioned for stronger emerging market currencies in Asia and low yields in high quality government bond markets.
Barclays Capital and Bank of America Merrill Lynch (BofAML) also puts Gold price to average $2000/oz in 2012 with BofAML noting that the recent correction “was not necessarily driven by a broad-based reassessment of fundamentals."
Legendary investor Jim Rogers is bullish for gold over the long-term but in the short-term, he prefers to be bearish. "In my view, gold could go to $1,200-$1,300 (an ounce)... Gold has been up 11 years in a row which is extremely unusual in any financial asset, so gold is overdue for a correction”, Rogers was quoted by Reuters.
Barclays Capital and Bank of America Merrill Lynch (BofAML) also puts Gold price to average $2000/oz in 2012 with BofAML noting that the recent correction “was not necessarily driven by a broad-based reassessment of fundamentals."
Legendary investor Jim Rogers is bullish for gold over the long-term but in the short-term, he prefers to be bearish. "In my view, gold could go to $1,200-$1,300 (an ounce)... Gold has been up 11 years in a row which is extremely unusual in any financial asset, so gold is overdue for a correction”, Rogers was quoted by Reuters.
Who holds the world's biggest gold reserves?
NEW YORK (Commodity Online): Following uncertainty in the equity markets and the global economy, countries and organizations believe that Gold is a safe haven and investing in gold is a sure ticket to preserving hard-earned wealth. A store of value and a safe one at that, gold as a commodity has been appreciating and giving investors ample returns barring a few instances.
In fact, the biggest institutional holders of gold—central banks, international entities and governments—are believed to account for approximately 16.5 percent of the world's gold, holding about 30,700 tons.
United States: The United States Bullion Depository in Kentucky—otherwise known as Fort Knox—is the most famous gold stockpile in the world. It holds the majority of the nation’s gold reserves, the remainder of which is held at the Philadelphia Mint, the Denver Mint, the West Point Bullion Depository and the San Francisco Assay Office. Altogether, the total gold reserves of the U.S. equal 8,965.6 tons and would be valued at approximately $522.16 billion in today's market.Germany: The Deutsche Bundesbank, Germany's central bank, has 3,747.9 tons of gold reserves, which are valued at about $218.28 billion. According to the World Gold Council, Germany’s gold coffers account for 71.4 percent of total foreign reserves.
The International Monetary Fund: The International Monetary Fund (IMF) oversees international economic operations of 185 member countries. Its gold policies have changed in the last 25 years, but the reserves remain to stabilize international markets and aid national economies. In one such instance, the IMF sold a portion of its reserves in December 1999 to aid the Heavily Indebted Poor Countries Initiative. The 3,101 tons of IMF Gold would fetch roughly $180.6 billion in the open market.
Italy: The Banca D'Italia manages Italy's foreign reserves, which have been reported at 2,701.9 tons by the World Gold Council and comprise the fourth largest gold reserve in the world. These holdings are worth $138.33 billion and account for 71.2 percent of the country's foreign reserves.
France: The French National Bank, Banque De France, is home to the country's gold holdings, which comprise 66.2 percent of its foreign reserves. With 2,683.8 tons of gold in reserve, France's holdings are worth approximately $156.31 billion.
Source: World Gold Council (data updated on August 2011)
In fact, the biggest institutional holders of gold—central banks, international entities and governments—are believed to account for approximately 16.5 percent of the world's gold, holding about 30,700 tons.
United States: The United States Bullion Depository in Kentucky—otherwise known as Fort Knox—is the most famous gold stockpile in the world. It holds the majority of the nation’s gold reserves, the remainder of which is held at the Philadelphia Mint, the Denver Mint, the West Point Bullion Depository and the San Francisco Assay Office. Altogether, the total gold reserves of the U.S. equal 8,965.6 tons and would be valued at approximately $522.16 billion in today's market.Germany: The Deutsche Bundesbank, Germany's central bank, has 3,747.9 tons of gold reserves, which are valued at about $218.28 billion. According to the World Gold Council, Germany’s gold coffers account for 71.4 percent of total foreign reserves.
The International Monetary Fund: The International Monetary Fund (IMF) oversees international economic operations of 185 member countries. Its gold policies have changed in the last 25 years, but the reserves remain to stabilize international markets and aid national economies. In one such instance, the IMF sold a portion of its reserves in December 1999 to aid the Heavily Indebted Poor Countries Initiative. The 3,101 tons of IMF Gold would fetch roughly $180.6 billion in the open market.
Italy: The Banca D'Italia manages Italy's foreign reserves, which have been reported at 2,701.9 tons by the World Gold Council and comprise the fourth largest gold reserve in the world. These holdings are worth $138.33 billion and account for 71.2 percent of the country's foreign reserves.
France: The French National Bank, Banque De France, is home to the country's gold holdings, which comprise 66.2 percent of its foreign reserves. With 2,683.8 tons of gold in reserve, France's holdings are worth approximately $156.31 billion.
Source: World Gold Council (data updated on August 2011)
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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)…
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