Tuesday, July 31, 2012

Recent Gold Hype Sounds Like Grade-School Chant; Five Non-Hype Reasons to Own Gold

"... There are plenty of reasons to own gold without all the needless hype.

1.Gold is a nice insurance policy against a currency crisis and I think one is coming. When or what country kicks things off that crisis, I don't know, but I suspect it is more likely to be the Japan, Italy, or some other country in Europe as opposed to the US.

2.Gold, contrary to popular myth, is actually a great hedge against deflation in the senior currency (clearly the US dollar).

3.Physical gold is a currency that is not someone else's liability and cannot be printed electronically.

4.Central banks (not just the Fed) have been pouring on the liquidity as the global economy moves from one crisis to another. Odds strongly favor more coordinated central bank liquidity moves, and those liquidity moves tend to benefit gold in the long-haul.

5.Should the world return to a gold standard with a 100% gold-backed dollar, $1600 an ounce will likely look like an extreme bargain..."
at http://globaleconomicanalysis.blogspot.com/2012/07/recent-gold-hype-sounds-like-grade.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29#PXV91z7q5U7bbFd4.99

Bonds are in a Bubble that could become Absurd

"Jim Rogers: I shorted Treasury bonds again a little while ago, and my timing has never been very good in that market. I’m down a little bit, not much. It’s going to be a bubble. But like all bubbles, they go much higher than anybody expects; certainly higher than anybody rationally expects. You shouldn’t ask me for the timing; I can’t tell you it’s a bubble. That doesn’t mean it can’t go higher. Between the fall of ’98 and the spring of 2000, in 18 months, Nasdaq tripled, even though it was clear to anybody around that it was mania and a bubble. But that’s what happens in bubbles. They become absurd. And this one, it looks like it’s going to continue to become absurd, too. - in Seekingalpha"

at http://jimrogers1.blogspot.com/2012/07/bonds-are-in-bubble-that-could-become.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+blogspot%2FWOHK+%28Jim+Rogers+Blog%29

Gold & Silver To Surge As Money Pours Into These Markets

"Today Stephen Leeb told King World News, “There is no plan for growth, and so in this type of environment people are going to remain very frightened.” Leeb, who is Chairman of Leeb Capital Management, also predicted, “This will lead to an ocean of paper money moving into the gold and silver markets.”

The acclaimed money manager also discussed Europe and the US, but first, here is what Leeb had to say about the ongoing crisis: “One thing that defines us today is fear, at least in this country. We are a very frightened people right now. For the first time that I’ve seen we’ve had a dramatic drop in median income. I’m not talking over the last 20 or 30 years, I’m talking about since this horrible recession began.”

Monday, July 30, 2012

When (Not If) Germany Slows, The Whole House Of Cards Collapses!!!

"The MSM has this as a leading headline today... Recession Stalks Germany as Breakeven Rates Drop: Euro Credit

The falling cost of protecting against inflation in the German bond market portends a deeper slowdown in Europe’s largest economy, signalling the effects of the continent’s debt crisis are edging closer to the core.
The two-year breakeven rate, a gauge of inflation expectations, dropped to minus 0.45 percentage point for Germany from 1.04 percentage point a year ago, and has remained negative since the end of May. The rate reflects investors selling index- linked bonds in favor of regular securities because they reckon consumer prices will start declining.
“Germany is most probably heading for a recession,” said Humayun Shahryar, chief executive officer of Auvest Capital Management Ltd., a fund company in Nicosia, Cyprus, overseeing $100 million. “We are going through a debt crisis inEurope, and massive global economic slowdown. I’m not sure how Germany will be able to escape that.”
As the biggest contributor to bailouts for indebted euro partners, the risk is that economic travails at home make it even harder to convince German voters to loosen their purse strings just as yields on Spanish bonds suggest the country will be next in line for a rescue.
German exporters Puma SE, Europe’s second-largest sporting- goods maker, and Siemens AG, the region’s largest engineering company, both said this month they are suffering from the debt crisis as sales and orders fail to meet expectations. Eight of the 17 euro nations are in recession.

Already Slowing

The year-on-year growth rate for the German economy, which accounts for 27 percent of the euro region’s gross domestic product, has fallen for four consecutive quarters.

I gave a very stern warning concerning the over reliance on Germany for economic stability in January via The Biggest Threat To The 2012 Economy Is??? Not What Wall Street Is Telling You... - to wit:..."

Coming Collapse of the EU Banking System Will Bring About Collapse of Entire Western Financial System!

"We are facing a crisis in Europe that is far, far worse than 2008. [It is so bad that,] before it ends, it is quite possible that we will see the entire western financial system collapse and a new system put into place.

Summers goes on to say, in part:
This will mean:
  1. Many major banks disappearing, as well as numerous, potentially lengthy, bank holidays...
  2. Multiple sovereign defaults, as well as broad economic contractions and their commensurate unemployment/ civil unrest/ erasure of retirement accounts/ pensions...
  3. New currencies or new denominations of currencies possibly being introduced…
  4. Massive wealth destruction to the tune of tens of trillions of dollars…
  5. The breakup of various countries/ unions and the implementation of new political/power structures.
  6. Very serious trade wars…and very possibly a real war.
If the above make you frightened, you’re not alone.
As I’ve dug deeper and deeper into the inner workings of the global financial system over the past months, the information I’ve come across has only gotten worse. I’ve been holding off writing all of this because up until roughly April/May it seemed possible that the world might veer towards another outcome. I no longer view this to be the case. I am almost certain that what I’ve written above will come to pass – so buckle up and let’s dive in..."

at http://www.munknee.com/2012/07/coming-collapse-of-the-eu-banking-system-will-bring-about-collapse-of-entire-western-financial-system/

Hathaway - We Are About To See $100+ Up Days In Gold

"Today four-decade veteran John Hathaway shocked King World News by predicting that we are about to start seeing $100+ up-days in gold. The prolific manager of the Tocqueville Gold Fund also stated that the Fed is close to acting and they are most likely going to do something, “... on a very big scale.” He warned, “... there is nothing worse than having an activist Fed which is ineffectual. That would just destroy confidence.” 

Here is what Hathaway had to say: “Hilsenranth, who everybody knows by now is basically a mouthpiece for the Fed, he went quite extensively into what the Fed is thinking about doing, including a round of quantitative easing, putting nominal interest rates to negative levels, and possibly cutting the interest rate on free reserves.”

Sunday, July 29, 2012

GATA, SHAKA ZULU, And The Coming Gold/Silver STORM!

This is Bill Murphy, GATA chairman and of
#810081;">www.LeMetropoleCafe.com, and this is about my commentary on Friday. To get right to the point, three quality sources told me three weeks ago that the gold and silver markets were going to take off in August and I have been pounding the table on such ever since. The action in the Gold Cartel suppressed precious metals markets the past few days suggests that surge has already started.

As part of this surge, it has come to my attention that the nefarious activities of JP Morgan’s manipulative short position in the silver market is going to come to light in August, especially since they still have a big problem with that position … and part of it relates to their announced “whale trade loss issue,” if what I am told is spot on.

The Barclay’s Libor scandal has alerted the investment world how manipulated the financial markets really are. The Gold Anti-Trust Action Committee has been sounding off on this critical issue since January 1999. On January 31, 2008, the Wall Street Journal printed GATA’s $264,000 full page color ad about the ramifications of the gold price manipulation scheme. We used the words “disaster” and “catastrophe” about what was coming in that very ad. In typical fashion, the press ignored GATA and how prescient we were…"

The $64 Trillion Question Is: “When and How Does the Debt Death Spiral End?”

"Global central banks of the top 10 debtor nations will be rolling over approx. 50% of their outstanding debt between now and 2015 because large portions of debt will be maturing in just the next two and a half years. This is a staggering amount equal to 20% of the entire world’s GDP!
As the table below shows, both the U.S. and Japan will see 20% of their total outstanding debt mature just between now and the end of the year and Canada [a whopping] 26%! The other members of the top 10 are only in a slightly better position with all but the UK to see double-digit debt rollovers of their total outstanding debt between now and 2015.

The above only reflects debt maturing. This amount would be difficult enough to finance, but these nations all run deficits which must be funded as well….The U.S., for example, will need to fund new debt resulting from projected deficits almost equal to its rollovers in the next three years. The total amount of debt issuance to meet both requirements totals over $8 Trillion dollars. Other countries in the above table run annual deficits which must also be added on to their rollover requirements. Proportionately, some are bigger than what is required in the US.
Where this funding will come from is the $64 Trillion question. There is just too much debt maturing over the next couple of years for capital markets to absorb. As such, it is highly likely we will see global quantitative easing occur as central banks step in to be buyers of last resort to help suppress interest rates and keep debt servicing costs low….It is likely [the money] will be created out of thin air…exactly as it has been for much of the last four years….If so, the question is when and how does this Ponzi scheme collapse? These debts cannot be funded without massive debasement of the currency — all currencies.
Nothing has been done to stop this march to ruin by the political classes – and nothing will be done! When this ends will be determined not by politicians but by markets who will eventually discipline politicians and all who trusted them. “Got Gold?”

at http://www.munknee.com/2012/07/the-64-trillion-question-is-when-and-how-does-the-debt-death-spiral-end/

Here is the Overwhelming Evidence That a Recession is Coming

"...Retail sales (both total and non-auto) have dropped for three consecutive months. This has happened only five times since 1967—-four times in 2008, and one now. Vehicle sales have tapered off with May and June being the two weakest months of the year. Consumer confidence for both the Conference Board index and the University of Michigan Survey are at their lowest levels of 2012.
June payroll numbers were weak once again and averaged only 75,000 in the second quarter. The latest weekly new claims for unemployment insurance jumped back up to 386,000 and the last two months have been well above the numbers seen earlier in the year.
The ISM manufacturing index for June fell 3.8 points to 49.7, its first sub-50 reading in the economic recovery. The ISM non-manufacturing index for June dropped to its lowest level since January 2010. Most recently the Philadelphia Fed Survey for July was negative (below zero) for the third consecutive month.
Small Business
The small business confidence index declined in June to its lowest level since October and has now dropped in three of the last four months. Plans for capital spending and new hiring have dropped sharply.
Despite all of the talk about a housing bottom, June existing home sales fell 5.4% to its lowest level since the fall of last year. In addition mortgage applications for home purchases have been range-bound since October.
Factory Orders
Core factory orders, while volatile on a month-to-month basis, have declined 2.6% since year-end, and the ISM numbers cited above indicate the weakness is likely to continue.
Leading Indicators
The Conference Board Index of leading indicators has declined for two of the last three months and is now up only 1.4% over a year earlier, the lowest since November of 2009, when it was climbing from recessionary numbers. The ECRI Weekly Leading Index is indicating a recession is either here now or will begin in the next few months.
Foreign Economies
In addition the foreign economies will be a drag as well. A number of European nations are already in recession and others are on the cusp. The debt, deficit and balance sheet problems of the EU’s southern tier are a long way from any solution, and will not remain out of the news for long. China is coming down from a major real estate and credit boom, and is not likely to avoid a hard landing. The Shanghai Composite is in a major downtrend, declining 28% since April 2011. The view that China is immune because of their unique economic system reminds us of what people were saying about Japan in 1989.
Stock Market
The stock market is ignoring these fundamentals as it did in early 2000 and late 2007 in the belief that the Fed can pull another rabbit out its hat. It couldn’t do it in 2000 or 2007 when it had plenty of weapons at its disposal. Now there is little that the Fed can do, although it will try. In sum, we believe that the stock market is in store for a huge disappointment..."

at http://www.munknee.com/2012/07/here-is-the-overwhelming-evidence-that-a-recession-is-coming/

Peak Credit – End of Civilization?

"Could the credit crisis we face globally destroy civilization as we know it? Richard Duncan, author of a new book called, “The New Depression: The breakdown in paper money,” says yes! Duncan claims the $50 trillion in credit expansion in the last 40 years must continue or the system will basically fall into complete chaos. In an appearance on the European version of CNBC last week, Duncan said, “If this credit bubble pops, the depression is going to be so severe, I honestly don’t think our civilization could survive it.” My question is why doesn’t CNBC have this guy on in the U.S.? Maybe the possible scenario he is talking about is just too scary and really bad for selling stocks? Who knows, but it is well worth a listen and something you should know about. Please enjoy the video and discussion..."

at  http://usawatchdog.com/peak-credit-end-of-civilization/

Roubini : Central Banks will do more Quantitative Easings

"Nouriel Roubini : "Everyone is going to do more monetary easing...We live in a world in which the problems of the advanced economies are not problems of liquidity. Banks have plenty of liquidity. The problems are fundamental solvency. So just throwing money at it implies that the loss will continue to collapse and banks will hold extra money in the form of excess reserves. The credit mechanism is broken and there is no creation of growth in most advanced economies. So it doesn't affect real economic activity." - in Bloomberg"

at http://nourielroubini.blogspot.com/2012/07/roubini-central-banks-will-do-more.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NourielRoubiniBlog+%28Nouriel+Roubini+Blog%29

Norcini - If This Happens It Will Devastate The Gold Shorts

"Today acclaimed commodity trader Dan Norcini told King World News, “Once you had the 50 day moving average in gold violated to the upside, then you had a much larger wave of short covering which began to occur.” Norcini also said, “The momentum crowd, that was waiting for $1,600 to be breached, then took over and the move has continued to feed on itself.”

Norcini also discussed a key level which “... is where you will really see the shorts panic.” But first, here is what he had to say about the recent action in gold: “The move in gold we have been seeing was precipitated by an article which indicated the Fed was going to move in August, instead of September. Some of the shorts began to cover yesterday, and as they began driving the prices higher they tripped some key technical levels.”

Greyerz - Expect Frightening Wealth Destruction As Gold Soars

"Today Egon von Greyerz told King World News that going forward the world is going to witness, “...unprecedented wealth destruction.” Greyerz, who is founder and managing partner at Matterhorn Asset Management out of Switzerland, also said to KWN that gold will soar, but in the midst of the rise, “There will be failing economies, higher unemployment, more QE, and extraordinary levels of social unrest.”
Here is what Greyerz had to say about the ongoing financial crisis and where we are headed: “Right now the world is on the edge. When Draghi says something it hits the wire and gold goes up and the dollar goes down. Market participants are sloshing money around from currency to currency, but, in the end, all of the currencies will experience a massive decline.”

An Absolutely Stunning Development In The Silver Market

"Today King World News is reporting on an absolutely stunning development, this time in the silver market. Acclaimed commodity trader Dan Norcini told KWN that in the silver market, “... the hedge fund outright short position is the largest position that I’ve got on my records going back to the beginning of 2007. We’re talking about a five and a half year period.” 

Norcini also noted there would be a huge move in silver, “if they (hedge funds shorts) get caught on the wrong side of that market ... because all of those shorts are going to head to the exits at the same time.”
The acclaimed trader also discussed hegde fund problems in the gold market, but first, Bill Haynes, President of CMI Gold & Silver, had this to say about QE: “Eric, it’s guaranteed, it’s just a question of when. Probably within a few weeks. Subastian Mallaby, a contributing editor to the Financial Times and a member of the Council on Foreign Relations, in Wednesday’s Financial Times, chided Bernanke and the Fed for not showing some audacity, some aggressiveness in attacking the problem of an economy that will not get going.”

Thursday, July 19, 2012

China Aims To Be "Major Gold Trading Center" With Interbank Gold Trading

"...China has proposed to broaden trading of precious metals in its local market in order to help China become a "major gold trading centre" (see News).

The Wall Street Journal was briefed about China's plans by "a person involved with the matter." The paper reports that "the move could increase liquidity and help Beijing gain stronger pricing power for key commodities like gold".

China is the largest consumer and now the largest producer of gold in the world and has aspirations to become a major gold trading center on a par with London and New York. China is also the fifth largest holder of gold reserves in the world after the U.S., Germany, France, Italy (see table).

Chinese officials have spoken of China’s aspirations to have gold reserves as large as the U.S. in order to help position the yuan or renminbi as a global reserve currency. Indeed, it would be only natural for China to aspire to have their currency become the global reserve currency in the long term.

In the longer term, being a major gold trading center would make China a more powerful financial and economic player and indeed could allow them to influence commodity and other important market prices. Indeed, Reuters reported that becoming a major gold trading center "would boost the country's clout in setting global prices"

at http://www.zerohedge.com/news/china-aims-be-major-gold-trading-center-interbank-gold-trading

Nick Barisheff: Make Sure You’ll Actually OWN the Gold Bullion Before You Buy – Here’s Why and How

"Worldwide economic uncertainty has created a growing interest in precious metals as a way to…protect one’s wealth from impending economic Armageddon…Unfortunately, many today don’t know how to purchase or store bullion, and consequently may find themselves as vulnerable to financial collapse as those who didn’t purchase any bullion at all..."

at http://www.munknee.com/2012/07/nick-barisheff-make-sure-youll-actually-own-the-gold-bullion-before-you-buy-heres-why-and-how/

Jim Rogers: American Economy could Collapse like the UK in 1918

"Olly Ludwig: Let's talk about America for a second. Some people talk about America in positive ways: It has unparalleled geography and the fiscal situation simply needs to be put on a path of sustainability and everything looks very different when you project out into the future. What is your reaction to that optimism you hear from some quarters?
Jim Rogers: It's going to take more than geography for the US to solve its problems. We cannot solve our problems in five years or 10 years. Just look at our problems. America is the largest debtor nation in the history of the world. We have staggering, staggering debt problems that cannot be solved in a decade—if ever. Most countries that have gotten themselves into this kind of situation never really do anything until there's a crisis or a semi-crisis.
Olly Ludwig: So, if there's no American exceptionalism in this realm, what does the worst-case scenario look like?
Jim Rogers: It might be like the UK. In 1918, the UK. was the richest, most powerful country in the world, bar none. But within one generation, they were in economic chaos, and within three generations they were bankrupt. I would suspect that what might happen here would be more like in the UK. than anywhere else. - in Goldnews interview 10 July 2012"

at http://jimrogers1.blogspot.com/2012/07/jim-rogers-american-economy-could.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+blogspot%2FWOHK+%28Jim+Rogers+Blog%29

Roubini : 5 Factors could derail the Global Economy

"Five Factors could derail the Global Economy , Those factors are:

  • A worsening of the debt crisis in Europe
  • Tax increases and spending cuts in United Sates that may push the world’s biggest economy into recession
  • A hard landing for China’s economy
  • Further slowing in emerging markets
  • A military confrontation with Iran

according to New York University Economics professor Nouriel Roubini “Next year is the time when the can becomes too big to kick it down (the road)…then we have a global perfect storm,” Roubini told Reuters in a recent interview - in Business Financial Post"

at  http://nourielroubini.blogspot.com/2012/07/roubini-5-factors-could-derail-global.html

Wednesday, July 18, 2012

EL-ERIAN: The Risk Of Collateral Damage And Unintended Consequences Caused By The Fed Is Material And Growing

"Mohamed El-Erian, CEO of PIMCO, is out with his latest criticism of the Federal Reserve's efforts to bolster the economy.
"The Fed increasingly finds itself in a large and deepening policy dilemma," he wrote in The Financial Times.
El-Erian notes that "the Fed has no choice but to consider another mix of unconventional measures – specifically, additional purchases of securities, a lower interest rate on excess reserves, an even more aggressive communication policy, and enhanced access to the discount window."
However, he thinks that even these moves may prove ineffective. Even worse, the actions could prove harmful:
But, more of the same will not have a durable beneficial impact, especially if other policymakers remain missing in action. Indeed, the advantages of another round of unusual Fed activism are declining while the risk of both collateral damage and unintended consequences is material and growing.
El-Erian notes that the next move for policymakers is tackling the "fiscal cliff," the impending expiration of over $600 billion dollars worth of government spending programs and tax cuts. He hopes that Bernanke was able to communicate the urgency of the matter."

at http://www.businessinsider.com/el-erian-collateral-damage-unintended-consequences-fed-is-material-and-growing-2012-7#ixzz210FZrKxQ

Chart of the day: Germany biggest winner from euro fixed exchange rates

"A hedge fund friend of mine who is interested in the euro crisis pointed out a nice chart to me. It shows Germany’s trade balance from 1990 to present.

Source: Sudden Debt
As you can see from the chart, Germany had a relatively small trade surplus in the early 1990s. But after the euro was formed, the surplus vaulted higher. The clear implication is that Germany’s export sector benefitted hugely from the introduction of the euro..."

at http://www.creditwritedowns.com/2012/07/germany-biggest-winner-euro-fixed-exchange-rates.html

Voters From Both Parties Overwhelmingly Support Big Defense Cuts

"...Americans of all stripes have had enough of massive Pentagon budgets and want significant cuts in defense spending, according to new survey data released on Monday.

In Republican and Democratic districts across the country, 74 percent and 80 percent of respective voters said they want less defense spending, the study found.

On average, voters indicated that they wanted a budget for fiscal 2013 that would be nearly 20 percent less than current defense spending.

With $645 billion enacted for total defense spending this year, the average voter’s preferred budget for next year, an 18 percent cut, would translate into a $116 billion savings—money lawmakers trying to balance the budget could sorely use.

“The idea that Americans’ would want to keep total defense spending up so as to preserve local jobs is not supported by the data,” said Steven Kull, director of the Program for Public Consultation, which conducted the survey with the Stimson Center and the Center for Public Integrity, a nonprofit investigative journalism group..."

at http://globaleconomicanalysis.blogspot.com/2012/07/voters-from-both-parties-overwhelmingly.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29#F3Tf0hPdPxR1mv0U.99

Netanyahu Accuses Iran Of Being Behind Bulgarian Bus Explosion, Promises "Strong Response"

"The number of casualties in the Bulgarian bus explosion (reported earlier) is not even known yet, but Israel already knows just who is behind it:
  • Prime Minister Benjamin Netanyahu: "Iran is responsible for the terror attack in Bulgaria, we will have a strong response against Iranian terror." - Haaretz


And here we were wondering why crude spiked above $90 for the first time in months earlier today."

at http://www.zerohedge.com/news/netanyahu-accuses-iran-being-behind-bulgaria-explosion

UBS Issues Hyperinflation Warning For US And UK, Calls It Purely "A Fiscal Phenomenon"

"From UBS, highlights ours.

Global Risk Watch: Hyperinflation Revisited

Hyperinflation: Paper money only has a value because of the confidence that the money can be exchanged for a certain quantity of goods or services in the future. If this confidence is eroded, hyperinflation becomes a threat. If holders of cash start to question the future purchasing power of the currency and switch into real assets, asset prices start to rise and the purchasing power of money starts to fall. Other cash holders may realize the falling purchasing power of their money and join the exit from paper into real assets. When this self-reinforcing cycle turns into a panic, we have hyperinflation. The classic examples of hyperinflation are Germany in the 1920s, Hungary after the Second World War, and Zimbabwe, where hyperinflation ended in 2009. Indeed, hyperinflation is not that rare at all. Economist Peter Bernholz has identified no fewer than 28 cases of hyperinflation in the 20th century..."
at  http://www.zerohedge.com/news/ubs-issues-hyperinflation-warning-us-and-uk-calls-it-purely-fiscal-phenomenon

Saut: The World Is In Its 3rd Super Cycle In The Past 200 Years

"...Then, in November of 2001, China joined the World Trade Organization, and I believe that put the world into its 3rd ‘Super Cycle’ in the past 200 years. 

I expect notional world GDP growth going forward to be somewhere around the 4% level. If you look at China’s economy, it is softening somewhat over there, but if feels to me like China has bitten the bullet and they are getting ready to accelerate again.
They have drawn down inventories over in China, and with domestic consumption still improving, I think they are going to have to crank back up the manufacturing sector. So I’m not one of these people that thinks China is going to implode, and I think over the next 15 years you are going to get the outsized economic growth from the frontier and emerging markets.
If you look at what China is doing, they are following the business model and economic model that Brazil figured out back in the mid-2000s. They figured out that they needed to stimulate some domestic demand, and I think China realizes that as well.
The know that in the long-run, the manufacturer/export driven economic model they’ve been operating on for 15 or 20 years is not sustainable. So they are trying to stimulate domestic demand. The way Brazil did that was to raise interest rates, which strengthened their currency. 

Brazil’s economy slowed a bit, but still kept growing. Then, lo-and-behold, they stimulated domestic demand, and I think that’s exactly what China is doing.”

Hathaway: Gold Manipulation - Banks Are Agents Of The State

"Today four-decade veteran John Hathaway told King World News, “People have talked about gold manipulation ... There is tremendous corruption in the banking system, and I think the banks are now essentially agents of the state, more than they ever have been.” The prolific manager of the Tocqueville Gold Fund also warned, “... people are concerned that their liquid assets are not safe,” and “... there is enough in the system, right now, to justify gold trading well above $2,500.” 

Here is what Hathaway had to say: “All of us look at the fundamentals and say, ‘How can gold not be $2,500?’ I remember back in 2008, and I asked myself, how can gold not be at a much higher number? What I learned then is the causes for gold to be trading higher are there, but you don’t get instant gratification in this game.”

John Hathaway continues:
“Let’s not forget we are fighting the powers that be, and they don’t want to see gold going to $2,500. So they are trying to paint the tape. People have talked about gold manipulation, and now we know that banks have manipulated LIBOR. There is tremendous corruption in the banking system, and I think the banks are now essentially agents of the state, more than they ever have been.

So that’s just one more reason to be distrustful of financial assets you have in the banking system...."

Tuesday, July 17, 2012

The Naked Shorts Will Be Destroyed In The Gold Market

"Today Stephen Leeb told King World News that the gold market now boils down to a “war between establishment and the non-establishment.” Leeb, who is Chairman of Leeb Capital Management, also said, “When the banks finally get scared that they are short too much gold, you will see a major explosion in price.”

The acclaimed money manager also stated, “The banks continue to charge the customers for holding their gold as ‘allocated,’ even though the gold has gone out the door to aid in the gold price suppression scheme. This is fraud, plain and simple, but this fraud is being encouraged by the establishment.”
Here is what Leeb had to say about the war in gold, who the players are, and how it will end: “I’ve been reading through your past interviews, Eric, and it’s becoming more and more apparent to me that the gold market is really at the center of what is the major divide in this world, and that’s the establishment vs non-establishment.”

Stephen Leeb continues:
“The establishment believes the dollar should be currency. I’m just saying they have a vested interest, a very, very strong interest in making sure the dollar maintains its status as a reserve currency. The problem is that it is becoming clear to virtually all savvy investors that gold is a better currency to own.

Gold has gone up almost six and a half fold since the beginning of this century...."

Rule - The Physical Silver Market Is Getting Dangerously Tight

"With continued volatility in global stock markets, and gold staging a big rally off of the lows, today King World News interviewed one of the wealthiest and most street-smart pros in the business, Rick Rule. Rule told KWN that when it comes to silver, “there is the strong case for some very substantial upside.”

Rule, who is now part of Sprott Asset Management, discussed silver and gold at length. He also talked about the problems the world currently faces. But first, here is what Rule had to say about Sprott’s very successful offering in the Sprott Physical Silver Trust: “I think it’s evidence of two things: One, we felt we had reasonably good chances of buying the silver if we raised the money. Second, this points to the continuing strength of the high end retail investment market for silver in North America.

Monday, July 16, 2012

Where Do U.S. Bonds Rank in Safety Compared to Other Countries? Not 1st, Not 5th, Not 10th, Not 12th, But…

"Natixis, the French investment bank and asset manager has determined that the safest country – the country whose bonds are really risk-free – is Sweden, the only one to score a perfect 5. Where do the U.S., Canada, the U.K., Australia and other major countries rank.

Natixis considers five criteria it says are necessary for a country’s bond to play a “risk-free” role in an investor’s portfolio, namely:
  1. have sound public finances (be solvent);
  2. not have excessive monetary creation which could result in either an abnormally low level of long-term interest rates in the near future or a risk of inflation in the long term;
  3. not have a chronic external deficit (due to the small size of industry, a chronic problem of competitiveness), which would lead to a balance of payments crisis;
  4. not have excessive private debt, which would lead to a financial and banking crisis;
  5. have sufficient potential growth to carry the debt.
Here is their ranking of past and present countries with perceived safe-haven statuses based on the five criteria:"

An Absolutely Stunning Development In The Gold Market

"Today King World News is reporting on an absolutely stunning development in the gold market. Acclaimed commodity trader Dan Norcini told KWN, “The swap dealers, (which is) a category of relatively large traders and big banks, for the first time on my records, are actually net longs in the gold market.” Norcini also noted, “Even back in 2008, at the height of the credit crisis, when there was a huge change of ownership in the gold market and traders were just jettisoning positions, the swap dealers never made it onto the net long side in the gold market.”

But first, Bill Haynes, President and owner of CMI Gold & Silver, had this to say about what buyers are doing in the gold market: “Eric, in the 70s we talked about hyperinflation. We had 13% inflation. Paul Volcker, appointed by Jimmy Carter, called in when Ronald Reagan took office, and (Reagan) said, ‘You put a stop to inflation!’ Paul Volcker did it.”

Bill Haynes continues:
“We jacked interest rates to 20% and it shut off inflation. We were worried about inflation then (in the 70s). We’re now talking about the survival of the world’s financial system, and when the smoke clears, (physical) gold and silver are going to be the last two men standing.
We had solid buying this week, some large orders came in. It was kind of interesting that one of the large buyers (of gold) that called us this week said, ‘I’ve watched this stuff long enough, it’s time to get in...."

This Major Fed Move Is About To Create An Explosion In Gold

"King World News is continuing to receive extraordinary levels of interest in what has turned into a series of Michael Pento pieces. Today Pento reports more stunning news, “Last week the ECB reported that overnight deposits parked at the central bank plunged by the most on record, or €484 billion in just one session. It now seems my theory that banks would deploy their reserves was proven correct in a matter of days.” 

Pento also predicted, “I believe the cyclical period of deflation that I warned about several months ago is now close to an end.” Pento is now calling for another significant move, and he noted, “If the Fed does indeed go down that road, I would expect to see U.S money supply growth increase significantly. This will cause gold and commodity prices to soar.”

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/7/15_This_Major_Fed_Move_Is_About_To_Create_An_Explosion_In_Gold.html

Embry - Economic Deterioration, Gold & Market Manipulation

"Today John Embry told King World News, As the global economy continues to deteriorate, the natural reaction to that (by central planners) is to create as much money as humanly possible, to make sure that it (the economy) doesn’t implode.” Embry also said, “To me, that’s enormously supportive of higher gold prices.”

Embry, who is Chief Investment Strategist of the $10 billion strong Sprott Asset Management, also discussed market manipulation. Here is what Embry had to say: “Gold survived another attack from the other side last week, and posted a very strong recovery on Friday. So I’m not the least bit surprised meeting resistance today because one of the mantras in this whole gold suppression scheme is to keep excitement to a minimum.”

John Embry continues:
“One way you do that is you don’t permit follow-through of any significance. You don’t have a day where gold is up 3% or 4%, and then follow it with another day like that. So now gold is struggling to hold its price it reached on Friday.
But the fact is we are coming into a seasonally strong period of demand...."

Saturday, July 14, 2012

How Rich People Are Taking Over America

"Who’s buying our democracy? Wall Street financiers, the Koch brothers, and casino magnates Sheldon Adelson and Steve Wynn.
And they’re doing much of it in secret.
It’s a perfect storm:
The greatest concentration of wealth in more than a century — courtesy “trickle-down” economics, Reagan and Bush tax cuts, and the demise of organized labor.
Combined with…
Unlimited political contributions — courtesy of Republican-appointed Justices Roberts, Scalia, Alito, Thomas, and Kennedy, in one of the dumbest decisions in Supreme Court history, “Citizens United vs. Federal Election Commission,” along with lower-court rulings that have expanded it.
Combined with…
Complete secrecy about who’s contributing how much to whom — courtesy of a loophole in the tax laws that allows so-called non-profit “social welfare” organizations to accept unlimited contributions for hard-hitting political ads.
Put them all together and our democracy is being sold down the drain.
With a more equitable and traditional distribution of wealth, far more Americans would have a fair chance of influencing politics. As the great jurist Louis Brandeis once said, “we can have a democracy or we can have great wealth in the hands of a comparative few, but we cannot have both.”
Alternatively, inequality wouldn’t be as much of a problem if we had strict laws limiting political spending or, at the very least, disclosing who was contributing what.
But we have an almost unprecedented concentration of wealth and unlimited political spending and secrecy.
I’m not letting Democrats off the hook. Democratic candidates are still too dependent on Wall Street casino moguls and real casino magnates (Steve Wynn has been a major contributor to Harry Reid, for example). George Soros and a few others have poured big bucks into Democratic coffers. So have a handful of trade unions.
But make no mistake. Compared to what the GOP is doing this year, Democrats are conducting a high-school bake sale. The mega-selling of American democracy is a Republican invention, and Romney and the GOP are its major beneficiaries.
And the losers aren’t just Democrats. They’re the American people.
You need to make a ruckus. Don’t fall into the seductive trap of cynicism. That’s what the sellers of American democracy are counting on. If you give up on our system of government, they win everything.
This coming Monday, for example, the Senate has scheduled a cloture vote on the DISCLOSE ACT, which would at least require that outfits like the Chamber of Commerce and Karl Rove’s “Crossroads GPS” disclose who’s contributing what. Contact your senators, and have your friends and relatives in other states — especially those with Republican senators (who have been united in their opposition to disclosure) — contact theirs. If the DISCLOSE ACT is voted down, hold accountable those senators (and, when and if it gets to the House, those House members) who are selling out our democracy for the sake of their own personal ambitions."

at http://robertreich.org/post/27128864190#ixzz20cgH6Qlm

Marc Faber : The World is heading toward a Major Crisis

"Marc Faber : The breaking point could be three, four, five years away. The world is heading toward a major crisis. In the meantime, central banks can continue to print money and markets might move up. Since 2009 stocks around the world have more or less doubled. But the economy hasn't performed well, and the typical household hasn't been helped. With quantitative easing, money flows into the hands of relatively few people. I am very negative about the outlook longer term.
It is safest to buy U.S. Treasuries because the U.S. can print money. It will pay the interest. But you are earning only 1.6%, and the cost of living is increasing by about 5% a year around the world. You are getting a negative real return. - in Baron's round table June 2012"

at  http://marcfaberchannel.blogspot.com/2012/07/marc-faber-world-is-heading-toward.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MarcFaberBlog+%28Marc+Faber+Blog%29

Commodities : Shortages are getting worse

"Jim Rogers : “Most people don’t think about commodities, but they’re starting to more and more.” “The supply of commodities has been in decline for over 20 years.” The major oil fields are in decline and there haven’t been many new mines opened. In agriculture, the average age of a farmer in the U.S. is 58, and 66 in Japan. “We’re running out of farmers,” Rogers noted. “I want to own real assets. I want to invest in companies that produce real goods. Shortages are getting worse, not better.” - in ETF trends"

at http://jimrogers1.blogspot.com/2012/07/commodities-shortages-are-getting-worse.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+blogspot%2FWOHK+%28Jim+Rogers+Blog%29

Friday, July 13, 2012

Full text: Moody’s downgrades Italy’s government bond rating to Baa2 from A3, maintains negative outlook

"Moody’s Investors Service has today downgraded Italy’s government bond rating to Baa2 from A3. The outlook remains negative. Italy’s Prime-2 short-term rating has not changed.
The decision to downgrade Italy’s rating reflects the following key factors:
1. Italy is more likely to experience a further sharp increase in its funding costs or the loss of market access than at the time of our rating action five months ago due to increasingly fragile market confidence, contagion risk emanating from Greece and Spain and signs of an eroding non-domestic investor base. The risk of a Greek exit from the euro has risen, the Spanish banking system will experience greater credit losses than anticipated, and Spain’s own funding challenges are greater than previously recognized.
2. Italy’s near-term economic outlook has deteriorated, as manifest in both weaker growth and higher unemployment, which creates risk of failure to meet fiscal consolidation targets. Failure to meet fiscal targets in turn could weaken market confidence further, raising the risk of a sudden stop in market funding.
At the same time, Moody’s notes that the sovereign’s current Baa2 rating is supported by significant credit strengths relative to other euro area peripheral economies, including (1) maintenance of a primary surplus, (2) large and diverse economy that can act as an important shock absorber in the current crisis, and (3) substantial progress on the structural reforms which, if sustained in the coming years, could improve the country’s competitiveness and growth potential over the medium-term..."

at http://www.creditwritedowns.com/2012/07/full-text-moodys-downgrades-italys-government-bond-rating-to-baa2-from-a3-maintains-negative-outlook.html

Jim Rogers : America has quadrupled its Debt

"Jim Rogers: "The federal government has been spending staggering amounts of money in the last three years. The people who got that money, of course, are better off. They're very happy; they've got a lot more money in their pockets." "Overall, the situation is getting worse; it's deteriorating. America has quadrupled its debt to do this, so overall debt is much, much worse." - in benzinga"

at http://jimrogers1.blogspot.com/2012/07/jim-rogers-america-has-quadrupled-its.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+blogspot%2FWOHK+%28Jim+Rogers+Blog%29

Nouriel Roubini : A Perfect Storm by Next Year

"Nouriel Roubini : "All of it matters in the sense that we're kicking the can down the road. The Europeans do not want to make the decisions and there will be political elections in Germany, Italy and other parts of Europe. We have the U.S. presidential election and until then, we're not going to do anything about our fiscal problem. In China, there is a stall right now because of the leadership transition that happens once in a decade and important decisions about their growth model has to be done. The problem is that every part of the world is kicking down the road to 2013. At this time we're reaching a point in which by next year, you could be in a scenario in which we hit a brick wall, and then euro zone breaks up, in the U.S. you have a fiscal cliff, in China the landing could be hard and in the Middle East you could have a war. That is a perfect storm." - in Bloomberg..."

at http://nourielroubini.blogspot.com/2012/07/nouriel-roubini-perfect-storm-by-next.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NourielRoubiniBlog+%28Nouriel+Roubini+Blog%29

Greyerz - Gold to Hit $3,500 - $5,000 in 12 to 18 Months

"Today Egon von Greyerz told King World News, “The credit bubble we’ve had, for at least 40 years, is going to accelerate dramatically, and the failures in the system will continue.” Egon von Greyerz, who is founder and managing partner at Matterhorn Asset Management out of Switzerland, also said, “I see gold reaching $3,500 to $5,000 in the next 12 to 18 months.” 
Here is what Greyerz had to say about the ongoing financial crisis and where we are headed: “There is a fire in almost every country in Europe. The US is going to catch fire also. There will be a catalyst coming soon, probably some concerted action of QE or money printing between the Fed, IMF and the ECB. That will happen as a result of the economies, worldwide, collapsing.”

Thursday, July 12, 2012

The East Asian Miracle Revisited

" Almost two decades ago, the World Bank published its landmark study The East Asian Miracle, analyzing why East Asian economies grew faster than emerging markets in Latin America, Africa, and elsewhere. These economies, the study concluded, achieved high growth rates by getting the basics right, promoting investment, nurturing human capital, and opening up to export manufacturing.

But that was not all. The World Bank also acknowledged, grudgingly, that governments intervened – systematically and through multiple channels – to foster development, including in specific industries in specific locations via subsidies, tax incentives, and financial repression.

In the intervening years, particularly after the Asian Financial Crisis, the pro-market, anti-intervention Washington Consensus fell out of favor. A “New Institutional Economics” (NIE) gained ground by filling in the gaps left by mainstream models, which ignored the central importance of institutions in managing the change and uncertainty that affect resource allocation and social choice. Indeed, in light of today’s Great Recession and the current European debt crisis, the main question remains that of the role of the state in promoting growth and development.

It was the collapse of the Soviet bloc’s planned economies that spurred both free-market hubris and the realization that institutions matter. But it was China’s ability to sustain rapid economic growth for three decades that necessitated a revisionist look at statist capitalism..."

The Market Has Spoken – And It Is Rigged

"In the aftermath of the Barclays rate-fixing scandal, the most surprising reaction has been from people in the financial sector who fully understand the awfulness of what has happened. Rather than seeing this as an issue of law and order, some well-informed people have been drawn toward arguments that excuse or justify the behavior of the Barclays employees.
This is a big mistake, in terms of both the economics at stake and the likely political impact.
The behavior at Barclays has all the hallmarks of fraud, pure and simple – intentional deception for personal gain, causing significant damage to others.
The Commodity Futures Trading Commission nailed the detailed mechanics of this deception in plain English in its “Order Instituting Proceedings” (which is also a settlement and series of admissions by Barclays). Most of the compelling quotes from traders involved this scandal come from the Order, but too few commentators seem to have read the full document. Please look at it now, if you have not done so already.
Barclays has acknowledged that its staff took part in a wide-ranging conspiracy (or perhaps a set of conspiracies) to rig markets – including, but not limited to, any securities for which the price is linked to a particular set of short-term interest rates. The collective term for these rates is the London InterBank Offered Rate, known as Libor, but the use of this nomenclature sometimes hides the fact that there is currently a separate Libor daily for each of 10 currencies at 15 maturities, from overnight to 12 months, according to the British Bankers Association. The notional size of the derivatives involved is on the order of $360 trillion.
Barclays could not have manipulated those rates by themselves – and that is not what the C.F.T.C. found or the basis of the Barclays settlement. Rather, some Barclays employees colluded with people at other banks in a way that, over a period of years, moved Libor rates up and down – depending on what would favor the trading positions of the people and organizations involved.
Each Libor “panel” of banks involves 7 to 18 banks. Participating banks submit the rate at which they can supposedly borrow at a particular maturity and in a specified currency, and an average is calculated (taking out high and low values). No one bank is likely to be able to move the calculated Libor rates by itself.
Once the global financial crisis began to bite, there appears to have been a more systematic manipulation of Libor reporting by Barclays management in a particular direction – downward, to make it seem that the bank was healthier and therefore able to borrow from other banks at a cheaper rate..."

at http://baselinescenario.com/2012/07/12/the-market-has-spoken-and-it-is-rigged/

Four Reasons To Be Even Less Optimistic About The Global Financial System Than You Were Last Month

"The cracks in the ice are getting bigger. At this point it is really hard to have much confidence in the global financial system at all. They told us that MF Global was an isolated incident. Well, the horrific financial scandal over at PFGBest is essentially MF Global all over again. They told us that we would not see a huge wave of municipal bankruptcies in the United States. Well, three California cities have declared bankruptcy in less than a month. They told us that we could have faith in the integrity of the global financial system. Well, now we are finding out that global interest rates have been fixed by insiders for years. They told us that Greece was an isolated problem and that none of the larger European nations would experience anything remotely similar. Well, what is happening in Spain right now looks like an instant replay of exactly what happened in Greece. So who are we supposed to believe? Why does it seem like nearly everything that "the authorities" tell us turns out to be a lie? What else haven't they been telling us?
The following are four reasons to be even less optimistic about the global financial system than you were last month...."

at http://theeconomiccollapseblog.com/archives/four-reasons-to-be-even-less-optimistic-about-the-global-financial-system-than-you-were-last-month

MARC FABER : US Bonds like The NASDAQ In 1999 - The Biggest Bubble Ever

"Marc Faber, publisher of the Gloom, Boom & Doom report, talks about his strategy for global stocks, bonds, commodities and currencies. " If you had asked me about the NASDAQ in December 1999, I would have said this is the biggest bubble ever. And yet the NASDAQ continued to go up 30 percent until March 21st 2000, and then what happened to the NASDAQ and how have these people faired that invested in the NASDAQ in the final months of 1999 and early months of 2000? It's been a disaster. And I think the government bonds bubble will also burst, but I don't know if it's tomorrow or in three months. I suspect actually maybe sooner than later, because the consensus is now buy US government bonds...I can see why people buy US Government bonds " Marc Faber said"

at  http://marcfaberchannel.blogspot.com/2012/07/marc-faber-us-bonds-like-nasdaq-in-1999.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MarcFaberBlog+%28Marc+Faber+Blog%29

All Hell is Going to Break Loose on the Upside in Gold

"With the US dollar hitting fresh two year highs, stock markets struggling around the world, and gold holding firm, today King World News interviewed acclaimed money manager Stephen Leeb, Chairman of Leeb Capital Management, to get his take on what is happening. Leeb told KWN there is a huge scandal because “...the banks don’t have the gold the customers are paying them to have on deposit,” and “all hell is going to break loose on the upside.”  

Here is what Leeb had to say about the scandal: “Examples that people like Eric Sprott have given, where an individual depositing gold in 2009, when they asked to get their gold back there were long delays. And the gold bars they got back were certainly not the gold they deposited because they came back dated 2011. What’s that all about?”

Stephen Leeb continues:
“What’s amazing to me right now, Eric, it’s come down to a world where the war is between those who believe in capitalism and those who don’t. What is interesting is that you have people on the right and the left that have banded together. They don’t trust government and they don’t trust the system, and who can blame them?
But the real scandal here is the banks don’t have the gold the customers are paying them to have on deposit. And the more countries like China and India accumulate, the more likely all hell is going to break loose on the upside....
“It’s that simple. And eventually there will be panic because the gold is not there at the banks. 
I see massive turmoil. It’s one thing if people want a lot of dollars out of the banks, you just print the dollars. But how are they going to print the gold? I just see massive turmoil when people finally realize the banks don’t have their gold.
You will see governments frantically trying to substitute fiat money for gold because this is going to feed on itself. And you have to keep in mind this is something that has happened all over the world. The banks take in customers gold and charge them fees for storing the gold as allocated, but then they turn right around and lease it out to the market to aid in price suppression.
This is the kind of thing that will end in catastrophe. At some point the government may try to impose some type of controls, but before you get that you could end up with $8,000 or $10,000 gold. I just think this whole situation will end in total chaos. They will be trying to satisfy customers wanting their physical gold by the printing presses and that’s not going to work. It’s not a pretty situation..."

Wednesday, July 11, 2012

How To Protect Yourself From Collapse of the Faith-Based Financial System

"...The financial system is so interconnected and so highly correlated, different asset classes that deemed to be uncorrelated or low-correlated, have become highly-correlated and are essentially all sitting in one systemic basket.

The way to address the problem is to look for baskets that are not in the financial system. You have to look for physical assets, hard assets, that are not financial instruments, not only the assets themselves are not in the financial system, but the way you own them is not related to the financial system.

In other words, direct physical ownership of non-financial assets. ... The main one is gold.

Physical gold is the answer because gold is the most liquid, most ubiquitous material, with a worldwide market.

It should owned physically outside the financial system and hopefully with geographic diversification so you can assess liquidity during tough times. We have started a fund to enable people to do just that..."

at http://globaleconomicanalysis.blogspot.com/2012/07/how-to-protect-yourself-from-collapse.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

Regardless of Who Wins in November the U.S. Is Going Over the Financial Cliff! It’s Just a Matter of Time – Here’s Why

"The outcome of the election of 2012 will [only] determine the rate of speed at which we approach the [financial] cliff [because] neither political alternative is willing to change course, to steer away from the cliff. The cliff is so high that whether we go over it at 200 mph (Obama) or whether we merely slip over the edge (Romney), the end result is the same — fatal for the economy and perhaps our entire political system. It is the fall that will kill us..."

at  http://www.munknee.com/2012/07/regardless-of-who-wins-in-november-the-u-s-is-going-over-the-financial-cliff-its-just-a-matter-of-time-heres-why/

Saut - The Systemic Problem, I’m Not Sure It Can Be Fixed

"With continued volatility in global markets, today King World News interviewed Jeffrey Saut, Chief Investment Strategist for Raymond James, which has $360 billion assets under management. Saut spoke with KWN about Europe and warned, “As I’ve always said, the systemic problem, I’m not sure can be fixed.” He also warned about possible conflict with Iran and class warfare, but first, here is what Saut had to say about the crisis in Europe: “I think Europe took a step in the right direction a couple of weeks ago. It was consistent with what I’ve been saying year, that when push came to shove that politicians, bureaucrats and bankers are the same over there as they are over here, and when you get to the ‘nth’ hour they are going to paper over ‘Euroquake’ and try to buy more time.”

Jeffrey Saut continues:
“In this particular instance I think the papering over was significant in some of the measures they took. It actually looked like the first step in the right direction, ever. Every three months I think they are going to have to come back and do some more QE-whatever it is over there, and try to continue to buy more time.
As I’ve always said, the systemic problem, I’m not sure can be fixed...."

Richard Russell - Gold, Stocks & Massive Fed Manipulation

"With continued uncertainty in global markets, the Godfather of newsletter writers, Richard Russell, wrote, “...we see the stock market up on Fed-created stilts ... I'm stating that deflationary and deleveraging forces are still in command, and all the Fed's manipulations are, and will, fail to turn the bear market into a new bull market.” 

Russell also pondered, “Yes, we had the usual late-session rally ... Is the Fed buying the Dow at the close? It wouldn't surprise me.” But first, this is what Russell had to say about gold: “Most of my subscribers are interested in gold. All I'm going to say about gold is wrapped up in the chart below. Here we see gold in a large rectangle formation. The 1550 level has been tested numerous times and it has shown to be solid support.

Rick Rule - We Are Near An Epic Collapse in Confidence

"With global stocks struggling, the US dollar very close to a breakout, and gold ignoring US dollar strength by trading higher, today King World News interviewed one of the wealthiest and most street-smart pros in the business, Rick Rule. Rule warned, “...for those who are looking for signs of a collapse in confidence, if past is prologue, you should examine our experience in 2008 and begin to look for immediate signs of structural stress.”
Rule, who is now part of Sprott Asset Management, also issued the following warning: “The world has been trying to solve a solvency problem with liquidity. Obviously the problem becomes, at some point in time, the issuers, be it the US government or the ECB or whoever the issuer is, runs into a problem where they can’t sell more paper. There is nobody to fund it.

Rick Rule continues:
“One of the things that comes to my mind is that what has passed for quantitative easing and refinancing in this market, is, in effect, counterfeiting. We have a situation where one of the biggest buyers of government bonds is the government.
In the United States, as an example, we took in between 40% and 45% of the federal budget last year by way of tax receipts. We took care of the other 55%+ of the budget by borrowing half of the deficit, and in the second instance by printing money which we used to retire government bonds. In other words we bought our own paper.
I guess that’s fine as long as it works...."

Tuesday, July 10, 2012

JAMES KUNSTLER: We're Entering A Dangerous New Period In History

"News that that a swarm of termites deep inside the British banking system have been fiddling the interbank interest rates (LIBOR) for years in order to systematically vacuum a few billion pence off the exchange floors for themselves is the latest blow to the credibility of the global money system - and probably a fine overture to a looming climactic implosion of the gigantic, creaking, smoldering, reeking, duck-taped edifice of broken promises, booby-trapped hedge obligations, counterparty follies, central bank euchres, sovereign flim-flams, and countless chicanes too various, dark, and deep to smoke out.

Next, we'll probably hear that Lloyd Blankfein over at Goldman Sachs has been tinkering with the rotation of the earth in order to gain a few micro-milliseconds of advantage in his firm's high frequency trading rackets. After all, back in 2008 Lloyd himself claimed to be "doing God's work."
In short, world banking is now hopelessly pranged, and I am not at all sure the project of civilization (modern edition) can continue by other means. The impairments of capital formation are now so profound that no one and nothing can be trusted.
Not only are all bets off, but nobody will want to make any new bets - and by that I mean venture to invest accumulated wealth (capital) in some useful project designed to sustain human well-being. What remains is just the desperate hoarding of whatever remains in assets uncontaminated by the pledges of others to pony up.
All this points to a dangerous new period of political history, a deadly Hobbesian scramble to evade the falling timber in a burning house as the rudiments of a worldwide social contract go up in flames..."

at http://feedproxy.google.com/~r/clusterfucknation/~3/zDvS65raWcw/the-drowning-pool.html#ixzz20FZpqcR7

Guest Post: Our Money Is Dying

"A question on the minds of many people today (increasingly those who manage or invest money professionally) is this: How do I preserve wealth during a period of intense official intervention in and manipulation of money supply, price, and asset markets?

As every effort to re-inflate and perpetuate the credit bubble is made, the words of Austrian economist Ludwig Von Mises lurk ominously nearby:

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner, as the result of a voluntary abandonment of further credit expansion, or later, as a final and total catastrophe of the currency system involved.

Because every effort is being made to avoid abandoning the credit expansion process -- with central banks and governments lending and borrowing furiously to make up for private shortfalls -- we are left with the growing prospect that the outcome will involve some form of "final catastrophe of the currency system"(s).

This report explores what the dimensions of that risk are. It draws upon both historical and modern examples to try to shed some light on how the currency collapse process will likely unfold this time around. Plus, we'll address how best to avoid its pernicious wealth destroying effects.

When Money Dies

In the book When Money Dies by Adam Fergusson, which details Weimar Germany's inflation over the period from 1918 to 1923, the most riveting parts for me were the first-hand accounts from the people caught in the storm.

So many people left their wealth in the system only to watch it get eroded and utterly destroyed over time. The reasons were many: patriotism, inertia, disbelief, and denial cruelly fed by hope every time prices moderated or even retreated momentarily.

The simple observation is that many people had a blind belief in the money system. They lost their wealth because they were unable or unwilling to allow reality to challenge their beliefs. It's not that there were numerous warning signs to heed -- in fact, they could be seen everywhere -- but most willfuly ignored them.

Most mysterious is the fact that in Austria and Germany, where the inflation struck most severely, there were numerous borders and currencies into which people could have dodged to protect their wealth. That is, protecting one's wealth was a relatively straightforward and simple manner. And yet…it did not happen.

The Many Types of Inflation

As always, the landscape of inflation needs to be carefully mapped before we can begin to hope to have a conversation with a destination. Where the symptom of inflation is rising prices – in fact, rising prices are the only things tracked by the Consumer Price Index, or CPI – the causes of rising prices are many, but they always boil down to the overexpansion of money and/or credit. Knowing the cause is essential to knowing what to do next..."

at http://www.zerohedge.com/news/guest-post-our-money-dying

Marc Faber : We have a Spiral on the Downside

"Marc Faber : We are in recession in Europe We have an economic slowdown in the U.S. and we have not really recovered in the U.S. from the lows of 2009 and we have essentially a slowdown in economic growth in Asia and we have sliding commodities prices , so the commodities producers they have less money to buy goods and so we have essentially a spiral on the downside..."

at http://marcfaberchannel.blogspot.com/2012/07/marc-faber-we-have-spiral-on-downside.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MarcFaberBlog+%28Marc+Faber+Blog%29

Jim Rogers : We Shot all our Bullets , The Next Slowdown will be a lot worse

"Jim Rogers : 2002 we had a slowdown , 2007 - 2008 was worse because the debt was so much worse , next time the debt is staggering so the next time we have a slowdown the problems are going to be a whole lot worse because we shot our bullets -in Reuters interview"

at  http://jimrogers1.blogspot.com/2012/07/jim-rogers-we-shot-all-our-bullets-next.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+blogspot%2FWOHK+%28Jim+Rogers+Blog%29

Jim Rogers: When things are collapsing, all sorts of strange things happen

"Oilprice.com: I read a report by the Economist Phil Verleger, who thinks that the Saudis' massive increase in oil production, along with other economic problems could cause oil prices to crash to $40 a barrel oil and $2 a gallon gasoline by November. Do you think this is a reasonable forecast, and we could see oil at these levels?
Jim Rogers: We could see anything. We certainly saw lower prices than that back in 2008 when there was a collapse. When things are collapsing, all sorts of strange things happen. We found that out in 2008, and we will probably find out in the future, as well. If oil does go to $40, that means it'll just be setting up an even more bullish scenario for the duration of the bull market.- in Oil Price"

Nouriel Roubini : in 2013 we will hit a Brick Wall

"Nouriel Roubini :"All of it matters in the sense that we're kicking the can down the road. The Europeans do not want to make the decisions and there will be political elections in Germany, Italy and other parts of Europe. We have the U.S. presidential election and until then, we're not going to do anything about our fiscal problem. In China, there is a stall right now because of the leadership transition that happens once in a decade and important decisions about their growth model has to be done. The problem is that every part of the world is kicking down the road to 2013. At this time we're reaching a point in which by next year, you could be in a scenario in which we hit a brick wall, and then euro zone breaks up, in the U.S. you have a fiscal cliff, in China the landing could be hard and in the Middle East you could have a war. That is a perfect storm."

at http://nourielroubini.blogspot.com/2012/07/nouriel-roubini-in-2013-we-will-hit.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NourielRoubiniBlog+%28Nouriel+Roubini+Blog%29

Embry - Hang On Because The Chaos is Going to Accelerate

"Today John Embry told King World News, “...the chaos will accelerate,” and “...before this ends, it will be cataclysmic.” Embry, who is Chief Investment Strategist of the $10 billion strong Sprott Asset Management, also discussed market manipulation. Here is what Embry had to say: “The fact that this LIBOR scandal has come to the surface is interesting. It’s an indication of the depth of the corruption in the system. The LIBOR scandal is just one of the many manipulations going on in the world at this point.”

John Embry continues:
“To me the biggest one and the longest running manipulation that no one will acknowledge is the gold and silver suppression scheme. This has been carried out to keep interest rates at low levels, and to suggest that the monetary policy being invoked is correct.

To me, the best thing about the LIBOR scandal is more people are going to start waking up to the fact that virtually everything in these markets is fake....
“There is no better example than what happened in the latter part of last week. Here we had two days that would, if left to its own devices, the gold and silver prices would have rocketed higher. 
First, we had broad easing across the globe from countries like China, England, the ECB, but the gold price got pummeled when all of this was announced. The next day we had a terrible US jobs report, which suggests QE is coming quickly, but gold was hit for a second time.
This was in the face of back to back situation that should have made gold move higher. So anybody that thinks this was normal trading action is simply naive.”
Embry also noted: “I get a huge kick out of the sentiment in the gold market, which as you know, Eric, is extremely negative. We are to a point where we are dealing with very little on the downside in gold, but thousands of dollars on the upside. This is one of the best buying opportunities in history.
The Chinese get it, and I think a number of the Eastern powers get it. They are just delighted that gold continues to be suppressed. From all of the information I get, more and more gold is headed in that direction (to the East)..."