Wednesday, January 30, 2013

Exclusive: Coming Short Squeeze In Gold To Shock The World

"Today the outspoken hedge fund manager out of Hong Kong, who recently lit the gold world on fire with his comments about a coming short squeeze in gold, told King World News that managed money around the world is already beginning to convert paper claims on gold into physical metal. Kaye, who 23 years ago worked for Goldman Sachs in mergers and acquisitions and who is now the founder and principal shareholder of Pacific Group in Hong Kong, strongly believes that “only a small fraction of investors in the world need to do what we are doing to create an enormous short squeeze” in gold.
KWN will be releasing a series of written interviews today with Kaye which discuss the coming global systemic meltdown, and how it will impact investors and key markets around the world, including gold and silver. Here is what Kaye had to say in part I of this exclusive interview: “We know the claims on gold in the marketplace exceed, depending on various estimates, 100 to 150 times the amount of physical gold known to exist. So when a credible country like Germany has sufficient concerns about whether they can get physical possession and safe storage of fully allocated gold, it’s our contention that any prudent investor should be concerned.”
William Kaye continues:
“When the music stops, what the leverage in the system should tell you is there aren’t going to be enough chairs. So Germany, as a credible country, is saying, ‘We’re reserving our chair.’ Now this is exactly the type of catalyst that, as investors, we look for as owners of fully allocated gold ourselves.
We share many of Germany’s concerns...."

Tuesday, January 29, 2013

China Just Threatened a Currency War if the Fed Doesn't Stop Printing

"The tension between Central Banks that we noted yesterday continues to worsen. This time it was China and the EU, not just Germany, that fired warning shots at the US Fed.

A senior Chinese official said on Friday that the United States should cut back on printing money to stimulate its economy if the world is to have confidence in the dollar.

Asked whether he was worried about the dollar, the chairman of China's sovereign wealth fund, the China Investment Corporation, Jin Liqun, told the World Economic Forum in Davos: "I am a little bit worried."

"There will be no winners in currency wars. But it is important for a central bank that the money goes to the right place," Li said.

Speaking at the same session, French Finance Minister Pierre Moscovici voiced concern that the euro was becoming overvalued as a result of quantitative easing and other stimulus actions taken by other nations' central banks.

"Certainly, the level of the euro is high and creates some problem," he said, attributing the single currency's recent gains partly to the return of confidence created by the European Central Bank and euro zone governments in starting to overcome Europe's debt crisis.

So first Germany begins pulling its Gold reserves from the US, and now China and the EU are saying publicly that the Fed’s policies are damaging confidence in the US Dollar.

This does not bode well for the financial system. The primary role of Central Banks is to maintain confidence in the system. If the Central Banks begin to turn on one another it is only a matter of time before the system breaks down.

Remember, every time the Fed debases the US Dollar it forces the Euro and other currencies higher, hurting those countries’ exports. The Fed has recently announced it will be printing $85 billion every month until employment reaches 6.5% (obviously the Fed is ignoring the mountains of data that indicate QE doesn’t create jobs).

How long will the other Central Banks tolerate this before they initiate a currency war? Both Germany and China have fired warning shots at the Fed. And we all know that just beneath the veneer of goodwill, tensions are building between the primary players of the global financial system..."


Russia to continue to buy Gold

"The Russian central bank will continue to buy gold as it seeks to diversify its foreign reserves away from paper assets it views as risky, First Deputy Chairman Alexei Ulyukayev said on Thursday.

The Bank of Russia has built up the world's fourth-largest foreign reserves, worth $530 billion, by buying oil export dollars to keep the rouble competitive. The hoard includes two rainy-day budget funds that guard against fiscal shocks.

The bank has also been a bullion buyer and the share of gold in its reserves is approaching a medium-term target of 10 percent, raising questions over whether it would keep buying gold."


Embry - Powerful Entity Now Battling The Silver Manipulators

"Today John Embry told King World News that a powerful entity is now battling the powers that be in the silver market. Embry, who is Chief Investment Strategist at Sprott Asset Management also spoke about the increase in net-long contracts in the face of the declining silver price, the silver shortage, as well as the gold market. Here is what Embry had to say in this powerful interview: “I’m focused on this vicious takedown of gold and silver that’s been ongoing for the last month and a half. I’ve been following this story for the better part of 15 years and I can honestly say I don’t think I’ve ever seen a more intense, day after day takedown.”
John Embry continues:
“When London opened gold and silver were driven down for about ten consecutive days. The COMEX PM close was lower than the AM opening. This just bespeaks very aggressive manipulation. The question I ask myself is, ‘What’s bothering them? Why do they feel they have to do this?’
I think there are a lot of reasons....
This German news that came out a few weeks ago about them wanting to repatriate their gold is big. I think that’s very significant.

All of the comments coming out of Japan in the last few weeks about them finally capitulating and printing money hand over fist because they finally realize they are being swamped by deflation, that’s (also) hugely bullish for gold. But that sort of thing has to be buried by the powers that be.
It was also interesting last week, the oldest bank in the world, that Italian bank, came out and said they had a major problem in the derivates field. You put all of those (events) together and they are wildly bullish for gold and silver, yet the prices were clobbered.”
Eric King: “You mentioned that last week we actually had an expansion in open interest as they took down silver. It’s not liquidation. It’s short selling by the bullion banks.”
Embry: “It’s wild. One of the days late last week the number of outstanding silver contracts went up over 4,000 contracts. That’s a huge number, and it’s challenging the highs from when the silver price was $3 or $4 higher a month or two ago.
So the fact that there is no liquidation to speak of, somebody is standing in and taking on the powers that be because I think they realize what a strong hand they have (against the manipulators). The silver market is grotesquely undervalued and there are mounting shortages that are being documented all over the place.
I just see a supply/demand picture which is amazingly bullish, and when you superimpose that on existing short positions and the fact that the silver price has been held back so much, when this gets loose and runs I think people will be shocked at how fast it goes and how far it ultimately goes. I will reiterate, I have no problem with silver (priced) in the hundreds and hundreds of dollars.”


Fed To Create Gold Rally & Bond Plunge Next Week

"With continued volatility in gold and silver, today Michael Pento has written exclusively for King World News and he is predicting a rally in gold next week. Here is Pento’s tremendous piece: “The recent spate of better data on initial jobless claims has caused bond yields to rise, stock prices to rally, and gold shares to tumble in the last few days. For the sixth time since 2010, an oasis of improving economic data (that has proven to be ephemeral each time in the past) is once again giving investors the false signal of a robust and sustainable recovery.
Michael Pento continues:
“This has, in turn, caused investors to once again wonder when the Fed would finally stop buying assets from banks and raise interest rates, which have been at zero percent for over four years. But the data on initial claims has been distorted by seasonal adjustments at the Labor Department. 
On an adjusted basis, initial jobless claims for the week ending January 19th dropped to 335k, which was the lowest level since January 2008....
“However, the raw data offers a different take on the labor condition. The unadjusted claims totaled 436,766 in the week ending January 19. That was 20k HIGHER than the 416k claims reported in the comparable week of 2012. The question is, how can initial claims be higher this year than the same week as last year; yet at the same time register the lowest level in 5 years?.
Other data on the jobs front confirms the view that the labor market is not improving substantially whatsoever. From the January Empire State Manufacturing Report released last week: “Labor market conditions remained weak, with the indexes for both the number of employees and the average workweek remaining below zero for a fourth month in a row.”
And then there is this from the Philly Fed’s Manufacturing Survey: “Labor market conditions at reporting firms deteriorated this month. The employment index, at -5.2, fell from -0.2 in December. The percentage of firms reporting decreases in employment (16 percent) exceeded the percentage reporting increases (11 percent). Firms also indicated a decrease in the average workweek compared with last month.”

Monday, January 28, 2013

Hagel Warned Obama Of Rogue Pentagon Leading A 'New World Order'

"As Chuck Hagel seeks support for his nomination to become Secretary of Defense, Bob Woodward has released a story about a White House trip the former Senator made in 2009.

The Washington Post reports:
According to an account that Hagel later gave, and is reported here for the first time, he told Obama: “We are at a time where there is a new world order.
"We don’t control it. You must question everything, every assumption, everything they” — the military and diplomats — “tell you. Any assumption 10 years old is out of date. You need to question our role. You need to question the military. You need to question what are we using the military for."


Startling Relationship Between Gold Price & U.S. Gov’t Debt Suggests What Price for Gold in 2017?

"Here is the scatterplot with the relationship: (The most recent datapoint, 9/30/12, is the one farthest to the right on the chart.)

To see this a little better, I multiplied the gold price by 7 so the scale would be about the same, and charted both together over time. See below:

[Below is another look.]

[While]…it would seem like a no-brainer investment thesis to buy gold at today’s price as a proxy for the not-otherwise-investable thesis that US total government debt will increase in the future, one must consider the possibility, however, that the gold price has already anticipated the future increase in US government debt..."


Is the First of Many Currency Crises Just Now Unfolding? Are Gold & Silver About to Take Off As a Result?

"I expect the eventual endgame to this whole Keynesian monetary experiment that has been going on ever since World War II [will] finally terminate in a global currency crisis. [That being said,] I’m starting to wonder if we aren’t seeing the first domino – the Japanese yen - start to topple…[It has] cut through not only the 2012 yearly cycle low, but also the 2011 yearly cycle low and never even blinked [and should it continue its steep decline] and break through the 2010 yearly cycle low [of 105.66] I think we have a serious currency crisis on our hands. Needless to say, if the world sees a major currency collapse… it’s going to spark a panic for protection – to gold and silver. Wouldn’t it be fitting that at a time when they are completely loathed by the market they are about to become most cherished?..."


Historic Move By The US Has Just Guaranteed Hyperinflation

"Today James Turk spoke with King World News about a historic event which has just taken place in the United States. Turk states that this situation is not being accurately reported in the mainstream media. He also believes that because of this unfolding drama, “It is all but certain now that the dollar is headed for hyperinflation.” Here is what Turk had to say: “The huge bases in gold and silver are getting bigger, which is very positive, Eric. The only thing the drop in price over the last few days has done is set up a retest of this significant and growing support.”
James Turk continues:
“We are seeing just another example of how the central planners intervene in the precious metal markets by selling paper to drive the price down during month-end option expiry. This maneuver maximizes the profit for their agents - those bullion banks facilitating the gold price suppression scheme – so that the calls they've sold to investors and financial institutions expire out of the money. It also ensures that as many call buyers as possible lose money, which helps the central planners foster a negative sentiment for the precious metals.
We have seen this time and again, Eric. Contributing to the manipulation is the FOMC meeting this week, during which the central planners like to put a lid on gold and silver prices while they announce their new money printing schemes. And then watch out for Friday when the unemployment report is released, usually a time of wide price swings aimed to trigger stops. None of this is new. But there is something new and important happening in Washington DC....
“The politicians have finally done it, Eric. The House passed a debt ceiling bill that throws away the last semblance of any discipline on federal spending. It is now all but certain now that the dollar is headed for hyperinflation, assuming the Senate and then the President go along with the measure passed by the House a few days ago, and the indications are that they will.
Because the federal government is running an operating deficit, it needs to borrow dollars. So the federal government needs the debt ceiling to be raised periodically to enable it to keep borrowing. The federal government reached the current $16.4 trillion debt ceiling a few weeks ago.
The mainstream media reported that the House has now extended the debt ceiling to May 19th. But that is not accurate. What the House actually did is suspend it. Bloomberg accurately reported that the House acted to “temporarily suspend” the debt ceiling.
In other words, the House is proposing to eliminate the debt ceiling, meaning that there will be no limit on what the federal government can spend until May 19th when the debt ceiling must again be considered.
But here's the really important point: These two words used by Bloomberg in reporting this event - temporarily suspend - are chilling, Eric. These are the exact same two words that Nixon used in his August 15, 1971 speech announcing that he was breaking the dollar's link to gold.
His temporary suspension has now lasted 42 years, which is the key point I am making here. T his suspension of the debt ceiling is not going to be temporary. Each time it comes up for consideration, the politicians will just keep extending the suspension again and again. They will always take the soft political option.
When Nixon broke the dollar's formal link to gold, he removed the constitutional check on the power of the government to inflate the dollar, sending the US government over the fiscal cliff. Nixon’s action in 1971 has directly led to the financial mess the US is now in. However, the debt ceiling still provided some constraint..."

Sunday, January 27, 2013

Kissinger: The Iran Nuclear Situation Will Come To A Head In The 'Very Foreseeable Future'

"Henry Kissinger recently gave an ominous forecast on the future of Iran's nuclear program: that it will be taken care of one way or another very soon.
Speaking at the World Economic Forum at a Swiss ski resort in Davos, Kissinger said, "People who have advanced their view will have to come to a determination about how to react or about the consequences of non-reaction," he said.
"I believe this point will be reached within a very foreseeable future."
Also at Davos, Agence France Presse reports that President Shimon Peres said, "There will be more attempts to try and negotiate, but there will always be in the horizon a military option, because if the Iranians think it's only economic and political, they won't pay attention."
Kissinger, Peres and Defense Minister Ehud Barak all seem to think that the Iran nuclear situation will come to close in some way in the next few months..."


China Successfully Tests 'Carrier Killer' Missile In The Gobi Desert [REPORT]

"China's PLA "sunk" a U.S. aircraft carrier during a war game in remote China using its DF-21D "Carrier Killer" missile, reports Taiwan paper Want China Times.

The China Times is a 63 year old Taiwanese paper slightly slanted toward unification, but with a solid reputation and accurate reporting.
The Times report originates with a Google Earth image published at SAORBOATS Argentinian internet forum.
The photo shows two big craters on a 600 foot platform deep in China's Gobi desert that Chinese military testers used to simulate the flight deck of an aircraft carrier.
There has been talk of the DF-21 for years with estimates of its range, threat, and theater changing implications, but this could be the first known test of the rocket.
The Dong-Feng-21D ballistic missile is expected to ring China's coast on its truck-mounted launcher, posing a significant threat to U.S. Naval forces in the region.
The 21D is particularly deadly in that it streaks to the atmosphere guided by satellites and possibly GPS enabled drones, and then drops faster than sound straight down on its targe
Lacking a horizontal flight path could make it much more difficult to defend against and with the Navy's new carrier's running at $13 billion plus per ship, losing one would be as great a financial blow as it would be psychological and tactical..."


Marc Faber : The Markets are Manipulated

"Marc Faber : “The problem with shorting the markets nowadays is that you have this huge intervention by governments. Look at bonds of Italy Portugal and Spain–they rallied last year, there was a huge profit opportunity, and I admit that I missed it, but the profit opportunity came about as a result of government intervention. I feel the markets are — some people say it is intervention. I can call it manipulation. If manipulation continues, you do not know how far they will go. The only thing I know is one day the markets will punish the interventionists, the Keynesians and the monetary that the Federal Reserve and ECB has enforced because the markets will be more powerful one day. How will this look like? Will the bond market collapse or equity markets become a bubble, which would be embarrassing for the Fed’s sake if the U.S. market became a gigantic bubble and at the same time the economy does not recover.” - in Bloomberg"


3 Incredibly Key Charts For Battered Gold & Silver Bulls

“Debt in most countries has been growing exponentially. Last year in Europe almost every single country grew its debt. If they don’t grow the debt the political leaders will be thrown out of office. Rajoy, the Prime Minister of Spain, had a landslide victory a year ago. Now with austerity his approval rating is down to 15%. So we know austerity will not work.
As long as these countries continue to run deficits, it’s guaranteed the currencies will continue to decline in real terms, which is against gold. In 1965, Charles De Gaulle gave a superb speech in which he said most countries accepted that the dollar was as good as gold. He said that will lead to the US going massively into debt.
De Gaulle, stated that “A currency system must be based on an indisputable money base that doesn’t bear the mark of one country.” He said that “There is only one standard that meets those criteria and that must be gold.” That was back in 1965, Eric.
A few years later De Gaulle demanded the US pay all of their debts to France in gold. Of course as we all know that forced Nixon to close the gold window in 1971. That was the start of the monetary experiment and explosion in money printing in the world, and this is only going to accelerate in the next few years.
I’ve included the gold chart below which shows that gold is up almost 7-fold since 1999. During the last 13 years gold has reached overbought situations a few times. We saw it in 2006, 2008, and again in 2011. Every time gold has reached those overbought situations we’ve seen a consolidation.

Compared to the previous rises this has been a relatively mild consolidation. This last consolidation has finished in my view. All of the major moving averages have caught up nicely to the price of gold and it is now preparing for liftoff.

The balance sheets of all central banks are continuing to grow and I’ve included a chart of the Fed’s balance sheet (see chart below). The Fed’s balance sheet has now gone over $3 trillion. $3 trillion is an absolutely massive amount. The total borrowings are now actually over $3.1 trillion.

So the Fed continues to print money to finance the deficits. They are also there to finance and backstop the precarious nature of the banking system. We’ve seen the balance sheet of the Fed consolidating in the last year, just like gold. But now as you can see on the chart above that it’s breaking out again and I think we are ready for the next move higher in the Fed’s balance sheet.
What we are witnessing right now is a perfect Ponzi scheme with the central banks buying up the government debt. But like all Ponzi schemes it will fail and it will fail badly. They will be constantly printing up new money to finance the debt and as this accelerates we will see the hyperinflation I have been predicting for quite some time.”


What To Expect After This Week’s Gold & Silver Smash

"There has been a great deal of propaganda from the Fed and mainstream media claiming that the world is on the road to recovery. Today one of the wealthiest and most street-smart pros in the business spoke with King World News about the reality of what is really taking place, the gold and silver smash, and where markets are headed from here. 
Rick Rule, who is the CEO of Sprott USA, said, “We are in the midst of a commodities super cycle of the same dimension we experienced in the 1970s.” The 1970s was an extremely difficult period, and it eventually culminated in a flight from fiat currencies into gold as the world experienced a period of tremendous turmoil.
Here is what Rick Rule had to say: “We are in the midst of a commodities super cycle of the same dimension we experienced in the 1970s ... By the way, I don’t disagree that there are attempts being made to suppress the price of gold, but the market is bigger than the morons who are trying to suppress it. As far as I’m concerned, the harder they try to suppress it, the bigger the ultimate move will be. 
At some point in time rational people, people who can add and subtract, are going to say, ‘Would I rather have my wealth held in the form of a floating abstraction, like a euro, yen, or US dollar? Or would I rather have an asset that is not simultaneously somebody else’s responsibility? Something that can’t be printed and counterfeited.’
My suspicion is that over time, more people will become comfortable with gold than they are with fiat currencies ... The Chinese government isn’t trying to suppress the price of gold. It’s encouraging Chinese individuals to own gold...."

Thursday, January 24, 2013

Are Higher Interest Rates the End of the World?

"It’s amazing what you can get used to if it just goes on long enough. Everyone with a family has experienced this personally, but it’s also true at the societal level, where one decade’s impossibility becomes the next’s normal. Not so long ago, for instance, interest rates signified the amount by which a bank CD or bond would increase your wealth each year. But today’s rates are so low that most fixed income instruments are now functionally the same as a checking account, simply a place to park your spare cash until you need it – not an investment that will grow with time. Zero interest rate policy (ZIRP) has created a depressing, in some cases impoverishing “new normal” for savers and retirees.
But the opposite is true for governments, for whom borrowing used to lead to higher interest expense, which in turn widened budget deficits. That’s no longer the case. In recent years, rolling over existing paper as rates have fallen has actually lowered the interest expense of investment-grade countries. Consider the following two charts. The first shows US government debt nearly tripling since 2000. The second shows how much its interest expense has risen: Not at all.
US government debt
US government interest expense
After a decade of massive deficits and rising debt, Washington’s interest expense remains modest because each new bond issue (and each rollover of existing paper) has been at lower rates. If you’re getting a Ponzi-like vibe, you’re right. This game can only go on as long as interest rates keep falling..."


German Gold-Not Last One Holding the Bag-Tom Cloud

"Germany recently announced it was moving some of its gold back to the homeland. Investment manager Tom Cloud says, “People are starting to pull away and take care of themselves. . . . You don’t want to be the last guy holding the bag.” In his 35 years of investing, Cloud says, “I am now seeing countries buying gold that are talking to me. . . We have banks buying the heaviest they have ever bought.” When it comes to silver, Cloud contends, “There is a real shortage out there. . . . You’ve got industrial buyers competing with the investor.” Cloud predicts, “There will be a time we’ll see a parabolic rise in the price of gold and silver, but we’re not there yet.” Join Greg Hunter as he goes One-on-One with Tom Cloud of"


Jim Rogers : Printing Money will lead to more Currency Turmoil

"Jim Rogers : Printing money will lead to more currency turmoil as well as more inflation and higher interest rates. This is going to end very badly. - in cpi financial"


Massive Squeeze Coming As WGC Confirms Gold-Backed Yuan

"King World News is pleased to break the news first in the world for our global readers that the World Gold Council has now confirmed the Chinese are going to back the yuan with gold. Today a legend in the business, Keith Barron, who consults with major companies around the world and is responsible for one of the largest gold discoveries in the last quarter century, informed KWN of this development and also stated, “... the gold and silver bulls are going to begin to trample the bears at some point in the near future.”

Here is what Barron had to say: “This is what I have heard firsthand regarding the silver shortage. I spoke to a dealer where I purchase gold and silver in the United States. He just told me that immediately after the Presidential Inauguration his firm immediately began selling the hell out of monster boxes of US silver eagles.”
Keith Barron continues:
“This dealer informed me that business is absolutely crazy right now and he can't keep product on the shelf because it's flying out the door. I would also like to mention two items which are very important that the KWN readers should be aware of.
The first one is regarding an investment group….
“This is actually a hedge fund named Pacific Group, which is converting 1/3 of its hedge fund assets into physical gold. They have already taken delivery of $35 million worth of gold bars. The head of the fund was quoted by Bloomberg as saying, “In our judgment we are in the early stages of what would likely be the world's largest short squeeze in any instrument.”
This goes back to what we were talking about the last time I was interviewed on KWN regarding gold repatriation back to Germany. Basically what these guys are saying is if everyone goes to claim their gold at the same time, the world will witness an incredible short-squeeze.
I believe the world will see that short squeeze in gold. The Germans have given the U.S. 7 years for a small portion of their gold, which is supposedly stored at the Fed, to be repatriated. But I'm sure that if it starts to look difficult to get it back the Germans will accelerate the process. This will simply add fuel to the massive squeeze which lies in front of us. This will literally cause a feeding frenzy as the gold market explodes higher.
The second thing I want to make KWN readers aware of is the report which was commissioned by the World Gold Council. This is an incredible document, especially coming from the World Gold Council because it's basically saying that the Chinese are going to back their currency with gold. This would, in turn, displace the US dollar and make the Chinese yuan the world's reserve currency.
The Chinese are sitting on piles of dollars right now, and while the US continues its decline, the reality is that all of the fiat currencies are in a race to the bottom. We just saw the Bank of Japan yesterday talk about opening up QE and printing vast sums of money. This will be an attempt to reverse their deflation with inflation. This move by the Japanese is very, very bullish for gold.
But between what is happening with the set up for the coming short squeeze in gold, coupled with the Chinese moving to back the yuan with gold, and the shortages we are seeing in the silver market, the outlook for gold and silver going forward are spectacular. Quite frankly, the gold and silver bulls are going to begin to trample the bears at some point in the near future.”

China May Now Have World’s 2nd Largest Gold Reserves

"Today acclaimed money manager Stephen Leeb stunned King World News when he said the Chinese may already have the world’s second largest gold reserves, eclipsing Germany to grab the number two spot. Leeb knows China is incredibly secretive about its insatiable accumulation of gold, and believes they are not fully disclosing their entire gold position to the world at this point. Here is what Leeb had to say: “I’m focused on precious metals and this fascinating battle between the East and the West, Eric, especially China and the United States. There is an economic ‘Battle Royale’ going on right now, and I think the Chinese definitely have the upper hand.”
Stephen Leeb continues:
“They have a stronger economy and a clear plan as to what they want to accomplish. They have a much longer-term perspective, and this spells very, very tough times for the United States. I wish it weren’t true, and I wish this country would wake up.
But everywhere I look right now I see limited resources and roadblocks even with such things as technology.."

Monday, January 21, 2013

Japan Threatens To Fire On Chinese Fighters — China Says 'There Will Be No Second Shot'

"When Chinese and Japanese fighters met for the first time over disputed islands in the East China Sea earlier this month, Japan promptly declared its right to fire tracers at China's jets.

Though met with outrage by China at the time, Japan continues promoting the live firing which Chinese military academics are calling the "first shot".
The Tokyo AP reports Japan believes it's simply following protocol:
“Every country has procedures for how to deal with a violation of its territory that continues after multiple cautionary measures,” Japanese Defense Minister Itsunori Onodera said Wednesday when asked if tracer shots would be fired against intruding aircraft that refuse to change course. “We have response measures ready that are consistent with global standards.”
If Japan's using the talk of tracer fire to gauge Chinese reaction, it was not disappointed.
The Chinese Foreign Ministry said Sunday his country is on "high alert" and that Japan and the U.S. are ignoring the fact that "the islands are China’s inherent territory."
Never to be left out, Chinese military academics quoted in Beijing's state-run media provided far more fiery replies:

“Japan’s desire to fire tracer warning shots as a way of frightening the Chinese is nothing but a joke that shows the stupidity, cruelty and failure to understand their own limitations,” Maj. Gen. Peng Guangqian of the Chinese Academy of Military Sciences was quoted saying by the China News Service and other state media..."


$7.66 Trillion Of Stimulus In America From 2008 To 2012, Itemized

"The U.S. Government took some enormous steps and continues to take enormous steps to right the economy.
In his 2013 outlook, KKR's Henry McVey points to the $7.66 trillion worth of stimulus as a reason to be bullish on real assets like real estate and commodities.
From McVey:
The United States is running an explicit reflationary policy of holding nominal interest rates below nominal GDP. Though this relationship was slightly more stretched back in the late 1970s, it is again near record levels. We are also dealing with far more liquidity injections by the U.S. government than in the past. In the U.S. alone, monetary and fiscal stimulus as a percentage of GDP has breached the 40% threshold, nearly 5 times what was put into the system after the great depression (Exhibit 52). Moreover, the latest round of quantitative easing is tied to unemployment, which we do not see changing quickly, given that new business formation is still running 35% below the historical average.
Here's a breakdown of all that stimulus."
kkr stimulus trillion


Currency wars should provide support for precious metals

"As nations see Japan’s success in weakening the yen (see discussion), some begin to take notice. Emerging markets nations often attempted to devalue their currencies in the past in order to improve competitiveness. But these days developed economies are doing it as well. This morning the Russians called these policies “currency wars”, which is a good way to describe the latest developments. And such policies are not limited to Japan.
Bloomberg: – The alert from the country that chairs the Group of 20 came as Luxembourg Prime Minister Jean-Claude Juncker complained of a “dangerously high” euro and officials in Norway and Sweden expressed exchange-rate concern.
The push for weaker currencies is being driven by a need to find new sources of economic growth as monetary and fiscal policies run out of room. The risk is as each country tries to boost exports, it hurts the competitiveness of other economies and provokes retaliation.
Yesterday “will go down as the first day European policy makers fired a shot in the 2013 currency war,” said Chris Turner, head of foreign-exchange strategy at ING Groep NV in London.
In an environment such as this it is somewhat surprising to see gold treading water..."


The Sovereign Debt Bubble Will Continue To Expand Until – BANG – The System Implodes

"Why are so many politicians around the world declaring that the debt crisis is "over" when debt to GDP ratios all over the planet continue to skyrocket? The global economy has never seen anything like the sovereign debt bubble that we are experiencing today. The United States, Japan, and nearly every major nation in Europe are absolutely drowning in debt. We have heard a lot about "austerity" over in Europe in recent years, but debt to GDP ratios continue to rise in Greece, Spain, Italy, Ireland and Portugal. In general, most economists consider a debt to GDP ratio of 100% to be a "danger level", and most of the economies of the western world have either already surpassed that level or are rapidly approaching it. Of course the biggest debt offender of all in many ways is the United States. The U.S. debt to GDP ratio has risen from 66.6 percent to 103 percent since 2007, and the U.S. government accumulated more new debt during Barack Obama's first term than it did under the first 42 U.S. presidents combined. This insane sovereign debt bubble will continue to expand until a day of reckoning arrives and the system implodes. Nobody knows exactly when that moment will be reached, but without a doubt it is coming.
But if you listen to the mainstream media in the United States, you would be tempted to think that this giant bubble of debt is not much of a concern at all. For example, in a recent article in the Washington Post entitled "The case for deficit optimism", Ezra Klein wrote the following...
"Here’s a secret: For all the sound and fury, Washington’s actually making real progress on debt."
How many times have we heard that before?
About a decade ago, government officials were projecting that we would be swimming in gigantic government surpluses by now.
Instead, we are running trillion dollar deficits.
But right now there is a lot of optimism about the economy. The stock market recently hit a 5 year high and the business community is loving all of the false prosperity that all of this debt is buying us.
Even Warren Buffett does not really seem concerned about the exploding U.S. government debt. He recently made the following statement...
"It is not a good thing to have it going up in relation to GDP. That should be stabilized. But the debt itself is not a problem."
Oh really?
A debt of 16 trillion dollars "is not a problem"?
Perhaps we should all run our finances that way.
Why don't we all go out and open up 20 different credit cards, run them all up to the max, and then tell the credit card companies that we can't pay them back but that it "is not a problem".
Of course real life does not work that way.
The truth is that government debt is becoming a monstrous problem all over the globe. Just check out how debt to GDP ratios all over the planet have grown over the past five years..."


Sunday, January 20, 2013

China's Buying A Fleet Of Russian Bombers Perfect For Taking On The US Navy

"Chinese websites are again reporting that Russia has agreed to sell Beijing the production line for the Tupolev Tu-22M3 bomber at a cost of $1.5 billion.

Once in service with the Chinese Naval Air Forces the Tu-22M3 will be known as the “H-10″.
The deal struck with Russia includes 36 aircraft: a batch of 12 followed by a second batch of 24 additional bombers.
The Tu-22 will be employed in the maritime attack role and used to attack targets from low levels to avoid radar detection.
The Tu-22 is a Soviet supersonic, swing-wing, long-range strategic and maritime strike bomber. It was developed during the Cold War and is among the closest things to a modern stealth bomber. However, it will get updated with indigenous systems and an extended range making it a significant threat to many latest generations weapon systems.
That's even more true if the deal with Russia includes the Raduga Kh-22 (AS-4 ‘Kitchen’) long-range anti-ship missile, in which case this could be a significant change in the strategic balance of the region.
The Tu-22 bombers will give China another tool to pursue the area denial strategy in the South China Sea and the Pacific theatre; a fast platform to launch cruise missiles, conventional or nuclear weapons in various regional war scenarios..."


Jim Rogers : These Interest Rates are absurd and will not last

"Jim Rogers : In my view interest rates will go higher in the next decade or so , there may be another drop first , but no no these interest rates are absurd and will not last- in Fox Business News Interview"


Jim Rogers : There is More Turmoil coming in the Currency Market

"Jim Rogers : ...we can still borrow at low rate because of the fed , this is an artificial development right now says Jim Rogers , and normally when central banks anywhere in the world do something this artificial it comes home to haunt them eventually and this will come home to haunt us too , the problem right now is there is more turmoil coming in the currency market , you see what's happening with the yen right now and if that happen a lot of people may push their money into the US Dollar and the US government bond market just because they do not know what else to do , it's the wrong thing to do but they'll do it anyway ..."


As Silver Shortage Intensifies, More Retail Products Disappear

"Today 41-year veteran Bill Haynes told King World News the silver shortage is becoming more evident and it is now impacting premiums of retail silver products his company sells. Haynes stated, “... what we’re seeing in the premium action suggests that (silver) is going into short supply.” 
Haynes also said it is causing inventory at wholesalers in the silver market to dry up. He went to discuss what the unprecedented buying will mean going forward. Here is what Haynes had to say: “It seems this week we had existing clients adding to their positions. It’s amazing, these are people that (already) own gold at $300, $400, silver below $10, and they are still adding to their positions at these levels.”

Saturday, January 19, 2013

Currency Wars

"The rules of global trade forbid countries from artificially boosting exports and curbing imports by manipulating the exchange rates of their currencies. But for many reasons, policymakers have been wary (more wary than presidential candidates, anyway) of pressing cases against abuses. That reluctance may be coming to an end, however, as the global recession slouches on and the shadow of chronic unemployment looms over industrialized economies.
What explains that traditional reluctance to pursue currency abuses? For one thing, more is typically at stake in bilateral relations than commerce. For another, some groups in the “losing” countries benefit from currency manipulation—Country A’s exporters’ unfair advantage translates into lower prices for consumers and higher profits for retailers in Country B.
Besides, economists argue, currency manipulation may determine which industries flourish, but it should not have much effect on the total number of unemployed in the long run. Last but not least, policymakers sympathize with some motives for currency manipulation—in particular, for building nest eggs of foreign currency to protect against economic (and military) shocks and for providing income for future generations when nonrenewable resources are depleted.
However, the politics and economics of what is appropriately dubbed “currency aggression” have been changing. Jobs do not seem to come back as quickly in the wake of economic downturns—and when they do come back, they leave a trail of economic and social dislocation. As the biggest nonaggressor, the United States is plainly suffering. I estimate that in 2011, currency aggression cost Americans more than two million jobs..."


James Turk - Germany’s Gold Is Being Held Hostage

"Today James Turk told King World News that the German gold is being held hostage by the Fed. Turk also believes that one portion of the Bundesbank’s press release was particularly misleading. Turk reveals the reality of what is taking place with Germany’s gold, and it’s not what the mainstream media and the Bundesbank are telling people.

Here is what Turk had to say in this extraordinary interview: “It’s quite clear that the German gold is being held hostage. They are not getting what they want. They are getting what the Federal Reserve is telling them they can have. The fact that they are doing it over 7 years rather than 7 weeks, is just an indication that gold probably isn’t in the Federal Reserve, and the Federal Reserve doesn’t want to have to go out and buy it overnight to fulfill the German demand. They are trying to stretch it out as long as possible in order to keep gold prices controlled.”
James Turk continues:
“I mean you can do 5 tons at a time on an airplane shipment. A few hundred shipments and you can have that (1,536 tons of) gold back (in Germany) in a matter of weeks. The only possible conclusion you can make is the gold isn’t there. 
You can do what France did back in the 1960s....
You send over a couple of ships and bring the gold back to your country that way.
When Charles de Gaulle asked for his gold out of the Federal Reserve, it didn’t take 7 years. He got it right away. But back then the gold was in the Federal Reserve because it wasn’t going out in the leasing and lending program that governments have been using in recent years in order to keep the gold price suppressed..."

Gold May Now Be Poised For A Staggering $600+ Surge

"On the heels of the announcement of Germany seeking to repatriate their gold, today top Citi analyst Tom Fitzpatrick told King World News gold may now be set up for a staggering $600+ move. Fitzpatrick has been incredibly accurate regarding his forecasts for both gold and silver.
Here is what top Citi analyst Fitzpatrick had to say, along with powerful charts: “We remain unequivocally bullish on gold. We are of the view that the present price action that we’ve been seeing is very reminiscent of what we saw going into 2007. So over the course of 2011/2012, we really believe all we’ve been doing is consolidating following an impulsive up-move.
This consolidation is similar to what we saw in 2006/2007, after which gold broke out and saw a significant push higher. We think we’re on very much the same path at the moment.

Assuming this is the correct diagnosis, we are not that far from the time frame where we would expect to see the upward momentum develop and the breakout in gold take place. But we do need to see some of the important levels on the charts we provided taken out on the upside in order to trigger the much higher upside targets we’ve been focused on for the past six to nine months..."


Celente: The 2013 Financial Collapse Will Be One For The Ages

"Today top trends forecaster Gerald Celente told King World News the Western world is heading into a massive financial collapse in 2013. Celente also provided KWN exclusively with a small portion of a frightening new piece from the former Assistant Treasury Secretary under Ronald Reagan, which is contained in the interview below. 

Celente went on to discuss what is happening with gold right now, and told KWN he is continuing to buy physical gold for himself ahead of this financial collapse. Celente is the founder of Trends Research, and the man many consider to be the top trends forecaster in the world. 
Eric King: “This is inside your (just released) Trends Journal (a small portion) from Dr. Paul Craig Roberts (Former Assistant Secretary of the Treasury during the Reagan Administration): 
“2013 could be the year that the Western world, based as it is on debt and fiat paper money that is printed in order to support debt, comes to an economic end ... Hopefully, the derivative exposure – essentially uncovered bets on interest rates, mortgages, currency exchange rates, and prices of oil and other commodities and equities – nets out in some way so that the net exposure to risk is far less than $227 trillion. Nevertheless, if enough of these bets go wrong, banks can go bust.
So far the “euro crisis” promoted by the US and Western media has protected the US dollar by sending euro holders fleeing into dollars, and the Federal Reserve’s purchase of the banks’ bad bets has kept economic Armageddon at bay. However, the Federal Reserve cannot forever create new dollars with which to purchase the banks’ bad bets and with which to finance the huge annual operating deficits of the US government without undermining confidence in the dollar.
Sooner or later the world is going to abandon the US dollar as the currency in which international accounts are settled. With this drop in the demand for the dollar, its price or exchange rate will fall, and import prices will rise. As the US is now an import-dependent country, from that day on, Americans who walk into Walmart will think they have walked into Neiman Marcus.”
Eric King: “This was powerful stuff from him, your thoughts on this essay?
Celente: “Yes, very powerful. This is Dr. Paul Craig Roberts. This is a guy who was a former Assistant Treasury Secretary under Ronald Reagan. So when Dr. Paul Craig Roberts speaks, I listen. We just saw the new trade data come out, and the United States keeps importing a lot more than it exports, even though they’ve devalued the currency in an attempt to export more.
The clock is ticking. We’ve seen this played before. It was the Crash of 1929, the Great Depression, currency wars, trade wars, World War...."

Greyerz - We Are Now Seeing Massive Shortages Of Silver

"Today Egon von Greyerz told King World News he is now seeing massive shortages of silver. Greyerz went on to warn about a frightening series of global storms which are set to collide, which will create an enormous hurricane in 2013. He also spoke about gold and included a tremendous chart that all KWN readers will want to see.

Here is what Greyerz, who is founder of Matterhorn Asset Management in Switzerland, had this to say in this remarkable, exclusive interview: “Eric, I see storm clouds gathering everywhere. We have currency storms, economic, political, and geopolitical storms. But short-term we may see some optimism in the economy as global stock markets make their final top.”
Egon von Greyerz continues:
“But that top in global stock markets is the final top before a major long-term collapse. Thereafter, I see these storm clouds developing into serious problems for the world. Every country is running a deficit and they all keep borrowing and printing incredible amounts of money.
Central bank balance sheets have exploded to extraordinarily dangerous levels in recent years..."

Monday, January 14, 2013

KWN Sunday Gold Chart Special

"Nick Laird: “Net Imports for China via Hong Kong were 63 tonnes for the month of November - the fourth highest level ever seen. Total cumulative net imports since 2001 now stand at 1242 tonnes (note black line).

Continue reading the Part I of the Nick Laird piece below...
“The following chart shows total net imports at 462.75 tonnes for the 11 months of 2012.
Here's a bigger view combining China's domestic gold production plus it's net imports from Hong Kong. This shows the potential gold quantities held in China.

And here's the same view over 80 years showing the parabolic nature of China accumulating gold, especially since the year 2000.
Currently we see China being the world's #1 producer. China is importing gold via Hong Kong in ever increasing quantities and also aggressively accumulating foreign producing gold mines in an attempt to dramatically increase their gold reserves.”

Hathaway - The Case For Gold To Trade Substantially Higher

"Today John Hathaway spoke with King World News about why gold is headed substantially higher in 2013 and the years beyond. The four decade veteran and prolific manager of the Tocqueville Gold Fund also believes money will continue flowing into physical gold from around the world. Here is what Hathaway had to say: “Well, to me the imperative to hold gold is stronger than ever. The current effective interest rate on the $16 trillion of US debt outstanding is less than 2%. That’s partly because the Fed remits interest back to the Treasury on the bonds it owns, and last year that number was almost $90 billion.”
John Hathaway continues:
“Should the Fed ever divest their bond holdings, which I don’t think they can ever possibly do, but even if interest rates stay at 2% or 2.5%, that’s $90 billion the government is going to have to start paying that they haven’t had to pay.
If we ever see a 300 or 400 basis point rise in interest rates across the yield spectrum, and multiply that times $16 trillion, that’s another $600 or $700 billion additional to the deficit we (already) have right now...."

Sunday, January 13, 2013

China Newspaper Says To 'Prepare For The Worst' After Military Confrontation With Japan In The East China Sea

"After repeatedly flying surveillance aircraft into disputed airspace with Japan, which made Tokyo scramble F-15s in response, China sent fighters of its own on Thursday into the East China Sea.

A Friday press release out of China confirms the incident began when Beijing was flying a Shaanxi Y-8 on a "routine Thursday patrol" over the "oil and gas fields in the East China Sea."


Davies - Gold Is Now Set Up For A Vertical Price Explosion

"Today rising star Ben Davies spoke with King World News about the extraordinary prediction that he made for the Japanese to enter the gold market in size. Davies was the first in the world to make such a call and it has proven to be deadly accurate, to the point where this is now actively being discussed in mainstream media. On the heels of being proven correct on his call for the Japanese to enter the gold market, Davies now predicts that gold is getting very close to the point where it will see a vertical explosion to the upside..."


Chinese To Increase Gold & Silver Storage A Staggering 180%

"Today acclaimed money manager Stephen Leeb told King World News the West is becoming even more desperate as the Chinese are going to increase storage a staggering 180% this year for gold, silver and other metals. Leeb continues to believe that when the Chinese eventually have gold underlying their currency the game is over. Here is what Leeb had to say: “I’m focused on this battle between the West and the East right now, and the Basel III situation. The Basel III ratios that discuss liquidity ratios the BIS wants the banks to maintain so they can survive a bank run are utterly baffling. The puzzling thing was what they said banks could hold in the event of a run on the banks or a liquidity squeeze.”


Wednesday, January 9, 2013

This Will Cause Oceans Of Paper Money To Panic Into Gold

"On the heels of last week’s Fed propaganda and the increasing desperation on the part of central planners, today Michael Pento has written exclusively for King World News to warn readers about what is going to cause oceans of paper money to panic into gold, silver and other hard assets. Here is Pento’s piece: “It is an unfortunate truth that Keynesian counterfeiters with their Kamikaze monetary and fiscal policies have taken over the developed world. Politicians and central banks in the United States and Europe have decided to cement, firmly in place, their addictions to debt, inflation, and artificially produced low interest rates.
Michael Pento continues:
“But Japan has now leapfrogged into the lead of those nations that believe prosperity can be brought about by loading up on government debt and increasing the number of zeros being printed by their central bank. Shinzo Abe and the Liberal Democratic Party swept into power in mid-December by promising to boost inflation and destroy the value of the Yen.
The new Prime Minister is trying to usurp the independence of the Band of Japan (BOJ) by dictating that the central bank provide an inflation target of at least 2%, and also force them to expand their government bond-buying program. The reason for this is clear; Japan’s debt has ballooned to over $12 trillion, and is now 237% of their GDP...."

Monday, January 7, 2013

Preventing World War III: NATO vs SCO, Avoiding Escalation Between Entrenched and Emerging Powers

"The worst-case scenario is a world war between the West — NATO, U.S., EU with Japan-Taiwan-South Korea — and the East—the Shanghai Cooperation Organisation (SCO) with Russia, China, Central Asia as members and India, Pakistan, Iran as observers. With four nuclear powers on each side, and West versus Islam as a major issue. In the centre is the explosive mix of a divided territory (Israel-Palestine) and Jerusalem, a capital divided by a wall.
We have been there before: the Cold War, with West versus Communism as a major issue. In the centre was the explosive mix of a divided Germany, and Berlin, a capital divided by a wall; and a divided Korea, by a demilitarised zone. And yet no direct, hot war, except by proxies; Korea, Vietnam. Why?..."


Russia beats Saudi to emerge as world’s biggest oil producer in 2012

"Rosneft reported one of the largest rises in crude output among the Russian oil majors last year
More crude from state-owned top producer Rosneft kept Russian oil output the highest in the world last year, ahead of Saudi Arabia, Energy Ministry data showed on Wednesday.
Crude output edged up almost 1% to a new post-Soviet high of 10.37 million barrels per day (bpd), but the increase could halt this year due to depleted oil fields in West Siberia.
Russia’s oil output, the world’s largest, edged up almost 1% in 2012 to a new post-Soviet average yearly high of 10.37 million barrels per day (bpd)..."


China’s anti-satellite weapon a ‘trump card’ against US

"Amid reports that China is gearing up to conduct one more anti-satellite weapons test (ASAT) putting US Global Positioning System (GPS) at risk, Chinese state media today asserted that Beijing had the right to carry out the test as it is a “trump card” against Washington.
China may be gearing up to perform a controversial ASAT test this month, perhaps in the next week or two, US media report said.
“In 2007 and 2010, China conducted anti-satellite (ASAT) weapons tests, both on January 11. Rumours circulating for the past few months suggest that some within the US defence and intelligence community believe China is preparing to conduct another ASAT test,” Union of Concerned Scientists, a Cambridge-based body of scientists reported.
China’s previous tests caused concern in India too with assertions by the Indian defence officials that New Delhi also should acquire such a capability.
“Just before Christmas, a high-ranking US defence official told us that the Obama administration was very concerned about an imminent Chinese ASAT test,” Gregory Kulacki, China project manager of the group and senior analyst reported two days ago..."


China Now Coal’s Largest Player

"China is the world’s largest coal producer and consumer and currently accounts for about half of the global coal consumption.
The U.S. Energy Information Agency noted in its 2012 country analysis brief on China, “Coal supplied the vast majority (70 percent) of China’s total energy consumption of 90 quadrillion British thermal units (Btu) in 2009,” adding, “EIA projects coal’s share of the total energy mix to fall to 59 percent by 2035 due to anticipated higher energy efficiencies and China’s goal to reduce its carbon intensity (carbon emissions per unit of GDP). However, absolute coal consumption is expected to double over this period, reflecting the large growth in total energy consumption.”
The World Energy Council reported that China held an estimated 128 billion short tons of recoverable coal reserves in 2011, the third-largest in the world behind the United States and the Russian Federation, or roughly 13 percent of the world’s total coal reserves. Chinese coal production rose to over 3.8 billion short tons in 2011, making China the largest coal producer in the world.
Currently 27 Chinese provinces mine coal, and the country’s coal consumption is approximately three times higher than it was in 2000, with more than half of China’s coal is used for power and heat generation.
Complicating the picture, China, previously a net coal exporter, in 2009 became a net coal importer for the first time over twenty years..."

at  China Now Coal’s Largest Player - 24/7 Wall St.

Sunday, January 6, 2013

The Launch Of Russia's New 'Silent' Sub Is Just One Step In Rebuilding Its Mighty Military

"Russia recently launched its near silent nuclear submarine following several years of development.

The Borey Class submarine, dubbed Vladimir Monomakh, has a next generation nuclear reactor, can dive deeper than 1,200 feet, and carries up to 20 nuclear intercontinental ballistic missiles (ICBM).
Each of these "Bulava" ICBM's can carry ten detachable MIRV warheads, what they call "re-entry vehicles," capable of delivering 150 kiloton yields per warhead (luckily, tests of the warheads only yielded 11 "successes" out of almost 20 attempts). Which doesn't mean they aren't a concern, MIRV's are what shook the Cold War to its foundation when they first appeared in the 1970s.
And the Kremlin's not dissuaded or slowing down with plans to build eight additional Borey's over the next year, at a very reasonable cost of about $700 million each.
The sub is just one portion of a larger effort at re-arming the Russian navy — the Defence Ministry allocated another $659 billion — for another 50 new warships as well.
Russia's currently engaged in its largest Naval exercise "in decades," involving four of its fleets — maneuvering within the Black Sea, Baltic Sea, and the Northern and Pacific Oceans. The exercise is an attempt to strengthen its presence in the Mediterranean..."


Japan Sends Fighter Jets After A Second Ever Chinese Invasion Of Its Airspace

"China's first ever invasion of Japan's airspace happened just weeks ago, but the move appears to becoming a routine addition to the burgeoning standoff.

Japan scrambled fighter jets on Saturday to head off a Chinese state-owned plane that flew near islands at the centre of a dispute between Tokyo and Beijing, a Japanese Defense Ministry spokesman said.
The Japanese jets were mobilized after a Chinese maritime aircraft ventured some 120 kilometres (74 miles) north of the Senkaku islands, which China calls the Diaoyus, at around 12:00 pm (0300 GMT), the spokesman said. The Chinese Y-12 twin-turboprop later left the zone without entering Japanese airspace over the islands, he added. It was the first time Japanese fighter jets had been scrambled this year to counter Chinese aircraft approaching the islands, the spokesman said.
This second round of confrontation in the skies comes after Japan dispatched eight fighter jets last month after provocations in the same region of the South China Sea..."


Roubini predicts further fiscal crises for US, will get "messy"

"Nouriel Roubini : "It won't be long before there is another crisis. Two months, in fact." "That is only the beginning later in 2013 a bigger debate on medium-term fiscal consolidation will begin." He added that "a big fight about entitlements should be expected as well as a series of little fights over tax reforms" and the whole process will likely "soon get messy." - in globalpost"


Sprott - Demand For Gold Is Now Overwhelming Central Banks

"Today billionaire Eric Sprott told King World News that the demand for physical gold is now overwhelming Western central banks. Sprott also said orchestrated price smashes in the paper gold market have been used in a desperate attempt to frighten investors and keep a further groundswell of demand from coming into gold. 
This is the third and final in a series of interviews with Sprott that has now been released which reveals the increasingly desperate situation Western central planners face as we head into 2013.
Eric King: “What has you worried going forward?”
Sprott: “What has me worried as an investor is that we are up against some powerful forces. I look at the minutes of the (Fed) meeting as, okay, here they go, they are trying to force the price of gold down. It’s a fight every day. I mean it’s trench warfare. And maybe they can convince people that they shouldn’t own gold. They are trying their damnedest. 
Luckily we have many allies on our side these days that weren’t allies before. We have the Chinese buying, the Russians buying, all sorts of countries are buying gold, and in large quantities. We see the American public buying gold, Canadian public, Europeans (also) buying gold and silver...
“It doesn’t take many people to think that there is something wrong with the system and want to move into gold, when gold represents less than 1% of all financial assets. It doesn’t take much of a turn by the people who own the other 99% to (dramatically) change the price of gold.
We’ve had some great thinkers who have come around. I refer to Bill Gross, Kyle Bass, Ray Dalio, I mean there are a lot of people realizing it’s the time to be in gold and silver. I think they are acting it out by the way (by purchasing physical gold and silver).
The Western central banks have for sure been supplying the gold, and they are probably in a jam. In fact, I almost look at those minutes that came out as recognition of the real problem they are facing, that the demand for physical gold is just overwhelming them. And they have to keep this volatility in the market so that there isn’t a groundswell of interest in terms of buying it. 
But I have no doubt the physical story will win the day, ultimately, and it’s not very far away. I was not surprised to see the US Mint halt sales in mid-December and say they wouldn’t start them again until January 7th, which is what they do when things get tight. But I would imagine you’ve had people telling you the markets for silver and gold are tight, and there is no way they can’t be based on all of the work that we do.
But we have these forces at work in the paper market that want to make us think there’s no upside here. I can assure you there will be plenty of upside. We’ve gone up 12 years in a row, and with a weak year last year, I suspect we’ll have a way better year this year. And some day it will break (massively to the upside). 
You see all of the concerns, whether it’s the people in Australia, Austria, Germany, ‘Where the hell is our gold?’ We’ll find out that the gold is not there. I don’t think they (central planners) know where their (other countries) gold is. It’s probably been sold would be my guess. Our analysis says that gold was leased and sold into the market. And someday, when some country goes to repatriate it, they are going to find out it’s not there.”

Fiat Money and Collective Corruption

"This article by Thorsten Polleit explains how Bernanke can get away with his monetary policy and the likely outcomes of that policy. Well worth reading.
In this article it will be argued that collective corruption—which is the logical result of government interventionism in the field of money production—can explain why public opinion accepts adherence to an economically and socially destructive monetary policy. Collective corruption can also explain why returning to sound money faces such high, perhaps insurmountable, hurdles once fiat money has been put into place..."

Friday, January 4, 2013

Gold & The Frightening Picture Of Our Financial Abyss

"Today 40-year veteran, Robert Fitzwilson, wrote the following piece exclusively for King World News. Fitzwilson, who is founder of The Portola Group, has two absolutely fascinating charts of gold and the monetary base, which clearly illustrate how dramatically undervalued gold is relative to the massive fiat money base.
Below is Fitzwilson’s exclusive piece for KWN:
“Potential energy is a scientific term that relates to real world phenomena, many of which we encounter in our daily lives. Gravity is a prime example. If you elevate a bowling ball to the top of the table, you have performed work. If the bowling ball were to fall to the ground, the impact it might make is one measure of the potential energy transferred to it through your efforts.
Potential energy is also relative. From the table perspective, there is simply a ball sitting on it. There is no potential energy relative to the table, only to the floor. When stopping to ponder this, it made me think about the price of gold relative to the massive increase in the monetary base....
“As many people are aware, the value of gold is one of the great questions debated in the financial community. We have used the example of currencies sitting on bar stools, including gold. On a stable floor, there would be no potential energy between the currencies, just personal preference and perhaps diversification considerations. 
However, if the fiat currencies sitting on their respective stools start to sink, there is financial potential energy being created relative to the gold stool that had not moved and the currency stools that are sinking (dropping in value).
Below is a chart that shows the Adjusted Monetary Base. It is a frightening picture and representative of the financial abyss into which we are sinking. From the post-Paul Volcker Fed era, you can see that the base more than doubled from 1984 to 2009. In 2009, the increase in the monetary base was and remains dramatic and unprecedented.
Answering the question about the value of gold relative to the massive increase in the monetary base, we created the chart below. This chart shows the price of gold divided by the value of the monetary base.
By definition, the chart will be driven by a rising or falling price of gold relative to an increase or decline in the base.
As you can see, gold was very overvalued at the start of the period. The graph plunged from 1984 until roughly 2002, as did the price of gold. Our suspicion is that the correction in the price of gold was not only driven by the corrective forces brought on by the overvaluation, but was turbocharged by the introduction of gold leasing and other non-market forces in the very early part of the 1990s.

As gold bottomed early last decade, the value of gold was extraordinarily undervalued relative to the monetary base. As gold move steadily higher, it’s relative value declined when compared to a steadily increasing, but non-exponential rise in the monetary base. The line then plunged in late 2008 as the monetary base exploded to the upside. The explosive growth in the monetary base has never abated.
What the wiggle to the right of 2009 represents is a battle between forces maintaining a trading range for gold and a mushrooming monetary base.
Keep in mind that the lower this indicator is on the chart, the greater the value of gold. It is clear that we are nowhere near the overvaluation of the 1980s. Given that there is no end in sight for increases in the monetary base, the financial potential energy contained in the current price of gold is extreme. Once that force is unleashed, the price of gold will rise in a dramatic fashion. The bottom line is the downside for gold is miniscule, and the upside is many times the current price.”