Half of German gold reserves will be stored in Germany by 2020 - Really?

"Bundesbank President Jens Weidmann described the partial transfer of German gold from New York as a trust-building measure in Germany. You are the one responsible for organising this major logistical undertaking. Indeed, we are inspiring trust by storing half of the 3,400 tonnes of gold in Frankfurt by 2020. Building trust also means being transparent. We were the first central bank to publish details of our storage facilities, including the respective quantities of gold stored there. Given the dis-trust surrounding this botched process no trust will be built until all of German's gold is stored in Frankfurt. Is there a scenario in which gold could begin to be used in monetary policy? A highly theoretical scenario would involve extreme turmoil on the foreign exchange markets. Germany safeguards its solvency through reserve assets. In addition to foreign currency, our reserve assets include gold reserves. This gold could be pledged or exchanged directly for foreign currency. That is also why we have left the other half of our gold reserves in New York and London. Although we thankfully do not envisage such a crisis scenario, central banks are designed for the long term..."

at: http://ausbullion.blogspot.com.tr/2014/02/half-of-german-gold-reserves-will-be.html#sthash.KaMnlxc1.dpuf

The Recovery™ - Bubble Back To the Bar For the Hair of the Dog That Bit You

"

"Double, double toil and trouble,
Fire burn and cauldron bubble.

Cool it with a baboon’s blood,
Then the charm is firm and good...

By the pricking of my thumbs,
Something wicked this way comes."

William Shakespeare, Macbeth, Act 4 Sc. 1

And why would you expect anything different, given the lack of serious reform and the careful targeting of the monetary expansion into the hands of the same old TBTF financial firms?

The best way to cure the damage from a widespread, real economic collapse in the aftermath of a financial asset bubble is surely a continuation of the failed policies of the past, and yet another asset bubble targeting the most wealthy in the hope that something will trickle down to the rest.

at http://jessescrossroadscafe.blogspot.com.tr/2014/02/the-recovery-bubble-back-to-bar-for.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+JessesCafeAmericain+(Jesse%27s+Caf%C3%A9+Am%C3%A9ricain)

Philly Fed Unexpectedly Back in Contraction; Weather Blamed Again

"The Philadelphia Fed Bloomberg Consensus for the Philly Fed manufacturing index was 9.4. The index came in -6.3. 

 Highlights

The Philly Fed's headline index for general conditions fell back into the negative column, to minus 6.3 vs January's 9.4. This is the first negative reading since May.

Last month's big 7.8 point decline in the new order index signaled the trouble for today's report. And new orders are even worse for February, in negative ground at minus 5.2 for a major 10.3 point decline. Unfilled orders are also in negative ground, at minus 2.6 for a 1.6 point decline from January.

Shipments, suffering from a lack of orders and also from weather effects, fell dramatically, down 22 points to minus 9.9. The weather effect is evident in delivery times, which slowed 5.7 points to 2.9.

Weather is a temporary effect and isn't holding down the longer term outlook in the sample as six-month readings are all strongly positive led by a 6.8 point gain for general conditions to 40.2.

The Philly Fed report doesn't usually cite commentary but it does for February, saying respondents attributed much of the month's weakness to severe winter weather. But January also was hit with severe weather.

at http://globaleconomicanalysis.blogspot.com/2014/02/philly-fed-unexpectedly-back-in.html#XRQ6xGcxkAokpA7l.99

Boom Bust - Gold Everything: Consumption, Gold Standard and More

"From Boom Bust Published on Feb 19, 2014 China has supplanted India as the number-one consumer of the world's gold, according to new numbers from the World Gold Council, even as the global supply of gold fell last year. Erin Ade reports. Then, Erin sits down with George Selgin of the University of Georgia and the Cato Institute to discuss whether the inflexibility of the gold standard contributed to debt-deflation in the 1930's. The famous Bretton Woods conference still has a huge impact on our global financial system, and has become shorthand for international monetary cooperation. Dr. Benn Steil, Director of International Economics at the Council on Foreign Relations, does some myth-busting on the meeting..."

at: http://ausbullion.blogspot.com.tr/2014/02/boom-bust-gold-everything-consumption.html#sthash.ahW1umKL.dpuf

Here Is The Roadmap To $4,000 Gold & Skyrocketing Silver

"In the aftermath of a significant move in gold and silver prices to start 2014, today Kevin Wides out of Switzerland sent King World News a fantastic piece which illustrates the roadmap to $4,000 gold and skyrocketing silver prices.  Below is what Wides had to say along with his outstanding charts:    

February 19 (King World News) - Last week may well have been be the defining week and month for both Gold and Silver.  Let’s look at the facts presented by the charts.

Gold Monthly

 

Gold:  Markets tend to move in 5 waves, 3 in the direction of the trend (waves  1 - 3 - 5 ) and 2 against trend (waves 2- 4).  The important thing to note here is that wave 5 on gold’s monthly bull chart has not occurred yet.  Waves 2 and 4 show alternation in price action, which is indicative of countertrend moves in the 5 wave cycle.

Based on waves 1 and 3, wave 5 could very well have a $3,500 to $4,000 target because 5th waves in commodities tend to be very extended to the upside (see chart above).

Sentiment can be a fantastic contrary indicator.  When there are extreme bearish readings, it generally implies the market is close to running out of sellers.  2014 started with extreme bearishness in Gold, as Goldman Sachs called it “a slam dunk” sell for lower gold  prices in 2014...."

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/2/19_Here_Is_The_Roadmap_To_$4,000_Gold_%26_Skyrocketing_Silver.html

Trust Is Lost & The Financial Destruction Will Only Get Worse

"On the heels of stocks struggling, crude oil breaking $103, and gold and silver consolidating recent gains, today a man out of Europe who has been extremely accurate with his calls on the gold market sent King World News a tremendous piece which warns that trust in the system has now been lost, and the financial destruction will only get worse from here.  Below is what Ronald-Peter Stoferle of Incrementum AG out of Liechtenstein had to say.

The (financial) world is at the moment long in questions but short in answers.  We believe that gold is one of the right answers in times of chronic uncertainty.  It is said that “trust is a delicate flower; once destroyed, it will not return easily.”  We believe that the trust lost in the past years will not be regained any time soon, and that the situation will actually still get worse....

The eurozone is still going through a breaking test, and the US dollar is gradually losing its status as the leading global currency.

Why do people place trust in the yellow metal?  Gold looks back on a history of success as the means of retaining value and purchase power that has spanned millennia. In that time span, the market has chosen the optimal currency from a logical and rational perspective.  Among the criteria are high liquidity, indestructibility, a high ratio of value per weight and volume unit, negotiability, easy divisibility, global acceptance, etc.  The slowly but steadily growing supply from the mines (gold reserves grow at about the same pace as the global population) ensures stability and trust.  These unique features make gold one of the best hedges against excessive monetary expansion and black swan events.

Even though critics will not tire of discrediting gold as the barbarous relic and yesterday’s money that has no place in modern society, we would like to ask the question:  What timeline they have looked at?  “Natural laws” such as “property prices don’t fall,” “US Treasuries are risk-free,” or “The Earth is flat” may have applied in the (recent) past, but if we broaden the (time) horizon, we find that the picture changes.  The mere extrapolation of the past leads to disastrous results in the long term.  Gold on the other hand has a track record of 6,000 years as the currency of last resort and has never turned worthless.

Gold is therefore in the center of the system while the currencies oscillate around it.  In his classic work “When Money Dies,” Adam Fergusson writes:  “Nevertheless, it was the natural reaction for most Germans, or Austrians, or Hungarians – indeed, as for any victims of inflation – to assume not so much that their money was falling in value as that the goods which it bought were becoming more expensive in absolute terms; not that their currency was depreciating, but – especially in the beginning – that other currencies were unfairly rising, so pushing up the price of every necessity of life.  It reflected the point of view of those who believe the sun, the planets, and the stars revolve with the moon around the earth...”  Therefore we could see a future where rather than asking for the price of gold, people will much more often ask for the price in gold.

Don’t fight the Fed – buy Gold!

The global expansion of monetary supply should continue to provide gold investments with a positive environment.  The reaction to the current crisis is already feeding into the next crisis.  Trying to resolve a crisis with the very same instruments that caused it (i.e., an expansive monetary policy) would seem to be clutching at straws.  The driving forces of wealth are savings and investments, not consumption and debt.  The weak US dollar is a logical consequence of the quantitative loosening, which from our point of view is just a euphemism for printing money..."

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/2/19_Trust_Is_Lost_%26_The_Financial_Destruction_Will_Only_Get_Worse.html

Gold Managed Funds Long Positions Back to the High of 2013

"The U.S. Comex gold futures rallied for nine consecutive days and ended at $1,324.40 on Tuesday. This is the longest rally since the summer of 2011. On Wednesday in Asia, the gold futures retreated about 0.7% to $1,315 while the Dollar Index declined to a seven-week low to below 80..."

at  http://news.sharpspixley.com/article/gold-managed-funds-long-positions-back-to-the-high-of-2013/192079/

ECONOMIST: Here's Why We're Permanently Doomed To Have Slow Growth

"

NBER

There's a general feeling among Americans that our good ole' technological ingenuity has been — and will continue to be — the catalyst for economic growth.

But Northwestern University professor and famed bear Robert Gordon has a new paper arguing that technology will not improve economic performance in the next 50 to 100 years.

And that, essentially, we are doomed.

Gordon's paper is a response to the more bullish batch of "techno-optimists who currently believe that we are at a point of inflection leading to faster technological change." He argues that the United States has been on a slow productivity decline for some time, and we face strong headwinds in the next 50 (like an aging population, inequality, and debt).

Here's Gordon's conclusion (via the Washington Post's Zachary Goldfarb):

Techno-optimists remind us that much of the innovation that originates in the U.S. travels around the world with blazing speed through purchases of smart phones and the software that has been developed for them. But other countries can have the free lunch of enjoying American innovation including thousands of smart-phone apps without being saddled with American socio-economic decay, poor educational test scores, massive student debt, high school drop-outs, rising poverty together with explosive growth of incomes at the very top, and the need to reform entitlement programs that are in trouble in part because the U.S. has refused to make medical care a right of citizenship. Today we can only guess which nations will replace the U.S. and remove it from its potential position of leadership due both to the size of its population and its world-leading real GDP per capita..."

at http://www.businessinsider.com/robert-gordon-technology-paper-2014-2#ixzz2thvLmHCP

REPORT: Israeli Arms Shipment Intercepted On Its Way To Iran

"Greek authorities intercepted an Israeli arms shipment intended for Iran, the Greek daily Kathimerini reported on Sunday. It is unknown when exactly the shipment was intercepted.

According to a secret investigation conducted in two phases, one in December 2012 and the second in April 2013, by the U.S. Homeland Security Investigations as well as Greece’s Financial Crimes Squad, the arms shipment contained spare parts for the U.S.-made F-4 Phantom aircraft.

Iran still has a fleet of U.S.-made, aging F-4 aircraft it bought in the 1970s. The U.S. imposed an arms embargo on Iran after the 1979 Islamic revolution; the embargo made it illegal to sell any military hardware to Iran, especially U.S.-made.

The F-4 first went into service in the 1960s and is still in use by several air forces around the world; Israel phased it out of service recently. The Phantom would not have been a threat to Israel's advanced air force, which has one of the biggest fleets of Boeing Co. (NYSE:BA) F-15 and F-16 fighter-bombers in the world.

Kathimerini, which claims it had access to the secret police probe, said the shipment had originated from an Israeli town, Binyamina-Giv’at Ada, 30 miles south of the Mediterranean port of Haifa. The shipment was sent via a Greek ghost company registered under the name Tassos Karras SA in Votanikos, near central Athens.

Israeli officials declined to comment Sunday, but Israel’s Channel 2 news reported that the U.S. was aware of shipments “in real time” and relayed the message to Israeli officials, as reported by the Times of Israel..."

at http://www.ibtimes.com/israeli-arms-dealer-may-have-tried-selling-military-parts-iran-caught-greece-1556211#ixzz2thgvCzLU

China Is Now The World's Largest Consumer Of Gold Read more: http://www.businessinsider.com/china-worlds-largest-gold-consumer-2014-2#ixzz2thfanMVM

"Chinese consumer demand for gold was up 32% on the year in 2013, to 1,065.8 tonnes, according to the latest World Gold Council report. The value demand for gold in China was $51.6 billion.

There was a surge in both jewelry and total bar and coin investment demand. This was the first time China bought over a thousand tonnes of gold and saw it oust India from its position of top gold consumer.

This compares with 974.8 tonnes of consumer gold demand in India, which was up 13% from a year ago.

"Higher import duties, strict import quotas and restrictions on gold-related lending and coin sales led to a contraction of supply to the domestic market as the government attempted to reduce the current account deficit," according to the report.

Here's a look at the surge in gold jewelry demand in China that far surpasses India.:

World Gold Council

And here's an interesting anecdote that highlights growing demand from non-consumer gold demand in China:

"The tremendous growth in vaulting capacity in China is also indicative of OTC investment and stock flows. The expansion of gold storage capacity both on the mainland and in Greater China, which has included the building of sizable new vaults, is in part a reflection of growing demand for gold which is not captured within the consumer categories of demand, some of which will be related to the pipeline stock build-up mentioned above. These flows of bullion above and beyond retail demand are therefore captured within the OTC figure."

2013 annual gold demand climbed to 3,756.1 tonnes."

at http://www.businessinsider.com/china-worlds-largest-gold-consumer-2014-2#ixzz2thfrhrd7

Global Gold Coin And Bar Demand Surged 28% To Record 1,654 Tonnes In 2013

"The World Gold Council’s global supply and demand figures have been released. They confirm what was already known - huge physical demand for coins and bars globally was counter acted by  significant liquidations by COMEX speculators and weak hand ETF investors.

Gold Demand Trends Full Year 2013 makes interesting reading nevertheless. The World Gold Council said full-year 2013 gold demand was 3,756 tonnes, valued at $170 billion and down from 4,415 tonnes in the previous year due to ETF liquidations.

The data confirms that 2013 saw record demand for coins and bars globally but especially in China, Japan and much of Asia.

Annual global investment in bars and coins reached 1,654 tonnes, up from 1,289 tonnes in 2012, a rise of 28%, and the highest figure since the World Gold Council’s data series began in 1992. For the full year, Chinese and Indian investment in gold bars and coins was up 38% and 16%, respectively.

Although much smaller markets in terms of volume, in the U.S. bar and coin demand was up 26% to 68 tonnes, and in Turkey it was up 113% to 102 tonnes.

China became the world’s largest store of wealth buyer of gold in 2013. They are not consumers as only a tiny fraction of  gold is ever consumed. Chinese people bought a record 1,066 metric tons of gold last year, as sudden price falls led to a 32% jump in bars, coins and jewelry buying.

China’s increased purchases helped limit the decline in gold prices as western speculators and investors sold 869.1 tons through exchange-traded products backed by bullion.

Chinese gold demand surged past Indian demand making China the world’s number one buyer of gold. However, India's gold demand remained buoyant in 2013 and rose by 13% to 945 tonnes compared to 2012.  The Indian demand number does not capture the full level of demand as the governments punitive import taxes led to a huge jump in black market activity and the smuggling of gold in huge quantities into India.

Gold demand in Japan jumped threefold in 2013 as people in Japan sought refuge from Prime Minister ShinzoAbe’s campaign to stoke inflation and weaken the yen. Demand for jewelry, bars and coins increased to 21.3 metric tons last year from 6.6 tons in 2012. Demand for jewelry rose 5.4% to 17.6 tons and Japan became a net buyer of bars and coins for the first time since 2005 with 3.7 tons of purchases. There is scope for a massive increase in Japanese  investment, pension and store of wealth demand in the coming years.

Central banks added 61 tons to gold reserves in the fourth quarter, the least since the end of 2010, and full-year purchases declined 32% to 368.6 tons, according to the council. Nations added to holdings for 12 consecutive quarters and will continue purchasing amounts in the hundreds of tons which should support gold.

It is important to note that full-year 2013 total global gold demand of 3,756 tonnes is worth just $170 billion which is what the Federal Reserve prints in less than three months. It is much less than what the Fed, ECB, BOE, BOJ and PBOC and other central banks are printing every month.

Global gold coin and bar demand at 1,654 tonnes per annum is worth just $75 billion which is not far off what the Federal Reserve is printing each month now. This shows how while demand has increased in recent years, the demand is very sustainable and there remains room for a significant jump in demand in the coming years..."

at http://www.zerohedge.com/contributed/2014-02-18/global-gold-coin-and-bar-demand-surged-28-record-1654-tonnes-2013

Gold & Silver To Torture Shorts As Historic Advances Continue

"On the heels of another surge in gold and silver, today top Citi analyst Tom Fitzpatrick sent King World News two incredibly important charts which show that gold and silver are going to torture shorts as they continue historic advances.  Below are the key gold and silver charts that all KWN readers around the world need to see.

Here is what Fitzpatrick had to say: Gold:  The rally through the 200-day moving average opens the way for a move to $1,361.  Beyond that, we believe a rally to $1,434 is in the cards....

The higher highs on gold and the rally through the 200-day moving average (not shown here) strongly suggests that a test of $1,361 - $1,365 is likely in the near-term.  This is where the high from October 2013 and the 55-week moving average converge.

 

A break above there ($1,365) opens the way for higher levels which are listed below:

$1,434 - the August 2013 high and double bottom neckline

$1,491 - 200-week moving average

$1,686 - the double bottom target

Silver:  The break above converged levels at $20.60 and the 200-day moving average ($21.04) is a bullish break.  The triple bottom targets of $22.02 - $22.30 and the next level of resistance is at $23.08.

Silver has rallied through the horizontal levels and triple bottom neckline around $20.60 as well as the 200-day moving average.

 .

The target for this setup is very much in sight at $22.30 and resistance above there is at $23.08.

The medium-term double bottom neckline is at $25.10 which should also eventually be tested."

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/2/17_Gold_%26_Silver_To_Torture_Shorts_As_Historic_Advances_Continue.html

These Three Charts Show Why Everyone Should Stop Freaking Out About Chinese Foreign Debt

"..."There has been no significant increase in China’s liabilities with the rest of the world – and when FDI is excluded, the absolute number is small and flat," writes Green. "No impending cataclysm here." 

Standard Chartered

Total foreign debt as a percent of GDP shows "no sign of a substantial ramp-up in borrowing from offshore."

Standard Chartered

China's foreign bank loans to China amount to 10% of GDP, one of the lowest  among emerging markets.

Standard Chartered

The one thing to watch is the pace at which the stock of cross-border loans is growing, currently up 50% year-over-year.

But the recent debt expansion "has been the normalization of what was an abnormal situation: a massive economy shutting itself off from offshore funding sources," writes Green.

Foreign borrowing of 10-14% of GDP is perfectly normal for the world's second largest economy and one that plans to become an international investor, according to Green."

at http://www.businessinsider.com/why-you-shouldnt-worry-about-chinese-foreign-debt-charts-2014-2#ixzz2tbtRXmRU

ART CASHIN: Central Banks Have Built Up 'A Very, Very Dangerous Situation'

"One of the biggest stories in the global economy is the lack of inflation in the developed markets.
With central banks around the world aggressively stimulating with easy monetary policy, many experts are struggling to understand why we haven't seen money move in a way that would stoke some inflation.

In fact, the economy remains quite sluggish, which has others worried we could actually be heading for deflation.

Art Cashin, the veteran NYSE trader from UBS Financial Services, has long been skeptical of the aggressive actions taken by the Federal Reserve and its peers.

In a new interview with King World News, Cashin warns that financial market conditions remain very risky. From the interview:

What I am saying is:  They thought they were going to solve a desperate problem by desperate measures.  I don’t believe it’s having the effect they wanted, and it’s building up a very, very dangerous situation.  If that money were suddenly to get velocity, inflation could break out.

Conversely, by pushing on a string and not getting anything done, they may wind up being in a spot where, if the economy moves to stall-speed, we’ll get deflationary pressure.  Yes, they’ve begun treating the patient with very, very drastic remedies, and my concern is:  Is it ultimately damaging the body in a way that will bring back some of the horrors they tried to avoid?

Read more at KingWorldNews.com."

at http://www.businessinsider.com/art-cashin-a-very-dangerous-situation-2014-2#ixzz2tbsg51qj

The US Navy Is Ready To Deploy A Futuristic Laser Weapon That's Been Likened To 'Star Wars'

"Some of the Navy's futuristic weapons sound like something out of "Star Wars," with lasers designed to shoot down aerial drones and electric guns that fire projectiles at hypersonic speeds.

That future is now.

The Navy plans to deploy its first laser on a ship later this year, and it intends to test an electromagnetic rail gun prototype aboard a vessel within two years.

For the Navy, it's not so much about the whiz-bang technology as it is about the economics of such armaments. Both costs pennies on the dollar compared with missiles and smart bombs, and the weapons can be fired continuously, unlike missiles and bombs, which eventually run out.

"It fundamentally changes the way we fight," said Capt. Mike Ziv, program manager for directed energy and electric weapon systems for the Naval Sea Systems Command.

The Navy's laser technology has evolved to the point that a prototype to be deployed aboard the USS Ponce this summer can be operated by a single sailor, he said.

The solid-state Laser Weapon System is designed to target what the Navy describes as "asymmetrical threats." Those include aerial drones, speed boats and swarm boats, all potential threats to warships in the Persian Gulf, where the Ponce, a floating staging base, is set to be deployed..."

at http://www.businessinsider.com/us-navy-to-deploy-laser-weapon-system-2014-2#ixzz2tbrf22e8

How Four Big Economies Jockeyed For Position Over The Past 1,000 Years

"The U.S. economy wasn't always the biggest in the world. And in a few years, it will most likely lose its position as the biggest economy in the world.

Here's an interesting chart from Nomura's Alastair Newton using data from economist Angus Maddison. It shows the evolving global economic shares of the U.S., Western Europe, China, and India.

at http://www.businessinsider.com/world-economy-share-since-1000-2014-2#ixzz2tbqjt4NG

"Soros Put" Hits Record As Billionaire's Downside Hedge Rises By 154% in Q4 To $1.3 Billion

"A curious finding emerged in the latest 13F by Soros Fund Management, the family office investment vehicle managing the personal wealth of George Soros.

Actually, two curious findings: the first was that the disclosed Assets Under Management as of December 31, 2013 rose to a record $11.8 billion (this excludes netting and margin, and whatever one-time positions Soros may have gotten an SEC exemption to not disclose: for a recent instance of this, see Greenlight Capital's Micron fiasco, and the subsequent lawsuit of Seeking Alpha which led to the breach of David Einhorn's holdings confidentiality).

The second one is that the "Soros put", a legacy hedge position that the 83-year old has been rolling over every quarter since 2010, just rose to a record $1.3 billion or the notional equivalent of some 7.09 million SPY-equivalent shares. Since this was an increase of 154% Q/Q this has some people concerned that the author of 'reflexivity' and the founder of "open societies" may be anticipating some major market downside..."

at http://www.zerohedge.com/news/2014-02-17/soros-put-hits-record-billionaires-downside-hedge-rises-154-q4-13-billion

Silver Surges By 6% In Shanghai - Longest Run Of Gains Since 1968

"Today’s AM fix was USD 1,326.00, EUR 967.60 and GBP 791.97 per ounce.

Friday’s AM fix was USD 1,308.50, EUR 955.60 and GBP 783.21 per ounce.           

_{Silver in U.S. Dollars, 1 Year - (Bloomberg)}
 

Silver futures in Shanghai surged by 6% - the  daily exchange limit. Silver for June delivery in Shanghai climbed to 4,440 yuan/kg, highest price for a most active contract since October 31.

In London, silver surged another 2.3% today to $21.99/oz prior to giving up some of those gains. Silver headed for the longest run of gains since at least 1968 according to Bloomberg. It is now up 11.3% year to date and is, as expected, again outperforming gold.

Buying in China picked up from Friday's levels. Premiums for 99.99% purity gold on the Shanghai Gold Exchange rose to about $7  from $5.50 on Friday though volumes were slightly  lower.

Gold bullion for immediate delivery rose 0.5% to $1,324.03/oz and gold in Singapore traded as high as $1,330.02, the highest since October 31. Prices climbed 4.1% last week, the biggest increase since the period ended August 16.

Gold climbed $16.90 or 1.3% Friday to $1,318.60/oz. Silver rose $0.94 or 4.58% at $21.55/oz. Gold and silver were both up for the week at 4.06% and 7.09%. The precious metals continued their strong recent performance as the dollar came under pressure. The dollar fell to its weakest level in a year after the recent poor U.S. economic data. Precious metals saw strong gains as prices moved up through key technical and psychological levels  such as $1,300 on gold and $20.50 on silver.

Gold has rebounded 10% so far in 2014 amid expanding demand for coins and bars as signs of faltering U.S. growth lead to safe haven demand. U.S. factory output unexpectedly fell in January by the most since May 2009, Federal Reserve figures showed on Friday. Recent retail sales and employment data were also poor.

Billionaire John Paulson kept his gold holdings unchanged in the fourth quarter, while hedge funds raised bullish bets to a three-month high last week.

Silver continues to have very favourable supply and demand fundamentals and should continue to outperform gold. The nominal high of $50 per ounce is likely to be seen again in the coming years and longer term, we continue to see silver reaching the inflation adjusted record high over $150 per ounce.

Those considering allocating to silver should consider dollar, pound and euro cost averaging into position to protect from the inevitable pullbacks..."

at http://www.zerohedge.com/contributed/2014-02-17/silver-surges-6-shanghai-longest-run-gains-1968

This Will Shock The Markets & Send Gold Soaring In 2014

"...This leads us to the velocity of money.  The history of it is shown below.

 

If it is correct that the unlimited supply of capital/fiat currency caused the price of money to fall, the same phenomenon can be seen in this chart.  The velocity of money calculation is a straightforward ratio of the value of transactions divided by the supply of money available for those transactions.

In today’s economy, the ratio has two problems:  First, the underlying economy is disturbingly weak and getting worse.  That will mean that the numerator is shrinking, not rising as the Fed would hope.  The bigger problem is the denominator.  If we expect that the Fed is going to continue to create unlimited amounts of money as we do, the denominator is only going to grow exponentially.  A shrinking numerator and a massively increasing denominator mean that the velocity of money is destined to converge on zero.  If so, we will be at “pedal to the metal” toward economic oblivion.

Investors need to convert paper assets to real assets with a great sense of urgency.  Prices of precious metals and particularly shares in mining companies are sprinting ahead of traditional stocks and bonds.  Despite the lack of coverage by the traditional financial media, the HUI has outperformed the Dow Jones Industrial Index by a staggering 26% so far in 2014.

It could very well be that the gold suppression scheme is finally on the run in the face of huge demand for physical metals.  If a short-squeeze develops, we will see dramatic increases in prices for both metals and the miners.  This is only the beginning of the reversal.  Sentiment will follow, but at the present time still remains dismally low.  Institutional and individual ownership is virtually non-existent.  In the absence of raw financial repression, we should expect 2014 to be the year in which the great bull market in precious metals reasserts itself in dramatic fashion."

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/2/17_This_Will_Shock_The_Markets_%26_Send_Gold_Soaring_In_2014.html

Dan Ariely: Why Humans Are Hard-Wired To Create Asset Bubbles

"Renowned behavioral economist Dan Ariely explains why humans are biologically wired to make irrational decisions when money is involved. It's a case of our evolutionary wiring interfering with the decisions we face in a modern world very different from the one our ancestors adapted to.

For instance, he explains how one of the easiest phenomena to create in a lab are valuation "bubbles". Our vestigial herding instinct encourages us to imitate the actions of those around us (e.g. bidding for a particular asset), which then strengthens that signal for others (leading to even higher bidding), resulting in behavior not justified by the underlying fundamentals of reality (asset prices destined to crash).

In this podcast, Chris and Dan explore the human cognitive triggers that have led us to our third major bubble in 15 years (tech stocks, housing, credit) and why our natural programming often works against our best interests. In certain cases, like the banking sector, bad decision-making has become so ingrained in our institutions that Ariely thinks the "clean slate" approach is our best option should we have the courage to deploy it:

In very general brushstrokes I think that most bankers are in fact inherently decent people. We just put them in situation in which their conflict of interest is tremendously high and their social norms are incredibly dysfunctional.

When you hear bankers talking about their customers as Muppets, for example, they are forgetting who they are serving. They are hired by the rest of us to do a particular job; and they forget this. And then they have terrible conflicts of interest.

Imagine that I give you a world in which, if you can adopt a particular perspective on life, you could get $5 Million as a bonus. Wouldn’t you start believing that world? And then everybody around you is doing the same thing, and you have some justification for it by talking about financial market theory and so on. All of a sudden you could see how you could take good people and you could put them in this distorted way -- in the same way that we talked about how global warming is probably the perfect storm for inaction -- I think Wall Street is the perfect storm for allowing people to rationalize their own selfish motivations as if they are serving other people..."

at  http://www.zerohedge.com/news/2014-02-15/dan-ariely-why-humans-are-hard-wired-create-asset-bubbles