GOLD : we are going to have a Rally

"im Rogers : "There are huge shorts that have been built up in the precious metals space. So, it's overdue for a rally. We had a big drop in 2013. Everybody got negative, and everybody got short. Given this, we're going to have a rally," - in ET Now"

at http://www.jimrogersinvestments.com/2014/03/gold-we-are-going-to-have-rally.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+blogspot%2FWOHK+%28Jim+Rogers+Blog%29

West Controlling Markets To Keep Confidence From Collapsing

"Today a man who has been involved in the financial markets for 50 years spoke warned King World News readers that the West is controlling markets in order to keep confidence from collapsing.  He also discussed gold, and the dangerous situation facing China, Russia, and Ukraine.  Below is what John Embry had to say.

Embry:  “I’m focused on the price action of the gold market this morning.  Gold was reasonably firm overnight, and then the London traders reported for work and the trouble began as usual at 3 AM in the morning New York time.  Not surprisingly, they turned on the algorithms and the price of gold was driven down about $10...."

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/3/17_West_Controlling_Markets_To_Keep_Confidence_From_Collapsing.html

This Event Is Going To Shock People Around The World

"“I am focused the disparity between paper and physical gold.  I think these investigations by the German financial regulatory agency, BaFin, and the Financial Services Authority (FSA) in England will expose why gold behaves the way it does.

One has to pay attention to the weak economic performance.  There is a decent chance that the economy will continue to be soft and will expose the likelihood that the Fed will reverse thrust on tapering and ramp it up once again.  I don’t think that is priced in the market at all but I wouldn’t rule it out.

If you look at the economic releases, they are very weak.  The Wall Street Journal focused today on the weak job creation.  If you look at the number of jobs that haven’t been created based on hours worked, we’ve had a net loss of jobs over the last 12 months.”

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/3/17_This_Event_Is_Going_To_Shock_People_Around_The_World.html

Richard Russell - Fed To Stun The World With QE5

"With continued chaos and uncertainty in global markets, today KWN is publishing another incredibly important piece that was written by a 60-year market veteran.  The Godfather of newsletter writers, Richard Russell, warns that “gold is being outrageously manipulated,” as the Fed prepares to stun the world by opening up “the floodgates of liquidity” for “QE5.”  He also discussed Putin, stocks, the Great Recession, and China..."

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/3/18_Richard_Russell_-_Fed_To_Stun_The_World_With_QE5.html

How the Artificial Boom of 1914-1929 Caused the Great Depression

"by David Stockman

From David Stockman’s Contra Corner. Remarks to the Committee For The Republic, Washington DC, February 2014 (Part 3 in a 6-Part Series) Go to Part 1.

In this setting, Bubbles Ben 1.0  (New York Fed Governor Benjamin Strong) stormed in with a rescue plan that will sound familiar to contemporary ears. By means of his bond buying campaigns he sought to drive-down interest rates in New York relative to London, thereby encouraging British creditors to keep their money in higher yielding sterling rather than converting their claims to gold or dollars.

The British economy was thus given an option to keep rolling-over its debts and to continue living beyond its means. For a few years these proto-Keynesian “Lords of Finance” —- principally Ben Strong of the Fed and Montague Norman of the BOE—-managed to kick the can down the road.

But after the Credit Anstalt crisis in spring 1931, when creditors of shaky banks in central Europe demanded gold, England’s precarious mountain of sterling debts came into the cross-hairs.  In short order, the money printing scheme of Bubbles Ben 1.0 designed to keep the Brits in cheap interest rates and big debts came violently unwound.

In late September a weak British government defaulted on its gold exchange standard duty to convert sterling to gold, causing the French, Dutch and other central banks to absorb massive overnight losses. The global depression then to took another lurch downward.

Inventing  Bubble Finance : The Call Money Market Explosion Before 1929

But central bankers tamper with free market interest rates only at their peril—-so the domestic malinvestments and deformations which flowed from the monetary machinations of Bubbles Ben 1.0 were also monumental.

Owing to the splendid tax-cuts and budgetary surpluses of Secretary Andrew Mellon, the American economy was flush with cash, and due to the gold inflows from Europe the US banking system was extraordinarily liquid. The last thing that was needed in Roaring Twenties America was the cheap interest rates—-at 3 percent and under—that resulted from Strong’s meddling in the money markets..."

at http://bastiat.mises.org/2014/03/how-the-artificial-boom-of-1914-1929-caused-the-great-depression/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MisesBlog+%28Mises+Economics+Blog%29

Russia and the Birth of the Eurodollar Market

"Talk that Russia could be behind the bulk of the more than $100 bln drop in the Federal Reserve’s custody holdings for foreign central banks, in the week ending Wednesday has many observers scratching their heads. This would represent about eighty percent of the dollar holdings.

As we noted earlier, rather than selling the Treasuries that Russia simply transferred them from the Federal Reserve out of the US. The incentive would be the threat of sanctions following this week’s Crimean referendum.

There is precedent for this kind of behavior from Russia. Recall that the origins of the Eurodollar market. The Eurodollar market has nothing to do the European Economic and Monetary Union (EMU) or the euro itself. Rather the Eurodollar market refers to dollars outside the US, initially Europe.

In 1956, the US and Soviet Union opposed British and French (and Israeli) invasion of Egypt (Suez Crisis). The US threatened to sell British pounds and intensify the pressure it was already experiencing in maintaining it peg to the dollar under Bretton Woods. It also threatened to veto the UK ‘s request for a large IMF assistance package. Russia witnessed the US willingness to use its financial acumen to impose its will on its special ally.

At roughly the same time, a reformist government came to power in the Hungary and among other things tried to leave the Warsaw Pact. The Soviet Union invaded. Russia feared that the US would use its financial superiority against it in protest. In 1957, Russia-based Narodny Bank shifted dollars from the US and deposited them in its branch in London. Viola, the birth of the Eurodollar market.

There were other advantages of this offshore market for US dollars beyond the Soviet Union’s intentions. Those dollars were not subject to US interest rate cap or regulations. These dollars, as we know with the benefit of hindsight, became the basis for a new bank credit, and a critical part of international finance.

The logic now is that Russia is bracing for the next round of sanctions..."

at http://www.creditwritedowns.com/2014/03/russia-birth-eurodollar-market.html

Foreigners Sell A Record Amount, Over $100 Billion, Of Treasurys Held By The Fed In Past Week

"A month ago we reported that according to much delayed TIC data, China had just dumped the second-largest amount of US Treasurys in history. The problem, of course, with this data is that it is stale and very backward looking. For a much better, and up to date, indicator of what foreigners are doing with US Treasurys in near real time, the bond watchers keep track of a less known data series, called "Treasury Securities Held in Custody for Foreign Official and International Accounts" which as the name implies shows what foreigners are doing with their Treasury securities held in custody by the Fed on a weekly basis. So here it goes: in the just reported latest data, for the week ended March 12, Treasurys held in custody by the Fed dropped to $2.855 trillion: a drop of $104.5 billion. This was the biggest drop of Treasurys held by the Fed on record, i.e., foreigners were really busy selling.

This brings the total Treasury holdings in custody at the Fed to levels not seen since December 2012, a period during which the Fed alone has monetized well over $1 trillion in US paper.

So is this the proverbial beginning of foreign dumping of US paper? Could Russia simply have designated a different custodian of its holdings? No, because as of most recently it owned $139 billion in US paper, or well above the number "sold" and a custodial reallocation would mean all holdings are moved, not just a portion. For another view, here is what the bond experts at Stone McCarthy had to say:

We don't have a ready explanation for the plunge in custody account holdings. One thing that is striking about the drop is that the last several days was not a period of heavy market buzz about "central bank selling" of Treasuries, at least to the best of our knowledge. China and Japan are by far the largest holders of Treasuries, with holdings of $1.269 trillion and $1.183 trillion in holdings at the end of December, respectively. China's holdings are more skewed to central bank holdings. Selling of Treasuries would appear to be at odds with China's recent effort to depreciate its currency, although on March 5 and 6 there was a brief correction in that trend.

As for the timing:

... the Wednesday-to-Wednesday decline was much larger than the weekly average decline in Treasury holdings of $46.6 billion. That implies that the plunge in Treasuries occurred later in week rather than earlier.

Some further thoughts from SocGen:

Weekly data from the Fed for US Treasury securities held in custody on behalf of foreign institutions and central banks fell sharply over the past week and may offer a plausible explanation as to why the USD has been offered pretty much all week against its major counterparts. EUR/USD in particular has stayed strongly bid since last week’s council meeting (to the bemusement of the ECB) and touched a high of 1.3967 yesterday before easing back after the exchange rate comments from president Draghi. The reduced appetite for USTs and strong demand for EUR debt and equity securities underlines the difficulties the ECB is encountering to stop the strong EUR from reducing inflation expectations in the euro area.

Foreign holdings of US government securities held at the Fed dropped by a whopping $104.5bn in the week to Wednesday 12 March according to the data published overnight (see chart below). This marks the biggest single weekly fall on record and compares with just a $13.5bn drop the previous week and a 4-week average fall of $1.5bn. The previous largest fall came in mid-2013 (26 June, a week after the FOMC meeting) when holdings fell by $32.4bn. The selling over the last week coincides with the latest US employment statistics, a run of weak data from China and the escalation of the situation in Crimea and Ukraine.

Russia has threatened to respond with sanctions of its own should economic measures be imposed by the EU and the US after the referendum in Crimea this weekend. Russia currently holds $138.6bn of USTs (based on December data) and the country has been a net seller for a combined $11.3bn of USTs over the last two months for when data is available. China sold $47.8bn alone in December. The latest Treasury International Capital (TIC) data for January are only due next week so we won’t find out officially until May how much Russia’s US government debt holdings dropped in March.

So either China selling TSYs and buying EURs to make European import power stronger, if not so much its exports (much to Draghi's ongoing horror). Or Russia, which may be dumping USTs to support the ruble... Or dumping just because."

at http://www.zerohedge.com/news/2014-03-14/it-begins-past-week-foreigners-sell-record-amount-over-100-billion-treasurys-held-fe

Jim Rogers Conversation with Stefan Molyneux : The Crisis is Not Over!

"The Crisis is Not Over! A Conversation with Legendary Investor Jim Rogers

Stefan Molyneux speaks with legendary investor Jim Rogers about the future of the world economy, the coming economic shift and how to prepare for the future. Jim Rogers is an American businessman, investor and author. He is currently based in Singapore. Rogers is the Chairman of Rogers Holdings and Beeland Interests, Inc..."

at http://www.jimrogersinvestments.com/2014/03/jim-rogers-conversation-with-stefan.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+blogspot%2FWOHK+%28Jim+Rogers+Blog%29

Gold Market Set For Stunning $550 Surge & 46% Spike In Silver

"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 may now be set up for a stunning $550 surge and silver for a massive 46% spike.  Below are the key gold and silver charts that all KWN readers around the world need to see, along with Fitzpatrick’s comments.

Fitzpatrick comments and charts below: 

Gold:  

“Gold has traded above very good resistance in the $1,350 to $1,362 range:

$1,350: 55-week moving average

$1,353: Top of channel from the 2012 peak

$1,362: Peak of bounce seen in October 2013....

Continue reading the Tom Fitzpatrick piece below

A weekly close above this range would open up the way for a test of the pivotal double bottom neckline at $1,434.

A weekly close above this ($1,434) level would complete the double bottom and suggest extended gains towards $1,680 - $1,685.  Such a move would take us back above both the 200-week moving average at $1,493 and the horizontal resistance (previously support) from 2011/2012 at $1,523 - $1,527.

Such a move, if seen, would strongly suggest that the corrective low is in and that a re-test of the all-time highs at $1,921 and beyond is highly likely..."

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/3/14_Gold_Market_Set_For_Stunning_$550_Surge_%26_46_Spike_In_Silver.html

Is “Dr. Copper” Foreshadowing A Stock Market Crash Just Like It Did In 2008?

"Is the price of copper trying to tell us something?  Traditionally, "Dr. Copper" has been a very accurate indicator of where the global economy is heading next.  For example, back in2008 the price of copper dropped from nearly $4.00 to under $1.50 in just a matter of months.  And now it appears that another big decline in the price of copper is starting to happen.  So far this year, the price of copper has dropped from a high of $3.40 back in January to a price of $2.95 as I write this article, and many analysts are warning that this is just the beginning.  By itself, this should be quite alarming to investors, but as you will see below there are a whole host of other signs that a stock market crash may be rapidly approaching..."

at http://theeconomiccollapseblog.com/archives/is-dr-copper-foreshadowing-a-stock-market-crash-just-like-it-did-in-2008

Shale Oil and Gas : All Hype

"Q: What are your thoughts on developments in recent years that have unlocked shale oil and gas? Some have said the U.S. energy boom is the most important development in political economy in decades.

Jim Rogers: I would urge people to go out and see what’s happening in the field. Yes, it was all very exciting in the beginning. But now we’re finding out that those wells are very short-life wells. Production dropped by 40 to 60 percent in the first year, and the demand for rigs to drill in the shale fields is down 75 percent in the last couple of years. The demand for pumps is down 50 percent.

So it’s not as much fun as we’d hope it would be. In some countries such as Poland, people have given up their shale leases, because they’ve realized it’s just not so simple. I read all the hype, but again I’d urge people to go into the fields and see what’s actually happened, rather than reading what journalists hype.

Natural-gas prices have quadrupled since the bottom. They’re not quadrupling because this is the most important thing in several decades.- in IBTimes"

at http://www.jimrogersinvestments.com/2014/03/shale-oil-and-gas-all-hype.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+blogspot%2FWOHK+%28Jim+Rogers+Blog%29

Ron Paul and Jan Skyoles on Gold, Bitcoin and the Monetary System - See more at: http://ausbullion.blogspot.com.tr/2014/03/ron-paul-and-jan-skyoles-on-gold.html#sthash.KfWfdsh0.dpuf

"Ron talks to Jan Skoyles of The Real Asset Company about why gold is great for the international monetary system and how our whole concept of what money is and how we use money is rapidly changing..."

at: http://ausbullion.blogspot.com.tr/2014/03/ron-paul-and-jan-skyoles-on-gold.html#sthash.KfWfdsh0.dpuf

A Surprise That May Send The Gold Market Soaring This Week

"On the heels of a wild couple of weeks of trading in global markets, today Canadian legend John Ing spoke with King World News about a surprise that may send the gold market soaring this week.  Ing, who has been in the business for 43 years, also discussed the flight into gold around the world.  Below is what Ing had to say in his fascinating interview.

ng:  “Today gold is making a five-month high.  Year-to-date gold is up 12 percent and the gold stocks are up almost 30 percent.  The next target for gold should be the 65-week moving average at $1,410, but the next major line of resistance is in the $1,550 area...."

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/3/12_A_Surprise_That_May_Send_The_Gold_Market_Soaring_This_Week.html

4 Astonishing Charts Reveal The World Is Going Exponential

"As the world seems to hurtle from one crisis to another, 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 asks the question, is the world going exponential?  There are also four remarkable charts included in this outstanding piece.  Below is the KWN exclusive piece by Ronald-Peter Stoferle of Incrementum AG out of Liechtenstein.

There is an undeniable fact with significant consequences:  Today money is lent into existence; the outstanding interest for that very loan is not....

Therefore, ‘stability’ in a debt based monetary system requires new money to be continually loaned into existence, otherwise a shortage of currency to service the debt will occur.  This leads to an imperative need for:

►  Exponential Money Supply Growth

►  Exponential Credit/Debt Growth

►  Exponential Nominal GDP Growth (Accomplished through productivity increases and/or price inflation)

Leaving this exponential path feels like going cold turkey and lets us cry for our monetary drug dealers, begging to bring us back to the exponential credit expansion.  This becomes more and more relevant as the curve of the money supply/debt starts becoming steeper and ‘goes exponential.’

Why Do The The Following Charts Remind Us Of Exponential Functions?

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/3/12_4_Astonishing_Charts_Reveal_The_World_Is_Going_Exponential.html

 

 

 

at 

Here's How The Air Force Is Going To Shrink Over The Next Five Years

"The USAF plans to divest entire fleets, including the A-10 Thunderbolt II attack plane and U-2 Dragon Lady spy planes, in order to “focus on the multi-role aircraft that can deliver a variety of capabilities combatant commanders require.”

This means that the Air Force is going to shrink over the next five years as a result of the structural changes announced on March 10, following the President’s Budget announced on March 4.

The plan is going to axe some 500 aircraft, reshaping the Air Force as “a smaller and more capable force [...] that can defeat more technologically advanced adversaries” according to Secretary of Defense Chuck Hagel.

The reduction will affect squadrons based in 25 States and the District of Columbia; units based abroad will suffer only minor cuts so as to maintain a significant overseas presence. Nevertheless, Osan airbase in South Korea will lose its A-10s, while RAF Lakenheath, in the UK, will probably have to give away a whole squadron.

Over the next 5 years, along with the about 340 A-10s and 33 U-2s, the “adjustment” will cut about 70 F-15Cs, 119 MQ-1 drones, 6 E-8 Joint Stars planes, 7 E-3 AWACS, and 7 EC-130 Compass Call aircraft. These cut aircraft will be partially replaced by some upgraded F-16s, made available as they are replaced by F-35s, and 36 MQ-9 Reaper drones."

at http://theaviationist.com/2014/03/12/fy15-adjustment-plan/#ixzz2vmOy7qJg

CHART OF THE DAY: Gundlach Warns NYSE Margin Debt Is In 'The Scary Zone'

"Traders are borrowing more than ever to leverage up their bets on the stock market.

Some fear that this is a sign of a bubbly stock market that's doomed to crash.

Others argue it's a more benign coincident indicator and at least partially reflective of the increasing presence of hedge funds.

"It is in the scary zone," said DoubleLine Funds' Jeffrey Gundlach during a webcast on Tuesday. "If and when it hooks over, that’s when you’re likely to see a double-digit decline in market indexes."

While he's not predicting imminent doom for stocks, he encourages us to be on the look out for a reversal.

Gundlach has previously characterized margin debt as both a cause and effect of the market rally.

Margin debt could very well continue to rise with the stock market. But it has a nasty way of adding to the downward momentum when stocks sell.

Doug Short

at http://www.businessinsider.com/gundlach-warns-about-margin-debt-2014-3#ixzz2vmOcQy2w

The Gold Market May Be Setting Up To Crush The Shorts

"On the heels of another surge in gold and silver, today top Citi analyst Tom Fitzpatrick sent King World News an incredibly important chart which shows that gold may now be setting up to crush the shorts with a major upside advance.  Below is the key gold chart that all KWN readers around the world need to see.

Here is what Fitzpatrick had to say: Gold:  “Gold continues to outperform as it makes a higher high for the trend.  A close above $1,362 would lend further support to the bullish trend and price action...."

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/3/12_The_Gold_Market_May_Be_Setting_Up_To_Crush_The_Shorts.html

We Are In FAR Worse Shape Than We Were Just Prior To The Last Great Financial Crisis

"None of the problems that caused the last financial crisis have been fixed.  In fact, they have all gotten worse.  The total amount of debt in the world has grown by more than 40 percent since 2007, the too big to fail banks have gotten 37 percent larger, and the colossal derivatives bubble has spiraled so far out of control that the only thing left to do is to watch the spectacular crash landing that is inevitably coming.  Unfortunately, most people do not know the information that I am about to share with you in this article.  Most people just assume that the politicians and the central banks have fixed the issues that caused the last great financial crisis.  But the truth is that we are in far worse shape than we were back then.  When this financial bubble finally bursts, the devastation that we will witness is likely to be absolutely catastrophic..."

at http://theeconomiccollapseblog.com/archives/we-are-in-far-worse-shape-than-we-were-just-prior-to-the-last-great-financial-crisis

SETH KLARMAN: This Is A 'Truman Show' Market Where Nothing Is Real

"Value investor Seth Klarman, the founder of Boston-based hedge fund Baupost Group, thinks this market looks like the 1998 Jim Carrey movie "The Truman Show."

In the film, Carrey's Truman Burbank lives a peaceful suburban life, but his world collapses upon realizing he's the star character in a massively popular reality show.

His entire life — from his father's death to convenient product placements — has been orchestrated by the show's creator, Christof (played by Ed Harris).

"As Truman starts to unravel the truth, his anger erupts and chaos ensues," Klarman writes to clients in his latest letter.

In Klarman's telling, Ben Bernanke and Mario Draghi play the "creators" who have "manufactured a similarly idyllic, if artificial, environment for today’s investors." Check out an excerpt from the rather bearish letter (via ZeroHedge):

But there is one fly in the ointment: in Bernanke’s production, all the Trumans – the economists, fund managers, traders, market pundits – know at some level that the environment in which they operate is not what it seems on the surface. The Fed and the Treasury openly discuss the aim of their policies: to manipulate financial markets higher and to generate reported economic “growth” and a “wealth effect.” Inside the giant Plexiglas dome of modern capital markets, just about everyone is happy, the few doubters are mocked and jeered, bad news is increasingly ignored, and markets go asymptotic. The longer QE continues, the more bloated the Fed balance sheet and the greater the risk from any unwinding. The artificiality of today’s markets is pure Truman Show. According to the Wall Street Journal (12/20/13), the Federal Reserve purchased about 90% of all the eligible mortgage bonds issued in November.

...Every Truman under Bernanke’s dome knows the environment is phony. But the zeitgeist so so damn pleasant, the days so resplendent, the mood so euphoric, the returns so irresistible, that no one wants it to end, and no one wants to exit the dome until they’re sure everyone else won’t stay on forever.

A marketplace of knowing Trumans seems even more unstable than the movie sound stage character slowly awakening to reality. Can the clued-in Trumans be counted on to maintain their complicity or will they go off-script? Will Fed actions reliably be met with the desired response? Will the program remain popular? Could “The Truman Show” be running out of material? After all, even Seinfeld ended.

"When the show ends, those self-deluded Trumans will be mad as hell and probably broke as well," Klarman concludes. "Hopefully there will be no sequels."

at http://www.businessinsider.com/seth-klarman-truman-show-2014-3#ixzz2vaio1VDk

Global Debt Exceeds $100 Trillion

"Bloomberg reports:

The amount of debt globally has soared more than 40 percent to $100 trillion since the first signs of the financial crisis as governments borrowed to pull their economies out of recession and companies took advantage of record low interest rates, according to the Bank for International Settlements.

Has all that money gone to stimulate the economy?

Nope …

Virtually none of it has.  Instead, governments chose big banks over their own people.  The huge amount of debt was racked up to bail out the big banks.

Central banks have been engaged in the the “greatest backdoor bailout of all time.”

And yet – as Bloomberg notes – everyone else gets austerity:

Concerned that high debt loads would cause international investors to avoid their markets, many nations resorted to austerity measures of reduced spending and increased taxes, reining in their economies in the process as they tried to restore the fiscal order they abandoned to fight the worldwide recession.

In essence, the elite financial players are manipulating the game so that they get the stimulus … and the little guy gets the austerity.

Indeed, the IMF is recommending “financial repression” of the average person, to plug the giant debt holes created by the bank bailouts.

And – whether or not you like Keynesian stimulus (most ZH readers don't!) – you should know that governments never really engaged in meaningful stimulus.

But didn’t we have to do this to save the economy after Lehman crashed?

Nope … top economists say we should instead of done what Iceland did:  let the big banks go bust, and use resources instead to help the people.

Proof can be found in the fact that throwing money at the big banks has led to a  “jobless recovery” – apermanent destruction of jobs – which is a redistribution of wealth from the little guy to the big boys. (Andsee this.)

Indeed, everything the government has been doing since 2008 has made unemployment much worse. And here and here."

at http://www.zerohedge.com/contributed/2014-03-10/global-debt-exceeds-100-trillion