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Monthly Archives: December 2008

A Golden Opportunity For 2009

31 Wednesday Dec 2008

Posted by jschulmansr in Bollinger Bands, capitalism, commodities, Copper, Currency and Currencies, deflation, Finance, Fundamental Analysis, gold, hard assets, How To Invest, How To Make Money, inflation, Investing, investments, Latest News, Make Money Investing, Markets, mining stocks, Moving Averages, oil, precious metals, silver, small caps, Stocks, Technical Analysis, Today, U.S. Dollar

≈ Comments Off on A Golden Opportunity For 2009

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agricultural commodities, alternate energy, Austrian school, banking crisis, banks, bear market, Bollinger Bands, bull market, capitalism, central banks, China, Comex, commodities, communism, Copper, Currencies, currency, deflation, depression, diamonds, dollar denominated, dollar denominated investments, economic, economic trends, economy, financial, Forex, futures, futures markets, gold, gold miners, hard assets, heating oil, India, inflation, investments, Keith Fitz-Gerald, market crash, Markets, mining companies, Moving Averages, natural gas, oil, palladium, Peter Schiff, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, protection, rare earth metals, recession, risk, run on banks, safety, Saudi Arabia, Sean Rakhimov, silver, silver miners, socialism, sovereign, spot, spot price, stagflation, Technical Analysis, timber, U.S. Dollar, volatility, warrants, Water

2008 What a Year! So what does 2009 have in store? In today’s post we explore a “Golden Opportunity” Imagine re couping your 2008 losses and more! Everything is lining up in place for our “Golden Opportunity”, read on and find out how you can benefit in 2009- jschulmansr

Portfolio Advice for 2009: Stick to Gold, Stay Away From Stocks- Seeking Alpha

Source: Sovereign Society- Eric Roseman

Records were broken in 2008 – money-losing records from an investor’s perspective.

U.S. stocks will record their worst calendar year since 1931. As measured by the S&P 500 Index, the broader market tanked 40% this year while the Dow Jones Industrials fell 36%.

U.S. stocks are already “dead money” since 1996. They’ve shown no net gain at all – including dividends. The ongoing market environment is eerily similar to another period of dismal returns – from 1966 to 1982. During those 16 years, the Dow and S&P 500 Index posted zero profits. Adjusted for soaring inflation, the markets actually recorded a loss.

Global equities as measured by the MSCI World Index posted its worst year since inception in 1969. International equities fared even worse with European and Japanese stocks down more than 45% and the MSCI Emerging Markets Index clobbered – down 53% in 2008.

World Markets Got Trashed in 2008

Gold Stocks and Oil Chart

For stocks, the ongoing bear market has resulted in record mutual fund outflows as investors continue to dump their holdings and run for cover into money market funds.

Unfortunately, money market funds are now paying barely any yield at all since the Fed slashed interest rates to effectively 0% on December 16.

Only Treasury bonds, European and Japanese government bonds yielded a profit for investors in a wickedly harsh year for investors. As a currency investor, naturally you already know that the Japanese yen was also a winner against the dollar and euro as the “carry-trade” came to a crushing halt.

So Much for “Diversification”

With the exception of super-safe and low yielding U.S. Treasury bonds, yen and gold, the entire gamut of assets from stocks to non-Treasury bonds all plummeted in 2008.

Commodities, certain currencies, fine art and hedge funds all succumbed to brutal price declines. Overall, 2008 was the first losing year for U.S. and global stocks since 2002 and the worst period to be invested in financial and hard assets in more than 75 years.

Stop-losses rang out like pinball machines in 2008. Diversification across sectors, industries, countries and currencies proved futile. Almost everything was pummeled. By October 10, a panic gripped world markets as the threat of systemic collapse threatened the viability of the banking system.

Chaos to the Rescue

In late 2007, I introduced the TSI Chaos Portfolio to my Sovereign Society readers. It’s a U.S.-based portfolio of six equally-weighted investments, including short-term Treasury bonds, gold, Japanese yen and reverse-index funds that bet against the S&P 500 Index. Recently I added a seventh safe-haven – short-term German government bonds.

This cost-effective strategy dominated my recommendations in 2008 rising more than 17%, including dividends.

For growth investors, hedging your market exposure is vital in a secular bear market. I continue to like the TSI Chaos Portfolio in 2009 even though the stock market has probably suffered the bulk of its declines at this point.

Volatility will remain rampant in an uncertain economic environment marked by growing consumer credit woes, massive government bond issuance to support gargantuan fiscal spending plans and weak corporate earnings. Investors must hold downside market protection.

Short Most Commodities, But Stock Up on Gold/Silver

Starting in October 2007, I recommended my Commodity Trend Alert (CTA) subscribers begin to bet against oil and gas stocks as a way to hedge against the energy sector. At the time, oil prices were racing to US$100 a barrel and the oil stocks were in the midst of a multi-year bull market. We all know how that story fared in 2008.

Since peaking in July, the benchmark CRB Index has crashed more than 50% as the entire commodities complex continues to aggressively deflate in a rapidly slowing global economy.

To protect our natural resource exposure in CTA, I immediately issued a series of reverse-index purchases betting against commodities. We were most successful betting against industrial metals or base metals, as copper and other metals collapsed. That position, still open, has gained a cumulative 80% since August 2008.

And since September, CTA has been riding a broad commodity index to the basement as part of our reverse index strategy – up more than 60%. We also maintain hedges against gold, oil, gas and long-term Treasury bonds.

Gold has also been a strong performer compared to most other assets in 2008. Significantly, gold is the only asset that is completely outside the credit system and the only asset that has no liability.

In 2008, spot gold prices gained a modest 1% – not much in absolute terms but certainly impressive compared to other plunging assets. Silver, more of an industrial metal and therefore more vulnerable to broad economic trends, declined 18%.

Looking ahead to 2009, growth investors will only reluctantly return to stocks. Losses have been massive for investors since late 2007 as mutual fund redemptions hit records.

Stocks might indeed offer better values compared to mid-2007 after plummeting more than 40% from their highs. But domestic consumption in the United States, Japan and Europe is depressed and likely to remain under threat as unemployment rises and savings rates begin to rise again.

The correlation between a higher savings rate and corporate earnings is negative. It’s difficult to be bullish on earnings when the world’s largest economy will remain mired in a period of sluggish growth, debt retrenchment and rising job losses. The same is true for Japan and Germany – the second and third largest economies, respectively.

This is not the time to be aggressively buying stocks. Odds are prices will get cheaper again following any bear market rally. That’s certainly been the case every time stocks have rallied off their lows since October 2007.

Instead, make sure your portfolio includes gold, portfolio hedging strategies and income from high quality investment-grade corporate bonds in 2009.

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Predictions For 2009: Who Will Be the Winners and Losers? – Seeking Alpha

Source: Tony Daitorio of Oxbury Publishing

Visit: Investing Answers

Visit: Bourbon and Bayonets

The year 2008 is coming to a close. Good riddance! 2008 will be remembered as the year that the chickens came home to roost for America’s brand of “elitist capitalism” and will long be remembered as the year where the greed of so few penalized so many.

In 2008, the vast majority of pension plans and retirement accounts incurred losses of one quarter to one half of their value because of the greed of Wall Street. To me what is most sad is that Wall Street’s greed not only devastated the savings of a generation of Americans but has also shackled future generations of Americans with the bondage of enormous amounts of debt.

Echoes of History

Human greed and financial bubbles are, of course, nothing new. History has many examples of manias and bubbles such as the South Sea Bubble. To me, most striking is the parallel between today’s hedge funds and the investment trusts of the 1920s.

Investment trusts used leverage as do hedge funds. Investment trusts were able to get away with revealing little about their portfolios because the equity bubble of the 1920s conferred an aura of omniscience on their managers. Sound familiar? Their managers, by the way, were also very highly compensated.

Reputations inflated in the bubble of the 1920s promptly evaporated in the 1929 crash and the 1930s bear market. The 1930s bear market also exposed numerous outright swindles by Wall Street. Some of the swindles were all too reminiscent of Bernie Mad(e)off and his Ponzi scheme. I believe that, as in the 1930s, many lofty Wall Street reputations will be washed away.

Recently, the Financial Times had an interesting article about 19th century Victorian England and its literature. Financial crises were part of everyday life at that time, which greatly affected their literature. The article spoke of authors such as Charles Dickens, Anthony Trollope, Elizabeth Gaskell, and William Makepeace Thackeray.

A character in Charles Dickens’ Little Dorrit – Mr. Merdle – whose schemes initially offered his investors huge returns before wiping them out definitely reminds me of Bernie Merdle, I mean Madoff. The literature of those times definitely echoes in our times.

A Penny for My Thoughts?

Obviously, at the end of last year no one predicted the dire straits that we would face in 2008. This just reinforces in my mind one thought. Why does anyone still watch CNBC and listen to what any of those shills has to say? The only person on CNBC that has some brains is my paisano – Rick Santelli. The rest of the people on CNBC are absolutely worthless.

Since at the start of a new year everyone seems to like to make predictions, I thought I would throw my two cents out there for readers to ponder. Please contact Oxbury Publishing for your comments on my predictions or feel free to make your own predictions about the upcoming new year.

The Biggest Loser(s)

Picking the biggest losers for 2009 is relatively easy. You simply find the assets that have the most fat. I believe that in 2009 we will actually have two biggest losers. Which asset classes?

As I said – where the fat is. The fat is where the Wall Street money managers have run to hide and cower in fear for their jobs. That is, of course, the US Treasury Market! As I stated in my previous article – the HMS Treasuries – the “pirates” of Wall Street have loaded all of their ill-gotten booty onto the ship called the HMS Treasuries. I firmly believe that this ship will follow its predecessor, the HMS Titanic, into history and sink below the waves. Remember – both ships were considered to be ultra-safe and “unsinkable”.

A close second ‘biggest loser’ will be the US dollar. The US dollar has been strong in 2008 because of the perverse reaction of Wall Street money managers. An analogy I used in previous articles was that a nuclear blast went off right in the middle of Wall Street.

Even a rudimentary knowledge of science would dictate that you get as far away as possible from the blast. Yet, Wall Street money managers ran full speed toward the nuclear blast – nobody said that Wall Street money managers were smart. Most of them sold all of their assets overseas and moved the assets into dollars.

I believe that this move will prove to be “radioactive” in 2009, as overseas investors seem to be waking up to the fact that the US will need many trillions of dollars to bail out the US economy. Overseas investors may not sell the US dollar outright, but they will not be anxious to add to their positions.

Predictions

My first prediction is that in 2009, ‘bombs’ will continue to go off up and down Wall Street. I predict that the Bernie Madoff $50 billion Ponzi scheme will be just the first of many such major swindles that will be revealed on Wall Street.

I predict that the government will be forced to inject many more trillions of dollars into the black hole laughingly called bank balance sheets, inflating our government’s deficit to levels undreamed of only a few years ago.

However, I also predict that the amount of money sunk into banks will be miniscule in comparison to the amount of money that will be created out of thin air by the Federal Reserve in 2009. This money creation will puncture the balloon of the deflationists.

In astronomy, when talking about the distance between stars, astronomers don’t measure the distance in trillions of miles. Astronomers use light-years as a convenient measure of distance. So instead of trillions of dollars, perhaps some similar measuring stick will be adopted as a measure of how fast the Federal Reserve will be create funny money.

I can hear it now – “yes, in the last light-second the Fed just created $10 trillion of funny money”. Instead of the Big Bang Theory, perhaps there will be the Fed’s Big Buck Theory. This theory will describe how out of deflationary nothingness, the Federal Reserve created a rapidly expanding inflationary economic universe.

Winners?

Will there be any winners in 2009? I guess I have to predict some winners, huh? Which asset classes?

I am looking at the asset classes most beaten down by the forced liquidations of hedge funds and other Wall Street fools.

One such asset class is corporate bonds. Corporate bonds are priced right now by the Wall Street numbskulls for conditions to become worse than the 1930s and a 25% default rate. I predict that corporate bonds will have a very good year.

Another asset that has been sold off by the Wall Street numbskulls who have bought fully into the deflation myth are TIPS or Treasury Inflation Protected Securities. When the Fed’s Big Buck Theory becomes apparent, I predict that TIPS will be a huge winner.

I also predict that most commodities will stage a decent comeback. I believe that gold will have a decent year and re-visit the $1000 per ounce level. I also believe that oil will rebound to a more fundamentally sound price of between $71 and $87 per barrel.

I also predict that the best of bad equity markets will be in the countries that actually have cash and/or assets and do not have to borrow enormous amounts of money. Sovereign debt will become two words that are not spoken in mixed company. I don’t believe it’s a wise economic policy for a nation to rely on the kindness of strangers. Examples of the “better-off” countries would be China and Brazil.

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Will the New GCC Single Currency Include Gold? – Seeking Alpha

Source: Peter Cooper of Arabian Money.Net

Gulf Cooperation Council leaders yesterday concluded their 29th annual summit meeting in Muscat, Oman with a final approval for the creation of a single currency for the six-nation economic bloc, still targeted for 2010.

Saudi Arabia is the largest economy in the GCC and boasts substantial gold reserves. But whether gold will be included in the currency basket has not yet been decided.

Golden opportunity

GCC assistant secretary-general Mohammad Al Mazroui told Gulf News: ‘We first have to decide on the location of the Central Bank, then the Central Bank and Monetary Council will have to decide on the gold reserves for the Central Bank’.

The creation of the GCC single currency – likely to be known as the Khaleeji which means Gulf in Arabic – is a major gold event for two reasons.

First, the breaking of their dollar pegs by the Gulf Arab nations is clearly dollar negative. Secondly, any inclusion of gold either as a part of the monetary basket, or in the reserves of the new GCC Central Bank will create additional demand for the precious metal.

2009 deadline

The project is gathering pace, and no lesser a figure than Saudi Arabia’s King Abdullah has directed that GCC economic integration committees speed up their work and complete the whole exercise by September 2009.

It is only a couple of months since a group of Saudi businessmen allegedly bought $3.5 billion worth of gold, believed to be the largest ever single transaction for the precious metal. Perhaps in 2009 it will be gold rather than local currencies which become of interest to speculators about monetary reform in the GCC.

Gulf countries are keen to break away from the link with the US dollar because it ties them to inappropriate monetary policies that exaggerate the boom-to-bust cycle in their economies.

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Don’t Miss The Coming Gold Bull- Seeking Alpha

By: Naufai Sanaullah of Dorm Room Derivatives

With the massive monetary expansion experienced in recent months and the promise for unprecedented levels of money and credit supply increase in coming months, the United States Federal Reserve looks on paper to be sending America straight into hyperinflation. Germany’s post-World War I Weimar Republic, post-World War II Hungary, 2001 Argentina, and present day Zimbabwe are all analogous examples of massive debt monetization, which all led to hyperinflationary disaster. Never before has the entire world’s economy been linked to one nation’s, however, as is the case today with the United States.

In a case of economic mutually assured destruction, foreign creditor nations and their central banks can’t afford to spark a run on the US Dollar, because it would kill their own export-based economies, as well as devalue their debt repayments and foreign exchange reserves. But the United States has been financing consumption through debt for decades and has resorted to monetary expansion to finance its debt and deficit spending, which is only going to increase with Barack Obama’s infrastructure and social programs. The Troubled Assets Relief Program (TARP) itself amounts to $700B, all of which will essentially be “printed.” Foreign demand for US debt is all but gone, as creditor nations are now attempting to unwind their USD positions. Huge creditor nations like China and Iran were net sellers of US Treasuries in recent months, attesting to the weakening of the American debt bubble. So where’s all this excess liquidity go?

The answer is gold, and it is the only way to prevent the hyperinflationary scenarios referenced above from materializing in the United States.

The Fed has been on a money printing binge of unprecedented proportions, but has been able to thus far “trap” the excess liquidity from reaching the consumer level, which is what causes price inflation. It started a massive foreign currency sale this summer through the Exchange Stabilization Fund (ESF) that led to a supply increase of Euros and suppression of dollar usage. It has been liquifying troubled banks by issuing them T-bills financed through monetization in exchange for toxic assets by utilizing reverse repurchase agreements. And it has used the recent deleveraging and commodity collapse (partially caused by credit defaults in many of the overleveraged institutions that were supporting the commodity bull) to supply the temporary demand for US Dollars and feeding its own foreign exchange reserves.

But the excess liquidity thus far is trapped in time-sensitive and manipulated instruments now, and without a demand for American debt, it has to go somewhere. As T-bills expire and the stock market descends further, actual currency is going to be released out of sequestration into the economy. The Fed cannot allow the market to breach below its November lows, unless it wants widespread insolvency in insurers and banks, which are legally required to halt operations in the event of insolvency. I’ve heard estimates of 7500 and 8000 in the Dow as being minimum support levels that, if broken for an extended time, would lead to economic collapse in America as financials would all go under. To prevent this and to finance Obama’s deficit spending, actual dollars will have to be injected into the system and they will be.

Weakness in the dollar causes strength in gold, which is something the Fed (through America’s banks) has been suppressing for years. COMEX shorts dominate this suppression of gold prices, but this act will be discontinued to prevent economic collapse. Allowing gold’s price to rise to current fair levels (and then rise further to represent gold’s rising fundamentals) will soak up much of the excess liquidity, preventing hyperinflationary price increases in consumer goods. Gold reached backwardation this month, signifying the big gold market manipulators are abandoning their short positions.

Ben Bernanke is a proponent of dollar devaluation against gold and is a staunch advocate of Frank D. Roosevelt’s decision to do so in 1934 during the Great Depression. Dollar devaluation is one of the government’s most prized tools, as it allows debts to be paid back in devalued nominal terms, transferring risk and purchasing power destruction to American taxpayers, who have no clue what is going on. Inflation is a tax on the people and with a fiat currency, a power-limitless Fed can (and has) tax the hell out of the American people.

The dollar, and fiat currency as a whole, faces collapse now, however, as the artificial wealth created and used in the past few decades is now showing its nature as being just that– artificial. The global monetary system will have to return to some sort of precious metal backing, directly or indirectly, and surging gold prices is essential for this to occur.

Rising gold prices represents the excess liquidity being soaked up and also causes nominal equity values to rise without dramatic rises in consumer goods. Gold has little utility outside of store of value, which is why its price hasn’t collapsed at nearly the same rate other commodities, like oil and natural gas, have. As crude and steel suffered demand destruction from consumers losing wealth quickly, gold was barely touched at all and in fact probably would have shown even more strength hadn’t it been for the aforementioned manipulations of the Fed and the global deleveraging of financial institutions.

Creditor nations like China and Iran are buying as much gold as is possible without dramatically disturbing prices, and Iran has said it wants to convert the majority of its foreign exchange reserves into bullion. Gold-buying sentiment is getting stronger as the massive seigniorage of the Fed, and with gold shorts being abandoned by the Fed, the huge demand is finally going to surface into price expansion.

Technically, gold appears poised to break out of its countertrend down move in its primary bull, leading to much higher prices soon. It broke out of its 50DMA on strong volume recently and is approaching a 200DMA breakout. With backwardation occuring this month, all indicators point to gold surging in the coming months.

Gold and gold miner stocks are also looking quite bullish. I recommend Royal Gold (RGLD), which recently broke out of a great long-term base, as well as El Dorado Gold (EGO), Goldcorp (GG), Iamgold Corp (IAG), Barrick Gold (ABX), Randgold Resources (GOLD), Jaguar Mining (JAG), Anglogold Ashanti (AU), Agnico-Eagle Mines (AEM), and Newpont Mining (NEM) for the coming year. Also, look into buying the Ultrashort 30-year Treasury Bond ETF (TBT) as the US debt bubble collapses and debt monetization starts to show up in the Fed’s balance sheets. I do suggest buying lots of bullion, however, as stock market returns are in nominal dollar-denominated terms.

The American total credit market debt to GDP ratio is at unprecedented highs, well above 350%, and this with ridiculously manipulated inflation numbers artificially deflated through hedonics. The government deficit could top $2 trillion next year. And the Fed is going to print money to pay for it all. The only way to prevent hyperinflation is to return to some sold of hard asset-backed monetary system and to allow gold’s price to rise dramatically.

My prediction: gold breaks $2000/oz in 2009 and $10,000/oz by 2012.

Disclosure: Long gold bullion; no positions in stocks.

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Gold Bugs Have Fed to Thank for Recent Rally

Source: Monday Morning

By Don Miller

The currency markets reaction to the Federal Reserve’s recent interest rate cuts has ignited a rally in gold, as investors weigh the benefits of owning the yellow metal versus U.S. Treasuries and the dollar.

As a result, gold has started to shine again as a stable source of value at a time when the dollar and other commodities – like oil and copper – have fallen hard. The spot price of gold has climbed above $870 an ounce on the New York Mercantile Exchange, up about 20% from its October lows.

Gold has been on roller coaster ride in 2008, moving from its all time high of $1035 in March, to as low as $681 an ounce. Some of that decline occurred during the recent stock market plunge. Many investors were forced to liquidate profitable gold positions in order to raise money to cover their paper losses.

Its decline was then accelerated by the recent onslaught of financial bailouts, as many investors held a preference for liquidity and safety in the form of cash holdings guaranteed by the U.S. government.  That was reflected in the skyrocketing prices of government bonds and investments in government-backed banks, which also lowered yields.
But with the Fed’s recent decision to cut its target interest rate to a range of 0% to 0.25%, the dollar has suffered a significant decline. Suddenly, foreign investors who were scooping up dollars have cut back on their flight to safety, knocking the dollar index (NYBOT: DX) down 10% in the last month.  The index reflects the dollar’s value against the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona, and Swiss Franc.

The Fed’s interest rate cut may also have given gold a comparative boost in the eyes of investors. Gold, which never pays interest, suddenly doesn’t look so bad when compared to T-bills, which also are paying zero interest lately.

Volatility has risen this year compared to previous years, and the last few months have been the most volatile of all – an indication of investor ambivalence. But any uncertainty about the increasing price of gold may have been waylaid by the Fed’s recent rate cut and its dampening effect on the dollar and Treasuries.

Consequently, don’t expect this rally to be short-lived. As we pointed out in our 2009 Outlook Report on Gold, the fundamentals in the market hold the promise of more gains ahead.

It appears unlikely central bankers around the world will stop stimulating economies, printing money and doing whatever it takes until growth and confidence are restored – even if the cost is rampant inflation.

Consider these wild card inflation indicators that Money Morning Contributing Editor Martin Hutchinson believes will carry gold prices to $1,500 an ounce by the end of 2009:

  • Over $7 trillion of freshly minted U.S. dollars are now in circulation with the aim of saving the global financial system.
  • The incoming Obama administration has promised another $1 trillion or so stimulus package is on the way.
  • It’s likely the Fed’s interest rate cuts will soon be followed by central banks around the world.

These economic stimuli are designed to do one thing – get the consumer spending again. 

The bailout of the banks was the first step, but the banks are still keeping a tight rein on credit. Now the government is trying to get easily available, cheap money back into the hands of the consumer by running the printing presses around the clock.

“The government is pumping money in so many banks, and that money has to come out somewhere,” said Hutchinson.

Some of that money will “come out” into the economy in the form of higher stock prices. That will make consumers wealthier, and could give them more confidence in the economy. More confidence means more spending. As that happens, prices for goods should begin ticking upward, giving another booster shot to gold prices.

For instance some of that money is already going into gold bars and coins. In fact, the U.S. Mint was forced to suspend sales of the popular American Eagle and Buffalo gold coins for extended periods twice in the last year. The mint was unable to secure enough gold blanks from suppliers to match demand.  

“I’ve never seen a case where demand was so high and supply was so short,” Chicago coin dealer Harlan Berk told the Associated Press. 

With massive amounts of capital floating around, the time it takes to re-inflate the global economy will be far shorter than most analysts expect. Governments fear deflation more than anything.  It appears they will only fight inflation when they are assured they have won the first battle, which is growth at any cost.

When inflation kicks in, the dollar’s buying power will suffer long-term.  In fact, we expect a decline in all the world’s paper money, over time.  Historically, investors in gold have prospered during periods of weakening fiat currencies.

That leaves gold as a bright light in the investment world, making it an odds-on favorite to open a new leg of a long-term uptrend
. 
News and Related Story Links:

  • Fortis Metals:
    Fortis Metals Monthly – December 2008
  • Associated Press:
    Woes on Wall Street coincide with gold coin rush
  • Money Morning:
    Five Ways to Play Gold’s Rebound to $1,500 an Ounce

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Warning! Info The Central Banks and the IMF Does Not Want You To Know

30 Tuesday Dec 2008

Posted by jschulmansr in Bollinger Bands, capitalism, commodities, Copper, Currency and Currencies, deflation, Finance, Fundamental Analysis, gold, hard assets, inflation, Investing, investments, Latest News, Markets, mining stocks, oil, precious metals, silver, small caps, Stocks, Technical Analysis, Today, U.S. Dollar, Uncategorized

≈ Comments Off on Warning! Info The Central Banks and the IMF Does Not Want You To Know

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agricultural commodities, alternate energy, Austrian school, banking crisis, banks, bear market, Bollinger Bands, bull market, capitalism, central banks, China, Comex, commodities, communism, Copper, Currencies, currency, deflation, depression, diamonds, dollar denominated, dollar denominated investments, economic, economic trends, economy, financial, Forex, futures, futures markets, gold, gold miners, hard assets, heating oil, India, inflation, investments, Keith Fitz-Gerald, Marc Faber, market crash, Markets, mining companies, Moving Averages, natural gas, oil, palladium, Peter Schiff, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, protection, rare earth metals, recession, risk, run on banks, safety, Saudi Arabia, Sean Rakhimov, silver, silver miners, socialism, sovereign, spot, spot price, stagflation, Technical Analysis, timber, U.S. Dollar, volatility, warrants, Water

Warning! Today’s post includes information the Central Banks and The IMF DO NOT Want you to Know! New Peter Schiff on Gold and more… If everyone would start taking delivery on their Gold and Silver Contracts we could create the “rumored” Short Squeeze since there s not enough physical Gold and Silver available to cover all of the Open Short Contracts; and at the same time sustain new buying. The same thing would also apply to taking delivery of Stock Certs in the Precious Metals Mining Companies. Such actions would create massive buying and become a self fulfillingprophecy unto itself. Enjoy! – jschulmansr

President of Euro Pacific Capital On Gold and the Dollar – Peter Schiff–Seeking Alpha

Source: Hard Assests Investor

Mike Norman, HardAssetsInvestor.com (Norman): Well, he’s back. Mr. Doom and Gloom is here … Peter Schiff, president of Euro Pacific Capital and author of the new book just out, “Bull Moves in Bear Markets.”

Peter Schiff, president of Euro Pacific Capital (Schiff): “The Little Book …”

Norman: “The Little Book …”; it’s in The Little Book Series. Well look … the last time you were here, things were kind of going your way, but it looks like things have turned upside down.


All kidding aside, I know your big thing over the last seven or eight years has been gold. We’re very supportive of gold on this show; we think that probably people should have some gold as part of their overall portfolio mix. But let’s just look at what happened.

Several weeks ago, the U.S. stock market had its worst week in history … even going back to the 1930s … worst week in history. I saw a breakdown of various assets – all assets really – stocks, bonds, gold, commodities, oil. Gold was at the bottom of the list. The top-performing asset, and something that you hate, was the U.S dollar.

So how do you explain that? If we are going through the worst economic and financial crisis in history – precisely what gold is supposed to protect against – why would it perform so bad?

Schiff: Well, I think it will perform very well; you got to give it a little bit more time.

Norman: More time or more decimation?

Schiff: No, what’s happening right now, Mike, is just de-leveraging, and so gold is going down for the same reason a lot of stocks are going down, a lot of commodities are going down. There’s a lot of leverage in this system, there’s a lot of margin calls, a lot of liquidation; a lot of people are having to sell whatever they own to pay off their debts.

Norman: But look at where the money is going … the money is going into U.S. sovereigns, Treasuries … it’s going into the U.S. dollar.

Schiff: For now.

Norman: Why for now?

Schiff: Right now there’s some perception of safety there, but it’s the opposite of the leveraging. If you’re selling your assets, you’re accumulating dollars; but ultimately right now, it’s like there’s been this gigantic nuclear explosion in the United States, and everybody is running toward the blast. Pretty soon they’re going to figure out they’re going in the wrong direction.

Norman: You always talk about gold as a currency, and we have seen currencies appreciate – the yen, for example, the dollar tremendously, for example, but gold has not held up.

Schiff: Well, if you actually look at gold versus other currencies, in the last couple of weeks gold has made new record highs in terms of the South African rand, the Canadian and Australian dollars … so gold was not doing as poorly as many of the currencies, and I think this is all short term.

I think you’re going to see a lot of money moving into gold, and if you look at how much gold has gone down from the peak, the peak was about a thousand … it’s off about 25%. Stocks are off 40%. Gold is still up during this year against the Dow.

Norman: Let’s see the performance from this point forward; we’ll look back at this again and we’ll revisit this issue.

Let’s talk about something else, something that you have also … and I just mentioned it … the U.S. dollar. You were very, very negative. In the last month, we have seen unprecedented actions by the U.S. Fed in terms of expansion of the monetary basis; in other words, printing money … what you call printing money … and despite that, the dollar has remained incredibly strong.

How do you explain that according to your logic?

Schiff: Everything the government is doing is inherently negative for the dollar, and all of this…

Norman: It’s not playing out that way.

Schiff: It will; you’ve got to give it time.

I remember when I was on television talking about the subprime and people were telling me it’s no big deal, and I said, just wait a while; give it time.

Look, everything that we’re doing – all the bailouts, all the stimulus packages – this is all being financed by inflation. It’s inherently terrible for the dollar.

Norman: But you just said yourself that everything is deflating.

Schiff: But right now, Mike, you’re getting this de-leveraging, and this is benefitting the dollar, so despite the horrific fundamentals for the dollar, it’s going up anyway.

But ultimately, when this phony rally runs out of steam, the dollar is going to collapse, and that’s when we’re going to have a much greater crisis because now you’re going to have a collapsing dollar, which is going to push long-term interest rates up, commodity prices up.

Norman: I still don’t understand why the dollar is going to collapse. So you’re saying that the Fed is just going to allow … or leave this enormous amount of liquidity in there, that at some point down the road, if we recover, they’re not going Scto take it out?

Schiff: Look, they have no control over it. The Fed is trying to artificially reflate our phony economy, right?

We had this economy that was based on Americans borrowing money and then spending it on products. We have this huge debt finance bubble which is collapsing, and it’s being supported by foreigners.

But when this artificial demand for Treasuries goes away, the Fed is going to try to print a lot of money and the dollar is going to get killed.

Norman: All right; I’m going to ask you to hold on. Folks, check back because we’re going to do the second part of my interview with Peter Schiff, so check back to this site. This is Mike Norman; bye for now.

=============================================

The Manipulation of Gold and Silver Prices – Seeking Alpha

By Peter De Graaf of Pdegraff.com

Here is an article you may want to forward to your favorite mining CEO.

This article deals with the blatant manipulation that has been occurring in the gold and silver markets, and offers a solution. While this scandal has been going on for many years, at last more and more people are becoming aware that it is going on.

One of the first people to document the ongoing attempts to suppress the gold price was Frank Veneroso. Next was Bill Murphy of GATA.org. GATA continues to press the issue. Gata has discovered that the IMF instructed its member banks to treat gold that had been leased to bullion banks and sold into the market as if it were still in the vault! Imagine if an entrepreneur was running his business in this underhanded manner – how long would the government allow that?

A few years ago John Embry, while he was Portfolio Manager at RBC Global Investment Fund – a multi-billion dollar resource fund at the Royal Bank – prepared a memo for the bank’s clients that detailed the manipulation in the gold market.

Ted Butler has written extensively on the manipulation in the silver market.

This is something I have observed first hand since I became interested in silver in the mid-1960’s. It seemed that every time silver reached a peak, an invisible hand came out of nowhere and knocked the price back down to the starting point again. I wrote an article about this titled: ‘Once upon a time, in Never-Never Land.’

Every time a geo-political event, or a serious economic happening, such as the collapse of Bear-Stearns, causes gold to rise, (as it would be expected to do since it has always been a ‘safe haven investment’), the price immediately gets trounced, and investors and producers accept this new price as ‘THE price,’ since the new event has now been discounted.

Whenever common sense tells you something is happening that should cause a rise in the price of gold and silver, you can count on intervention to cap the price. As a result, millions of investors and mining companies have lost billions of dollars that they would have earned if these markets had been allowed to run their normal course.

The manipulation is obvious in the following charts:

click to enlarge

This chart shows steady buying interest that took price from the low at 955.00 on July 14th to 985.00 the next day. The buying took place in Asia, then Europe, and carried over for about an hour in New York, when suddenly, in the space of minutes, an unseen entity dumped gold in the form of futures contracts (green line), without any attempt to obtain the best price possible. In about 5 minutes the gold price was down by 15.00, and the rise was over, as price drifted sideways for the rest of the day.

It was discovered later that several large banks, suspected to be HSBC (HBC) and JPMorgan Chase (JPM) and possibly one other bank, had switched from being ‘net long’ 5,381 gold contracts at the beginning of July 2008, to being ‘net short’ 87,609 gold contracts by the end of July. That is a 94,000 contract ‘turnaround’ and smacks of blatant interference in the market place, since these banks do not produce gold, nor are they likely to be hedging against that much gold in the vaults, since they do not own physical gold. Such a dramatic switch without any change in fundamentals is beyond reason.

Featured is the daily gold chart from October 13th. The blue line shows steady demand followed by consolidation early on Oct 14th, as recorded via the red line. Then a mysterious seller showed up shortly after the COMEX began trading in New York, and in the space of minutes the price was knocked down by 30.00. This is totally illogical, since the seller has no interest in obtaining the best price. His only interest is to destroy the price.

“In 1980 we neglected to control the price of gold. That was a mistake.” Paul Volcker.

“Central banks are ready to lease gold, should the price rise.” Alan Greenspan during Congressional testimony July 24/1998).

Featured is the price action right after the COMEX began trading in New York on October 16th. Within a few minutes the price was knocked down by 35.00 (green line), after the price had established a solid trading range between 830.00 and 850.00 during the previous two days (red and blue lines). This illogical dumping of gold contracts caused margin related selling to bring the price down another 15.00 before bargain hunters were able to level the price around the 800.00 mark.

These are just some of the examples of ‘irrational behavior’ on the part of several large traders on the COMEX, whose actions are not being controlled by the people who oversee the COMEX. While this article deals primarily with gold, the same manipulation exists in the silver markets. To repeat an earlier comment, ‘millions of investors (including miners), have lost billions of dollars because of the manipulation.’ The US government is able to interfere in the markets by way of the Exchange Stabilization Fund which is run by the Federal Reserve and the Treasury Department. The size of the manipulation referred to in this article could not take place without the encouragement that is very likely provided by people who are highly placed in government.

CAUSE AND EFFECT

The effect of this manipulation in the gold and silver markets is an artificial low price. In view of the fact that bullish events are not being allowed to permit prices to rise, nevertheless these events will eventually have a positive effect on the price. The cause is real, but the effect is delayed. The steam in the kettle continues to boil, despite the lid being clamped down. The artificial low price stops the development of mining projects that would have been profitable at the higher price. The artificial low price also cuts into profit margins at every producing mine, making it more difficult to obtain funding for exploration to increase resources. Every mine in the world is at all times a ‘depleting asset’ and needs exploration to postpone the day when the last ounce is mined.

THE MANIPULATORS ONLY HAVE TWO WEAPONS

The ammunition used by the manipulators is provided by two sources: Central banks (including the IMF), and the COMEX. While there is nothing anyone can do about the gold selling that originates with the central banks, there are ways to choke off the amount of precious metal that flows into the COMEX warehouses.
Those of us who are tired of the manipulators picking our pockets need to become active.
In 1978 – 1979 it was a rising silver price that caused gold to rise – silver was the leader. It makes sense therefore to concentrate on silver, especially since the central banks do not have hoards of silver.

A SOLUTION!

Mining companies that supply silver to the COMEX need to find a way to turn their silver into small bars (1 oz to 100 oz), and 1 oz rounds and sell these to the public. Already some mines are doing this by selling from their website, and they are obtaining a hefty premium over the spot price. If your production is limited, join forces with a mine that is already merchandising silver products, or form a sales organization with other small mines. Hire some cracker-jack salespeople; there is a big market out there! Starve the COMEX if you want to see silver sell to realistic prices. Adjusted for inflation, the silver price of 48.00 that we saw in February of 1980, is trading at 4.00 today. (In 1980’s dollars, silver is now selling for 4.00 an ounce!)

Next, (and still communicating to mining CEO’s), instead of keeping money in the bank, or in various kinds of short-term notes, store up silver, and show us that you believe in the product you are producing. Instead of cash on hand, buy futures contracts, and keep rolling them over.

Coin dealers and wholesalers need to buy 5,000 oz bars from the COMEX, take delivery, and contact a refiner who will turn the silver into retail products. If your operation is not large enough for a 5,000 oz purchase then buy silver from people like Jason Hommel, who was smart enough to start doing this on a large scale.

Investors who can afford to spend $55,000.00 should consider buying a silver contract from the COMEX and taking delivery. James Sinclair at JSMineset.com will show you how to go about that.

Finally, anyone who holds any kind of a certificate that promises to deliver silver, needs to make sure that the bank or institution that stores the silver, is willing to provide bar numbers. Otherwise when the day comes to collect, you may find that the silver does not exist. On my website you will find an article that I wrote about a fund that stores gold and silver at a bank in Western Canada. They invite auditors twice a year to audit the inventory.

Cartoon courtesy Gary Varvel, Indy Star.

The Madoff scheme is but one example of the lack of oversight on the part of people who have been placed in the position of protecting the public. In the US Congress, two of the people responsible for the mess that was created by Freddie Mac (FRE) and Fannie Mae (FNM): Congressman Barney Franks and Senator Chris Dodd, are now part of the group that is trying to ‘fix’ the problem. The foxes are in the henhouse! It was Franks and Dodd, who for years received money from Fannie and Freddie, while they stood in the way of people who wanted to tighten the lending standard at these two mortgage lending institutions. Whatever happened to responsibility? Where is the outrage?

Featured is the weekly gold chart. Price is ready to breakout on the upside. The supporting indicators are positive (green dashed arrows). The 7 – 8 week cycles have been short (twice at 6 weeks). We are due for a longer cycle. A close above the blue arrow will indicate that week #4 is the start of a run up to the green arrow. Once 925.00 is reached, then 975 is next. Since Labor day, the Federal Reserve’s assets (including huge amounts of toxic assets), have increased from 905.7 billion to 2.3 trillion dollars. This, along with the increase in the monetary base is going to add to price inflation and will cause a lot of investment money to enter the gold market. The gold rally that started in November has only just begun.

Featured is the weekly silver chart. Price has been rising since late October. The supporting indicators are positive (green dashed arrows). A close above the blue arrow sets up a target at the green arrow.

Thanks to Eric Hommelberg for the idea to use ‘historic spot charts’ to make my case. I applied the 11th commandment: “Thou shalt use every good idea thou comest upon.”

=====================================================

Noteworthy Pundit: Marc Faber’s 2009 Predictions

Source: Tim Iacono of Iacono Research

Despite the stumbling introduction by Joe Kernen and some bizarre in-studio camera work on what appears to be a very old picture of Dr. Doom, this is a pretty good interview.

==================================================

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SEO TOOLS To Monitor With

23 Tuesday Dec 2008

Posted by jschulmansr in computer security, Computers and Computing, SEO, Website

≈ 3 Comments

Tags

backlinks, SEO, SEO OPTIMIZATION, SEO TOOLS, Website, websites

My Note: I thought I’d run an article today about some SEO Tools to help you Monitor Your Web Site – Enjoy! – jschulmansr

SEO Tools to monitor your website…
by:  Craig Lerner

You can’t just put your website on the net with right keywords and all the right touches and expect your traffic and ranking will remain constant. As the web is an ever changing landscape, you have to keep track of your own web results like what is happening with the competition and also the best and highest ranked sites. There are many useful tools to help you find out what exactly is happening.

1. A tool which you can use to test your own website links or other websites for broken links: 

http://home.snafu.de/tilman/xenulink.html

2. With this tool you can check search engines for the number of back links to your URL i.e. other web pages linking to your site: 

http://www.digitalpoint.com/tools/backlinks/

3. It sometimes becomes important to know where the servers of your hosting company are physically located. Because, some search engines like Google have the ability to filter search results based on their physical location called geotargeting. This could be used to determine why your site is showing in only a certain country. This link can also be used to research the country location of a particular competitor’s website:

 http://www.digitalpoint.com/tools/website-country/

4. In order to track the location of the visitor or a customer to your website:

http://www.digitalpoint.com/tools/geovisitors/

5. In order to check the Yahoo! web ranking of your’s or your competitor’s website use :

http://www.digitalpoint.com/tools/webrank/

6. Here is a link to check the web ranking of a website using a Mac or Apple computer:

 http://www.digitalpoint.com/tools/pagerank-mac/

7. You need a Google AdSense account for using this. This link provides you with charts and reports which will help you analyze traffic, clicks, and results from your AdSense advertising: 

http://www.digitalpoint.com/tools/adsense-charts/

8. If you have an AdSense account, you can analyze your website address or another website address to see what Google ads will be displayed when the customer selects certain website names or keywords:

http://www.digitalpoint.com/tools/adsense-sandbox/

9. This link will take you to a cooperative advertising network where you can join to display and share your ads with other website owners: 

 http://www.digitalpoint.com/tools/ad-network/

10. You can add the Search Functionality on your website which uses Google. This works only if your site is listed in the Google Index. 

http://www.digitalpoint.com/tools/search/

11. Here are some links to free website counters which you can use on your website to track your traffic and hits.

http://www.digitalpoint.com/tools/counter/ 

http://www.amazingcounters.com/?ref=gad033  http://www.cyber-counter.com/signup.php 

http://www.statcounter.com/free_hit_counter.html 

http://www.free-counters.net/

Article kindly provided by: RainbowofDiamonds 

Experienced SEO expert Craig Lerner, boosts his performance by using these unique: SEO TOOLS

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All That Glitters! – Gold is Looking Good!

22 Monday Dec 2008

Posted by jschulmansr in Bollinger Bands, capitalism, commodities, Copper, Currency and Currencies, Finance, Fundamental Analysis, gold, hard assets, inflation, Investing, investments, Latest News, Markets, mining stocks, precious metals, silver, small caps, Stocks, Technical Analysis, Today, U.S. Dollar, Uncategorized

≈ Comments Off on All That Glitters! – Gold is Looking Good!

Tags

agricultural commodities, alternate energy, Austrian school, banking crisis, banks, bear market, Bollinger Bands, bull market, capitalism, central banks, China, Comex, commodities, communism, Copper, Currencies, currency, deflation, depression, diamonds, dollar denominated, dollar denominated investments, economic, economic trends, economy, financial, Forex, futures, futures markets, gold, gold miners, hard assets, heating oil, India, inflation, investments, Keith Fitz-Gerald, market crash, Markets, mining companies, Moving Averages, natural gas, oil, palladium, Peter Schiff, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, protection, rare earth metals, recession, risk, run on banks, safety, Saudi Arabia, Sean Rakhimov, silver, silver miners, socialism, sovereign, spot, spot price, stagflation, Technical Analysis, timber, U.S. Dollar, volatility, warrants, Water

My Note: The Charts are looking great for Gold and Silver. Included in today’s post, the latest from Peter Schiff on Gold, An overview of the Charts for Gold and Silver. Finally, a very interesting article on Comex and a short squeeze, what could happen? My Disclosure Long Precious Metals and Stocks and more… Get aboard the Gold Train now… Last Call! – jschulmansr

Peter Schiff: Outlook for The Gold Market

By: Peter Schiff of Euro Pacific Capital

The Wall Street Transcript recently interviewed Peter Schiff, President and Chief Global Strategist of Euro Pacific Capital, Inc., on his outlook for the gold market. Key excerpts follow:

TWST: These are somewhat trying times. What has this meant so far for the gold market and where do we go from here?

Mr. Schiff: Gold has actually held up very well compared to other asset classes. If you look at the price of gold relative to its peak, it’s only off about 25%, whereas if you look at stock markets around the world, most are off 50% or more, certainly if you price them in US dollars. If you look at how gold has held up relative to industrial metals, relative to energy, relative to agriculture, gold has done extremely well. I think the fact that it has gone down in dollars has caused a lot of people to assume that gold is not performing in this correction whereas, in fact, it has. Also if you look at gold in terms of other currencies, recently you’ve seen all-time record highs in the price of gold in South African rand, in Australian dollars, in Canadian dollars. So gold has actually had a very strong, stealth move when viewed from the prism of something other than the US dollar.

TWST: Why does everybody key in on the US dollar side of the equation?

Mr. Schiff: Because gold was priced in dollars, it’s traded in dollars and so we all look at it as the dollar price, and the fact that gold has not made a new high in dollars during this economic crisis has led some to believe that maybe it’s lost its luster, it’s not a safe haven. But this rise of the dollar is very suspicious to me, I don’t think it’s justified. But it’s been the unlikely beneficiary of all the problems. You’ve got the problem centered in the US economy; the epicenter of the financial crisis is in America. The reason that the world is in trouble is mainly because of bad loans made to Americans and it’s our economy that I think is a complete facade, a house of cards that has now collapsed, so this dollar rally actually makes no sense.

And especially in light of the monetary policies that we pursued over the course of the last six months, the bailouts, the stimulus, all of the things that are likely to happen with Barack Obama saying that the sky is the limit on budget deficits, we’re going to print money until we run out of trees. Everything that we are doing is so negative for the dollar, yet the dollar has managed to rally. So I think temporarily the fundamentals are on hold, but I think once the dollar really resumes its decline, you’re going to see gold really shine again not only in terms of the dollar. It will continue to do well against other currencies, but it will do particularly well against the dollar.

TWST: Isn’t gold normally the “safe haven” that investors seek?

Mr. Schiff: I think it’s a safe haven. A lot of people are seeking safety right now in the US dollar, but that makes no sense to me. That’s like jumping out of the frying pan into the fire. I think the dollar is a fundamentally flawed currency that is doomed to collapse, and temporarily it’s benefiting from the fact that it’s seen as the alternative to everything else. People are worried about all asset classes, nobody wants to own anything and somehow by default, the dollar is the opposite of owning other things. People are keeping score in terms of dollars and I’d certainly think that some of the most impaired financial institutions are in the United States. I think some of the losses are very heavy here and that has made a lot of American institutions — investment banks, hedge funds, mutual funds —liquidate assets all around the world, many assets in other countries; those institutions require the liquidation of those currencies to repatriate the dollars necessary to meet their margin calls, to fund their redemptions, and so that might also be temporarily propping up the dollar.

TWST: Has the supply/demand situation in gold changed at this point because of the problems with the hedge funds?

Mr. Schiff: Yes, I think that the credit crunch has certainly put the screws on a lot of gold exploration. A lot of the junior miners are basically on the verge of going bankrupt right now. I’m sure a lot of projects are on hold; a lot of exploration is simply not going to get funded. This is simply improving the supply and demand imbalances that have favored gold for some time and other commodities too. Certainly in industrial metals, in the energy complex, a lot of exploration, a lot of development projects have been cancelled or are never going to see the light of day for many, many years because of the credit crunch and because of the fear of falling prices, which I think is unwarranted. But even when prices start to recover, I think there will be a lot of suspicion of the rally. So people are going to be reluctant to commit capital to a market they have no confidence in.

So I think the supply and demand imbalances for commodities are going to continue, and that commodities themselves are still one of the best asset classes around the world to own. As for the commodity producers, it all depends on their balance sheets. Some of them are going to be spectacular buys. Looking at the gold complex, I think one positive development I’ve seen has been the strength of the South African miners, which seem to have bottomed first. They started to decline before the overall sector; when many of the Canadian miners were making new highs, the South African stocks were falling. But it seems like the South Africans have bottomed here. They’ve made significant rallies, some of them have even doubled from their lows and they seem to be stronger. So they topped out first; maybe the fact that they have bottomed first is a positive sign. Maybe they are going to lead on the way up just like they led on the way down.

TWST: How about on the political side of the equation? What’s going to be the position of central banks now relative to gold?

Mr. Schiff: The Bank of Canada just slashed rates down to 1.5%. Central banks all around the world are reducing interest rates. It’s the most inflationary monetary policy globally that we have ever experienced and ever will experience in our lifetime. That’s a very favorable market for gold. When central banks are just putting the pedal to the metal on the printing presses and driving interest rates down to nothing, how can you not own gold? Gold is money, the supply of gold is going to grow very slowly over time, and the supply of all fiat currencies is going to grow rapidly. You’re looking at maybe 10%, 20% per year or more annual increases in money supply in every country in the world, and then they pay you next to nothing for holding it. If you want to take currency that is rapidly being debased and you want to deposit it someplace, you are barely getting interest, so why not own gold instead? Even though gold doesn’t pay interest, at least it’s not being debased.

TWST: What about the central banks selling gold? Are they going to back off now due to the financial crisis?

Mr. Schiff: At some point, the central bank selling is going to turn into buying. Who are these guys kidding? They need to have real reserves behind their currencies. They can’t simply hold the US dollars and say our currency has real value because it’s backed by the dollar. When the dollar is backed by nothing and being rapidly debased and paying no interest — our rates are down to 1% and likely to head lower. What’s the justification for foreign central banks holding dollar deposits rather than gold, when the dollar yields next to nothing? It doesn’t make any sense. So I think central banks are going to become buyers and the central banks that own the most gold are going to have the most influence, the strongest currencies, etc. I think people are going to see that and right now, if you look at the percentage of gold owned by central banks, it’s at the lowest it’s ever been.

TWST: Silver and platinum have come down much more than gold. Is that because of supply/demand or just because of what’s going on in the market?

Mr. Schiff: I think there are more industrial uses for those metals and so more of this whole idea that the global economy is going to collapse and no one is going to buy anything is hurting those metals relative to gold. I think gold is more of a pure monetary metal. Sure there’s some jewelry demand for gold, but it’s not used as much in industry, and I think it’s more of a monetary metal, a safe haven metal and so, because of that function, it is holding on to its value. I think there are a number of individuals around the world who understand the difference between gold and fiat money, and I think a lot of people are worried and want to protect their wealth. There is a minority of investors who see through the smokescreen and are not buying US Treasuries, they are buying gold. At some point, the people who are doing that are going to be the ones who are going to be vindicated as gold prices ultimately make new highs, and I still think that we could hit $2,000 an ounce next year in the price of gold.

ps- Peter Schiff has been very accurate recently!-jschulmansr

============================================

Great Looking Precious Metals Charts

By: Jeff Pierce of Zen Trader

I’ve had mixed results trading gold stocks in the past but those stocks have some of the best looking charts in the market pointing to higher prices very soon. I’m not going to speculate on why they’re rising when you consider how much money has been printed by the US and the inflation/deflation debate, but the fact is, they are rising and have the right price/volume action you want to see for near term price appreciation.

While I am near term cautious on the overall markets, I do have a buy signal on the gold/silver stocks as they have the capability to rise even when the general markets are falling.

aipc

While SLV didn’t rebound like the individual stocks in the silver sector did on Friday, it does look poised to move higher after a retest of the higher trendline of the triangle formation below.

aipc

============================================

Gold and Precious Metals Likely to Improve in 2009

By: Boris Sobolev of Resource Stock Guide

 

In this short update we focus on the long term technical picture for gold and precious metals stocks since the fundamentals have not changed and remain bullish. The technical picture, however, is getting very interesting.

Gold price action in the past half a year can best be characterized (especially after the recent rally) as consolidation. Such a consolidation is reasonable after a huge spike last year into early 2008, where gold exploded from $650 to over $1000 per ounce.

The long term monthly chart is encouraging. There is the clearly evident higher lows pattern, the RSI has bottomed and the MACD histogram is starting to curve higher.

Most importantly the 20-month Exponential Moving Average (EMA) is turning up, reversing a first-time-in-eight-years bearish turn downward. It is very important to see gold close above the 20-month EMA two months in a row; this would give further evidence of a bullish reversal.

The bull market in gold will resume in full force after gold penetrates its downtrend line which is currently at around $930.

Another bullish factor for gold is the renewed investment demand by the StreetTRACKS Gold Shares (GLD). Gold holdings have now reached an all-time-high of 775 tonnes.

On the monthly charts of a Gold Bugs Index ($HUI), highly significant buy signals have been generated. There have been successively higher lows for three months in a row, the RSI has bottomed and started moving higher, the stochastic indicator reversed from a very low level (a rare signal) and the MACD histogram is starting to curve.

Chart15

These long term reversals in indicators are highly reliable and rarely fail. There is a good probability that 2009 will turn out to be a complete opposite of the brutal 2008 for the precious metal stocks.

As stated several times before, we are starting to accumulate precious metals stocks having low exposure to base metals, with high gold and silver grade deposits, healthy balance sheets and prospects for internal growth.

===============================================

Will Comex Default on Gold and Silver?

By: Avery Goodman

Avery B. Goodman is a licensed attorney concentrating in securities law related cases. He holds a B.A. in history from Emory University, and a Juris Doctorate from the University of California at Los Angeles Law School. He is a member of the roster of neutral arbitrators of the National Futures Association (NFA) and the Financial Industry Regulatory Authority (FINRA).

 

 

With investment advisors like the former NASDAQ Chairman Bernard Madoff being prosecuted for fraud, it is natural for people to begin to seek stores of wealth that are not subject to counterparty risk. The precious metals have been relatively safe stores of wealth for the past 10,000 years. Many people are going back to basics, turning back to the precious metals, as places to put their money, in these uncertain times.

Gold and silver were once the most stable of all goods. Extreme volatility, however, is now a part of their nature. It comes from being made a part of the commodities casino, known as the American futures market, where speculators are allowed to use margin to control 14 times as much metal as they actually have money to buy. When the price drops a little, the “stop loss” orders of these leveraged players are triggered, and that amplifies the price move such that the price collapses on the futures market. Similarly, when gold fever begins, the prices can shoot into the sky, as the leveraged longs begin buying again. That is why the price for futures based gold and silver is still very low compared to March, 2008, even though the real world investment demand for both metals is higher than it was, back then (higher than ever before in history, actually), mining supply for gold is down by 5%, and the mine based supply of silver has utterly collapsed.

It should be noted that precious metal volatility is a short and sometimes medium term phenomenon. Since 1913, when the Federal Reserve was created, the dollar has depreciated by 97% against gold. The dollar has depreciated by about 90% against silver in that same 95 year time period. Gold has also appreciated tremendously in price as compared to 8 years ago, 2.5 times against the Euro and 3 times against the dollar. Rational people, therefore, cannot deny that, using a multi-year or, even more, a century long point of view, gold and silver are the best stores of wealth. When looking at long term family legacies, therefore, a large position in gold and silver should be a part of every estate plan. That is especially true now, given that demand currently substantially exceeds supply, the imbalance has every likelihood of becoming more severe in the near future, and the “futures” exchange prices are now very low compared to the real market.

In the last decade, central banks selling and leasing made up the long time shortfall between supply and demand. But, given the financial crisis, and the fear that the U.S. dollar will eventually collapse, central banks no longer want to hold all their exchange reserves in U.S. dollar cash, U.S. dollar denominated bonds and other investments. They are also unwilling to hold everything in other paper currencies, like the Euro. Some governments, including those in Europe and the USA, still have large gold hoards. But, China wants to buy 3,600 tons of additional gold for its reserves. The only way that this demand can be fulfilling without exploding the price is through a “privately negotiated” off-market sale of IMF gold. European banks don’t want to continue selling what gold hoards they still have left, after 20 to 30 years of participation of selling and leasing gold.

In the case of silver, almost all government stockpiles are now gone. The only ones left are in Russia and China, and China restricted the export of silver last year. The U.S.A., for example, has already expended every last ounce of its strategic silver reserves years ago. The U.K. and all other western nations exhausted their supplies even before the U.S.A. Newly mined supplies have never been sufficient, and demand continues to increase. The imbalance between supply and demand is becoming especially severe, and, in the case of silver, is going to increasingly be a difficult industrial use issue in the next few years.

Because of the severe shortages, retail dealers are charging hefty premiums for both gold and silver. This is dissuading many people from buying, but it shouldn’t, because there are ways to buy the metals without paying any premium at all. Gold and silver are selling cheaply, without premiums, on the American futures markets. Most futures contracts allow buyers to demand delivery of the metal, so the futures market is an excellent way to obtain comparatively cheap precious metals. This has already been noticed by astute investors. In the past, most traders used futures markets solely for purposes of speculation. Normally, delivery demands average less than 1% each month. Now, however, because of the premiums available in the real market, buying a futures contract and demanding physical delivery upon maturity has become a cheap method of obtaining substantial quantities of physical gold and silver. With respect to the December contract, for example, exchange records show that more than 5% of people holding open standard sized (100 ounce) gold futures contracts, and about 10% holding open silver futures contracts (5,000 ounce) demanded delivery. The delivery demands are happening even more often among deliverable mini-contracts (33.2 ounce gold/1,000 ounce silver) purchased on the NYSE-Liffe exchange.

Some speculate that clearing members of the exchanges, who have sold gold and silver short on the futures market, will eventually be bankrupted by these delivery demands. According to these skeptics, the gold and silver consists mostly of fake claims to vaulted supplies that do not exist. They say that futures contracts are nothing more than “fake paper gold” and most refuse to buy on the futures markets, opting, instead, to pay huge premiums at retail gold and silver dealers. The skeptics may be right about the failure to keep adequate supplies of vaulted metal, but it doesn’t really matter. If you buy gold and silver on the futures exchanges, you will get your metal, whether or not the short sellers are trying to defraud you, and I’ll now explain why.

The Commodities Futures Trading Commission is charged with the responsibility to monitor and regulate American futures markets. In spite of this, the futures markets have morphed from a legitimate place to hedge the risk of commodities, into a worldwide casino, which has a gaming commission that claims all of games of chance are really “investing”. This is nonsense. The exchanges are mostly used as gambling halls, with banks as casino operators, and speculators serving in the role of casino guests. All types of bets, from taking odds on interest rates to taking odds on the volatility of the stock markets (with no underlying security except the VIX!) are allowed, and are available to anyone who enjoys games of chance. If the CFTC ever bothered to enforce its own enabling act, and associated regulations, most of these games of chance would be quickly closed. For example, CFTC regulations require 90% of all deliverable commodity contracts (including gold and silver) to be covered by stockpiles of the real commodity, and/or real forward contracts from real producers (like miners). In practice, however, CFTC has never done a spot audit of even one vault. We really have no idea whether or not short sellers really have the gold or silver that they claim to have. We can assume that they probably don’t, given that the number of futures contracts issued has often exceeded the entire known supply of silver, for example, in the entire world.

Indeed, in spite of rampant speculation as to their identity, in truth, we don’t even know who the short sellers are. Other countries, like Japan, have full disclosure of identities and positioning, in open and transparent futures markets, but this is not true of the much larger futures markets based in America. American futures markets are mostly opaque, because the CFTC keeps the information secret. Lack of transparency always is a recipe for fraud and corruption. The likelihood of widespread violations, occurring at exchanges regulated by CFTC, is very high. Logical people, therefore, can make some reasonable assumptions. It is quite likely that the sellers on COMEX do not have 90% of their silver contracts, for example, backed by stockpiles of the metal.

Yet, adherence to Federal regulation is an implicit provision in the terms and conditions of every futures contract. If COMEX and/or NYSE-Liffe short sellers are entering into naked short contracts, they are violating market rules, falsely presenting their contracts to the public, and doing all this with a premeditated intent to defraud buyers. Knowingly making false assertions and promises is fraud in the inducement. Violation of the market rules is also “fraud upon the market”, and a federal and state felony level crime that can result in a long jail sentence. The vast majority of short positions in gold and silver appear to be held by only 2 – 3 American banks, so, it would be extraordinarily easy to pinpoint the perpetrators. Potentially, they could be prosecuted for market manipulation, common law fraud, state and federal RICO actions, as well as other counts.

In other words, a large scale default on COMEX or NYSE-Liffe would not only trigger the paying of money damages, but would also involve criminal liability. Even if a few individuals within the federal government are complicit, as has been alleged, and the U.S. Justice Department refused to prosecute, there are enough politically ambitious state prosecutors to take up the baton. Futures market short sellers would pay a heavy price if there were ever a big default. Because of this, they will spend whatever money is needed to make sure it never happens.

If a clearing member of an exchange fails to deliver, the futures exchanges are legally liable on the debt. If a clearing member goes bankrupt, performance becomes the obligation of the exchange. If a short position holder cannot or does not deliver, the exchange must either deliver, or pay in an amount equal to the difference between the contract price, and the amount of money needed to buy the physical commodity in the open market. Generally speaking, contract holders are allowed to purchase silver or gold on the spot market in a reasonably prompt manner, and all costs of doing so must be reimbursed.

Contrary to the claims of some sincere but misguided metal aficionados, while gold and silver may be occasionally in so called “backwardation”, both are readily available at the right price. That price, of course, may be considerably higher than the reported prices on futures markets. Precious metal will continue to be available so long as the price is “right”. If short sellers on COMEX are really as naked as some claim, the only result of technical “default” at the COMEX will be a huge “short squeeze”, sending precious metals prices to the roof. During this squeeze, movement of the U.S. dollar, up or down, will be irrelevant. If delivery demands exceed supplies in futures market warehouses, metal will be purchased on the spot market. Short sellers or the exchange will be forced to make good on whatever price is paid.

Here’s how it would work. Let’s say you buy a futures contract for February delivery of 100 ounces of gold at $800 per ounce in December. In February, spot gold is selling for $1,000 per ounce, and you deposit the full cash cost of your futures contract into your account, instructing your broker to issue a demand for delivery. The counterparty can’t deliver because the COMEX warehouse runs out of “registered” metal. There is a huge short squeeze as short sellers run around the world physical market, trying to buy gold. The short seller misses the last day to deliver. Because everyone starts hearing about the missed deliveries, by the next day after the last possible delivery date, spot gold in London starts selling for $1,359 per ounce. Your commodities broker must take the money you deposited and buy the commodity on the spot market for $1,359. The broker will be reimbursed by the short seller and/or the exchange in the amount of $55,900, plus any expenses you incurred in buying physical gold on the spot market. In the end, you get your gold or silver at the price you paid for the futures contract, regardless of the default.

A number of well intentioned, but misinformed, precious metal commentators have claimed that exchanges will escape from this obligation by a declaring a co-called “force majeure” event. Force majeure is a legal doctrine which says that compliance with a contract is excused if an “act of God” makes it impossible to comply. Formal force majeure provisions exist in many NYMEX contracts, including gas and oil contracts, for example. After recent hurricanes in Louisiana, a NYMEX committee declared force majeure, and an extension of time for delivery of natural gas pursuant to the contracts. Unlike gas, however, which is produced from the ground, or must be moved long distances under sometimes difficult conditions, gold and silver are commodities that normally reside in vaults, and are easily transported. It should be noted that, as of this date, no formal written force majeure provision exists in the specifications of COMEX gold and silver contracts. Admittedly, force majeure is a legal doctrine that is implied in every contract, and need not be written down. However, higher gold prices and/or failure to comply with the 90% cover rule are not acts of God and will not excuse contract performance.

Let’s say, as some claim, that short sellers have enmeshed themselves in a web of fake contracts, wherein third parties are contracted to deliver metal to them, even though both the short sellers and the third parties know that these contracts are fake, and there really is no metal to deliver. This web of lies assumedly is designed to protect against claims that they are selling “naked” shorts. The existence of such contracts doesn’t matter to the concept of force majeure. The obligation to deliver cannot be changed by a mere failure of “third” parties to deliver. Failure of contracts owed to short sellers are not acts of God. Failure of third parties to honor their contracts does not excuse performance of the short seller’s obligation to deliver to the final contract holder. It certainly does not alter the obligation of the exchange to guarantee delivery.

Some are still skeptical. What if the entire COMEX and NYSE-Liffe exchanges fail? I doubt that will happen. First, let me say that I do not agree with bailouts. Companies, whether in the financial district or in Detroit, should fend for themselves. No one should be allowed to become parasites who feed on the taxpayers, as the big banks and automakers have now become. If companies make mistakes, behaving in an inefficient and/or outright stupid manner, they and their executives should pay the price. The process of creative destruction is essential to prosperity in a capitalist system. Bad actors and inefficient operators should be swept away to make room for innovation and steadier hands. But, my views are not shared by the U.S. government or most other governments around the world. A large number of the clearing members of both COMEX and NYSE-Liffe have already been bailed out by their respective governments. Huge institutions like JP Morgan (JPM), Citigroup (C), Morgan Stanley (MS), Merrill Lynch (MER), Goldman Sachs (GS), Bank of America (BAC), UBS and Credit Suisse (CS) are considered “too big to fail.”

Can you imagine the exchanges not being too big to fail, when their individual members are? What chance do you think there is of the Federal Reserve allowing the entire COMEX or NYSE-Liffe exchange going bankrupt? In my opinion, the chance is close to zero. A massive failure to deliver is highly unlikely, but, if it did happen, and if the exchanges were unable to comply with their legally binding guarantee, the government will step in and provide gold from Fort Knox and enough money to buy silver in the open market, no matter what the price. The end result will merely be a huge price increase, and an end to the assumed legitimacy of futures market prices, not a default.

Summing things up, if you want to buy gold and silver, but don’t want to pay high premiums, buy them on futures exchanges. First, open a futures account with a commodities broker. Make sure it is a real commodities broker and not an imitation. Stock brokers, like Interactive Brokers, ThinkorSwim, MBTrading, and a number of others claim to be “futures brokers.” In truth, they are not. They can only offer you speculation, and not hedging services. They will not deliver, and will forcibly sell you out of your positions, even at great loss to you, if it comes too close to the delivery date. So, instead, make certain that you open your account with a real commodities broker, like RJOFutures.com, PFGBest, lind-waldock.com, MF Global, e-futures.com or any other broker willing to arrange deliveries. You can speculate just as easily, using a commodities broker, as you can using a stock broker that dabbles in futures. But, if you want delivery, you must have a real commodities broker. Steer clear of stock brokers unless you want to buy stocks.

Middle class families, looking for safety in precious metals, but who don’t have enough money to buy 100 ounce contracts, can buy deliverable mini-gold and mini-silver contracts on the NYSE-Liffe futures exchange. The mini-contracts require delivery of as little as 33.2 ounces of gold and 1,000 ounces of silver. If you want delivery, however, make sure you do not buy COMEX based miNY gold and/or miNY silver contracts. These COMEX mini-contracts are cash settled. The standard contracts, however, on both the COMEX and the NYSE-Liffe (consisting of 100 ounces of gold and 5,000 ounces of silver) are all deliverable.

The highly leveraged nature of gold and silver futures contracts create high levels of volatility. That should be kept in mind when you decide to put a large portion of your investment assets into precious metal. Big price rises and deep dips are commonplace. Most of these market movements occur without much regard for the forces of supply and demand in the real world market. If you need the money tomorrow, steer clear. But, if you want to preserve your family legacy with something that will take you safely through depressions and hyperinflations, over years and decades, gold and silver are good choices.

If you demand delivery and just put your bars in a safe place, you don’t need to worry about the volatility. The price is sure to rise in the longer term because of the fundamentals. Remember, as you watch the dizzying roller coaster of so-called “official spot” prices, that you are buying for the long term and/or for emergency use. Day to day price fluctuations should be ignored.

By way of disclosure, I hold interests in GLD, IAU and SLV as well as
physical gold.

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Final Note: The more buyers who take delivery on their Gold or Silver contracts, the greater the chance of a “short squeeze”- jschulmansr

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Market Alert! Gold and Silver and More…

19 Friday Dec 2008

Posted by jschulmansr in commodities, Copper, Currency and Currencies, Finance, Fundamental Analysis, gold, hard assets, inflation, Investing, investments, Jschulmansr, Markets, mining stocks, Moving Averages, oil, precious metals, silver, small caps, Stocks, Technical Analysis, U.S. Dollar

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My Note: Gold is testing it’s new base of $825 to $840 level, if Gold Hold here then our next target will be $900-$940. After it clears that and yes I am bold enough  to make that prediction, then watch out! I have heard predictions of $1000, $1200, $1600, even $2000 and above. On a seasonal basis Gold usually makes it’s low in Nov. and then has a great rally through the 1st and even 2nd quarters of the following year. My prediction is that we should see Gold somewhere in the $1250 range on this next leg of the rally. Next, the Gold to Silver Ratio is 80-1, historically it has been averaging 50-1. If the ration tightens only to 60-1, then at $1250 gold we should see $25 silver. Platinum, not to be forgotten will resume it’s normal premium to Gold level (see article below) and I think with $1250 Gold we will see $2200 to $2500 Platinum. Bottom line if you haven’t gotten in (invested), NOW would be an excellent time! Now for the latest news… Enjoy! – jschulmansr

Gold and Silver Forcaster Market Alert!

By: Julian D. Phillips of Gold/ Silver Forcaster.com- Global Alert!

Gold has now entered the next and major leg of the long-term gold bull market after correcting down from $1,035.   We believe it is now targeting $1,000, initially.   This will be achieved with pullbacks and periods of consolidation.

 

We believe, too, that gold shares will benefit to a greater extent than gold itself, in the next moves up.  In particular, we feel that soundly based gold “Junior” mining companies will benefit strongly.

 

Please refer to our latest issues for our preferred shares.

 

The move has been triggered by the clear signal from the Fed that the deflationary spiral gripping the global economy is far more serious than realized until now.   The initial impact has already been seen in the precipitous fall of the U.S.$ to over $1.41 so far.   As repeated attempts to re-invigorate the flow of liquidity have failed, the U.S. Federal Reserve had to do more, much more. 

 

q       The Fed’s interest rate cuts and ‘Quantative Easing” will soon be followed by central banks across the world.  

q       The swamping of the global economy with liquidity will stem deflation, but will also badly damage confidence in the world’s monetary system and give rise to explosive inflation.  

q       The time it takes to reflate the global economy will be far shorter than most commentators expect.  

q       The strains that the world will now feel, particularly in the different world economies, will become in many instances, unbearable, so we expect to see restrictive local action in those economies to manage the huge capital flows that will be experienced.  

 

All of these prospects are very positive for gold.

 

We last issued a similar Alert early in September in 2007.   History shows how correct we were!     

 

This alert is to prompt you to act now before the market really takes off.

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Gold Stock On The Move

By: Brad Zigler of Hard Assets Investor / Brad’s Desktop

Real-time Inflation Indicator (per annum): 10.5%

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Why The Bull Market is Far From Over

Source: Gold Forecaster.com

 


Some talk of the end of the credit crunch. Some say that the gold bull market has suffered severe damage, which will affect its long-term prospects. If we were to accept these statements then it would appear that the gold ‘bull’ market is over. But are these statements acceptable and do they reflect the true picture underlying the gold [and silver] markets?

To get the proper perspective let’s stand back
and look at the ‘BIG’ picture.


Is the Worst Over?
Credit Crunch Not according to the I.M.F. An assessment by the International Monetary Fund says potential losses as a result of the credit crisis could exceed US$1 trillion. The assessment includes warnings that further losses and write-downs on prime mortgages, commercial real estate, leveraged loans, and consumer finance were likely. The IMF’s Global Financial Stability report put credit market losses at USD945bn, as of mid-March, with more losses expected for months to come.
The report also stressed the fact that the credit crisis was impacting the full spectrum of the financial market in one way or another, with losses distributed between banks, insurance companies, pension funds, hedge funds, and other investors. We note that credit card finance alonside car finance has been included in assets acceptable to the Fed as collateral, which tells us it is not over by a long shot.

U.S. Trade Deficit February recorded a Trade deficit of $62.3 billion against a January deficit of $59.0. This still looks like a $720 billion deficit to us and with oil prices now at over $120 a barrel and Chinese imports still cheaper than local products and flooding in, the prospects are for a worse annual Trade deficit than ever before. And there is no real sign that this deficit is dropping.

 


Oil Prices With OPEC talking of a potential oil price of $200 a barrel something has to be done to stop more than a decline in the $; a stop must be put to the massive global scramble for resources by a combination of the developed world and the emerging world, because prices will continue to rise until they are so high that some will have to do without. This problem is about the massive rises in demand with far greater ones to come.
 
So are there solutions in the pipeline? It seems that the only solutions available to the authorities are existing market controls and proposed market controls on all types of markets, but not on a globally coordinated front. Unless there is global coordination such control will be completely inadequate.

Control of the Markets
Little has been published on the proposed actions by the Treasury department, the Fed and the G-7. But they are actions that will attempt to place important markets under the control of monetary authorities of the G-7. They do not, however, include the interests of the emerging nations on important fronts.

The plan of Treasury Secretary Paulson to overhaul the financial system included a crucial proposal: it would officially transform the Federal Reserve into a “market stability regulator.” The U.S. Treasury has indicated that the Fed could use proposed new regulatory powers to stop, “credit and asset market excesses from reaching the point where they threaten economic stability.” David Nason, assistant secretary for financial institutions, said the Fed could even use its proposed “macro-prudential” authority to order banks, hedge funds and other entities to curtail strategies that put financial stability at risk.

Treasury wants to merge the Securities and Exchange Commission, the US markets watchdog, with the Commodity Futures Trading Commission that is charged with overseeing the activities of the nation’s futures market. A conceptual model for an “optimal” regulatory framework focused was being put forward to achieve three objectives: market stability, safety and soundness with government backing, and business conduct.

A working group was being established between Britain and the United States to sketch out the best way to tackle financial market turmoil. The British government said that it wants to work closer with the US and our other major international partners in dealing with the global financial turbulence. This is a global issue that requires a global response, it said. While it appears the intentions are noble, they are without a doubt ways and means to control markets as the Fed deems fit, inside the USA and the UK.

“The G-7 group of nations agreed to “calm markets showing irrational moves”. But this message did not have enough emphasis or was it ignored as a threat? To reinforce the statement, Jean-Claude Juncker, Luxembourg’s premier and the chair of Europe’s finance ministers, announced on April 23 “financial markets and other actors [had not] correctly and entirely understood the message of the [recent] G7 meeting.” In other words, markets were put on notice that the world authorities may [will and are?] take action to halt the collapse of the US$ and undercut commodity speculation by hedge funds.”

“French Finance Minister Christine Lagarde likened the recent G-7 stance to the 1985 Plaza Accord when the industrialized nations agreed to “coordinated intervention” to drive down the US$.

“Could this be a joint effort by the States and Europe to try to impose a tight trading range on the €: $ movements in the future? We think it is as the €: $ exchange rate moves of the last few weeks have shown [trading between $1.54 and $1.59 against the €]. Much as Central Banks don’t want to ‘intervene’ in foreign exchange markets, it seems that they will do so. Threats will be ignored until turned into action.

“Now we have food crises; governments in the emerging world are proposing other market controls. The issue of food inflation has led some governments to contemplate provocative strategies to lower food prices. India is reported to be considering a ban on trading in food futures, a move designed to stifle what the Indian government regard the speculative influence of hedge funds and financial market traders in the recent surge in commodities prices. As food shortages build up food protectionism is starting in some nations, curtailing exports of food needed internally. This type of control has to become more widespread as food prices hurt nation after nation going forward. With food as well as resource prices running up dramatically action to restrain them will have to be taken on a national basis, which we do not see being followed through on an international front.


“It seems inevitable that more and more controls will have to be imposed on more and more markets. It is inevitable that global movements of capital will have to be retrained at national levels. The world just cannot afford to have the huge wealth funds and trade surpluses running through constrained exchange rates, spreading inflation through higher prices, until local capital and trade markets demand drastic exchange controls. Attempts at intervening in foreign exchange markets to contain exchange rates will attract the switching of huge surpluses into currencies other than the US$. US-based funds can be controlled for sure, but can Asian and Middle Eastern ones? History well testifies that it takes the full impact of a crisis to give good political cause to trigger draconian measures, such as Capital and Exchange Controls.

The Impact on Gold and Silver Prices
While monetary authorities may not be happy to see a resurgence of global demand for gold and silver, those who are able to, will see these mounting controls as a threat to the true measurement of value, which currencies have provided since the last world war. As the dangers become more apparent, the $: € exchange rate will not serve as a determinant of the gold and silver prices, but the falling macro-confidence, fear of more instability, doubts about the value of global currencies, both ‘hard’ and ‘soft’ and uncertainty on a broad global front, will prompt a broadening of the type of global investors attracted to these metals to reflect these fears over time, to ensure that the gold and silver prices reflect global values and counter those measured against controlled values [managed currencies] in other markets.

Certainly, the ‘bull’ market in gold and silver is far from over. The market is metamorphosizing into a new phase promising far higher prices than we even contemplate now.

What prices will gold and silver have then?

“The actual prices of gold and silver will become simply academic.”

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Gold Marks Two Important Milestones!

By: Martin Zielinski of 8 Stock Portfolio.com

In the past week, gold quietly marked two important milestones.

First, as of Monday the price of gold is now showing a gain for the year. The closing price of gold on December 31, 2007 was $833.75. The price of gold today is $854.60. That makes gold up 2.5% for the year to date. If gold can hang onto this gain into the end of the year, this will also mark the eighth year in a row that gold has had a positive return. For the year and for this decade, gold has humbled its naysayers and rewarded its investors.

Second, on Tuesday the price of gold exceeded the price of platinum. The two metals now trade within a few dollars of each other with gold at $854.60 and platinum at $858. This is a big change from earlier in the year when platinum was trading over $2,200 per ounce, more than double the price of gold. If I’m not mistaken, the price of platinum has been higher than the price of gold for this entire decade. Not since the 1990s has gold been more expensive than platinum. Considering that platinum is thirty times scarcer than gold, this makes a strong statement about the demand for gold.

Disclosure: Author is long physical gold and platinum

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A New Place For Investors To Find Silver

By: David Morgan of Silver Investor.com

received a phone call from Tarek Saab, a former finalist on Donald Trump’s television show, The Apprentice. At first I was a bit suspicious because, believe it or not, there are a few flakes floating around the gold and silver arena, and having someone claim to be associated with The Donald did send up warning flags. I must state, however, that perhaps to an outsider, all gold and silver bugs probably seem nuts!

Tarek’s call was followed by an e-mail and this gentleman sounded as bullish on the precious metals as anyone I have met. In fact he began something that many of my friends and associates have talked about for years. He began a peer-to-peer network where buyers and sellers can find true price discovery and deal in physical silver and gold.

His company, GoldandSilverNow.com, is helping solve a “shortage” problem in the precious metals market by linking buyers and seller directly. In a previous article, I mentioned that one of my colleagues in Belgium has put together a method of tracking eBay (EBAY) prices; see Precious Metals Price Discovery.

The current situation is a huge spread between the paper derivative price on COMEX and the actual price paid for silver and gold by retail investors. This was discussed in my article “Silver Arbitrage.” People can take advantage of a price differential between two or more markets, striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices.

There is without a doubt a price differential between retail silver product, such as 100-troy-ounce silver bars, and the spot price for silver on the Futures Exchange. In fact, this presents a very good arbitrage opportunity for those willing to take the risk. This is accomplished by selling lots of 1000 troy ounces in 100-ounce-bar increments and locking in the 1000-oz. COMEX bars for delivery. This process is achievable and, as with all arbitrage situations, will find some market participants willing to take advantage of this opportunity.

But GoldandSilvernow.com is not an auction house. The company, described by Saab as a “virtual bullion dealer,” has a simple transaction process: A seller registers and sends a picture of his inventory. The buyer, who must purchase a minimum of 500 ounces silver and 10 ounces gold, wires funds directly to the company, which acts as escrow. When the funds clear, the seller ships his bullion via registered mail, according to strict packing instructions.

Now it must be impressed that this seems to be a rather simple idea, and in fact it is, but to my knowledge it is just beginning to be implemented. Saab’s is not the only one, however; we are seeing more and more Web sites pop up that are selling precious metals.

There is another Web site that has begun business recently that is known as seekbullion.com and has some of the expertise from goldseek.com and silverseek.com. The founder of goldseek.com came to one of my first appearances at the Wealth Protection Conference in Phoenix, Arizona, and we have been friends ever since.

According to their Web site, “SeekBullion.com™ is an online precious metals/bullion auction Web site that deals with trusted pre-screened authorized dealers (sellers). SeekBullion.com™ is a division of GoldSeek.com and SilverSeek.com, Gold Seek LLC, founded in 1995. SeekBullion.com™ aims to create a new marketplace for bullion products at competitive rates, whereas other auction Web sites will charge several percent on auctioned products which increases the cost to both parties. SeekBullion.com™ aims to greatly reduce the cost of bullion auctions with the trust and integrity of Gold Seek LLC, the premier global leader in precious metals information and financial truth.”

A third Internet site that deals in silver is FlettExchange.com. According to its Press Release:

Flett Exchange LLC is introducing a new silver market. 100 oz and 1,000 oz silver bars are now listed on Flett Exchange, LLC, to buy and sell. For hundreds of years silver has been recognized as a superior form of monetary currency and is internationally accepted. It has retained its intrinsic value by backing paper currencies and has many versatile industrial uses. Our 100 oz and 1,000 oz silver bar markets will allow participants to convert cash into silver and silver into cash.

100 oz and 1,000 oz silver bars are proficient way for investors to gain access to a growing silver market. These premium bars are easily shipped, conveniently stored, uniformly stacked and are dependable forms of financial liquidity. Our silver bar markets are live, anonymous, two-way market determined by Flett Exchange, LLC, users. Customer price-negotiation eliminates the premium buyers pay and the discount sellers incur, when transacting with major bullion houses and other auction platforms.

These are just three of the recent websites that have seen an opportunity and capitalized upon it. To be clear I have not personally dealt with any of them, so I am not necessarily endorsing any of them but do find it interesting that market participants and proving the free market still exists. In closing, this will be the last weekly article in the public domain as we are working overtime on the January issue which is by far the largest issue of the year. Those interested in viewing our work in full can click here.

Some readers outside of the U.S. have asked us where can I buy without huge premiums and one place that works with industrial size bars can be found by clicking here.

So, in closing out another year, I wish everyone Peace in the New Year

My Note: If you go to these websites please due your due diligence and check them out before investing or buying- A word to the wise!- jschulmansr

=====================================================

In light of what I just mentioned above, here are some tips-jschulmansr

Ponzi Red Flags!

By: Andy Abraham My Investors Place

It is front page news that Bernie Madoff created one of the largest Ponzi schemes ever….How could sharp investors get sucked in… it is really unbelievable…The question is what can you do to protect yourself…Here are some of my quick thoughts…as well open the floor to all to add their thoughts..

1.Avoid managers who are unknown, or unregulated, or come without good referrals, or haven’t been in the industry long.
2.Look out for an investment manager who wants complete control of your money and does not fully detail what EXACTLY he does… it has to be simple enough that anyone could understand.
3.Check Finra (I added the link-jschulmansr)
4. Understand the EXACT strategy
5. Don’t rely on black box ideas
6. If the returns are too good to be true…( it goes without saying)
7.Have a broker dealer have custody and get copies of your statements directly from the broker.
8.Ask for recent audits…and make sure the accounting firm is a reliable entity…

Some of these basic ideas would have kept you from investing with Madoff… but with consistent 10% returns for years… it almost becomes a self fullfilling prophecy…and as other investors plow money into the idea… the safer you might feel… but look at this list…and I would like to hear your opinions as well…

Andy

 

===================================================
Have a Great Weekend! –jschulmansr
DARE SOMETHING WORTHY TODAY TOO!

 

Noticed something? Take a look at the inflation number in the subhead. The indicator’s gone into double digits as the result of the Fed’s recent move to cheapen the dollar. Gold, not surprisingly, responded with a gap-higher opening Wednesday and a fill-in trading session Thursday.

February COMEX gold has set itself up for a test of the $880 level, a price visited but not held on Tuesday. A close above $880 would be convincing evidence of bullish resolve to work toward the October reaction highs above $900. On the other hand, a close below $803 would indicate that a short-term top is in.

 

COMEX Gold (Feb. ’08)

 

 

It’s that “other hand” stuff that’s so worrisome to gold aficionados.

There’s been a lot more enthusiasm for gold stocks recently. Over the past trading week, mining issues proxied by the Market Vectors Gold Miners ETF (NYSE Arca: GDX) have gained 6.5%, while bullion has risen just 4%. The performance edge, in fact, has been held by gold equities for more than a month as bullion formed a base and started working higher. That can be visualized by comparing the relative performance of the SPDR Gold Shares Trust (NYSE Arca: GLD) to the Market Vectors portfolio. The bullion trust’s price multiple has fallen from 4.1 to 2.8 since late November.

 

Bullion (GLD)/Gold Equities (GDX) Ratio

 

 

Of the Market Vectors ETF’s three dozen components, Royal Gold Inc. (Nasdaq: RGLD) has been the strongest. And for good reason. Denver-based Royal Gold acquires and manages royalty interests in a variety of production, development and exploration stage projects worldwide. Strong fundamentals such as industry-beating cash flow-to-sales and current ratios, together with a steady dividend stream, have attracted interest in the stock. So much so that Royal Gold shares have appreciated nearly 38% for the year, with 20% less volatility than the Market Vectors portfolio.

 

Royal Gold Inc. (RGLD)

 

 

So, the big question remains:. If Royal Gold has been noticed by investors, is its stock now fully valued?

If you’re a “glass half empty” investor, you’d have reason to be concerned. After all, a 38% return in a market like 2008’s is a gift. The “glass half full” folks, though, are looking at a short-term price objective of $51, another 18% in upside potential.

You can either raise your half-empty glass to bid farewell to 2008 or toast the new year with your half-full glass.

Enjoy your holidays.

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New Breaking News on Gold! + New AOL Poll Says Obama Needs To Prove Eligibility!

18 Thursday Dec 2008

Posted by jschulmansr in 2008 Election, Achievement, Barack Obama, capitalism, commodities, Copper, Currency and Currencies, Electoral College, Finance, Free Speech, Fundamental Analysis, gold, hard assets, id theft, inflation, Investing, investments, Latest News, Markets, mining stocks, Politics, precious metals, Presidential Election, silver, socialism, Stocks, Technical Analysis, Today, u.s. constitution, U.S. Dollar, Uncategorized

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2008 Election, agricultural commodities, alternate energy, Austrian school, banking crisis, banks, Barack Dunham, Barack Hussein Obama, Barack Obama, Barry Dunham, Barry Soetoro, bear market, Bollinger Bands, bull market, capitalism, central banks, Chicago Tribune, China, Columbia University, Comex, commodities, communism, Copper, Currencies, currency, Currency and Currencies, D.c. press club, deflation, depression, diamonds, dollar denominated, dollar denominated investments, economic, economic trends, economy, Electoral College, Electors, Finance, financial, Forex, fraud, Free Speech, futures, futures markets, gold, gold miners, hard assets, Harvard Law School, hawaii, heating oil, id theft, India, Indonesia, Indonesian Citizenship, inflation, Investing, investments, Joe Biden, John McCain, Keith Fitz-Gerald, Latest News, legal documents, market crash, Markets, mining companies, Moving Averages, name change, natural born citizen, natural gas, Oath of Allegiance of the President of the United State, Occidental College, oil, palladium, Peter Schiff, Phillip Berg, physical gold, platinum, platinum miners, Politics, poser, precious metals, Presidential Election, price, price manipulation, prices, producers, production, protection, rare earth metals, recession, risk, run on banks, safety, Sarah Palin, Saudi Arabia, Sean Rakhimov, silver, silver miners, socialism, sovereign, spot, spot price, stagflation, Stocks, Technical Analysis, timber, Today, treason, u.s. constitution, U.S. Dollar, Uncategorized, volatility, voter fraud, warrants, Water, we the people foundation

My Note: New AOL poll shows a majority of Americans would like to see  Obama prove “eligibility” to be US President. My question still is and has been why doesn’t Obama just show the Birth Certificate instead of spending gobs of money on 3! defense attorney firms to prevent him from having to. What is he hiding? Or is he just letting his pride get into the way? All of us have to show our Birth Certificates for eligibility purpose i.e. get a drivers license and etc. As president elect he should be taking the lead in obeying identification/eligibility rules and regulations, not fighting them! Just show us the Birth Certificate!

Next, more great news on the Gold Market with the Fed confirming now is the time to BUY gold! Plus I have included some very good articles on everything from more junior miners to new alerts on Buying Gold-

Enjoy! – jschulmansr 

Fed Says Buy Gold the Start of a Bullish Pattern!

By: David Nichols of Fractal Gold Report

On Tuesday we received direct confirmation from the Fed that the U.S. dollar will continue to be sacrificed to resuscitate ailing credit and asset markets. “Helicopter Ben” is finally living up to his advance billing, as dollars are set to rain down on the economy.

Gold markets got a huge burst of upside energy immediately following this surprisingly forthright Fed statement, and the long-anticipated move up to $875 is well underway. This is of course great news for our long positions, and it looks now like $875 will only be a temporary waypoint on the way back up to the all-time highs.

On a related note, the trading program for the Fractal Gold Report has captured the majority of the move up off the bottom, with our initial long position coming way back at $710. While many hedge funds and money managers have had a disastrous year, the program has not only come through this tough period unscathed, but is well into positive territory, and that includes all fees and commissions. (Past results are not necessarily indicative of future results. There is risk of loss in all trading.) Subscribers to the Fractal Gold Report are eligible for participation in the trading program if they meet the brokerage firm requirements.

As the New Year approaches, this is the perfect time to assess which methods have been successful during this historic market shake-out. As they say, it’s easy to be a genius in a bull market. But the real “value-added” is most apparent during the turbulent periods.

My road-map for gold in 2008 called for a top around $1,010 in late March, followed by a lengthy and difficult corrective period which was likely to carry gold all the way back down to $730, which I subsequently adjusted to $675 as the correction was underway.

The actual high was $1,033 in late March. Then after a difficult six month corrective period, gold bottomed out at $681 in late October.

But the most important thing to notice on this monthly chart is how the correction has already accomplished its main job, which was to bring the monthly fractal dimension back over 55. This means that gold is again in position to rocket to the upside. A monthly trend in gold can carry prices up $400 or even $500. These are huge moves. There is still plenty of room to extend higher, even in the short-term.

The 150-minute fractal dimension has dropped quickly with this very strong breakout move, but it’s only down to 41, so there should be more than enough energy left to take gold up to $875 on Wednesday.

At this point my plan is to take profits at $875 if the 150-minute fractal dimension is again down in the low 30s or high 20s as gold is stretching up to this target. As we just saw at $810, there is little risk of missing out on further upside in such a scenario, and it can greatly reduce risk, as we can side-step that period of time when gold is highly unlikely to make further upside progress, and is much more likely to correct back down.

But after this expected short-term correction off the $875 energy level, we will be looking to get right back in for the next phase of this very exciting bullish pattern.

As always, I will provide daily updates on gold in the Fractal Gold Report, and subscribers with the annual plan also receive the Fractal Silver Report.

==============================================

Gold and Silver Forcaster Market Alert!

By: Julian Phillips

Gold has now entered the next and major leg of the long-term gold bull market after correcting down from $1,035.   We believe it is now targeting $1,000, initially.   This will be achieved with pullbacks and periods of consolidation.

 

We believe, too, that gold shares will benefit to a greater extent than gold itself, in the next moves up.  In particular, we feel that soundly based gold “Junior” mining companies will benefit strongly.

 

Please refer to our latest issues for our preferred shares.

 

The move has been triggered by the clear signal from the Fed that the deflationary spiral gripping the global economy is far more serious than realized until now.   The initial impact has already been seen in the precipitous fall of the U.S.$ to over $1.41 so far.   As repeated attempts to re-invigorate the flow of liquidity have failed, the U.S. Federal Reserve had to do more, much more. 

 

q       The Fed’s interest rate cuts and ‘Quantative Easing” will soon be followed by central banks across the world.   

q       The swamping of the global economy with liquidity will stem deflation, but will also badly damage confidence in the world’s monetary system and give rise to explosive inflation.   

q       The time it takes to reflate the global economy will be far shorter than most commentators expect.   

q       The strains that the world will now feel, particularly in the different world economies, will become in many instances, unbearable, so we expect to see restrictive local action in those economies to manage the huge capital flows that will be experienced.   

 

All of these prospects are very positive for gold.

 

We last issued a similar Alert early in September in 2007.   History shows how correct we were!      

 

This alert is to prompt you to act now before the market really takes off.

 

As you know, we at Gold & Silver Forecaster are dedicated to following these developments so that Investors can maximize their understanding and profits from the gold and silver [and platinum] markets.  As a result we expect to see the gold market shine far brighter than we have seen to date.

 

If you have not followed the newsletter, we recommend that you subscribe quickly to it so as to see which shares we believe will benefit investors the most and to keep your fingers ‘on the pulse’ of the gold price.   Our coverage of the global economy is focused on the factors driving the gold price including oil, the $, and other relevant markets.   

 

 
  

We will always keep the global perspective, making our letter “must-have” reading in these markets.

 

Kind regards,

 

Gold & Silver Forecaster

www.goldforecaster.com

www.silverforecaster.com

— Posted Wednesday, 17 December 2008

Previous Articles by Julian D. W. Phillips, Gold/Silver Forecaster – Global Watch

=================================================

Risky Opportunity Awaits in Junior Gold Sector

By: James West of the Midas Letter


The biggest error an investor might make in the burgeoning third phase of the gold bull market is thinking the boat has been missed after new price territory is reached. Limiting your gains by trading in and out of the physical is insanity. Physical gold should only be considered if you plan to hold on to it for years, not months. Transportation, storage and security issues will chew up short term gains.

Moving into the market we are, where the US Dollar is going to crash in value, and gold is going to head in the opposite direction, it’s time to allocate investments intelligently among various asset classes that will benefit from the gold bull.

Producing mining companies are a great way to capture the upside gold will impart, and provides a very limited exposure to risk – especially if you’re considering one of the major producers such as Barrick, (NYSE: ABX) Newmont (NYSE: NEM) or Goldcorp (NYSE: GG), who tend to develop assets with strong economics in relatively stable countries.

South African senior producers have a special set of challenges ahead of them that make investment there riskier than in their North American counterparts. Electrical infrastructure is in major need of upgrade, and the depths to which these mines now extend negatively impact production costs going forward.

As you proceed down the list of producers, risk is intensified. This is because mid-tier producers typically gain access only to projects too small, too risky or too expensive for the big players. With increased risk comes the potential for a greater reward – especially with companies who have not yet defined the limits of deposits under development, or where the political situation is uncertain.

The biggest leverage right now, especially considering the drubbing they’ve experienced this year, are among the junior explorers. The juniors also occupy the highest risk segment, but no pain, no gain…or at least, little gain.

The current market is not differentiating efficiently the companies with potentially world class deposits and management from the “wanna be’s” who are probably never “gonna-be’s.” And in that lack of efficiency lies tremendous opportunity for risk-tolerant and patient investors.

You’ve probably heard a lot of talking heads on business stations suggesting that the economic stimulus initiatives are going to have a positive impact on stocks, and how the worst is over, and blah blah blah blah…the same guys were saying the worst is over back in August of last year. All data suggests that we are heading for a prolonged DEPRESSION, and just as in every long bear cycle, there will be little bullish corrections that will snag the naïve predictably.

The pressure on gold will be accordingly intensified. The premium will be on physical and senior production, which is why right now is the time be accumulating gold juniors. Historically, they are the last to benefit from strengthening gold fundamentals, and in this new environment of mistrust and paranoia, it will be no different.

Again, the primary consideration here must be advanced exploration/near-term production, plenty of cash on hand, and aggressive but sensible management. In the last year, I’ve visited several gold deposits, all of which have exceptional potential, and will continue to do so in the months ahead.

When I say exceptional potential, I mean companies that have the potential to earn investors ten times the money, just because they have not yet published a Canadian National Instrument #43-101 report, which is quickly becoming the accepted standard worldwide for mineral resource reporting.

The key is in looking closely at the exploration results and ignoring the headlines. There is a tendency emerging to call everything over 2 grams per tonne gold “high grade”, which is just plain misleading. And high grades can be less relevant where huge tonnage potential exists near infrastructure or existing milling operations, especially if they start at or near surface and have low strip ratios.

The key to evaluating results from a lay person’s perspective is continuity. Long intercepts of low grade mineralization that start near surface are better than short intercepts of higher grades at depth. If mineralization doesn’t start anywhere in the exploration zone above 200 metres in depth, there’s a lot of overburden to go through to reach the good stuff.

Similarly, and what NovaGold (NYSE: NG) is discovering, you can have a monstrous low-grade high tonnage deposit, and discover that the cost of building access and infrastructure can discourage investors and derail the path to production.

In NovaGold’s case though, as long as it is able to navigate through this troubled period where raising cash is tough, the economics improve as gold increases in value and construction materials and energy costs decline. Financing for these projects will become available as these economic factors solidify.

2009 will be a devastating year for many investors. Those with no experience or with little tolerance for risk will miss out on what will become the most profitable phase of the long term bull market for gold that began in 2002. Investors who buy a diverse basket of the very best juniors are going to make out very well, both in the short term and the longer.

===============================================

Now For Obama…

Obama citizenship issue has merit, AOL poll says

Nation Seeks Answers to questions about the president-elect’s eligibility…

Baro also sent investigators to the newspaper offices to examine files, but the Advertiser could not confirm who actually placed the ad.

According to Baro’s affidavit, Beatrice Arakaki affirmed she was a neighbor of the address listed. She has lived at her current residence of 6075 Kalanianaole Highway from before 1961 to the present.

Moreover, Arakaki said she believed that when Obama lived with the Dunhams, his grandparents, the family address was in Waikiki, not on Kalanianaole Highway.

Baro was able to determine the previous owners of the residence at 6085 Kalanianaole Highway – the alleged address of Obama’s parents when he was born – were Orland S. and Thelma S. (Young) Lefforge, both of whom are deceased.

Baro’s affidavit also documents that the Certification of Live Birth that Obama posted on his campaign website is not the original “long form” birth certificate issued in 1961 by the obstetrician or physician giving birth and the hospital where the baby was born.

Baro’s investigators learned that a “Certificate of Hawaiian Birth Program” established in 1911 during the territorial era and terminated in 1972 during the statehood era allowed Hawaiian residents to apply for a “Late Birth Certificate,” called a “Certificate of Hawaiian Birth,” which appears identical to the “birth certificate” Obama posted on his campaign website.

“This raised the question in my mind as to whether the ‘Certification of Live Birth,’ which is the only document that has been produced and as previously stated solely handled by the representatives of factcheck.org outside Obama’s campaign, is a certification of a live birth or a late birth,” Baro stated in his affidavit.

“I am left with the conclusion that a simple request from Senator Barack Obama to produce the ‘long form’ (redacted if necessary) would end any speculation or question as to his birthplace,” Baro’s affidavit continued. “His continued denial to do so is suspect, in my professional opinion.”

Baro also pointed out that factcheck.org is funded by the Annenberg Foundation, which “is at the center of the ongoing Obama-Bill Ayers controversy – hardly an unbiased source for information in my view.”

 

 

By Chelsea Schilling
© 2008 WorldNetDaily

America Online is conducting a new poll asking readers whether they believe there is any merit to the controversy surrounding Barack Obama’s citizenship – and most respondents say “yes.”

There are more than 88,000 national votes in the unscientific survery. A full 52 percent of nationwide respondents believe people should be concerned about Obama’s citizenship, 42 percent say the controversy has no merit and 6 percent of voters remain undecided.

In all, 43 states agree that there could be merit to the Obama citizenship controversy.

Where’s the proof Barack Obama was born in the U.S. or that he fulfills the “natural-born American” clause in the Constitution? If you still want to see it, join more than 190,000 others and sign up now!

Among voters who said Obama’s citizenship shouldn’t be an issue, represented by 7 yellow states, an average only 50 percent of those states’ respondents sided with Obama.

However, Washington, D.C., voters overwhelmingly sided with Obama – with 74 percent voting to drop the issue.

On a similar note, WND poll asked readers, “Are you satisfied Obama is constitutionally eligible to assume the presidency?” A full 97 percent of 6,000 voters said “no.”

The top three answers were:

  • No, if I can’t get a driver’s license without an original birth certificate, how can Obama become president without one?
  • No, and Americans should continue to dog him about it through his term
  • No, there’s a reason why he’s unwilling to disclose his original birth certificate

  

AOL readers posted comments under its poll results, including the following:

  • No, I don’t think it has any merit. A birth certificate was posted on his web site showing his birth in Hawaii and a story to go with it. Those who are keeping it alive are just sore losers.
  • This could be put to rest with a $10 copy from the government, and yet Obama has spent somewhere between $500,000 and $800,000 to block this. Why does he waste taxpayers money on this foolishness.
  • The birth certificate thing is just more racism under a smoke screen. You birthers can keep this going as long as you want with no results, just as the “Impeach Bush” folks never got anywhere for the past 8 years.
  • Why spend thousands of dollars to block lawsuits that are requesting him to do what John McCain willfully and freely did?
  • It’s sad that every pathetic, Republican racist out there is clinging to the hope that President Obama is not a red-blooded, red, white and blue right down to his soxs American citizen! President Obama is a God given gift to America. He has a big job ahead of him … cleaning up Bush’s mess!
  • Now isn’t that interesting that the slime states of the left which are in the most trouble with their budgets are the ones who think this thug is real.

=====================================================

Investigator Casts Doubt on Obama’s Birth Residence

By Jerome R. Corsi
© 2008 WorldNetDaily

 A private investigator has released to WND an affidavit that casts doubt on whether Barack Obama’s family lived at the address listed in the published notice of his birth in 1961.Jorge Baro was hired by WND to investigate issues related to Obama’s birth amid allegations the Democrat does not meet the Constitution’s requirement that a president be a “natural born citizen.”

Baro’s affidavit documents an interview his staff conducted with Beatrice Arakaki, who has lived at 6075 Kalanianaole Highway in Honolulu since before Obama was born.

The affadivit is at the center of a federal lawsuit filed prior to the November election in Hattiesburg, Miss., before U.S. District Judge Keith Starrett. The suit is one of several yet to be adjudicated that calls for proof of Obama being a “natural born citizen” as required by the Constitution.

Baro is the in-house senior investigator for Elite Legal Services, LLC, in Royal Palm Beach, Fla.

 

 


WND Exclusive


OBAMA WATCH CENTRAL

Investigator casts doubt on Obama’s birth residence

Neighbor believes family didn’t live at address in newspaper announcement


Posted: December 16, 2008
10:09 pm Eastern 

By Jerome R. Corsi
© 2008 WorldNetDaily

 


Barack Obama and his mother, Anne Dunham

A private investigator has released to WND an affidavit that casts doubt on whether Barack Obama’s family lived at the address listed in the published notice of his birth in 1961.

Jorge Baro was hired by WND to investigate issues related to Obama’s birth amid allegations the Democrat does not meet the Constitution’s requirement that a president be a “natural born citizen.”

Baro’s affidavit documents an interview his staff conducted with Beatrice Arakaki, who has lived at 6075 Kalanianaole Highway in Honolulu since before Obama was born.

The affadivit is at the center of a federal lawsuit filed prior to the November election in Hattiesburg, Miss., before U.S. District Judge Keith Starrett. The suit is one of several yet to be adjudicated that calls for proof of Obama being a “natural born citizen” as required by the Constitution.

Baro is the in-house senior investigator for Elite Legal Services, LLC, in Royal Palm Beach, Fla.

In Hawaii, WND was able to locate at the Honolulu public library microfilm of a notice placed in the Sunday Advertiser Aug. 13, 1961. The announcement in the “Births, Marriages, Death” section read: “Mr. and Mrs. Barack H. Obama, 6085 Kalanianaole Hwy., son, Aug. 4.”

Arakaki told Baro’s investigators she had no recollection of Obama being born or of the family living next door having a black child born to a white mother.

Baro sent a team of investigators to Honolulu to explore records regarding current residents of Kalanianaole Highway and to track down residents back to 1961.

Baro’s investigators were unable to locate any current or past resident of Kalanianaole Highway who could recall Obama or his family living at the address listed in the Sunday Advertiser announcement.

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Gold is Starting to Move Up!

17 Wednesday Dec 2008

Posted by jschulmansr in capitalism, commodities, Copper, Currency and Currencies, Finance, Fundamental Analysis, gold, hard assets, Investing, investments, Jschulmansr, Latest News, Markets, mining stocks, precious metals, silver, Stocks, Technical Analysis, U.S. Dollar, uranium

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agricultural commodities, alternate energy, Austrian school, banking crisis, banks, bear market, Bollinger Bands, bull market, capitalism, central banks, China, Comex, commodities, communism, Copper, Currencies, currency, deflation, depression, diamonds, dollar denominated, dollar denominated investments, economic, economic trends, economy, financial, Forex, futures, futures markets, gold, gold miners, hard assets, heating oil, India, inflation, investments, Keith Fitz-Gerald, market crash, Markets, mining companies, Moving Averages, natural gas, oil, palladium, Peter Schiff, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, protection, rare earth metals, recession, risk, run on banks, safety, Saudi Arabia, Sean Rakhimov, silver, silver miners, socialism, sovereign, spot, spot price, stagflation, Technical Analysis, timber, U.S. Dollar, volatility, warrants, Water

 

As I make this post Gold is up another $20/oz this morning. As mentioned in yesterdays post this does not bode well for the “short sellers” in the Gold market especially if traders start taking physical delivery off Comex. Is this the beginning of the Short Squeeze? Only time will tell, but I find it very interesting that Gold is continuing to rise as we approach the end of the Dec. contracts. In addition with the Fed’s latest round of intrest rate cuts which show its’ resolve to keep deflation from occuring and to free up the credit markets, Of course long term this will spell inflation even hyper-inflation, which in turn makes Gold in any form the obvious investment choice. Personally I am looking to increase my positions in many of the mid-tier and juniors in the gold mining sector, These companies even with the recent move in Gold are still trading at extremely low levels, and many are trading below book value!  Here are some excellent articles for you today, ENJOY and Buy Precious Metals! Your  children and grandchildren will thank you! – jschulmansr

Jeffrey Christian: Foreseeing Bright Days for Metals – Seeking Alpha

By:  Jeffrey Christian of The Gold Report

A foremost authority on the precious metals markets and a leading expert on commodities markets, CPM Group founder and Managing Director Jeffrey Christian brings some holiday cheer to The Gold Report readers. In this exclusive interview, he debunks doomsayers who await the dollar’s demise, anticipates what may well be a more powerful recovery from recession than most pundits do and foresees bright days for gold, silver, PGMs and specialty metals.

The Gold Report: Perhaps you could begin by giving us your macro overview of the world economy and the outlook as you see it.

Jeffrey Christian: If you go back to 2006 or 2007, our view had been that we would see a relatively short and shallow recession in the first half of 2009. Beginning in late 2007, we said maybe the recession would start earlier, maybe in the fourth quarter of 2008. And then we said maybe the third quarter of 2008. Now we find from the National Bureau of Economic Research that the recession officially started in December of 2007.

We still see it ending around the middle of 2009. But it’s obviously going to be much longer and much deeper than we had expected a year or two ago. Economic problems are much worse. What we really have is a financial crisis, a freezing up of credit availability, which has led to a domino effect of reducing demand for products. We started with a bank panic and a freeze-up in the credit market that has now spilled over into final demand for goods and services across the real economy. It’s proving extremely difficult to treat. I happen to think that the U.S. government policies pursued in September, October and November have not necessarily been the best policies to resolve these issues. We’re looking to see what the new government does after January; a different approach may be more palliative to the economy.

But the bottom line for the overall economy is things are bad, they probably will get a little bit worse, and we’re probably looking at a pretty weak first half of 2009. Our view is that by the second half of 2009, maybe early 2010, you’ll see an economic recovery come along. That economic recovery may be a lot more powerful on the upside than a lot of people expect. One of the things that we’ve seen and have written extensively about over the last few years—and it’s become even more prominent with the government largesse—is an enormous amount of money sitting in cash and cash equivalents waiting for a signal that it’s safe to invest again. All of this money is standing by, ready to invest in precious metals, invest in commodities, invest in real estate, equities and corporate debt. So we think that in the second half of 2009, or whenever the recession ends, you could see a rather rapid recovery in overall economic activity globally.

So that’s our economic overview. I will say this. Everybody in the world is looking at the amount of money the governments have pumped into the market, saying it spells death and destruction for the U.S. dollar and inevitably will lead to hyperinflation. I’m not convinced that’s true and I think that’s a very important point. When you look at all of the monetary liquefaction that’s occurred, it’s definitely going to lead to a lower dollar and higher inflation than we’ve seen over the last 25 years. Still, we may well avoid a total collapse of the dollar and hyperinflation if the monetary authorities of the world effectively are able to sterilize the inflationary implications of this once the recovery starts. We won’t know that for a year or so.

TGR: What do you mean by “sterilize the inflationary implications”?

JC: It means suck the inflationary money creation out of the economy. I’ve spent a lot of time looking at what happened in the period of 1979 to 1983; the really critical point here is in the middle of 1982 we were two years into a double dip recession. At the time it was the deepest recession in the post-war experience. In the middle of 1982, Brazil, Argentina and Mexico were about to default on their government bonds. Paul Volcker called the central bankers of the world together and said, “We have to monetize ourselves out of this recession because it’s about to become something much deeper and harder to solve.”

The governments of the world opened the sluices and flooded the world with money. By December of 1982, the world was out of a recession, auto sales had rebound sharply, Geoffrey Moore’s leading index of inflation indicators, which was basically money supply, had gone off the chart. Gold had risen from $290 in July of 1982 to $500 by the end of the year because everybody was convinced that this was going to be inflationary and that the dollar was going to collapse. By the end of ’82, early ’83, it was clear that we were out of the recession.

Fortunately for Volcker, Reagan (Ronald) and an associate named Regan (Donald Regan, Reagan’s Treasury Secretary) had taken a $40 billion Carter (Jimmy) deficit and turned it into a $200 billion Reagan deficit and needed to finance it. So Volcker said, “That’s easy; Let’s sell $300 billion worth of T-bonds and suck $300 billion out of the economy.” And they did it. So they started selling a tremendous amount of bonds to monetize the debt that the government was racking up and thus sterilized the inflationary implications of their earlier monetary creation.

Then oil prices fell 15% in the first quarter of 1983, from $34 to $29 per barrel, gold prices fell $100, inflation went from about 7% to 3% and is only now getting back up there. We entered a 25-year period of the lowest inflation in a long, long time right when everybody was convinced that all of that money creation would lead to hyperinflation. The government has followed that model every time we’ve gone into a financial crisis since 1982. This time around everything is much bigger and the question is, “Can they do it again on an even grander scale?”

TGR: We didn’t have the fundamental problems back then that we have today. We didn’t have all these derivatives. So many things are so different, and we’ve seen nothing of this magnitude.

JC: Actually, the two biggest and most important differences are that we had extremely high U.S. interest rates then, and a very strong and persistently rising dollar. The dollar was rising then, as it is now, but it has been weak from 2003 until the middle of this year. You’re right—we didn’t have the derivatives and all of this enormous financial liquidity that we have now. And as I said, we’re playing a much higher-stakes game this time around and we’re doing it in a situation with low interest rates and a fundamentally weak dollar. People talk about how strong the dollar has been in the last few months, but it’s still very low compared to what it had been.

Funny, I just got an email from someone who attended a conference I spoke at in Zurich about a year ago. He said this is amazing, that a year ago everybody laughed at me because I said the dollar would be strengthening—but I didn’t say what kind of environment it would be strengthening in.

TGR: Isn’t another difference between the current situation and the one 30 years ago the fact that back in ’79 it was basically the U.S. and the Banana Republics that were having problems? It wasn’t Germany, France, Switzerland—it wasn’t everybody, was it?

JC: No. It was everybody. The U.S. was in a deep recession, Europe was in a deep recession. That’s when they coined the term “Eurosclerosis.” I was at J. Aron at the time and we were doing a lot of gold loans with Eastern European governments, because they needed the money. We found ourselves in workout situations with sovereign debt in Eastern Europe in 1981; whereas Latin America didn’t erupt until 1982. But it was pretty much universal. The U.S. was a bigger part of the world economy back then, too.

TGR: So a decoupling, when you look at the BRIC countries, will help carry us through or avoid an international recession this time around?

JC: I don’t think so. I think we’re in an international recession. The IMF seems to think so. When everybody started talking about how the economies of the world could decouple from the U.S., I said it’s just one of those pater nosters that makes no sense and doesn’t stand up to statistical scrutiny. You’re seeing that. You’re seeing India, China, and all of the other emerging countries really suffering from a decline in demand for their products, much of which are exported into the United States and Europe, and it’s having catastrophic consequences. Granted, there is a movement away from being dependent on the American consumer on a worldwide basis, but it’s a very slow movement and hasn’t progressed far enough to insulate the rest of the world from the problems in the U.S.

TGR: You were talking about Volcker, who issued something like $300 billion of debt—Treasuries— in the ’80s and sold them to cover it and continued to do more of that. At some point, don’t we have to pay that back? Isn’t there a Piper to be paid?

JC: In theory, yes. But there’s a problem with the doomsayers. Look at Jim Grant, who publishes the Interest Rate Observer. I think it was in 1980 that he said, “Oh, my God, look at this $37 billion debt that Carter’s ramping up. This is unsustainable; the Treasury market is going to collapse.” At some point, he probably will be right and the Treasury market will collapse. But in the meantime, we’ve had 28 years that make a $37 billion deficit pale. We wish we could have a $37 billion deficit.

In the meantime, several things mitigate against any imminent collapse. One is the fact that the world economy basically always has been and always will be a giant confidence game, in the sense that there has to be a certain level of confidence to keep things going. The other thing is that for the dollar to collapse, some other currency has to rise very sharply. The problem that the world’s in right now is that for the dollar to fall sharply, investors have to have greater confidence in some other currency. This is really great for gold. It makes you really bullish for gold. Another currency has to rise if the dollar’s going to fall. Ask people “Which one do you have more confidence in?” There’s silence in the room and then people buy gold. No one has any confidence in any of the other currencies or the governments behind them—the Euro, the Yen, the Swiss Franc or anything else.

In a speech a few weeks ago, I said, “The dollar is like your mother. You’ll sit around and complain about her and how she’s so mean and nasty and you’ve got to get away from her. But as soon as you cut your knee, you go running back to her crying.” That’s what’s happening right now in the world economy, in the financial markets. Everybody has been saying for five years that the dollar is toast and the dollar is no good and the U.S. debt is unsustainable. But as soon as you get into a banking panic, everybody converts their money into dollars and Treasuries and CDs held by banks that are guaranteed by the FDIC. Why? Because even though we’ve lost a tremendous amount of faith in the U.S. Treasury, we still have more faith in the U.S. Treasury than we do in, say, the European Central Bank or the Bank of Japan or the Bank of England.

TGR: So if the dollar devalues and some other currency has to rise, it bodes really well for gold. But considering the trillions of dollars of debt out there, is there enough gold for it to be a viable alternative currency? Or will the price for every ounce of gold become something cataclysmic like $3,000 or $4,000?

JC: Yes. If you tried to monetize the debt in gold, or if you tried to go back to a rigid gold standard, you would either have to have $3,000 or $4,000 or $5,000 or $6,000 gold, or you would have to severely contract the world economy back to where we were in, say, the 17th century. But I don’t think that’s what you’re looking at. Rather, you’re looking at some portion of the world’s assets moving into gold as an alternative to currencies. In that situation, you “only” see $1,000 or $2,000 gold.

TGR: Some of us might like $5,000 or $6,000 gold, but maybe not everything else that would be going on with gold prices at that level.

JC: Right. You definitely wouldn’t like everything else going on. It’s interesting. It depends on how a gold standard would be created. The last time we had a “serious” discussion of a gold standard in the United States was during 1980 election campaign. The Republicans actually had a platform plank written by Arthur Laffer to return to a gold standard. What Laffer said was that for the U.S. Treasury notes in circulation, you would have to have 40% of the value of the Treasury notes in gold held by the U.S. Treasury, or a 40% cover. It sounded really stringent, but then you realized that since the 1960s almost all of the bills printed actually had been Federal Reserve notes—not Treasury notes. When asked about that, Laffer said that’s right. What you need from a gold standard is the public’s sense of confidence in it. If you tell them Treasury notes are backed by gold, they’ll be more confident in the value of the dollar. They won’t bother looking at the fact that we’re printing Federal Reserve notes ’til the cows come home. It was a very disingenuous and cynical approach to the American voters.

TGR: So we may see some rush to gold, which may lift it up to $1,000 or $2,000. What about other precious metals like silver? Will that tail along with gold?

JC: I’m actually now in a situation where I like silver, platinum, palladium and the other platinum group metals as well as gold. I like silver for a couple of reasons. One is it’s a financial asset like gold, it is benefiting from the move of investors into silver and gold, and it will continue to benefit from that. But you’ll also see several other things. First off, there is not a lot of metal in the silver market, half a billion ounces in bullion and maybe a half a billion ounces in bullion coins. In gold you have a billion-plus ounces that investors own and another 980 million ounces that central banks own. There aren’t those large enormous stockpiles of silver if you’re looking at it on a dollar value basis. In addition, silver is an industrial metal with some very interesting new uses coming up. It’s losing some of its traditional uses such as photography; but in other uses, such as batteries and electronics, it’s actually growing very sharply and could grow more sharply over the next few years. So I think silver’s got a lot of good things going for it. It’s an alternative financial asset like gold. It’s a smaller, less liquid, more volatile market than gold. And it has the industrial base that gold doesn’t have. So I like silver for those three reasons.

TGR: What brought silver down so much? It got up to $21; now we’re at $9 and change.

JC: The massive amount of leveraged investment in these things has brought all of these metals down. Everybody keeps talking about de-leveraging, but if you ask them to explain it, they can’t. But let me try to explain what I mean when I say leveraged investment. You had hundreds of billions of dollars of institutional money invested in gold and silver forwards, gold and silver over-the-counter options, and gold and silver indexed notes—all written by banks and all with major leverage factors. Some were 10:1; some of them were actually 30:1 or 40:1. As the financial crisis occurred, institutional investors had their credit lines pulled back. Consequently, they had to reduce the amount of investments that they’d borrowed money to make. So a hedge fund that has $10 billion under management and a leverage factor of 20 might have $200 billion of leveraged trades. Then suddenly you don’t have the money to support $200 billion worth of leveraged trades. You have to liquidate most of them because you really only have $10 billion—which is going down in value fast. So there’s been this massive sale of leveraged products. It’s like running for the exit in a theater when somebody yells fire. It’s a very small door, a very illiquid market, and all of a sudden there’s no provision of credit. Everybody’s trying to get rid of their leveraged exposure all at once and these prices have just plunged down. That’s really what it’s been.

TGR: But silver has lost nearly half, while gold is down less.

JC: Silver prices are always more volatile than gold prices. That’s just a fact of life. It has to do with the fact that the silver market is about one-twelfth the size in dollar terms. The other thing is that gold is money and silver is like money. Silver has this schizophrenic personality. It is an industrial commodity, but it’s also a financial asset and you do see more people investing in gold than in silver worldwide right now. As the prices plunged, you have seen an unprecedented volume of physical gold and silver being purchased by investors around the world. So you have this dichotomy, where the price is being hammered down by de-leveraging in the paper market, while people—in some cases the same people—are taking what’s left of their chips and putting them into physical gold. One of the things I think you will see going forward over the next many years is a lot of institutional investors, including sovereign wealth funds and government funds, wanting exposure to gold and silver but not on a leveraged basis where they’re really owning IOUs issued by major banks. They are wanting the physical material.

TGR: Does that hold true for retail investors too? So rather than buying ETFs or Central Fund of Canada (AMEX:CEF), should they be buying actual physical?

JC: It really depends on the investor and their perspective. The high net worth individuals we deal with own some physical gold and silver and maybe platinum group metals that they actually store in their own vaults. They own other material that’s being held for them in depositories in various parts of the world. They also own some ETFs, some options, some mining companies and some exploration companies. So it’s really a diversified portfolio.

Except for these high net worth individuals, we don’t deal with retail investors directly as customers at CPM Group. We talk to them, though, and we do deal with people who supply the retail market. A lot of people are moving into the physical material. Demand in the ETFs also has been strong over the last few months and some of that demand comes from people who can’t get their orders filled for one-ounce coins or 100-ounce silver bars. They’re buying ETF shares instead because they’re the next best thing.

TGR: Does that carry implied leverage?

JC: The ETFs do not. The ETFs are ounce-for-ounce and it’s held in an allocated account. If I’m an investor and want to own a 100-ounce bar, I can’t find one in silver. Northwest Territorial Mint will sell me one if I want to wait 16 weeks for delivery. Silver Recycling Company [TSX.V:TSR] is also selling them and they have it for relatively prompt delivery, but that’s a very new development just in the last few weeks, in response to this market. If I’m an investor and I want to buy 100 ounces of silver and can’t find Maple Leafs or Eagles and I can’t find a 100-ounce silver bar, I can buy a share of an ETF and have it stored for me on an allocated basis through the ETF mechanism.

TGR: Suppose the economy actually does start to turn around, as you’re projecting maybe in the second half of 2009, and you have all this money on the sidelines, which you indicated might flow back into the marketplace rapidly. Does that mean gold will rise through the recovery and then go back down?

JC: Because gold is money and an alternative asset, gold and silver probably will rise in the first half of 2009 in response to the economic distress that we expect at that time. And then as the economy recovers—let’s be hopeful and say it starts in the second half of 2009—you actually might see gold and silver come off some. Platinum group metals, which we’ve only mentioned in passing, are the other way around. They’re really industrial metals, heavily tied to auto sales and so probably will remain weak until auto sales recover. But when that happens, expect platinum group metal prices to rise sharply.

TGR: You mentioned Silver Recycling starting to sell physical silver. What else can you tell us about this company?

JC: For purposes of full disclosure, I personally own some stock in Silver Recycling and they are a CPM Group client. We are financial advisers to them. I can talk about who they are and what their ideas are, what their plans are. I like the company a lot because they’re basically a consolidation play to create a publicly traded company in refining silver from scrap. They’ve identified three initial targets of small privately owned silver recyclers in the United States and are working with them. They have agreements with all three to acquire them and bundle them together, consolidate them and benefit from the economies of scale. And then there are other companies they can target later. It’s a very interesting operation. If you compare them to a silver mining company, they have the capacity to produce silver from scrap without any of the capital costs, country risks and operational risks that are common with a mine. So lower costs, less capital, fewer risks, still producing silver.

TGR: What sort of volume are we talking about?

JC: The first company they have an agreement with has 5 million ounces of production a year. The others have somewhat less. I don’t know the numbers off the top of my head, but I believe that the three companies combined would be producing something in excess of 10 million ounces a year.

TGR: Using that as rough estimate, what publicly traded silver producers come up with 10 million ounces a year?

JC: I think Coeur d’Alene Mines Corp.(NYSE:CDE) is slightly less than that this year, but maybe more than that next year. Apex Silver Mines (AMEX:SIL) and Pan American Silver Mines (Nasdaq: PAAS) probably produce more than that. Silver Standard Resources (Nasdaq: SSRI), which is moving toward opening its Pirquitas mine, will produce more than that when they’re up. There are probably a few other companies—Hecla Mining Company (NYSE:HL), maybe—that I’m going to anger people for forgetting. And then there are some larger diversified mining companies that produce much more than that. Penoles [MX:PE&OLES] is a good example. A lot of people think of Peñoles as a silver mining company and it does produce an enormous amount of silver, but it also produces lead, zinc, copper and gold. Also KGHM and BHP, but they’re not silver companies per say, either.

TGR: What other companies, either in silver or gold, would you recommend our readers take a look at?

JC: Well, we’re really commodities analysts. I’m proud to say I am not an equity analyst. I don’t sit there and tell people which equities to buy on any given day. I won’t tell anybody what to do with their equity investments, but I’ll tell you what I do with mine. I have a diversified portfolio.

Let’s look at the gold market. I have physical gold. I sometimes have futures and options in gold. In the equity side, I have AngloGold Ashanti Ltd (NYSE:AU) shares. I have Goldcorp (NYSE:GG) right now. I don’t have Barrick Gold Corp (NYSE:ABX) right now. I have in the past. I like Barrick a lot. And I have some smaller exploration and development companies in my portfolio. I tend to look for really well managed large companies that are cash flow generators, like Goldcorp, and I also look for exploration and development companies that have the capacity to bring production on stream within a couple of years, they have attractive mines, and management that I find good. So that’s it in gold.

TGR: What are some of these other companies?

JC: It’s not an exploration company along the lines of that, but one name I’ll throw out is Tanzanian Royalty (AMEX:TRE), Jim Sinclair’s company. It’s been hammered down along with everything else lately, but I still like it a lot.

TGR: And switching to silver?

JC: I like Silver Standard. I like Silver Standard’s management a lot. I think this Pirquitas mine that’s coming on stream will be a company maker. I also like Apex Silver Mines; I’ve been involved with Apex since before it actually was officially organized as a company. I think that’s good. Pan American is a very interesting growth story. Coeur d’Alene has been hammered in this market, but it has some very interesting properties, so it could do well. And Hecla is probably a tremendous turnaround story. Management over the last several years has done a remarkably good job in rebuilding Hecla Mining.

TGR: Gosh, they’ve been beaten up, too.

JC: Yeah, everybody’s beaten up. I spend a lot of time these days talking to clients about the difference between value and price. Six months ago we were talking about the fact that the price was over the value of a lot of mining assets and now we’re talking about the fact that the prices are woefully under the value of a lot of these companies. A company like Great Panther Resources [TSX.V:GPR] is a pretty interesting story. Fortuna Silver Mines [TSX.V:FVI] I like a lot. Endeavour Silver Corp (AMEX:EXK) is a good company, an emerging company. I’m afraid to leave out people. I own some Silvercorp Metals [TSX:SVM], a very interesting company with lead and silver mines in China. What I do is I look at companies from a management perspective and a property perspective. First thing is I’ve got to be comfortable with management.

TGR: What about platinum group metals?

JC: I thought platinum was overvalued years ago and it just kept rising and rising, but now it’s clearly undervalued. The cost of producing platinum or palladium at most mines in the world is higher than the current prices. About 50% of platinum in the world goes into auto catalysts, 60% of palladium and 80% of rhodium. With the auto industry and the auto market on their back in North America and Europe, these markets have spiraled down. A lot of investors who poured into the platinum markets partly based on the auto story are now pouring out. I think platinum group metals prices will rise sharply once the auto industry turns around.

And, the auto industry will turn around. Not necessarily because of the situation in the United States, but if you look at the BRICs, for example, you have a tremendous growth in auto sales and it’s fallen. In China it’s gone from 15% per year down to about 8% per year, but that’s a cyclical thing. It will turn itself around and people will start buying more. An interesting thing about platinum is that you don’t have the share market similar to what you have in gold and silver. In North America you have North American Palladium Mines (AMEX:PAL) and you have Stillwater Mining Company (NYSE:SWC). Both are having problems right now.

TGR: With costs exceeding current prices, the issue on the production side is clear, but what’s the problem on the exploration side?

JC: They can’t get financing. And insofar as some of these companies are exploring in South Africa, problems related to electricity and electricity allocations predate the bank panic. South Africa basically has not really invested in electricity-generating capacity for a decade. Those power shortages and outages are going to take many years to solve. They’re saying they’ll pay attention to existing mining companies, existing corporations, existing consumers of electricity. When you’re building a mine, you have to go to Eskom, the state electrical utility. Unless you’re already in the construction phase and have your electricity allocation, they’re just going to say they don’t know when they will be able to supply you electricity. That’s going to delay exploration and development. On top of that, the financial freeze will delay a lot of new capacity coming on stream. That will make the platinum group metals that much tighter.

TGR: As we come out of this recession, many people say certain sectors will emerge faster than others. You talked about how gold’s going to have a nice run up while we’re in recession. What commodities should we expect to come out of the recession first?

JC: I think gold and silver come out first. We’re looking at some specialty metals like ferroalloys—vanadium and molybdenum—because those markets are much tighter. The prices have been beaten up, as have the prices of larger metals like aluminum and copper. But if you look at molybdenum, for example, a lot of its uses are in transmission pipelines for gas and oil, offshore platforms for gas and oil production, and drilling pipe and production pipe for oil and gas. Even with lower oil and gas prices, these areas are going to be very strong over the next five, 10, 20 years. So we think you’ll see a relatively fast turnaround for a lot of these specialty metals, things that are harder to come by, but generally speaking are indispensable in critical economic applications. I think steel will also do very well because I expect the new government in the United States to undertake a major new program to rebuild all of these bridges that are about to fall down. I think you’ll see steel do very well from that perspective.

A graduate of the Missouri School of Journalism (University of Missouri, BJ, 1977), Jeffrey M. Christian chose his course of study because he was interested in chronicling developments in places such as Africa, Asia, Latin America and Central and Eastern Europe (well before they emerged as significant world economies). In 1980, Jeff left his job as an editor at Metals Week, an industry publication—having decided that metals markets he wrote about appealed to him more than journalism did. A year before Goldman Sachs acquired it, J. Aron and Company brought him on board and he soon managed the Commodities Research Group’s precious metals and statistical work there. In 1986, he engineered a leveraged buyout of this group—of which he was then VP—to create CPM Group, which he has led to become a world-class research, consulting, investment banking and asset management company that focuses on the fundamental analysis of global commodities markets. Jeff continues to write extensively.

 

Since the late 1970s, he has authored many pieces on precious metals markets, commodities and world financial and economic conditions. In 1980, he wrote World Guide to Battery-Powered Road Transportation: Comparative Technical and Performance Specifications. Now out of print, it remains a great index of many of the earliest electric cars. In 1981 he wrote one of the first market reports on the platinum metals group. Fast-forward to the 21st century, he and his staff of analysts write six major reports per year for publication and 12 monthly reports plus several more weekly reports and special reports. He published Commodities Rising in 2006. Jeff has pioneered application of economic analysis and econometric studies to gold, silver, copper, and platinum group metals markets, as well as efforts to improve and extend the quality of precious metals and commodities market statistics and research overall. As passionate about his work today as he was 22 years ago, he loves the fact that it gives him a tremendous network of contacts at high levels and a tremendous amount of discretion as to the work CPM Group undertakes. CPM counts among its clients many of the world’s largest mining companies, industrial users of precious metals, central banks, government agencies and financial institutions.

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The Safest Ways To Invest in Gold and Silver

By: Jason Hamlin of Gold Stock Bull

I am often asked what is the best or safest way to get exposure to precious metals. To be sure, there is a dizzying array of options from owning and storing the physical metal yourself to buying junior mining stocks. But the current crisis of confidence, brought on by the collapse of institutions that nobody thought could fail and the most recent $50 billion Ponzi scheme, has investors looking at safety and wealth preservation more than ever.

Buying physical gold and silver gives the owner definite possession, but comes with high premiums and the necessity to store and protect the metal. This can be done via a bank safe deposit box, but adds to the cost of owning the metal and doesn’t provide total peace of mind for many investors that have lost trust in the banking system. Others might prefer to store the gold on their property, hiding it in the floorboards or purchasing a safe. But this potentially puts you and your family members in harm’s way and again does not offer 100% security.

For investors that prefer not to hold the physical gold, yet place a high value on the safety of their investment vehicle not to default, I recommend the Central Trust of Canada (CEF) or its all-gold counterpart, the Central Gold Trust (GTU). Unlike the popular ETFs such as GLD and SLV, these funds do not lease out your gold and they always maintain 90% or more of assets in unencumbered, segregated and insured, passive long-term holdings of gold and silver bullion. Trace Mayer of Runtogold.com, recently published an article detailing the risk of investing in GLD and SLV. James Turk and others have also covered the unanswered questions about these ETFs in earlier articles.

Setting itself apart from the competition, the stated investment policy of the Board of Directors requires Central Fund to maintain a minimum of 90% of its net assets in gold and silver bullion of which at least 85% must be in physical form. On July 31, 2008, 97.6% of Central Fund’s net assets were invested in gold and silver bullion. Of this bullion, 99.3% was in physical form and 0.7% was in certificate form.

Central Fund’s bullion is stored on an allocated and fully segregated basis in the underground vaults of the Canadian Imperial Bank of Commerce (CM), one of the major Canadian banks, which insures its safekeeping. Bullion holdings and bank vault security are inspected twice annually by directors and/or officers of Central Fund. On every occasion, inspections are required to be performed in the presence of both Central Fund’s external auditors and bank personnel. Central Fund’s chief executive comments:

Our bullion is stored in separate cages, with the name of the owner printed on the cage, and on top of each pallet of bullion it states Central Fund or Central Gold-Trust. This disables the bank from using the asset from any of their purposes. We also pay Lloyds of London for coverage of any possible loss.

Adding to investor peace of mind, CEF has been around since 1961, is based outside of the U.S. (Calgary, Canada) and is run by a board that is respected in the precious metals community, not a bunch of corrupt Wall Street cronies. Demonstrating transparency that is much needed in today’s investment climate, Central Fund makes regular trips to visit the assets and takes their auditors with them. And you get the sense that you are dealing with honest gold investors and not slick marketing or public relations specialists by taking a quick perusal of the CEF website. While they aren’t going to win any design awards, the website is packed with all of the investor information necessary for due diligence.

On the downside, CEF does come with a hefty premium (currently at 16% to NAV). But this premium is less than the premium you are likely to pay on physical bullion, so it is a non-issue for me. And while it is a greater premium than GLD or SLV, I am willing to pay it since I have about as much faith in those ETFs as I do in the Comex.

Tax implications are another deciding factor. Ian McAvity, founding director and advisor to CEF, said there are definite tax advantages to CEF as opposed to an open-ended ETF. Long term gains in the gold ETFs (and presumably Barclays’ silver ETF) would be taxed as collectibles at 28%, according to the Gold ETF prospectus. As a passive foreign investment company with shares not convertible into bullion, CEF is believed to qualify as a passive foreign investment company [PFIC] to enable the 15% capital gains tax treatment, which can be an important factor for investors with long-term ambitions and taxable accounts, said McAvity.

Lastly, we should consider the performance of the various investment options. Year-to-date CEF underperformed by 3 points versus GLD, but this is largely due to the silver exposure. A more fair comparison would be to use Central Gold Trust. GTU significantly outperformed GLD (14 point gap), which should ease any concerns investors have about a higher premium. CEF and GTU offer not only more peace of mind, but better returns compared to the “trust us, the gold/silver is there” approach from iShares or SPDR. It is also interesting to note that the Gold Miners ETF (GDX) is the worst performer year-to-date. This could change as precious metals prices take off in 2009, but I am inclined to park at least half of my gold/silver investments in a safer place than stocks or funds that can’t prove that they actually have physical gold to back my investment dollars. Year-to-date returns are as follows:

click to enlarge

ETF Chart_1.png

While GTU has outperformed CEF during 2008, I expect silver to outperform gold during the next upleg and thus I own and favor CEF for 2009. Regardless, both of these funds represent sound investment choices during a time when there are fewer and fewer safe places to park your assets. Peace and prosperity to all.

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Mickey Fulp, “Mercenary Geologist”: Look for the Right Share

Structure, People, and Projects

 

Sourcee:  The Gold Report

 

 “Mercenary Geologist” Michael S. (Mickey) Fulp’s 29 years of field experience as an economic geologist evaluating exploration and mining projects throughout the Americas and China make him uniquely qualified to give The Gold Report an intriguing overview of what’s happening now in gold, precious metals and rare earths, and uranium. Mickey, always on the lookout for companies with the right share structure, people, and projects, is a proponent of the “Boot Leather and Drilling” style of exploration. He gives us a quick tour of his take (and favorite stocks) in the sector.

The Gold Report: On your website, it says you look for stocks that can double share price in 12 months or less. Is that still true in this bear environment?

Mickey Fulp: Most definitely. It’s not so easy to pick those doubles now, but I certainly think that should always be the goal in speculative resource stocks. I’ll pick stocks that I think will double in 12 months or less and stick to the way I’ve always traded; that is, when those stocks double, I sell half of my position plus enough to cover my brokerage fee; then I’m playing with the house money with a zero cost basis and half my original position. Then I take that money and do it again on another stock.

TGR: I know that you wear several hats, and I want to start with your global economy hat. What are you seeing in terms of precious metals, and how they’ll be reacting in the bear environment? Can you give me an overview of what you see happening in gold?

MF: I’m looking here on my KCAST (Kitco) gold, and it’s $753 an ounce as we speak. I think $750 is a viable price for legitimate gold producers. It’s unknown how gold will react in a deflationary environment. We’ve never really experienced a deflationary environment in modern times when the price of gold was floating because, when the Great Depression started, gold was $20.67 an ounce. Roosevelt raised that to $35 an ounce in 1933, made it illegal to own privately, and the price of gold was fixed throughout the Depression and until Nixon’s debacle in 1971.

Arguably, we are in a deflationary environment right now. I personally think we’re in a depression. At some point, with the Fed creating money willy-nilly and the U.S. government bailing out all the failed financial institutions, we’re going to look at a hyper- inflationary environment; and we all know that bodes well for the price of gold.

TGR: We’ve talked about the bailout here in the U.S., but there are also forms of bailouts happening in Europe and China. If every government is inflating its currency …

MF: That’s very true.

TGR: Worldwide, doesn’t that kind of equalize?

MF: Well, you can make that argument, but it’s hard to know which currency is going to come out on top on this. Probably none because they are all fiat with no hard asset basis. Certainly, fiat currencies in nearly every country are in a world of hurt right now. We just saw the Chinese devalue its currency—what was it—6% this week? Yes, it does even out, and the price of gold will rise with hyper inflation.

TGR: Let’s switch over to silver and other precious metals. Are you focusing just on gold or do you think there’s also a play for silver, palladium, platinum?

MF: I don’t have a strong opinion on platinum and palladium because they are so driven, no pun intended, by the auto catalyst market and with the downturn in automakers worldwide, that does not bode well for those two metals. On the other hand, they certainly have value as precious metals. Silver is also a bit of both. It’s both an industrial metal and has some value as a store of wealth. One thing I’ve looked at lately (and I’ve actually been a buyer of physical silver for the last couple of months or so), is the gold-silver ratio. Whenever it gets high, as it is right now, I consider that a buying opportunity in silver.

There’s been a lot of press about silver not being available, but silver is available in large bars. You can buy a 1,000 ounce bar through COMEX and take delivery on a January contract now—for somewhere around 25 cents over the spot price, if you pick the right broker. When I see the gold-to-silver ratio go above 80, I consider that a buying opportunity for physical silver.

TGR: We always hear that silver has more swings than gold and it will lag gold when gold starts to go up.

MF: It does have wider swings and that gives it some more volatility on both the upside and the downside. I look at that as a way to make money. Because of its volatility, it could lag gold on the way up; if it does, then the ratio gets out of whack. Historically, the ratio was 16:1. When gold and silver were both floated on the open market that ratio grew. Over the past 10-15 years it has been somewhere between about 40 and 70. As we speak right now, it’s 80.

So you can play sort of an arbitrage; the increased volatility of silver compared to gold gives you some leverage, much the same as playing junior resource stocks gives leverage on both the upside and the downside vs. the price of gold. Junior resource stocks will go up and down with much more volatility than the price of gold, so that’s how we end up with the proverbial five or ten baggers. In this environment, those five and ten baggers can be negative five and ten baggers. But at some point, resource stock valuations get so low that good companies—especially those with current gold production or near-term production, positive cash flow, and in particular, takeover targets—are ridiculously undervalued.

TGR: In your newsletter, Mercenary Musings, do you talk about buying physical gold and silver or do you focus on equity investments?

MF: I focus on many things, including stocks, educating investors, markets and macroeconomics, commodities, libertarian ideals, my field adventures, etc. I’m not a certified financial analyst. I’m a geologist with nearly 30 years experience. I basically tell people what I have done, or am doing, in the market. For instance, when I find a stock I like, I may say I’m accumulating this right now; I like this about that, etc. So my newsletter is quite varied.

TGR: We were talking earlier about palladium and platinum and I noticed that one of the companies you have in your technical analysis is Avalon Ventures Ltd. (AVL: TSX-V). I believe that’s a rare metals company.

MF: Yes, it is.

TGR: Would you talk a little bit about your viewpoint of rare earth elements, kind of global economics, and the importance it will play or the downside it will face given the recession that we’re all going through?

MF: That’s a very good question. Rare earth elements are increasingly used for high-tech applications, specifically super magnets and batteries. They are in short supply because in the late ’80s and early ’90s, the Chinese developed a very robust deposit in Northern China and, basically, they cut out all the established world producers by drastically lowering prices. They now supply over 90% of the world’s rare earth elements. These metals are critical for hybrid cars and large commercial air conditioning systems; they’re also used extensively in high-definition LCD TVs and electronics technology. For example, cerium provides the red color for your little LCD headlamp. So there’s a bunch of varied high-tech uses for these metals. Certainly demand for those things is dependent on a viable world economy.

Avalon’s in an interesting position, as it has a unique deposit in the Northwest Territories about hundred kilometers East-Southeast of Yellowknife. The Thor Lake deposit is concentrated in the heavy rare earth elements. Rare earth elements are kind of a mixed bag of 16 elements (15 plus yttrium), and they always occur together. Avalon’s deposit is unique in the fact that, in this series of 15 elements on the periodic chart from atomic number 57 to 71, the heavy rare earth elements are much more rare than the light rare earths.

As a result, they are in greatly increased demand and they trade at very high values, hundreds of dollars per kilogram in some instances. So I’m bullish on the long-term prospects for Avalon. It’s really been beaten up lately with a year high of $1.97, a year low of about 35 cents; currently it’s at 40 cents. It made a rally a couple of months ago and has gone south since then. The key to Avalon is they have a deposit that is potentially economic outside the Chinese supply monopoly. They are being courted as we speak by Japanese auto makers because the Japanese cannot depend on the Chinese for a supply of rare earth elements. The Chinese have put on export quotas and taxes because, as much as possible, they want to keep all their production in China and develop processing facilities there. They consume about 60% of the world’s rare earths.

TGR: You said earlier the key to the deposit of Avalon is to make it viable outside the Chinese monopoly. It sounds to me that, given the two facts you stated immediately afterward, it’s going to be clear imminently.

MF: It’s going to be clear soon because Avalon is working on a resource estimate as we speak that will include drilling through last winter. They drilled this summer with great success, and they will come back with a second resource estimate and a process metallurgical report, probably by the end of the first quarter of next year, and then move on to a pre-feasibility study. So, assuming we have a viable world economy—and, arguably, that’s questionable right now—I would look at Avalon as in play, if you will, or looking to secure an off-take agreement for its production with a Japanese company sometime in 2009.

TGR: When will it start producing?

MF: I think they’re still about four years away from actually constructing a mine and getting it into production. The climate up there is northern boreal forest and water or ice, so for the construction phase, it’ll be a seasonal operation.

TGR: Are there other potential prime geological territories that might produce these rare earth metals?

MF: The area that comes to mind, of course, is Mountain Pass, which is in southeast California. It dominated world production until it was cut out by the Chinese. It’s just sitting there, held by Unocal with something like 20 million tons of nearly 8% to 9% in dominantly light rare earths, so this is a bit of a different market than what Avalon would be courting because Thor Lake is a heavy rare earth element deposit. There’s also a deposit in Australia, Lynas Mining’s Mt. Weld, concentrated in neodymium and it could dominate the supply of neodymium.

TGR: Is that in production?

MF: No, but it is in development and pending completion of concentrating and materials plant facilities. The rare earth elements themselves are not particularly rare, but the deposits that concentrate them in minable quantities are extremely rare worldwide.

TGR: I also see, when looking at your Mercenary Musings online, that you had a recent Musing regarding Animas Resources (TSX.V:ANI). What caused you to write about that specific company?

MF: Well, as with most of the things I cover, I put my Mercenary money where my mouth is. I was an IPO investor of Animas Resources. I still hold the warrants. It’s a story I have followed since inception. I have a bit of a mantra about a good company; it’s got to have the right share structure, people, and projects. And, in my view, Animas has all three of those.

It’s a Carlin-type system in Northern Mexico, having produced 650,000 ounces of gold in the 1990s, and then shut down in 2000, because of a depressed gold price of $300 an ounce. It shut down with an historic resource, not 43-101 qualified and I need to make that clear, of 718,000 ounces. It has the geologic characteristics of Carlin-type systems in northeast Nevada and, in my Musing, I list 10 of those.

It’s never been drilled deep, and it’s never been drilled systematically under gravel cover adjacent to the 12 small deposits that were mined in 22 separate pits. So it’s historically been a district—and Animas controls the entire district—that has produced from small deposits. Management at Animas includes a “who’s who” of senior-level geologists who have worked for major mining companies. One of its consultants is Odin Christensen. Odie was Chief Geologist for Newmont Mining Corp. (NYSE:NEM) in the Carlin Trend when it first was drilled deep. And huge, deep high grade gold deposits were found, which really made the Carlin Trend. I see the same geological characteristics at Santa Gertrudis. The management is good; low number of shares outstanding—less than 27 million shares; very tightly held. It hit an all-time low at 29 cents today; it’s very encouraging that the entire management and controlling group of this company has never sold shares or exercised options. They obviously like the project and intend to play it out.

It’s strictly an exploration play. I don’t like very many exploration plays right now; but, with working capital at $4.5 million, they can go at least to early 2010 and give Santa Gertrudis their best shot. If they find big, deep, high-grade Carlin-style deposits, they will be in play as a takeover candidate. If they don’t, they have other options. There are lots of small miners in Mexico, small junior companies mining less than 100,000 ounces a year in that region. Animas has six different projects in the district and it could JV some of them out to people that want to mine on a smaller scale.

TGR: We covered gold, precious metals and rare earths, and uranium. It’s been quite a tour around the world here very quickly.

MF: I have one other gold company that I like—PDX Resources Inc (TSX:PLG), formerly called Pelangio Exploration.

TGR: What’s caused you to focus on this one?

MF: I followed the story for quite some time, did my detailed due diligence, and became a shareholder. PDX owns 19 million shares of Detour Gold (TSX:DGC); the Detour Lake gold property in Northern Ontario. Detour Gold, at a $700 gold engineered pit, has 10.75 million ounces of gold resource. That’s measured and indicated resource. That’s always important—measured and indicated. It has some additional inferred, but I don’t pay much attention to inferred resources.

If you do the math, Detour Gold is now being valued at over $15 per ounce of contained gold. PDX Resources owns 42.4% of Detour Gold shares and their valuation now is $10.50 an ounce. Detour Gold is in the final throes of a feasibility study. It was scheduled to be out by the end of this year; I do not know if they’re presently on schedule for that, but they become a takeover candidate with a positive feasibility. You have leverage there for PDX shares vs. Detour Gold shares, at a 30% discount per ounce of gold in the ground.

TGR: But you’re saying Detour is the potential takeout candidate?

MF: Yes, it is.

TGR: Isn’t this what you mentioned earlier, where the only potential company that would take them out because of their share structure is PDX?

MF: No, PDX Resources originally spun out 50% of the deposit to a new entity, Detour Gold, a Hunter-Dickinson company and now exists only as a shareholder of Detour Gold. It is the minority shareholder, and is comprised of expert explorationists. So recently in September, it spun out all its other properties into a new exploration company, which is Pelangio Exploration; thus PDX holds its Detour Gold shares solely for investment purposes. With 10.75 million ounces, this is a huge deposit; it was a past producer of Placer Dome. It failed because of a low gold price in the previous downturn in the gold business. I think you’re probably looking at a bidding war for Detour Gold.

Goldcorp (TSX:G) (NYSE:GG) is the obvious candidate and we saw what Goldcorp did with its acquisition of Gold Eagle in the Red Lake District. Kinross Gold Corp (K.To) (NYSE:KGC) is a possible suitor. With this size of deposit, you’ve got to throw in the big boys—Barrick Gold Corp (NYSE:ABX), Newmont, Anglo, Gold Fields Ltd. (NYSE:GFI)—and some of the mid-tier gold companies looking to become major producers. It’ll get taken out at the Detour Gold share price, which is now trading at $15 per ounce of gold in the ground, while PDX is currently trading at $10.50. That’s 30% discount, so you have leverage to the upside with PDX Resources. Make sense?

TGR: That’s a great and very interesting play. Mickey, thank you for your time.

Michael S. “Mickey” Fulp, who launched MercenaryGeologist.com in late April 2008, brings more than 29 years of experience to his role as an exploration geologist. Specializing in geological mapping and property evaluation, Mickey has worked as a consulting economic geologist and analyst for junior explorers, major mining companies, private companies and investors. Check out his website for free access to the Mercenary Musings newsletter, as well as technical reports. Future offerings will include a premium paid subscription service that provides early and special access to subscribers. You may contact him at mailto:Mickey@MercenaryGeologist.com.

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Now Gold is currently up over $35/oz. What are you waiting for? Time to get on board- Good Trading! – jschulmansr

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Is the “Squeeze” Starting In Gold?

16 Tuesday Dec 2008

Posted by jschulmansr in capitalism, commodities, Copper, Currency and Currencies, Finance, Fundamental Analysis, gold, hard assets, inflation, Investing, investments, Latest News, Markets, mining stocks, Moving Averages

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Is the “Squeeze” Starting In Gold?

Short Note by jschulmansr of Dare Something Worthy Today Too!

Word is slowly leaking out on the street that a potential short squeeze is developing in the Gold Market where we are already seeing backwardation. If traders and investors etc. start taking delivery on their gold contracts we will see a lot of the “Shorts” scrambling to be able to make delivery, while chasing a very short supply. It would appear that we have a “perfect storm” starting to form. Since the “Shorts” are actually legally bound to make delivery there is a very real possibility of a “bidding war ensuing in the Gold Market Commodity Trading Pits.  In turn this may turn out to be the final catalyst needed to breakout gold above the $850 resistance level and “jump-start” the next upward leg of the “Golden Bull”. If you haven’t already started, get invested in Precious Metals especially Gold NOW! If already invested you may want to load up on some more and increase your holdings. Either way in the long term picture I do not think that you will be disappointed. However, remember to do your Due Diligence before making any investments.

Good Investing!-jschulmansr

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Counterparty Risk May Lead to Potential Squeeze in Gold Market – Seeking Alpha

By: Mark O’Byrne of Gold and Silve Investments  

Gold rallied sharply last week and was up nearly 9% despite continuing uncertainty and a very mixed performance in stock markets. The US dollar index fell some 4% on the week and it looks increasingly likely that the dollar may have topped out and may soon resume its bear market. For the year, gold is now up by more than 4% in dollar terms and by much larger amounts in euros (+11.7%) and pounds (+40.4%).

Gold rallied sharply on the open in Asia and has remained elevated as oil is stronger (up some 4%) and the dollar remains weak.

The FT reported late Friday on the potential for squeeze in the gold market by year end which would see prices rise materially.

The FT’s Chris Flood reported that:

Traders have been hearing talk that the gold market could face a potential squeeze at the end of this year if market participants with futures position on New York’s Comex exchange decide not to roll over their positions, because of concerns about counterparty risk and opt for physical delivery instead.

But dealers dismissed the threat of a squeeze, pointing out that Comex gold stocks stand at 8.5 million ounces, well above the five-year average of almost 6 million ounces. …”

The 8.5 million ounce figure cited by the FT is actually the total Comex gold inventory which includes gold that belongs to customers who are storing it on the exchange which is not available for delivery. The amount that is registered to dealers, and therefore available for delivery, is only 2.846 million ounces. The delivery notices that have been issued so far in December total 1.26 million ounces, which is 44 percent of the available deliverable gold. There is also the possibility that some of the gold may be encumbered in lending/swap operations.

According to the Gold Anti-Trust Action committee (GATA), the Comex authorities themselves have been alerting various futures firms about the potential of a squeeze on the December contract . The Comex is allegedly advising the $840 December shorts to exit their remaining open positions. There have been 12,636 notices of delivery. The shorts have until December 31 to make delivery. Normally they deliver early to take in cash and earn the interest.

This represents about 43 percent of the gold available at the Comex. Some speculate that concerned futures players could buy the February gold contract and then spread into December, which would shock the shorts and lead to a massive short squeeze sending prices markedly higher in a short period of time.

Former Federal Reserve Governor Says Fed’s Gold is Important Asset

Another bullish development for the gold market was former Federal Reserve Governor, Lyle Gramley reassuring that the Federal Reserve’s solvency was not at risk (due to its rapidly deteriorating balance sheet). Gramley denied such concerns were valid as he said the Fed has significant assets in the form of undervalued government gold certificates.

Interviewed Monday last week on the “Trading Day” program of the Business News Network in Canada, Gramley hinted that a big upward revaluation of gold may figure heavily in the Fed’s attempt to rescue the U.S. economy. Gramley, now senior adviser at Stanford Group in Houston, was asked about the seemingly grotesque expansion of the Fed’s balance sheet in recent months by the program’s guest host, Niall Ferguson, an author and history professor at Harvard.

Ferguson asked:

I’ve heard it said that the Fed has turned into a government-owned hedge fund, leveraged at 50 to 1. Do you feel nervous about what this might actually do to the Fed’s reputation?

Gramley reponse was:

I think you have to reckon with the fact that one of the Fed’s assets is gold certificates, which are priced, as I remember, at $42 an ounce, and if we were to price them at market prices, the Fed’s leverage would look a lot less than it is now.

More signs that gold is increasingly being viewed as the potential savior of central banks internationally from the global deflation gripping the world. The Federal Reserve is one of the largest holders of gold in the world with most of its foreign currency reserves in gold. A devaluation of the dollar and revaluation of gold may help the U.S. government and the Federal Reserve to protect their solvency and inflate their way out of a Depression.

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Gold Is One of The Few Investments That’s Up This Year

By: Tim Iacono of The Mess That Greenspan Made

Don’t look now, but the little yellow metal that pays no interest and provides no dividend is one of just a few assets that can make the claim of being in positive territory for the year.
IMAGE

It’s only eked out a gain of about one percent – a London PM fix of $833.75 last December 31st versus about $840 as this is written – but, most investors would be happy with any number that doesn’t start with a minus sign this year.

Interestingly, if you held the physical metal versus the paper variety, you’d be up somewhere around five percent at the moment.

The next two weeks could also be kind to gold as the second half of December has produced an average gain of about two percent over the last seven years, since the price began rising at the rate of almost 20 percent per year.

IMAGE Just an average gain between now and New Year’s Day would put the price at around $860 an ounce, still down more than 15 percent from the high seen in the spring, but quite a good result, all things considered.

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These Commodities Are Starting To Look Tradable Again –

by Lee Lowell, Futures Options & Commodities Specialist, Smart Profits Report

In my last column on December 1, the price of crude oil had just slid under the $50 a barrel level – and over the past couple of weeks, the action has continued to be anything but boring.

We’ve seen the price drift down just shy of the $40 mark – a level we haven’t seen on a front-month futures contract since December 2004.

To illustrate how fast the market is moving these days, we saw a very brief bounce back to $50 earlier today before the gooey stuff fell right back down to $45.

Now that’s what I call some good, old-fashioned intraday volatility.

I don’t know about you, but I’ve noticed that the price of gasoline at my local station has shifted more than usual on an intraday basis, too.

But if the OPEC oil cartel has its way, we could see oil climb more forcefully again. The ministers have already promised to “shock” the market with a supply cut when they meet on Wednesday. I think anything under a two million barrel per day cut will be seen as bearish for the market.

Natural Gas Edges Closer To A Prime Bullish Level

Natural gas prices have made another move lower, finally falling under the $6 per MMBtu level to its current level of approximately $5.650 per MMBtu. We’re looking for natural gas prices to get down to the key $5 per MMBtu level.

Why? Because the $4.500 to $5.000 per MMBtu area has proven to be a solid support level for the past six years. The last time prices traded under $4.500 per MMBtu on a consistent basis was in early 2002. If it does so again, this is the price at which we could consider a bullish trade.

Has Logic Returned To The Precious Metals Market?

At last! The old theory of precious metals being in high demand during times of economic turmoil might finally be coming back into play.

It seems that gold and silver have washed out all the weak bullish speculators, with both metals enjoying decent technical bounces and possibly regaining some upside momentum.

Gold has already made solid upside moves over the last two weeks and silver looks like it might be able to break out of the narrow trading channel that has trapped it for the past two months.

Keep an eye on these because if the world markets continue with their downtrends, these metals could be the only bullish things around.

But hold on a second…

Grains Looking Good

Over in the grains world, we’ve seen some good upside action over the past week, with corn, wheat, and soybeans all beginning to look up.

Check out their charts here:

CORN: http://futuresource.quote.com/charts/charts.jsp?s=ZC%20H9
WHEAT: http://futuresource.quote.com/charts/charts.jsp?s=ZW%20H9
SOYBEANS: http://futuresource.quote.com/charts/charts.jsp?s=ZS%20F9

Along with the rest of the commodity sectors, these markets topped out in July after making new all-time highs and have been mired in stubborn downtrends ever since.

It may be too early to tell if these markets have finished with their downmoves as historically speaking, prices are apt to trend lower from this time forward until springtime, since most of the harvests have been concluded. But while we may see grains drift south just a little bit longer, we might have seen the last of the 2008 lows at this point.

Cotton Looks Tempting, But We’re Going To Hold Off A Little While Longer

As I’ve mentioned a few times in recent weeks, the cotton market was trending down towards its all-time low price of $0.28 per pound, which it set in 2001 (based on information spanning back to 1979). So with that possibility still in sight, I’m keeping a close watch on it.

The current front-month futures contract (March 2009) dipped under the $0.40 per pound level on November 20 and has since turned higher to its current level of $0.44 per pound.

In my opinion, it’s starting to coil itself into tighter trading ranges and when it finally blasts out, you can expect it do so with gusto. We just need to wait and see what direction it will break to.

Until next time… good trading.

Lee Lowell

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TIME TO BUY PRECIOUS METALS? – DARE SOMETHING WORTHY TODAY TOO!

15 Monday Dec 2008

Posted by jschulmansr in commodities, Copper, Currency and Currencies, Fundamental Analysis, gold, hard assets, inflation, Investing, investments, Latest News, Markets, mining stocks, oil, precious metals, silver, small caps, Stocks, Technical Analysis, Today, U.S. Dollar

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TIME TO BUY PRECIOUS METALS? – DARE SOMETHING WORTHY TODAY TOO!

Gold and Silver: Backwardation and Manipulation – Seeking Alpha

By: Jake Towne of Yet Another Champion Of The Constitution

In this article we will take a look at some alternate but constructive views of Fekete’s recent articles on gold backwardation, covered in earlier articles in this series. I want to note it appears to be a perfect storm shaping up, although it not yet outside the grasp of short-term government manipulation, especially if there is the hint of a panic, or “gold fever” developing. The price of gold and silver are both up over the past week as both metals are in (temporary for now) backwardation, but the price does not have a high degree of relevance. All eyes are on the gold basis will probably drive the price which you can learn about by reading the below mini-series.

Part I: “The End for the Dollar and all Fiat Currencies (1/5)“Part II: “The Next Bubble to Pop! (2/4)“Part III: “On Gold and Market Manipulation (3/5)“Part IV: “The Significance of Gold Backwardation Explained (4/5)“Supplement to explain futures market basics and backwardation: “The Money Matrix – What the Heck Are Derivatives? (PART 10/15)“

Now some news. Three-month Treasuries slipped negative for the first time ever on December 9 per Bloomberg. The UBS banker “analyst” cheerleading the masses towards buying Treasuries sounds like he is smoking crack. “Everyone wants to be in bills going into year-end. Buy now while the opportunity is still there.” Let’s see, no interest and I will actually lose money by buying? No thanks! Even gold’s naysayers realize holding paper cash is smarter.

A wild rumor of the IMF* dumping 3,000 metric tons of gold around December 10 was unleashed at the gold world on December 8. This is probably just a hoax similar to many prior IMF scares, though the size of it is shocking; the last hoax** was 400 tons, but the IMF only claims to have 3,217 total tons. However:

  1. The IMF (for all intents and purposes a US puppet) does not have the required Congressional permission to sell (although the recently discovered bailout principle spells out this could happen quickly),
  2. The IMF probably does not have that much gold, or perhaps any gold per the research and correspondence with the stalwart yet “fringe” GATA (Gold Anti-Trust Action Committee),
  3. The IMF itself has criticized its own fallacious accounting practices, and
  4. There is a huge difference between the IMF selling on the open market, or completing an international transaction with China, which would be dollar-bearish and gold-bullish, respectively. [FYI, China is ALWAYS rumored to be searching for… you guessed it! 3,000 tons of gold! See this 2005 article from the nation’s mouthpiece, the People’s Daily and this November 2008 article from HK’s The Standard.]

*[Under the IMF’s Articles of Agreement Schedule C, item 1 (p49/85), linking of a member’s currency (its “par value” or face value) to gold is prohibited. This means that the IMF is in direct violation of the Constitution of the United States of America (which actually also forbids the existence of the doomed Federal Reserve Note) by stating in Article 1, Section 10 that our country can not “make any Thing but gold and silver Coin a Tender in Payment of Debts.” Today’s Keynesian economists and investors should read these documents. The IMF Articles of Agreement is a relic of a bygone age (1970s) plagued by its refusal to acknowledge gold as money. For instance, note iron reporting rules required of members in Section 5(a), p19-20, are morbidly focused on monitoring and controlling gold. (Why? Gold is Money.) The Constitution is a shining if neglected example of how the government’s role in a free market economy (last seen in the early 1900s) is confined to an honest monetary system and setting up anti-fraud laws.]

**[An example of a hoax and blatant attempt “The International Monetary Fund will probably sell 5-10 million ounces of gold to fund a program of debt relief, but will not disrupt the markets with its sales.” ex-Goldman Sachs, ex-Citigroup, ex-Secretary of Treasury, now close Obama advisor Robert E. Rubin, on March 17, 1999. No gold was sold, although the market price of gold sure suffered! Rubin is Director and Senior Counselor of Citigroup (C), where he was the “architect” of Citigroup’s strategy of taking on more risk in debt markets, which by the end of 2008 led the firm to the brink of collapse and an eventual government rescue. From November to December 2007, he served temporarily as Chairman of Citigroup. From 1999 to present, he earned $115 million in pay at Citigroup. Obama: “Change” We Can Believe In.]

(Sources for the above: IMF Articles of Agreement (1978) and Gold Wars by ex-Rothschild Swiss banker Ferdinand Lips (2001), pages 135 and 178.)

Ex-Chase Manhattan banker and owner of goldmoney.com, James Turk issued a helpful letter, stating what the Reader should already realize from this series. “Backwardations are no big deal in most commodities, but they are indeed a very big deal for gold.”

Turk uses the London Bullion Market Association’s Gold Offered Forward (GOFO) rates here to determine technical backwardation, while Fekete was looking at intraday trading sessions. My thoughts are that it’s ok to disagree, but geez guys, the overall message is the same. Analyst Rob Kirby understands this as well and issued an article “Backwardation: Facts from Fiction” that may be useful to the Reader.

[For the Reader, NYMEX Gold Session Futures chart, Silver Session Futures chart. Gold spot price chart. Silver spot price chart. When the spot price is greater than the futures price, backwardation exists.]

Trader Dan Norcini of jsmineset.com also reviewed Fekete’s note and issued a statement and charts here on December 5. Again gold is unlike wheat or copper, it has a fixed supply of bars mined from the earth for the past 6,000 years plus new supply from the mines at 1-2% of the total and are just traded back-and-forth on the COMEX. People do not save wheat; they eat it. People do not save copper; they use it for electrical conduits and other industrial uses. People DO save gold. Norcini explains why for gold backwardation is unusual:

If spot gold is trading at $750 and the futures market is trading at $745, that is a $5.00 per ounce risk free profit just sitting there waiting for a type of arbitrage. One could immediately sell his physical gold at the $750 price and immediately buy it at $745 in the futures market with the intent of taking delivery to meet his contractual obligations and pocket $5.00 ounce for however many ounces one wished. Buy 5 million ounces of gold at $745 and sell that same amount of gold for $750 and you have gotten yourself a cool $25 million profit less the delivery expenses, etc. Not bad. That is why such a thing does not occur very often nor does it last for long. Too many would jump on the chance for a no-risk trade of such nature. Why then are they not doing so? Antal has answered that question they are not willing to part with their gold for paper profits! That is what makes this development so noteworthy.

If you prefer talking heads, here is a Business News Network video where the analyst concluded that the reason behind the “desire of protection of wealth.” [Note: This YouTube user “GoldtotheMoon” has an incredible amount of goldbug videos, many helpful.]

Now for more on the alleged market manipulation of both gold and silver. For gold, the authority is the Gold Anti-Trust Action Committee (GATA). You can visit their site here. On silver, use the silverseek.com link below; the chief source I follow is Theodore Butler. Although I take exception to details (so picky!), I have bought into both overall theories since August, which was when global physical coin markets starting going haywire. No other explanation made any sense then or now. Since then, of course, the cover on government intervention in the economy has blown off for all to see, to put it mildly. As I wrote in “A Money Matrix Addendum: Citigroup and GATA Call for an End to the Suppression of the Gold Market“:

Fiat currency is a scheme perpetrated by central banks and the tacit (or is it helpless?) permission from their governments. Fiat currency is almost completely worthless and has no intrinsic value. Ultimately electronic and paper fiat money will be worthless. All of the world’s fiat money is actually a form of debt, and it results in never-ending currency debasement, of which one way is expanding the money supply, aka “printing more money,” aka inflation. To make their scheme work, they intervene in the precious metal markets to manipulate the prices of silver and especially gold. By keeping the prices of real honest money suppressed, they try to make their fiat currency look stronger.

I want to highlight an enlightening article that supports the above theory from Gene Arensberg of www.resourceinvestor.com. In his article “‘On the Fly’ Gold and Silver COT Information” on December 10, Arensberg has done a masterful job of demonstrating the control of the gold and silver markets. [COT stands for “Commitments of Traders” which report open interest and trading positions for the futures and options markets in the US. The reports are issued by the US Commodity Futures Trading Commission (CFTC), a government agency. The CFTC’s mission is “to protect market users and the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures and options, and to foster open, competitive, and financially sound futures and option markets.” As you will shortly see, they are doing a horrible job, similar to the SEC missing the Madoff collapse. Here is why the CFTC motto is: “NOTHING TO SEE HERE! Please disperse!”

On gold, Gene Arensberg writes:

As of December 2, as gold closed at $783.39, the CFTC reported that 3 U.S. banks had a net short positioning for gold on the COMEX, division of NYMEX, of 63,818 contracts. The CFTC also reported that as of the same date all traders classed by the CFTC as commercial held a collective net short positioning of 95,288 contracts. That means that justthree U.S. banks accounted for 66.97% of all the commercial net short positioning on the COMEX for gold futures. Here’s what the three U.S. banks’ positioning looks like on a graph: (chart courtesy Arensberg)

gold

 

 

 

Arensberg then concludes with the revelation that the current short position totals over twice the contents of the COMEX warehouses. Do they really have this gold and why is the “market” concentrated in the hands of so few banks? [Here we learned short positions are the “deliverers” or sellers of gold, while the longs are the “receivers” or buyers.] My comment is to look at the dip into the “long” side by these banks in roughly June 2008. See how the price fell? Nothing to see here! Disperse, disperse!

Let’s look at silver: Arensberg continues:

For silver, it’s even more startling. On December 2, as silver closed at $9.57, exactly 2 U.S. banks held a net short positioning of 24,555 contracts. The CFTC reports that as of the same date all traders classed as commercial held a net short positioning of 24,894 contracts. So, the 2 U.S. banks, with one particular Fed member bank probably holding almost all of it, held a sickening 98.64% of all the collective commercial net short positioning on the COMEX, division of NYMEX in New York. (chart courtesy Arensberg)

silver

Arensberg comments that these two banks’ (cough JP Morgan Chase cough those-damn-corporate-raiders-from-the-Great-Depression cough cough) “net short positioning is equal to about 153% of the amount of deliverable silver in ALL the COMEX members’ accounts.” Sure looks like total control to me! The above is a big reason why the gold and silver markets are so tight now. Who in the right mind would enter the market to play with these giants? Again, where is their silver? So the silvers futures market is not a real “market.” More like a banker’s paradise!

Arensberg also has a section on the coin market in terms of the premium paid. Historically speaking, the premiums have been within a few percentage points of the spot value. Not anymore, gold is about 6%, and the silver premium is pretty amazing, roughly 50% over spot! Try using the law of supply and demand to explain that!

Let me finish with a respectable opinion to the contrary from Mish Shedlock’s blog. Try “No Fever Like Gold Fever: Response“, “Nonsense About Gold Backwardation, Ameros,Yuan Devaluations, etc.“, “Double Standard in Gold Hedging?“. I already laced into these articles in the comments field in Part 4, but decide for yourself. Feel free to leave any comments or questions below.

[Update 12/14 – Fekete just posted another update entitled “Backwardation that Shook the World.”]

My Note: It is time to load up the applecart – Buy Gold and Silver Now!- jschulmansr

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The Significance of Gold Backwardation

By Jake Towne of Nolan Chart

I’ve written a short series on what is, in my opinion, the major economic event of gold going into backwardation and what this will mean. Due to recent interest, particularly email comments, in this article I would like to further describe this event and in the next part share links to more gold and silver news on this topic with you (as well as some objective criticism of Fekete).

I think it is also important to note that I am no expert. I fully realize I could be wrong for now, or misjudge how the government forces will intervene. It is far from clear whether this backwardation will become permanent. That said, I do believe that the resistance shackling gold and silver will be eventually be overwhelmed; it’s just a question of when. In the final analysis, Gold is the world’s greatest chance at economic liberty and a world with far less war.

Part I: “The End for the Dollar and all Fiat Currencies (1/5)” Part II: “The Next Bubble to Pop! (2/4)” Part III: “On Gold and Market Manipulation (3/5)” Supplement to explain futures market basics and backwardation: “The Money Matrix – What the Heck Are Derivatives? (PART 10/15)” Part V: “More on Gold and Silver Backwardation and Manipulation (5/5)”

Let’s return to the rice example I used in an earlier article, which is traded on commodity futures markets in a similar fashion as gold and silver are today. Let’s say I absolutely must have 1000 bushels of rice 1 month from today. At the futures market, I have two options – I can buy a 1-month futures contract and take delivery right before I need it, or I can buy at the immediate market price (or spot price) and store it for a month.

Now, let’s say rice goes into backwardation. This means that the spot price is more expensive than the 1-month futures price. So, normally I would buy the futures contract since it is cheaper and the storage cost is borne by the other party. And if enough people did this, backwardation would quickly disappear. Now why would I buy at spot price?

I would buy at spot only if I feared that within a month the other party would not have any rice to deliver. Now the strange thing is that for backwardation to continue to exist, all rice traders at the market need to believe the same thing. Why?

If other traders holds surplus rice and do not need it for a month, and believe they will get delivery 1 month later, they will release this stock into the market (driving the spot price down and the futures price up) and take delivery in a month’s time, which would give a tidy basis profit (spot price minus the futures price), plus the savings of not storing the rice for a month.

So therefore, backwardation is the sign of a very tight market, and a market that will be tight for sometime into the future – either 1) current supply is very tight, 2) future supply is projected to be very tight, or 3) there is a severe distrust in counterparties – that the short positions can deliver the goods on time per the contract, or vice versa that the long positions will not have the cash.

That said, backwardation in seasonable, weather-dependent perishable commodities like rice or corn is certainly not unheard of. It even sometimes occurs with industrial commodities like lead or copper. Sometimes it can even be the natural state of the market.

However, gold futures are completely unlike these other commodity markets. Gold is mostly traded solely as a “store of value”; the jewelry or electronics or dentistry demand pales in comparison to the quantities of the yellow metal traded as a store of value (even an “anti-dollar” if you wish). In other words, gold is not a consumable market.

And here is the final piece to the above from South African Daan Joubert, quoted at lemetropolecafe.com. Gold backwardation can only mean that either “a) There are enough people so concerned about non-delivery that they will pay a large premium to get their hands on gold right now” or “b) There are no large holders of gold who have sufficient faith in the futures exchange to exploit the [backwardation].”

Dr. Fekete has issued two recent updates, “Has the Curtain Fallen on the Last Contango in Washington” and “There’s No Fever Like Gold Fever.” I consider both must-reads, especially the conclusion to the “Gold Fever” article. I will freely admit to you that for some of the reasons Fekete mentions in the “Gold Fever” article I considered not writing this series under my own name (perhaps I may later regret it) but there is something about sharing the truth as I see it that forbids me what ultimately amounts to cowardice. Anyways, here is the intro to “Gold Fever”:

 

Here is an update on the backwardation in gold that started on December 2 at an annualized discount rate of 1.98% and 0.14% to spot in the December and February contracts. It continued and worsened on December 8, 9, and 10 as shown by the corresponding rates widening to 3.5% and 0.65%. It is nothing short of awesome. This is a premonition of a coming gold fever of unprecedented dimensions that will overwhelm the world as soon as its significance is fully digested by the doubting Thomases.

 

Keynesian economist John Keynes once pessimistically noted, “In the long run, we are all dead.”

I say, YES, the day when gold or silver breaks the COMEX IS death.

Death to the Keynesians for all the havoc they have wrought.

===============================================

Is The Second Great Depression Imminent?

By: Lionel Badal

The world is currently facing the most serious financial and economic crisis since the Great Depression of 1929. How have countries responded to the crisis? Well as we know it, by lending huge amounts of money through bailouts and other tax cuts. So while the current crisis was caused by excessive lending, such as the subprimes, the only answer our governments and financial elites found was lending even more and making money out of nothing.
My Note: Wake Up Indeed! Time To Buy Gold and Silver- Ya Think???-jschulmansr

Dollar Down, Gold Up

By: Dr. Duru of Dr. Duru’s One Twenty 

I have been and remain a bear on the dollar. Back in mid-August, I conceded that the gathering momentum in the dollar trade would postpone the weak dollar scenario until 2009. I was wrong on a few of my reasons for expecting continued strength in the dollar, but a stronger dollar is what we have.

I know a lot of dour folks have explained why they expect America’s “well-intentioned” borrowing and printing binge to lead to rampant inflation in the future (Peter Schiff is one of many examples). I have also tried to make the case. The main crux of my current opinion is that America will win its fight against deflation, sooner rather than later, and will be too slow to remove the monetary (and fiscal) injections into the economy to stave off the high inflation we will get as our reward.

The first signs of fresh dollar weakness are finally showing up. The chart below (click to enlarge) shows a potential double-top in the dollar. Some technicians may prefer to call it a head-and-shoulders pattern.

Dollar double-top

It is at these kinds of critical transition points that people who want to cling to the former trend will proclaim the loudest that all is well. Dollar bulls surely believe that the fundamentals of the currency have never been better given the world’s belief that the dollar represents a safe place to park in a world of turmoil. Maybe major global governments borrow and print even faster and harder than we are doing. If that happens, I will have to like gold even more since its global supply will not increase nearly as fast as the supply of global money. Regardless, we should all know by now what results when a massive crowd jams into one side of a trade – short-term Treasuries represent the powder keg du jour.

Until recently, it has been difficult to play commodities in anticipation of reflation given prevailing downtrends. Gold has held up better than most but it too is still caught in a downtrend of lower lows and lower highs. The recent weakness in the dollar has perked gold back up, and I am sticking to it as one of my favorite places to be for 2009.

Gold

*All charts created using TeleChart:
The dollar down, gold up scenario gets delayed again if the dollar manages to make a new high above the recent double-top and gold makes another lower low.

Be careful out there!

Full disclosure: long GLD. For other disclaimers click here.

==============================================

Will We See A Big Upward Move in Gold?

By: Mark Courtenay of  Check The Markets.com

Did you know that the Federal Reserve Bank owns gold certificates? Mounting evidence suggests the Fed intervenes in and participates in the gold and silver markets on a regular basis.

Interviewed Monday last week on the “Trading Day” program of Business News Network in Canada, former Federal Reserve Governor Lyle Gramley hinted that a big upward revaluation of gold may figure heavily in the Fed’s attempt to rescue the U.S. economy.

The program’s guest host, Niall Ferguson, an author and history professor at Harvard, asked Gramley, now senior adviser at Stanford Group in Houston, about the seemingly grotesque expansion of the Fed’s balance sheet in recent months.

Ferguson asked: “I’ve heard it said that the Fed has turned into a government-owned hedge fund, leveraged at 50 to 1. Do you feel nervous about what this might actually do to the Fed’s reputation?”

Gramley replied: “I think you have to reckon with the fact that one of the Fed’s assets is gold certificates, which are priced, as I remember, at $42 an ounce, and if we were to price them at market prices, the Fed’s leverage would look a lot less than it is now.”

While valuing the U.S. government’s claimed gold reserves at today’s Comex closing price of around $822 per ounce instead of the government antique bookkeeping entry of $42.22 per ounce would indeed vastly expand the government’s monetary assets, it might not be enough to offset the liabilities and guarantees the government lately has taken on.

But the job might be done by revaluing the gold to $5,000 or $10,000 per ounce, as the British economist Peter Millar speculated two years ago might be necessary to prevent debt deflation: yet this is admittedly speculation.

What did Gramley mean by “…the Fed’s leverage”? That would suggest that the Fed not only owns “gold certificates” but also future contracts and options on futures. They might be big benefactors in a gold squeeze.

Speaking of a gold squeeze, I read another report from the Gold Anti-Trust Actioin committee (GATA) saying that the Comex is warning brokers of a December gold squeeze.

Yes, the Comex is alerting various futures firms about the potential of a squeeze on the December contract and is advising the $840 December shorts to exit their positions. That is the remaining open position.

There have been 12,636 notices of delivery. The shorts have until December 31 to make delivery. Normally they deliver early to take in cash and earn the interest. They must be delaying.

As I understand the situation, that represents about 40 percent of the gold available at the Comex, and of course someone could enter the scene late, buy February gold, and then spread into December, which would stun the shorts.

My broker friend said his back office said this sort of alert is highly unusual and that the concern is real, not only for gold, but for other commodities too, like copper and palladium, as there is a good deal of talk of taking deliveries there too. But gold is the one for which the advice to cover went out.

This is an extremely productive development and could spur the price of gold up quickly as word spreads. As we all know, buying Comex gold and silver (the cheapest way to buy precious metals) makes all the sense in the world in this financial environment.

This might just be reason enough to begin “stocking up” on some of the ETFs that would be beneficiaries like (GLD), (SLV) and The PowerShares DB Commodity Index Tracking Fund (DBC). The 1-year chart below is instructive.//seekingalpha.com/symbol/dbc' title='More opinion and analysis of DBC'>DBC</a>)

Some interesting names in the copper business to keep an eye on and begin accumulating on any meaningful pullbacks are Freeport McMoran (FCX), Southern Copper Corp (PCU) which as of this writing still pays a dividend, unlike FCX, and Sterlite Industries (SLT) which is India’s bigger copper producer and is poised to benefit from any resurgence of copper demand in Asia.

It might be one of those “ready, get set, not yet” approaches to what an investor should do. The economic news and the relapsing into the next and possible worse phase of this credit crisis, great-recession, and deflationary mess might delay the upside potential on commodities.

But if you’re a trader (a.k.a. “gambler”) there might be a short-term pop in at least gold over the next couple of weeks…maybe spilling into January 2009 where quick profits could be made….as well as some quick and disappointing losses.

Are you an investor, a short-term gambler, or both? No matter what the answer, if you know yourself well then you know how you might respond to all this news and the rumor mill. Best of luck!

When FCX dipped back down near $16 after the suspension of their dividend I decided to pick up a few shares for a quick trade. I’m fortunate that it worked out.

I firmly believe that there will be a trading range for all the better commodity stocks and ETFs that will give us several chances to buy low and sell high over the months directly ahead. Your comments on that will be appreciated. Happy holidays to you all.

Disclosure: Long GLD, SLV, FCX, SLT.

 

All of these measures will have an impact on economies, no doubt on that. Before the end of 2009 an –artificial- recovery will take place. Good news you may think? Not at all…

In parallel to the recovery, global oil demand will increase next year as mentioned recently by the IEA. This is where the collapse will occur. Global oil production is about to decline, as major oil fields in Mexico and the North Sea have passed their peak… the rate of decline is staggering (check the latest IEA annual report).

Additional energies and non-conventional oils which should have been here do not exist; why? Very simple to understand, with the financial crisis and oil prices back to the low 40s, major energy investments are either cancelled or postponed (they no longer look profitable). In short, when the demand will go up, oil production will be declining; logically prices will explode. Dr. Faith Birol, IEA’s Chief-Economist, well aware of the seriousness of the situation declared on Peak Oil:

What I can tell you is that one day global conventional oil will peak… I think it is going to peak very soon. The main problem here is that the existing fields, many mature fields, are declining.

While you may have found this explanation shaky or over-pessimistic, as early as 2005 the geologist Dr. Colin Campbell (founder of the Association for the Study of Peak Oil-ASPO) declared:

Expansion becomes impossible without abundant cheap energy. So I think that the debt of the world is going bad. That speaks of a financial crisis, unseen, probably equalling the Great Depression of 1930; it’s probable we face the Second Great Depression. It would be a chain reaction, one bank would fail, and another one would fail, industries will close…

What is commonly known as Peak Oil, a decline in global oil production is about to happen: you can ignore it, fight it, but to be sure, you will not escape from it. I will not enter into the details of the Peak Oil debate, an endless one. Nevertheless, here are statements on Peak Oil held by some of the most authoritative groups:

Peak oil is at hand with low availability growth for the next 5 to 10 years. Once worldwide petroleum production peaks, geopolitics and market economics will result in even more significant price increases and security risks. To guess where this is all going to take us is would be too speculative.

US Army, Corps of Engineers (September, 2005)

The end-of-the-fossil-hydrocarbons scenario is not a doom-and-gloom picture painted by pessimistic end-of-the-world prophets, but a view of scarcity in the coming years and decades that must be taken seriously.

Deutsche Bank (December, 2004)

More recently, a British Industry Taskforce (e.g. Shell (RDS.A), Yahoo (YHOO), Virgin, and Solarcentury) conducted a vast study on oil production. They concluded that, “peak oil is more of an immediate threat to the economy and people’s lives than climate change, grave as that threat is too” and added “the risks to UK society from peak oil are far greater than those that tend to occupy the Government’s risk-thinking, including terrorism” before asking the government to urgently take action.

Here is the “recipe” for the greatest disaster ever. What cheap and abundant oil created, Peak Oil will destroy; our failure to invest in alternatives 10 or 20 years ago is about to fall on us. Michael Meacher, a former British Environment Minister and current Labour MP similarly declared on what is coming:

This is an apocalyptic scenario. In terms of industrial production, in terms of the food supply but above all in the terms of the transportation sector, we cannot continue as we now are.

Like in 1929, this Second Great Depression, caused by hyperinflation (within 3 years) will have dramatic political consequences:

As oil prices rise, it will be millions who suffer, millions of ordinary people who are just trying to get on with their lives, millions of ordinary decent people will be forced into states of anxiety, depression, fear and anger.

Voters take to new ideas, even radically new ideas when the system that they have trusted, worked with, admired and felt comfortable with falls apart.

Peak Oil may well be an important catalyst that helps us to win political power because we are the ones talking about it now.

The British National Party and its leader Nick Griffin are well aware of the seriousness of the coming crisis, yet for them it is seen a unique opportunity. History is here to remind us that dramatic changes can happen so fast that we don’t even see them until they have happened. Nick Griffin, who is passionate about Peak Oil as one of the BNP permanent staff member told me, is also a racist, holocaust denier. Make no mistake, in a post-Peak Oil world Mr. Griffin and his look-a-likes throughout the world will do all they can to apply their heinous political agenda.

The process has started and once again Europe will face its old demons, fuelled by populism, unemployment and incompetence from mainstream leaders. As mentioned in a recent Newsweek article, un-favourable views on Jews has climbed from 20% in 2004 to 25% today in Germany, in France from 11% to 20% and in Spain from nearly 21% in 2005 to about 50% today[16]. Yet the worst of the crisis is just a few years away and nobody seems to perceive the seriousness of the situation. In fact, the current crisis will soon be seen as no more than a gentle prelude or the “good old days”. Denis MacShane the author of the Newsweek article similarly observed that “the BNP was now the fastest growing political party in Britain”[17].

Wake up!

================================================

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Gold Supply and Demand + Troubling Questions For Obama

12 Friday Dec 2008

Posted by jschulmansr in 2008 Election, Barack Obama, capitalism, commodities, Copper, Currency and Currencies, deflation, Electoral College, Finance, Free Speech, Fundamental Analysis, gold, hard assets, id theft, inflation, Investing, investments, Markets, mining stocks, oil, Politics, precious metals, Presidential Election, silver, small caps, socialism, Stocks, Technical Analysis, Today, u.s. constitution, U.S. Dollar, Uncategorized

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Gold Supply and Demand

By Luke Burgess of  Gold World

Jesse Lauriston Livermore is perhaps the most famous stock trader of the early 20th century.

Famous for amassing and subsequently losing several multi-million dollar fortunes, Livermore also shorted the stock market heavily during the crashes of 1907 and 1929.

Livermore, who was also known as the Boy Plunger, is famed for making—and losing—several multi-million dollar fortunes and short selling during the stock market crashes in 1907 and 1929.

One of Livermore’s core trading rules was…

Be Right and Sit Tight

It’s simple…

Invest in a growing trend and have the courage to hold long-term for really big gains.

Clearly, the gold bull market is one such growing trend. And investors who “sit tight” will undoutbly see big gains by owning the precious metal now.

Buy Gold Now

The bull market has already pushed gold prices over 300% higher since 2001. And now with the world’s demand for gold is starting to significantly outpace supplies, even higher prices are on the horizon.

During the third-quarter there was a colossal 10.5 million ounce deficit (worth $8.5 billion) in world’s supply and demand of gold. World gold demand increased over 50% since the second-quarter while supplies dropped 64% year-on-year.

Gold demand, particularly in the investment sector, is currently at all-time highs. But estimates suggest that the world will only produce 76.8 million troy ounces during 2008. This represents a 9% decline in world gold production since 2001.

20081208_world_gold_production.png

Gold Mine Supplies to Continue Falling

The world financial meltdown has forced the shut down of hundreds of gold mines around the world and slashed exploration and development budgets across the board. And the near-term future of new investment still looks pretty grim.

The effects of these budget cutbacks won’t be felt in the gold market for several months to years. But the lack of investment money going into gold mines right now-and probably for over the next several months-will certainly have an effect on global gold supplies in the future.

 

And the lack of these supplies will positively affect gold prices.

The global economic crisis has motivated miners of all metals to cut back on exploration and development activities. Below is a just partial list of mine closures and delays that have been announced over the past several weeks:

August 21
HudBay Minerals [TSX: HBM] closes its Balmat zinc mine and concentrator.

October 13
Intrepid Mines [TSX: IAU, ASX: IAU] postpones the development of the Mines Casposo gold/silver project.

October 20
Polymetal, Russia’s largest silver miner, cuts its production forecast and says it will consider revising its investment plan for next year.

October 20
First Nickel [TSX: FNI] suspends production at its Lockerby nickel mine.

October 21
Freeport-McMoRan Copper & Gold [NYSE: FCX] announced that the company will defer mine expansions and put off restarting at least one operation.

October 21
North American Palladium [AMEX: PAL, TSX: PDL] temporarily closes its Lac des Iles platinum-group metals mine.

November 6
Thompson Creek Metals [NYSE: TC, TSX: TCM] postpones the development of its Davidson molybdenum mine.

November 10
Rio Tinto [NYSE: RTP, LON: RIO] cut its Australian iron-ore production by about 10%.

November 10
Freeport-McMoRan Copper & Gold [NYSE: FCX] cut molybdenum production at its Henderson mine by 25%.

November 10
Platinum and chrome producer Xstrata Alloys and its South African joint-venture partner, Merafe Resources, temporarily suspends six furnaces of the Xstrata-Merafe chrome venture.

November 11
Arehada Mining [TSX: AHD] temporarily shut down of operations at its zinc/lead/silver mine and plant.

November 11
Frontera Copper [TSX: FCC] suspends mining activities at its Piedras Verdes operation.

November 13
Lundin Mining [NYSE: LMC, TSX: LUN] suspends zinc production from its Neves-Corvo copper/zinc mine, and put another operation, Aljustrel, on care and maintenance until metal prices recover.

November 13
Anvil Mining [TSX: AVM, ASX: AVM] suspends the fabrication and construction works for its Kinsevere Stage II solvent extraction-electrowinning plant.

November 14
Geovic Mining [TSX: GMC] delays construction and financing for its Nkamouna cobalt project.

November 17
Teal Exploration & Mining [TSX: TL] cut output at the Lupoto copper project’s small-scale mining operation

November 18
Stillwater Mining [NYSE: SWC] scales down operations at its East Boulder mine, reduces capital expenditure and cut jobs.

November 18
The world’s third-largest platinum-miner, Lonmin, announces the closure of South African mines, and says it will halt growth projects.

November 19

First Majestic Silver [TSX: FR] temporarily suspends all activities at its Cuitaboca project.

November 19
Weatherly International [LON: WTI] announces the closing two of its copper mining projects in Namibia.

November 20
Hochschild Mining [LON: HOC] announces that the company will delay its San Felipe zinc project.

November 21
Katanga Mining [TSX: KAT] temporarily halts mining operations at the Tilwezembe open pit and ore processing at its Kolwezi concentrator.

Novmeber 21
Apogee Minerals [TSX-V: APE] halts production at its La Solucion silver/lead/zinc mine, in Bolivia.

November 24
Norilsk Nickel put its Waterloo and Silver Swan underground mines into care and maintenance.

November 26
Bindura Nickel announces the closure of two nickel mines, and its smelter and refinery operations.

December 1
The Xstrata-Merafe joint venture suspends operations at another five ferrochrome furnaces, bringing the company’s offline capacity to 906,000 tonnes per year, or more than half of its annual production capability.

December 3
BHP Billiton [NYSE: BHP, ASX: BHP] reduces manganese and alloy production.

December 8
Companhia Vale do Rio Doce, the world’s biggest iron-ore producer, has suspended operations at two pellet plants.

With demand soaring and supplies plummeting, there’s never been a better time to own gold. Gold prices could go to as high as $5,000 once this gold bull market plays out.

Be right and sit tight.

Buy gold.

Good Investing,

Luke Burgess
Managing Editor, Gold World

P.S. It’s simple, really. Demand is soaring. Supplies are plummeting. And if you don’t buy gold now, you may not get the chance to later.

==============================================

Troubling Questions For Obama Team

By: Linda Chavez of GOPUSA

A corruption scandal in President-elect Obama’s backyard is the last thing this country needs. But like it or not, that’s exactly what we have in the unfolding drama of Illinois Gov. Rod Blagojevich’s arrest earlier this week for trying to sell Barack Obama’s Senate seat. The federal prosecutor in the case — Patrick Fitzgerald, the man whose investigation of the Valerie Plame leak case nearly paralyzed the Bush White House for a time — has made it clear that nothing ties Obama directly to the Blagojevich scheme. But the timing of Fitzgerald’s announcement raises some serious questions.

Apparently, Fitzgerald knew that Blagojevich was trolling for bidders for the Obama seat in the waning days of the general election. Before the first votes were counted to elect Obama president, Blagojevich was so confident in Obama’s victory he was already soliciting bids for the seat. And Fitzgerald already had substantial evidence that Blagojevich was engaged in major corruption before the governor put a “for sale” sign on the Senate seat. So why didn’t the federal prosecutor act prior to the election? Had he done so, of course, it could have damaged Obama.

Many would argue that bringing down another Illinois Democrat before the election would have smelled like a dirty trick. The federal prosecutor, after all, was a Republican appointee, and the McCain campaign had already run ads trying to tie Obama to political corruption in Chicago. One of Obama’s early financial supporters, land developer Tony Rezko, was convicted on corruption charges earlier this year, and Rezko figures prominently in the Blagojevich scandal. Had Blagojevich been forced to do a perp walk before Election Day, voters might have asked why Obama had endorsed Blagojevich just two years earlier, considering the governor was at that time under investigation for taking bribes. The endorsement would have been yet another example of Obama’s bad judgment in his associations from Rezko to the Rev. Wright to Bill Ayers.

But even if Fitzgerald acted fairly and prudently by not moving against Blagojevich in the heat of a political campaign, why did he decide to act this week? His explanation was that he was trying to stop “a political corruption crime spree.” Under existing Illinois law, the governor has final authority to appoint someone to fill a vacant U.S. Senate seat and wiretaps suggest Blagojevich was about to do just that. According to the criminal complaint, Blagojevich had found at least one bidder — identified only as Senate Candidate 5 — who offered to raise the governor $500,000 and another $1 million if he got the appointment. Perhaps Fitzgerald simply wanted to go public before Blagojevich sealed the deal.

But there are other possible explanations. Fitzgerald’s hand may have been forced by the Chicago Tribune, which reported Dec. 5 that Blagojevich’s phone lines were being tapped. This information signaled everyone — the governor and anyone talking to the governor or his aides — that they could become ensnared in a huge criminal investigation leading to indictments.

President-elect Obama has emphatically denied that he ever talked to Blagojevich about his Senate replacement. And certainly Fitzgerald has done everything he can to confirm that Obama is not implicated in any way. But there are a number of unanswered questions about what contact members of the president-elect’s team might have had with the governor or his aides, directly or through intermediaries. A number of aides, including the incoming White House Chief of Staff, Rahm Emmanuel, and former campaign leader David Axelrod, have long-standing ties to Blagojevich. And Axelrod has already had to revise his earlier assertion that Obama had spoken with Blagojevich about candidates to replace him in the Senate.

The president-elect has said “I want to gather all the facts about any staff contact that may have taken place. We’ll have those in the next few days and we’ll present them.”

The president-elect’s credibility is on the line. For the good of the country, we must all hope this scandal doesn’t infect anyone in the new administration. The best way to ensure that is for the president-elect and his aides to be forthcoming quickly.

—

Linda Chavez is the author of “An Unlikely Conservative: The Transformation of an Ex-Liberal.”

COPYRIGHT 2008 CREATORS SYNDICATE, INC.

============================================

Chicago Politics Stains Obama 

By: Michael Barone of US News And World Report

I have not seen it recorded whether John F. Kennedy, after he was elected president in 1960, held conversations with Massachusetts Gov. Foster Furcolo as to who would be appointed to fill his seat in the Senate. History does record that Furcolo, just nine days before turning the governorship over to the Republican elected to succeed him, appointed one Benjamin A. Smith II, a college roommate of Kennedy’s and former mayor of Gloucester, who chose not to seek the seat in the next election in 1962, which happened to be the year in which Edward Kennedy turned 30 and was therefore old enough to run for it.

Memory tells me that there was little fuss made of this at the time. Ambassador Joseph P. Kennedy obviously wanted someone appointed to keep the seat warm for Teddy, and so it was done. And Edward Kennedy has turned out to be an able and accomplished senator.

That was a different tableau from the one we have seen unfold in Chicago this past week. Furcolo was an intelligent man, disappointed to have failed to win the state’s other Senate seat and destined not to win elective office again. But he knew that it would not pay to buck the Kennedys.

Rod Blagojevich, the governor who under Illinois statute has the power to appoint a senator to fill out the remaining two years of Barack Obama’s Senate term, is made of different stuff. He was arrested last Tuesday, and the U.S. attorney filed a criminal complaint and made public tapes of Blagojevich seeking personal favors in return for the Senate seat.

Obama denied having conversations with Blagojevich about his choice, though his political strategist David Axelrod said last month that Obama had. Obama declined further comment when asked whether his staff members had discussed the matter with the governor, but he then promised to reveal the details later.

In the ordinary course of things, there would be nothing wrong with such conversations (did Foster Furcolo decide on Benjamin A. Smith II without prompting?). And the construction of the evidence most negative to Obama one can currently make is that someone in Team Obama suggested nominating Obama insider Valerie Jarrett, Blagojevich simply refused or asked for something improper in return and Team Obama promptly broke off communications. Any impropriety in this version was on Blagojevich’s part, not on Obama’s.

Still, these are not headlines the Obama transition team wants. So far, the president-elect has won wide approval for his performance since the election, with poll numbers significantly higher than George W. Bush or Bill Clinton got in their transition periods. His leading foreign, defense and economic appointments have won high praise from all sides, in some cases more from conservatives than liberals. And in a time of financial crisis and foreign threats, he has seemed to keep a clear head and a steady hand.

He has appeared to avoid all but small mistakes, and his theme of unifying the nation — muted perhaps necessarily in the adversary environment of the campaign — has come forth loud and clear.

From all this the Blagojevich scandal is an unwanted distraction. It is a reminder that, for all his inspirational talk of hope and change, Obama, like Blagojevich, are both products of Chicago Democratic politics, which is capable of producing leaders both sublime and sordid.

Obama has not always avoided the latter. For 20 years he attended the church of the Rev. Jeremiah Wright, now thrown under the bus, and for more than a decade engaged in mutually beneficial exchanges political and financial with the political fixer Tony Rezko, now in federal custody.

Blagojevich, never a close political ally, has now been thrown under the bus, too, and seems likely to share Rezko’s fate. Obama fans can point out, truthfully, that other revered presidents had seamy associates and made common cause on their way up with men who turned out to be scoundrels. Franklin Roosevelt happily did business with Chicago Mayor Ed Kelly, though warned that he was skimming off money from federal contracts. John Kennedy no more thought to deny a request from the Mayor Daley of his day than Obama has thought to buck the Mayor Daley of his.

But as Kennedy supposedly said of a redolent Massachusetts politician, “Sometimes party loyalty asks too much.” The man in question was the Democratic nominee for governor and was not elected. Until Patrick Fitzgerald released his tapes, Barack Obama never said the same of Rod Blagojevich.

Obama has profited greatly from his careful climb through Chicago politics. But there is an old saying that in politics nothing is free — there is just some question about when you pay the price. Obama is paying it now.

To read more political analysis by Michael Barone, visit http://www.usnews.com/baroneblog

COPYRIGHT 2008 U.S. NEWS AND WORLD REPORT

DISTRIBUTED BY CREATORS SYNDICATE INC.

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The Dollar Gets Slammed+Understanding Warrants

11 Thursday Dec 2008

Posted by jschulmansr in Uncategorized

≈ Comments Off on The Dollar Gets Slammed+Understanding Warrants

Tags

agricultural commodities, alternate energy, Austrian school, banking crisis, banks, bear market, Bollinger Bands, bull market, capitalism, central banks, China, Comex, commodities, communism, Copper, Currencies, currency, deflation, depression, diamonds, dollar denominated, dollar denominated investments, economic, economic trends, economy, financial, Forex, futures, futures markets, gold, gold miners, hard assets, heating oil, India, inflation, investments, Keith Fitz-Gerald, market crash, Markets, mining companies, Moving Averages, natural gas, oil, palladium, Peter Schiff, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, protection, rare earth metals, recession, risk, run on banks, safety, Saudi Arabia, Sean Rakhimov, silver, silver miners, socialism, sovereign, spot, spot price, stagflation, Technical Analysis, timber, U.S. Dollar, volatility, warrants, Water

The Dollar Gets Slammed – Seeking Alpha

Source: Bespoke Investment Group

While investors have been focused on the S&P 500 and its attempt to break through its 50-day moving average, the Dollar had no problems breaking through its 50-day. Unfortunately, the break was to the downside. With a decline of 1.5% today, the US Dollar index traded below its 50-day moving average for the first time since late July.

At the same time the Dollar has been falling, the Euro has been rallying, as it broke above its 50-day moving average for the first time in months. Was the negative yield on the three month T-Bill a wake up call to foreign investors that holding cash in Dollars is not a very attractive option?

click to enlarge

Not surprisingly, Gold is benefiting from the Dollar’s weakness with a gain of 3% today. A look at this chart shows that the commodity is still nowhere near breaking its downtrend. However, it is currently trading right at a short-term resistance level of around $830. How it acts in the weeks and months ahead will be a good indication of how concerned the market is regarding inflation.

==============================================

Confused About Warrants? Using Goldcorp To Explain

By: Dudley Baker of Precious Metals Warrants.com

Warrants are being mentioned more and more in the traditional media as the U.S. government moves to receive warrants in connection with some of the bailout/rescue plans for the Big Three auto manufactures and also with AIG back in September.

Warrants have a long history going back into the 1920s, but the average investor has absolutely no idea what this investment vehicle is all about.

So let’s make this simple and provide you with a brief understanding of warrants and why you should perhaps consider warrants in your investment plans. (After all, this is not rocket science!)

Warrants are a security issued by a company usually in connection with a financing arrangement or a public offering of shares giving the holder the right, but not the obligation, to acquire the underlying security at a specific price and expiring on a specific date in the future. Sounds a lot like a call option, doesn’t it? Yes, very similar but with a few important differences, namely, how they are issued and how they are traded.

While understanding the term warrants is essential, the next most important question is a warrant on what? The underlying company is of utmost importance because if the company does not perform, execute on its business plans and thus the shares price rising in the markets, then the warrants can not be expected to go up and we are all about making money.

A common question from investors is why would I buy a warrant when I just want to own the common shares of the company? Good question and we have a very easy answer. An investor would purchase a warrant because of the expectation of a greater gain than purchasing the common shares and this term is usually referred to as leverage. See our analysis below on Goldcorp (GG). We would normally suggest investors attempt to seek a leverage of 2 to 1, meaning if the common shares rise by 100% we would expect the warrants to increase by 200%. Another benefit of buying the warrant is that it will cost you much less money thus lowering your investment cost and potentially increasing your return on your investment.

Perhaps a detailed example would clarify any questions you may still have on warrants.

Let’s say you are a believer in the return of the long term bull market in the precious metals and commodity sector and you are aware that one of the major gold producers is Goldcorp which trades on the NYSE and the TSX. As you hear many analysts commenting on Goldcorp, you are thinking maybe this would be a good addition to your portfolio. You do some more research (due diligence) and find that Goldcorp, a Canadian company headquartered in Vancouver, Canada, employs more than 9,000 people worldwide has has 16 world class operations and development projects focused throughout the Americas with over 70% of reserves in low risk NAFTA and they do not hedge or sell forward its gold production.

Now you are excited. You have found that Goldcorp meets all of your criteria and you see the potential for the shares to rise perhaps to $70 to $100 due to your bullish views on the precious metals markets within the next 2 years.

This is where we encourage investors, before purchasing the common shares, to ask the question, does Goldcorp (or any other company you are considering in your portfolio) have a long-term warrant which is trading which may provide me with a better return on my investment? We know that Goldcorp does in fact have a warrant which is trading and the issue now becomes, what is the exercise price, when does the warrant expire and does this warrant offer me great upside leverage as the common shares increase in price?

As of the close on Friday, December the 5th, Goldcorp common shares were at C$27.85 and the warrants at C$7.34. The warrants have an exercise price of C$45.75 and will expire on June 9, 2011. At a projected share price of $100 you would have a gain of 259% and with the common at $100, the warrants would have a minimum gain of 639% for a leverage of 2.5 times.

We would like to stress that this is an example and not a recommendation of the Goldcorp warrants. However with the warrant trading on Goldcorp if the answers to your questions are answered satisfactorily the warrant should then be purchased in lieu of the common shares after performing your due diligence and consulting with one’s investment advisor.

Currently there are warrants trading on some of the large producers as well as many of the smaller junior mining companies with expiration dates of 2011 and out to 2017 providing investors with some incredible opportunities

More Info on Warrant Can Be Found Here

============================================

What Does Backwardisation Mean For Gold & Silver Prices?

By: Peter Cooper of Arabian Money.net

Antal E. Fekete, a professor at Intermountain Institute of Science and Applied Mathematics, and frequent writer on precious metals, answers a timely question:

Q: People from around the world keep asking me what advance warning for the collapse of our international monetary system, based as it is on irredeemable promises to pay, they should be looking for.

A: My answer invariably is: ‘watch for the last contango in silver’.

It takes a little bit of explaining what this cryptic message means. Contango is that condition whereby more distant futures prices are at a premium over the nearby. The opposite is called backwardation which obtains when the nearby futures sell at a premium and the more distant futures are at a discount.

When contango gives way to backwardation in all contract spreads, never again to return, it is a foolproof indication that no deliverable monetary silver exists.

Silver price hike

Thank you professor! This is really an extension of the argument on this website dating back to before the summer rout of precious metal prices.

Physical stocks are low and the futures price has been distorted by big hedge fund forced-sales – now we are coming to the day of reckoning when the physical shortage starts to determine the spot price, and not the futures market.

The upside – which should have been there all along – will now come back with a vengeance and smash the few remaining shorts. This is likely to be spectacular – but after the culling of bulls recently not all precious metal fans will be there to benefit.

 

 

Backwardation means BIG GOLD Price Rally Coming!

By: Peter Cooper of Arabian Money.Net

Please forgive this late contribution – I have been distracted by the delights of ancient Egypt in Luxor – but this is highly significant.

Professor Emeritus of Mathematics Antal E. Fekete says that Dec 2nd. marked the beginning of the end for paper currencies and wealth based on such currencies.

Since at least 1972, the price of gold futures has been higher than the spot price. But on December 2nd, the futures price went below the spot price – and has stayed there for several days.

Fekete argues that this means that gold owners are hoarding their gold because (1) they’re not confident that they’ll be able to buy it back in the future, and (2) they have lost all faith in paper currency. He says:

Back to the future

‘Once entrenched, backwardation in gold means that the cancer of the dollar has reached its terminal stages. The  progressively evaporating trust in the value of the irredeemable dollar can no longer be stopped.

Negative basis (backwardation) means that people controlling the supply of monetary gold cannot be persuaded to part with it, regardless of the bait. These people are no speculators. They are neither Scrooges nor Shylocks.

They are highly capable businessmen with a conservative frame of mind. They are determined to preserve their capital come hell or high water, for saner times, so they can re-deploy it under a saner government and a saner monetary system.

Their instrument is the ownership of monetary gold. They blithely ignore the siren song promising risk-free profits. Indeed, they could sell their physical gold in the spot market and buy it back at a discount in the futures market for delivery in 30 days.

In any other commodity, traders controlling supply would jump at the opportunity. The lure of risk-free profits would be irresistible. Not so in the case of gold. Owners refuse to be coaxed out of their gold holdings, however large the bait may be. Why?

Well, they don’t believe that the physical gold will be there and available for delivery in 30 days’ time. They don’t want to be stuck with paper gold, which is useless for their purposes of capital preservation.’

A big change

PhD economist James Conrad confirms the backwardation of gold:

‘Backwardation is always the first sign that a huge price rise is about to happen. In the absence of backwardation, there is no rational explanation as to why HSBC, Bank of Nova Scotia(BNS), Goldman Sachs, and others are forcing COMEX to make large deliveries.

Things … are changing fast … the first major mini-panic among COMEX gold short sellers happened last Friday. As of Wednesday morning, about 11,500 delivery demands for 100 ounce ingots were made at COMEX, which represents about 5% of the previous open interest.

Another 2,000 contracts are still open, and a large percentage of those will probably demand delivery. These demands compare to the usual ½ to 1% of all contracts.

European central banks no longer want to sell gold. China wants to buy 360 tons of it as soon as humanly possible, and as soon as it can be done without sending the price into the stratosphere. A close look at the Federal Reserve balance sheet tells us that Ben Bernanke eventually intends to devalue the U.S. dollar against gold.

Anyone who reads the written works of our Fed Chairman knows that Bernanke’s long term plan involves devaluing the dollar against gold. This is the exact opposite of most prior Fed Chairmen. He has overtly stated his intentions toward gold, many times, in various articles, speeches and treatises written before he became Fed Chairman.

He often extols the virtues of former President Franklin Roosevelt’s gold revaluation/dollar devaluation, back in 1934, and credits it with saving he nation from the Great Depression. According to Bernanke, devaluation of the dollar against gold was so effective in stimulating economic activity that the stock market rose sharply in 1934, immediately thereafter. That is something that the Fed wants to see happen again.

Huge international banking firms normally do not take metal deliveries from futures markets. They normally buy on the London spot market. The fact that they are demanding delivery from COMEX means one of two things. Either the London bullion exchanges have run out of gold, or these firms are finding it cheaper to buy gold as a ‘future’ than as a spot exchange.

Smart traders at big firms may be              buying on COMEX to sell into the spot market, for a profit. This pricing condition is known as backwardation.’

==============================================

 

 

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Kinross Gold Leads Gold Sector Rebound – Seeking Alpha

10 Wednesday Dec 2008

Posted by jschulmansr in Bollinger Bands, commodities, Copper, Currency and Currencies, diamonds, Finance, Fundamental Analysis, gold, hard assets, inflation, Investing, investments, Latest News, Markets, mining stocks, oil, precious metals, silver, small caps, Stocks, Technical Analysis, Today, U.S. Dollar, uranium

≈ Comments Off on Kinross Gold Leads Gold Sector Rebound – Seeking Alpha

Tags

agricultural commodities, alternate energy, Austrian school, banking crisis, banks, bear market, Bollinger Bands, bull market, capitalism, central banks, China, Comex, commodities, communism, Copper, Currencies, currency, deflation, depression, diamonds, dollar denominated, dollar denominated investments, economic, economic trends, economy, financial, Forex, futures, futures markets, gold, gold miners, hard assets, heating oil, India, inflation, investments, Keith Fitz-Gerald, market crash, Markets, mining companies, Moving Averages, natural gas, oil, palladium, Peter Schiff, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, protection, rare earth metals, recession, risk, run on banks, safety, Saudi Arabia, Sean Rakhimov, silver, silver miners, socialism, sovereign, spot, spot price, stagflation, Technical Analysis, timber, U.S. Dollar, volatility, warrants, Water

Kinross Gold Leads Gold Sector Rebound – Seeking Alpha

By: Sam Kirtley of Gold-prices.biz

Sam Kirtley has been involved in investment in the financial markets for a number of years and has experience in stock investment and analysis as well as options trading. He is now a writer and analyst for various websites including uranium-stocks.net, gold-prices.biz, and silver-prices.net.

Gold stocks have been bouncing back recently, but few can challenge the extraordinary recovery of Kinross Gold (KGC), which has more than doubled since its low below $7. This is a sign that KGC is indeed one of the best gold mining companies in the world, since it has bounced back the furthest and the fastest.

(click to enlarge)

Technically some good signs from KGC are that the Relative Strength Index is moving higher having bounced up off the oversold zone at 30. Similarly, the MACD is trending northwards and is now in positive territory, but can still rise a lot further before giving an oversold signal.

If one is to have favourite shares, Kinross Gold Corp would certainly be one of ours, as it has been a holding of ours for years now, although we have traded the ups and downs when the opportunities presented themselves.

Having originally acquired Kinross at $10.08, after a large rally Kinross then went through a bit of a pull back so we signalled to our readers to “Add To Holdings” at discounted levels of around $11.66. We also gave another ‘Kinross Gold BUY’ signal when we purchased more of this stock on the 20th August 2007 for $11.48. On 31st January, 2008, we reduced our exposure to this stock when we sold about 50% of our holding for an average price of $21.96 locking in a profit of about 93.60%. On the 24th July, 2008, we doubled our holding with a purchase at $18.28 giving us a new average purchase price of $14.50.

As well as trading the stock, we have also dabbled in options contracts with Kinross, buying call options in KGC on the 16th June, 2008, paying $2.68 per contract and selling them on the 28th June 2008 for $5.30 per contract generating a 100% profit in two weeks. We then re-purchased them after they dropped for $2.50, and we are still holding them, although at a significant paper loss.

The reason we like Kinross Gold Corp so much is that it fits our criteria almost perfectly. When we look for a gold stock to buy, we are looking for solid fundamentals, a stable geopolitical situation and most importantly, leverage to the gold price itself.

As far as the fundamentals go, Kinross is a mid to large cap gold producer with a market cap of $9.47 billion. Some may consider this too large a company to offer decent leverage to the gold price, but as shown by the recent performance of the stock price, Kinross is definitely providing that leverage.

As well as leverage to rising gold prices, Kinross is also growing well as a company in its own right. Having made a gross profit of $390.40M in 2006 and then $501.80M in 2007 and with the Sep 08 quarterly profits at $269.80M, Kinross appears to be on track for another good year of record profits. There is also something in the financials that is particularly helpful in the present credit environment. In the last report from KGC, out of the $1284.80M in current assets, Kinross has a massive $322.90M in cash. This means it is well positioned to face any liquidity issues and will not be forced to try and raise money in the current difficult credit conditions.

Therefore, we continue to like Kinross and maintain our stock and option position in the company. Kinross Gold Corp is not only well positioned to benefit from rising gold price, but it is also a great company in its own right, with good growth potential. A full list of the stocks we cover can be found in our free online portfolio at http://www.gold-prices.biz.biz.

=============================================

Goldcorp Expected to Get 40% Gold and Silver Reserve Boost at Penasquito

Source: Financial Post Trading Desk

By: Jonathan Ratner

 Goldcorp provided an update for the Penasquito project in Mexico on Monday, a day ahead of its tour for analysts and shareholders.

The miner said its capital cost estimate is less than 10% higher than the original estimate of US$1.494-billion and construction continues to progress well.

When engineering work is complete, Goldcorp expects an approximate increase of 30% in gold reserves and a 15% to 20% increase in silver, lead and zinc reserves for year-end reporting.

There is also the potential for initial resources to be declared for bulk mineable and high-grade underground zones, as well as the Noche Buena property nearby, noted Canaccord Adams analyst Steven Butler. He assumes reserve additions will be roughly 40% for gold and silver and around 16% for lead and zinc.

Concentrate shipments are scheduled to being in the fourth quarter of 2009 and commercial production is expected for the following quarter. Meanwhile, shipments of large trial lots are anticipated in 2009 now that concentrate samples have been provided to select smelters, Mr. Butler said in a research note.

The analyst also noted that Goldcorp’s optimization efforts are underway. They include the possibility of recovering precious metals from low-grade lead ore that was previously considered uneconomic, the potential for underground bulk mining beneath currently defined open pits, and the possibility of cheaper power from a dedicated facility through a partnership with an independent provider.

Canaccord rates Goldcorp a “buy” with a price target of US$32 per share.

Jonathan Ratner 

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–>========================================

The Fed Still Manipulates Gold and The Markets

By: Jake Towne of Yet Another Champion of the Constitution

In a dynamic duo of articles published last weekend, I predicted the fall of the Dollar via a Gold-based perspective, and a US Treasury-based perspective. I want to round off and perhaps even reinforce my theory with a few more opinions and thoughts, which of course may be faulty as the major decisions are still at the mercy and discretion of the Fed, whom I have learned to never underestimate. To be a real “expert” in economics today requires one to be an “expert” in predicting government interventions, so it is all guesswork unless one is an insider. I am highly interested if there are any crucial facts I am missing by the way, please leave any counterarguments below.

I own some gold and if gold goes down I’ll buy some more and if gold goes up I’ll buy some more. Gold during the course of the bull market, which has several more years to go, will go much higher. – Jim Rogers, famed commodities trader, last week

I have written previously how the Fed creates and destroys money, but the example I used of open market operations (OMOs) has changed dramatically in 2008. The Fed is, on a daily basis, still altering its Treasury holdings, but more importantly propping up other assets by buying them, such as mortgage-based securities, Citigroup (C), AIG, etc. The Fed balance sheets have plunged from its historical levels of ~95% Treasury securities to less than 32% Treasuries, which hampers OMOs since the assets purchased will likely find no willing buyer on the market.

It may seem like the Fed is creating lots of money (and they are) but remember that $7.76 trillion, $8.5 trillion, WHATEVER the new number will be by the end of this week, pales in comparison to the amount of financial derivatives in existence, which per the BIS at last count (and just over-the-counter!) was $684 trillion. I am not sure if I ever wrote this phrase in this column before, but I’ve always viewed the financial crisis as a “Triple-D” crisis. Dollar. Debt. Derivatives.

There is another method of money destruction that I have not overlooked and want to mention. In an economic “disintegration” or a monster of a recession, money can also be destroyed by corporate, government and private bankruptcies.

In the debt-based world we live in, I think money destruction could be seen in shocking scales far exceeding the imaginations of the Keynesian-economics-based minds of the Fed and other central bankers. For instance, comparatively there has been much less noise in the commercial mortgage markets. However, if a lot of businesses fail, which has been known to happen in any recession, how do you suppose those mortgages will be repaid to the banks? In such a scenario, central bankers have just two options: create replacement money to re-inflate supply, or revalue the currency to an asset (very likely gold, after all central bankers do not hold at least some gold for their collective health, the yellow stuff is nice life insurance for fiat currency, ain’t it?).

In this eye-popping December 4 essay by James Conrad, he reasons the central bankers will revalue to some sort of a gold standard to escape oblivion, and the price of gold will go from $750 per ounce to $7500-9000. [Remember the “price” is not REALLY going up, after all 1 ounce of gold is the same from day to day. What it really means is that all fiat currencies are going to be massively devalued as the worthless scraps of paper and electrons they really are!]

There is a legal requirement that, in every futures contract that promises to deliver a physical commodity, the short seller must be 90% covered by either a stockpile of the commodity or appropriate forward contracts with primary producers… Things, however, are changing fast. As previously stated, the first major mini-panic among COMEX gold short sellers happened last Friday. As of Wednesday morning, about 11,500 delivery demands for 100 ounce ingots were made at COMEX, which represents about 5% of the previous open interest. Another 2,000 contracts are still open, and a large percentage of those will probably demand delivery. These demands compare to the usual ½ to 1% of all contracts.

Time for Captain Calculator! On December 5, the open interest was 264,796 contracts (at 100 troy ounces per bar). This equates to 823 tonnes, a very significant amount equal to about 10% of the total gold reserves claimed by the United States, the world’s largest holder. There are 26.5 million ounces in contracts and only 2.9 million ounces in COMEX warehouses to cover deliveries as Dr. Fekete notes here. Over 40% of the warehouse totals will be delivered before January 1.

Where is the gold to cover the rest of the contracts? In the ground? In central bank vaults? At the GLD London vault? I do not know the answer, but I agree with Fekete’s comment on gold’s recent backwardation and Conrad, the traders requesting delivery are skeptical there is enough.

Conrad then proceeds to outline a very convincing (to me) proof that ends with:

It is only a matter of time before gold is allowed to rise to its natural level. Assuming that about half of the current increase in Fed credit is eventually neutralized, the monetized value of gold should be allowed to rise to between $7,500 and $9,000 per ounce as the world goes back to some type of gold standard. In the nearer term, gold will rise to about $2,000 per ounce, as the Fed abandons a hopeless campaign to support COMEX short sellers, in favor of saving the other, more productive, functions of the various banks and insurers.

Revaluation of gold, and a return to the gold standard, is the only way that hyperinflation can be avoided while large numbers of paper currency units are released into the economy. This is because most of the rise in prices can be filtered into gold. As the asset value of gold rises, it will soak up excess dollars, euros, pounds, etc., while the appearance of an increased number of currency units will stimulate investor psychology, and lending and economic output will increase, all over the world. Ben Bernanke and the other members of the FOMC Committee must know this, because it is basic economics.

 

Hyperinflation is nasty stuff. I first wrote about it in my July article “Calling All Wheelbarrows: Hyperinflation in America? (Part 2/2)” and a fellow Nolan Chart columnist, Republicae, with far more experience than I wrote “The Hyper-Inflationary Trigger.”

Jim Sinclair, precious metals expert, comments here:

I recently completed the same mathematics that helped me so much in 1980 to determine the price that would be required to balance the international balance sheet of the US.

Balancing the international balance sheet is gold’s mission in times of crisis.

I recently did the math again and was sadly shocked to see what the price of gold would have to be to balance the international balance sheet of the USA today. That price for gold is more than twice Alf’s projected maximum gold price.

 

Alf Field’s maximum projection is $6,000 per troy ounce. Wow, guess Captain Calculator can take a vacation! On that note I would like to end with a reminder to the republican, Republican, and the third person who is reading this:

“We renew our allegiance to the principle of the gold standard and declare our confidence in the wisdom of the legislation of the Fifty-sixth Congress, by which the parity of all our money and the stability of our currency upon a gold basis has been secured.”

– Republican National Platform, 1900

“We believe it to be the duty of the Republican Party to uphold the gold standard and the integrity and value of our national currency.”

– Republican National Platform, 1904

“The Republican Party established and will continue to uphold the gold standard and will oppose any measure, which will undermine the government’s credit or impair the integrity of our national currency. Relief by currency inflation is unsound and dishonest in results.”

– Republican National Platform, 1932 [Above are sourced from H.L. Mencken, A New Dictionary of Quotations on Historical Principles from Ancient and Modern Sources (1985, p. 471)

“We must make military medicine the gold standard for advances in prosthetics and the treatment of trauma and eye injuries.”

– the only mention of gold in the Republican National Platform, 2008. Try searching for ‘gold’ or ‘dollar’ here.

Well, the Gold Standard ended in the US in 1914 when the first unbacked and “unsound” Federal Reserve Notes were printed. Ok, I hate the Fed, but fellow columnist Gene DeNardo phrased it best in his intriguing article “MV=PT A Classic Equation and Monetary Policy“:

When the economy grows in a healthy way, we all share in the profit as our currency becomes stronger and is able to purchase more.

========================================

Inflation on Sale as Deflation Dominates Markets

By:  Eric Roseman of  The Sovereign Society

The time to start building fresh positions in oil, gold, silver and TIPs has arrived. Even distressed real estate should be accumulated if credit can be secured.

Over the next 6-12 months the United States, Europeans, Japanese and Chinese will eventually arrest deflation. And long before that materializes, hard assets will begin a major reversal following months of crippling losses.

Since peaking in July, the entire gamut of inflation assets has collapsed amid a growing threat of deflation or an environment of accelerated price declines. The last deflation in the United States occurred in the 1930s, purging household balance sheets, corporations, states, municipalities and even the government following two New Deals.

Thus far, U.S. CPI or the consumer price index has not turned negative year-over-year. Yet as oil prices continue to lose altitude and other commodities have been crushed, input costs and price pressures continue to decline dramatically since October. The only major component of CPI that continues to post modest year-over-year gains is wages. And with unemployment now rising aggressively this quarter it’s highly likely wage demands will also come to a screeching halt.

Plunging Bond Yields Discount Danger

In the span of just six months, foreign currencies (except the yen), commodities, stocks, non-Treasury debt, real estate and art have all declined sharply in value in the worst panic-related sell-off in decades. More than $10 trillion dollars’ worth of asset value has been lost worldwide in 2008.

What’s working since July? U.S. Treasury bonds and the U.S. dollar as investors scramble for safety and liquidity.

On December 5, 30-day and 60-day T-bills yielded just 0.01% – the lowest since the 1930s while the benchmark 10-year T-bond traded below 2.55% – its lowest yield since Eisenhower was president in 1955. Even 30-year bonds have surged as the yield recently dropped below 3% for the first time in more than four decades.

The market is now pricing a severe recession and – possibly – another Great Depression. Despite a series of formidable regular market interventions by central banks since August 2007, the credit crisis is still alive and kicking. The authorities have not won the battle …at least not yet.

Heightened inter-bank lending rates, soaring credit default swaps for sovereign government debt and plunging Treasury yields all confirm that the primary trend is still deflation.

To be sure, credit markets worldwide have improved markedly since the dark days of early October. Investment-grade corporate debt is rallying, commercial-paper is flowing again and companies are starting to issue debt once more – but only the highest and most liquid of companies. For the most part, banks are still hoarding cash and borrowers can’t obtain credit.

The real economy is now feeling the bite as consumption falls off a cliff, foreclosures soar and the unemployment rate surges higher. These primary trends are deflationary as broad consumption is severely curtailed, with consumers preparing for the worst economy since 1981 and rebuilding devastated household balance sheets.

But at some point over the next 12 months, the market might transition from outright deflation or negative consumer prices to some sort of disinflation or at least an environment of stable prices. That’s when inflation assets should start rallying again.

Inflate or Die: The Name of the Game in 2009

The battle now being waged by global central banks, including the Federal Reserve is an outright attack on deflation. Through the massive expansion of credit, the Fed and her overseas colleagues are on course to print money like there’s no tomorrow to finance bulging fiscal spending plans, bailouts, tax cuts and anything else that helps to alleviate economic stress.

Earlier in November, the Fed announced it would target “quantitative easing” and “monetization,” unorthodox monetary policy tools rarely or never used in the post-WW II era.

Without getting too technical, the term “quantitative easing” means the Fed will act as the buyer of last resort to monetize Treasury debt and other government agency paper in an attempt to bring interest rates down. Quantitative easing aims to flood the financial system with liquidity and absorb excess cash through monetization or purchasing of government securities.

Through monetary policy, the Fed controls short-term lending rates but cannot influence long-term rates that are largely set by the markets; the Fed now hopes it can influence long-term rates through quantitative easing. And since its announcement two weeks ago, long-term fixed mortgage rates have declined sharply.

These and other open market operations directed by the Fed and Treasury will eventually arrest the broad-based deflation engulfing asset prices. It will take time. Inflation is the desired goal and is the preferred evil to deflation, a monetary phenomenon that threatens to destroy or seriously compromise the financial system. Policy-makers have studied the Great Depression, including Fed Chairman Bernanke, and the consequences of failed central bank and government intervention in times of severe economic duress are unthinkable.

Ravenous Monetary Expansion

According to Federal Reserve Board data, the Fed is now embarking on a spectacular expansion of credit unseen in the history of modern financial markets.

Lichtensteins Banner

The total amount of Federal Reserve bank credit has increased from $800 billion dollars to $2.2 trillion dollars (or from 6% to 15% of gross domestic product) as the central bank expands its various liquidity facilities in an attempt to preserve normal functioning of the financial system.

The Fed’s ongoing operations to arrest falling prices are targeted namely at housing – the epicenter of this financial crisis. It is highly unlikely that the United States economy will bottom until housing prices find a floor. Quantitative easing hopes to stabilize this market.

Buy Gold Now

Relative to other assets in 2008, gold prices have declined far less. The ongoing liquidity squeeze has forced investors to dump assets, including gold to raise dollars. I suspect this short-term phenomenon will end in 2009 once the ongoing panic subsides and credit markets become largely functional again.

Gold should be accumulated now ahead of market stabilization. As the financial system gradually comes back to life over the next several months or sooner, the dollar should commence another period of weakness; there will be little incentive to hold dollars with short-term rates at or close to zero percent. The Fed will be in no hurry to raise lending rates.

Still, the Japanese experience in the 1990s warns investors of the travails of long-term deflation.

The Japanese, unlike the United States, only started to seriously attack falling prices in the economy in 1998 through massive fiscal spending. In contrast, the U.S. is already throwing everything at the crisis after just 17 months.

I expect the United States to print its way out of misery and, over time, and conquer deflation. But the cost will be humungous and at the expense of the dollar, U.S. financial hegemony and calls for a new monetary system anchored by gold.

It’s literally “inflate or die” for global central banks. Inflation will win.

My Note: If you haven’t START BUYING PRECIOUS METALS NOW! Especially GOLD -I AM!    jschulmansr

 

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Gold (H)edges Gold Stocks + New CBOE Gold and Silver Options

09 Tuesday Dec 2008

Posted by jschulmansr in capitalism, commodities, Copper, Currency and Currencies, deflation, Finance, Fundamental Analysis, gold, hard assets, inflation, Investing, investments, Latest News, Markets, mining stocks, oil, precious metals, silver, small caps, Stocks, Technical Analysis, U.S. Dollar, Uncategorized, uranium

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Gold (H)edges Gold Stocks – Features and Interviews – Hard Assets Investor

By: Brad Zigler of Hard Assets Investor

This is an excellent teaching article- jschulmansr

I suppose I shouldn’t have been surprised by the number of visitors to the San Francisco Hard Assets Conference who wanted to talk about wrestling the risk of their gold stock investments. After all, 2008 has turned out brutal for gold miners. Witness the AMEX Gold Miners Index off by 46% for the year.

Some of the conferees have been puzzling over their hedging options. And there are plenty of them: options, futures and exchange-traded notes, to name a few. This array leaves many wondering which hedge is optimal.

If you’re pondering that question yourself, you first have to ask yourself just what risk you want to hedge. In a so-called “perfect” hedge, price risk is completely checked, effectively locking in the present value of an asset until the hedge is lifted.

Is that what you really want, though?

A less-than-perfect hedge neutralizes only a portion of the risk subsumed within an investment. Gold stocks, for example, provide exposure to both the gold and equity markets. Hedging a gold stock with an instrument that derives its value solely from gold may dampen the volatility impact of the metal market upon your portfolio, but leaves you with equity risk. This may be perfectly acceptable if you feel stocks in general – and your issues in particular – are likely to appreciate. Hedge out the gold exposure and you’re more likely to see the value that the company’s management adds. If any.

We touched on this subject in recent Desktop columns (see “Gold Hedging: Up Close And Personal” and “More On Hedging Gold Stocks“).

More than one Desktop reader asked why the articles proposed a hedge strategy employing inverse gold exchange-traded notes – namely, the PowerShares DB Gold Double Short ETN (NYSE Arca: DZZ) – instead of stock-based derivatives such as options on the Market Vectors Gold Miners ETF (NYSE Arca: GDX).

Well, we’ve mentioned one of the advantages of a gold-based hedge already, but the question deserves a more detailed answer. Let’s suppose, for illustrative purposes, you hold 1,000 shares of a gold mining issue now trading at $50 and are concerned about future downside volatility. [Note: The prices shown in the illustrations below are derived from actual market values.]

AMEX Gold Miners Index And ETF

The AMEX Gold Miners Index is a modified market-capitalization-weighted benchmark comprised of 33 publicly traded gold and silver mining companies.

While price movements in the index are generally correlated with the fluctuations of its components and other mining issues, the relationship isn’t perfect. Close, but not perfect. The Gold Miners Index represents the market risk, or beta, specific to gold equities. Any hedge that employs an index-based derivative will need to be beta-adjusted to compensate for any differences in the securities’ volatilities.

You have to consider the proper index-based derivative to be used in the hedge. The GDX exchange-traded fund could be shorted, but that would require the use of margin, something that some investors might abhor.

If you’re not put off by margin, you’ll first need to size your hedge. And for that, you’ll need a beta coefficient for your stock. A quick-and-dirty beta can be approximated by taking the quotient of the securities’ volatilities or standard deviations (you can get a stock’s standard deviation through Web sites such as Morningstar and SmartMoney, or you can derive a beta more formally through a spreadsheet program such as Excel).

Gold Stock Volatility ÷ ETF Volatility = 94.8% ÷ 81.8% = 1.16

The ratio tells you how to calculate the dollar size of your hedge. If your stock is trading at $50, your $50,000 position would require $58,000 worth of GDX shares sold short. If GDX is $23 a copy, that means you‘ll need to short 2,522 shares.

Once hedged, you’ll still carry residual risk. The volatility correlation could shift over the life of the trade, leaving you over- or underhedged. So you’ll need to monitor the position for possible adds or subtractions. Hedging is not a “get it and forget it” proposition.

You’ll also need fresh capital to place and maintain the hedge. There’s the initial cash requirement of $29,000 (50% of $58,000) and possibly more if you hold your hedge through significant rises in GDX’s price.

GDX Options

You can avoid margin altogether by using certain GDX options instead of a short sale. Purchasing puts on GDX, for example, gives you open-ended hedge protection against declines in gold equities like a GDX short sale but with a clearly defined and limited risk. There’s no margin required, but you’ll have to pay a cash premium to buy the insurance protection. And, like an insurance contract, the coverage is time-limited.

Let’s say you can purchase a one-month option that permits you to sell 100 GDX shares, at $22 a copy, for a premium of $245. Keep in mind that the put conveys a right, not an obligation. You’re not required to sell GDX shares. At any time before expiration, you can instead sell your put to realize its current value, or you can allow the option to expire if it’s not worth selling.

Just how does the put protect you? Let’s imagine that, just before expiration, GDX shares have fallen to $10. Your put guarantees you the right to sell GDX shares at a price that’s now $12 better than the current market. That’s what your option should be worth: $12 a share, or $1,200. If you sell it now, you’d realize a $955 gain that can be used to offset any concomitant losses on your gold stock.

To figure out how many puts are necessary to fully hedge your stock position, you’ll need to extend the ratio math used previously.

Option prices only move in lockstep with their underlying stocks when they’re “in the money” like the put illustrated above. The expected change in an option premium is expressed in the delta coefficient. If the delta of the $22 put, when GDX is $23, is .40, the option premium is expected to appreciate by 40 cents for every $1 GDX loses.

The arithmetic used to construct the full hedge is:

[Stock Value ÷ (Delta x 100 Shares)] x Beta = [$50,000 ÷ (.40 x 100)] x 1.16 = 1,450 puts

Here’s where the efficacy of the GDX options hedge really breaks down. GDX’s high price volatility has inflated the cost of hedge protection to impractical levels. The hedge would cost $245 x 1,450, or $355,250; much more than the potential loss that would be incurred if you remained unprotected. Clearly, the cost of hedging gold equity market risk, like the cost of insurance after a catastrophe, has been puffed up to protect the insurer.

Of course, you can elect to hedge only a portion of your stock position, but the high premium necessitates a large “deductible” on your market risk.

Wrapping Up

You’ll note that some gold mining issues have options themselves. Using these as hedges in the current market presents another set of problems.

Given that the volatilities for individual issues are higher than that of GDX, the stock contracts are even more expensive than index options. Using stock options, too, would hedge away management alpha. Individual options, as well, are inefficient if you hold multiple mining issues in portfolio.

Now, consider the contrasting benefits attached to using the DZZ double inverse gold notes in your hedge: 1) no overpriced insurance cover, 2) you get to keep your stock’s equity and management risk; you’re only hedging out gold’s volatility, 3) a single purchase can hedge any number of mining issues in portfolio, and 4) your insurance doesn’t expire.

Seems to me that DZZ has the edge.

===============================================

Today’s Grab Bag- Brad Ziegler Hard Assets Investor

Cheaper Oil and Silver + Gold Options 

Real-time Inflation Indicator (per annum): 7.9%

A couple of quick items for your consideration this morning.

Merry New Year from the EIA

The U.S. Energy Information Administration (EIA) has issued its monthly short-term forecasts for oil prices. In the words of this little corner of sunshine in the Department of Energy:

 “The current global economic slowdown is now projected to be more severe and longer than in last month’s Outlook, leading to further reductions of global energy demand and additional declines in crude oil and other energy prices.”

The EIA has set an average price forecast for West Texas Intermediate (WTI) crude oil at $100 per barrel. That’s the average for all of 2008. Keep in mind that, year-to-date, WTI has traded at an average barrel price of about $104. Now, we’ve only got 15 trading days left in 2008. To bring the current average price down $4 in that time, the sell-off pace has to quicken some.

In essence, the EIA – if you put any faith in its forecasts – is telling you to short oil. And this while the quarterly NYMEX oil contango has ballooned to a record $7.21 a barrel (need background on contango? See “Oil Demand Perking Or Peaking?”).

 NYMEX Crude Oil Quarterly Contango 

NYMEX Crude Oil Quarterly Contango

Back in November, the EIA eyed a $112 average price for 2008. Do I need to tell you that they missed the mark on that one?

Looking ahead, the EIA thinks WTI crude will average $51 a barrel in 2009.

Never let it be said that your stingy government didn’t give you something for the holidays.

And now, ladies and gentlemen, SLV options

Frustrated that you haven’t been able to play your favorite option trades in the silver market? Be vexed no longer. The Chicago Board Options Exchange (CBOE) has come to your rescue. Yesterday, CBOE launched option trading on two metals grantor trusts, the iShares COMEX Gold Trust (NYSE Arca: IAU) and the iShares Silver Trust (NYSE Arca: SLV). Both trusts hold physical metals.

This is both a first and a “two-fer” for the options bourse. Back in June, CBOE inaugurated trading in the SPDR Gold Shares Trust (NYSE Arca: GLD); options on a silver grantor trust haven’t been traded on an organized exchange before.

The American-style options will trade on the January expiration cycle, initially with contracts maturing in December, January, April and July.

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Obama Eligibility dispute, Part 2, Latest News

09 Tuesday Dec 2008

Posted by jschulmansr in 2008 Election, Barack Obama, capitalism, Electoral College, Finance, Free Speech, id theft, Investing, investments, Joe Biden, John McCain, Latest News, Markets, Politics, Presidential Election, Sarah Palin, socialism, Stocks, Today, u.s. constitution, U.S. Dollar, Uncategorized

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Eligibility dispute, Part 2, scheduled by Supremes

By Bob Unruh
© 2008 WorldNetDaily

Not even the U.S. Supreme Court can kill the dispute that has developed over Sen. Barak Obama’s eligibility to occupy the Oval Office based on questions raised over his birthplace and citizenship and his steadfast refusal to provide documentation on the issue.

The high court today denied a request to listen to arguments in a case, Donofrio v. Wells, from New Jersey that addressed the issues. But literally within minutes, the court’s website confirmed that another conference is scheduled for Friday on another case raising the same worries.

The case of Leo C. Donofrio v. New Jersey Secretary of StateNina Mitchell Wells claimed Obama does not meet the Constitution’s Article 2, Section 1 “natural-born citizen” requirement for president because of his dual citizenship at birth.

 

The new case, Cort Wrotnowski v. Susan Bysiewicz, Connecticut secretary of state, also makes a dual citizenship argument. It had been rejected by Justice Ruth Ginsburg Nov. 26 but then was resubmitted to Justice Antonin Scalia. There was no word of its fate for about 10 days, then today the court’s website confirmed it has been distributed for Friday’s conference, a meeting at which the justices consider whether to take cases.

Where’s the proof Barack Obama was born in the U.S. or that he fulfills the “natural-born American” clause in the Constitution? If you still want to see it, sign WND’s petition demanding the release of his birth certificate.

Donofrio, whose case was rejected today, said he’s hopeful Wrotnowski’s complaint will find a more receptive panel.

“It includes a more solid brief and a less treacherous lower court procedural history,” Donofrio writes on his Natural Born Citizen blog. “I must stress that [Wrotnowski] does not have the same procedural hang up that mine does.”

 

The website explained an appeals judge in New Jersey had incorrectly characterized Donofrio’s original complaint as a “motion for leave to appeal” rather than a “direct appeal.”

“If Cort’s application is also denied then the fat lady can sing,” the website stated. “Until then, the same exact issue is before SCOTUS as was in my case. Cort’s application before SCOTUS incorporates all of the arguments and law in mine, but we improved on the arguments in Cort’s quite a bit as we had more time to prepare it.”

Besides the plaintiffs for these two and about a dozen other legal actions that challenge Obama’s eligibility in courts around the country, there are tens of thousands of people who are alarmed by the unanswered questions about Obama.

More than 60,000 letters were generated by WND readers specifically asking the U.S. Supreme Court to review Obama’s eligibility.

The campaign included 6,682 packages of nine letters each delivered to the court on the case about Obama’s eligibility under the “a natural born citizen” requirement

 

 

“If we didn’t do everything possible to let the Supreme Court justices know what a concern this is to millions of Americans, I would feel like I was letting down the Constitution and the men who framed it – not to mention every citizen of the United States living now and in the future,” Joseph Farah, WND’s founder and editor, said of the campaign. “This constitutional eligibility test has become a key issue with me because if the plain language of the Constitution is no longer taken seriously by our nation’s controlling legal authorities, we have become an outlaw nation – no longer under the rule of law but under the rule of men.”

A petition drive Farah launched also has collected more than 175,000 signatures – so far – from people who want to know the truth.

Last month WND reported worries over a “constitutional crisis” that could be looming over the issue of Obama’s citizenship. The concerns were raised in a lawsuit in California asking state officials to prevent Electoral College members from voting for Obama until they investigated his eligibility, a case being handled by the United States Justice Foundation.

WND senior reporter Jerome Corsi had gone both to Kenya and Hawaii prior to the election to investigate issues surrounding Obama’s birth. But his research and discoveries only raised more questions.

The biggest question is why Obama, if a Hawaii birth certificate exists as his campaign has stated, hasn’t simply ordered it made available to settle the rumors.

The governor’s office in Hawaii said there is a valid certificate but rejected requests for access and left ambiguous its origin: Does the certificate on file with the Department of Health indicate a Hawaii birth or was it generated after the Obama family registered a Kenyan birth in Hawaii?

Obama’s half-sister, Maya Soetoro, has named two different Hawaii hospitals where Obama could have been born. There have been other allegations that Obama actually was born in Kenya during a time when his father was a British subject. A one point a Kenyan ambassador said Obama’s birthplace in Kenya already was being recognized.

Among the plaintiffs in the California case is presidential candidate Alan Keyes.

“Should Senator Obama be discovered, after he takes office, to be ineligible for the office of president of the United States of America and, thereby, his election declared void, petitioners, as well as other Americans, will suffer irreparable harm in that (a) usurper will be sitting as the president of the United States, and none of the treaties, laws, or executive orders signed by him will be valid or legal,” the action challenges.

Wrotnowski’s case challenges the courts to review allegations of election fraud, suggesting the Connecticut secretary of state should not have placed Obama’s name on the ballot without verification of his eligibility.

After state courts refused to take the case, he said the point was, “this document has not been produced.”

“I’m not the first, not the last, just among a growing number of people across the country who’ve become distressed about the lack of disclosure,”

Donofrio had alleged that Obama’s dual citizenship disqualifies him. Obama’s campaign said the British citizenship expired, leaving him with “natural-born” U.S. citizenship.

Obama’s Fight the Smears website confirms Donofrio is correct about the Democrat’s citizenship at birth.

Donofrio’s case originally was denied a conference of the judges by Justice David H. Souter, but Justice Clarence Thomas agreed to bring it back for consideration last week. To go forward, from conference to a full hearing, the case needed the approval of four of the Supreme Court’s nine justices.

Also, the “certification of live birth” posted by the Obama campaign cannot be viewed as authoritative, critics allege.

“Hawaii Revised Statute 338-178 allows registration of birth in Hawaii for a child that was born outside of Hawaii to parents who, for a year preceding the child’s birth, claimed Hawaii as their place of residence,” according to reports. “The only way to know where Senator Obama was actually born is to view Senator Obama’s original birth certificate from 1961 that shows the name of the hospital and the name and signature of the doctor that delivered him.”

Critics also raise the circumstances of Obama’s time during his youth in Indonesia, where he was listed as having Indonesian citizenship. Indonesia does not allow dual citizenship, raising the possibility of Obama’s mother having given up his U.S. citizenship.

Any subsequent U.S. citizenship then, the case claims, would be “naturalized,” not “natural-born.”

WND’s petition is available online, and more information is available at this link.

====================================================

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Time to Revise Our Gold Expectations – Seeking Alpha

08 Monday Dec 2008

Posted by jschulmansr in Bollinger Bands, capitalism, commodities, Copper, Currency and Currencies, deflation, Finance, Fundamental Analysis, gold, hard assets, Investing, investments, Latest News, Markets, mining stocks, precious metals, silver, small caps, Stocks, Technical Analysis, Today, U.S. Dollar, uranium

≈ Comments Off on Time to Revise Our Gold Expectations – Seeking Alpha

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Time to Revise Our Gold Expectations – Seeking Alpha

Source: FP Trading Desk

The price of gold is showing signs of stability after gold stocks got crushed in the commodity sell-off early this fall. However, we are clearly not in the $1000-plus gold price environment many had anticipated under these dire economic conditions, nor have traditional multiples returned, says Credit Suisse analyst Anita Soni.

Apart from a brief period earlier this year, when gold hit an all-time high above $1030 an ounce, the yellow metal has not performed true to course. The first quarter advance proved to be a bubble with large-scale institutional speculators driving the price sharply higher… and then sharply lower over the next seven months, according to Jeffrey Nichols, managing director at American Precious Metals Advisors.

Mr. Nichols told the China Gold & Precious Metals Summit in Shanghai on Thursday:

In spite of the lack of direction and day-to-day price volatility in the gold market this year, at least we can say that no other asset class has held its value quite so well.

“Clearly the standard 1 to 2 times price-to-net asset value [NAV] paradigm no longer applies, particularly for the more junior stocks,” Ms. Soni said in a research note, adding that exposure to base metal by-products is no longer a guarantee of lower cash costs. For senior producers, P/NAV multiples are around 0.5 times, while they range for 0.66x for mid-tier names and as much as 1x for small market cap companies.

Until longer-term valuation fundamentals matter again, Ms. Soni believes she has determined an appropriate near-term basis for valuing gold equities. It uses spot commodity prices plus 10% to determine net asset values: $850 per ounce for gold, $10.50 for silver, $1.80 per pound of copper and $0.58 for zinc.

This produces returns between 30% and 60%, which she considers a reasonable near-term basis for valuation until gold moves upward again. Ms. Soni has also produced target prices and net asset values for the long term, with an extra 10% for gold again, or $930, a level she said is “imminently achievable.”

As a result of these changes, Credit Suisse has upgraded its rating on Kinross Gold Corp. (KGC) to “outperform,” while Yamana Gold Inc. (AUY) and Northgate Minerals Corp. (NXG) have been downgraded to “neutral.” Target price reductions for the miners it covers range from 18% to 80%.

“The issues in the mid-tier space are those of operational risk and to a lesser extent, the spectre of potential funding shortfall,” Ms. Soni said. Yamana’s recent production and cost revisions have not been well-received, sending its share price multiple from near-senior levels to the discounted mid-tier level.

She cited several other near-term issues that could weigh on the stock. Its production ramp-up will likely be slower than expected and the market may show a lack of patience with this.

Yamana’s capital program funding could get very tight if current market conditions and commodity prices persist, which may make it very hard for the company to resist issuing equity given the success Agnico-Eagle Mines Ltd. (AEM) and Red Back Mining Inc. (RBIFF.PK) have had with their recent financings.

Cut-backs to preserve capital will hurt its value in terms of adding exploration and growth opportunities, and Yamana currently has significant exposure to copper.

And while Ms. Soni suggested that Yamana is perhaps the best candidate for a takeover given its low valuation and a few very good assets, particularly El Penon in Chile, she says this is not enough to recommend it as an “outperform.”

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IAMGOLD: Expect a Move Higher – Seeking Alpha

08 Monday Dec 2008

Posted by jschulmansr in capitalism, commodities, Copper, Currency and Currencies, Finance, Fundamental Analysis, gold, hard assets, inflation, Investing, investments, Latest News, Markets, mining stocks, Moving Averages, precious metals, silver, small caps, Stocks, Technical Analysis, Today, U.S. Dollar, Uncategorized

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IAMGOLD: Expect a Move Higher – Seeking Alpha

By: Glenn Cutler of The Winners Forum.com

IAMGOLD Corp (IAG) is a Canadian based mining company that participates in worldwide exploration and development of mineral resources and produces roughly 1 million ounces of gold annually from eight property locations on three continents: North America, South America and Africa. The company boasts the largest cash flow ratio on investment in the entire industry and is second among top mining companies in terms of achieving earnings per $1000 invested. Revenue, adjusted net earnings and cash flow have all risen sharply through the first 9 months of 2008.

IAG MAINTAINS STRONG FINANCIAL POSITION

Given recent concerns about the economy and in particular, debt and leverage, stocks which are most likely to attract investor attention are those of companies that have bullet proof balance sheets, stable or growing cash flow and access to capital. IAG is a gold star candidate, with a low Debt/Equity Ratio and recent liquid assets as published in their 2008 TWP Presentation document as follows:

  • CASH and CASH EQUIVALENTS – $153 million
  • GOLD BULLION (at market value) – $154 million
  • 5-YEAR UNDRAWN CREDIT FACILITY – $140 million
  • TOTAL FUNDS AVAILABLE – $447 million
  • YTD 9 MONTH OPERATING CASH FLOW – $189 million

GOLD PRODUCTION/GEOGRAPHIC DIVERSIFICATION – This company produced 253,000 ounces, a 5% increase in the latest quarter. They are on track to produce 950,000 ounces in 2008. Production costs are $476/ounce slightly below the estimated $480-490 range. Geographic diversification is another important factor for investors. IAG has production at 8 different facilities which breaks down as 51% (Africa), 30% (Suriname) and 19% (Quebec). Its current goal is to double total production to 1.8 million ounces in 2012.

RESERVES and RESOURCES

Mines Proven & Probable Measured & Indicated* Inferred
Rosebel 3,233,000 8,283,000 79,000
Doyon Division* 206,000 662,000 576,000
Mupane 311,000 792,000 7,000
Tarkwa 2,307,000 2,752,000 733,000
Sadiola 394,000 1,609,000 325,000
Yatela 200,000 234,000 103,000
Damang 274,000 468,000 266,000
Total 6,925,000 14,800,000 2,089,000

IAMGOLD Acquires 71.6% of EURO RESSOURCES S. A. (EUR.TO) for $1.20 / Reopens Offer

On December 3rd, IAMGOLD Corp announced results of its $1.20/share tender offer for French company Euro Ressources S.A. That company’s principal asset is a 10% royalty interest in the Rosebel Gold Mine in Suriname which is operated by IAMGOLD. This mine which is estimated to have 10 million ounces, achieved record throughput and the $44 million expansion and optimization project in on target for completion in early 2009. According to the CEO of IAMGOLD, this strategic purchase will reduce cash costs by about $45 per ounce produced at this specific property.

With the recent decline in the foreign exchange rate of the Euro currency, IAG was able to move quickly to purchase Euros and lock in the transaction cost at an average rate of 1.27, approximately 15% below the 1.47 exchange rate the date they announced the deal. Regulations require the offer be reopened for an additional 10 days at the same price, until December 17th.

IAG STOCK – Recent Price Activity

Typical of most mining stocks, IAG has been in a steady downtrend over the past year. Shares were banging around $10 when the year began and then gradually declined. The price stair-stepped its way down, spending time in each support zone before breaking down to the next area where buyers would regroup. The $5-6 range held from April through most of September, and then when financial markets cracked the price tumbled hard and fast to print a recent new low around $2.22 a share. Shares have been trending modestly higher since hitting their lows, and it’s possible we could see a new pattern of higher lows and higher highs on a recovery.

Given its outstanding balance sheet and strong positive cash flow, downside investment risk is small. Technical patterns indicate a high probability for shares to move up into their recent congestion zone between $5.50 and $6.50, where there will be overhead supply to work through before the stock could continue higher. As with all mining stocks, performance relates directly to how the underlying precious metals perform, so it’s critical that gold move in either a sideways manner where mining stocks can consolidate and base build or trend modestly higher. Or, if the gold market can rally strong, there is no doubt shares of mining stocks will also rise nicely.

Based on a multi-decade chart of gold, there is reason to believe a move higher is not far off. A more detailed discussion of the technical outlook for gold is available in a published report at TheWinnersForum.com – Cutler’s Stock Market Blog.

OTHER FUNDAMENTAL FACTORS – Considerations for Investment

UNDERVALUED MARKET VALUATION VERSUS PEERS – The slide in the share price to below $4 now values the entire company at $1.2 billion, which is now only 1.5x trailing 12-month revenue, far below industry peers. To compare: Agnico-Eagle Mines (AEM) trades at 10x, Kinross Gold (KGC) trades at 6.5x, Newmont Mining (NEM) trades at 2.2x and Barrick Gold (ABX) trades at nearly 3x revenue.

RECENT ACQUISITION OF DOYON ROYALTY – In July, with a focus on reducing cash costs, the firm acquired the participation royalty in the Doyon/Westwood Property located in Quebec from Barrick Gold for $13 million. The acquisition eliminated royalty payments which was 25% of gold prices above $375 an ounce. The savings was about $140 an ounce. The participation royalty also extended to the Westwood Development Project, about 2 kilometers from the Doyon mine. Westwood production was also freed from royalty obligations.

Other Mining Activities / Projects

Niobium Mine in Quebec – Through its Niobec Mine in Quebec the company mines a lesser known metal called Niobium. Originally known as Columbium, this 41st element is a paramagnetic metal which has a high melting point and low density. One of its noteworthy characteristics is that it is corrosion resistant. It has superconductivity properties. It is used as an alloy in the steel industry because it increases the toughness strength and weldability of steel. It is also used in producing commemorative coins. According the company, the addition of $4 of niobium can reduce the weight of mid-sized cars by 100kg which save .05l/100 km in fuel consumption. It is also used in construction and land based turbine and jet engines. They company forecast to produce 4300 tons in 2008.

Quimsacocha gold Project in Ecuador – A new constitution took effect in Ecuador in October which received 64% of a referendum vote. This is a positive development that will enable a new mining law to allow responsible mining in the country. The 100% owned 3.5 million ounce Quimsacocha Project will complete its feasibility study in 2009.

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Court won’t review Obama’s eligibility to serve – Yahoo! News

08 Monday Dec 2008

Posted by jschulmansr in 2008 Election, Barack Obama, Currency and Currencies, Electoral College, Finance, Free Speech, id theft, Investing, investments, John McCain, Latest News, Markets, Politics, Presidential Election, Prophecy, psychology, socialism, Stocks, u.s. constitution, Uncategorized

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Court won’t review Obama’s eligibility to serve – Yahoo! News

My Obama Watch Central

WASHINGTON – The Supreme Court has turned down an emergency appeal from a New Jersey man who says President-elect Barack Obama is ineligible to be president because he was a British subject at birth.

The court did not comment on its order Monday rejecting the call by Leo Donofrio of East Brunswick, N.J., to intervene in the presidential election. Donofrio says that since Obama had dual nationality at birth — his mother was American and his Kenyan father at the time was a British subject — he cannot possibly be a “natural born citizen,” one of the requirements the Constitution lists for eligibility to be president.

Donofrio also contends that two other candidates, Republican John McCain and Socialist Workers candidate Roger Calero, also are not natural-born citizens and thus ineligible to be president.

At least one other appeal over Obama’s citizenship remains at the court. Philip J. Berg of Lafayette Hill, Pa., argues that Obama was born in Kenya, not Hawaii as Obama says and the Hawaii secretary of state has confirmed. Berg says Obama also may be a citizen of Indonesia, where he lived as a boy. Federal courts in Pennsylvania have dismissed Berg’s lawsuit.

My Question Is Still Why Doesn’t Obama just produce his Birth Certificate So this is over once and for all! 

Otherwise even according to the Chicago Tribune “this will drive a wedge in an already undivided public”

See Below:

Court won’t review Obama’s eligibility to serve

By Tim Jones

Tribune correspondent

9:16 AM CST, December 8, 2008

UPDATE: The Supreme Court has turned down an emergency appeal from a New Jersey man who says President-elect Barack Obama is ineligible to be president because he was a British subject at birth.

The court did not comment on its order Monday rejecting the call by Leo Donofrio of East Brunswick, N.J., to intervene in the presidential election. Donofrio says that since Obama had dual nationality at birth — his mother was American and his Kenyan father at the time was a British subject — he cannot possibly be a “natural born citizen,” one of the requirements the Constitution lists for eligibility to be president.

Donofrio also contends that two other candidates, Republican John McCain and Socialist Workers candidate Roger Calero, also are not natural-born citizens and thus ineligible to be president.

At least one other appeal over Obama’s citizenship remains at the court. Philip J. Berg of Lafayette Hill, Pa., argues that Obama was born in Kenya, not Hawaii as Obama says and the Hawaii secretary of state has confirmed. Berg says Obama also may be a citizen of Indonesia, where he lived as a boy. Federal courts in Pennsylvania have dismissed Berg’s lawsuit.

 

This is a story that won’t go away.Barack Obama‘s birth certificate, the controversy over allegations that Obama is not eligible to take office next month has reached the Supreme Court, which is expected to announce Monday whether it will consider the matter.tmjones@tribune.com

Five weeks after the State of Hawaii vouched for the authenticity of President-elect

The fight is unusual because it thrives outside the so-called mainstream media, far beyond the oak-paneled offices of $700-an-hour lawyers and a world away from the 535 individuals whose surnames are preceded by Representative or Senator.

This is a different army at work, in an environment increasingly influenced by the Internet.

“It’s only being mentioned by a relative few, by the real die-hard, anti-Obama crowd,” said Michael Harrison, editor and publisher of Talkers magazine, the trade bible of the talk-radio industry. “On mainstream talk radio, it’s not a big deal right now. I think it’s run its course.”

“But,” Harrison added, “we live in a time that, because of the Internet, all points of view can live forever.”

Just as there is a split on the legitimacy of the legal claims, there is also a split within the media on the merits of the story. Is it the last gasp of opposition from opponents of Obama who have a found community of like-minded believers on the Internet, or is there a legal question to be resolved? The court will answer the latter question this week.

The campaign challenging the legitimacy of Obama’s 1961 birth certificate or the legality of his taking office is chronicled by WorldNetDaily, a popular, politically right-leaning site that was the 26th most-visited news and media Web site during November, according to Hitwise, which monitors Net traffic.

“If this [Obama taking office] happens, the question of eligibility for the highest office in the land will no longer even be a matter for concern,” wrote Joseph Farah, founder and editor of WorldNetDaily.

“Precedent will have been established. Arnold Schwarzenegger will suddenly be eligible to run for the office in 2012,” Farah wrote, referring to the Austrian-born California governor and film star.

An Obama spokesman declined to comment for this story.

The lawyers who, in at least six states including New Jersey and Connecticut, have argued Obama is not a natural-born citizen and cannot be president include one who supported Hillary Clinton’s presidential bid, one who has thundered for decades against the legality of the federal government collecting income tax, and one who argues that Sen. John McCain, by virtue of his birth 72 years ago in the Panama Canal Zone, would be banned from moving into the Oval Office, had he won last month’s election.

Leo Donofrio is a New Jersey lawyer who tried to get Obama and McCain stricken from the New Jersey ballot in November. Donofrio’s case was presented Friday to justices of the Supreme Court. Another case challenging Obama’s eligibility, this one from Pennsylvania, has not yet been presented to the full court for its consideration.

“My question is on a pure constitutional ground,” said Donofrio. “[Obama] is a citizen of the United States. I just don’t believe he’s a natural-born citizen.”

This is the thrust of the attack, picked up by people such as Bob Schulz, an upstate New York engineer who bought two full-page ads in the Tribune this month that called Obama “a usurper” who “would be entitled to no allegiance, obedience or support from the People.”

Schulz has challenged the federal government on issues including the Iraq War, the Patriot Act and the income tax. “I have a long history of petitioning the government for redress of grievances for violations of the constitution and the law,” said Schulz, who said he and his wife live on Social Security checks. Schulz said the ads cost “tens of thousands of dollars” and were paid for with more than 500 private donations from individuals who support the effort. He said there were “no financial angels” behind it.

If the Supreme Court decides not to consider the case, Donofrio said there “won’t be any beating on the drums saying there wasn’t any justice.”

But that will not be the end of the matter, Farah vowed.

“It’ll plague Obama throughout his presidency. It’ll be a nagging issue and a sore on his administration, much like Monica Lewinsky was on [ President Bill] Clinton,” Farah said. “It’s not going to go away and it will drive a wedge in an already divided public.”

That may underscore a landscape change in the media, where the Internet is playing a bigger role in setting the agenda. In 2004, the so-called swift boat campaign against Sen. John Kerry, the Democratic presidential nominee, began on the Internet. In fact, the co-author of “Unfit for Command: Swift Boat Veterans Speak Out Against John Kerry,” Jerome Corsi, also wrote “Obama Nation,” a book critical of Obama, published earlier this year.

Brendan Nyhan, a political scientist at Duke University, said the Internet’s role in forming public opinion is gaining strength. WorldNetDaily, for instance, has one of the faster-growing audiences on the Internet, up 62 percent in the past year, according to Hitwise.

Nyhan co-wrote a study this year that said journalists’ attempts to correct misinformation is unlikely to sway public perceptions because many people want to believe the misperception.

“People often have a strong bias for believing the evidence they want to believe and disbelieving what they don’t believe,” Nyhan said. “There is less of a sense that we all have a common set of facts we can agree on. There’s a polarization, and we can’t even agree on the basic factual assumptions to have a debate.”

 

Copyright © 2008, Chicago Tribune

 

 

 

 

 

 

 

 

 

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Latest Obama News, Supremes Deliberating, Muslim Plea To Obama, More

07 Sunday Dec 2008

Posted by jschulmansr in 2008 Election, Barack Obama, Currency and Currencies, Electoral College, Finance, Free Speech, Fundamental Analysis, id theft, inflation, Investing, investments, Joe Biden, John McCain, Markets, Politics, Presidential Election, Sarah Palin, socialism, Today, u.s. constitution, U.S. Dollar

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Latest Obama News, Supremes Deliberating, Muslim Plea To Obama, More…

Decision on Obama

citizenship pending…

Court delays action on suit

Source Washington Times By Tom Ramstack

The Supreme Court held off Friday on deciding whether to grant a hearing in a long-shot lawsuit that would decide whether Barack Obama can constitutionally become president as a “natural born” U.S. citizen.

The Friday list of court orders that denies or grants hearings did not mention the lawsuit, which says Mr. Obama should be disqualified from the presidency because he purportedly acquired the same British citizenship that his father had when he was born.

A spokesman for the court said the decision on whether to hear the suit brought by retired New Jersey lawyer Leo Donofrio is likely to be announced next week.

The Supreme Court may hear a lawsuit that argues President-elect Barack Obama cannot become president as a "natural born" U.S. citizen. (Associated Press)

A decision not to grant a writ of certiorari — the legal term for the declaration that the justices will hear the case — would mean that a lower court ruling that dismissed the lawsuit can stand.

The Supreme Court’s justices met in a private conference Friday morning to discuss the issue. At least four of the court’s nine justices must approve before the case is heard.

Justice Clarence Thomas picked up the petition to hear the lawsuit after it was denied by Justice David H. Souter. Justice Thomas referred it to the full court,     which decided to distribute the case for the justices’ conference.

Mr. Obama demonstrated his citizenship during his campaign by circulating copies of his birth certificate, which showed he was born in Hawaii on Aug. 4, 1961. But unlike many of the lawsuits regarding Mr. Obama’s citizenship — which claim he really was born on foreign soil — Mr. Donofrio’s case concedes that Mr. Obama was born in Hawaii but says he still held foreign citizenship at birth.

“Since Barack Obama’s father was a citizen of Kenya, and therefore subject to the jurisdiction of the United Kingdom at the time of Senator Obama’s birth,  then Senator Obama was a British citizen ‘at birth,’ just like the framers of the Constitution, and therefore, even if he were to produce an original birth certificate proving he were born on U.S. soil, he still wouldn’t be eligible to be president.”

Kenya was British East Africa until it received its independence in 1963.

Legal scholars doubt the court will hear the case. The Supreme Court rarely grants the kind of court orders — or stays — sought by Mr. Donofrio. And doing so in this case would set up an unprecedented challenge to the presidency of a man who already has won the election and almost certainly will have taken office by the time any hearings or decisions could occur.

About a half-dozen people who say the court should stop Mr. Obama from becoming president protested in front of the Supreme Court on Friday morning.

“He does not meet the criteria of the Constitution that the Founding Fathers set out,” said Roger Bredow, an Internet publisher from Bethlehem, Ga., who has tried to rally lawsuit supporters to block Mr. Obama’s presidency.

Valerie Wohllheden, of Alexandria, said the danger is that in deciding the lawsuit, the Supreme Court might bend to “the will of the people” by allowing Mr. Obama to become president despite constitutional provisions.

“Then you’ve got mob rule,” she said. “How can he uphold the Constitution if  he’s breaking it?”

The Supreme Court may hear a lawsuit that argues President-elect Barack  Obama cannot become president as a “natural born” U.S. citizen.  (Associated Press)

After the list of actions was released, Washington resident Theresa Cao said  she took heart from the court’s delaying its decision on whether to grant a hearing.

“They apparently need the time to deliberate,” she said.

Copyright 2008 Washington Times-used with permission

=====================================

Will Supremes Review Citizenship Arguments?

Lawsuit: Even with a valid Birth Certificate, ‘he still wouldn’t be eligible to be president’

Source: © 2008 WorldNetDaily-used with permission

With protesters gathering and praying on the front steps, the U.S. Supreme Court met in conference today to discuss whether or not to hear a case challenging Barak.Obama’s eligibility to be president.

“Obama was born a dual citizen,” protester Roger Bredow told the Washington, D.C., local events blog, DCist. “British, and a citizen of the United States, at birth.”

According to Bredow – and the case the Supreme Court reviewed today – dual citizenship makes Obama ineligible to take the oath of office.

 

Roger Bredow and demonstrators protesting before the U.S. Supreme Court

Roger Bredow and demonstrators protesting before the U.S. Supreme Court

 

 

 

 

 

 

 

 

 

 

 

Where’s the proof Barack Obama was born in the U.S. or that he fulfills the “natural-born American” clause in the Constitution? If you still want to see it, sign WND’s petition demanding the release of his birth certificate.

The case of Leo C. Donofrio v. New Jersey Secretary of State Nina Mitchell  Wells, which claims Obama does not meet the Constitution’s Article 2, Section 1 “natural-born citizen” requirement for president, was initially denied a hearing by Supreme Court Justice David H. Souter, but Justice Clarence Thomas agreed to bring it back for review today.

In order to go forward in the process, the case needs four of the Supreme Court’s  nine justices to approve a full hearing.

Bredow created a YouTube video inviting supporters to travel to Washington, D.C., and join him in urging the Supreme Court to hear the Donofrio case.

 

“If I’m going to be honest with you,” Bredow confessed, “I thought I might be the only person here.”

DCist contributor Dave Weigel reported roughly 15 to 20 people showed up for the rally.

“There aren’t a lot of people out here today,” said Steve Brindle, who drove into  the capital from Pennsylvania. “There are a lot of people talking about this back  home. Really, everyone’s asking questions.”

Donofrio’s questions began months ago.

Donofrio’s original suit sought a court order to stop the Nov. 4 presidential   election. When that was denied, he amended his complaint to stop the Electoral College from certifying Obama as the winning candidate when it meets Dec. 15.

Unlike many of the lawsuits regarding Obama’s “natural-born citizen” status, the Donofrio case makes no allegation that Obama was born on foreign soil. Instead, Donofrio contends Obama was a British citizen at birth,  because of citizenship in a British colony, Kenya.

“Don’t be distracted by the birth certificate and Indonesia issues,” Donofrio writes on his Natural Born Citizen blog. “They are irrelevant to Senator Obama’s ineligibility to be president. Since Barack Obama’s father was a citizen of Kenya and therefore subject to the jurisdiction of the United Kingdom at the time of Senator Obama’s birth, then Senator Obama was a British citizen ‘at birth.'”

Obama’s Fight the Smears website confirms that Donofrio is correct about the crat’s citizenship at birth, but says his dual citizenship with Britain expired, leaving him with only American citizenship.

Donfrio, however, contends that the Constitution was written in such a way to exclude dual citizens like Obama.

“The Framers of the Constitution, at the time of their birth,” Donofrio writes, “were also British citizens, and that’s why the Framers declared that, while they  were citizens of the United States, they themselves were not ‘natural born citizens.'”

“Therefore,” Donofrio summarizes, “even if he were to produce an original birth certificate proving he were born on U.S. soil, he still wouldn’t be eligible to be president.”

As WND has reported, Donofrio’s case is only one of several filed around the  country challenging Obama’s eligibility to be elected president under the Constitution.

Last month WND reported worries over a “constitutional crisis” that could be looming over the issue of Obama’s citizenship.

WND senior reporter Jerome Corsi even traveled to Kenya and Hawaii prior to the election to investigate issues surrounding Obama’s birth. But his research and discoveries only raised more questions.

The biggest question is why Obama, if a Hawaii birth certificate exists as his campaign has stated, simply hasn’t ordered it made available to settle the rumors.

The governor’s office in Hawaii said there is a valid certificate but rejected requests for access and left ambiguous its origin: Does the certificate on file with the Department of Health indicate a Hawaii birth or was it generated after the Obama family registered a Kenyan birth in Hawaii?

Obama’s half-sister, Maya Soetoro, has named two different Hawaii hospitals where Obama could have been born. There have been other allegations that Obama actually was born in Kenya during a time when his father was a British subject.

Former presidential candidate Alan Keyes and others filed a court petition in California asking the secretary of state to refuse to allow the state’s 55 Electoral College votes to be cast in the 2008 presidential election until Obama verifies his eligibility to hold the office.

The California action was filed by Gary Kreep of the United States Justice Foundation on behalf of Keyes, the presidential candidate of the American Independent Party, along with Wiley S. Drake and Markham Robinson, both California electors.

“Should Senator Obama be discovered, after he takes office, to be ineligible for the Office of President of the United States of America and, thereby, his election declared void, Petitioners, as well as other Americans, will suffer irreparable harm in that (a) usurper will be sitting as the President of the United States, and none of the treaties, laws, or executive orders signed by him will be valid or legal,” the action challenges.

The popular vote Nov. 4 favored Obama over Sen. John McCain by several percentage points. But because of the distribution of the votes, Obama is projected to take the Electoral College vote by a 2-to-1 margin.

The California case states, “There is a reasonable and common expectation by the voters that to qualify for the ballot, the individuals running for office  must meet minimum qualifications as outlined in the federal and state Constitutions and statutes, and that compliance with those minimum qualifications has been confirmed by the officials overseeing the election process,” the complaint said, when in fact the only documentation currently required is a signed statement from the candidate attesting to those qualifications.

“Since [the secretary of state] has, as its core, the mission of certifying and establishing the validity of the election process, this writ seeks a Court Order barring SOS from certifying the California Electors until documentary proof that Senator Obama is a ‘natural born’ citizen of the United States of America is received by her,” the document said.

“This proof could include items such as his original birth certificate, showing the name of the hospital and the name and the signature of the doctor, all of his passports with immigration stamps, and verification from the governments where the candidate has resided, verifying that he did not, and does not, hold citizenship of these countries, and any other documents that certify an individual’s citizenship and/or qualification for office.

The “certification of live birth” posted by the Obama campaign cannot be viewed as authoritative, the case alleges.

“Hawaii Revised Statute 338-178 allows registration of birth in Hawaii for a child that was born outside of Hawaii to parents who, for a year preceding the child’s birth, claimed Hawaii as their place of residence,” the document said. “The only way to know where Senator Obama was actually born is to view Senator Obama’s original birth certificate from 1961 that shows the name of the hospital and the name and signature of the doctor that delivered him.”

The case also raises the circumstances of Obama’s time during his youth in Indonesia, where he was listed as having Indonesian citizenship. Indonesia does not allow dual citizenship, raising the possibility of Obama’s mother having given up her U.S. citizenship.

Any subsequent U.S. citizenship then, the case claims, would be “naturalized,” not “natural-born.”

WND’s petition is available online, and more information is available at this link.

Muslim plea to Obama: Return to ‘Islamic Roots’

‘Allah will reward you for all who you convert in your footsteps’

By Aaron Klein
© 2008 WorldNetDaily-used with permission

 JERUSALEM – Claiming Barack Obama has roots in the Islamic religion, an   Egyptian cleric has broadcast a plea urging Obama to convert to Islam while warning if the U.S. doesn’t withdraw its troops from the Middle East and provide aid to Muslims, those “eager for [death]” will attack America.

“My message to [Obama] is threefold,” declares Egyptian cleric Hassan Abu Al-Ashbal, speaking last week on the state-funded Al Nas religious television network. “First, I invite him to convert to Islam. This is the call of the Prophet and of Allah. Oh, Obama – convert to Islam, and you will be saved.”

Video of Ashbal’s message can be seen below:

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Washington Times – Court to weigh question about Obama citizenship

05 Friday Dec 2008

Posted by jschulmansr in Uncategorized

≈ 1 Comment

Tags

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Washington Times – Court to weigh question about Obama citizenship

My Obama Watch Central – Jschulmansr

Late Breaking News From The Washington Times

I’ve Included some of the comments from the article as well-jschulmansr

Unlikely decision could deny him presidency

Tom Ramstack (Contact)

The Supreme Court plans to meet Friday to decide whether to hear a case that could determine whether President-elect Barack Obama ever becomes the nation’s president.

Justice Clarence Thomas picked up the petition to hear New Jersey attorney Leo Donofrio‘s lawsuit after it was denied by Justice David H. Souter. Justice Thomas referred it to the full court, which decided to distribute the case for the judges’ conference.

The decision to put the case on Friday’s docket resulted from more than a dozen lawsuits challenging Mr. Obama’s right to be president based on his citizenship at birth. The issue preoccupied many conservative bloggers in the weeks before the Nov. 4 election.

ASSOCIATED PRESS President-elect Barack Obama was born under the jurisdiction of a foreign power, Britain, and is therefore ineligible to serve as president of the United States, according to a lawsuit that has reached the Supreme Court.

Some legal analysts say the lawsuits have little chance of success. The Supreme Court rarely grants the kind of court orders – or stays – sought by Mr. Donofrio.

“Nothing in what we’ve seen from the court so far suggests any likelihood the court is actually going to take the cases,” said Eugene Volokh, constitutional law professor at the University of California at Los Angeles School of Law.

Nevertheless, for the lawsuit even to make it to the docket raises the possibility of an unprecedented case going before the Supreme Court . At least four of the court’s nine judges must approve before the case is heard.

Mr. Donofrio originally sued New Jersey Secretary of State Nina Mitchell Wells, seeking a court order to stop the Nov. 4 presidential election. When that was denied, he amended his complaint to stop the Electoral College from certifying Mr. Obama as the winning candidate when it meets Dec. 15.

Unlike many of the lawsuits regarding Mr. Obama’s citizenship – which claim he was born on foreign soil – Mr. Donofrio’s case concedes that Mr. Obama was born in Hawaii as he claims. Mr. Donofrio contends, however, that Mr. Obama is not a “natural born citizen,” as Article II, Section I of the U.S. Constitution requires.

“Don´t be distracted by the birth certificate and Indonesia issues,” Mr. Donofrio said in a statement on the Citizen Wells Web site. “They are irrelevant to Senator Obama´s ineligibility to be president.

“Since Barack Obama´s father was a citizen of Kenya, and therefore subject to the jurisdiction of the United Kingdom at the time of Senator Obama´s birth, then Senator Obama was a British citizen ‘at birth,’ just like the framers of the Constitution, and therefore, even if he were to produce an original birth certificate proving he were born on U.S. soil, he still wouldn´t be eligible to be president.”

Comments 1 – 20 of 36

  • By: wth

    Cobra:

    A few corrections on what would happen if by some miracle Obama were to be found constitutionally ineligible to be president.

    If the declaration were to be made prior to the electoral college vote, then the field would be wide open. In theory the electors could vote for anyone. Some, but not all, states have laws requiring electors to vote for whom they are pledged. The constitutionality of those laws has never been before a court, but if the pledged candidate is found to be ineligible then I doubt said laws would be invoked.

    You do make a good argument that they probably _should_ elect McCain in that situation, but I doubt that that would happen. Most likely, the Democrat electors will coordinate among themselves to vote for a substitute candidate. Now, if there’s no coordination among the electors and there’s a smattering of votes for Hillary, a few for Biden, a few for other Democrats, etc., then the election would go the the House with them choosing from McCain and whatever 2 Democrats got the most electoral votes.

    If Obama were to be declared ineligible after he is formally elected, then Amendment XX would control:
    “Section. 3. . . . if the President elect shall have failed to qualify, then the Vice President elect shall act as President until a President shall have qualified . . .”
    Meaning that in that case Biden would be Acting President for the entirety of Obama’s term. (I’ve always assumed that the clause “until a President shall have qualified” alluded to the unlikely possibility of someone under 35 being elected president. The VP would act as president until the president-elect’s 35th birthday.

  • By: ronwest

    For all concerned, the case also challenged McCain’s claim to be a “natural born citizen” and as for the communist manifesto it has already been slyly implemented. Read the 12 points and think about things as they are. The liberal news spews the proof. as does the unconstitutional acts of the government:

    December 5, 2008 at 12:42 p.m.  | 

  • By: dynodick

  • If this country would only adopt the Communist Manifesto in favor of the Constitution this whole issue wouldn’t be a problem!!

    December 5, 2008 at 12:30 p.m.  

  • By: wth

  • First of all, let me say that I do not want Obama to be president. However, most of these challenges to his citizenship seem irrelevant to me. As others have said previously, if he were born in the US he is a citizen. Period. The caveat of “subject to the jurisdiction of” in the 14th ammendment and the corresponding part of the US code refers to diplomats who are not subject to the jurisdiction of the US. A non diplomat alien, even if here illegally, is still subject to the jurisdiction of the US.

    Regarding whether or not Obama was born in the US, I haven’t seen _any_ report on what’s actually needed determine whether or not Obama is a natural born citizen. If he was indeed born outside of the US to a non US citizen father and a US citizen mother, the key fact is how long his mother lived in the US prior to his birth.

    8 USC 1401 is as follows:
    “The following shall be nationals and citizens of the United States at birth:
    (a) a person born in the United States, and subject to the jurisdiction thereof;
    [ . . . ]
    (g) a person born outside the geographical limits of the United States and its outlying possessions of parents one of whom is an alien, and the other a citizen of the United States who, prior to the birth of such person, was physically present in the United States or its outlying possessions for a period or periods totaling not less than five years, at least two of which were after attaining the age of fourteen years . . ..
    [the remainder of the paragraph deals with an exception for persons serving abroad for military or government employment].

    So, as long as Obama’s mother grew up in the US, Obama almost certainly meets the criteria for natural born citizenship under 8 USC 1401g. (Unfortunately from my POV).

    Of course, I’m assuming that Obama’s mother did grow up here. If anyone has evidence that she did not meet the ‘5 year total including 2 years after age 14’ requirement, then I’ll REALLY be interested in where Obama was actually born. The other potential flaw in my reasoning is that what I quoted above is the current law. I don’t have access to historical US code — I’d be grateful if someone could verify whether or not the law was different at the time Obama was born.

    December 5, 2008 at 12:27 p.m.

  • By: ptown3

  • Now, this is the problem with the Two party system, Both sides believe its only a crime or bad for the Constitution if the other guys are doing it, and the people on the side lines(all of us guys)got all the answers.

    Stop the talking and get involved, Hindsight is 20/20…run for office then talk.

    December 5, 2008 at 12:17 p.m.

  • By: Cobra

  • BTW, snopes.com can not determine the legitimacy of alegal document, like Obama’s birth certificate, any more than factcheck.org can. Once again, only a COURT can determine the legitimacy of any legal document.

    December 5, 2008 at 12:08 p.m.

  • By: Cobra

  • “The GOP lost, folks…get over it.”

    Tell that to the democrat who instigated this lawsuit. I’m sure he doesn’t care.

    December 5, 2008 at 12:04 p.m.

  • by: hipshot

  • With only four non-activists on the court, it might not make any difference what the Consitution says.

    December 5, 2008 at 11:59 a.m.  

  • by: Safyre

  • snopes.com/politics/obama/citizen.asp includes a link to his actual birth certificate. The GOP lost, folks…get over it.

    December 5, 2008 at 11:34 a.m.  

  • By: Cobra

  • “Even if it were within the court’s power to enjoin this presidential election as requested, that remedy would irreparably harm the public interest”

    How would ignoring the Constitution and/or federal law, as the FEC suggests, be BENEFICIAL to the public interest? I think the members of the FEC needs to go back to school and learn just what the term “public interest” actually means.

    December 5, 2008 at 11:27 a.m.  

  • By: HCY727

  • The Constitution is to protect the people from the government. NOT the Government from the people.

    Presidential oath of office. TO UPHOLD THE CONSTITUTION!

    The trouble is that the Liberals are always trying to change the Constitution!

    Dear Lord! Please protect us from the Liberals and help us to defend and uphold the Constitution of the United States of America.

    December 5, 2008 at 11:16 a.m.  

  • By: wvobiwan

  • If Barry isn’t a natural born US citizen, then he can’t sit as President.

    What’s absolutely infuriating is that the lefist media, and even so-called conservative blog sites like Little Green Footballs’ Charles Johnson ignored and repressed this issue until it was too late. Johnson’s a meglomaniacal tool these days, just like the leftist media.

    I’m sick of media’s lies and scams, we need some legislation re-establishing media’s financial culpability for negligence and untruthful reporting.

    December 5, 2008 at 11:14 a.m.

  • By: Atlanta, GA

  • FactCheck.org…some interesting facts…

    That factcheck.org site is from the Annenberg Public Policy Center of
    the University of Pennsylvania…

    ANY CONNECTION WITH THE CHICAGO ANNENBERG CHALLENGE?

    The Annenberg Political Fact Check is a project of the Annenberg
    Public Policy Center of the University of Pennsylvania. The APPC was
    established by publisher and philanthropist Walter Annenberg in
    1994….

    The Chicago Annenberg Challenge is another foundation established by philanthropist Walter Annenburg in 1995…

    The Chicago Annenberg Challenge is the foundation that Bill Ayers and Barack Obama sat on the board….

    Convenient to cite references from a site that’s related to Obama’s former foundation.

    December 5, 2008 at 11:05 a.m.  

  • By: HCY727

  • We are going thru a sad period in our history of which many books will be written.
    An election based on fraud to scam the American people by the Liberals to get their power back by electing a historical first black President.

    Why did the liberal drive by media decide not to report on all of the discrepancies of fact that were brought up during this campaign?
    Why is ACORN allowed to get away with voter registration fraud and possible actual voter fraud?
    Why is Acorn getting funding with our tax paid dollars from hidden funding lost in the federal budgets?
    How can Congress get away with slipping additional funding for Acorn in the Bailout money?
    How can Sub-Prime loans thru Fannie & Freddie guaranteed by the Federal Gov’t bring down the world economy?
    How can a presidential candidate have all of his records sealed so that they can’t be looked at?
    How can campaign funds from foreign sources be accepted?
    How can the same people who caused this mess stay in power without going to jail?
    Why are the people that brought us Sub-Prime are now grilling the Big 3?

    So our president to be can’t take the oath of office because Mr. Obama is not a “natural born citizen,” as Article II, Section I of the U.S. Constitution requires! Not a problem because this is an Historical Election> First Black President. We shed our White Guilt and the rest of the whole wide world will come to love us again! The Liberal Media is so proud to have made this happen. A new day has dawned on America. All will be well! Gas prices have fallen ant the seas will part and peace and love will flow causing much happiness thru out the lands.

    Forget about all of the above. Obama will take the oath because to deny him after all of the fraud heaped on the American people to get him elected and to keep the Democrats in power, will cause an upheavel so great with riots in the streets that we have never seen before.

    The truth will set you free ! Not in this case ! The truth can only tear us apart! How did we ever get into this mess!

    Court to weigh question about Obama citizenship! Not very likley. Will cause Civil unrest if the truth ever comes out !

    December 5, 2008 at 11 a.m.

  • By: Lonnie

    We are a country ruled by a document and not a man, on purpose. Our Founders knew all to well how power could intoxicate and lead to tyranny which deprives people of their rights. Our Founders chose to safeguard our rights through our Constitution making us accountable to a written document and not to a man, thereby making every citizen, president or not, accountable to the law. OBAMA’S STRIKE AGAINST OUR CONSTITUTION, THROUGH THE WILLFUL NEGLIGENCE OF REFUSING TO RELEASE ANY PERSONAL DOCUMENTS WHICH WOULD CONFIRM HIS NATURAL BORN CITIZENSHIP, IS A BLOW TO THE DOCUMENT THAT IS THE FOUNDATION OF OUR SOCIETY! He is bascially saying I’m above the Law and don’t need to comply with it! Why else would he be spending millions to prevent any release of his documents? The whole government derives it’s legitimacy from the Constitution and Obama has the audacity to trample it!! I’m sorry Obama supporters but majority support doesn’t OVERRULE CONSTITUTIONAL AUTHORITY. The popularity of a candidate does not supersede our fundamental law. Remember, the CONSTITUTION IS THE RULE OF THE LAND NOT A POPULAR PERSON. Mobs can be wrong! Look at the French Revolution.

    December 5, 2008 at 10:55 a.m.  

  • By: Cobra

  • “John McCain wasn’t even born in a US state and the court disallowed that lawsuit.”

    This is because there is a specific federal law which grants McCain the status of Natural Born Citizen, so there is no legitimacy issues involved in his candidacy. It’s vary hard to ignore the law in this matter. The same can not be said of Obama.

    “Obama did release his birth certificate. It was examined and found to be legit.”

    The legitimacy that birth certificate itself is in question, and an examination by a private party does NOT resolve that legitimacy question.

    You may not realize this, but FactCheck.org staffers are not recognized by the court (nor by me, or most other people by the way) as legitimate experts who are able to verify anything, so their OPINION about the legitimacy of Obama’s birth certificate is worthless. Only a Court can verify the legitimacy of his birth certificate, or any other legal document for that matter. No other “conclusions” by private parties like Factcheck.org are legally acceptable.

    December 5, 2008 at 10:39 a.m.  

  • By: doublehook

  • The BHO camp and its Harvard lawyers will do anything and whatever it takes to keep their Harvard grad in the executive seat. What are the scores on Yale vs Harvard grads in the executive seat?

    December 5, 2008 at 10:26 a.m.

  • By: Old-Norm

  • Talk about grasping at straws! John McCain wasn’t even born in a US state and the court disallowed that lawsuit. And for the LAST TIME, Obama did release his birth certificate. It was examined and found to be legit. Check out this report: http://www.factcheck.org/elections-2008/born_in_the_usa.html
    And for those who think FactCheck.org is a Democrat friendly site, read their reports on debunking Dem and GOP claims.

    December 5, 2008 at 10:23 a.m.  

  • By: Cobra

  • “I think, and may be totally wrong, that the Dems would have to nominate someone else and the election reheld.”

    I believe it would depend on if the Electoral College had completed it’s vote before the court makes a ruling. You, and everyone else for that matter, needs to remember that the Electoral Vote has yet to occur.

    If the ruling comes before the vote (doubtful as there’s only ten days left before the various States assemble their Electors and vote) and Obama is ruled ineligible to hold office, the Electoral College has no choice but to elect McCain as President, since he would “win” the “popular” general votes in each district as Obama’s candidacy, and any votes cast for him, would be null and void.

    If the Ruling comes AFTER the vote, then it is up to the House to elect the next President as per the 12th Amendment. In this case, McCain would, once again, be chosen as he he is the only remaining candidate with the highest “popular” vote.

    Granted, the House could choose someone other than McCain, but they can only choose from a list of EXISTING, certified Presidential candidates (they can’t add or subtract from the list of actual candidates) and I doubt that any other candidate would get the support of the House.

    December 5, 2008 at 9:26 a.m.  

  • By: leiphasw

  • It is always interesting to watch how Democrats in general and the Obama worshippers in particular, twist, ignore, or deny the truth to fit their agenda. For example, in this Obama Citizenship issue, the people that are against exploring his qualifications seem to never actually attempt to justify their or Obama’s position or explain how what he is going is correct. They typically follow this path:

    1: They start saying it is a partisan issue, but since the originator of the suite is a Democrat and the original suite named both the Democrat and Repuplican candidates, that doesn’t fly.

    2: Then they say it is a race oriented issue. But supposedly (we won’t know for sure till we see is BC) Obama is as white as he is black. Also, the Supreme Court justice which accepted the case for review is black.

    3: Then, if those two tactics don’t work, and they never do because they are without merit, the only thing left for them is to start cursing and calling all their opponents names.

    I find it very sad for our great country that someone can be so completely unknown, have no significant experience or qualification, lock his past in ironclad secrecy, and have a big political party, an enormous horde of mindless minions, and the huge, powerful, myopic mass media propel him to the pinnacle of world’s most powerful nation.

    “A Democracy cannot exist as a permanent form of government. It can only last until the citizens discover they can vote themselves largesse out of the public treasury. After that, the majority always votes for the candidate promising the most benefits from the public treasury with the result that the Democracy always collapses over a loose fiscal policy, to be followed by a dictatorship, and then a monarchy.” — Alexander Tytler 1790, (unverified)

  • By: hipshot

    If he was born a British citizen, then perhaps he could also become Prime Minister, thereby reuniting the colonies and the mother country. Let me check the Constitution….

    December 5, 2008 at 7:32 a.m.  

  • By: UnbamboozleUs

  • Thank you, Mr. Ramstack, for properly researching this article. I have read many stories about the various cases challenging the eligibility of the individuals who ran for president, particularly the Donofrio case, and this is the first one that actually reported the story accurately. What a breath of fresh air.

    This matter involving constitutional law (our highest and most revered last I checked) absolutely must be resolved before this country can move forward in a productive and honorable direction.

    December 5, 2008 at 7:04 a.m.  

  • By: CommissionerGordon

  • The real gamble here is, and always was, Obama’s. And, the DNC’s. Perhaps you don’t think they knew that what they were doing was wrong. Recall for a moment that Obama’s focus at Harvard was Constitutional Law. His friend, Sarah Herlihy, wrote all about the Constitutional requirement for the President of the United States to be a natural born citizen. Opening the introduction to her Law Review article in 2005 she said, “The natural born citizen requirement in Article II of the United States Constitution has been called the “stupidest provision” in the Constitution,….” Get the picture? They knew exactly what they were doing. The stonewalling response to the lawsuits confirms that. So does the huge sum of money paid to his legal teams to keep the matter out of court. And, so does the classification of his vault birth certificate and his school transcripts as Top Secret. There is definitely something to hide.

    So, is it really any wonder that Obama now holds the record as having the most pre-inaugural press conferences? He held multiple press conferences, allowed greater “access” for interviews, established the Office of the President-Elect, entered negotiations with heads of state, why? All the public appointments, the constant visibility of his developing administration, all this attention-seeking behavior is a desperate attempt to make his status appear legitimate, and to make it harder for authorities to evict the One with squatter’s rights.

    But, was it really that big a gamble, anyway? Maybe not, if the plan included this worst-case scenario. President Pelosi issues a blanket pardon to cover the entire conspiracy, fraud, obstruction of justice, and illegal immigration status of both Barack and Auntie Zeituni in order to “heal the nation’s wounds” and to stop the rioting. In fact, she confers upon both of these illegal immigrants the honor of United States citizenship. So now Obama’s out of office, but he’s not in jail. And, he is certainly not financially ruined. In fact, he now becomes the most sought after guest on every liberal talk show. The additional book or books he may or may not write, the endless and exorbitant public speaking fees, the hero’s glory for going against the man; heck, he may spin his own television/radio program, African-American studies in law and government institute, high-end cosmetics, and designer line of clothing! One thing I liked about Obama, the man; he dressed well. If only that were his legacy. Even as the Democrats in Congress ensure that Obama’s and the DNC’s treachery goes unpunished, a very large breach of trust has been created and will endure for ages. Whether the election crimes will be un-investigated, just like the unexamined Democrat-driven origins of the sub-prime mortgage crisis, that brought on world-wide financial collapse, remains to be seen.

    December 5, 2008 at 6:59 a.m.  

  • By: mason

  • Ruggercop, Your offensive speech matches your ignorance. The Framers grandfathered themselves in. See the next part of Article II where it says,roughly, “or citizens at the time of the signing of the Constitution”. They included themselves, but wanted no one else with possible foriegn allegiance to become President.

    If Obama is disqualified before the electors vote, the parties would get to decide who their respctive candidates are. And the DNC did such a bang-up job last time. Don’t you think they would put up Hillary?

    December 5, 2008 at 6:52 a.m.  

  • By: Desperado

  • I like Paul Madison’s (Federalist Blog) explanation of the constitutional term “natural born citizen” means. I like it because it is the only definition that would accomplish the sought goal of requiring the President to be natural born: attachment to this country. Any other definition just returns us back to ANYONE can be president if they were lucky to been born on one inch of claimed US territory.

    I also think the reason Obama won’t release his original BC is because he doesn’t want the recorded hospital he was born revealed.

    December 5, 2008 at 3:55 a.m.  

  • By: Rachel Questions

  • When I first heard about this issue I thought it was just a political smear tactic, however the more I followed it, the more I began to believe that there is something seriously wrong. A large portion of this is due to Obama having all his records sealed and having spent more than $500K to prevent those records from being made public. This is unbelievably suspicious, as well as unbelievably insolent of Obama.

    I am a retired peace officer and I swore an oath upon being hired to uphold the United States Constitution. I took that oath very seriously at that time and I continue to do so to this day. When I graduated from college I spent several hundred dollars getting dozens of certified copies of my birth certificate, college transcripts, and high school transcripts because along with every application I submitted for an entry level position with police/sheriff/probation departments that I applied to I was required to submit these documents along with copies of my diplomas. I also had to submit a list of all the addresses where I had lived since becoming an adult, and any trips I had made out of country. This information was used to conduct background investigations since I was applying for jobs that required a security clearance. Obama is applying for the highest office in the land and is refusing to produce these documents, even though Obama admits in his book that he has a copy of his birth certificate.

    I looked over my own birth certificate recently and went over the information on it. It clearly states on the document the address and Parish (I was born in Louisiana so the term “Parish” would be the equivalent of “County”) where I was born, as well as who delivered me.
    I also went over my college transcripts and there are fields on it that indicate what your citizenship is as well as what grants, scholarships, and financial aid you received during your education there. I am sure that grad schools would have similar information on their transcripts as well.

    This is a link to an excellent article describing what the term ‘Natural Born Citizen’ means as defined by the author of the 14th Amendment (towards the bottom of the article).
    http://federalistblog.us/2008/11/natural-born_citizen_defined.html
    “Rep. Bingham commenting on Section 1992 said it means “every human being born within the jurisdiction of the United States of parents not owing allegiance to any foreign sovereignty is, in the language of your Constitution itself, a natural born citizen.”

    Personally, after following this issue for the last couple of months, I have now come to the realization that I will never accept Obama as POTUS because Obama has failed to prove that he meets the eligibility requirements for that office. The duty of SCOTUS is to protect the US Constitution and to ensure that the tenets therein are followed. I have no doubt that SCOTUS will do the right thing by hearing arguments for this case.

    December 5, 2008 at 3:19 a.m.  

  • By: road warrior

  • Everybody is talking about this and blogging about this but it doesn’t matter even a little. Of course the courts are going to want to hear this out just to say that they did but nothing, absolutely nothing will be done. Not only is Obama the soon to be president of the United states but thanks to the liberal illuminati he is also probably the most popular figure in the world. He is a rock star and there is no way this scandal will ever hit the streets if there is even any merit to it.

    December 5, 2008 at 1:39 a.m.  

  • By: AceTomato

  • Very interesting, NJGuy. I thought this was crackpot hooey for a long time, but as the suits began to crop up and I read the legal arguments and looked at the evidence, the question of law became very more serious.
    I found myself digging up old constitutional law cases and works on the various methods/theories for interpreting the constitution to examine how this question might be worked out.
    No wonder Clarence Thomas is interested.
    I think Berg thinks removing Obama will result in Hillary nomination (and probably a Hillary win). He may actually be right. Depending on what happens, anyway.
    If I was on SCOTUS I’d love to chew this one over. It’s the stuff of dreams for judges who love the law.

    December 5, 2008 at 12:07 a.m.  

  • By: NJguy

  • The Donofrio case being conferenced tomorrow challenges three candidates as ineligible:
    McCAIN (born in Panama and able to get American citizenship from his two parents but not natural born citizenship)
    OBAMA (born into a situation of dual citizenship due to his father being Kenyan and transferring British citizenship, creating a Constitutionally impermissible “divided allegiance” at birth which found the U.K. in a position to exercise “jurisdiction” over Obama)
    CALERO (Socialist Workers Party candidate who was born in Nicaragua, is still a citizen of Nicaragua, but who is in the U.S. on a Green Card)

    Amazingly, Calero was on the ballot for president in NJ and in other states, showing that there is no gatekeeper process in place. The political parties apparently are not “vetting” their candidates, the “certifications” coming from the nominating conventions don’t certify basic eligibility but only the fact of winning the “nomination” of the parties, and most of the state Secretary of State offices are not discharging state-statutory obligations of screening for eligibility, either. A handful of states had SoS challenges to Calero to keep him off the ballot, which those Secretaries of State could have researched by looking up a Wikipedia on him and learning he lacked even basic citizenship.

    If Donofrio v. Wells were to be favorably resolved by adopting the legal “originalist” argument advanced by the plaintiff, McCain would be “out” just as much as Obama, on eligibility grounds.

    Because the case originated in NJ, a local town Forums in a small NJ municipality has been tracking it with some interesting research along the way. It would be a fascinating case of first impression for a phrase which has never been defined by the highest court. It took over 200 years for SCOTUS to issue a ruling about the Second Amendment; there’s a lot of unplowed ground in the Constitution. The Courts only deal with the need to interpret the Constitution when real cases with real facts present themselves.

    People interested in some of the laws, statutes and “legislative history” can read and learn at the link below.

    http://www.ventnorevoice.com/bulletinboard/showthread.php?t=1124

    December 5, 2008 at 12:01 a.m.  

  • By: AceTomato

  • Pssst to Mediawatch: Berg (lawsuit #1) is a Democrat. Keyes/Donfrio (California electorate suit) is the American Independent Party.

    If all this is Republican meanness, why doesn’t Obama just release his birth certificate and prove everyone wrong? Why spend over $500,000 in legal fees to AVOID producing it?

    You don’t have to belong to any particular political party to find that a little weird. It’s a $12.00 document he claims will prove he is eligible, yet he is doing everything he can to not produce it. Makes ya go “Hmmmmm . . “

    December 5, 2008 at 12:01 a.m.  

  • By: MediaWatch

  • It’s easy to see the almost hysterical level of excitement in the the Republican posts, almost like a lynch mob. These people are taking a huge gamble, the reputation and future of their party is at stake. If this turns out to be a groundless charge against Obama, these people and their party will be discredited even further than they are now. The nastiness of this citizenship pursuit, the presidential campaign and the conservative posters online will stick in the minds of the rest of us Americans, and the citizens of many other countries, forever. All of these things, added to the disgusting recent Republican sex scandals and corruption charges, have destroyed the image and reputation of the Republican party. It’s fine by me, because the Democrats will certainly benefit from it for decades to come.

    December 4, 2008 at 11:38 p.m.  

  • By: AceTomato

  • If some of you can let go of thinking this is desperate measures by Republicans to remove Obama, you might notice that it is a fascinating question of Constitutional Law. The Constitution requires the President be a natural born citizen – so what does that mean exactly and how is it tested? Who determines it?

    If Obama were to be disqualified as POTUS, it would not automatically go to McCain (and frankly, most Republicans are not enamored of McCain). I think, and may be totally wrong, that the Dems would have to nominate someone else and the election reheld. If so, the Speaker of the House would step in. That’s Pelosi. Pelosi is probably the one person Republicans would want to see LESS than Obama in the white house (okay, Dodd, Reid and Frank are runners up, too).
    It’s not an attempt to give McCain the win. It’s a question of whether Obama belongs in the process to begin with.

    December 4, 2008 at 11:32 p.m.  

  • By: JJ

  • I’m not sure Ruggercop can calm down enough to get the point of this: the question is whether he really was born in Hawaii or whether he was born somewhere else such as Kenya.

    A reasonable enough question. And surprising that Obama wouldn’t have produced a more legitimate birth certificate by now.

    December 4, 2008 at 11:11 p.m.  

  • By: DrJim77

  • Constitutional vs Common law pertaining to the definition of natural born citizen must be clarified by SCOTUS..

    If a POTUS is elected by the electoral college and then in a year from now is shown to be ineligible.. Every law, appointment to office would be illegal and or null and void..

    Or worse.. If USA was attacked, POTUS would be powerless to command the military..

    The supreme court must NOT allow this to occur… whoever is president

    SCOTUS must protect us

    December 4, 2008 at 10:50 p.m.  

  • By: steveb777

  • Obama has been dishonest and secretive about his past. Anybody with a bit of common sense knows that online documents can be altered (as the factcheck docs appear to have been). Okay he has unknown docs on file in Hawaii, but he also has unknown sealed docs on file in Kenya. Why does he have sealed docs in KENYA??? I could go on an on. If he has nothing to hide, release the documents!

    I WANT TO SEE HIS BIRTH CERTIFICATE!!

    December 4, 2008 at 10:22 p.m.  

  • By: doublehook

  • So if the court finds that he is not a citizen by birth, voiding his candidacy and election…do we get McC by default or is there another election, or will Harry Reid continue to violate the Constitution? Maybe it will be Joe Biden by default! ! ! !

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My Obama Watch – Jschulmansr- More Than 60K letters delivered to the Supremes!

05 Friday Dec 2008

Posted by jschulmansr in Uncategorized

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WND readers deliver urgent requests to review Obama citizenship issue! Over 60,000 Letters Sent

+ Bonus More Peter Schiff  (Bottom of Post New Video!)

By Chelsea Schilling
© 2008 WorldNetDaily

The Supreme Court will soon receive urgent requests to determine whether Barack Obama meets natural-born citizenship requirements under the U.S. Constitution
–  in the form of more 60,138 letters.

 The shipment includes 6,682 FedEx packages of nine letters each that will be delivered before the court reviews a case Friday challenging the eligibility of Barack Obama under Article 2, Section 1 of the Constitution, which stipulates the position can only be filled by “a natural born citizen.” 

“If we didn’t do everything possible to let the Supreme Court justices know what a concern this is to millions of Americans, I would feel like I was letting down the Constitution and the men who framed it – not to mention every citizen of the United States living now and in the future,” said Joseph Farah, WND’s founder and editor. “This constitutional eligibility test has become a key issue with me because if the plain language of the Constitution is no longer taken seriously by our nation’s controlling legal authorities, we have become an outlaw nation – no longer under the rule of law but under the rule of men.”

Farah personally drafted the letter that has been sent to the justices above the name and address of participants in the program.

Farah launched a petition drive on WND three weeks ago that calls on all controlling legal authorities to ensure the Constitution is followed on the question of eligibility and for full public disclosure of the facts of Obama’s birthplace and parentage. More than 153,000 people have signed on to the petition so far.

Obama has claimed in his autobiography and elsewhere that he was born in Hawaii in 1961 to parents Barack Hussein Obama Sr., a Kenyan national, and Stanley Ann Dunham, a minor. But details about which hospital handled the birth and other details provided on the complete birth certificate have been withheld by Obama despite lawsuits and public demands for release.

The letters have been individually addressed to each justice over the names and addresses of those who take part in the limited-time program. The body of the letter reads:

Dear Associate Justice ______: If the Constitution doesn’t mean precisely what it says, then America is no longer a nation under the rule of law. A nation no longer under the rule of law is, by definition, under the rule of men. Article 2, Section 1 of the Constitution clearly stipulates “No person except a natural born Citizen” shall be eligible to serve as president of the United States. That statement has clear meaning, and the Supreme Court of the United States is one of the controlling legal authorities in ensuring that the Constitution is enforced – even if doing so may prove awkward.

With the Electoral College set to make its determination Dec. 15 that Barack Hussein Obama Jr. be the next president of the United States, the Supreme Court is holding a conference Friday to review a case challenging his eligibility for the office based on Article 2, Section 1.

I urge you to take this matter most seriously – and judge it only on the clear, unambiguous words of the Constitution: A president must, at the very least, be a “natural born citizen” of the United States.

If you agree that this clear constitutional requirement still matters, the Supreme Court must use its authority to establish, beyond any shadow of a doubt, that Barack Hussein Obama Jr. qualifies for the office under that standard.

There is grave, widespread and rapidly growing concern throughout the American public that this constitutional requirement is being overlooked and enforcement neglected by state and federal election authorities. It’s up to the Supreme Court to dispel all doubt that America’s next president is truly a natural born citizen of the United States.

I urge you to honor the Constitution in this matter and uphold the public trust.

Sincerely,

Sender’s name

Sender’s address

==============================

 

 Weatherman Terrorists: Obama’s Centrism a “Smokescreen” 

 By Aaron Klein
© 2008 WorldNetDaily 

President-elect Barack Obama is “feigning” a centrist position on some issues so he can ultimately push through a radical agenda, including universal healthcare and trimming the military, according to analysis by a founder of the Weathermen terror group, Mark Rudd, who has ties to Obama mentors. 

Another top former Weathermen terrorist with ties to Obama mentors, Jeff Jones, concurred the president-elect will attempt major change, including “redistributing financial resources downward.” He called Obama’s “centrist” appointments a “smokescreen” to “co-opt the moderate center,” declaring, “even Lenin would be impressed!”

In an article on the radical leftist Rag Blog, Rudd commented, “Obama plays basketball. I’m not much of an athlete, barely know the game, but one thing I do know is that you have to be able to look like you’re doing one thing but do another. That’s why all these conservative appointments are important: the strategy is feint to the right, move left. Any other strategy invites sure defeat. It would be stupid to do otherwise in this environment.”

Rudd stressed what he called Obama’s second-tier appointments to various agencies, claiming those individuals are far more “progressive.”

“Cheney was extremely effective at controlling policy by putting his people in at second-level positions,” noted Rudd.

The terror group founder outlined what he believes is Obama’s domestic agenda:

“What he’s doing now is moving on the most popular issues – the environment, health care and the economy. He’ll be progressive on the environment because that has broad popular support; health care will be extended to children, then made universal, but the medical, pharmaceutical, and insurance corporations will stay in place. … The economic agenda will stress stimulation from the bottom sometimes and handouts to the top at other times. It will be pragmatic.”

He said Obama ultimately seeks to shrink the military but cannot make that goal public for some time.

Find out all about Barack Obama’s links to Weather Underground leader Bill Ayers and his entire agenda for “change” in Brad O’Leary’s “The Audacity of Deceit,” the virtual blueprint for the next administration’s radical prescriptions.

“Leave the military alone because they’re way too powerful,” writes Rudd. “For now, until enough momentum is raised. By the second or third year of this recession, when stimulus is needed at the bottom, people may begin to discuss cutting the military budget if security is being increased through diplomacy and application of nascent international law.”

On the same blog, former Weatherman terrorist Jones wrote Obama is “really SMART.”

“His centrist appointments are a smokescreen; they co-opt the moderate center, but he’s still the commander in chief. Even Lenin would be impressed!” he declared.

Jones wrote that Obama’s various initiatives, “which will collectively set the nation on a path towards energy independence, ending the war and redistributing financial resources downward, are presented as unconnected pieces of legislation, but actually they are interlocking components of Obama’s coherent multi-layered agenda.”

Both Jones and Rudd were active in Progressives for Obama, an independent organization acting to ensure the Illinois senator’s election. The group includes among its ranks many former members of the 1960s radical organization Students for a Democratic Society, or SDS, from which the Weathermen splintered, as well as current and former members of other radical organizations, such as the Communist Party USA and the Black Radical Congress.

Jones, according to his own website, was “elected, along with (Weathermen terrorist) Bill Ayers and Mark Rudd, to the SDS national office. Then, in the spring of 1970, he disappeared. As a leader of the Weather Underground, Jeff evaded an intense FBI manhunt for more than a decade. In 1981, they finally got him. Twenty special agents battered down the door of the Bronx apartment where he was living with his wife and four-year-old son.”

Jones’ site says he traveled to Cambodia in 1966 to meet with high-level leaders of the anti-American National Liberation Front. In 1967 and 1968 he served as an SDS regional organizer for New York City.

Rudd, a petition supporter as well as a main signatory to the Progressives for Obama group, was one of the main founders of the Weathermen terrorist organization. A biography published on his website explains Rudd worked to form the Weathermen as a radical alternative to the SDS and for white Americans to eject their “white skin privilege” and begin “armed struggle” against the U.S. government.

Rudd went underground in 1970 when a bomb exploded in a townhouse in Greenwich Village in New York City, killing three of his comrades. He lived for seven and a half years in hiding as a fugitive, finally surrendering in 1977 and facing only low-level state charges after federal charges against Weathermen leaders had been dropped. He resurfaced as a teacher in New Mexico.

As late as 2005, Rudd wrote an editorial in the Los Angeles Times lamenting the state of the anti-war movement in the U.S.

“What’s hard to understand – given the revelations about the rush to war, the use of torture and the loss of more than 2,000 soldiers – is why the antiwar movement isn’t further along than it is,” he wrote. “Given that President Bush is now talking about Iraq as only one skirmish in an unlimited struggle against a global Islamic enemy, a struggle comparable to the titanic, 40-year Cold War against communism, shouldn’t a massive critique of the global war on terrorism already be underway?”

In the piece, Rudd condemned the Weathermen’s decision to embark on an “armed-struggle,” calling it “stupid” since the violent acts led to the group’s demise. But he didn’t condemn the terrorism itself, only its contribution to the downfall of the Weathermen.

The New Zeal blog noted both Rudd and Jones have connections to Obama through the radical Movement for a Democratic Society, where the two serve on the board alongside former Weathermen Ayers and Bernardine Dohrn, whose deep connections to Obama sparked controversy during the presidential campaign.

=================================================

Dare Something Worthy Today – Bonus!

More Peter Schiff

Peter Schiff Gets Cut Off

By Jason Hamlin of Gold Stock Bull

I am surprised the networks even allow Peter Schiff on the air, with his propensity to speak the truth and not repeat the same party lines about how the bailouts are necessary and the government can fix everything. Mr. Schiff has been right time after time about the direction of the economy. Shortly after he rightfully placed some of the blame on the Federal Reserve, he gets cut off by CNN due to “technical difficulties.” Yeah right. Summary and video are below.

– The only good decision was letting Lehman Brothers fail
– We are in this mess because of government spending and too much debt
– We don’t have any money and need China and Japan to lend it to us
– If Obama’s advisers think the economy needs more stimulus, they should not be in these jobs
– American’s need to make things, go to work and save their money
– The government has to get out of the way and let the phony economy collapse
– How can we let Citigroup executives pay themselves millions of dollars when the companies are broke?
– Capitalism is not about propping up failed companies
– Behind it all is the Federal Reserve, which intervened in the market and poured the alcohol that got Wall Street drunk
– It is not fair that everyone holding U.S. dollars has to pay because of bad bets made on Wall Street
– There is no question that we are facing awfully difficult times for Americans for a long time

 

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