• Recommended Sites & Links
  • About

Dare Something Worthy Today Too!

~ Gold & Precious Metals, Investing & Investments, Stocks and Stock Markets, Financial Markets & Market Timing, Technical Analysis, Oil and Energy Markets, Hard Assets Investing, Computers and Internet, SEO, Computer and Internet Security, Politics, Science, Christianity and much much more…

Dare Something Worthy Today Too!

Monthly Archives: January 2009

It’s Official- The New Gold Rally Has Begun!

30 Friday Jan 2009

Posted by jschulmansr in Austrian school, Bailout News, banking crisis, banks, bear market, capitalism, central banks, China, Comex, Copper, Currencies, currency, Currency and Currencies, deflation, dollar denominated, dollar denominated investments, economic, Economic Recovery, economic trends, economy, Federal Deficit, Finance, financial, Forex, futures, futures markets, gold, Gold Bullion, Gold Investments, gold miners, How To Invest, How To Make Money, India, inflation, Investing, investments, Junior Gold Miners, Latest News, Make Money Investing, market crash, Markets, mining companies, mining stocks, palladium, physical gold, platinum, platinum miners, precious metals, price manipulation, prices, producers, production, Prophecy, resistance, Siliver, silver, silver miners, spot, spot price, stagflation, Stocks, TARP, Today, U.S. Dollar

≈ Comments Off on It’s Official- The New Gold Rally Has Begun!

Tags

agricultural commodities, alternate energy, Austrian school, Bailout News, banking crisis, banks, bear market, Bollinger Bands, bull market, capitalism, central banks, China, Comex, commodities, communism, Copper, Currencies, currency, deflation, Dennis Gartman, depression, diamonds, dollar denominated, dollar denominated investments, economic, economic trends, economy, Federal Deficit, financial, Forex, futures, futures markets, gold, gold miners, hard assets, heating oil, India, inflation, investments, Keith Fitz-Gerald, Marc Faber, Mark Hulbert, market crash, Markets, mining companies, Moving Averages, natural gas, oil, palladium, Peter Brimelow, 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 it write this Gold is up $22.50 oz to $929.00! It absolutely smashed thru the $920 resistance! If we hold here $950 -$975 is the next level.  Barrick Gold CEO Munk says China to be a big buyer of gold as confidence is lost in the U.S. Dollar. The treasuries bubble is starting to burst and money is pouring into gold!- Good Investing! – jschulmansr

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

Catch the New Bull! – Buy Gold Online – Safely, quickly, and at low prices, guaranteed! Bullion Vault.com

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

Source: MineWeb.Com

 WORLD ECONOMIC FORUM

Munk forecasts currency, economy fears will send gold to new record highs

Whether it’s the currency effect or a reaction to a feeling of uncertainty, Barrick Gold Chairman Peter Munk says gold is more likely to go up than down.

Author: Barbara Lewis
Posted:  Friday , 30 Jan 2009

DAVOS, Switzerland (Reuters) – 

Gold is likely to hit new record highs, spurred by serious concern about the U.S. currency and doubt about the state of the world economy, the chairman of Barrick Gold Corp. said on Thursday.

There was even a possibility, although not a probability, central banks, including China’s, might start to switch from dollar holdings to gold, which could cause the metal’s price to treble or more.

From a gold producers’ perspective, one negative is that the cost of bringing on production has remained high, even as other raw materials, including base metals and energy, have slumped.

“Gold is at record levels in every currency except dollars. Even within dollar terms it is within a few percentage points of an all-time high at a time when all the other major commodities are falling,” Peter Munk told Reuters at the World Economic Forum meeting in Davos.

“Whether it’s the currency effect or a reaction to a feeling of uncertainty, gold in my opinion is more likely to go up than down,” the chairman and founder of the world’s largest gold mining company said.

Spot gold was at $902.80/904.80 at 1817 GMT. It hit a record high of $1,030.80 an ounce in March last year.

Munk stressed he was merely weighing the odds.

“It would be stupid to assume commodities prices can only go one way,” he said, adding physical demand for gold jewellery was not high during the economic downturn.

Gold has been one of the best-performing assets of late, rising in value by nearly 17 percent since late October.

Investors have bought heavily into physical bullion in the form of coins and bars and physically-backed assets such as exchange-traded funds as a safe store of value at a time of increased volatility in other asset prices.

Munk said downward pressure on the dollar, partly because of massive U.S. spending to stimulate the economy, would increase gold’s attractions as an investment further.

Gold usually moves in the opposite direction to the dollar, as it is often bought as a hedge against weakness in the U.S. currency.

“My personal feeling is that with the rescue packages calling for trillions, not billions… the value of the (U.S.) currency has to go down,” said Munk.

DUMB TO HEDGE

His company did not hedge its output for now — meaning it does not use derivatives to insure against a fall in price — and relied instead on the price climbing. In the past its successful hedging allowed it to make the acquisitions that helped to make it the world’s biggest gold miner.

“It would be dumb to hedge,” Munk said of the current climate.

His bullishness was underscored by the possibility central banks, including that of major dollar asset-holder China, might start buying gold.

“If they decide to diversify, we assume into gold, then we start to talk about a trebling or quadrupling of the gold price. It could be followed by Russia or Kuwait.

“I don’t think it’s likely, but it’s more likely. I would not have said it two years ago …I’m not a gold bug …but it’s more likely than it was two years ago.”

A strong price climate has meant ongoing investment in bringing on new gold, Munk said.

“In every other mining area, people are cancelling mines.”

But declines in other commodities have yet to have a major impact on cost.

“Marginally yes, but substantially no. For some reason cash costs are tending to continue to increase,” he said, when asked whether investment costs were falling.

“Energy costs have gone down. It does help, but labour costs are consistently increasing.”

The one way to reduce production costs is to invest in efficient new mines, Munk said, citing two major new projects in Nevada and the Dominican Republic and a smaller one in Tanzania.

(Reporting by Barbara Lewis, additional reporting by Jan Harvey in London; editing by Anthony Barker)

© Thomson Reuters 2009 All rights reserved

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

Catch the New Bull! – Buy Gold Online – Safely, quickly, and at low prices, guaranteed! Bullion Vault.com

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

Hedge Fund to Measure Returns in Gold Rather Than Currency – Seeking Alpha

By: Todd Sullivan of Value Plays

This is a pretty stunning move. What is even more alarming is the reasoning given.
From the FT:

A hedge fund has begun offering investors the chance to have their investment denominated in gold, as worries grow over governments debasing their currencies by printing money.

Osmium Capital Management, a $178m hedge fund manager based in Bermuda, is launching a new share class allowing investors to hold shares measured as troy ounces of the fund, rather than U.S. dollars, sterling or euros.

The move follows a surge in investor demand for small gold (GLD) bars and coins held by individuals and gold-backed exchange-traded funds that are holding a record amount of bullion.

Chris Kuchanny, Osmium chief executive and a former London ABN Amro trader, said he was putting almost all his personal wealth into the new share class: “Investors have voiced concerns that they’re overly exposed to the major fiat [paper] currencies in an environment where the fundamentals of those currencies are clearly deteriorating with governments assuming more debt and having lower revenue and more expenditure.

This shows a stunning lack of confidence in currencies. It also says that the fund is anticipating inflation to rear its ugly head in a scary way. When it does, the value of the currencies will plummet and gold will rise.

What is to watch now is whether or not other funds begin to follow. If this becomes a movement rather than an individual act, the crash in currencies could be expedited in a nasty way. Stay tuned…

Disclosure: No position in gold… yet.

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

Catch the New Bull! – Buy Gold Online – Safely, quickly, and at low prices, guaranteed! Bullion Vault.com

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

My Disclosure: Long Gold , Gold Etf’s, Gold Miners/Producers, Long Silver, Silver Miners/Producers, Platinum and Paladium Miners/Producers- jschulmansr

More to follow later today…

Nothing in today’s post should be considered as an offer to buy or sell any securities or other investments, it is presented for informational purposes only. As a good investor, consult your Investment Advisor, Do Your Due Diligence, Read All Prospectus/s and related information carefully before you make any investments. –  jschulmansr

Share this:

  • Reddit
  • Facebook
  • LinkedIn
  • More
  • Twitter
  • Pinterest
  • Tumblr
  • Print
  • Email

Like this:

Like Loading...

You Are At Risk – Late Breaking News…

29 Thursday Jan 2009

Posted by jschulmansr in Uncategorized

≈ 5 Comments

Late breaking news, you are definitely at risk! Read on for further details of how criminals are about to get you and me. A must read. Also, Gold today started off lower, tested support and exploded upward like a rocket to close at $906.50 oz- jschulmansr

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

Data Scams have kicked into highgear as markets tumble- USA Today

Source: USA Today.com

Facebook, founded by Mark Zuckerberg, above, has been used by cybercrooks to spread viruses
Facebook, founded by Mark Zuckerberg, above, has been used by cybercrooks to spread viruses
By Byron Acohido and Jon Swartz, USA TODAY
Cybercriminals have launched a massive new wave of Internet-based schemes to steal personal data and carry out financial scams in an effort to take advantage of the fear and confusion created by tumbling financial markets, security specialists say.

The schemes — often involving online promotions touting fake computer virus protection, get-rich scams and funny or lurid videos — already were rising last fall when financial markets took a dive. With consumers around the world panicking, the number of scams on the Web soared.

The number of malicious programs circulating on the Internet tripled to more than 31,000 a day in mid-September, coinciding with the sudden collapse of the U.S. financial sector, according to Panda Security, an Internet security firm.

It wasn’t a coincidence, says Ryan Sherstobitoff, chief corporate evangelist at Panda.

“The criminal economy is closely interrelated with our own economy,” he says. “Criminal organizations closely watch market performance and adapt as needed to ensure maximum profit.”

FIND MORE STORIES IN: Internet | London | Seattle | Social Security | Trojans | Wachovia Corp. | MySpace | Bank of America | Facebook | mid-September | Verizon | Internet-based | Twitter | Monster.com | MacBook Pro | SecureWorks | Heartland Payment Systems | Panda Security | Hackers | Authentium | Fortify Software

Among those caught in the most recent barrage of scams was Justin Terrazas, 27, a beverage merchandiser from Seattle. He clicked on a Web link that infected his MacBook Pro laptop with a data-stealing program. Not realizing the laptop was compromised, Terrazas later typed his Bank of America debit card number and PIN to pay his Verizon cellphone bill online. The data-stealer swiftly siphoned his information.

A few days later, someone used Terrazas’ debit card account to make a $501.41 online purchase from Modabrand.com, a designer clothing store. The merchandise was shipped to London, leaving Terrazas to unravel a big mess.

“This is definitely something you don’t need in your life,” he says.

The boom in cyberthreats that occurred during the last three months of 2008 could accelerate, especially if the economy continues to falter, security specialists say. Organized cybercrime groups have become increasingly efficient at assembling massive networks of infected computers, called botnets, and deploying them to amass large caches of stolen data, according to several surveys and dozens of interviews with security and privacy analysts. Meanwhile, scammers have honed the trickery used to turn stolen data into cash.

“There is a well-funded, well-educated horde continually probing for cracks and finding their way in” to consumers’ financial information, says Roger Thornton, chief technology officer of security firm Fortify Software.

“They are breaching … the highest levels of the global finance infrastructure and a majority of our home computers.”

Last fall, virulent programs called Trojans began to circulate more widely in e-mail and instant-message spam, got embedded in tens of thousands popular Web pages and spread in a widening barrage of online ads. Click on the wrong thing, and you would download an invisible Trojan crafted to steal sensitive data and allow the attacker to control your computer.

All types of con games — from e-mail phishing scams, which try to trick you into typing sensitive data at fake websites, to cyberhijacking, in which crooks use stolen user names and passwords to pilfer online accounts — increased, according to security firms, government regulators and law enforcement officials.

Targeting data storehouses

Hackers also are intensifying attacks on data storehouses.

Last week, Heartland Payment Systems disclosed that intruders cracked into the system it uses to process 100 million payment card transactions a month.

And Tuesday, Monster.com announced it would impose a mandatory password change for all North American and Western European users of its popular employment website. Thieves recently broke into Monster’s databases to steal user IDs, passwords and other data that could be useful in a variety of scams.

“There are limitless opportunities in data of this quality,” says Robert Sandilands, anti-virus director at the security firm Authentium.

To cybergangs, the implosion of the financial markets and widespread job cuts have translated into more opportunities.

Not long after banking giant Wachovia failed, phishing e-mail began circulating asking current and former customers to type in personal information to a website to complete mandatory installation of a new Internet security certificate. The website was a counterfeit, and some users who fell for the scam had their computers infected with the Gozi Trojan, which funnels stolen data to a computer server equipped to instantly sell the data to other criminals, according to the security firm SecureWorks.

Some thieves have stuck to the path of least resistance, snaring account user names, passwords and Social Security numbers. Cybercrime groups have gone further, sending tainted links in e-mail and instant messages, and spreading viruses via the direct messaging systems used on the social-networking websites Facebook, MySpace and Twitter.

Facebook encourages users to report any suspicious messages, but there’s only so much it — and the other networking sites — can do to stop cybercriminals.

“We’ll investigate and take appropriate action, which may include disabling the sender’s account and blocking certain links from being posted,” says Facebook spokesman Barry Schnitt.

But cybergangs now routinely activate hundreds of accounts by the minute, dedicating them to criminal pursuits.

Tainted links also are increasingly turning up in routine search queries on Google, Yahoo search and Windows Live search. The search companies also say they can do little to stem the rising tide of cybercrime. Google spokesman Jay Nancarrow says only that the search giant has “strict policies” against fraudulent practices, which it takes pains to enforce.

The FBI and Secret Service have created partnerships with police agencies around the world to combat cybercrimes. U.S. agents have been able to infiltrate several organized crime groups to make dozens of arrests, says Shawn Henry, assistant director of the FBI Cyber Division. Even so, “The offense tends to outpace the defense,” Henry says. “The cyberthieves are extremely creative.”

The threat from insiders

Some cybercriminals have begun to spread malicious programs by corrupting online banner ads. Security firm Finjan reports that new tools being sold on criminal forums can be used to infect online ads that use Adobe’s popular Flash player.

The wide availability of such tools — and the fact that thousands of tech-savvy workers are being laid off in today’s economy — is raising concerns that some of the jobless might see cybercrime as a way to survive.

“Unemployed IT personnel potentially can find easy income by purchasing and using crimeware,” says Finjan CTO Yuval Ben-Itzhak. “We expect a rising number of people will try.”

Some novice cybercrooks won’t need anything fancier than a Web browser to get rolling. M. Eric Johnson, director of the Center for Digital Strategies at the Tuck School of Business at Dartmouth College, recently tried typing simple search queries, such as “insurance record,” in Google and on file-sharing networks Gnutella and LimeWire.

He collected 3,328 files with potentially sensitive medical information; about 5% held data that could be used to fraudulently buy drugs or bill treatments. Data thieves are using such simple steps, too, he says.

Data-stealing gangs could begin reaching out to laid-off or disgruntled employees who know their employers’ tech systems, security experts warn. Database security firm Application Security’s recent audits of 179 organizations found 56% had suffered at least one data breach in the past 12 months. The survey does not reveal how any particular breach happened.

“It’s a three-legged beast,” says Pat Clawson, CEO of Lumension Security. “There is an absolute crunch in IT spending, there are more profit-minded hackers, and employees with access to valuable data” are willing to sell access to criminals.

About 75% of the 1,400 tech operations and information management professionals recently surveyed by Lumension and Ponemon Institute said cybercrime remains a major concern, despite efforts to thwart hackers.

“In the next year or two, these challenges will increase in both breadth and depth of threats,” says Larry Ponemon, chairman of Ponemon Institute.

‘It’s so easy’

In a recent episode that reflected the complexity of leading-edge attacks, three different thieves collaborated to steal $99,000 from a credit union, says Tom Miltonberger, CEO of security firm Guardian Analytics.

The first thief pilfered a credit union member’s online account user ID and password, and gave it to a second thief. That person then logged on several times to see images of cleared checks and to monitor the balance available on a pre-approved home equity line of credit, says Miltonberger, who investigated the case.

That information went to a third thief, who drew up a forged fax request with instructions to transfer funds from the home equity line of credit into the checking account, and then to wire those funds to another account. Because the forged signature was so good, the credit union carried out the transfer.

No one has been arrested in the case.

In another recent attack, someone acquired the user name and password for a system administrator at CheckFree.com, the nation’s largest e-bill payment system. Using those log-in credentials, an intruder gained access to CheckFree’s domain name service account — an account that permits the administrator to redirect traffic trying to access CheckFree’s home page to other legitimate company pages.

For several hours, the intruder redirected anyone typing http://www.mycheckfree.com to a Web server in the Ukraine that tried to install a password-stealing Trojan. Although as many as 160,000 customers may have been affected, none had any of his or her data stolen, says Lori Stafford-Thomas, a spokeswoman for Fiserv, the parent company of CheckFree. “CheckFree sites are all up and running properly and securely,” she says.

But the attempt was a sign of things to come, says Amit Klein, CTO of security firm Trusteer.

“The moral of this attack is that it’s so easy to take over your (website),” Klein says. “I just need to get ahold of your user name and password once. And we all know how easy it is to get your credentials.”

Beverage merchandiser Terrazas knows all too well the downside of having one’s sensitive data stolen. He says Bank of America covered the illicit charge to his debit card and gave him a new card account number. But he had to alter several other financial accounts to reflect the change, and he no longer trusts using his debit card to pay bills or make purchases online.

“It’s a bummer that somebody took my information,” he says. “But if I don’t want this to happen again, this is what I have to do.”

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

Make sure you get Anti Virus, Anti Spyware, Firewall Software/Hardware to protect yourself. Don’t click on links you get from people or organizations you don’t know. Also, if it smells like a phish it probably is a fishy scam!-jschulmansr!

Share this:

  • Reddit
  • Facebook
  • LinkedIn
  • More
  • Twitter
  • Pinterest
  • Tumblr
  • Print
  • Email

Like this:

Like Loading...

Are You Ready For This? – It’s Back and Ready To Rally!

29 Thursday Jan 2009

Posted by jschulmansr in Bailout News, banking crisis, banks, bear market, bull market, capitalism, central banks, China, Comex, commodities, Copper, Currencies, currency, Currency and Currencies, deflation, dollar denominated, dollar denominated investments, economic, Economic Recovery, economic trends, economy, Federal Deficit, Finance, financial, Forex, Fundamental Analysis, futures, futures markets, gold, Gold Bullion, Gold Investments, gold miners, How To Invest, How To Make Money, India, inflation, Investing, investments, Jim Rogers, Jim Sinclair, Latest News, Make Money Investing, Marc Faber, Mark Hulbert, market crash, Markets, mining companies, mining stocks, palladium, Peter Brimelow, physical gold, platinum, platinum miners, precious, precious metals, price, price manipulation, prices, producers, production, protection, run on banks, safety, Saudi Arabia, security, silver, silver miners, spot, spot price, stagflation, Stimulus, Stocks, TARP, Technical Analysis, Today, U.S. Dollar

≈ Comments Off on Are You Ready For This? – It’s Back and Ready To Rally!

Tags

agricultural commodities, alternate energy, Austrian school, Bailout News, banking crisis, banks, bear market, Bollinger Bands, bull market, capitalism, central banks, China, Comex, commodities, communism, Copper, Currencies, currency, deflation, Dennis Gartman, depression, diamonds, dollar denominated, dollar denominated investments, economic, economic trends, economy, Federal Deficit, financial, Forex, futures, futures markets, gold, gold miners, hard assets, heating oil, India, inflation, investments, Keith Fitz-Gerald, Marc Faber, Mark Hulbert, market crash, Markets, mining companies, Moving Averages, natural gas, oil, palladium, Peter Brimelow, 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

Are You Ready For This! You are asking yourself “am I ready for what?””What’s ready to Rally?” Gold my friend is the answer! As I write Gold is consolidating right around the $900 level. If you had listened to me you would be sitting on profits of $50- $100 oz. already! Well don’t worry Gold still has plenty of room to move as you will see in today’s post. – Good Investing! – jschulmansr

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

Catch the New Bull! – Buy Gold Online – Safely, quickly, and at low prices, guaranteed! Bullion Vault.com

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

Gold Price Could Double – World Gold Council

Source: World Gold Council

The value of gold could soar due to increased demand following the global financial crisis, it has been suggested.

According to Citigroup, the price of gold could double by the summer, the Daily Mail reports.

“We continue to remain unequivocally bullish on the medium to long-term view on gold and still believe that we can ultimately see levels in excess of $2,000 (?1,398),” the firm told the paper.

Such levels would mean the price of gold would more than double its current value.

The paper notes that since September, the value of the precious metal has already risen by $122.

Citigroup added that price rises will either come via inflation following liquidity injections by governments around the world, or by continuing investment from those who view gold as a safe haven.

In related news, a recent poll conducted by Bloomberg showed that 28 of 31 traders, investors and analysts questioned said now is a good time to purchase gold.
=================================

Catch the New Bull! – Buy Gold Online – Safely, quickly, and at low prices, guaranteed! Bullion Vault.com

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

$850B Stimulus Plan Signals Gold Take-Off – Seking Alpha

By: Peter Cooper of Arabian Money.net

Last night the US passed its much anticipated $850 billion Obama stimulus package, representing another huge monetary expansion. Countries all around the world have been at it, and the volume of money in circulation is increasing at a record level.

Meantime, gold prices have been perky and past $900 earlier this week. Now gold has fallen back a little. The gold chart has completed an almost perfect inverse head-and-shoulders pattern which should mark the reversal of the falling trend that started at $1,050 an ounce last March.

Gold technicals

Aside from the technicals of the gold chart, let us also get back to fundamentals: the supply of gold and silver is pretty much fixed. Money supply is undergoing huge and unprecedented expansion.

At present, governments are printing money like fury and little is happening to their economies because banks, companies and individuals are hoarding cash. But eventually pulling on this string will work, and money will flood into the economy in an uncontrollable way.

It is at this point that gold prices will go ballistic. That should not be more than nine months to a year away based on past precedent.

However, before that golden age occurs there will be increasing speculation about the future of the gold (and silver) price. More and more investors will read articles like this one and be impressed by the argument – which is far sounder than trying to come up with a new bull market for equities, bonds or real estate.

Bond crash

Sometime soon the bond markets of the world are also going to weaken much further, and that will give precious metals another reason to rise in value as an alternative safe haven class.

For investors in precious metals then it is just a matter of holding on and taking advantage of price dips to stock up with bullion and shares, although it is surely arguable that the best buying opportunities are behind us now as the price trend is about to head back up.

Trying to time the market exactly or using borrowed money is not a clever approach in volatile markets, but a diversified precious metals portfolio is going to be a winner over the next two years.

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

Catch the New Bull! – Buy Gold Online – Safely, quickly, and at low prices, guaranteed! Bullion Vault.com

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

Gold $2200: What’s in a number? – Seeking Alpha

By: Adrian Ash of Bullion Vault

Gold must hit $2,200 an ounce to match its real peak of Jan. 1980. Or so everyone thinks…

WHAT’S IN A NUMBER…? Ignoring the day-to-day noise, more than a handful of gold dealers and analysts reckon gold will hit $2,200 an ounce before this bull market is done.

Why? Because that’s the peak of 1980 revisited and re-priced in today’s US dollars.

Which sounds simple enough. Too simple by half.

First, betwixt spreadsheet and napkin, there’s often a slip. Several targets you’ll find out here on the net put the old 1980 top nearer $2,000 in today’s money. Another Gold Coin dealer puts the figure way up at $2,400 an ounce.

Maybe they got the jump on this month’s Consumer Price data. Maybe $200 to $400 an ounce just won’t matter when the next big gold top arrives. But maybe, we guess here at BullionVault, an extra 20% gain (or 20% of missed profits) will always feel crucial when you’re looking to buy, sell or hold. Perhaps that’s the problem.

Either way, having crunched (and re-crunched) the numbers just now, even we can’t help but knock out a target…

To match its inflation-adjusted peak of $850 an ounce – as recorded by the London PM Gold Fix of 21st Jan. 1980 – the price of gold should now stand nearer $2,615.

Second, therefore, the lag between current Gold Prices and that old nominal high scarcely looks a good reason to start piling into gold today. “Ask the investor who rushed out to Buy Gold precisely 29 years ago, at $845 an ounce, about gold as an inflation hedge,” as Jon Nadler – senior analyst at Kitco Inc. of Montreal, the Canadian dealers and smelters – said on the 29th anniversary of gold’s infamous peak last week.

“They could sell it for about $845 today…[but] they would need to sell it for something near $2,200 just to break even, when adjusted for inflation.”

This lag, of course, can be turned any-which-way you like. For several big-name Gold Investment gurus, including Jim Rogers and Marc Faber, it mean gold has got plenty of room left to soar, compared at least with the last time investors began swapping paper for metal in a bid to defend their savings and wealth.

But for the much bigger anti-gold-buggery camp – that consensual mob of mainstream analysts, op-ed columnists, news-wire hacks and financial advisors – gold’s inflation-adjusted “big top” just as easily stands as a great reason not to Buy Gold. Ever.

“An investor in gold [buying at the end of 1980] experienced a reduction in purchasing power of 2.4% per annum,” notes Larry Swedroe, a financial services director at BAM Services in Missouri, writing at IndexUniverse.com and recommending Treasury inflation-protected TIPs instead.

“[That was] a cumulative loss of purchasing power of about 55%…Even worse, that does not consider the costs of investing in gold…[and] while gold has provided a slightly positive real return over the very long term, the price movement is far too volatile for gold to act as an effective hedge against inflation.”

Volatility in Gold can’t be denied. Indeed, it’s the only thing we ever promise to users of BullionVault. (They can judge our security, cost-efficiency and convenience for themselves.) Traditionally twice as volatile as the US stock market, the price of gold has become five times as wild since the financial crisis kicked off. But price volatility has also leapt everywhere else, not least in the S&P 500 index – now 8 times wilder from the start of 2008. The Euro/Dollar exchange rate is more than four times as volatile as it was back in Aug. ’07, when the banking meltdown began. Even Treasury bonds have gone crazy, making daily moves in their yield more vicious still than even the Gold Price or forex!

So putting sleepless nights to one side (you may need to ask your pharmacist), the key point at issue remains “long term” inflation.

This chart shows the value of Gold Bullion – measured in terms of purchasing power, as dictated by the official US consumer price index – since the data series begins, back in 1913. (Hat-tip to Fred at the St.Louis Fed; the current CPI calculations and headline rate might bear little resemblance to personal experience of retail inflation, but for long-run data where else can we go?)

Starting at 100, our little index of gold’s real long-term value has then averaged 97.8 over the following 96 years…pretty much right where it began. As you can see, however, that long-term stability includes wild swings and spikes. And whether gold is tied to official government currency (as it was pre-1971) or allowed to float freely on the world’s bullion market, volatility looks the only sure thing.

The starting-point, 1913, just happens to be when the Federal Reserve was first founded. It was given the easy-as-pie challenge of furnishing the United States with an “elastic currency”.

Okay, so it ain’t quite made of rubber just yet. But the Dollar’s own value in gold – by which it used to be backed, pre-1971 – just keeps brickling and bouncing around like it’s being used to play squash.

What the chart above offers, however, is a picture of gold’s real long-run value outside of Dollar-price fluctuations.

“With the right confluence of economic and geopolitical developments we should see gold break through $1,500 and then $2,000 and then possibly still higher round numbers in the next few years,” said Jeffrey Nichols, M.D. of American Precious Metals Advisors, at the 3rd Annual China Gold & Precious Metals Summit in Shanghai last month – “particularly if we get the type of buying frenzy or mania that often occurs late in the price cycles of financial and commodity markets.”

“This is hardly an audacious forecast when looked at relative to the upward march in consumer prices over the past 28 years. After all, the previous high of $875 an ounce in January 1980, when adjusted for inflation since then, is today equivalent to more than $2,200.”

Audacious or not, as Nichols points out, the thing to watch for would be a “buying frenzy” – a true “mania” amongst people now Ready to Buy Gold that sent not only its price but also its purchasing power shooting very much higher.

Because for gold to reach $2,200 an ounce in today’s money (if not $2,615…) would mean something truly remarkable in terms of its real long-run value.

  • Inflation-adjusted, that peak gold price of 21 Jan. 1980 saw the metal worth more than 5 times its purchasing power of 1913;
  • In March 2008, just as Bear Stearns collapsed and gold touched a new all-time peak of $1,032 in the spot market, the metal stood at its best level – in terms of US consumer purchasing power – since December 1982;
  • Touching $2,200 an ounce (without sharply higher inflation undermining that peak), gold would be worth almost 6 times as much as it was before the Federal Reserve was established in real terms of domestic US purchasing power.

“I own some gold,” said Jim Rogers, for instance, in an interview recently, “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.”

But “much higher” in nominal Dollar terms is not the same as “much higher” in terms of real purchasing power, however. More to the point, that previous peak of $850 an ounce – as recorded at the London PM Gold Fix on 21 Jan. 1980 – lasted hardly two hours.

Defending yourself with gold is one thing, in short. Assuming gold is the perfect inflation hedge is quite another. And taking peak profits in gold – as with any investable asset – is surely impossible for everyone but the single seller to mark that very top price.

That doesn’t diminish gold’s real long-term value to private investors however, as we’ll see in Part II – to follow.

Catch the New Bull! – Buy Gold Online – Safely, quickly, and at low prices, guaranteed! Bullion Vault.com

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

Is Gold Really Pausing? – MarketWatch

By: Peter Brimelow of MarketWatch.com

 Will Mark Hulbert’s recent column, pointing out that the Hulbert Gold Newsletter Sentiment Index (HGNSI) was over-extended, signal an important top? Or just a ripple? See Hulbert’s Jan. 27 column.

Either way, there will be a group of angry readers. Of the 220 comments about the column, as I write, the furious bulls outnumber the fanatical bears about 3 to 1.
But both sides are pretty riled up. This is only money, people!
Early Monday in New York, gold cleared $915. But Wednesday evening, it was down $30-plus from its high. And the US$ 5×3 point and figure chart kindly supplied by Australia’s The Privateer service has turned down. See chart.
There is a possibility that the action around the weekend was a false breakout.
If it turns out to be a bull trap, GoldMoney’s James Turk will turn out to have been wise in his latest Freemarket Gold & Money Report. Turk accepts the radical thesis that the price of gold is manipulated by an alliance of private and public sector actors.
He writes: “Gold must still contend with the gold cartel and its ongoing efforts to cap the gold price. It may try to ‘circle the wagons’ above $900, which would seem a logical point for them to make another stand now that $850 has been exceeded. If the gold cartel is successful in stopping gold for any length of time, new longs may get discouraged by the lack of progress and take profits. That selling, along with new shorts by the gold cartel, could begin a cycle of selling that gains momentum and drives gold back to its last level of support, which is $850.” See GoldMoney Web site.
Will gold stumble? In favor of the bears, oddly enough, is the section of Bill Murphy’s radical goldbug LeMetropoleCafe Web site that follows India. The Indians are definitely out of the world gold market, it appears. On downswings, their support is usually crucial. See LeMetropoleCafe Web site.
But the radical gold bugs think strange things are happening. Murphy’s site noted Tuesday that the extraordinary premiums being paid in the West for gold items did not go away on this month’s rise. And the Comex gyrations, closely examined, continue to suggest the presence of large, determined buyers.
For perspective on Mark Hulbert’s HGNSI, look at MarketVane’s Bullish Consensus for gold. This surveys futures traders. It peaked at 74% on Monday, and came in tonight at 72%.
Sometimes gold peaks do occur with this reading in the 70s. That happened at the turn of the year, and again last September.
But the normal behavior, especially before a big sell-off, is for the upper 80s at least to be reached. Last February/March, as gold attempted $1,000, the Bullish Consensus spent no less than four weeks in the 90s. See MarketVane Web site.
So the radical gold bugs conclude that gold may pause. But it’s not seen a major blow-off yet. End of Story
===============================
Catch the New Bull! – Buy Gold Online – Safely, quickly, and at low prices, guaranteed! Bullion Vault.com

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

Gold headed south for the short term?- MarketWatch

By: Mark Hulbert of MarketWatch.com

ANNANDALE, Va. (MarketWatch) — Gold certainly deserved a rest Wednesday.
After all, it had mounted an impressive rally over the previous two weeks, gaining some $100 per ounce. So we can definitely excuse gold bullion  for forfeiting $9 in Wednesday trading.
The more crucial question, however, is whether the decline was merely the pause that refreshes, or the beginning of a more serious drop.
Unfortunately for those hoping gold’s recent rally to continue, the conclusion of contrarian analysis is that the metal’s short-term trend is more likely to be down.
Consider the latest readings of the Hulbert Gold Newsletter Sentiment Index (HGNSI), which reflects the average recommended gold-market exposure among a subset of short-term gold-timing newsletters tracked by the Hulbert Financial Digest. As of Tuesday night, the HGNSI stood at 60.9%.
This is identical to where the HGNSI stood at the end of December, when I last devoted a column to gold sentiment. ( Read my Dec. 29 column.)
Over the two weeks following that column, of course, bullion dropped by around $70 an ounce.
Contrarian concern about gold’s short-term trend isn’t just based on this one data point, however. I have more than 25 years of daily data for the HGNSI, and rigorous econometric tests show that the inverse correlation between HGNSI levels and the gold market’s subsequent short-term direction is statistically significant at the 95% confidence level.
This is why the HGNSI’s current level is so ominous.
To put it in context, consider that this sentiment gauge’s average reading over the last five years has been 32.6%, only slightly more than half where it stands now. Over the last five years, furthermore, the HGNSI has been higher than where it is now just 13% of the time.
This does not mean gold can’t go higher from here. But it does suggest that the odds are against it doing so.
Lest I incur undeserved gold-bug wrath by writing that, let me hasten to add that this bearish conclusion applies to just the next several weeks. Sentiment affects the short-term trend of the market, not the long term.
So my conclusion is entirely consistent with gold being in a major, long-term bull market.
But even if it is, the implication of my contrarian analysis is that gold is not ready, at this very moment, to commence on that march upward. End of Story
Mark Hulbert is the founder of Hulbert Financial Digest in Annandale, Va. He has been tracking the advice of more than 160 financial newsletters since 1980.
=============================
My Note- While feeling that Gold price make take a breather here consolidate and maybe even drop a little, both Mark Hulbert and Peter Brimlow agree; Gold is in a long term Bull Market! Any dips in price should be taken as an opportunity to buy more gold!…

Catch the New Bull! – Buy Gold Online – Safely, quickly, and at low prices, guaranteed! Bullion Vault.com

That’s all for now, hit the subscribe button to keep up with all the latest Gold, Market News and more…Enjoy! – jschulmansr
Nothing in today’s post should be considered as an offer to buy or sell any securities or other investments, it is presented for informational purposes only. As a good investor, consult your Investment Advisor, Do Your Due Diligence, Read All Prospectus/s and related information carefully before you make any investments. –  jschulmansr

Share this:

  • Reddit
  • Facebook
  • LinkedIn
  • More
  • Twitter
  • Pinterest
  • Tumblr
  • Print
  • Email

Like this:

Like Loading...

Today’s Technical Corner – Gold Whats Next?

28 Wednesday Jan 2009

Posted by jschulmansr in agricultural commodities, Bailout News, banking crisis, banks, bear market, Bollinger Bands, bull market, capitalism, central banks, China, Comex, Copper, Currencies, currency, Currency and Currencies, deflation, depression, dollar denominated, dollar denominated investments, economic, Economic Recovery, economic trends, economy, Federal Deficit, Finance, financial, Forex, Fundamental Analysis, futures, futures markets, gold, Gold Bullion, Gold Investments, gold miners, hard assets, How To Invest, How To Make Money, India, inflation, Investing, investments, Jim Sinclair, Junior Gold Miners, Latest News, Make Money Investing, market crash, Markets, mining companies, mining stocks, Moving Averages, oil, palladium, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, silver, silver miners, small caps, spot, spot price, stagflation, Stimulus, Stocks, TARP, Technical Analysis, U.S. Dollar, Uncategorized

≈ 1 Comment

As I write Gold is currently down $10.80 at $886.90, taking a much needed breather from its recent upward thrust. If Gold can hold and consolidate around this level the next target will be $920 and then $950. Today’s post contains articles on how to trade gold for those who don’t like risk, much tecnical analysis and more… -jschulmansr

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

Catch the New Bull! – Buy Gold Online – Safely, quickly, and at low prices, guaranteed! Bullion Vault.com

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

A Guide To Buying Gold for the Risk Averse – Seeking Alpha

By: J Clinton Hill of Hillbent.com

 

Lately, there has been plenty of talk about gold and a growing consensus that favors bullish fundamentals. Here’s my take on gold based upon the Spyder Gold Trust ETF (GLD) and its most recent wave, i.e. from its 1-15-09 bottom at 78.87 to its 1-26-09 top at 90.19.

 

 

Catch the New Bull! – Buy Gold Online – Safely, quickly, and at low prices, guaranteed! Bullion Vault.com

================================================.

That’s it for today click on one of the subscribe buttons to receive all the latest news for Gold and Precious Metals, and much more!

Good Investing! – Jschulmansr

 

Nothing in today’s post should be considered as an offer to buy or sell any securities or other investments, it is presented for informational purposes only. As a good investor, consult your Investment Advisor, Do Your Due Diligence, Read All Prospectus/s and related information carefully before you make any investments. –  jschulmansr

 

 

Catch the New Bull! – Buy Gold Online – Safely, quickly, and at low prices, guaranteed! Bullion Vault.com

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

Hourly Action In Gold From Trader Dan

Source: Trader Dan Norcini of JRMineset

Gold appears to have run into resistance near the $920 level which is blocking its upward path for now. Since we know that the funds are purely technical traders and have been buying, both adding new longs and for those who were short, getting out by covering, while open interest has been steadily increasing, it is safe to say that the bullion banks are the ones blocking the upward trajectory. Nothing new there and it does not take much observation for those who have been watching gold the last 8 years to know this.

The inability of the mining shares to continue higher yesterday, even in the face of a much higher bullion price, gave some paper longs at the Comex a reason to cash in some profits and emboldened the bears to dig in their heels.

To show you how fickle these markets have become, do you remember when gold was following the equity markets around not all that long ago. They went down – it went down. They went up – it went up. It was all about the famous “risk aversion” or deleveraging trade. Now the exact opposite seems to be happening. The equities go up and gold goes down. Well guess what they have come up with to now explain this turn of events? Yes – risk aversion!

Here’s the latest – equities are going up because supposedly some of the news from the banking sector is not as dire as many have come to expect. The bearish sentiment in the equity markets is misplaced. Gold has been going up because of banking sector fears and currency risk. Ergo – gold should now go down as those fears are overblown because the risk averse psychology has become too excessive. In other words – all’s clear and the water is just lovely so dive on in!

I could not make this stuff up if I tried.

Had enough – how about this one?  – Gold has now broken its relation to the Dollar. The fact that the Dollar was being bid up was evidence of a panic into safety. Now that the Dollar is going down it means that the panic is subsiding. Therefore gold should go down as well which means the inverse relationship between gold and the Dollar has been severed.

Again, I am just repeating the latest mantra du jour.

Just wait and see – when gold starts going up as the Dollar starts going down the same guys who came up with the latest explanations will be singing how the historic relationship between gold and the Dollar has been restored once again. No matter what happens – they will have proven to be right! Geniuses all!

It reminds me of the global warming crowd. When droughts were springing up and record highs were being shattered it was called global warming. When record snowfalls suddenly showed up and record lows were being set as people all over the globe freezing their keisters off,  it morphed into climate change. No matter which way the temperatures go, that crowd will always be right! Shame on you climate destroyers for not cramming your family into something that more closely resembles a go-kart rather than an automobile on your assorted trips around town. If you had any concern for the planet you would be riding a horse to work. Then again that creature gives off methane gas which is actually being seriously considered as a pollutant and thus liable to be taxed by the idiots in Washington DC, so no matter what you do, you are royally screwed. It’s too bad that there remains no undiscovered country where freedom loving people who believe in honest money and limited government could sail off to and found a nation where the money changers and government control freaks would be banned from entering.

By the way, did you notice that the new President just signed the death sentence for the US automotive industry yesterday by mandating new mileage efficiency standards – all in the name of saving us from a problem that does not exist? Yep – nothing like telling an industry already on life support that their most profitable units, the bigger and safer vehicles, will have to go in favor of smaller, less profitable ones. Don’t touch the unions however whose demands have forced the US auto industry into concentrating their efforts on the more profitable lines (the larger vehicles) in an effort to offset the financial drain imposed upon them by the exorbitant salaries and benefits that they are forced to pay these same unionized workers.

Remember that big move up in Copper yesterday? Remember how the existing home sales number ran all the shorts out and pushed the market right into technical chart resistance threatening an upside breakout? Well, that is history today as it went “KERPLUNK”! To show you how utterly insane these markets have become and the farce that the hedge funds have turned them into, consider this – Copper closed at 1.4720 on Friday. On Monday it rallied sharply blasting upwards closing at 1.5865 reaching a high of 1.6310. Today it collapsed making a low of 1.4545 and closed at 1.4850, down 10 cents a pound. In other words, it went NO WHERE in TWO DAYS but in the process it careened all over the place blowing out upside buy stops before triggering a wave of downside sell stops today. And to think this hedge-fund created madness has become the price discovery mechanism by which commercial producers and end users are somehow supposed to be able to enter into contracts and hedge risk to ensure profitability. I have been watching these futures markets for more than 20 years and I have never seen such idiocy. This is what happens when computers have taken over trading decisions based on nothing but the latest price tick. I know it sounds excessive to some, but I honestly have come to believe that the entire futures industry is very close to being destroyed by these out of control hedge funds. A commercial entity simply cannot use these markets to hedge and without commercials these markets cannot survive since they will serve no useful purpose whatsoever as all that will be left is hedge funds trading their algorithms against the algorithms of other hedge funds with the commercials using forward contracts amongst themselves and bypassing the futures markets altogether.

Back to gold – technically gold still looks very good although it has stalled just below the $920 level. Ideally, it would hold support on any subsequent RE-test of the Downsloping trendline of the wedge formation on the weekly chart which is drawn off the July and October highs. That comes in near the $880 level. I would prefer to see it consolidate above the $880 level but would view an ability to hold above the $870 level as still friendly. Failure at $870 would give the shorts enough impetus to try to shove it back to $850- $840.

Upside resistance remains near $920 while more formidable resistance comes in near the $945-$950 region. That corresponds to both Downsloping trendline resistance drawn off the peak high made back in early 2008 and the July high which also happens to be the highs made back in October last year. Those are the parameters we are working with technically.

On the daily chart, all of the major moving averages, including the 100 day moving average are all now trending solidly upwards. The 10 day is close to making a bullish upside crossover of the 20 day which will give some trend following funds a reason to buy while the RSI remains below the 70 level. So we have room to run to the upside IF, and this is a big IF, the market can push through the bullion bank selling near $920. The inability of the mining shares to continue moving higher does concern me however. In an ideal bullish environment for gold, the shares move higher alongside the bullion price.

It looks to me like the weakness in crude oil today is contributing some downward pressure in gold as many of those fund algorithms use its price action as a factor in their selling or buying of commodities. Weaker crude oil prices give rise to the deflation scenario and that still leads some to sell gold because of misguided notions of how it will perform during periods of general price deflation. Again, gold is primarily a currency – not a commodity, and it will rise when faith in paper currencies falters, all of the arguments of the deflationists notwithstanding. When governments slash interest rates to NOTHING and issue more and more paper IOU’s, the sheer supply guarantees that they will lose value meaning that investors seeking wealth preservation are buying scraps of paper that pay zero return and lose any “value” that they might have once possessed. Gold thrives in such periods as it is solid, substantial and cannot be diluted by conniving Central Bankers. Which would you rather have in your hand during times of financial chaos and upheaval – a promise by a politician or a metal which has stood the test of 6,000 years? If you have any problem making a decision, I suggest you take a good look at the price chart of the British Pound and especially the price of gold in Sterling terms.

The HUI and the XAU were unable to manage strong closes above their former double tops make back in mid-December of last year and early January of this year in yesterday’s session meeting up with selling from the opening bell and never quite being able to shrug that off. Still, their charts look good as they are consolidating right around that former double top. I would like to see them hold above the 10 and 20 day moving averages near the 115 – 116 level in the XAU and 279 – 282 in the HUI.

Bonds finally saw an up day today which is to be expected given the beating that they have taken of late. The downdraft in bonds could be called “parabolic in reverse”. Jim likes to call it a “waterfall”, which is an apt description considering the fact that if one were long while this has occurred, they have indeed taken a bath in their trading accounts or better yet, drowned under a sea of red ink.

The Dollar is generally weaker today although it has bobbed back and forth between a small gain and a small loss. The charts still appear to show a technical failure near the 88 level. It is treading water above the 50 day moving average (barely) while the 100 day lies near the 83.50 level. A breach of that level and it should move back down to retest 80.

Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini

January2709Gold1230pmCDT.jpg

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

1. Before 2009 is out the next major economic shock will become obvious. There is not one major funded retirement program intact thanks to the manufacturers and distributors of OTC derivatives. The unfunded ones are a total loss. Retirement in the future is totally out of the question. Many now retired will end up in the same situation as those trying to live off fixed income. Both categories are being culled from the human gene pool.
 
2. By my 68th birthday Obama will recognize his position as a bagged President, knowing then that the economic situation does not have any practical solution.
 
3. By July 4th, 2009 the rally in the US dollar will have become a simple hope for the lows to hold.
 
4. My long held targets of $1250 and $1650 for Gold that were once laughed at as outrageously high can now be laughed at for being painfully too low.
 
5. Only gold and related shares are insurance against the economic cataclysm now taking place.

Everyone is looking for where and when the top in gold will come. Will it be Jim’s $1650 or Alf Field’s $10,000 plus before it comes back down?
 
To put it nicely, you are all wrong. Gold is going up and STAYING up.
 
There is no top to look for because like all things people strive for, the top does not exist.
 
Gold will trade within $200 of a given point as a product of the Master of the Financial Universe, Paul Volcker, taking control when all this is totally out of control. He will instate the revitalized and modernized Federal Reserve Gold Certificate Ratio, not gold convertibility, and not tied to interest rates as an automaticity. Only then can Volcker put in place policy backed by the sitting administration that has a provable history of starting the change from deficit to surplus, his price of saving the world one more time.
 
The Gold mining business will then be the best business there is and the highest dividend paying monetary utility.
 
Respectfully yours,
Jim
=========================================================

Catch the New Bull! – Buy Gold Online – Safely, quickly, and at low prices, guaranteed! Bullion Vault.com

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

The Resurgence of Junior Gold Miners – Seeking Alpha

Junior mining stocks were all the rage back in the early stages of the gold bull market. During the time frame of 2002-2006 many junior miners were putting in annual gains of 200%, 300% or more. Some junior miners like Seabridge Gold (SA) produced 3-year returns in excess of 1500%! It seemed like you could close your eyes and randomly point your finger at a list of junior gold miners, buy the stock and sell a few weeks later for a gain of 30% or more. No feasibility study, no permits, no management experience or path to production… no problem!

But volatile stocks are volatile in both directions and when the gold market corrected, junior miners lost all of those gains and then some. Amateur investors that were patting themselves on the back and recommending investments to their buddies based on their recent success were caught off-guard by the severity of the decline in the junior mining sector and suddenly found that they gave back most or all of their gains. To be sure, some booked profits and got out before the ship sank, but most were caught unsuspecting and unwilling to believe the party could be over so quickly. Many junior miners lost 80% or more of their market cap during the past year or two.

Precious metals investors have a sour taste in their mouth in regards to junior miners and have largely dismissed the entire sector as too risky. For many investors, junior miners have been removed from their portfolios, watch lists and consideration set for future investments. Newsletter writers and analysts that couldn’t contain their excitement over the next “5-bagger” rarely mention a word about juniors these days. While much of this condemnation is warranted, I think we should be careful not to throw the baby out with the bath water.

While I will acknowledge that 75% or more of junior mining companies are not good investments and many will go out of business with credit markets contracting, there are still quite a few impressive juniors that deserve a second look now that the dust has settled. Mine production is decreasing and the larger miners will need to acquire junior miners with quality properties in order to add to their pipeline and keep their production numbers growing. After a massive sell-off that brought the entire sector crashing down, some of the most promising juniors have finished a bottoming pattern, consolidated and have already began moving up very impressively. Cash-strapped investors and weak hands have been shaken free of their junior mining shares as the focus has shifted to more “safe” and liquid investments. Has this produced an opportunity for savvy precious metals investors to pick up quality mining companies at undervalued prices? Here are my main criteria for selecting which junior mining companies are worth my investment dollars.

  1. Already producing or moving toward production in the next 1-2 years
  2. Quality properties in politically-stable areas with necessary road access
  3. Proven and probable resources that justify a higher market cap
  4. Seasoned management that has a track record of bringing projects to production
  5. Healthy balance sheet with cash on hand and/or the ability to raise capital easily

Many of the companies that meet most or all of the criteria above have already bottomed and are quietly posting exceptional gains that outpace those of the major producers. Even with today’s decline in gold equities, many of my favorite juniors are up 100% or more since their respective Q4 2008 lows. A few of these companies were recommended in the premium subscription service and have been masked out of respect to paying subscribers. All of the gains listed below were produced in just 1-3 months and illustrate the explosion in junior miners that most analysts and newsletter writers seem to be missing.

click to enlarge

As the entire gold and silver sector has done well over the time period, I have included the PHLX Gold and Silver Index (XAU) index at the bottom for comparison sake. While the XAU is up 85%, the average gain for the junior mining companies that we track over the same time period is 171% or double the gain of XAU. Junior miners are not only joining in this latest rally, they are leading the rally and gaining at twice the pace of the major gold mining companies.

Those that are comfortable with a higher risk/reward proposition might want to take a second look at junior mining companies during 2009. If the trend continues or accelerates as investors warm back up to juniors, we could see the return of another explosive few years for junior mining companies as gold pushes above $1,000 on its way towards its inflation-adjusted high of $2,300.

Catch the New Bull! – Buy Gold Online – Safely, quickly, and at low prices, guaranteed! Bullion Vault.com

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

Now From One of the Masters’ Himself Jim Sinclair

Jim’s Outlook On 2009

 

First, to keep things in proper perspective, GLD has already appreciated 27% since Nov 12, 2008. Also, let us not forget that central banks have a perverted sense of humor and plenty of “funny money” and other diversionary tricks up their sleeves to defer the inevitable arrival of inflation. With this as our background, I will jump right into my strategic analysis for trading or investing in gold.

GLD hit resistance at 90.19, has retreated and appears headed to test support at 86.50 with the possibility of also filling a minor gap at the 85 level.

If support holds, the natural inclination is to buy (entry at 86.75 with a stop loss at 84.12 for -3% maximum loss). Assuming one is playing this trade for an exit at its most recent resistance, i.e. at 90.19, the risk to reward ratio is only at 1.33. In a fear-driven market environment, I am strongly inclined to pass on these odds (even with beer goggles).

Ideally, a trade with a minimum risk to reward ratio at 3 or 4 is much more seductive, even in interesting times like these. However, to find the ideal opportunity, one needs to be patient and think counter-intuitive to the buy low and sell high paradigm. Hypothetically (I only say “hypothetically” because I have been long GLD at 74.85 since Oct 29, 2008), I would wait for GLD to break above its resistance at 90.19 and buy at $90.50. This would confirm that there is additional demand and fresh support at this level.

Here is where the trade can get a little tricky. There is some resistance at the 92 level and one should probably anticipate a minor pullback and retest of the newly established level of support at the 90 area. However, if support is violated, I am willing to accept a stop loss at 89 for a -1.5% maximum loss of capital. In the majority of instances when support fails the “retest”, this signals a false breakout.

Now let’s get to the good part. If the breakout is legitimate, then GLD should run to the 97.50 area, which is its next level of major resistance and also where I would definitely be inclined to book some short-term profits or at least hedge my position with long puts and/or short calls. Under this scenario, this trade presents a much more attractive risk to reward ratio at 5.24.

Gold certainly has both technical and fundamental positives going for it. The short, intermediate, and long term are all trending upward while the monetary policies of global central banks reflect a desperate willingness to accept future inflation to avert the immediate threat of deflation. Another tail wind, also aiding gold’s bullish movement, is the recent weakness and apparent correction in the U.S. Dollar Index.

In summary, the example of the above trading strategy is an opinion on how to play gold for those who are risk averse and can ill afford to lose more capital. Otherwise, for those turned on by a fundamentally bullish or bearish bias towards the precious metal, assume the position (pun intended) and enjoy the ride along with all its ups and downs. Yeah Baby!!!

Disclosures: Hillbent.com, Inc. or its affiliates may own positions in the equities mentioned in our reports. We do not receive any compensation from any of the companies covered in our reports

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

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

Share this:

  • Reddit
  • Facebook
  • LinkedIn
  • More
  • Twitter
  • Pinterest
  • Tumblr
  • Print
  • Email

Like this:

Like Loading...

Is this the Move? Gold is Breaking Out!

26 Monday Jan 2009

Posted by jschulmansr in agricultural commodities, banking crisis, banks, bear market, bible, Bollinger Bands, bull market, capitalism, central banks, China, Comex, commodities, Copper, Currencies, currency, Currency and Currencies, deflation, Dennis Gartman, depression, dollar denominated, dollar denominated investments, economic, Economic Recovery, economic trends, economy, Federal Deficit, Finance, financial, Forex, Fundamental Analysis, futures, futures markets, gold, gold miners, hard assets, How To Invest, How To Make Money, id theft, India, inflation, Investing, investments, Latest News, Make Money Investing, market crash, Markets, mining companies, mining stocks, natural gas, oil, palladium, physical gold, platinum, platinum miners, precious, precious metals, price, price manipulation, prices, producers, production, silver, silver miners, small caps, spot, spot price, stagflation, Stimilus, Stimulus, Stocks, TARP, Technical Analysis, timber, Today, U.S. Dollar, Uncategorized, uranium, volatility

≈ Comments Off on Is this the Move? Gold is Breaking Out!

Tags

agricultural commodities, alternate energy, Austrian school, Bailout News, banking crisis, banks, bear market, Bollinger Bands, bull market, capitalism, central banks, China, Comex, commodities, communism, Copper, Currencies, currency, deflation, Dennis Gartman, depression, diamonds, dollar denominated, dollar denominated investments, economic, economic trends, economy, Federal Deficit, 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

As I write Gold currently is up another $9.30 oz today! Even more importantly it is well above the psychologically important price level of $900 oz. A new high will confirm the breakout and BANG! we’re off to the races. Todays past has some good articles detailing why could could be breaking out here. Enjoy and Good Investing!- jschulmansr

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

Here is a safe way for even a small investor to get in on the Gold Rush! You can buy quantities as little as 1 gram to 1000’s of oz. I personally use Bullion Vault for my physical metal purchases.

Catch the New Bull! – Buy Gold Online – Safely, quickly, and at low prices, guaranteed! Bullion Vault.com

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

Could There Be a Real Breakout In Gold?— Seeking Alpha

By: Trader Mark of Fund My Mutual Fund

After a series of head fakes much of the past half year, the most watched move in the market might finally be “real” this time. With all the world’s printing presses going on overdrive, and currencies being mocked – gold “should” have been rocketing. Many theories persist on why it hasn’t, but really it does not matter. The price action is all that matters and this type of movement will get the technicians very interested.

Things to like
1) a series of higher lows
2) the trendline of lower highs has been penetrated

Things to see for confirmation
1) any pullback is bought
2) price prints over October 2008’s highs, signaling the end of “lower highs”

When last we looked about 6 weeks ago [Dec 11: Dollar v Gold – Can we Trust this Change?] , it was just another headfake – this formation on the chart does look more promising.

These are 2 names; one in gold and one in silver we’ve had our eyes on.

Or just play it simple and go double long gold

 

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

Happy Days For Gold? —Seeking Alpha

By: Jeff Pierce of Zen Trader

Gold was in the spotlight on Friday in a big way, nearly moving $39. Is this a hat tip to the big move that many goldbugs have been anticipating? Is all the money printing that the Federal Reserve finally catching up with the US Dollar? Should you have bought gold on Friday because it’s a straight line up from here? Let me preface my answers by saying that I’m a short term trader that will sometimes allow a trade to turn into a longer term trade but that doesn’t happen very often. I’m currently flat precious metals but will be looking for a good risk/reward, but for anybody reading this know that this analysis is from a momentum based perspective.

So the answers to the previous questions I believe are yes, yes, and no.

gld

I’m a big fan of gold for a number of reasons (fundamental, technical, historical) but I know from experience that it trades much different from a momentum point of view. It tends to sell off once it goes outside it’s upper bollinger band as seen by the arrows above. Just when it looks like gold is going to bust out and move to blue skies it seems to run out of buyers and reverses. As you can see GLD and many individual gold miners moved outside this indicator on Friday and I expect a small pullback before it begins a new wave up.

Judging by the negative divergence on the RSI you can easily see that momentum is waning. As the stock has been making higher highs, the RSI has not been confirming the move. We could possibly move up to the 92 level before profit taking hits, but I just don’t see a good entry at this point if you’re not already invested in these stocks. It would be more prudent to wait for a slight low volume pullback before entering. The only problem with this way of thinking is there could possibly be many with this outlook and that could actually propel gold to higher levels, but I’m willing to risk that because if it does move up even more, then that will confirm the strength and I’ll buy even more on the eventual dip.

If you are long from lower levels I would consider taking some profits off the table now to prevent yourself from giving up any of your gains.

“I made all my money selling to soon.” ~ JP Morgan

slv

I like silver’s chart a tad better from a technical aspect as the base that it’s been building since last September seems a little more stable. The RSI trendline has been steadily moving higher as the price has been trending higher which is very bullish. I think we’re a tad overbought here and will be looking to get long stocks such as PAAS, SLW, and SSRI when we pullback or move sideways for a week or two.

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

Now- Some Commentary by Dennis Gartman

Dennis Gartman on Gold, Oil, Government and the Economy- Seeking Alpha

Source: The Gold Report

With a real roller-coaster year behind us, how would you characterize your macro overview of major economic trends for 2009?

Dennis Gartman: It’s abundantly clear that we have been in recession; we’re in a recession; and we’re likely to remain in a recession through the greatest portion of 2009. The monetary authorities around the world have done all the things they’re supposed to do, which is during a period of economic weakness throw liquidity in the system as abundantly, as swiftly, as manifestly as possible and expect the liquidity eventually to wend its way through the economy and strengthen economic circumstances. That may be sometime late in 2009. In the meantime, we’ll see continued bad economic data and continued increases in unemployment. It’s going to seem like things are really, really, really bad.

But let’s remember that things are always their worst at the bottom. By definition, recessions begin at the peak of economic activity when all economic data looks its best. So while things will start to look very bad through the rest of 2009, I bet that by late this year and early 2010 we will start to see economic strength coming at us because of the liquidity injections going on everywhere.

TGR: What will be the first signs that we’ve reached the bottom in terms of the recession and are starting to turn around?

DG: The signs of a turnaround will be that everybody believes that there are no signs of a turnaround. We’ll see Newsweek writing a series of cover stories talking about the end of Western civilization. The Financial Times of London headlines will read, “The Recession Seems Endless” and “Depression Is Upon Us.” Every day’s Wall Street Journal articles will be just manifestly bleak in nature. That’s what the signs will be.

And then all of a sudden, things shall begin to turn around. But the signs are always their worst at the bottom. That’s how things function.

TGR: So the popular press is in essence on a delay mode.

DG: Oh, it always is.

TGR: By three months, by six months, by a year?

DG: It’s probably a little less slow to react than it used to be, but let’s say three months.

TGR: So you like the fact that the monetary authorities have put liquidity into the system?

DG: Absolutely.

TGR: And it sounds as if you think it just takes time to work through the system.

DG: Always has; always will. That’s how these things go about. You have recessions because you had an economic advance where, in Greenspan’s terms, “irrational exuberance took over.” You have to dash that irrational exuberance and make it into irrational depression. Irrational, manifestly bleak, black philosophies have to make their way to the public. That’s just how these things happen; it’s happened time and time again.

The recession that I recall the most clearly is that of ’72-’74. We have to remember that unemployment was high up in double digits. We saw plenty of articles in the press about the new depression. If you go back and read articles from July through September of 1974, you will be convinced that we will never have an economic rebound in our lives again. Well, clearly, that’s just not the case.

TGR: What about the bearish people who say we’ve never seen worldwide conditions like this and that we’re in the “new era”?

DG: We probably haven’t seen the world going into recession at one time such as we are now. But I think that’s simply indicative of the fact that today’s communications are so much better. People in the United States or Canada or Europe really never would have known much about a recession in India 20 years ago, because the news media would not have covered it. Nothing told you about economic circumstances abroad. Now, with the Internet, information comes at you absolutely one-on-one.

All correlations have gone to one in this present environment. When stocks go down in the United States, they go down in India. When they go down in India, they go down in Vietnam. When they go down in Vietnam, they go down in Australia. That wasn’t the case 20 years ago; you didn’t have the small world united through communications that we have now. And now the correlations of emerging markets and large markets have all come together.

TGR: If that’s true, and worldwide financial markets are all tied together, could any given country “emerge” as a growth country while the rest remain in recession?

DG: Oh, it’s possible, but I don’t think we’ll call them “emerging markets” anymore. You’ll just find that one country pursued better economic policies, probably by cutting taxes or increasing government spending or doing away with some onerous legal circumstance that might have previously inhibited economic activity. The Chinese are doing any number of good things at this point, and that country may just have been more enlightened and it may come out of the recession faster than the others do. But now they won’t do it on their own, and anybody who does do it will be watched and understood much more swiftly than in the past. For example, did you ever know what was going on in Iceland 10 years ago? Of course not; but now you do.

TGR: Right. The only emerging markets we heard about were China and India. No one ever discussed South America.

DG: And now they’ve emerged. But now we understand. We hear news from Venezuela every day. Now we hear news from Sri Lanka every day if we want it; we can get it very easily. We couldn’t do that 10 years ago; 20 years ago clearly we couldn’t. That’s been the big change. Information travels so much more rapidly. That’s why all the correlations have gone to one. We are now one large economic machine that maybe one of the component parts does a little bit better, but it won’t shock anybody, and there won’t be anything “emerging.”

TGR: Back to the bear people. You referenced the ’72-’74 economy, but this time, many are pointing to the debt situation that the U.S. and probably a bunch of the world economies are in and the fact that we’re committing to billions—and in the U.S., trillions—of dollars more. Won’t that influx of new money have some kind of significant bear impact going forward?

DG: No, it will have a bullish impact. Unless all the rules of economics have been rescinded, money pushed into a system will push economic activity higher.

TGR: But it will also push inflation higher.

DG: Oh, that’s very likely to happen. The question is whether it will be inflation of 1%, 2%, 5%, or will it be a Zimbabwean-like inflation? The latter isn’t going to happen, and 1% isn’t likely going to happen. But 2% to 5% inflation? Yes, that’s likely to happen several years down the line.

TGR: Gold bugs are saying, “Buy gold now.” What would be your advice under these circumstances?

DG: I happen to be modestly bullish on the gold market, but not because of inflationary concerns. It’s more that I think gold has quietly moved up the ladder of reservable assets, a reservable asset being one that central banks are willing to keep on their balance sheets, all things being equal. Dollars are still the world’s dominant reservable asset. The Euro is next and gold is probably the third.

The Fed has thrown off a lot of other assets and taken on securities, debt instruments, mortgages and the like, but I think they’re doing exactly the right thing. Some central banks with a lot of U.S. government securities on the balance sheet may decide that going forward, they may buy more gold rather than more U.S. government securities if they’re running an imbalance of trade surplus. For instance, if I’m the Bank of China and I hold a minuscule sum of gold, maybe I should own a slightly larger minuscule sum.

TGR: That’s really diversifying your monetary assets.

DG: I think that’s all that will drive the gold prices quietly higher. I am not a gold bug; I don’t think the world’s coming to an end. I think the history of man is to progress. And yes, we have relatively large amounts of debt, but you can go back to the recession of 1974; you can go back to 1980-81; you can go back to the recession of 1907, and you will see the same arguments—that the world is too debt-laden. And the same arguments, the same language, the same verbiage was always written in exactly the same circumstances. Guess what? We moved on. This time might be different, but I’ll bet that it won’t be.

TGR: What would your recommendation for investors to do in gold? If they want to do any type of holding assets in monetary value, should they be looking at holding physical gold or buying ETFs or buying into the equity?

DG: For the past several years, I’ve told people that if they’re going to make the implied bet on gold, bet on gold. The gold bugs tell you that you have to own bullion. I say, no, you should really own the GLD, the ETF. It trades tick-for-tick with gold. If some truly untoward chaotic circumstance ran through the world’s banking system I guess maybe GLD and bullion would diverge at some point, but we’d have other problems long before that would occur. So if you’re going to make the implied bet on gold, bet on gold. Do the GLD.

TGR: But not physical gold?

DG: I do own some physical gold. But do I own a lot of it? No. And quite honestly, I hope I lose money on the physical gold I have. It’s an insurance policy. Nothing more than that.

TGR:: Are you looking at physical gold as the insurance policy or any investment in gold as an insurance policy?

DG: There’s the old saying, “Those aren’t eatin’ sardines; them is trading sardines.” Some gold I consider to be tradable, and that’s ETF-type stuff, and I have a small amount in the lockbox in the form of gold coins. That’s my insurance policy.

TGR: That would be what the typical investment broker might advise, 5% to 10% in gold.

DG: That’s it. Exactly, that’s it. Don’t get overwhelmed by it.

TGR: How about mining stocks?

DG: If you’re going to bet on gold, there’s nothing worse than being bullish on gold and owning some mine—especially in some junior fly-by-night—and walking in one morning and finding out that the mine you thought you had got flooded or all of your workers were unionized and walked off or management was somewhat derelict. You may have been right on the direction of gold, but your stock went down. So I’ve told people to stay away from the juniors; that’s a terrible bet on gold. If you’re going to bet on gold, bet on gold.

Maybe you’ll want to start punting on Barrick Gold Corporation (NYSE: ABX) or Newmont Mining Corp. (NYSE: NEM) or the real large names, rather than the juniors. There’s just too much risk in the juniors. Yes, everybody says, “I bought this junior at a nickel and now it’s at 15 cents.” Well, jolly for you, but you probably bought 15 others at a nickel, and they’re all bankrupt. If you’re going to bet on gold, bet on gold.

TGR: So you’re saying with that advice that if you want to bet on gold equity, bet on blue-chip gold equity stocks that have just been hammered down through the market.

DG: That’s correct, Agnico-Eagle Mines (TSX: AEM), ASA Ltd. (NYSE: ASA), the Newmonts, the Barricks, that sort of thing.

TGR: If we take that logic and look across the broad array of sectors, would you also recommend looking at other blue chips that have just been battered? Or do you think that some sectors will recover faster than others? Such as the financial sector, the energy sector, the housing sector, the precious metals sector?

DG: I’m really quite bullish on infrastructure—the movers and the makers of the things that if you drop them on your foot, it will hurt. I think I want to own steel and copper and railroads and tractors because I think we’re going to be building roads and bridges. That’s probably one of the things that probably will bring us out of the economic morass. Along those lines, I wouldn’t mind owning a little bit of gold at the same time.

TGR: Unlike gold that you can buy and own, if you look at steel and copper, are there specific companies and equities that are appealing to you?

DG: Again, as in gold, if I am going to buy gold equities, I’m going to buy the biggest names. If I’m going to buy steel, I’m going to buy the biggest names. U.S. Steel comes to mind. That’s the easiest; that’s the best; that’s where liquidity lives. It has been bashed down from the highs made last July; it’s down—what?—75% from its high. Recently it stopped going down and is in fact starting to go up now on bad news. So if you’re going to buy steel, buy the most obvious ones—U.S. Steel or buy Newcorp.

TGR: You talked about the energy market being weak in one of your recent newsletters. Do you see this weakness continuing or do you see a turnaround happening in ’09?

DG: The one thing that we can rest assured in the rest of the world is that OPEC chiefs cheat on each other—they always have and they always will. So when OPEC says that it’s cut production, that’s a lovely thing. No, they haven’t, and they don’t. Because the problem OPEC has is they’ve all raised their standards of living and the expectations of their people, and they all have cash flow requirements. You have to sell three times as much $50 crude oils as you sold $150 crude oil to meet the demands of your populace that you have increased. So the lovely thing from a North American perspective is that Chavez finds himself in a very uncomfortable position and needs to produce a lot more crude oil to keep his public happy. It’s rather comical, isn’t it, that Chavez was giving crude oil away to the Kennedy family to be distributed to people in the Northeastern United States until two weeks ago when he had to stop. He had to stop because he needs the crude oil on his own to sell, not to give away, to meet cash flow demands.

Iran is in exactly the same position. Isn’t it lovely to see that Putin, who was really feeling his military oats six months ago with $150 oil, has to pick fights with Ukraine and smaller countries now with crude at $45 a barrel? Where is crude going to go? I wouldn’t be surprised if we make new lows.

TGR: Will there be new lows for ’09? Are you buying into this whole peak oil argument that production eventually will be unable to meet demand?

DG: Do I believe that we’re going to run out of crude oil in the next 100 years? Not on your life. Sometime in the next 10,000 years we probably will run out of crude oil. In that instance, I am a peak oil believer. It’s not going to happen soon though. I remember they told me when I was in undergraduate school back in the late ’60s that we would be out of crude oil by 1984.

TGR: Do you mean out of oil? Or at a point where demand exceeds production?

DG: We would be out! Gone, done! There would be no more. Isn’t it interesting? We’ve pumped crude oil for 28 more years. This is an interesting statistic: We have either seven or eight times more proven reserves now than we had in 1969. And I think we have used a bit of crude oil between now and 1969.

TGR: Just a wee bit.

DG: A wee bit, and yet we have seven or eight times more proven reserves. Every year we have more proven reserves. So, yes, I’m a peak oil believer. Sometime in the next 10,000 years we will run out of crude.

TGR: With Obama now in office and talking about getting off our reliance on foreign oil, what’s your view of the future on all the alternative energies that are being so pushed by many people in the U.S. government?

DG: I think it’s wonderful job-creation programs, none of which will prove to be of much merit at all. All of the Birkenstock-wearing greens will feel very good about having their rooftops covered by solar panels, but is that going to resolve any energy problems we have? No. No. Nuclear power will do that. Maybe using the oceans will do that, but wind power, probably not. Solar power, probably not. It makes everybody feel good, but are we going to power our cars in the next 40 years with solar power? I doubt it. Do I expect some sort of material technological breakthrough in the next 100 years that will change what we use as energy? Oh, absolutely. Do I have any idea what it will be? Of course not.

TGR: If the price of oil if it remains low, is there a role for nuclear in the next 50 years?

DG: Oh, absolutely.

TGR: What will drive that?

DG: It’s absurd that we don’t use nuclear energy. Even the French derive 80% of their electricity from nuclear energy, cleanly, efficiently, without any problems whatsoever. Why we don’t do the same in the United States other than the left and the eco-radicals keeping us from doing it is really quite beyond me.

TGR: So, given that we still have eco-radicals and a big push toward alternative energies, do you see anything happening in the U.S. in nuclear in the near future?

DG: Yes, actually. It’s interesting. There are a lot of new nuclear facilities on the drawing boards, and they’re probably going to be approved. If there’s going to be one surprise by the Obama Administration, it will be that you don’t get nuclear energy advances under a right-wing government; you always get them under a left-wing government. Obama will be smart enough to understand that that’s the only way—that’s the best and cleanest methodology to use. And the left won’t argue with a fellow leftist pushing for nuclear energy. Only Nixon could go to China; only Obama can push nuclear energy.

TGR: And you think that he will?

DG: Oh, yeah, he’s smart enough to understand that.

TGR: Going back to your investment strategy, which big blue chip players in oil and nuclear would you point out as good investments?

DG: In oil, I’d want to take a look at companies such as ConocoPhillips (NYSE: COP), which dropped 70% from its highs. How can you go wrong with the Conocos and the Marathons and the large oil companies whose price-to-earnings multiples are down to at single digits and their dividend streams are 5%, 6%, and 7%? Why would you not want to own those? That’s the best investment.

And at the same time, the volatility indices on the stock market are so high that, gee, you can buy Conoco, get the dividend, and sell out of the money calls at very high premiums and ramp your dividend yield up. It’s like a gift; it’s like manna.

TGR: Well, what about in terms of the nuclear sector and uranium?

DG: I really don’t understand uranium. I don’t know where to go, and I don’t how to buy it yet. So I’ll just say there’s a future for it, but I don’t know what to do with it.

TGR: What other sectors should be looking at for 2009?

DG: Banks, banks.

TGR: They’re making a comeback. Do you think there will be more consolidations?

DG: There will be more consolidations; there has to be. But look at the yield curve—what a year to be a bank! The overnight Fed funds rate, the rate banks are going to pay depositors for their demand deposits or checking accounts is zero. And you’re going to be able to lend that out to hungry borrowers at 7%, 8%, 9%, 10% and 12%. The next three years will be the greatest three years banks have ever seen. Banks will just make money hand over bloody fist in the next three years.

TGR: Are you talking about the big boys?

DG: No, I’m talking about the regionals. The big boys have problems in toxic assets. I am not even sure there is a Peoples Bank & Trust in Rocky Mount, North Carolina, but a bank like that—or the First National Bank of Keokuk, Iowa or the First National, or the Peoples Bank & Trust of Park City, Utah—those are the banks that are going to make lots of money.

TGR: Do you see an explosion in regional banks? Will move of them come into the marketplace?

DG: I think we’ve probably got all we need. It’s just that they’re very cheap.

TGR: What will the role of the international banks be?

DG: Mopping up the disasters that they’ve created for themselves for the past decade, trying to survive, being envious of the decent regional banks that are going to be earning enormous yields on this positively sloped yield curve and wishing they were they.

TGR: Do you see a role long term for international banks?

DG: Oh, sure, of course. How could there not be? It’s a smaller world; it’s an international world; it’s a global world. International banks will be back in full force a decade from now. They’ve got some wound-licking to do, and they’ll do it.

TGR: In addition to regional banks as being a great play to look at for ’09, ’10, any other interesting plays to bring up?

DG: You want to own food and grains again.

TGR: Are you talking about grains or food producers like Nabisco?

DG: No, I think you want to own grains. If you’re going to make a speculation, I think you want to own on the grain markets again.

TGR: Grain for human consumption or grain for livestock consumption?

DG: Yes and yes.

TGR: Are you looking at buying that on the commodities market?

DG: You can actually buy that on ETFs now. The wonderful world of ETFs is just extraordinary. You can actually buy a grain ETF now. DBA (DB Agriculture Fund) is one; JJG (iPath Grains) is another. Those are basically long positions in the grain market. Wonderful things to use.

TGR: You like ETFs; but the naysayers will say that ETFs could be encumbered and there’s actually no guarantee that they hold any assets.

DG: That’s true; that’s correct.

TGR: But you’re comfortable that people should go into an ETF for grains?

DG: I didn’t say that. What I said is if you wish to trade in grain, there are ETFs that will do that. Do I know for sure that they will all perform perfectly and that if the world were to come to a chaotic banking circumstance that there wouldn’t be problems? I don’t know that. Does that bother me? No. It doesn’t bother me even slightly.

Should you worry about [not trading] an ETF just because there might be some problem under an untoward economic environment? No, it’s illogical. And shame on those people who say those sorts of things or who tell you not to use them because they ETF may not function properly if there is some total breakdown in the banking system. Well, if that happens, we have other problems.

TGR: And what’s your projection for the overall investment market? We’ve been hearing speculation that it will rise through April, bottom out even deeper than it is today, and then a slow climb in 2010.

DG: Gee, I have no idea. I just think that stock prices will be higher six months from now than they are now, much higher 12 months than they will be six months from now, and higher still in 24 months than they will be 12 months from now. But where will they be in April? Golly, I don’t know. I think the worst is far behind us and better circumstances lie ahead. And that’s the first time in a loooonnnng while that I’ve said that.

TGR: Yeah, now if the media will just catch up with you, we can enjoy watching it again.

DG: It won’t. Watch the news; it will just get bleaker and bleaker as the year goes on. And watch the unemployment rate; it’s going to be a lot higher.

TGR: Other than Barack Obama saying we’re going to start building infrastructure, do you anticipate any dramatic changes in the U.S.? Right now we’re a services country, and we need to move back to being a manufacturing country.

DG: We’ll never move back to being a manufacturing country. Won’t happen. Here’s an interesting bit of data. Do you know what year that we had the absolute high number—not just as a percentage of population—but the absolute high number of manufacturing jobs was in the United States?

TGR: Somewhere around the World War II era.

DG: Very good, 1943. We have lost manufacturing jobs since 1943. I think that’s a fairly well-established trend.

TGR: Is there a future for the services sector, though? That’s the key.

DG: It will be larger. And so what? It’s like saying we need more farmers. No. We need fewer farmers. We have one-hundredth as many farmers as we had at the turn of the 20th century. We now 500 times more grain? Seems to me every time we lose a small farmer, we get better. So, we need fewer farmers. And we need fewer manufacturing jobs.

TGR: But doesn’t that put the onus on the United States as the economic world leader? Considering the fact that, as you mentioned, information now is instantly available everywhere, just in terms of worldwide confidence; it seems like every time we hiccup, the planet hears it?

DG: There is probably some truth to that fact. But it is probably not us that will lead; it’s probably Australia or New Zealand or the Baltic States or some smaller country that actually changes policies and frees up markets and cuts taxes, and all of a sudden their economy starts to turn around. Then people elsewhere will say, “Oh, look! That’s the right thing to do. Let’s us go do that.”

TGR: Really? Economic recovery worldwide will not come from the United States?

DG: Well, if we don’t recover, the rest of the world won’t, but we won’t be the first. What I am saying is that some smaller country will do the right things faster than we do.

TGR: Isn’t what Australia does irrelevant to what the U.S. needs to do?

DG: No, it’s dramatically relevant. If Australia starts to do things properly—if Australia were to suddenly come out and slash taxes and go to a flat tax and cut paperwork by 50% and it’s economy starts to turn higher, wouldn’t that be a good incentive for us to do the same thing?

TGR: But that implies that every country should use the same economic strategy; that we’re all basically at the same state in our economic development. That what will work for Zimbabwe or China will work for the U.S.

DG: I think anywhere in the world that you have smaller government, lesser taxes—every time you do that, that economy, no matter where it is, does better. It does better. And anywhere you put higher taxes and more government, that economy usually does worse. It does; it just does.

TGR: You’re looking at it from a macro point of view.

DG: I’m looking at it just from an economic point of view, whether macro or micro. Look at Ireland, for example. Why was Ireland for many years the “Celtic Tiger” of Europe? Their tax regime was lower than the rest of Continental Europe. The Germans and the French, who are statists, who are collectivists, instead of emulating the Irish, kept trying to drag Ireland down to their level. Now, that was stupid, wasn’t it? That didn’t work.

My favorite example is New Zealand back in the 1980s. Every year from the 1970s through the 1980s, New Zealand ran a budget deficit and a trade deficit. Every year the IMF said, “You must raise your taxes and cut the value of your currency to try to balance your budget and run a trade surplus.” So New Zealand would do that, and every year the deficit got worse and their trade imbalance grew larger. They did this for five or six years and it got worse every time they did it—every time they followed the IMF tactic of raising taxes and cutting the value of the currency.

Finally New Zealand Treasury Secretary Graham Scott (Secretary from 1986–93) told the IMF, “Don’t ever come back here. Everything you’ve told us to do has proven to be utterly worthless. We’re going the other way. We’re slashing taxes.” From I think a 75% marginal tax rate, over the course of five years, they cut it to like 18%. And every year they took in more money—more money—every time they cut taxes they took in more money. And when they strengthened their currency, their exports picked up; as their currency got stronger, they exported more stuff. Isn’t it fascinating?

TGR: That’s the paradox.

DG: It got to be so interesting—it wasn’t Gordon Campbell—I’m trying to remember; I just went blank for his name. But he passed the baton on to a woman by the name of Ruth Richardson, who was a little more leftwing than her predecessor—the tax rate was down to a flat 18%. They asked her if she was going to cut it again, and she said, “You know, I don’t think I can cut it any more; I can’t spend the revenue I am taking in now.” It’s a classic line. So, what does she do? They actually started raising the tax rates again, and what happened? Tax revenues fell.

But New Zealand had taught a lot of people that cutting taxes and strengthening your currency is the best thing you can do. And as they were cutting taxes, they kept cutting prohibitions and regulations; they kept chopping them back. They were the real precursors of the Free Market Movement that developed in the early ’90s and the early ’00s.

TGR: Let’s hope the United States learns from that. Obama announced his tax cuts; we’ll see what comes of that.

DG: He said entitlements are even on the table. Can you imagine a Republican ever making that statement? They would boo him. But here’s a leftist who puts it on the table. He can say that.

Irreverent, outspoken, entertaining, sardonic and—in his own words, a “glib S-O-B,” Dennis Gartman has been producing The Gartman Letter for more than 20 years. His daily commentary on global capital markets as well as short- and long-term perspectives on political, economic and technical circumstances goes to leading banks, brokerage firms, hedge funds, mutual funds, energy companies and grain traders around the world.

A 1972 graduate of the University of Akron (Ohio), he undertook graduate studies at North Carolina State University in Raleigh (where he remains involved as a member of the Investment Committee.

Before devoting himself full-time to The Gartman Letter, Dennis analyzed cotton supply and demand in the U.S. textile industry as an economist for Cotton, Inc.; traded foreign exchange and money market instruments at North Carolina National Bank, went to Chicago to serve as A.G. Becker & Company’s Chief Financial Futures Analyst and then become an independent member of the Chicago Board of Trade, dealing in treasury bonds and notes and GNMA futures contracts; and moved to Virginia to run Virginia National Bank’s futures brokerage operation.

In addition to publishing The Gartman Letter, Dennis delivers speeches to audiences around the world (including central banks, finance ministries, and trade groups), teaches classes on derivatives for the Federal Reserve Bank’s School for Bank Examiners, and makes frequent guest appearances on CNBC, ROB-TV and Bloomberg television.

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

Finally for the Technical Analysis Junkies (like me!) here is an awesome article!

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

Market Leaders Hesitate on Stimulus Plan— Seeking Alpha

By: Chris Ciovacco of Ciovacco Capital Management

Proposed Economic Stimulus Plan May Not Stimulate Much

The new administration is proposing an $825 billion “stimulus” plan. Most of the package is geared toward helping existing or expanded programs such as unemployment assistance, law enforcement, food stamps, etc. Much of this spending will “save” existing jobs or keep existing programs already in place. This may help prevent things from getting worse, but it will offer little in the way of providing new stimulation for the economy. Another large portion of the stimulus plan is in the form of tax cuts. While depreciation incentives may spur some new business spending, credits to individuals may offer little incentive to spend given the state of their balance sheets and concerns about employment. After all the hype about infrastructure spending, only about 25% of the package is geared toward this area.

Tug of War Between Liquidity and Economic Weakness

The chart below was created on the website of the Federal Reserve Bank of St. Louis. It shows the eye-popping expansion of the money supply as financial institutions have swapped securities and other “assets” for cash via borrowing from the Federal Reserve. Borrowing prior to this crisis is barely visible on the graph. Recent borrowing is an extreme example of the term “spike” on a graph. Despite the never before seen tapping of the Fed, financial assets show little evidence of reflation taking place.

Borrowing From FEDU.S. Stocks: Downtrend Remains In Place

If you compare the long S&P 500 ETF (SPY) to the short S&P 500 ETF (SH), it is clear the short side of the market is in better shape. There is little in the way of fundamentals, except hope of government bailouts, to expect any change to these trends.

S&P 500 ETF - SPY - LongRecent weakness in the S&P 500 Index leaves open the possibility that we will revisit the November 2008 lows around 740 (intraday). If those lows do not hold, a move back toward 600 becomes quite possible. On Friday (1/23/09) the S&P 500 closed at 832. A drop back to 740 is a loss of 11%. A move back to 600 would be a drop of 28%. These figures along with the current downtrend highlight the importance of principal protection and hedging strategies. SH, the short S&P 500 ETF, can be used to protect long positions or to play the short side of the market.

2009 Investing Deflation Inflation Outlook StrategyGold & Gold Stocks Still Face Hurdles

Friday’s big moves in gold (GLD) and gold mining stocks (GDX) have some calling a new uptrend. While recent moves have been impressive some hurdles remain.

Gold At Important LevelsGold stocks (GDX) look a little stronger than gold, but any entry in the market should be modest in size. If $38.88 can be exceeded, our confidence would increase and possibly our exposure.

2009 Investing Deflation Inflation Outlook StrategyRun In Treasuries Is Long In The Tooth

Investments with the highest probability of success are those with positive fundamentals and positive technicals. Conversely, the least attractive investments have poor fundamentals and poor technicals. With the U.S. government issuing new bonds at an alarming rate, a continued deterioration in the technicals could signal the end of the Treasury bubble.

2009 Investing Deflation Inflation Outlook StrategyTBT offers a way to possibly profit from the negative forces aligning against U.S. Treasury bonds.

2009 Investing Deflation Inflation Outlook StrategyStrength In Bonds Shows Little Fear of Price Inflation

The government’s policies are attempting to stem the tide of falling asset prices. They hope to reinflate economic activity along with asset prices. The charts here show:

  •  
    • A weak stock market (see SPY above), and
    • An improvement in many fixed income investments (below: LQD, AGG, BMT, PHK, and AWF).

Weak stocks and stronger bonds tell us the government’s reflation efforts are thus far not working. If concerns about deflation remain more prevalent than concerns about inflation, fixed income assets may offer us an apportunity. With money markets, CDs, and Treasuries paying next to nothing, we may be able to find improved yields in the following:

  •  
    • LQD – Investment Grade Corporate Bonds
    • AGG – Investment Grade Bonds – Diversified
    • BMT – Insured Municipal Bonds
    • PHK – High Yield Bonds
    • AWF – Emerging Market Government Bonds

With the economy in a weakened and fragile state, we need to tread carefully in these markets. Some key levels which may improve the odds of success are shown in the charts below. Erring on the side of not taking positions is still prudent. The markets remain in a “prove it to me” mode where we would like to see the markets move through key levels before putting capital at risk.

2009 Investing Deflation Inflation Outlook Strategy 2009 Investing Deflation Inflation Outlook Strategy 2009 Investing Deflation Inflation Outlook Strategy 2009 Investing Deflation Inflation Outlook Strategy 2009 Investing Deflation Inflation Outlook StrategyU.S. Dollar Remains Firm

From a technical perspective, the dollar continues to look strong. Its strength supports the continuation of concerns about deflation, rather than inflation.

2009 Investing Deflation Inflation Outlook StrategyDisclosure: Ciovacco Capital Management (CCM) and their clients hold positions in SH, GLD, and PHK. CCM may take long positions in GDX, TBT, LQD, AGG, BMT, and AWF.

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

Catch the New Bull! – Buy Gold Online – Safely, quickly, and at low prices, guaranteed! Bullion Vault.com

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

Nothing in today’s post should be considered as an offer to buy or sell any securities or other investments, it is presented for informational purposes only. As a good investor, consult you Investment Advisor,  Do Your Due Diligence, Read All Prospectus/s and related information before you make any investments. – jschulmansr

Share this:

  • Reddit
  • Facebook
  • LinkedIn
  • More
  • Twitter
  • Pinterest
  • Tumblr
  • Print
  • Email

Like this:

Like Loading...

Latest Obama Eligibility News and More…

25 Sunday Jan 2009

Posted by jschulmansr in 2008 Election, Achievement, Barack Obama, bible, communism, Electoral College, id theft, John McCain, Presidential Election, socialism, Today, u.s. constitution, U.S. Dollar, Uncategorized

≈ 2 Comments

Tags

2008 Election, Barack Dunham, Barack Hussein Obama, Barack Obama, Barry Dunham, Barry Soetoro, capitalism, Chicago Tribune, Columbia University, Currency and Currencies, D.c. press club, Electoral College, Electors, Finance, fraud, Free Speech, gold, Harvard Law School, hawaii, id theft, Indonesia, Indonesian Citizenship, Investing, investments, Joe Biden, John McCain, Latest News, legal documents, Markets, name change, natural born citizen, Oath of Allegiance of the President of the United State, Occidental College, Phillip Berg, Politics, poser, Presidential Election, Sarah Palin, socialism, Stocks, Today, treason, u.s. constitution, U.S. Dollar, Uncategorized, voter fraud, we the people foundation

Well here we are, Obama’s 1st act was to flub his oath of office, there are still cases on Obama eligibility filtering up. One thing we should be aware of, when has it become legal for a person to consult with the judges who are going to hear and potentially try his case? Once again total dis-regard and disdain for the Constitution. Yes, I know it was a “courtesy” trip, however, timed conveniently before the judges are set to see if the latest eligibility case has merit? And was there a secret session? Watch the 1st Video First! ***Eye Opening-***jschulmansr

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

Where Is Your Birth Certificate? Mr Open President?

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

Religious Leader On Obama’s Birth Certificate

Dr. James David Manning, PhD (ATLAH Church) is angered by Barack Obama’s failure to present his Birth Certificate.


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

Why The Oath Was Retaken

By: Joseph Farah World Net Daily

When Supreme Court Chief Justice John Roberts and President-elect Barack Obama flubbed the oath of office on inauguration day, WND was pilloried for prominently noting the problem.

“Oh, come on,” wrote one emailer. “This is just being nitpicky. Your antipathy for Obama is showing in your willingness to jump on him for everything.”

Yet, one day later, Roberts and Obama agreed to repeat the oath of office – this time in a more private setting and following the specific requirements of the U.S. Constitution.

Maybe paying strict attention to the Constitution isn’t nitpicky after all?

Article II, Section 1 of the Constitution stipulates the exact 35 words of a proper oath of office: “I do solemnly swear (or affirm) that I will faithfully execute the Office of President of the United States, and will to the best of my Ability, preserve, protect and defend the Constitution of the United States.”

Since some of those words were transposed and left out of the original oath on the day of inauguration, Roberts feared the matter could become a point of contention. Twice before in American history presidents Chester A. Arthur and Calvin Coolidge needed to repeat their oaths because of similar mistakes.

I’m glad someone still takes at least part of the Constitution seriously. Unfortunately, another part of Article II, Section 1 was completely trampled upon during the 2008 election process and right up through the swearing in ceremony. That is the issue of whether Obama is indeed, as the Constitution requires, a “natural born citizen.” Perhaps he is, perhaps he isn’t. Perhaps we’ll never know, because no controlling legal authority has ever required proof and publicly affirmed its validity.

Again, when such issues were raised, many have suggested it’s simply nitpicking.

But the Constitution either means precisely what it says or it doesn’t. If we’re going to fudge on such simple, straightforward matters as eligibility requirements for the president and oaths of office, where does the fudging end?

And, conversely, if it is so critically important to recite the specific and exact 35 words of the oath of office as delineated in the Constitution, why was it not important to establish Obama’s eligibility beyond any shadow of a doubt?

Should this matter now be dropped?

Or should it be relentlessly pursued?

What would happen now if it were determined that Obama was not, in fact, constitutionally eligible to become president? It’s certainly not a simple matter like restating the oath.

On the other hand, because of the enormous potential for raising a constitutional crisis, should the American people just sweep the matter under the rug

?

These are the tough questions we have been left with by Obama and all those in authority who allowed this question of eligibility to fester for so long.

Once again, they provide us with some practical arguments for taking the Constitution seriously and literally in all matters. The Constitution is the bedrock of our system

of governance. It is the tie that binds our nation together. It is the foundation for the rule of law in America.

There is nothing frivolous about its requirements.

There is nothing nitpicky about adhering to them.

So, I’ll ask the pointed question one more time: “Where’s the birth certificate?”

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 200,000 others and sign the petition demanding proof of eligibility now!

Maybe we need a national movement of people asking the same question in venue after venue – anywhere and everywhere the new president appears. Maybe we need rallies on the National Mall where ordinary Americans bring copies of their birth certificates and display them proudly with accompanying signs that say: “I’ll show you mine if you show me yours.”

Do we need a national uprising of the American people simply to get the Constitution observed and taken seriously and literally?

It seems like a lot to ask.

Yet, on the other hand, is there a more important national cause?

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

Okay this part of the constitution is important but proving eligibility to be the President under the constitution is not? I am confused!

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

President’s meeting with Judges questioned

Lawyer challenging eligibility raises issue of secret conference

Source: World Net Daily

A lawyer working on a case before the U.S. Supreme Court that challenges the eligibility of President Obama is raising concerns over a meeting between the defendant in the case and the judges who are expected to review it.

The case is one of many brought before U.S. courts that allege Obama doesn’t meet the “natural born” requirement of the U.S. Constitution for the president. It’s one of about half a dozen that have reached the U.S. Supreme Court, which already has declined to grant hearings to several cases.

Orly Taitz, whose case is scheduled to be heard tomorrow in a conference among justices – a private meeting at which they review cases and decide whether they should hold a hearing – confirmed on her website today that a supplemental brief in her arguments had been distributed.

But the website also reported she “had to explain … many of us citizens are also concerned about the eight out of nine justices meeting privately with Mr. Obama (while the cases are pending).”

The blog continued, “No reporters were allowed. No attorneys were invited on behalf of the plaintiffs. This causes many of us citizens to question the rules of judicial ethics and causes us to question the impartiality on behalf of the justices.”

The report said “quite a number of people” have raised their questions with their U.S. representatives over the issues.

According to a CBS report, Obama visited the Supreme Court before his inauguration at the invitation of Chief Justice John Roberts. The report described it as a protocol visit.

According to a separate published report, Obama and then-Vice President-elect Joe Biden met in a court conference room with Roberts and seven other justices for about 45 minutes.

The report said the only absent justice was Samuel Alito.

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 215,000 others and sign the petition demanding proof of eligibility now!

The supplemental documents in the Taitz case cite an executive order concerning qualifications issued by President Bush Jan. 16.

“This action is seeking the mandate for the U.S. State Department, the FBI and the Director of the Personnel Department to seek the documents for verifying Obama’s legitimacy as president and also his citizenship of the United States,” the blog reported.

The Supreme Court document reveals that the Taitz case is scheduled for conference tomorrow, and her supplemental briefs have been distributed to the justices.

Taitz said her arguments rest on precedents from both the California Supreme Court, which years ago removed a candidate for president from the ballot because he was only 34, and the U.S. Supreme Court’s affirmation of the ruling. The Constitution requires a president to be 35. Her case raises the issue of Obama’s birthplace and citizenship status, which also are specified in the Constitution.

The lawsuits allege in various ways that Obama does not meet the “natural born citizen” clause of the U.S. Constitution, Article 2, Section 1, which reads, “No Person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution, shall be eligible to the Office of President.”

Some allege his birth took place in Kenya, and his mother was a minor at the time of his birth – too young to confer American citizenship. They argue Obama’s father, Barack Obama Sr., was a Kenyan citizen subject to the jurisdiction of the United Kingdom at the time and would have handed down British citizenship.

There also are questions raised about Obama’s move to Indonesia when he was a child and his attendance at school there when only Indonesian citizens were allowed and his travel to Pakistan in the ’80s when such travel was forbidden to American citizens.

One case, handled by Gary Kreep of the United States Justice Foundation, is seeking Obama’s school records from Occidental College, which could reveal if Obama attended class on aid intended for foreign students.

Another lawyer working on similar allegations, Philip J. Berg, has written to Congress seeking an investigation, while Taitz’s filings have been before the U.S. Supreme Court.

Berg, whose information is on his ObamaCrimes.com website, said the issue isn’t going to disappear.

Others agreed.

“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,” argues a California case brought on behalf of Ambassador Alan Keyes, also a presidential candidate. “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.”

WND twice has organized opportunities for readers to send FedEx letters to the Supreme Court, asking for consideration of the issue on its merits.

The most recent campaign generated 12,096 messages, following the earlier effort that resulted in 60,128 letters.

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.

Meanwhile, a separate report has emerged in the Buffalo, N.Y., News about a woman who said she recalled being told about Obama’s birth in Hawaii. Barbara Nelson reported she was having a dinner with Dr. Rodney T. West, an obstetrician, when he discussed the birth of a baby boy to Stanley Ann Dunham, Obama’s mother.

She said she later taught Obama as a high school student in Hawaii.

WND senior reporter Jerome Corsi went to both 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 was why, if a Hawaii birth certificate exists as his campaign has stated, Obama 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?

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

Share this:

  • Reddit
  • Facebook
  • LinkedIn
  • More
  • Twitter
  • Pinterest
  • Tumblr
  • Print
  • Email

Like this:

Like Loading...

Scary, they’re actually Going to Pass This?

24 Saturday Jan 2009

Posted by jschulmansr in Austrian school, Bailout News, banking crisis, banks, Barack Obama, bear market, capitalism, central banks, Comex, commodities, Copper, Currencies, currency, Currency and Currencies, dollar denominated, dollar denominated investments, economic, Economic Recovery, economic trends, economy, Federal Deficit, Finance, financial, Forex, Fundamental Analysis, futures, futures markets, gold, gold miners, hard assets, How To Invest, How To Make Money, inflation, Investing, investments, Latest News, Make Money Investing, market crash, Markets, mining companies, mining stocks, platinum, platinum miners, precious, price, price manipulation, prices, producers, production, recession, risk, run on banks, safety, silver, silver miners, small caps, sovereign, spot, spot price, stagflation, Stimilus, Stimulus, Stocks, TARP, Technical Analysis, U.S. Dollar, volatility

≈ Comments Off on Scary, they’re actually Going to Pass This?

Tags

agricultural commodities, alternate energy, Austrian school, Bailout News, banking crisis, banks, bear market, Bollinger Bands, bull market, bullion, capitalism, central banks, China, Comex, commodities, communism, Copper, Currencies, currency, deflation, depression, diamonds, dollar denominated, dollar denominated investments, economic, Economic Recovery, Economic Stimulus, economic trends, economy, Federal Deficit, financial, Forex, futures, futures markets, gold, gold bars, gold coins, gold miners, goldbugs, hard assets, heating oil, hyper-inflation, India, inflation, Investing In Gold, 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, Precious Metals Investments, 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, Stimulus, TARP, Technical Analysis, timber, U.S. Dollar, volatility, volatility index, warrants, Water

Curious?… to find out what I am talking about? Read On… Congress shouldn’t be allowed to do this! Not only am going to include the TIME magazine article, I am including the actual link to the bill itself, the press release version. The coming runaway Inflation Train and what to do to protect yourself! Read Below…Good Investing! – jschulmansr

*********************************************************************

First Here are the links…

The American Recovery and Reinvestment Bill of 2009

The American Recovery and Reinvestment Bill of 2009 Press Summary

*********************************************************************

A Guide to Reading the America Recover and Reinvestment Bill- TIME MAGAZINE

Source: Time Magazine

Brendan McDermid / Reuters

Brendan McDermid / Reuters

“Madness is to think of too many things in succession too fast, or of one thing too exclusively” — Voltaire

The American Recovery and Reinvestment Bill of 2009 should be required reading for every citizen from billionaires to the average person. It was issued by The Committee On Appropriations and is the road map for the $825 billion that the Congress and Administration intend to put into the U.S. economy to jumpstart the economy out of the recession.

The most important part of the document may be the description of how the country was dragged into the worst economic period in its history. ( See pictures of the Top 10 scared traders.)

At the beginning of the bill, the authors write: “Since 2001, as worker productivity went up, 96% of the income growth in this country went to the wealthiest 10% of society. While they were benefiting from record high worker productivity, the remaining 90% of Americans were struggling to sustain their standard of living. They sustained it by borrowing … and borrowing … and borrowing, and when they couldn’t borrow anymore, the bottom fell out.”

If that analysis is true, then two other things must be accurate. The first is that the cause of the recession was Americans becoming overextended in their use of credit. The other one, which is a consequence of the first, is that if the government can facilitate future consumer borrowing, the economy will be righted again in short order. That would mean that more complex methods of solving the problems of the recession, such as spending money on infrastructure, would be unnecessary. It would be simpler to take $825 billion and make it available for home equity loans, enlarge credit card lines, and auto loans.

But, the authors of the bill are not willing to follow their own logic, so they have crafted another plan. The first assumption of what the program will do, and among the most important of its goals, is only mentioned in passing. “This package is the first crucial step in a concerted effort to create and save 3 to 4 million jobs.” This is a little twist on what is being said in public.

The general assumption about job creation under the program is that it will add 3 to 4 million jobs. But in the introduction to the bill the assumptions about job loss are laid out quite clearly: “Credit is frozen, consumer purchasing power is in decline, in the last four months the country has lost 2 million jobs and we are expected to lose another 3 to 5 million in the next year.”

The mathematics of the two sets of employment analysis taken together would show then that no new jobs would be created. The three million or so jobs which will be lost in 2009 will simply be replaced by three million new ones. The jobs lost late in 2008 will not be replaced in this program, leaving a two million job deficit Joblessness will stay at about 7.2%

Other than those details, the money will be well spent.

The states need help, and the federal government means to provide it: A sum of $79 billion in state fiscal relief will be provided to prevent cutbacks to key services

After the plans to help the states, cut taxes, and provide new infrastructure for the nation, the programs get a little off track.

The bill means to spend $44 million to repair the U.S. Department of Agriculture’s headquarters. About $400 million will go to repairing national monuments in Washington, which are somehow considered essential to national infrastructure.

Additionally, Congress plans to pay out $200 million to provide financial incentives for teachers and principals to do their jobs better. Another $100 million will be used to establish a set of grants to provide $100 to local governments and nonprofit organizations to remove lead-based paint hazards in low-income housing.

Perhaps the best investment in the bill is for $80 million to ensure that worker protection laws are enforced as recovery infrastructure investments are carried out. In other words, there will be a police system set up to make sure that no one with a new job working on national infrastructure with money provided by the government will have his or her rights violated.

The bill calls for over one hundred programs which Congress plans to enact. These include addressing problems as diverse as community block grants, upgrading the forestry service, bridge removal, and NASA research funding. The remarkable thing about the legislation is that almost every program is ill-defined and subject to broad interpretation and a wide variation as to how it might be enacted.

In a sentence, The American Recovery and Reinvestment Bill of 2009 will have to build a bureaucracy larger than any ever created by the US government in order to manage its many parts.

The first sentence of the bill reads “The economy is in a crisis not seen since the Great Depression.” If it requires all of these plans to get America back on the road to recovery, the process will take a decade.

— Douglas A. McIntyre

See pictures of the global financial crisis.

For constant business updates, go to 24/7wallst.com.

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

*** My Cure for the coming runaway inflation train? Read below…

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

Gold Will Shine Again in 2009 – Seeking Alpha  Part 1

By: Sean Hyman of mywealth.com

I think this one may be a shocker to many…that gold is going to be much higher at the end of 2009 than it is right now. I think it will take out its highs just above $1,000 an ounce and will head for at least $1,250 an ounce. (Gold is presently trading around $853 an ounce.)

When I was a stock broker, I hated gold. To me it was the dumbest investment on the planet. Of course I worked as a broker when gold was in a multi-year bear market.

But the more that volatile booms and busts have caused the need for more government intervention, the more of a believer I’ve become in gold.

Let’s look at several of the dynamics that have helped to form my view for gold in 2009.

South Africa is home to some of the biggest gold mines in the world. In 2008, their gold output shrank as exploding input costs caused them to close some of their most expensive mines. (Produce less of the metal and the speed of the supply shrinks which helps to support the price.)

This has been one dynamic that has helped to support prices in 2008 and that has kept gold in an 8 year bull market. Even in 2005 and 2008 when the dollar rallied, gold still held its ground. This shows a lot of strength for the metal since the dollar and gold largely trade somewhat opposite of each other (being that gold is denominated in dollars and when the dollar is rising, it tends to calm the fears for the currency which typically dulls the demand for the precious metal).

In fact, had it not been for tons of hedge fund failures and liquidations, I think gold would actually be much higher than it is right now.

Helicopter Ben & Obama will do their part to help gold out!

With the credit crisis in full swing, the Fed has responded by turning on the printing presses at full speed. This enormous increase in the money supply (which is temporarily clogged up in the banks) will eventually be unleashed on the economy. Once this happens, you will quickly see deflation erased and we may actually move into a period of hyper-inflation.

Why would I go so far as to think that? Heck, the Obama administration may print as much as a few trillion dollars to help out the banks according to former central banker Volcker.

We’ve also got another stimulus package coming within weeks according to the Obama administration.

Another reason why I feel that a huge bout of inflation will return is because of interest rates. If you’ll remember, Congress got pretty harsh with Alan Greenspan for taking rates down to 1%. They even went so far as to accuse him of causing the recent bubbles in the economy, which he denies.

Well, if the “1% cheap money” inflated things into the stratosphere, what do you think will happen with Ben Bernanke’s interest rate range of 0% to 0.25%? Could you say it would have any less of an effect? No, it will have an even greater “bubble effect” in time as the cheap money actually is released out into the economy.

Tomorrow, I’ll continue with “Part 2” of this “gold story”… So stay tuned!

Gold Will Shine Again in 2009 Part 2

by Sean Hyman

Get ready for the “economic pipes” to be unclogged and for a tidal wave of inflation to head our way!

I assure you that Obama’s economic advisors will be the “drain-o” that gets the pipes unclogged. When this happens, the Fed knows that it will have to “mop up” this excessive liquidity in the financial system.

However, here’s what I predict will happen: The Fed, while it wants to be a forecaster of the economy really just ends up becoming a “responder” after the fact to what’s going on in the economy. Therefore, between the time that the Fed starts to see the inflationary signs in the economy and starts the process of draining the excess liquidity from the economy, it will be too late. The hyper inflationary effects will already be in play. They will be “late to the ball game” yet again.

When all of this starts to happen (and possibly a bit beforehand), savvy gold investors will sense it coming and will buy up gold ahead of time…positioning themselves like a surfer that gets out ahead of the coming wave that will propel him forward.

The Fed will do its best at that point to drain the money supply and hike rates, but there are delays from when they start to act and when it actually starts to effect the economy. This “lag time” will cause a huge return of inflation in a big way that will propel gold ever higher and will eventually dilute the dollar as well.

You see, when there’s more of something in existence, it begins to hold less value. So as the money supply is quickly increasing, the dollar will eventually feel the effects of it. Remember, there’s that delayed “lagging” period which is why it hasn’t already been felt even now.

However, as sure as the sun is coming up tomorrow…it’s coming. So get prepared ahead of time. For, the key to successful investing is to buy just ahead of the massive move. This requires an investor to “think ahead”. You can’t just see what’s happening at present and prosper like you should in your investing. It requires one to be “forward looking” and thus “forward thinking”.

When all of this unfolds, investors will buy gold (which is essentially exchanging their dollars for gold) as they seek safety, liquidity and an “insurance policy” against runaway inflation.

Gold production will continue to shrink and Central Banks will hold onto their gold in 2009!

So with the economy deeply damaged, unemployment claims hitting almost 600k as of this writing, there’s not going to be a huge incentive for investors to sell gold. That’s why gold has only come off of its top by 17.9% and stocks have been 40+% off of their highs on average. You can see its underlying strength just in that fact alone.

Also, remember that gold supplies will continue to tighten in 2009 just as they did in 2008. Why? Africa’s production of gold sank 14% which was the lowest levels since 1899. That’s serious! But it’s not just a South Africa story. U.S. gold production fell 2% last year. While China (which has now become the world’s biggest producer of gold) had their production rise 3% last year, the “net” result collectively among all countries is a net slowdown in gold production.

Central bank selling in gold was down a full 42% last year. And you’d be an idiot of a central banker to sell a bunch of gold in 2009 with the U.S. and global economy still hobbling along. Therefore, you can count on these guys not adding to the selling.

Therefore, get ready to buy gold, sell dollars and buy foreign currencies like the euro and especially the Aussie dollar which is greatly helped by rising gold and other commodity prices.

Most of the increase in gold and selling of dollars may come more in the 2nd half of the year than the 1st half due to the delayed effect of Fed policy and as the Obama administration starts to get its feet wet in tackling the economic woes.

But be aware and watch for the change just in case it happens even a bit sooner than I think.

Gold consolidates its multi-year gains as it catches its breath and prepares to run “ever higher” in 2009!

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

2009 Gold Outlook

2009 Gold Outlook

How To Invest in Gold in 2009

By Luke Burgess
Monday, January 5th, 2009

The investment markets are yielding to the fact that the global economy will remain weak for the better part of 2009.

As a result, investors will continue to seek safe havens.

Under normal conditions, these safe haven investments would include land and real estate. These assets have intrinsic value; or in other words, their value will never fall to zero. But with falling prices, investing in real estate is out of the question for most people right now. And there’s little doubt that investors will look elsewhere for safety against financial crisis.

The best safe haven asset in the world right now is still gold because it is never considered to be a liability.

And we believe that safe haven investment demand will drive gold prices during 2009. With this in mind, we would like to present a broad overview of Gold World‘s 2009 gold outlook. But before we get into that, let’s review what happened to gold prices in 2008.

Gold Was One of the Best Investments of 2008

In March 2008, gold prices hit a record high of $1,033 an ounce as the gold bull market entered its seventh year of life. This was followed by a normal 18% correction, which drove gold prices back down to $850 an ounce.

Gold prices subsequently rebounded and were once again closing in on the $1,000 level in mid-July. At the same time, however, the fundamental and psychological effects of the slowing housing and credit markets were just beginning to devalue significantly the investment markets across the board.

As a result, many long gold positions had to be sold in order to cover losses from investments in other markets. Over the next several months, this forced selling pressure pushed gold prices down.

Gold prices were also held down during the second half of 2008 as the U.S. dollar enjoyed a +20% rally. Foreign governments, institutions, and banks began buying the U.S. dollar, which despite a legion of problems continues to be the world’s most important reserve currency, as a hedge against domestic economic turmoil.

20090105_2009_gold_outlook.png

These factors contributed to a significant drop in the price of gold, which officially bottomed out for the year at an intraday low of $683 an ounce in October 2008.

Gold prices have subsequently bounced off of the $700 level as major selling has dried up, and fresh buying has come into the market.

Despite three 20% corrections and serious deflation in the market, gold exited 2008 with a positive 5.4% gain for the year. Although subtle, this gain outperformed every major equity index and commodity in the world. Here are just a few examples…

Index/Commodity
Percent Change During 2008
Dow Jones
-34%
NASDAQ
-41%
S&P 500
-39%
TSX -35%
TSX Venture -74%
Oil
-55%
Silver
-23%
Copper
-54%
Gold
+5%

This made gold one of the best investments of 2008.

And the 2009 gold outlook looks just as strong.

Despite a bit of downside in the immediate future, we expect gold to have a stellar year.

Global economic turmoil and deflation will undoubtedly continue to influence gold prices in the near-term. A short-term pullback in gold prices from current levels to $800—maybe even a bit lower—before a recovery is not out of the question. However, we expect gold prices to break new records during 2009.

For our current perspective, we expect gold prices to reach as high as $1,300 during 2009, which would be a profit of over 50% from current levels.

Gold prices in 2009 will be supported more heavily by supply/demand fundamentals than in the previous years of this gold bull market.

As we’ve previously discussed, during the third quarter of 2008, world gold demand outstripped supply by 10.5 million ounces. This deficit was worth $8.5 billion and was the largest supply/demand deficit since the gold bull market of the 1970s.

Official 4Q 2008 world gold supply/demand figures will be calculated and reported later this month. Gold World will report them to you when the data is released.

In the meantime, though, all estimates suggest that there will be another very large deficit in world gold supplies from the fourth-quarter, with investment demand continuing to drive the market.

We expect that a continuing surge in investment demand could push gold prices as high as $1,300 at one point during 2009.

There will likely be a bit more volatility in the gold market in 2009 as more and more speculators come into the market. It is likely that the gold market will experience three or four price peaks (selling points) during 2009.

How to Invest in Gold for 2009

As we expect a near-term drop in gold prices as a result of continuing deflation, we are advising our readers to hold off on any physical gold buying for the immediate future. As previously mentioned, gold prices could dip back down to $800 before recovering again.

Nevertheless, we expect 2009 to be another great year for gold investors.

Good Investing,

Luke Burgess and the Gold World Research Team
www.GoldWorld.com

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

Tomorrow we’ll check on what’s the latest on the Obama eligibility issue.

Be Blessed and Remember: Dare Something Today Too!


Share this:

  • Reddit
  • Facebook
  • LinkedIn
  • More
  • Twitter
  • Pinterest
  • Tumblr
  • Print
  • Email

Like this:

Like Loading...

Are You Invested In Gold Miners?

23 Friday Jan 2009

Posted by jschulmansr in bull market, Comex, commodities, Copper, Currency and Currencies, economic trends, economy, Fundamental Analysis, futures, futures markets, gold, gold miners, hard assets, How To Invest, How To Make Money, inflation, Investing, investments, Latest News, Make Money Investing, Markets, mining companies, mining stocks, palladium, physical gold, platinum, platinum miners, precious, precious metals, price, price manipulation, prices, producers, production, rare earth metals, silver, silver miners, small caps, spot, spot price, stagflation, Stocks, Technical Analysis, Today, U.S. Dollar

≈ Comments Off on Are You Invested In Gold Miners?

Tags

agricultural commodities, alternate energy, Austrian school, Bailout News, 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, Federal Deficit, 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

Good Morning, As I am writing this post Gold is up another $17 to $876/ oz. It would appear barring sudden dollar strength, we have succesfully broken the upper resistance level of $860 to $870; if we hold here $900+ will be the next level. Are You Invested In Gold Miners? If so, today’s post is a must read. – Good Investing!- Remember to Dare Something Worthy Today Too! – jschulmansr

ETF vs. Mutual Fund: Two Ways to Invest in Gold Miners – Seeking Alpha

By: Don Dion of Fidelity Independent Advisor

Whether saddled to mutual funds like Fidelity Select Gold (FSAGX) or ETFs like Van Eck’s Gold Miners Index (GDX), gold investors have experienced a wild ride over the last year. While the recent volatility in gold prices is certainly enough to give investors pause, a good argument exists for the presence of a gold ETF or mutual fund in a well-diversified portfolio. Both FSAGX and GDX help investors mitigate the pitfalls of falling currencies and economic slowdowns. Since gold is a physical asset, it tends to maintain its value over time, giving wary investors an added measure of security as time-tested institutions vanish in the face of economic crisis.

FSAGX and GDX both invest assets in companies that are primarily engaged in the exploration, mining, processing and dealing of gold. As of FSAGX’s semiannual report in November 2008, the fund held seven out of ten of the same top ten holdings. While GDX tracks the NYSE Arca Gold Miners Index, comprising 32 small, medium and large companies incorporated in any gold index, FSAGX is managed by Joe Wickwire and is composed of 69 holdings. The similarities between the two funds are striking, but some investors prefer having a human, rather than an index, at the helm. The larger number of holdings in FSAGX also means a smaller concentration of assets in top holdings, reducing the exposure that investors have to any one portfolio component.

The top component for both FSAGX and GDX is Barrick Gold Corp. (ABX), constituting 13.77% of GDX’s portfolio as of January 13 and 9.5% of FSAGX’s portfolio as of late November 2008. The Toronto-based exploration company holds interests in a variety of gold resources in South America, Africa and Australia. At the end of 2007, ABX had 124.6 million ounces of proven and probable gold reserves, 1.03 billion ounces of contained silver within gold reserves, and 6.2 billion pounds of copper.

Goldcorp (GG), the second-largest holding for both GDX and FSAGX, saw shares battered with a series of downgrades and target price reductions in early January, after releasing lower guidance for 2009. Some analysts, however, have dismissed the tarnish to Goldcorp’s shares as an overstatement of the reality of an industry-wide slowdown. In GG’s latest report, the adjusted forecast calls for 50% growth in production through 2013—only 5% lower than analysts’ estimates. In 2008, GG produced a hefty 2.3 million ounces of gold, achieving low margins on a scale larger than those of other competitors such as Yamana Gold (AUY) and Agnico-Eagle Mines (AEM).

While the most obvious difference in deciding between an ETF and mutual fund is the fees associated with the two different investments, investors should consider several factors when choosing FSAGX or GDX. Even though the expense ratios of both funds are well below the category average—FSAGX is 0.86% while the ratio for GDX is 0.59%—many investors have gravitated to the ETF fund in recent years for the additional edge.

Investors who own FSAGX will have to hold shares of the fund for longer than 30 days in order to avoid a 0.75% redemption fee—a nerve-racking setback for nervous investors who prefer the option of getting in and out of investments quickly. As opposed to the once-a-day pricing method of mutual funds, ETFs like GDX trade continuously throughout the trading day, but this flexibility also brings an increased measure of volatility. ETFs tend to be more affected by changing news events than mutual funds are, causing surges and dips in price avoided by comparatively steadier mutual funds.

The differences between GDX and FSAGX are more apparent when comparing fund performance in recent months. GDX dropped more than 63% from July 14, 2008, to October 28, 2008, but it has since recovered 35%. FSAGX, however, fell only 60% from July 14 to October 28 and has recovered 36% in the period since. While their price movement is relatively similar, investors fearing intraday volatility may feel more comfortable with FSAGX than GDX, especially given its longer track record.

While putting assets into gold could prove to be a profitable move for many investors, it is important for prospective GDX and FSAGX buyers to keep the role of this commodity in perspective. With the ultimate success of gold investments weighing heavily on continuing inflation concerns, placing a bet on gold—or any narrow sector—could whipsaw investors as the inflation battle takes shape under the new administration. For those investors seeking the added security that gold could add to their portfolios in 2009, both GDX and FSAGX, with their solid track records and investor interest, are good places to start.

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

My Note: Mutual Funds (and there are many in addition to the above), are a good way to get a nice spread (basket) of different Gold Miners. In addition, I personally like to have holdings in Individual Companies too! I have 2 different Mutual Funds, in addition to holdings in many of the above mentioned companies. I also like a lot of the mid tier and junior Gold Miners too. I generally try to invest in companies that have production (or about to produce), with a lot of cash on hand (due to financing difficulties for comapnies). The whole sector has been beaten down in prices and if you look carefully, you can find many companies right now that are selling at or for less than actual book value. Personally, I am loading up! As always, do your due diligence and read all the prospectuses; and/or consult your investment advisor.

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

Kinross Raises More Capital; Gold Miners Look Strong – Seeking Alpha

By: Marc Courtenay of Check The Markets.com

Kinross Gold (NYSE:KGC), one of the world’s best performing gold stocks, announced a public equity offering of 20.9 million common shares at $17.25 per share, with gross proceeds of about $360.5 million, to enhance the company’s capital position following the funding of recent acquisitions.

In 2008, the gold and silver miner bought Aurelian Resources for around $809 million. Since that time, the shares of stock have had average daily volume of over 11 million shares on the NYSE and traded in a 52-week range of $6.85-$27.40.

The Canada-based company has also granted the group of underwriters, led by UBS Securities Canada Inc., an overallotment option to purchase up to an additional 3.135 million common shares at the offering price. This option is available for 30 days after the offering closes. If this option is excercised in full, it will bump up the total proceeds to about $414.6 million.

The offering is scheduled to close on or around February 5, 2009. The company has 665 million shares outstanding.

Kinross ranks as number one global gold pick among a number of analysts and investors. Production for the group is anticipated to grow around 30% this year to around 2.45 million ounces.

The new money now being raised is targeted for general corporate purposes after recent acquisitions depleted around $180 million of Kinross’s existing cash. Just two months ago, Kinross shelled out $250 million on a 6 million ounce gold deposit in Chile.

The last quarter’s earnings growth was up an impressive 64% year-over-year, the balance sheet looks better than average with a total debt-to-equity ratio of just .017 and total cash of over $720 million.

The Kinross acquisition may have upped the tone for other gold miners. Harmony Gold (NYSE:HMY), the world’s fifth biggest gold miner by ounces produced, on December 22 announced the raising of R979 million before costs, by placing 10.5 million shares at an average price of R93.20 each between November 25 and December 19 2008.

The fresh capital is earmarked mainly to further pay down Harmony’s debt, which is targeted, on a net basis, to be around zero by mid-2009.

Among other capital raisings, during November, Agnico-Eagle Mines (NYSE:AEM), a leading Tier II gold digger, raised $252 million in a seemingly effortless offering.

Overall, when it comes to healthy, proactive and well-managed gold mining companies, the offerings are “in response to strong investor demand.”

Although right now I have both a long and a short position with KGC, I won’t be buying any more until the price per share corrects at least 20% below present levels. But I’m impressed with both the fundamentals of Kinross and the way the investment community views them so favorably.

KGC, along with Goldcorp (NYSE:GG), Barrick Gold (NYSE:ABX), Yamana Gold (NYSE:AUY) and IAM Gold (NYSE:IAG) are shares I want to be accumulating for the year ahead.

The market volatility should help us to buy at lower prices, but the whiff of future inflation and the popularity of gold as a monetary alternative may keep share prices from falling as low as I would like. Patience though, is usually rewarded.

Disclosure: Author holds both a long and short position in KGC

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

Next – Do we have a potential Takeover or Meger Forming? – Read this next article… 

Flush Kinross Likely Looking for a Deal with Yamana-Credit Suisse- Seeking Alpha

Source: Financial Post Trading Desk

If Kinross Gold Corp. (KGC) had $705-million in cash at the end of the third quarter, why did it decide to raise another $360-million in a bought deal offering of 20.9 million common shares at $17.25 each?

The company said it will use the money to bolster its capital position and for general corporate purposes, but investors are surely wondering if any acquisitions are in the making.

An over-allotment option of 3.14 million shares would bring total proceeds from the offering to $415-million. Credit Suisse analyst Anita Soni also noted that Kinross is expected to have another $541-million in operating cash flow in 2009 (based on $700 per ounce gold), while it has $700-million in obligations this year (including capex of $460M).

“Kinross is well funded with its current cash and cash flow position and does not require additional funds for its current pipeline of growth,” she told clients, adding that the company is strengthening its coffers to capitalize on acquisition opportunities to shore up its growth profile.

Ms. Soni said “tack on” acquisitions like the Lobo Marte gold project deal with Teck Cominco Ltd. (TCK) for about $250-million, plus a royalty, in November, are possible. However, she also said a larger transaction in the senior or mid-tier space could surface, with Yamana Gold Inc. (AUY) and Teck’s Pogo mine as likely candidates.

Ms. Soni said:

Yamana has a good project pipeline but it does not have the near-term capital to fund that growth. An acquisition of Yamana would deliver a project pipeline and growth from 2009-2011 even using our conservative forecasts for Yamana. It is also likely that Kinross would be able to realize additional ounces beyond what we forecast for Yamana given Kinross’s ability to fund growth.

Yamana’s current multiple based on metal and share prices is around 1.2x, while Kinross is at 1.5x.

The analyst added that Agnico-Eagle Mines Ltd. (AEM) is too expensive, while Goldcorp Inc. (GG) and Barrick Gold Corp. (ABX) are too big in terms of market capitalization.

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

That’s it for today, Gold now up $19 at $878/oz! – Good Investing- jschulmansr

Dare Something Worthy Today!

Share this:

  • Reddit
  • Facebook
  • LinkedIn
  • More
  • Twitter
  • Pinterest
  • Tumblr
  • Print
  • Email

Like this:

Like Loading...

Are We Getting Ripped Off? Latest Bailout and Gold News

21 Wednesday Jan 2009

Posted by jschulmansr in agricultural commodities, alternate energy, Austrian school, Bailout News, banking crisis, banks, Barack Obama, bear market, bull market, capitalism, central banks, Comex, commodities, communism, Copper, Currencies, Currency and Currencies, deflation, depression, dollar denominated, dollar denominated investments, economic, economic trends, economy, Federal Deficit, Finance, financial, Forex, Fundamental Analysis, futures, futures markets, gold, gold miners, How To Invest, How To Make Money, inflation, Investing, investments, Latest News, Make Money Investing, Markets, mining companies, mining stocks, Moving Averages, oil, palladium, physical gold, platinum, platinum miners, Politics, precious, precious metals, price, price manipulation, prices, producers, production, rare earth metals, recession, Religion, silver, silver miners, spot price, stagflation, Stocks, Technical Analysis, Today, U.S. Dollar, volatility, warrants

≈ 3 Comments

Tags

agricultural commodities, alternate energy, Austrian school, Bailout News, 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, Federal Deficit, 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

Are We Getting Ripped Off? Read Today’s Post dealing with the Bailout, Gold Price Manipulation and more. I’m back, we have a new President, what does this mean for your investments… Read On and Good Investing! – jschulmansr

Preventing The Greates Heist In History- Seeking Alpha

By: Whitney Tilson of Value Investing

There’s currently an idea to fix the financial system that’s getting quite a bit of traction: an RTC-type program whereby the government would buy $1 trillion of troubled assets from struggling U.S. banks, with the goal of restoring them to health so they can begin lending again, leading to an economic recovery.

 

The problem with this idea (let’s call it “New RTC”) is that either the government will pay market prices for the toxic assets – in which case, it will simply accelerate the collapse of our financial system – or pay above-market prices, in which case taxpayers will likely suffer big losses.

 

 

De-Leveraging Is Not Deflation-Seeking Alpha

By: Paco Ahigren of Ahigren Multiverse

“Inflation, as this term was always used everywhere and especially in this country, means increasing the quantity of money and bank notes in circulation and the quantity of bank deposits subject to check. But people today use the term `inflation’ to refer to the phenomenon that is an inevitable consequence of inflation, that is the tendency of all prices and wage rates to rise. The result of this deplorable confusion is that there is no term left to signify the cause of this rise in prices and wages.”

— Ludwig von Mises

It’s true that just about every asset class is coming down in price right now. This, however, is not deflation — as I have said so many times recently, much to many readers’ unqualified chagrin. To the contrary, these declines are the products of de-leveraging — not deflation — and the distinction is nearly incalculably important, although the subtlety seems to elude even the most astute these days.

If the previous premise is true (which it is), any removal of money from the economy would eventually result in an increase in the value of our currency, relative to everything else. And that, in turn, would eventually translate into lower prices in dollars. But that’s clearly not what is happening. No, the Fed is printing money, sending the amount in the economy higher than ever seen in U.S. history. That’s not deflationary. That’s inflationary.

Just so you’ll know, here’s the definition of inflation I’m using. And before you pooh-pooh it with too much eagerness, remember that one of its authors, F.A. Hayek, won the Nobel Prize in economics in 1974.

Look, the thing we should be worried about is relative value, not “inflation,” per se. It’s not about the growth of M0, or M1, or M2 (or even M3, if you keep up with shadowstats.com), so much as it is about what the money supply is doing relative to everything else that is happening. I know assets are falling in price — believe me, I get no shortage of reminders every single day. But the amount of money in the system — not just M0 — is increasing at a tremendous rate. I won’t argue that the relative value of things like real estate and equities are going to continue to drop — maybe even dramatically, and for a long time — in terms of demand (or lack thereof). No, what I’m most concerned about is that demand will stay extremely low, and yet prices will rise anyway because of the increase in the amount of money in the system.

But it’s not just money; it’s also Treasuries. The Fed has specifically stated that its objective is to stimulate “inflation” (by its definition). It wants prices to rise, and it’s going to do everything it can to find success. But the amount of money in the system is unprecedented. When the Treasury bubble starts to collapse, yields are going to explode. Yes, the Fed will probably print more money to buy down the long-end of the curve, but how long will that work? Some people say years, but how? Do you really think the Chinese and the Japanese are going to keep funding that sort of behavior? Or even more importantly, do you think they’re just going to sit on their current holdings? Probably not, and if they start dumping Treasuries, yields are going much higher.

It’s not a matter of if this is going to happen. Yields can’t stay where they are for any sustained amount of time, and once they start rising, so will prices. But will demand for, say, houses have increased? No. Cars? No. Boats? Televisions? No. Why? The American consumer is tapped out.

Credit card companies are tightening limits prodigiously. Teaser rates are all but gone. Home equity has dried up. The consumer has driven two-thirds of our economy for at least the last few decades, and now the consumer is dead. There’s another aspect to this that I won’t go too deep into: the American consumer protects his or her credit score for one reason — to obtain future credit. But the consumer also knows that loans have dried up — not just today, but for the very distant future as well. You know these consumers have to be thinking about defaulting; if they can’t get loans anyway, why would they not default on thousands of dollars in unsecured credit card debt? I plan on writing more about this in future articles, but suffice it to say, I think credit card companies are going to give us the next blow to our collective stomach, and it’s going to hurt.

So here we have a situation in which demand is gone, and yet prices and rates are rising — because of inflation (printing money) and the Treasury collapse. And that’s the point: it’s not going to come from just one source. It’s not just going to be inflation (printing money). It’s not just going to be the collapse in Treasuries. It’s not just going to be the nearly unfathomable costs of the stimulus packages that are coming online in the next two years. It’s going to be the confluence of all of it. And if I’m right about the continued deterioration in credit markets, things will be even worse.

You think it’s not different this time? Add it all up, in real dollars — the staggering amount of debt, the parabolic rise of currency in the system, the annihilation of real-estate investment, and the demise of the consumer. $8.5 trillion committed to bailouts and stimulus packages. Oh, yes it is different this time. It’s very different.

Credit cards didn’t even exist in 1930, and the dollar was backed by gold. Credit cards barely existed in 1973. Nixon had just taken us off the gold standard, and look what happened? Volcker was immensely lucky to have stopped hyperinflation, and look at the extreme measures he had to employ to do it.

Of course, every time I bring all of this up — which is a lot lately — somebody starts talking about the velocity of money. And pretty soon after that, somebody starts talking about the multiplier effect.

Yes, the U.S. employs a fractional reserve system, and while that system certainly lends to rising prices and yields, the amplifier effect is not inflation. Like the printing of money, the fractional reserve system is only one ingredient in the poison that lends to the ultimate catastrophe inspired by central banks: rising prices and increased costs of borrowing.

And then there’s velocity…

While I am eternally grateful to my critics for forcing me to defend the theories I hold dear, I sometimes fatigue of the incessant snapping at my heels by people who want me to know that the velocity of money has slowed down. I know the velocity of money has slowed. It doesn’t matter. It’s not going to stay this low for long, and when it starts speeding up, it’s not going to be a “good thing.” Treasuries are going to break, rates and prices are going to rise, and all that money pressing against the dam is going to find a crack. Why? It has to. People will flee from dollars that are losing value. They will extract all the dollars sloshing around the system, and they will buy commodities and durables in order to preserve the value of their wealth.

Remember, just because the dollar is losing value does not mean that the concomitant subsequent rise in certain asset classes necessarily means that demand for all assets has increased dramatically — as it did during previous eras of easy money. Demand for assets economy-wide can continue to wane even as people spend dollars as fast as they can get them in the midst of rising prices. And this is a very important distinction: prices can rise because of demand, but prices can also rise because of excessive increases in the amount of money in the system. If prices are rising without a simultaneous increase in demand, well, I can’t think of a more dangerous economic environment to be in.

You don’t believe it can happen? You think there’s a huge demand for houses, cars, and boats in Zimbabwe? Prices there are rising exponentially, but there is very little demand for assets — other than staples, of course. What do you think their velocity of money is?

The other day I wrote that Treasuries and the dollar are not “safer” than gold, and for my efforts I was heckled by several readers. Ultimately, however, flight-to-quality will seek the true risk-free rate of return, and this is yet another factor that will contribute to the imminent ferocity of the move that’s coming. Once Treasuries unwind, people and institutions will scramble to find a place to put the money they had once placed in the “safety” of U.S. government debt. And unless you know of a medium whose historical consistency and safety surpasses gold’s, that will be the place investors find haven.

Just for future reference: when I say the dollar’s going to fail (which it is), and you’re hovering over your keyboard, poised like some bird-of-prey, ready to strike me with all the ire of God-upon-Sodom, will you try to remember that I acknowledge velocity is, at least for the time-being, near zero. Will you also try to remember that I don’t believe the massive increase in currency alone will not be responsible for imminent rising rates and prices? In fact, I think Treasuries are going to play a greater role in the beginning.

Also, I agree with many of you that my timing may be a bit premature, and I exited my TBT after the last run-up. Unfortunately, today the stock market and Treasuries are getting crushed as gold rallies. I wouldn’t want to declare myself “right” based just on the behavior of these markets in recent days. That would be stupid. And yet I sit here and watch TBT move higher, wondering if getting out was even more stupid.

To add to my trepidation, some sort of manager in the South Korean finance ministry came out over the weekend and announced that the time has come to sell U.S. Treasuries. How do you think that made my stomach feel? Of course, Bernanke keeps promising to do battle with the long end of the curve, so maybe he’ll make good on his threat and I can find a point to get back in comfortably.

Of course, if I miss the move because I listened to some of you cynics. Well, at least I still own gold.

Disclosures: Paco is no longer short U.S. Treasuries (although he hopes to be again soon). He is long physical gold, and the Proshares Ultra long gold ETF (ticker: UGL).

Copyright 2009, Paco Ahlgren. All Rights Reserved.

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

On Gold Price and Market Manipulation 

Questions Begging Answers- GoldSeek.Com

By: Rob Kirby of Kirby Analytics

To say that markets have been behaving “strangely” recently is an understatement.  In recent weeks and months we’ve been witness to historic lows in sovereign interest rates in-the-face-of record amounts of debt being issued by governments?  We’ve seen the price of gold behave counter intuitively by “not rising” in-the-face-of unprecedented systemic global economic malaise?  Last, but not least, we’ve witnessed a “complete flip-flop” in the traditional pricing of Brent Crude Oil [IPE-London] versus West Texas Intermediate [NYMEX-N.Y.]?  

 

So we have the price of gold, the price of crude oil and interest rates – three items vital to the integrity of the U.S. Dollar – ALL trading in total disregard for their underlying fundamentals?

 

The following is a thought provoking analysis with commentary:

 

The Situation In Gold

 

First and foremost it is imperative that everyone realize and understand that Gold “is” Money.  We know that gold is money because every Central Bank in the world carries gold on their balance sheets as ‘an official reserve asset’.

 

With that in mind, folks would do well to read one of James Turk’s latest articles titled, The Fed’s blueprint for market intervention .  In this article, Turk offers commentary on a recently unearthed 1961 document from the archives of the late, long-time former Chairman of the Federal Reserve, William McChesney Martin Jr. which details in the Fed’s own pen; their plans to intervene surreptitiously in the currency and gold markets to support the dollar and to conceal, obscure, and falsify U.S. government records so that the intervention would not be discovered.  In Turk’s words,

 

“In short, [the newly unearthed document] lays out what the Treasury and Federal Reserve needed to do in order to begin intervening in the foreign exchange markets, but there is even more. This document plainly shows what happens when government operates behind closed doors. It also makes clear the motivations of the operators of dollar policy long described by the Gold Anti-Trust Action Committee and its supporters — namely, that the government would pursue intervention rather than a policy of free markets unfettered by government activity. The run to redeem dollars for gold had put the government at a crossroads, forcing it to make a decision about the future course of dollar policy. This paper describes what the government would need to do by choosing the interventionist alternative.

This document provides primary, original source supporting evidence that GATA has been right all along.” 

 

In Feb. 2007 here’s what the Royal Bank of Canada’s Chairman, Tony Fell had to say, confirming unequivocally that gold is money,

 

 

“At Royal Bank of Canada, we trade gold bullion off our foreign exchange desks rather than our commodity desks,” says Anthony S. Fell, chairman of RBC Capital Markets, “because that’s what it is – a global currency, the only one that is freely tradable and unencumbered by vast quantities of sovereign debt and prior obligations.
“It is also the one investment and long-term store of value that cannot be adversely impacted by corrupt corporate management or incompetent politicians,” he adds – “each of which is in ample supply on a global basis.”

 

In short, says Fell, “don’t measure the Dollar against the Euro, or the Euro against the Yen, but measure all paper currencies against gold, because that’s the ultimate test.”

 

 

 

 

 

Fell’s admission coupled with the recently unearthed account of the Fed’s game plan shows that gold “is” and always has been feared as competition for the U.S. Dollar and a game plan has long been in place to thwart it.  This explains why economic data has been falsified and the price of gold has been surrepticiously managed and interfered with by the United States Treasury and the Federal Reserve.

 

The mounting evidence is this regard is so compelling that from this point forward any ‘economist’ attempting to explain our current situation without prefacing their explanation with an EXPLICIT ACKNOWLEDGEMENT that our capital markets are not free and are in fact RIGGED by officialdom – their analysis is not worth the time to read it.  In this regard, perhaps never have more prescient words been uttered than GATA’s Chris Powell in Washington in April, 2008 – when he opined, There are no markets anymore, just interventions.

 

The recent decoupling in price of gold as measured by the spread between the futures price and the cost to obtain physical ounces is a stark reminder that smart money is beginning to repudiate fiat money by seeking tangible ownership of goods perceived to posses value instead of derivative ‘promises’ to deliver the same.

 

The Oil Picture

 

Back in June, 2007, Market Watch reported,

 

Normally, Brent crude costs $1-$2 less than WTI crude, according to James Williams, an economist at WTRG Economics. At its peak, the price spread between the two topped $5, according to his data.

 

The article went on to explain,

 

WTI usually trades at a premium to Brent “because of the slightly higher quality, and the extra journey” oil tankers have to take to get the oil to the U.S., according to Amanda Lee, a strategist at Deutsche Bank. So “WTI minus dated Brent should be roughly equal to the freight rate,” she said. Indeed, “crude-oil prices usually depend on two things: quality and location,” said Williams. “The greater the distance from the major exporters, the greater the price.”

 

But here’s what’s happened recently in the global crude oil market:

 

 

 

 

 

 

Brent Crude trading at a 7 Dollar premium to West Texas Intermediate is like the SUN rising in the west and setting in the east – and no-one asking any questions why?

 

Thanks to the unearthing of the Fed’s Playbook Document, referenced above, along with cumulative knowledge of the existence of the President’s Working Group On Financial Markets [aka the Plunge Protection Team]; we know that interference in strategic markets with national security implications is now practiced commonly by the Government and the Fed working together.  No other explanation for this distortion is plausible other than NYMEX regulators like the Commodities Futures Trading Corp. [CFTC – Plunge Protection Team members] are more brazen and actively complicit in market rigging of strategic commodities than their London counterparts. This manipulation is all being done in desperation; to preserve U.S. Dollar hegemony by perpetuating the illusion that inflation is being held at bay.  Ample anecdotal evidence exists in a host of articles – particularly relating to derelict CFTC oversight of COMEX gold and silver futures – archived at kirbyanalytics.com to support this position.

 

Spiking VLCC Rates Reflect “The Movement to Tangibles”

 

The “unusual” premium for Brent Crude is even more perplexing given that crude oil shipping rates [unlike their dry goods shipping counterparts, as depicted by the Baltic Dry Index] for VLCCs [very large crude carriers] have, as recently as Dec. 2008, been enjoying robust and improving charter rates,

 

 

Last week the spot rate for Suezmax tankers was in the low $40k per day range. Yesterday, I check the rates and they have popped to over $90k this week! VLCC (very large crude carriers, i.e. supertankers) rates have not jumped as much but appear to be following the trend. So what is the deal here? Oil prices are falling and so is the apparent global demand for oil. Are not oil tankers just sitting around idle like the dry bulk carriers?
The answer is somewhat counter intuitive. The spike in spot tanker rates is actually the result of the low oil prices. Many tankers are being leased on the spot market as storage tanks. Oil producers, for whatever reason, do not want to significantly slow their oil production, but at the same time do not want to sell it for $45 a barrel. So they are leasing tankers to store oil in the hope or belief that oil prices will recover shortly. Two names in news articles that I have read doing this are Royal Dutch Shell and Iran. The majority of the planet’s oil production is owned by national oil companies that have policy and employment as well as financial reasons to keep the oil flowing. So at least in the short term, the current low oil prices are a boon for tanker owners.

 

Oil tanker companies, like their dry cargo brethren, can sign their ships to either long term, multi-year leases or charter them on the spot market where they are leased for a single voyage at the current spot rate.

 

 

 

 

 

The fact that “smart money” is now paying elevated prices to lease very large crude carriers [to store physical crude for later sale] is further evidence that faith in fiat money is waning simply because – you can do the same “trade” on paper – utilizing futures – without the bother and nuisance of leasing ships and handling the physical.  Ask yourself why smart money has recently become engaged in buying ‘relatively illiquid’ physical crude oil, in a world allegedly awash in the stuff, for resale at a later date – instead of playing futures, accepting promises and holding cash?

 

Smart money is in the process of losing confidence in cash.

 

Interest Rates

 

It is vital that everyone understand that the function of interest rates in a system of usury is to solemnly act as the efficient arbiter of capital – rising to restrict money / credit growth when the economy overheats and falling to create the opposite when the economy cools.

 

Interest rates no longer serve this function.

 

As deceitfully disastrous as the surreptitious interventions in the crude oil and gold markets has been – they pale in comparison to the travesty which has been perpetrated through the premeditated hobbling of usury. 

 

         

 

The roots of this most wicked experiment are traceable to the appointment of Alan Greenspan as Chairman of the Federal Reserve and then to academia – Harvard – where Robert Barsky and Lawrence Summers co-authored an academic research paper in the 1980s titled, Gibson’s Paradox and the Gold Standard.  The “elevator speech” of what the paper examined was the co-relation between bond prices, inflation and the price of gold and, by extension, theorized that interest rates could be driven down [or kept low] – without sacrificing the currency – in the face of and despite profligate monetary policy so long as gold prices declined or did not rise.

 

  

 

After a stint as Chief Economist at the World Bank, Mr. Summers brought this “theory” to Washington mid-way through the first Clinton Administration [late1993] as Under Secretary of Treasury to Robert Rubin where he began laying the groundwork – with co-conspirators Greenspan, Rubin and Clinton – for the implementation of his “theoretical research”:

 

 

 

Gold price suppression began in earnest concurrently with changes in how the Office of the Comptroller of the Currency [OCC] begins records the mushrooming growth of derivatives [mostly interest rate swaps which – absent end user demand – only create artificial demand for government bonds]:

 

 

 

The Federal Reserve acting in cahoots with the U.S. Treasury utilizing the futures pits in N.Y. [COMEX] and the obscenity that has become J.P. Morgan’s Derivatives Book – the Fed / Treasury combo seized control of both the gold price and interest rates.  The mechanics of how interest rate swaps were utilized to suppress interest rates is chronicled and explained in detail at Kirbyanalytics.com in a paper titled, The Elephant in the Room.

 

Subscribers are reading about the logical implications, and what comes next, as a result of the market manipulations outlined above as well as actionable suggestions to help insulate your investment portfolio from the inevitable fallout.

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

Gata’s Tenth Anniversary: Gold Manipulation Evidence Mounts-Gold Seek.Com

By: Bill Murphy of LeMetropole Cafe 

“Faced with the choice between changing one’s mind and proving that there is no need to do so, almost everyone gets busy on the proof.” … John Kenneth Galbraith

“An error does not become truth by reason of multiplied propagation, nor does truth become error because nobody sees it.” … Mahatma Gandhi

 

 

 

GO 

 

 

GATA!
 

 

 

 

This week marks GATA’s tenth anniversary of our efforts to expose the manipulation of the gold market. In another few weeks we will mark the tenth anniversary of my appearance on CNBC (interviewed by Ron Insana) … the first and last GATA appearance on the US TV media to date … for once they heard what GATA had to say, we have been blackballed ever since. It also marks a shameful period for the US financial market press, which is now clamoring for answers as to how we ever got in the financial market/banking mess we are presently facing. For that answer they ought to first look at themselves and their dismal way of kowtowing to the rich and powerful, and banning those who are willing to challenge the Orwellian grip on what Americans are allowed to hear and know.

America is facing quite a dichotomy at the moment. We are on the Inaugural Eve of our first black President, with all the hopes and dreams he is envisioning for our country. At the same time we are enduring the most horrific financial crisis since the Great Depression.

President-elect Obama, a superb orator, is calling for Americans to pull together to effect the CHANGE he called for in his campaign, and for all of us to contribute individually to make that change happen. He has wisely warned of the tough times ahead while going all-out to ready policies ASAP which he believes are the correct way to remedy the growing economic problems of the day.

He has also assembled an economic team of advisors which are acclaimed and generally very highly regarded … including Robert Rubin, Lawrence Summers, Timothy Geithner and Paul Volker. Unfortunately for the GATA camp, they are the ALL-PROS of the gold price suppression scheme. It is almost like our worst nightmare. On paper it represents anything but change as far as US gold policy is concerned, and has the potential to make our investment lives miserable for years to come. After all…

*Robert Rubin coined the phrase “US Strong Dollar Policy,” and flaunted the phrase. Rigging the price of gold was that policy’s lynchpin. What else was there? Steve Forbes was on Fox News Saturday talking about how important he believes it is for America to MAKE the dollar strong again. He talked sheepishly about gold in vague terms and referred to Rubin.

Robert Rubin hatched the gold price suppression scheme while running Goldman Sachs’ operations in London. This was many years ago, when interest rates were very high (say from 6 to 12% in the US). Rubin had Goldman Sachs borrowed gold from the central banks at about a 1% interest rate. Then he sold the gold into the physical market, using the proceeds to fund their basic operations. This was like FREE money, as long as the price of gold did not rise to any sustained degree for any length of time.

He continued his innovative money ploy as CEO of Goldman Sachs in New York and then put his Strong Dollar Policy ploy on steroids as Treasury Secretary under President Clinton.*Lawrence Summers followed Rubin as Clinton’s Treasury Secretary, and who could be more qualified to continue Rubin’s gold price suppression scheme than him? After all, while at Harvard he co-authored a paper, “Gibson’s Paradox and The Gold Standard.” The bottom line of Summers’ analysis is that “gold prices in a free market should move inversely to real interest rates.” Control gold and it will help to control interest rates.

Obama has designated Mr. Summers to be the Director of the U.S. National Economic Council.

*Which brings us to Timothy Geithner, who is President-elect Obama’s nominee to be U. S. Treasury Secretary. Geithner was named president and chief executive officer of the Federal Reserve Bank of New York on November 17, 2003. In that capacity, he serves as the Vice Chairman and a permanent member of the Federal Open Market Committee, the group responsible for formulating the nation’s monetary policy.

Mr. Geithner joined the Department of Treasury in 1988 and worked in three administrations for five Secretaries of the Treasury in a variety of positions. He served as Under Secretary of the Treasury for International Affairs from 1999 to 2001 under Secretaries Robert Rubin and Lawrence Summers.

Geithner is also happens to be a member of the Bank for International Settlements and since 2005 has been Chairman of the Committee on Payment and Settlement Systems. You might want to see what The CPSS undertakes “at their own discretion” as listed here:

http://www.bis.org/cpss/index.htmLike outgoing Treasury Secretary Hank Paulson, Tim Geithner is a graduate of Dartmouth College. Talk about knowledge of the gold price suppression scheme!

*And then there is the venerable Paul Volcker, who so effectively brought down runaway inflation in the US, starting in 1980. His one regret:

“Joint intervention in gold sales to prevent a steep rise in the price of gold (in the 1970s), however, was not undertaken. That was a mistake.” … Former Federal Reserve Chairman Paul Volcker (writing in his memoirs).

All-Pros? All-World is more like it when it comes to devotees of suppressing the price of gold. Outside of Volcker, the other three are those most responsible for making it happen in the first place.

So what’s the point? To get us all depressed over what lies ahead? NO, just the opposite.

On December 18th, on GATA’s behalf, I met with Bart Chilton, a CFTC commissioner who showed interest in hearing what we had to say. There were three others from the CFTC in attendance, including Elizabeth L. Ritter, Deputy General Counsel of that organization.

From my MIDAS commentary later in that afternoon…

Bart listened intently and took notes, as did one of the others, and asked numerous questions. Basically, I laid out our GATA presentation as I explained in the Sunday Midas. I am not going to get into all the details of what they said, as we will see what takes place in the months to come … except to say that I chuckled when saying to them if they really wanted to comprehend what the real gold price suppression scheme is all about, all they have to do is go to their new proposed Chairman … at the right time. No one knows what is going on better than he does.

(Insert- Gary Gensler was nominated that day to be the new chairman of the CFTC. Gensler was Undersecretary of the Treasury (1999-2001) and Assistant Secretary of the Treasury (1997-1999).

Gensler spent 18 years at Goldman Sachs, one of the ringleaders of The Gold Cartel, making partner when he was 30, becoming head of the company’s fixed income and currency operations in Tokyo by the mid-90’s.

As the Treasury Department’s undersecretary for domestic finance in the last two years of the Clinton administration, Gensler found himself in the position of overseeing policies in the areas of U.S. financial markets, debt management, financial services, and community development. Gensler advocated the passage of the Commodity Futures Modernization Act of 2000, which exempted credit default swaps and other derivatives from regulation.

Could The Gold Cartel have recruited a better ALL-PRO/ALL-WORLD man for their team? It is also important to keep in mind that chairman of the CFTC is one of the four members of the President’s Working Group on Financial Markets. Now why does a bureaucrat need to participate with the President and US Treasury Secretary on the markets? I thought the CFTC was supposed to regulate them, not be a part of policy.)

I did not hold back and said the main culprit of The Gold Cartel was our own government (their own boss), who has been in league with bullion banks like JP Morgan Chase, and others, to suit their own hidden agenda….

I was very impressed with Bart Chilton (very sharp guy) and he mentioned that my trip to D.C. would not be in vain.

***

What I stressed most at the meeting was that the gold price suppression scheme would not survive another four years, over the length of Obama’s elected term … and presented lengthy documentation to prove my point … meaning The Gold Cartel would run out of enough available central bank gold to meet a growing annual supply/demand deficit over the next four years. The bottom line was that Obama could stop the gold price manipulation scheme now and allow the price of gold to trade freely, thereby letting the Bush Administration be the fall guy; or he could let his economic team persuade him to carry on the status quo, in which case the price of gold will blow sky high in the years ahead, and he would have to take the blame for the resulting ramifications … especially when the gold scandal becomes a huge public ordeal.

What better way for Obama himself to understand the true gold situation than to ask his top economic advisors what the real deal is. If GATA is correct, and we have been on target for years, the U.S. has a BIG problem when it comes to its gold reserves (how much of it has been encumbered and is therefore GONE?) That is an essay unto itself, with many variables to be discussed, and for another time. All Obama has to do is get the five above-mentioned gentlemen in a room and get right to the nitty-gritty. They can start with the extensive package I handed to Bart Chilton, who is a member of the Obama transition team, and someone who once worked for Tom Daschle, formerly the Democratic leader in the Senate for ten years, and is now Obama’s Secretary of Health and Human Services nominee.

What Bart Chilton does with what I gave to him is his business, but since he told me my visit would not be in vain, I assume GATA’s extensive presentation did not go into the dumpster.

Meanwhile, in GATA’s tenth anniversary year, we are making our own call for CHANGE, and are pressing on. Obama has stated over and over again he wants THE PEOPLE to be represented and asked us to give him input. Who has more pertinent input go get to him than our camp? Therefore, we are asking everyone interested in a free gold market to make a renewed effort to further disseminate our decade’s worth of evidence of gold market manipulation into the public domain by contacting the financial market media and to others in the Obama transition team (if you have any contacts).

I know how frustrating it has been to get the jaded financial market media to listen to, and then acknowledge, what we have to say, but that was yesterday and perhaps times have changed due to the growing financial market crisis, and yearning to understand how we got here. After all President-elect Obama is urging for “government accountability” and “transparency.”

This call to arms has been instigated by the dramatic and sudden discovery of an important document buried in the Federal Reserve’s archives by writer and researcher Elaine Supkis. This document is posted on her blog at:

http://emsnews2.wordpress.com/2009/01/15/1961-top-
secret-fed-reserve-gold-exchange-report/

The document, which is marked “Confidential,” is from the papers of William McChesney Martin, Jr., and this collection is held by the Missouri Historical Society. A scanned image of the original document is posted by the Federal Reserve Bank of St. Louis at the following link:

http://fraser.stlouisfed.org/docs/histor ical/martin/23_06_19610405.pdf

Most importantly, GATA consultant James Turk has brilliantly dissected this document in an essay titled, “The Federal Reserve’s Blueprint for Market Intervention,” which has been served at The Matisse Table and at www.GATA.org…

http://www.gata.org/node/7095The title of this confidential report is:

Confidential – – (F.R.)
U.S. Foreign Exchange Operations: Needs and Methods

 

 

 

 

James Turk notes:

In short, it lays out what the Treasury and Federal Reserve needed to do in order to begin intervening in the foreign exchange markets, but there is even more. This document plainly shows what happens when government operates behind closed doors. It also makes clear the motivations of the operators of dollar policy long described by the Gold Anti-Trust Action Committee and its supporters — namely, that the government would pursue intervention rather than a policy of free markets unfettered by government activity. The run to redeem dollars for gold had put the government at a crossroads, forcing it to make a decision about the future course of dollar policy. This paper describes what the government would need to do by choosing the interventionist alternative.

This document provides primary, original source supporting evidence that GATA has been right all along.

I have long hoped that a “confidential” document like this one would eventually emerge. There are no doubt countless more like it, as evidenced by the Federal Reserve’s and the Treasury’s refusal to provide all the documents requested by GATA under its recent Freedom of Information Act request. Maybe those documents will eventually see the light of day too.

***

James makes a key point regarding one of the assertions of this report…

“The basic purpose of such operations would be to maintain confidence in the dollar.”
 

 

 

 

James T notes…

“This statement confirms one of the basic planks of much of the work by me and others that has been published by GATA over the years. The efforts to cap the gold price have one aim. It is to make the dollar look worthy of being the world’s reserve currency when in fact it is not.”

***

This significant report was written some 48 years ago, yet could have been written at any time in the past 10 years during which GATA has discovered blatant manipulation of the prices of gold and silver … as well as noted ludicrous counterintuitive dollar market action, which has been most noticeable in recent days, as our hysterical financial crisis in the US intensifies.

James Turk’s title says it all: it is a blueprint for the gold price and financial market manipulation so prevalent now. Ironically, there is a common misconception out there that the US is in the financial market mess it is in today because of too much deregulation. To some extent that is very true, as the likes of Secretary Paulson and Gary Gensler urged Congress to allow the US investment banks to increase the allowable debt/credit on their books from 12:1 to 40:1.

Yet, just as big a problem was the secretive interference in the US financial markets which allowed credit and risk issues to go completely out of control in America … meaning too much secretive market manipulation … and in a hidden way, too much regulation. Had the gold market not been artificially suppressed and allowed to trade freely, the price would have soared these past years, interest rates would have risen dramatically, and there would have not been the reckless investment bank shenanigans that have put our financial system in such peril. Simplistically, it is generally acknowledged that if gold had been allowed to keep up with inflation for the past 28 years, the price would be over $2,000+ per ounce. The GATA camp knows why it is not there RIGHT NOW!

Had the Plunge Protection Team (Working Group on Financial Markets) not stepped up their constant Hail Mary play activity after 9/11 to drive the DOW mysteriously higher in the last hour of trading on the New York Stock Exchange, the market probably would have broken down much earlier than it did and given the investing public more of a clue that something was wrong, instead of the misleading Stepford Wives drill that “Everything is fine.”

What is profoundly disturbing about the discovery of this confidential document is it fits in with much grander conspiracy theories than where GATA is coming from. Since this document, based on what has happened, really is a blueprint for market manipulation since 1961, it feeds into the worst fears of those who are constantly on the case about the Bilderbergers, Council on Foreign Relations, Trilateral Commission, and so on. This document to William McChesney Martin, Jr. is EXACTLY what I have been seeing and reporting over the past decade … not that much different than those who pointed out the Madoff Ponzi scheme during the same period of time. To learn that this market deception and manipulation was conceived when I was a freshman in high school is almost beyond comprehension, especially since the Wall Street crowd hasn’t permitted a serious discussion about it ALL THIS TIME! Nor has our government allowed a true independent audit of US gold reserves since the Eisenhower Administration in 1955.

It also feeds right into the scary notion revealed in a famed President Clinton comment that goes something like … “I didn’t realize I wouldn’t be in control here when I became President.” … meaning there were far more powerful background forces pulling the strings and on how he must operate.

GATA doesn’t want to go there, but based on this new discovery, it certainly opens up further comments for fair game, even for some of GATA’s Board of Directors. Adrian Douglas (an oil industry consultant who is presently off to Angola) sent the following email to James Turk:

James,
Congratulations. This was an excellent analysis. What a stunning document! Real dynamite.

It got me thinking as to whether the heist they have pulled is bigger than we think. The BIS as we know, and as mentioned in this memo, is the organization that allows for cooperation behind the scenes of the Central banks. We know they went private to prevent any need for public disclosure seeding the opportunity for Reg Howe’s lawsuit. We have plenty of evidence that Central Bank gold holdings have been depleted. We keep saying that the gold is “gone”. But what do we mean by “the gold is gone”? Gold is not like crude oil, expensive wine, even silver… it does not get consumed. It has not “gone”; it has changed ownership. The Central Banks leased out gold to the bullion banks. Now who did the the bullion banks sell the gold to? We know that the bullion banks can’t get the gold back. If the central banks ask for the gold back the bullion banks can declare bankruptcy or settle in cash. How convenient! The Central bank gold has gone into someone else’s hands that are unknown and the loss will eventually be written off. We know that Central Banks are owned or controlled by some of the richest families and/or entities in the world. Is it possible that these “bankers” can benefit from a fiat Ponzi scheme while it can be maintained AND still end up with the gold in which case they can benefit from a return to a gold standard and when the gold standard eventually gets abused and abandoned in the future they will play the whole fiat game over again? It would certainly require cooperation between central banks to pull off such a heist.

It would be great to have the whole world sitting in a room and ask those who own more than 10 million ozs of gold to raise their hands!

The crime may be more than manipulating the price of gold to “defend the US dollar” and concealing the evidence from the public. The Cartel may well have aided and abetted embezzlement of the citizens’ gold of the Western world. And who ever has it, they bought it perfectly legally from the bullion banks with fiat currency.

This seems to make sense because Central bankers and the “elitists” (Rockefellers, Rothchilds, Morgans, Mellons, Carnegies, Vanderbilts etc etc) are not stupid. They must know gold is real money. They can study monetary history too. The fiat money game in this context is a decoy for the theft of sovereign gold.

It is not without precedent, the great inflationist, John Law, was arrested escaping with a coach loaded with gold and silver!

Is this a bridge too far in conspiracy theory?
Cheers
Adrian

Which provoked this reply from another GATA Board member, Catherine Austin Fitts (Assistant Secretary of Housing/Federal Housing Commissioner at the United States Department of Housing and Urban Development in the first Bush Administration)…

Adrian:
My hypothesis since 2001 is that the NWO is shifting assets out of sovereign governments and shifting liabilities back in. The goal is to reengineer global governance into the hands of private banks and corporations in a manner that dramatically centralizes control. This is why the creation of a genetically controlled seed and food supply, etc.
To achieve such centralization requires the centralization of the gold and silver stores. Whoever has the gold has the most powerful financial asset. So if you want a new centralized currency, you need a monopoly on gold and silver. I think part of the end game is to shift back to something involving some kind of gold standard.

 

If you use fiat currency to acquire ownership and control of all the real assets on the planet, then you need a gold standard to make sure you keep them.

 

 

So, it would not surprise me to see G8 and GATA start to move into alignment, strange as it may sound.
Catherine

 

Neither opinions are official GATA viewpoints, but they are intriguing, eye-opening and worth pondering.

When I met with Bart Chilton I said GATA’s high command is just a bunch of proud Americans who have stumbled across a profoundly disturbing situation. I showed the four CFTC individuals in attendance GATA’s full-page color ad in the Wall Street Journal on January 31, 2008. It was titled, “Anybody Seen Our Gold?” …

http://www.gata.org/node/wallstreetjournalSome of you are very familiar with this copy in the ad…

“The objective of this manipulation is to conceal the mismanagement of the US dollar so that it might retain its function as the world’s reserve currency. But to suppress the price of gold is to disable the barometer of the international financial system so that all markets may be more easily manipulated. This manipulation has been a primary cause of the catastrophic excesses in the markets that now threaten the whole world.”

… and then…

“Surreptitious market manipulation by government is leading the world to disaster.”

The DOW was a little below 13,000 at the time. I mean how right could we have been? Yet the US financial market press completely ignored this very visible ad. There was not even a query of what we were talking about and why we would spend $264,400 to make such a warning.

So now we are fast forwarding virtually a year later and the US financial markets and economy ARE in chaos. If soon to be President Obama really wants CHANGE and TRUTH, we will give him critical input on one way he can effect what he says he is looking to do.

To increase the likelihood that what GATA has discovered actually reaches him, GATA is asking all who read this, and agree with GATA, to make some small effort to get this commentary to the financial market media in the world, especially the US financial market press.

That means contacting writers and media outlets such as the Wall Street Journal, Washington Post, Washington Times, New York Times, Forbes, Fortune, CNBC, CNN, Reuters, Bloomberg, the AP, Fox News, Newsweek, Time, etc. In addition, sending this Tenth Anniversary GATA commentary to widely-followed internet bloggers would also be helpful; perhaps stirring up so many out there who are searching for the reasons behind what has happened financially and economically in the US and why.

In such troubling times, Obama’s coming Presidency has given optimism and hope to many. For that to occur there must be true change, the desires for which have swept him into office. President-elect had some army. And GATA has its army.

Please take a little time and make just a small effort to help Obama help himself, even if our issue is the last one he is thinking about at the moment. Funnily enough, it ought to be one of the first, as it is one of the most prominent ones which got us into the financial market/economic nightmare we are in today. After all, it is many of the same bullion banks/investment houses our government is bailing out that were so instrumental in the gold price suppression scheme. Our mission is to let him know, via all sources possible, what the heck has happened and continues to go on.

Bill Murphy
Chairman
Gold Anti-Trust Action Committee

Copyright (c) 1999 – 2009

Le Metropole Cafe, Inc

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

John Doody: A Winning Situation For Gold Stocks- Seeking Alpha

Source: The Gold Report

By: John Doody of The Gold Stock Analyst

Heralded as “the best of today’s best,” John Doody, author and publisher of the highly regarded Gold Stock Analyst newsletter, brings a unique perspective to gold stock analysis. In this exclusive interview with The Gold Report, Doody ponders the efficacy of the Keynesian approach, makes a case for gold equities and explains how the GSA Top 10 Stocks portfolio has outperformed every other gold investment vehicle since 1994.

The Gold Report: John, you’ve stated in your newsletter, Gold Stock Analyst: “It’s clear the U.S. is going down a Keynesian approach to get out of this recession/depression.” I am curious on your viewpoint. Will the Keynesian approach actually work, or will they need to eventually move over to the Chicago School of Free Markets?

John Doody: A free market approach of letting the crisis resolve itself would work, but would cause too much damage; we’d probably lose our auto industry, and it would take too much time. As Keynes said: “In the long run we’re all dead,” so the government is trying to get a faster resolution. The Treasury is pursuing his fiscal policy idea of deficit spending. They’re borrowing the money to bail out the banks. When Obama’s plan is implemented, which could be another $700 billion in stimulus, it will be funded with more borrowings.

Bernanke and the Fed are pursuing a loose monetary policy with a now 0% interest rate. There’s actually no way we can not end up with inflation. This is much bigger than ‘The New Deal’ under Roosevelt. And I think that the market disarray over the last several months has confused investors; but when the markets settle down, it’s clear to me that it will be up for gold and gold stocks.

TGR: Is there any economic scenario that you wouldn’t see gold going up in?

JD: Basically, we’re pumping money into the system, but it’s just sitting there. It’s not being put to work, so there are those who think that we are going to enter a deflationary era. But I can’t see that. Some don’t like Bernanke, but I think there’s probably nobody better prepared to be in his role.

Bernanke is a student of the Great Depression and knows the mistakes the Fed made then, such as forcing banks to upgrade the quality of loans on their balance sheets. His approach is to buy the banks’ low quality loans, enabling them to make new loans. They haven’t done much of the latter yet, which is probably a fault of the Fed not requiring the funds received for the junk to be redeployed, but they ultimately will lend more as that’s how banks make money.

He knows in the early 1930s we went into a deflationary period of falling prices. For three or four years prices were down about 10% annually. He fully understands the risks of that, one of which is the increased burden of existing debt payments on falling incomes. The debt burden is lighter in an inflationary environment and that’s his target. Long term, he knows he can cure inflation; Volker showed us how with high interest rates in the 1980s. But there’s no sure way to cure deflation, and so Bernanke’s doing everything possible to avoid a falling price level. And I think that, because this is a service-driven economy, companies won’t lower prices to sell more goods—they will just lay off more workers, as we’re seeing now. I don’t think we’ll get the price deflation of the ’30s, and I’m sure Bernanke is going to do everything to prevent it.

TGR: But aren’t we already in a deflationary period?

JD: Well, we may be to an extent; you can get a better buy on a car. But, to put it in the simplest terms, has your yard guy lowered his price, or your pool guy, or even your webmaster?

TGR: Yes, but people opt to do things themselves versus paying other people to do it.

JD: Maybe, but if they do, it won’t show up in prices—it will show up in the unemployment statistics. So if the yard guy, pool guy or webmaster don’t lower prices and their clients become do-it-yourselfers, the effect will show up in unemployment, not inflation data.

TGR: So if every major country in the world is increasing their monetary supply, we would expect inflation. Will there be any currency that comes out of this to be considered the new base currency, sort of like the U.S. dollar is now?

JD: Well, that’s the $64,000 question. We don’t really know and, because there’s no totally obvious currency, that is why the dollar is doing well of late. But the dollar is in a long-term downtrend, in part because interest rates in Europe remain higher than here. Higher interest rates, as you know, act like a magnet in attracting investment money, which first has to be converted to the higher interest currency and that bids up its value versus the dollar.

The Euro represents an economy about the size of the U.S., so there may be some safety there. You could argue for the Swiss Franc maybe, but you know the Swiss banks (Credit Suisse, for example) have had some problems, so we’re not quite sure how that’s going.

So, to me, the only clear money that’s going to survive all this and go up, because everything else is going to go down, is gold.

TGR: What’s your view of holding physical gold versus gold equities?

JD: I only hold gold equities. They’re more readily tradable; when gold goes up, the equities tend to go up by a factor of two or three times. Of course, that works to the reverse, as we know. As gold went down, the equities went down more. But because you hold them in a government-guaranteed SIPC account, it provides ease of trading—you don’t have the worries of physical gold. . .insurance, storage or whatever. You may want to hold a few coins, but that would be about it in my opinion.

TGR: On your website, your approach to investing in gold equities is to choose a portfolio of 10 companies that have the opportunity to double in an 18- to 24-month period with the current gold price.

JD: Yes. We don’t really look forward more than 18 or 24 months; but within that timeframe, say a year from now, we could reassess and raise our targets so that, in the following 18 to 24 months, the stocks, while having gone up, could go up more still. There are lots of opportunities to stay in the same stocks as long as they continue to perform well. We’re not a trading newsletter, and as you probably know, the way we define an undervalued stock is based on two metrics.

One is market cap per ounce. The market capitalization of a company is the number of shares times its price. You divide that by its ounces of production and its ounces of proven and probable reserves, and you see how the company’s data compares to the industry’s weighted averages.

Second, we look at operating cash flow multiples. Take the difference between the gold price and the cash cost to produce an ounce, multiply that by the company’s production per year, and you get operating cash flow. Divide that into its market capitalization and you get its operating cash flow multiple. We look at that this much the same as one looks at earnings per share multiples in other industries.

For reference, we last calculated the industry averages on December 29, 2008 for the 50+ gold miners we follow, which is everyone of significance. At that time, the average market cap for an ounce of production was $3,634, an ounce of proven and probable reserves was $194, and the average operating cash flow multiple on forecast 2009 production, assuming $900/oz gold, was 7.4X.

We focus companies that are below the averages and try to figure out why. An ounce of gold is an ounce of gold, it doesn’t matter who mined it. If you’re going to buy an ounce of gold from a coin dealer, you want to get the cheapest price. Well, if you’re going to buy an ounce of gold in the stock market, you should want to get those at the cheapest price, too. It’s oversimplified, as there are other factors to be considered, but this is a primary screening tool to determine which stocks merit further study. The method works, as the GSA Top 10 Stocks portfolio has outperformed every other gold investment vehicle since we began in 1994.

TGR: Are all the companies in your coverage producers or have 43-101’s??

JD: Yes, all are producing or near-producing. They may be in the money-raising stage to build a mine, but they’ve got an independently determined reserve. And that part of the market has done better than the explorers because it has more data to underpin the stocks’ prices.

TGR: And you focus in on having 10 just because, as you point out in your materials, it allows you to maximum upside at minimum risk (i.e., if one of the 10 goes down 50%, you will only lose 5% of your money). Is your portfolio always at 10 or does it ever expand more than that?

JD: No, earlier in 2008 we were 40% cash, so it was six stocks. For a couple of months later in 2008 it was 11 stocks. But 90% of the time it’s at 10.

TGR: What prompted you to be 40% in cash?

JD: That was when Bear Stearns was rescued in March and gold went to $1000; we were just uncomfortable with that whole scenario. And actually we put the 40% in the gold ETF; so it wasn’t true cash.

TGR: Okay. And as you’re looking at these undervalued companies, are you finding that there are certain qualifications? Are they typically in a certain area, certain size?

JD: While we follow Barrick Gold Corporation (NYSE:ABX) and Newmont Mining Corp. (NYSE:NEM) and they’ve both been Top 10 in the past, neither is now. We’re currently looking further down the food chain. There’s one with over two million ounces growing to four million a year. Another has a million growing to two million. So, some are still pretty good sized. And then there are others further down that are either developing mines or are very cheap on a market cap per ounce basis.

Earlier, one of the Top 10 was selling at its “cash in the bank” price. We’ve had a nice little rally since October and this stock has doubled, but it’s still cheap. It has 9 million ounces of reserves at three mine sites in European Community nations, and it’s not Gabriel in Romania. It has no major troubles with permitting its mines and it was selling at its cash/share. Then the chairman of the board bought 5 million more shares. It was already top 10, but I pointed this out to subscribers as great buy signal. It’s doubled since and will double again, in our opinion.

TGR: Can you share with us some of the ones that are in your top 10?

JD: Well, the astute investor would probably recognize Goldcorp (NYSE:GG) as the one at two million ounces growing to four million ounces. Their tremendous new mine in Mexico, Penasquito, which I have been to and written about, is going to average half a million ounces of gold and 30 million ounces of silver a year. It’s going to be the biggest producing silver mine in the world, momentarily anyway, and will produce huge quantities of lead and zinc. At current prices, it’s going to be a billion-dollar-a-year revenues mine, which is enormous. And because of by-products, and even at current prices, the 500,000 ounces of gold per year will be produced at a negative cash cost per ounce.

TGR: Wow. Because of the credits?

JD: Because of the by-product credits. Another one would be Yamana Gold Inc. (NYSE:AUY), which is growing from a million ounces to two million ounces. Both Yamana and Goldcorp are in politically safe areas—no Bolivia, no Ecuador, no Romania—none of the places where you have to take political risk. I think we’ve learned enough from the Crystallex International Corp. (KRY) and Gold Reserve Inc. (NYSE:GRZ) situation in Venezuela, where they’re both on portions of the same huge deposit that is probably 25 million ounces or more. It looks to me that the government is going to take it away from them. So, I would just as soon not be involved in that kind of political risk scenario. There’s enough risk in gold just from the mining aspects of it that you don’t have to take chances on the politics too, as in some nations that’s impossible to assess.

TGR: Yes, another one that is really doing quite well is Royal Gold Inc. (Nasdaq:RGLD). Can you speak about that company?

JD: Yes. Royal Gold has been GSA Top 10 for 18 months now. We put it on in part because of the Penasquito deposit that I mentioned earlier. Royal has a 2% royalty on that, and 2% of a billion dollars is $20 million a year. Royal is unique in that they haven’t prostituted themselves by selling shares on a continuous basis. They only have 34 million shares outstanding and they will have royalty income this year of about $100 million. Penasquito is just coming on line, so its $20 million per year won’t be fully seen until late 2010.

Plus Royal pays a dividend. I think it could pay $1.00/share ($0.32 now). Dividend-paying gold stocks typically trade at a 1% yield. A $1.00/share dividend would make Royal a potential $100 stock. That’s my crystal ball down-the-road target.

Royal is a great play on gold price because they don’t have the aggravation of mining. They have a portfolio of mine royalties, plus a small corporate office. Royal employs 16 people, has $150 million in the bank and over $100 million a year income, which is about $3.00 per share pre-tax. Their biggest cost is taxes.

TGR: I see also that Franco Nevada Corp. (FNV.TO) has had quite a rise, though they have been kind of tumultuous between November and December.

JD: Franco is also a stock we like. About half of its royalties are from oil, so that’s why it’s suffered. The original Franco Nevada, as you know, was merged into Newmont for five years, and then they came public again in December ’07. I think it’s a good way to play gold and oil, and I think everybody agrees that oil is not going to stay in the $40 range for long.

TGR: John, can you give us a few more?

JD: A couple of smaller ones we like are Northgate Minerals Corp. (AMEX:NXG) and Golden Star Resources Ltd. [TSX:GSC]. Northgate is a misunderstood producer. Everybody thinks it’s going out of business when the Kemess Mine closes after 2011, but it’s actually not. It has 200,000 ounces a year from two mines in Australia and has a potential new mine in Ontario where they’ve just announced a 43-101 with over three million ounces. That’s potentially another 200,000 ounces a year, so we think they’ll remain at 400,000 ounces a year from Canada and Australia, both of which are countries we like. Cheap on our market cap per ounce of production and reserves metrics, it’s trading at an operating cash flow multiple under 2.0X.

Golden Star has several nearby mines in Ghana with production targeted at about 500,000 ounces in 2009. They’ve been ramping up to this rate for the past year and cash costs have run much higher than plan. If costs can be controlled and production goals met, it’s a takeover candidate for someone already in the country, such as Newmont or Gold Fields Ltd. (NYSE:GFI).

One thing I think readers should bear in mind is that gold mining will be one of the few industries doing well in 2009. Their key cost is oil, which is about 25% of the cost of running a mine. Oil’s price, as we know, is down about 75% in the $147/barrel high last July. At the average $400 cash cost per ounce mine, that’s a cut of about $75/oz off their costs. That result alone is going to give them an uptick in future earnings versus what they showed for third quarter 2008.

Something else people may not recognize is that currencies are also falling; many are down 20% to 40% versus the U.S. dollar. All the commodity nation currencies—the Canadian dollar, the Australian dollar, the South African Rand, the Brazilian Real, the Mexican Peso—they’re all down 20% to 40%. When your mining costs in those countries are translated back into U.S. dollars, they’ll be 20% to 40% lower.

So, the miners are going to have falling cash costs and even if the gold price remains exactly where it is now profits are going to soar. This will be unique in 2009. I can’t think of any other industry in which people are going to be able to point to and say, “These guys are making a lot more money.” I think the increasing profits will get the gold mining industry recognition that it isn’t getting now. Of course I’m a bull on gold because of the macroeconomic picture. When you put falling costs of production together with a rising gold price, you’ve got a winning combination for the stocks in 2009.

TGR: I was wondering if you could give us something on Silver Wheaton Corp. (NYSE:SLW).

JD: Well, Silver Wheaton is another royalty company; it’s not a producer. It gets its profit royalties by paying a cash sum up front and $4/ounce on an ongoing basis. It captures the difference between the silver price and $4 an ounce; if silver is $10 and it pays $4, it makes a $6 an ounce profit; at $20 silver, its profit would be $16. Aside from no pure silver miner actually producing ounces as low as $4.00, there’s a lot of leverage to silver price. I am not a silver bull, but because I’m a gold bull I think silver will follow gold higher.

Silver Wheaton is one of those companies that doesn’t have the issues of actually doing the mining. It has a portfolio of mines that it gets production from, and it owns 25% of the production from Goldcorp’s Penasquito mine that it buys at $4 an ounce, and will average about 8 million ounces a year. It’s just starting up now, but it will really get going in 2010. Silver Wheaton’s share of the total mineralization at Penasquito is 1 billion ounces. There’s 4 billion total ounces of silver there and it bought 25%. So, for a long time—the mine life of Penasquito is over 30 years—it’s going to be a big producing mine for Silver Wheaton.

TGR: Isn’t there a twin sister to Silver Wheaton in the gold area?

JD: Well, there’s Gold Wheaton Gold Corp. [TSX.V:GLW]. It’s based on the premise that some companies have a gold by-product. With their primary production in some other kind of metal, some might like to lay off the gold for a $400 an ounce on-going payment and an up-front purchase amount. Yes, some of the same guys are involved. I’m not convinced it’s going to do as well because it’s already got a lot of shares outstanding, and I just don’t like the capital structure as much. I wouldn’t bet against these guys but I’m not a believer.

TGR: And you said you’re not a silver bull. Why is that?

JD: We do cover about 15 silver miners, but reason number one for not being a bull is that it’s a by-product. Few mines are built to get just silver; 70% to 80% of silver comes as a by-product to copper, zinc, gold or some other metal. If you’re producing copper, you’re more interested in the copper price than you are in the silver price and you tend to just dump the silver onto the market.

And second, it’s not a monetary commodity. It is poor man’s gold—but it doesn’t have the universal monetary acceptance that gold does. It has a growing list of industrial uses, but it’s not growing at any rate that’s going to offset the falling use in photography. So, the overall demand for silver is not growing at any great rate. It’s not going to go from 800 million ounces a year to 1.6 billion ounces a year; it may get there in 20 years or 30 years, but that’s not our investment time horizon.

I think silver just follows gold along; but, in fact, it hasn’t been following gold along because right now silver is trading at a discount to gold. The ratio of gold to silver price, which normally runs around 50–55, is now around 80, so silver might have a little bit of a pop-up if the discount closes. But there are a lot of new silver mines coming on line and maybe that’s why the discount exists. Penasquito is one and Silver Standard Resources Inc. (Nasdaq:SSRI) has a big one starting in 2009. Coeur d’Alene Mines Corp. (NYSE:CDE) has now one ramping up and Apex Silver Mines Ltd. (AMEX:SIL) San Cristobal is now on line at 20+ million ounces per year as a zinc by-product. There’s potentially more silver coming to market than the world really needs. We do recommend Silver Wheaton, but that’s our single play.

TGR: Can you give us any comments on Minefinders Corporation (AMEX:MFN)?

JD: Well, you know, it’s in the uncertainty phase as to whether or not the new Delores mine in Mexico is going to work. Now built, it’s just starting up. We like the stock as we think it’s going to work. The question is: will it? Two mines in the area—Mulatos, owned by Alamos Gold Inc. [TSX:AGI], and Ocampo owned by Gammon Gold Inc. (GRS) did not start up smoothly. The market is betting against Delores starting smoothly, but this is the last of the three mines to come on line, and the first two mines—Alamos’ and Gammon’s—did get fixed and are now running okay. So, I think Minefinders has probably learned from the experience of the others, and the mine should start up all right. But, you know, the proof will be in the pudding. If you take its market cap per ounce on the forecast 185,000 ounces of production in 2009, or its almost 5 million ounces of reserves, and compare it to the industry averages we calculate, it’s potentially a double or triple from here.

TGR: So, the start-up issues of the other two mines, were they politically related?

JD: No, it was metal related. Processing facilities aren’t like televisions; you don’t just turn them on. It’s more like buying a new fancy computer system that needs to be twiddled and tweaked and loaded with the right programs. And you know, all geology is different, so things seldom start up properly; and, given the long teething problems at the other two mines, that’s sort of been a curse. If Minefinders can beat it and start up on plan, it’s an easy winner in 2009.

TGR: So, John do you have a prediction on where you think gold will go in ‘09?

JD: People talk about $2,000 or $5,000—it’s all pie in the sky, you know. Gold might get there; but the bigger question is: what’s the timeframe? Will I be around when gold is $5,000? I doubt it. Will it get there? Probably.

But we look for undervalued situations no matter what the gold price. And in the ‘90s—you know we’ve been writing Gold Stock Analyst since 1994—in the mid-90s gold did nothing for three years, it traded between $350 and $400. With our methods of selecting undervalued stocks, we had a couple of years of the Top 10 portfolio up 60% and 70% but gold was flat. Until mid-2008 the GSA Top 10 was up almost 800% in the current gold bull market. When gold does go up, the stocks go up more; but, in general, even if gold does nothing, we can still find good buys. Royal Gold is an example of finding winners in a tough market. Made a Top 10 stock at $23 in mid-2007, it gained 60% in 2008 and has doubled over the past 18 months.

We don’t follow the explorers, in part because there is no data to analyze beyond drill hole results, which are a long way from showing a mine can be built and operated at a profit. For us, the pure explorers are too much like lottery tickets. The producers do exploration and you can get your discovery upside from them. Bema Gold (acquired by Kinross Gold in February 2007) was a Top 10 stock with 100,000 ounces per year of production when it found Cerro Casale and it did very nicely on the back of that find. So, with the smaller producers you can get plenty of exploration upside. You don’t need to focus on the greenfield explorers because it’s just too hard to tell who’s going to win and who’s going to lose.

 

John Doody brings a unique perspective to gold stock analysis. With a BA in Economics from Columbia and an MBA in Finance from Boston University, where he also did his Ph.D.-Economics course work, Doody has no formal “rock” studies beyond “Introductory Geology” at Columbia University’s School of Mines.

An Economics Professor for almost two decades, Doody became interested in gold due to an innate distrust of politicians. In order to serve those that elected them, politicians always try to get nine slices out of an eight slice pizza. How do they do this? They debase the currency via inflationary economic policies.

Success with his method of finding undervalued gold mining stocks led Doody to leave teaching and start the Gold Stock Analyst newsletter late in 1994. The newsletter covers only producers or near-producers that have an independent feasibility study validating their their reserves are economical to produce.

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

***All Posts are  not  to be considered Investment Advice, the articles/posts are presented for Informational Purposes. Consult Your Own Investment Advisors and Carefully Research and Read the Prospectus’s before making any Investment.*** jschulmannsr

As Always Bringing You The Must Have Information for Today’s Gold Markets and Hard Assets Investing- Dare Something Worthy Today Too!  Brought To You By:- jschulmansr

 

 

 There is another option, however, which involves debt holders taking a share of the losses. If steps are not taken to ensure that this happens, the greatest heist in history will have occurred: at least $1 trillion will be transferred from taxpayers to debt holders of failed financial institutions. This must not be allowed to happen.

 Mark-to-Market vs. Real Losses

To understand the government’s dilemma, one must realize that the great majority of the not-yet-recognized losses in our financial system are not short-term, mark-to-market losses that will someday be reversed, but permanent losses. This is a huge misunderstanding that many people, especially those in Washington, seem to be suffering from.

 To understand why the losses are real, consider this simple example: imagine a bank that lent someone $750,000 via an Option ARM mortgage to buy a McMansion in California at the peak of the bubble less than two years ago. Virtually all homeowners with this type of loan will default, thanks to declining home prices, the structure of the loan, and the fact that 70-80% of Option ARMs were liar’s loans. If we assume the house is only worth $400,000 today, then there’s been an actual loss of $350,000. That money will never be recovered. If one considers the millions of toxic loans made during the bubble – subprime, Alt-A, Option ARM and second mortgages, home equity lines of credit, commercial real estate, leveraged loans, credit cards, etc. – it easily adds up to at least $1 trillion in additional, unrecognized very real losses.

 Imagine that New RTC buys this loan for $400,000. In this case, it might not lose money, but then the bank (or the structured finance pool) holding the loan has to immediately realize the loss of $350,000 – and it is certain that the U.S. (and world) financial system has not even come close to marking these assets to what they’re really worth, which explains why they won’t lend, even when given new money. Thus, if New RTC buys these assets at fair value, then the financial institutions suffer the losses – but this would bankrupt many of them. Yet if New RTC pays the inflated prices they’re marked at today, then it (and taxpayers) will suffer huge losses.

Who Should Bear the Losses?

To save our financial system, somebody’s going to have bear these losses – the only question is, who? Some fraction of this will certainly have to be taxpayer money, but all of it needn’t be if the government would stop bailing out all of the debt holders.

 Government policy has been all over the map. Among the large financial institutions that have run into trouble (in chronological order, Bear Stearns, IndyMac, Fannie & Freddie, Lehman, AIG, WaMu, Citigroup and Bank of America), in some cases the equity was somewhat protected, while in others was wiped out, and likewise with the debt. Most likely due to the chaos that ensued after Lehman filed for bankruptcy, the current policy, as reflected in the most recent cases of Citi and BofA, is to at least partially protect the shareholders and, incredibly, 100% protect all debt holders, even junior/unsecured/subordinated debt holders.

 The result is at least a $1 trillion transfer of wealth from taxpayers to debt holders. This makes no sense from a financial, fairness or moral hazard perspective. While there’s an argument that the government should protect senior debt holders to preserve confidence in the system (even though they knowingly took risk – after all, they could have bought Treasuries), the junior debt holders got paid even higher interest in exchange for knowingly taking even more risk by being subordinate in the capital structure (of course, equity and preferred equity holders are the most junior). These investors made bad decisions, buying junior positions in highly leveraged companies that made bad decisions, so why should they be protected?

 Moreover, the reckless behavior of debt investors was a major contributor to the bubble. It was low-cost debt with virtually no strings attached that allowed borrowers, especially the world’s major financial institutions, to become massively overleveraged, fueling the greatest asset bubble in history. This was not an equity bubble – unlike the internet bubble, for example, stock market valuations never got crazy – it was a debt bubble, so it would be particularly perverse and ironic if government bailouts allowed equity holders to take a beating, yet fully protected debt holders.

 Case Study: Bank of America

Let’s look at Bank of America (BAC), which effectively went bankrupt last week (disclosure: we are short the stock). The cost to taxpayers of avoiding this outcome wasn’t the headline $20 billion, but far more – the government is going to take a bath on the $120 billion that it guaranteed – and it’s likely that this is just the beginning of the losses.

 Consider this: as of the end of 2008, BofA had $1.82 trillion in assets ($1.72 trillion excluding goodwill and intangibles), supported by a mere $86.6 billion in tangible equity – 5.0% of tangible assets or 20:1 leverage – and $48.9 billion of tangible common equity – 2.8% of tangible assets or 35:1 leverage (common equity excludes the TARP injection of capital in the form of preferred stock, which has characteristics of both debt and equity). (All data from BofA’s earnings release on 1/16/09; note that these figures include Countrywide, but not Merrill Lynch)

 At such leverage levels, it only takes tiny losses to plunge a company into insolvency. It’s impossible to know with precision what BofA’s ultimate losses will be, but among the company’s loans are many in areas of great stress including $342.8 billion of commercial loans ($6.5 billion of which is nonperforming, up from $2.2 billion a year earlier), $253.5 billion of residential mortgages ($7.0 billion of which is nonperforming, up from $2.0 billion a year earlier), $152.5 billion of home equity loans (HELOCs; about $33 billion of which were Countrywide’s), and $18.2 billion of Option ARMs (on top of the $253.5 billion of residential mortgages; all of which were from Countrywide, which reported that as of June 30, 2008, 72% were negatively amortizing and 83% had been underwritten with low or no doc).

 BofA is acknowledging a significant increase in losses, but its reserving has actually become more aggressive over the past year. From the end of 2007 to the end of 2008, nonperforming assets more than tripled from $5.9 billion to $18.2 billion, yet the allowance for credit losses didn’t even double, from $12.1 billion to $23.5 billion. As a result, the allowance for loan and lease losses as a percentage of total nonperforming loans and leases declined from 207% to 141%.

 So BofA had big problems on its own and then made two very ill-advised acquisitions, the result of which effectively wiped out the company, causing the government to come in and bail it out, at a huge cost to taxpayers. So what price is being paid? NONE! The architect of this debacle, Ken Lewis, is still in place, as is the board that approved everything he did. Ditto with Citi. These banks are just getting do-overs, with the management, boards and debt holders not being touched – the only losers are the common shareholders (to some extent) and taxpayers (to a huge extent).

 Since big losses from Merrill Lynch triggered last week’s bailout of BofA, why are all of its debt holders ($5.3 billion of junior subordinated notes, $31.2 billion of short-term debt and $206.6 billion of long-term debt) being protected 100%, while taxpayers are taking a bath eating Merrill’s losses from its reckless, greedy behavior?! This is madness.

A Better Solution

So what’s a better solution? I’m not arguing that BofA (or Citi or WaMu or Fannie or Freddie or AIG or Bear) should have been allowed to go bankrupt – we all saw the chaos that ensued when Lehman went bankrupt. Rather, if a company blows up (and can’t find a buyer), the following things should happen:

1) The government seizes it and puts it into conservatorship (as Fannie, Freddie, IndyMac and AIG effectively were, to one degree or another);

2) Equity is wiped out (again, as with Fannie, Freddie, IndyMac and AIG);

3) However, unlike Fannie, Freddie, IndyMac and AIG (and certainly Citi and BofA), everything in the capital structure except maybe the senior debt is at risk and absorbs losses as they are realized; the government would only provide a backstop above a certain level. This is what happened in the RTC bailout;

4) Over time, in conservatorship, while the businesses continue to operate (no mass layoffs, distressed sales, etc.), the government disposes of the companies in a variety of ways (just as the RTC did via runoff, selling the entire company or piece-by-piece, etc.), depending on the circumstances (as it’s doing with AIG and IndyMac, for example – these are good examples, except that the debt holders were protected).

Counter-Arguments

One counter-argument to my proposal is that we don’t want the government to nationalize banks. I don’t like it either, but the alternative – inject hundreds of billions of dollars of taxpayer money and not take control – is even less palatable. There should certainly be urgency in disposing of the companies, but also the recognition that it could take years, as with the RTC.

 Another counter-argument is Lehman: nobody wants a repeat of the chaos that ensued when the company went under and debt holders were wiped out. But the mistake here wasn’t the failure to protect the debt, but rather allowing the company to go bankrupt, which not only impacted Lehman’s equity and debt holders, but also stiffed Lehman’s countless clients and counterparties. It’s the latter that caused the true chaos. Lehman should have been seized and put into conservatorship, so that all of Lehman’s clients and counterparties could have relied on Lehman (as was done with AIG) – but debt holders would have taken losses as they were realized (which is not being done with AIG).

A final argument for protecting the debt is the fear of contagion effects: for example, other financial institutions who own the debt might become insolvent (this was probably why Fannie and Freddie subdebt was saved). Also, debt markets might freeze up such that even currently healthy banks might not be able to access debt and collapse.

 Regarding the former, the debt is owned by a wide range of institutions all over the world: sovereign wealth funds, pension funds, endowments, insurance companies and, to be sure, other banks. Some of them would no doubt be hurt if they take losses on the debt they hold in troubled financial institutions – but that’s no reason to protect all of them 100% with taxpayer money.

 As for the latter concern that debt markets might freeze up, causing even healthy banks to collapse, it’s important to understand that right now there is no junior debt available to any financial institution with even a hint of weakness – there’s very high cost equity and government-guaranteed debt. Neither of these will be affected if legacy debt holders are forced to bear some of the cost of the failure of certain institutions.

 Conclusion

The new Obama administration needs to understand that the greatest heist in history is underway – at least $1 trillion is being transferred from taxpayers to debt holders of failed financial institutions – and take steps to stop it before taxpayers suffer further unnecessary losses.

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

Share this:

  • Reddit
  • Facebook
  • LinkedIn
  • More
  • Twitter
  • Pinterest
  • Tumblr
  • Print
  • Email

Like this:

Like Loading...

Latest Obama News and The Ad “They” Don’t Want You To See!

10 Saturday Jan 2009

Posted by jschulmansr in 2008 Election, Barack Obama, communism, Conservative, Conservative Resistance, Currencies, currency, Currency and Currencies, dollar denominated, dollar denominated investments, economic, economic trends, economy, Electoral College, Finance, financial, Free Speech, Fundamental Analysis, futures, futures markets, id theft, inflation, Investing, investments, Latest News, market crash, Markets, Presidential Election, resistance, socialism, Today, u.s. constitution, U.S. Dollar, Uncategorized

≈ 2 Comments

Tags

2008 Election, Barack Dunham, Barack Hussein Obama, Barack Obama, Barry Dunham, Barry Soetoro, capitalism, Chicago Tribune, Columbia University, Currency and Currencies, D.c. press club, Electoral College, Electors, Finance, fraud, Free Speech, gold, Harvard Law School, hawaii, id theft, Indonesia, Indonesian Citizenship, Investing, investments, Joe Biden, John McCain, Latest News, legal documents, Markets, name change, natural born citizen, Oath of Allegiance of the President of the United State, Occidental College, Phillip Berg, Politics, poser, Presidential Election, Sarah Palin, socialism, Stocks, Today, treason, u.s. constitution, U.S. Dollar, Uncategorized, voter fraud, we the people foundation

Why are the major news networks refusing to allow the Obama ad below? Yes, even Fox News has refused to sell airtime to run the ad- Why? The cases and lawsuits keep trickling their way to the Supreme Court, so his “eligibility” issues will continue even after he is inaugurated. Obama- “Please just show us the Birth Certificate as any patriotic citizen would do when asked.” Why are you hiring teams at last count (3) different legal teams to prevent your birth certificate from being produced? What is Obama hiding? Could it truly be he is not eligible to be the President of The United States? Fellow citizens is our Constitution no longer important or relevant? You decide- read below…- jschulmansr

Eligibility Issue to Follow Obama into the Oval Office – World Net Daily

By Bob Unruh
© 2009 WorldNetDaily

A legal challenge that alleges Barack Obama isn’t a “natural born” citizen and therefore constitutionally ineligible to be president of the United States will follow the Democrat into the Oval Office, with a U.S. Supreme Court conference on the dispute set after the Jan. 20 inauguration.

The court’s website today announced that a fourth case on the issue will be reviewed by justices Jan. 23.

The court previously heard two cases in conference – private meetings at which justices consider which cases to accept – and denied both Cort Wrotnowski and Leo Donofrio full hearings.

The court now has a conference scheduled Friday on a case raised by attorney Philip Berg, with another conference on a matter related to the same Berg case on Jan. 16. Then today the court website revealed the case Gail Lightfoot et al v. Debra Bowen, California Secretary of State, will be heard in conference Jan. 23.

The case initially appeared at the Supreme Court Dec. 12 but was rejected. It then was submitted to Chief Justice John Roberts, and today’s notice confirmed it was distributed for the Jan. 23 conference.

Orly Taitz, the California attorney handling the case, said, “The timing of this decision by the chief justice of the Supreme Court, John Roberts, is absolutely remarkable. On January 7, one day before the January 8 vote by Congress and Senate whether to approve or object to the electoral vote of Barack Hussein Obama, aka Barry Soetoro, as president of the United States, Chief Justice Roberts is sending a message to them: ‘Hold on, not so fast, there is value in this case, read it.'”

She noted the available procedure during congressional review for a member of Congress to object to the Electoral College results and demand documentation regarding Obama’s citizenship.

Join the campaign to urge the Supreme Court to take the eligibility question seriously by FedExing the justices.

“Each and every member of the U.S. Congress and Senate owes it to 320 million American citizens to do his due diligence and demand all necessary records,” she said.

Members of Congress, she said, “can spend a day or two of their time defending this Constitution, reviewing necessary documents, in order to see if Barack Hussein Obama is a natural born citizen…

“This is the message that the chief justice of the Supreme Court is sending to them. … (The) truth will come out, no matter how many millions Obama is spending to hide it,” she said.

The plaintiffs in the case include a vice presidential candidate on the California election ballot, four electors and two others.

She said her case was rejected by the California Supreme Court with a single-word decision, “Denied.” And she said her arguments rest on precedents from both the California Supreme Court, which years ago removed a candidate for president from the ballot because he was only 34, while the Constitution requires candidates to be 35, and the U.S. Supreme Court’s affirmation of that ruling.

“We’ll see what happens,” she told WND. “This is not going to go away.”

WND has reported extensively on questions raised about Obama’s eligibility, and the resulting lawsuits. The Taitz case is the fourth to earn a hearing at a Supreme Court conference.

Twice before the justices have heard the questions, in cases brought by Wrotnowski and Donofrio, and twice before they’ve decided to ignore them.

The result is that the questions remain unanswered and cloud the impending presidency of a man whose relatives have reported he was born in Kenya and who has decided, for whatever reason, not to release a bona fide copy of his original birth certificate in its complete form.

The lawsuits allege Obama does not meet the “natural born citizen” clause of the U.S. Constitution, Article 2, Section 1, which reads, “No Person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution, shall be eligible to the Office of President.”

Some allege his birth took place in Kenya and his mother was a minor at the time of his birth – too young to confer American citizenship. They report Obama’s father, Barack Obama Sr., was a Kenyan citizen subject to the jurisdiction of the United Kingdom at the time, and would have handed down British citizenship.

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 200,000 others and sign the petition demanding proof of eligibility now!

There also are questions raised about Obama’s move to Indonesia when he was a child and his attendance at school there when only Indonesian citizens were allowed in that nation’s schools and his travel to Pakistan in the ’80s when such travel was forbidden to American citizens.

On Friday the justices will consider Philip J. Berg’s Petition for Writ of Certiorari.

“This is a historic occasion that will impact the office of the president of the United States as never before. No one has ever brought an action against a president-elect candidate challenging his eligibility to serve based on the ‘natural born’ citizen requirement provided in the United States Constitution, Article II Section 1,” said a statement on Berg’s ObamaCrimes.com website.

Berg suggested if Obama “is allowed to be sworn in as president of the United States, there will be substantial and irrevocable harm to the stability of the United States of America and to its citizens.”

“Because Barack Obama is not a ‘natural born’ citizen as required by the United States Constitution, then all of his actions as president would be null and void,” Berg said.

Last month, WND reported similar concerns raised in a separate lawsuit filed in California.

“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,” argues a case brought on behalf of Ambassador Alan Keyes, also a presidential candidate. “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.”

Because of the high stakes, WND earlier launched a letter campaign to contact Electoral College members and urge them to review the controversy.

That followed a campaign that sent more than 60,000 letters by overnight delivery to the U.S. Supreme Court when one case contesting Obama’s eligibility for the Oval Office was pending.

A separate petition, already signed by more than 200,000 also is ongoing asking authorities in the election to seek proof Obama was born in the U.S. or that he fulfills the “natural-born American” clause in the Constitution.

WND senior reporter Jerome Corsi went to both 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 was why, if a Hawaii birth certificate exists as his campaign has stated, Obama 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?

Join the campaign to urge the Supreme Court to take the eligibility question seriously by FedExing the justices.

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

Watch The Obama commercial they don’t want you to see- FOX, CNN, MSNBC questioning Barak’s Eligibility refuse ads

Source: World Net Daily

Barack Obama’s campaign officials and transition office repeatedly have rejected reporters’ requests for comment on questions raised over his lack of documentation regarding his birth and the resulting concerns over his eligibility to be president. Now a number of media organizations apparently don’t want questions raised either.

WND columnist Janet Porter told WND she found that out when her organization, Faith2Action.org, tried to purchase airtime to publicize information about the eligibility concerns.

She told WND that national networks that refused to sell her time for a 60-second commercial included CNBC, MSNBC, Headline News, CNN and Fox. Washington, D.C., outlets for the same organizations did the same.

“With the date for congressional approval (of the Electoral College today), we wanted them to have access to the facts,” she told WND. “Congress is sworn to uphold the Constitution.”

She said the donors who contributed the funding that was to be used for the ads were being contacted to find out whether they wanted to reach another direction in the media.

The ad to be broadcast already is available on YouTube, and also is embedded here:

“Heard rumors about Barack Obama’s citizenship? These are the facts,” the ad states.

It cites a statement from the president-elect’s paternal grandmother that she was present at his birth in Kenya, his refusal to release his original birth certificate, his attendance at school in Indonesia “as Barry Soetoro when only Indonesia citizens were permitted to attend,” and Obama’s travel to Pakistan in 1981 “when it was illegal to enter as a U.S. citizen.”

Join the campaign to urge the Supreme Court to take the eligibility question seriously by FedExing the justices.

It concludes, “Our Constitution still matters.”

“As requested, we backed up every sentence of this ad, and still it was rejected,” Porter said. “What does that say about freedom of speech when we not only cannot count on the media to cover the story, but we can’t even buy time to publicize what may be the biggest story of the century.”

She raised several questions about the issue in her recent column.

“What if an impostor from another country ran for the presidency and won?” she asks. “What if the media blocked any news of his birthplace and citizenship? What if the media censorship even blocked paid advertising which tried to expose it?

“What if no one had the courage to challenge or verify it? What if he was inaugurated illegally? What if the military had to answer to a commander in chief who was illegitimate? What if every law he signed was invalid?”

And, she wonders, “What if it all happened on our watch?”

WND reported the U.S. Supreme Court has scheduled Friday a conference – a private meeting at which justices consider whether to take individual cases – on a lawsuit challenging Obama’s eligibility.

Twice before the justices have heard the questions, and twice before they’ve decided to ignore them.

The lingering questions continue to leave a cloud over the impending presidency of a man whose relatives have reported he was born in Kenya and who has decided, for whatever reason, not to release a bona fide copy of his original birth certificate in its complete form.

Multiple lawsuits have been filed around the nation alleging Obama does not meet the “natural born citizen” clause of the U.S. Constitution, Article 2, Section 1, which reads, “No Person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution, shall be eligible to the Office of President.”

Some of the legal challenges have alleged Obama was not born in Hawaii, as he insists, but in Kenya. The woman identified by Obama as his American mother, the suits contend, was too young at the time of his birth to confer American citizenship to her son under the law at the time – especially if it took place in a foreign country and the man identified as his father, Barack Obama Sr., was a Kenyan citizen.

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 200,000 others and sign the petition demanding proof of eligibility now!

Other challenges also have focused on Obama’s citizenship through his father, a Kenyan subject to the jurisdiction of the United Kingdom at the time of his birth, thus making him a dual citizen. Such cases contend the framers of the Constitution excluded dual citizens from qualifying as natural born.

Several details of Obama’s past have added twists to the question of his eligibility and citizenship, including his family’s move to Indonesia when he was a child, his travel to Pakistan in the ’80s when such travel was forbidden to American citizens and conflicting reports from Obama’s family about his place of birth.

On Friday the justices will consider Philip J. Berg’s Petition for Writ of Certiorari.

“This is a historic occasion that will impact the office of the president of the United States as never before. No one has ever brought an action against a president-elect candidate challenging his eligibility to serve based on the ‘natural born’ citizen requirement provided in the United States Constitution, Article II Section 1,” said a statement on Berg’s ObamaCrimes.com website.

Berg suggested if Obama “is allowed to be sworn in as president of the United States, there will be substantial and irrevocable harm to the stability of the United States of America and to its citizens.”

“Because Barack Obama is not a ‘natural born’ citizen as required by the United States Constitution, then all of his actions as president would be null and void,” Berg said.

Last month, WND reported similar concerns raised in a lawsuit filed in California.

“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,” argues a case brought on behalf of Ambassador Alan Keyes, also a presidential candidate. “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.”

Berg, who has another case on the issue pending on behalf of a retired military officer, earlier stated, “I am determined, on behalf of the 320 million citizens in the United States, to see that ‘our U.S. Constitution’ is followed. Specifically, in the case of Soetoro a/k/a Obama, does he meet the constitutional qualifications for president?

“I am appalled that the mainstream media continue to ignore this issue as we are headed to a ‘constitutional crisis.’ There is nothing more important than our U.S. Constitution and it must be enforced,” he said.

The Supreme Court also has another hearing on an issue raised by Berg for Jan. 16, and the Supreme Court just confirmed today yet another conference is scheduled Jan. 23 on a separate case, this one handled by California attorney Orly Taitz, challenging Obama’s eligibility.

Because of the high stakes, WND earlier launched a letter campaign to contact Electoral College members and urge them to review the controversy.

That followed a campaign that sent more than 60,000 letters by overnight delivery to the U.S. Supreme Court when one case contesting Obama’s eligibility for the Oval Office was pending.

A separate petition, already signed by more than 200,000 also is ongoing asking authorities in the election to seek proof Obama was born in the U.S. or that he fulfills the “natural-born American” clause in the Constitution.

WND senior reporter Jerome Corsi went to both 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 was why, if a Hawaii birth certificate exists as his campaign has stated, Obama 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?

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

Join The Resistance

This group is not intended to encourage animosity or malice toward President Obama or to bolster personal, ad hominem attacks so often used in political discourse.

On the contrary, it is imperative that conservatives maintain a love for country and respect for our institutions as we defend this nation against the threats posed by the Obama Administration. Our disagreements with President Obama must be based on ideology and public policy, not personal attacks. From this firm foundation, we can mount a patriotic, resilient, conservative resistances to Obama’s agenda.

Specifically we resist:
• Wealth distribution and higher taxes
• Government takeover of more and more of our lives
• Open borders, amnesty and undermining of our uniquely American culture
• Taxpayer-funded abortions and a radical anti-life agenda
• The weakening of our military and retreat in the War on Terror
• Socialized health care
• The end of marriage and the exaltation of LGBT rights
• International taxation and submitting our nation to the ideals of “global citizenship”
• The Courts stacked with leftist judges who betray our Constitution
• Weakening of the 2nd Amendment through unconstitutional gun laws that take away our firearms and our ability to defend our family, property, and ourselves

Sign The Petition and Find Out More


Share this:

  • Reddit
  • Facebook
  • LinkedIn
  • More
  • Twitter
  • Pinterest
  • Tumblr
  • Print
  • Email

Like this:

Like Loading...

The Obama Ad Nobody Wants You To See? – Why?

09 Friday Jan 2009

Posted by jschulmansr in 2008 Election, Barack Obama, communism, economy, Electoral College, Free Speech, Fundamental Analysis, id theft, Latest News, Presidential Election, socialism, Stocks, u.s. constitution, U.S. Dollar, Uncategorized

≈ Comments Off on The Obama Ad Nobody Wants You To See? – Why?

Tags

2008 Election, Barack Dunham, Barack Hussein Obama, Barack Obama, Barry Dunham, Barry Soetoro, capitalism, Chicago Tribune, Columbia University, Currency and Currencies, D.c. press club, Electoral College, Electors, Finance, fraud, Free Speech, gold, Harvard Law School, hawaii, id theft, Indonesia, Indonesian Citizenship, Investing, investments, Joe Biden, John McCain, Latest News, legal documents, Markets, name change, natural born citizen, Oath of Allegiance of the President of the United State, Occidental College, Phillip Berg, Politics, poser, Presidential Election, Sarah Palin, socialism, Stocks, Today, treason, u.s. constitution, U.S. Dollar, Uncategorized, voter fraud, we the people foundation

Why is Obama still refusing to come up with his Birth certificate and just end all of this? Again I ask “Obama what are you hiding?”. Check Out this video on the ad “They” don’t want you to see! – jschulmansr

 

Come On Obama- Give It Up! (the Birth Certificate)

Share this:

  • Reddit
  • Facebook
  • LinkedIn
  • More
  • Twitter
  • Pinterest
  • Tumblr
  • Print
  • Email

Like this:

Like Loading...

Has World War III Started?

09 Friday Jan 2009

Posted by jschulmansr in agricultural commodities, alternate energy, Austrian school, banking crisis, banks, Barack Obama, bear market, Bollinger Bands, bull market, capitalism, central banks, China, Comex, commodities, communism, Copper, Currencies, currency, Currency and Currencies, deflation, depression, diamonds, dollar denominated, dollar denominated investments, economic, economic trends, economy, Finance, financial, Forex, Fundamental Analysis, futures, futures markets, gold, gold miners, hard assets, heating oil, How To Invest, How To Make Money, India, inflation, Investing, investments, Keith Fitz-Gerald, Latest News, Make Money Investing, Marc Faber, market crash, Markets, mining companies, mining stocks, Moving Averages, natural gas, Nuclear Weapons, 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, Siliver, silver, silver miners, small caps, socialism, sovereign, spot, spot price, stagflation, Stocks, Technical Analysis, timber, Today, U.S. Dollar, uranium, volatility, warrants, Water

≈ Comments Off on Has World War III Started?

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, 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

Has World War III already started? According to Marc Faber it has! Check out his interview. Next do you think the government can lose? According to this pundit not only will it lose it is going to lose big! Finally, for years now China has been coming to the rescue by buying Treasuries and US Debt, what will happen when they and other countries stop? Continuation of series from yesterday’s post. Just In! Peter Schiff Interviwed on Russian TV- Get Prepared!  adjust your portfolios and if you own Precious Metals hang on for the ride of your life!- Good Investing!- jschulmansr

Marc Faber on the Economy, Gold, WWIII – Seeking alpha

By: Tim Iacono of Iacono Research

Another good interview with Dr. Marc Faber, this one over at Bloomberg where he’s been a regular for many years (recent appearances at the likes of CNBC are somewhat unusual as he tends to go against conventional wisdom, something that abounds at CNBC).
IMAGE

Click to play in a new window

There’s lots of good stuff in this one – the outlook for the global economy, oil, gold, base metals, natural resource stocks, World War III having already started…

On the subject of alternatives to the government solutions for the current problems, he was asked how he expected the populace to stand for the government doing nothing?

That’s the problem of society. If people can not accept the downside to capitalism, then they should become socialists and then they have a planned economy. They should go to eastern Europe twenty years ago and to Russia and China for the last 70 years.

How do you tell that to somebody in Detroit who’s losing his home today?

 

 

 

Why is he losing his home? Because of government intervention. The government – the Federal Reserve – kept interest rates artificially low and created the biggest housing bubble, not just in the U.S. but worldwide. That is what I’d explain to the worker in Detroit.

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

How the Federal Government will Lose in 2009 – Seeking Alpha

By: Rob Viglione of The Freedom Factory

Through a combination of incompetence and greed, the federal government has placed itself in a position of checkmate. There is no way to finance its budget deficits without devaluing the dollar or causing interest rates to rise. With $10.6 trillion in debt, $8.5 trillion in new money created or given away in 2008, and multiple years of trillion dollar deficits planned by Obama, government has no way to fund its extravagances without either printing a lot more money or borrowing unprecedented sums.

This means that either Treasury bonds will crash, or the dollar will suffer significant devaluation relative to foreign exchange or precious metals, especially gold.

TV Does Great Interview With Peter Schiff (Russian TV, That Is)

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

Remember Dare Something Worthy Today Too!

 

Market forces are telling the world to shed unproductive assets and shrink capacity, yet central banks and governments around the world, in particular the U.S., are refusing to listen. Rather than allow markets to snap back to sustainable equilibrium from previously artificial highs, the federal government clings to the notion that forcibly shuffling resources, propping up asset prices, and diluting the money supply will magically save the day.

There are consequences to everything. The consequences of shuffling resources (taxing productive ventures and doling out those resources to failing ones, i.e. bailouts) are stunted growth for good businesses and propagation of bad ones. Artificially propping up asset prices means that those who are generally less competent remain the custodians of society’s capital, and diluting the money supply inflates aways everyone’s wealth over time, particularly harming the poor and middle class.

For decades the federal government has gotten away with this reshuffle and inflate game, but the pawns are drowning, the rooks helpless, and the knights ready to turn on the King. Perhaps this is overly dramatic. Clearly, I doubt the capability of the Federal Reserve, Congress, and Obama to “fix” the economy; rather, I strongly believe they are destroying it by forcing us all to drink this Keynesian Kool-Aid. However, whether or not the economy recovers amidst this historic central government action, there are two phenomena we can exploit to our advantage:

  • Short the US dollar
  • Short US Treasuries

In “When will the great Treasury unwinding begin?” I show how government debt has been bid to unsustainable levels and will likely fall. The one concern I see stated all too often is that the Federal Reserve will keep buying Treasuries to artificially depress interest rates. This will, it is claimed, keep bond prices inflated. The one undeniable counter to this is that government must somehow fund its $1.2 trillion estimated 2009 deficit. It cannot do this by issuing and then buying the same bonds. It can only raise revenue by selling bonds to other parties, or by diluting the money supply by cranking up the printing presses. There are no other options. There you have it – we have the government in checkmate!

The likely outcome is that they will try to do both. That is why I am heavily shorting both 30-Year Treasury bonds and the dollar. Both assets will likely lose as the government becomes increasingly desperate and the world’s biggest buyers realize there are better alternatives available. Make your bets now before it becomes treasonous to bet against Big Brother!

Disclosure: Long UDN, short TLT, long GLD.

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

Five New Forces to Drive Gold Higher – Seeking Alpha

By: James West of The Midas Letter

Gold naysayers habitually point to the relatively weak performance of gold relative to the broader market over the last 5 years. Given the market today, that argument is increasingly wrong, and the naysayers are soon to either admit their mistake, or pretend that they were never naysayers at all. That’s because during the last 3 months, five major new forces have emerged to compound the previous strong drivers of the gold price up to now.

These new forces are as follows:

  1. China has stopped buying U.S. debt.
    An interesting piece in the New York Times today signals that China, up until now the biggest buyer of U.S. Treasuries and bonds issued by Fannie and Freddie, is moving towards an end to that policy. China holds over US$1 trillion of such paper, and as interest rates collapse, there is less and less incentive for them to buy American.China has made several adjustments to programs that used to give banks and other financial institutions within the country incentive to buy U.S. assets, which means essentially that these same customers for assets will now be looking for Chinese products.The effect this will have on gold is two-fold. In the first place, reduced demand for U.S. debt will hamper Obama’s plans to keep printing money, because the one limiting factor that still seems to be respected in terms of how much paper can be printed, is the idea that there must be a counterparty to every issuance of T-Bills to warrant continued printing. Theoretically, less demand for T-Bills will force a rise in interest rates to attract investors. But that does not appear forthcoming, which will make the U.S. dollar weak relative to other currencies – especially gold.The second effect is that by eliminating incentives for Chinese banks to acquire U.S. denominated assets, investors there will divert more funds to holding gold as a hedge against their current U.S. dollar holdings, which will be diminishing in value.
  2. Future discoveries of gold deposits will diminish dramatically.
    The biggest source of gold ounce inventory for major gold producers is the discoveries made by the several thousand juniors who scour the earth in search of favorable geology. With the collapse in base metals prices, many of these juniors are under increasing pressure to consolidate and downsize, and many more will disappear altogether.That means less money going into gold exploration, and that means the number of new discoveries that can be acquired by majors is going to go down sharply in the coming years. In theory, as gold continues to outperform all other asset classes, there will be a rush back into junior gold exploration, but that won’t happen until gold is taken much higher and investment demand for it soars.
  3. Existing by-product gold production will fall sharply
    In copper, zinc and other base metals mines around the world, gold occurs in metallic deposits as a by-product of some other dominant mineral. In the United States, 15 percent of gold production is derived from mining copper, lead and zinc ores.With the collapse in prices for these metals, the by-product production of gold is most often insufficient to justify the continued operation of the mine profitably, and it is likely that a significant amount of this by-product gold production will cease along with the shutdown of these operations. The result will be less gold production from existing operations, contributing to the now even faster growing gap between supply and demand.
  4. Gold is becoming mainstream
    One of the biggest contributors to gold’s unpopularity as a main street investment is that it has been mercilessly derided and ridiculed by mainstream investment media and institutions. There is very little opportunity for an investment advisor to insinuate himself into a gold purchase transaction, since most anybody who wants to hold the metal can visit their local bullion exchange or mint and buy as much as they’d like. Because the massive investment institutions that dominate the investment advisory business can’t make a fee out of advising you to buy gold, they try to convince you to purchase other asset classes which their firm has either originated or is a participant in a syndication of investment banks selling such products.Thanks to the widespread coverage of the questionable integrity of these complex securities, and since many main street investors have been burned by their investment advisors (they feel), there is increasing main street advice being doled out to buy gold. One need only search Google news on any given day to discover that headlines critical of gold are now replaced with headlines singing its praises.
  5. Gold is the best performing asset class of the decade
    Now that the global financial meltdown has got up a head of steam, investors are hard pressed to find any investment that has performed well over the last ten years as consistently as gold. The chart below outlines this performance and appears here courtesy of James Turk’s GoldMoney.com.
Gold Performance: 2001-2008 (click to enlarge)
Gold Performance 2001 - 2008

As you can see, any investment still returning an average of 10 – 17 percent is a winner, compared to everything else you can generate a chart for. As this intelligence permeates the none-too-quick popular investment imagination, and, combined with the other 4 factors, gold is going to be where the world’s next crop of millionaires is minted.

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

Share this:

  • Reddit
  • Facebook
  • LinkedIn
  • More
  • Twitter
  • Pinterest
  • Tumblr
  • Print
  • Email

Like this:

Like Loading...

The U.S. Dollar and Deficit-Gold Relationships

08 Thursday Jan 2009

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, Investing, investments, Latest News, Make Money Investing, Markets, mining companies, mining stocks, Moving Averages, oil, platinum, precious metals, silver, small caps, Stocks, Technical Analysis, Today, U.S. Dollar, Uncategorized

≈ Comments Off on The U.S. Dollar and Deficit-Gold Relationships

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- Gold came roaring back today and being beaten down yesterday, currently Gold is up $15 at $856+ and holding above the $850 level. Today’s articles explore the relationship of the U.S. Dollar, the Deficit and National Debt; and their relationship to Gold prices. If you are not alarmed by the current deficit you should be! Now with Obama predicting a yearly deficit of over 1 Trillion dollars what does this mean for the Economy, the Dollar and the price of Gold? Read On and Find Out… Good Investing – jschulmansr

Things We Don’t Talk About (But Should); National Debt and the $2 Trillion Deficits- Seeking Alpha

By: Jonathan O’Shaughnessy of Emerginvest Blog & Emerginvest 

It has been around for decades, and has been ignored by many for just as long. However, the US national debt stands to finally be thrown into the forefront of political discussion as the record for a single-year deficit looks to be beaten – by threefold.

According to the government-run TreasuryDirect.gov, US national debt is the largest it has been in history at $10.6 trillion, or $10,638,425,746,293.80. This is at a time when the US is facing the worst economic crisis since the Great Depression, which requires record-shattering government spending to stabilize the faltering economy. In addition, global demand for US national debt is waning as countries world-wide are implementing their own financial stimulus packages. Yet economists are virtually unanimously advocating for radical government spending to stabilize the economy, which leaves future generations of Americans holding extremely large amounts of national debt.

The problem for the average American is twofold: national debt doesn’t seemingly affect their daily lives and $10.6 trillion is a hard number to conceptualize. After a certain point, the human brain stops comprehending the magnitude of a given number, and simply categorizes it as “extremely large.” Subsequently, there is little public outrage or discussion when the US has run up a few hundred billion dollar deficit in years past. It doesn’t seem to affect their lives, no government projects are cut, and adding $0.2T onto $10.6T seems relatively insignificant.

However, when viewed in another light, the enormity of the national debt is astonishing. According to the 2007 United States budget, and TreasuryDirect.gov, the interest alone on national debt is approximately $460 billion. It accounts for the second-highest expenditure on the US budget and if the US could forgo paying that interest on national debt for one year, the United States government could:

1) Pay for the entire education budget of the United States six times over

2) Reduce federal taxes by 33% for all Americans, or

3) Write a check to every man, woman, and child in the United States for $1,500.

Yet, that $460 billion in annual interest looks to grow substantially with looming deficits in the years to come.

A New York Times article entitled “Obama Warns of Prospect for Trillion-Dollar Deficits,” stated: “President-elect Barack Obama on Tuesday braced Americans for the unparalleled prospect of ‘trillion-dollar deficits for years to come.’” President-elect Obama did not give details about the size of the deficit, but projections place the proposed deficit at close to $1.2 trillion for 2009, shattering the record from President Bush last year at $455B.

That is not counting the proposed $800B 2-year stimulus package which could easily raise the deficit into the $1.7 trillion range – bringing the national debt to roughly $12.3 trillion by the end of 2009. Assuming deficits run at approximately $1 trillion per year for the next two years, which may or may not be conservative, the US could see its national debt as high as $15 trillion in three years.

Subsequently, Obama added emphasis on tighter government regulation, quoted in the NYTimes article as saying: “’ We’re not going to be able to expect the American people to support this critical effort unless we take extraordinary steps to ensure that the investments are made wisely and managed well.’” In correlation, he created a new position, chief performance officer, in charge of eradicating government inefficiencies.

This comes at a time however, when global demand for US debt is falling sharply. A prime example is China, one of the largest creditors to the US, which has heavily curtailed its purchases of US debt in light of the recent financial crisis. Another NYTimes article entitled: “China Losing Taste for Debt from U.S.,” states that: “China’s foreign reserves will increase by $177 billion this year — a large number, but down sharply from an estimated $415 billion last year.” The Chinese government is dealing with their own economic woes – a stock market which has shed two thirds of its value in the last year – and is attempting to implement their own economic stimulus package. Furthermore, the sharp outflow of foreign direct investment in China has further complicated the issue. The situation is similar across the world, as the Emerginvest heat map shows the damage from the past quarter (click to enlarge):

The lack of global demand for US national debt could put severe pressure on US interest rates in the years to come if demand continues to shrink drastically. However, there is a political buffer, as the article stated that: “China’s leadership is likely to avoid any complete halt to purchases of Treasuries for fear of appearing to be torpedoing American chances for an economic recovery at a vulnerable time, said Paul Tang, the chief economist at the Bank of East Asia. ‘This is a political decision,’ he said. ‘This is not purely an investment decision.’”

Yet even in the face of significant strain on government debt and sagging global demand, economists are virtually unanimous in calling for exorbitant amounts of government spending to stabilize the economy. Yet another NYTimes article entitled: “A Crisis Trumps Constraint,” states that: “To a degree that would have been unimaginable two years ago, economists and politicians from across the political spectrum have put aside calls for fiscal restraint and decided that Congress should spend whatever it takes to rescue the economy,” in addition to: “’It pains me to say that because I am a fiscal conservative who dislikes budget deficits and increases in government spending,’ Mr. Feldstein told the lawmakers. But he said, ‘Reviving the economy requires major fiscal stimulus from tax cuts and increased government spending.’”

Therefore, it looks as if the U.S. is inexorably tied to unparalleled government spending in the short term, nearly guaranteeing a national debt of over $14 trillion within a few years. The Obama administration has hinted at overhauling Medicare and Social Security as ways of dampening the gargantuan deficits, but the method, and certainly the net effect of such an undertaking remains ambiguous until the budget is revealed. It seems as if, in the interest of short term self-preservation, future generations of Americans will be inevitably saddled with incomparable amounts of national debt which will heavily shape future American fiscal policy for decades.

Disclosure: Emerginvest is an international finance portal, providing analysis and data on 120+ world markets to help individuals find investments from around the world. Emerginvest provides impartial information about world stock markets, and does not have any holdings in foreign equities.

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

Government Panic Could Herald Dollar Panic – Seeking Alpha

Source: John Browne of Euro Pacific Capital

One of the few things more troubling for an economy than government intervention is government intervention driven by panic. Time and again, history has shown that when governments rush to engineer solutions to pressing problems, unintended difficulties arise.

In the current crisis, there is growing evidence that Washington is in a state of increasing panic. Despite its massive cash injections, market manipulations and ‘rescue’ plans, the recession is clearly deepening and spreading. With little to show thus far, politicians don’t know if they should redouble past efforts, break ground on new initiatives, or both. However all agree, unfortunately, that the consequences of doing too little far outweigh the consequences of doing too much.

Although there are many parallels between the current crisis and the Crash of 1929, one key difference is the global profile of the U.S. dollar. In 1929, the dollar was on the rise, and would soon eclipse the British Pound Sterling as the world’s ‘reserve’ currency. Furthermore, the American economy was fundamentally so strong that in 1934 America was the only major nation able to maintain a currency tied to gold.

Ever since, the U.S. dollar’s privileged ‘reserve’ status has been a principal factor in America’s continued prosperity. The dollar’s unassailable position has enabled successive American governments to disguise the vast depletion of America’s wealth and to successfully increase U.S. Treasury debt to where the published debt now accounts for some 100 percent of GDP. The total of U.S. government debt, including IOU’s and unfunded programs, now stands at a staggering $50 trillion, or five times GDP! If the dollar were just another currency, this never would have been possible.

In today’s crisis however, the dollar is likely making its last star turn as the leading man in the global financial drama. Other stronger, less burdened currencies are waiting in the wings for the old gent to take his final bows.

The dollar’s demise is being catalyzed by the neglect of the Federal government. Instead of enacting policies that would restructure the U.S. economy, and restore productive, non-inflationary wealth creation, Congress is simply financing the old crumbling edifice.

Faced with the growing realization that America is not doing the work necessary to right its economic ship, it will not be long before America’s primary creditors begin to seriously question the nation’s ability to service, let alone repay, its debts.

There is now the prospect (inconceivable until recently), that America could lose its prestigious ‘triple-A’ credit rating. In today’s risk adverse market, this could cost the Treasury one percent in interest on long bonds. Each additional percentage point of interest would cost America some $10 billion a year on each trillion dollars of new debt, or some $300 billion over the life of a 30-year bond.

Many of the foreign governments who hold huge amounts of U.S. dollar Treasury debt, such as China and Japan, have announced plans to spend money on their own ailing economies. Should these foreign central banks divert to domestic initiatives some of the funds used to buy U.S. Treasuries, serious upward pressure on U.S. interest rates will result. Should they actually sell parts or all of their holdings they will likely put serious downward pressure on the U.S. dollar. Last week, a Chinese official claimed the U.S. dollar should be phased out as the world’s ‘reserve’ currency.

In the short term, as dollar ‘carry-trades’ continue to be unwound and questions of political will and falling interest rates haunt the Euro and some other currencies, the U.S. dollar may be the recipient of some upward appreciation. But with the American government appearing increasingly to be in panic mode, a run on the U.S. dollar could develop rapidly into cascading devaluation. Even if no such panic run materializes the long-term outlook for the U.S. dollar is one of high risk and low return. This beckons major upward pressure on precious metals.

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

What is Going On With Gold? – Seeking Alpha

Source: The Pragmatic Capitalist

Gold (ETF:GLD) is one of the most fascinating and talked about assets on the planet. There are more conspiracy theories and story lines behind gold than just about anything on earth. Heck, the followers of the asset even have their own club: the goldbugs. You can’t go a day without seeing a commercial about gold. If you google “buy gold” you get almost as many results as if you search “buy real estate” (15.4MM vs 16MM).

But gold has been acting funny lately. The conspiracy theories have been running even crazier than usual (from government conspiracy to backwardation) and the goldbugs are angry. As the world economy deteriorates and the U.S. prints money like it’s going out of style, gold has not appreciated. If you had told me in December of 2007 that the global stock market would fall 40% in 2008 I would have told you to buy gold and nothing else because of its safehaven characteristics. But a funny thing happened on the way to the demise of the global economy: Gold fell.

After rallying into the second quarter of 2008, gold went on a gut wrenching 6 month decline of over 30% – all in the midst of one of the greatest financial collapses ever. It was, if nothing else, quite a paradox. Even crazier, the US dollar stabilized and then rallied into the end of 2008. Why did this happen? How could gold fall in such an environment?

Gold remains an anti-dollar investment. It’s as simple as that. When you buy gold you’re essentially buying a hard asset currency with the hope that one day it will become the world’s choice of currency again. If the dollar (UUP) weakens or one day fails the likelihood of a gold based currency increases. In essence, buying gold is a way of betting against the greenback and U.S. economic dominance. You can argue the extent of my argument, but you can’t really argue with the inverse correlation in the two assets:

Click to enlarge

The correlation is clear. If you’re betting on a rise in gold you’re betting on a falling dollar. I’ve been banking on a higher dollar for over 6 months for one reason: it’s the best currency in a bad lot. Jim Cramer should change his area of expertise to currencies, because while there isn’t always a bull market in stocks and commodities, there is always a bull market somewhere in the currency market. Trades are paired in Forex and unfortunately, it’s hard at this time to make an argument in favor of other currencies over the greenback. And as long as the greenback remains strong it’s unlikely that gold will make any sustainable run.

So why is the dollar the best of the worst? It’s quite simple in my mind. Two major currencies on the planet now effectively bear zero interest: the dollar and the Yen. Of the two, the U.S. is the far superior economy. In essence, neither country can really devalue their currency all that much more unless they decide to print money to the point of insanity and although I believe the U.S. is printing wildly I am not incredibly alarmed as of yet simply because the destructive deflationary forces at work are so much greater than the inflationary response by the Fed. Inflation is certain to rear its ugly head in the coming years, but I suspect it will be relatively mild as the economic rebound is slow and the overall monetary destruction of this deflationary phase proves to be incredible.

So, getting back to the greenback – the U.S. was first to enter a recession and it now looks like the world is catching pneumonia from our cold. Unfortunately Europe and Asia still have relatively high interest rates (read: room for currency devaluation) and simply don’t carry the same status as the U.S. – we are the reserve currency and the only true AAA nation. Yes, you can certainly make the argument that the U.S. is no longer a AAA rated country, but if we’re AA then what does that make Japan (the world’s second largest economy) or Germany? Much worse, in my opinion.

So what we’re seeing is essentially a flight to quality in a time of financial distress? Yes, that’s right, the U.S. dollar is a higher quality asset right now than just about any currency on the planet. And if you’re a U.S. citizen you should be thanking your lucky stars it’s THE reserve currency because this crisis would likely be even worse if that wasn’t the case.

So, before you go placing bets on gold it might be better to research the greenback first.

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

Not Time To Exit Commodity Positions – Seeking Alpha

By: J.D. Steinhilber of Agile Investing

Diversified commodities have suffered approximately the same one-year decline as stocks, but the descent has been more violent since broad commodity indexes peaked in the middle of 2008, whereas most stock indexes peaked in October 2007. Just as it is not the time to abandon stock market commitments, this is certainly not the time to exit commodity positions in the context of a diversified multi-asset portfolio.

Cyclical commodities are not a valuable hedge to a stock portfolio in a deflationary bust and a liquidity crisis such as we have seen, but those conditions are not likely to persist over any investment horizon measured in years rather than months. Massive government reflation and stimulus efforts will support hard assets in 2009. Infrastructure spending is bullish for commodity prices, and tighter credit conditions, along with lower prices, puts pressure on the supply of commodities as suppliers curtail production.

Gold finished the year on a very strong note and managed to produce another year of positive returns in 2008. Gold has the most attractive three and five year annualized returns of all the asset classes we track. Gold will continue to be whip-sawed by the volatility in the currency markets.

We hold Gold (GLD) in our portfolios as an insurance policy against financial crisis and paper currency devaluation. The opportunity cost of holding gold, which produces no dividend or interest income, is now very low given that the Federal Reserve has cut the official U.S. overnight lending rate to zero to 0.25%, and has stated that “weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.”

[click to enlarge]

 

 

 

 

 

 

 

 

 

 

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

How Will Obama’s “Trillion Dollar Deficits” Affect the Markets? – Seeking Alpha

By: Simit Patel of Informed Trades.com

The New York Times has an article this week reporting on US President-elect Barack Obama’s warning that there will be ‘trillion-dollar deficits for years to come.” What does that mean for the markets?

The first line of recourse will be the issuance of Treasury bonds; in other words, the US government will look to borrow money, offering to pay it back with interest. The key question, though, is to what extent buyers of Treasuries will be easily found. As we have discussed previously, the very low yield on bonds coupled with the fact that the economic pains are being felt all around the world suggest one of two possibilities: bond rates will have to go up or the Federal Reserve will have to “monetize the debt” — meaning it will simply have to print more money.

I have stated and continue to believe that the result of increased deficit spending, due largely to government bailouts, in this environment will be debt monetization (even if there is a rate hike, that will only increase the future debt, and thus will only delay and exacerbate debt monetization). I believe this will prove to be inflationary, that it will devalue the US dollar, and that this is the real way the bailouts will be paid for; not via a direct tax, but rather a tax through inflation. Economist Mike Shedlock, however, offers a counter viewpoint:

The Fed at some point will resort to out and out monetization, and that will have the inflationists screaming at the top of their lungs. However, banks will still be reluctant to lend, and consumers and businesses will be reluctant to borrow. In addition, I expect the velocity of money printed to be close to zero and for the savings rate to rise. In aggregate, these are not hyperinflationary things. Heck, they are not even inflationary things.

Admittedly, I am one of those inflationists who will be screaming at the top of my lungs.

There are two reasons I believe debt monetization will be inflationary:

  1. I disagree with the notion that banks won’t lend and consumers won’t borrow. As I recently noted, we are seeing a declining TED spread as well as an increase in many money supply metrics (M1, M2, MZM). And even in this environment, we have seen companies like Verizon be able to secure a massive $17 billion loan.
  2. Even if lending is reduced due to the economic climate, debt monetization increases the likelihood that foreigners will not only stop buying Treasuries, but that they will sell the ones they have, and will dump US dollar holdings out of a concern of dollar devaluation by the part of the Federal Reserve. This suggests there will be a “run on the currency,” similar to what was seen in Argentina. See our previous article on the similiarities between the US economic crisis and the Argentinian crisis of 2001 for more on this subject.

How to Trade This Scenario

Timing is the key issue for trading this; we are currently seeing a rally in the market, though I expect that at some point in the second half of 2009 we will see the concerns about the Treasury market begin to manifest. As a trend-following trader I look for momentum that corresponds to my fundamental viewpoint, with the exception of precious metals, which I treat as buy and hold type investments.

With that in mind, here are the conclusions I am making based on the trillion dollar deficit scenario:

  1. US dollar will fall in value. For stock market traders, UDN is an ETF to watch.
  2. Dollar hedges like gold and silver will rise. GLD and SLV are corresponding ETFs.
  3. Both monetization of debt as well as a hike in interest rates will send bond prices falling, as a rate hike devalues all bonds previously issued at a lower rate while monetization of debt introduces inflation concerns and the possiblity of the bond being paid back with a currency that is worth less.
  4. A rate hike, which I think is increasingly unlikely given the Fed’s behavior though still possible, will be bearish for US stocks. DOG and SH are inverse ETFs worth considering in such a scenario.

Disclosure: Long gold and silver; currently short US dollar against Australian dollar.

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

My Note: Whether as “Portfolio Insurance”, or as a Speculative Investment, I think now is the time to buy and Invest in  Gold and Precious Metals in any form. I am calling for $1000 to $1250 Gold later this year and even higher if the Middle East Situation disintergrates and gets worse. Other factors are mentioned in detail above, don’t kick yourself later, buy Precious Metals and Miners at these ridiculously low levels NOW!

My- Disclosure: I am long Physical Precious Metals, Etf’s, and Mining/Producer Stocks. I.e. my money is where my mouth is! Remember to do your own Due Diligence and read all Prospectus’s before making any investment. -jschulmansr

Share this:

  • Reddit
  • Facebook
  • LinkedIn
  • More
  • Twitter
  • Pinterest
  • Tumblr
  • Print
  • Email

Like this:

Like Loading...

Gold-History Repeating Itself?

06 Tuesday Jan 2009

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

≈ Comments Off on Gold-History Repeating Itself?

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, silver, silver miners, socialism, sovereign, spot, spot price, stagflation, Technical Analysis, timber, U.S. Dollar, volatility, warrants, Water

Today’s action: Gold opened down by a few dollars and now has reversed itself and is cusrrently up $7-10 oz. Based off of chart formations it would appear that  Gold is breaking out to the upside and getting ready to challenge the $900 level, If it can break that then we are set up for a test of the $950-$975 level. If it fails here, a pullback to the $800 level (support base) will probably occur. Today’s articles include one about a new 2yr gold price cycle that appears to be forming. Next some questions answered about the markets for 2009. Finally a special report from Gold World about Gold Backed Banking. Enjoy and good investing! – jschulmansr

Gold’s 2-year cycle – MineWeb

A Mineweb reader has noticed a recent two-year cycle for gold price behaviour which, if it continues will likely give some guidance to price movements this year and next.

By: Joseph Cafariello

EDMONTON, CANADA –

There seems to be a two-year cycle in the gold price which has been repeating itself since about 2004.  The even years follow one pattern, while the odd years follow another pattern.  The even years tend to reach exaggerated extremes to the upside and to the downside on a percentage basis, while the odd years tend to be a little calmer with less volatility.

For example, 2008 went very much like 2006, with exaggerated highs reached in the spring of each year, and a late start to the traditional autumn-winter-spring upswing, which began around October/November of 06 and 08.  On the odd-number side, 2007 went much like 2005, with moderate highs reached in May of each year, and an early start to the traditional autumn-winter-spring upswing, which began around August/September of 05 and 07.

If this is indeed a reliable cycle, we can expect 2009 to be much like 2005 and 2007 all throughout the year.  The first half of 2009 should see gold follow the same pattern as the first halves of 2005 and 2007.  In the springs of 05 and 07, gold kept hitting its head against the previous year’s high all throughout the spring.  More than once during the spring of 2007, gold topped out at about $690, coming to within about 5% of the 2006 high of $735.  Similarly, the spring of 09 should see gold hitting its head against 2008’s high of $1,035, coming to within 5% of it, or up to about $985.  That will be the high for the first half of 2009 at around the beginning of May, though this will not be the high for 2009 as a whole.

Given the odd-number year pattern, we might also expect the back half of 2009 to be much like the back halves of 2005 and 2007.  In both 2005 and 2007, the summertime pull-backs were modest, and the autumn-winter-spring upswings started early, at around August/September of 05 and 07.  The latter half of 2009, then, should see a modest summer-time pull-back of about 5% to 7% of its spring 09 high, taking gold down from $985 in May 09 to about $925 by August 09.  However, the low for 2009 will still be the upcoming January low of $800, which is now only about a week or two away.  The lows of January 2005 and January 2007 were also “the” or “close to the” annual lows for those years.  So the low of 2009 will be at around $800 in January.

The high for 2009 will come in December.  The traditional autumn-winter-spring upswing in 2009-10 will be much as it was in 2005-06 and 2007-08, with an early start.  The year-end run for 09 will begin around August or the beginning of September, jumping from about $925 in Aug/Sep 09 and rising steadily until the end of December 09.  The annual highs for 2005 and 2007 were hit in or near December of each year, and each high was about 20% higher than the average of their first halves.  Thus, the annual high of 2009 will be hit in or near December, and will be 20% higher than the average of its first half, putting the 2009 high at about $1,150 in December.

The traditional autumn-winter-spring upswing, however, will certainly not end in 2009, but will spill over into the spring of 2010 much as it did in the springs of 2006 and 2008.  The high in the spring of 2008 was about 40% higher than high in the spring of 2006.  Hence, the high in the spring of 2010 will be about 40% higher than 2008’s high of $1,035, putting gold at about $1,450 in the spring of 2010.  Then, the summertime pull back of 2010 will be just as stark as were the summertime pullbacks of 2006 and 2008.

And so the two-year cycle will continue, where even-number years follow a pattern of extremes, while the odd-number years are calmer, but with a nice upward kick at the end.  This two-year cycle with even-number years on the extreme side and odd-number years on the moderate side will continue until the commodity boom is over (say around the year 2030, when the populations of China and India finally achieve a 75% middle-class), and until the US dollar recovers at around the same year (2030), when the rest of the world will be looking to the US as a nice place to shop given its then-to-be dirt-cheap dollar.

The above comment was contributed by Mineweb reader Joseph Cafariello who describes himself as “A raving gold bug and proud of it”

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

2009 Market Q&A: Four Questions Answered – Seeking Alpha

Source: Eric Roseman of The Sovereign Society

By Eric Roseman

Over the last several weeks I’ve received numerous questions from Sovereign Society subscribers, including individuals who frequent our daily blog.

As we start 2009, I thought this would be an ideal forum to collect some of these important questions and attempt to give you my best conclusions. I can’t reprint all of these inquiries; but I’ve compiled several excellent questions from our members.

Overall, I don’t like forecasting. I generally believe it’s a total waste of time and most consensus estimates ahead of 2008 ended in the basement with the majority of analysts dead wrong about the economy, the market and just about everything else.

I have to admit that I never expected the markets to crash, the banking system to go bust or the dollar to skyrocket in the midst of the worst financial crisis in 75 years. To be fair, I think most pros failed to make accurate predictions.

Question: I’m a retired investor living on income. Prior to the big rally in Treasury bonds, I held most of my savings in short-term Treasury’s and bank term deposits. But with short-term rates under 1% and government bonds yielding a pittance, I’m nervous. What should I do to supplement my income?

Comment: This is perhaps the most challenging environment for retirees in more than a generation. With money-market funds yielding almost nothing, Treasury bonds yielding around 2% and bank CDs paying under 1%, retirees must supplement their income.

My advice is to take a small portion of your savings, say 20%, and scatter that sum across a dozen or more investment grade corporate bonds. I emphasize “investment grade” and not junk debt. Investment grade debt includes anything rated BBB or better in my book and, to make it easier, I would stick to issues rated A- or higher.

The Dow Jones Corporate Bond Index now yields 6.90% – down from its post-crash high yield of 8.87% in early $100 bill imageOctober. Still, investors can tap into non-financial bonds like IBM, Johnson & Johnson (JNJ), Wal-Mart (WMT) and Kraft Foods (KFT) – all paying 5.5% or more. Or, look at corporate bonds issued by America’s largest banks, including JPMorgan Chase (JPM), Goldman Sachs (GS), Wells Fargo (WFC) and US Bancorp (USB). These banks won’t default.

A good strategy to keep things simple is to buy a laddered portfolio of corporate bonds ranging from two years all the way to seven years. This should at least give your nest egg a boost and if you feel comfortable with this formula, then increase your position to say 35% of your portfolio. But remember, don’t go whole-hog; at some point over the next 12 months, perhaps later, Treasury bond prices will get smashed and long-term rates will head higher as the government expands credit to the moon. Keep your powder dry.

Question: Do you think we’ll avoid another Great Depression? Despite all the money thrown at the markets since late 2007 we’re still in the midst of a severe credit contraction and the global economy has literally fallen off a cliff since October.

Comment: I think we’ll avoid another Great Depression but only because government will nationalize or partially nationalize key industries. Without government intervention, the free market would have resulted in massive failures and a total collapse of the banking system and the broader global economy. There’s no doubt in my mind that the government made a big mistake not rescuing Lehman Brothers last September. Once you’re bailing out major banks, then do it right. But in all honesty, we don’t know what transpires behind the Fed’s walls or the Treasury’s. There’s some crazy buddy system in progress with special interests influencing government policy. The government doesn’t give a damn about you or me. What they care about is protecting their interests. That’s why we must protect our assets and, in the end, I believe gold will triumph above all paper money, especially against the dollar.

I don’t advocate government intervention; but these are not normal times and the consequences might have resulted in the death of capitalism and perhaps the emergence of a new social order, similar to what occurred in post-Weimar Germany in the 1920s. Harsh economic times usually result in a new socio-economic regime. If the Fed and Treasury fail to rescue the credit system, then we might face similar consequences. The world as we know it will come to an end.

It’s hard to know exactly what goes on behind the Federal Reserve’s closed doors and at the Treasury’s. Thus far, government efforts have been bold since the October crash, including major central banks worldwide. Major credit indicators have indeed improved since November but the housing market – the crux of the crisis – is still in a freefall. Housing must stabilize before this severe recession ends.

In my eyes, it seems that bailouts and backstops are not addressing the real problem; most TARP money is ending up in bank coffers again and, in most cases, these institutions aren’t lending. The core of this credit crisis lies with the consumer and with housing. If you’re going to fork out several trillion dollars to fix or remedy this crisis then give the money to the consumer – not the banks. The consumer is in a severe bear market with personal assets plummeting over the last 18 months, including real estate, stocks, most bonds and now, possibly his or her job might be next on the chopping block.

Give consumer households $50,000 or more and allow them to clean-up their busted balance sheets, keep their homes (service mortgages) and pay off installment debt. You might not agree with me and, in all fairness, it’s against the tenets of the Sovereign Individual; but what good will all this money do if it’s basically squandered by government and ending up in the pockets of reckless bankers again? I have serious doubts about how the government is dealing with this crisis and I don’t think Obama’s spending package will help much at all despite perhaps growing the economy for a few quarters.

Question: What about the banks? With governments now standing behind their biggest financial institutions, is the worst over?

Comment: The global banking system, for all intents and purposes, is effectively bust or bankrupt. This is especially the case in the United States, Europe and, to a lesser extent, in Japan. More than a dozen emerging market banks are totally bust, including Iceland, the Baltics, Hungary, Romania, Bolivia, Ukraine, Ecuador, Argentina, etc. Not a pretty picture.

I think we’re more than 75% through the worst at this juncture. Governments now stand behind the largest banks in each country and, in some cases, even guarantee entire deposits until 2010 (e.g. European Union). I wouldn’t worry about the largest banks failing at this point. The worst is now behind us.

Question: I know you’re a big gold bug, but isn’t the euro a strong currency and do you think it’s a better hedge against the dollar than gold? Is it too late to purchase gold coins and, if not, where would you suggest I buy coins?

Comment: I have absolutely zero faith in the U.S. dollar and other currencies, including the euro or yen. In the end, all currencies will decline vis-à-vis gold and, in fact, since 2005 the world’s currencies have been losing their relative value to gold bullion. Despite big moves by the yen and euro over the last several years, they pale against gold.

Increasingly, the average man in the street will realize that paper money is not protecting his purchasing power and will revolt against fiat money. At The Sovereign Society, we’ve driven home this message since our first year of publication in 1997. Gold is the only asset in this world that isn’t someone else’s liability; with U.S. interest rates effectively at 0%, paper money now competes with gold, which also pays 0% interest. In a zero percent world, which asset would you rather own? I think the answer is obvious.

The government’s enormous spending plans to rescue the financial system and bailout almost every ailing industry Gold Coin Imageassures dollar destruction because the Fed is now on course to print money like never before to quash deflation. We all better hope and prey that the Fed can drain excess bank liquidity very quickly when this credit crisis ends. If not, we’ll have some serious inflation – much worse than what we saw prior to July 2008.

I think every investor should hold at least 10% of his assets in physical gold. This means coins, wafers or bars. Getting gold coins today is difficult because the U.S. Mint has stopped selling Eagles since last summer while other dealers are complaining about tight supplies amid booming investor demand. I suggest KITCO or First Federal Coin Corporation.

Also, I would not hold or store all of my physical gold at my home domicile. I strongly suggest parking some of your gold in Switzerland, too. Remember, you must report assets outside of the United States and Canada.

I’m convinced we’ll see some sort of government confiscation of gold again just like we did in the 1930s. Back then, FDR did allow Americans to hold a maximum of 100 ounces. I’m not so sure the next confiscation will be so generous.

I hope you found this helpful.

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

2009 Gold Outlook – Gold World

How To Invest in Gold in 2009

By Luke Burgess

The investment markets are yielding to the fact that the global economy will remain weak for the better part of 2009.

As a result, investors will continue to seek safe havens.

Under normal conditions, these safe haven investments would include land and real estate. These assets have intrinsic value; or in other words, their value will never fall to zero. But with falling prices, investing in real estate is out of the question for most people right now. And there’s little doubt that investors will look elsewhere for safety against financial crisis.

The best safe haven asset in the world right now is still gold because it is never considered to be a liability.

And we believe that safe haven investment demand will drive gold prices during 2009. With this in mind, we would like to present a broad overview of Gold World‘s 2009 gold outlook. But before we get into that, let’s review what happened to gold prices in 2008.

Gold Was One of the Best Investments of 2008

In March 2008, gold prices hit a record high of $1,033 an ounce as the gold bull market entered its seventh year of life. This was followed by a normal 18% correction, which drove gold prices back down to $850 an ounce.

Gold prices subsequently rebounded and were once again closing in on the $1,000 level in mid-July. At the same time, however, the fundamental and psychological effects of the slowing housing and credit markets were just beginning to devalue significantly the investment markets across the board.

As a result, many long gold positions had to be sold in order to cover losses from investments in other markets. Over the next several months, this forced selling pressure pushed gold prices down.

Gold prices were also held down during the second half of 2008 as the U.S. dollar enjoyed a +20% rally. Foreign governments, institutions, and banks began buying the U.S. dollar, which despite a legion of problems continues to be the world’s most important reserve currency, as a hedge against domestic economic turmoil.

20090105_2009_gold_outlook.png

These factors contributed to a significant drop in the price of gold, which officially bottomed out for the year at an intraday low of $683 an ounce in October 2008.

Gold prices have subsequently bounced off of the $700 level as major selling has dried up, and fresh buying has come into the market.

Despite three 20% corrections and serious deflation in the market, gold exited 2008 with a positive 5.4% gain for the year. Although subtle, this gain outperformed every major equity index and commodity in the world. Here are just a few examples…

Index/Commodity
Percent Change During 2008
Dow Jones
-34%
NASDAQ
-41%
S&P 500
-39%
TSX -35%
TSX Venture -74%
Oil
-55%
Silver
-23%
Copper
-54%
Gold
+5%

This made gold one of the best investments of 2008.

And the 2009 gold outlook looks just as strong.

Gold’s 2009 Outlook

Despite a bit of downside in the immediate future, we expect gold to have a stellar year.

Global economic turmoil and deflation will undoubtedly continue to influence gold prices in the near-term. A short-term pullback in gold prices from current levels to $800—maybe even a bit lower—is not out of the question. However, we expect gold prices to break new records during 2009.

For our current perspective, we expect gold prices to reach as high as $1,300 during 2009, which would be a profit of over 50% from current levels.

Gold prices in 2009 will be supported more heavily by supply/demand fundamentals than in the previous years of this gold bull market.

As we’ve previously discussed, during the third quarter of 2008, world gold demand outstripped supply by 10.5 million ounces. This deficit was worth $8.5 billion and was the largest supply/demand deficit since the gold bull market of the 1970s.

Official 4Q 2008 world gold supply/demand figures will be calculated and reported later this month. Gold World will report them to you when the data is released.

In the meantime, though, all estimates suggest that there will be another very large deficit in world gold supplies from the fourth-quarter, with investment demand continuing to drive the market.

We expect that a continuing surge in investment demand could push gold prices as high as $1,300 at one point during 2009.

There will likely be a bit more volatility in the gold market in 2009 as more and more speculators come into the market. It is likely that the gold market will experience three or four price peaks (selling points) during 2009.

How to Invest in Gold for 2009

As we expect a near-term drop in gold prices as a result of continuing deflation, we are advising our readers to hold off on any physical gold buying for the immediate future. As previously mentioned, gold prices could dip back down to $800 before recovering again.

Nevertheless, we expect 2009 to be another great year for gold investors.

Good Investing,

Luke Burgess and the Gold World Research Team
www.GoldWorld.com

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

Gold World Special Report – Gold Backed Banking

Special Report – Here’s How To Get Your Own Copy – Simply Subscribe

January, 2009

Gold Backed Banking

It’s a wonder Americans aren’t rioting in the streets.

Not including the $700 billion blank check issued to the banks and signed by the US taxpayer, the sum of liabilities assumed by the US government from the finance industry in the past 6 months alone exceeds 50% of the GDP.

Despite this unprecedented government intervention, the solvency of other every commercial and investment bank is still at stake!

Recognize this all-but-forgotten quote?

“The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered.”
— Thomas Jefferson, Founding Father, Third President of the United States, and the principal author of the US Declaration of Independence

How bout a drink from the cup of truth…

The Bush administration’s $700 billion bailout plan may keep some banks afloat for the time being. But fundamental problems are still deeply rooted within the financial markets that threaten to bring down the whole system.

The hard truth is that there is no 100% safe place to keep your money.

Physical cash and gold are the safest places to hold your wealth right now. Anyone who tells you otherwise has either a motive or no clue.

Those with the means to do so should be holding at least some physical cash and gold.

Of course, people will debate why you should hold these assets…

Gold is the ultimate in hedging against financial turmoil. But as it stands today, it’s quite rare to find someone willing to trade a product or service for gold. In other words, it’s difficult to spend gold like money, which has been a criticism of owning physical gold for decades.

Today’s digital age allows consumers to move electronic fiat money around at speeds exponentially faster than ever before. This morning I paid my cable bill with my check card. The entire transaction was completed within 5 minutes. Had I paid by mailing a check, it could have taken up 1-2 days to reach the cable company and 3-5 days to clear my account.

So what if there was a way gold could be used as easily as electronic money?

The World’s Only “100% Backed-by-Gold Bank”

You might have a hard time believing this, but you can actually put yourself on a personal gold standard with a new kind of currency, and it’s rapidly growing among gold bugs.

Understand first, this new currency is not legal tender issued by any government. That means there’s no debt, inflation, geopolitical turmoil, or any other considerations normally associated with government-issued currency.

The currency comes in electronic form, but can be used like any other currency in the world today to pay for goods and services, and even settle debt. But there’s one major difference that sets this currency apart from every other in the world:

It’s 100% backed by gold.

In fact, in most cases you can instantly exchange this currency for physical gold at any time… a feature taken away from the US dollar decades ago.

This currency has a new system fully established, making it as easy to use as the current banking industry’s electronic money. Right now, in fact, there are already over 3,000 outfits—and climbing—in which you can pay online using this currency.

How the “Gold Bank” Works

Customers transfer funds from traditional bank accounts into these unique gold-backed bank accounts, and earn interest on their funds prior to placing an order.

Meanwhile, for customers already holding gold and silver in secured (and insured) vaults, their metals are insured and held in specialized bullion vaults. Their metals assets go through an annual audit, and are fully reported to customers.

Once customers’ funds are in the database, customers’ orders are made through its secure online system. Database servers record all transactions and store currency and metal balances.

The Advantages of Using this Currency?

Being backed by gold, the purchasing power of this currency fluctuates in relation to the price of gold.

This means that as the price of gold increases, the purchasing power of the account increases. On the flip side, however, if the price of gold falls, so does the value of the account. Nonetheless, the risk of significant price fluctuation in gold is small compared to the risk of value fluctuations among fiat currencies, especially the US dollar.

And despite a short-term correction, the price of gold has increased significantly over the past five years. So this factor has worked out to the advantage of anyone holding this currency over that period. And with +$2,000 gold on the horizon, holders of this currency should do quite well in the future.

Now you should know that I’m in no way affiliated with this service, nor do I receive any compensation from it. That said…

I Recently Put the Final Touches on my New Research Report…

This report shares all the details about the new gold-backed electronic currency, and it’s yours free after you take a risk-free trial of the Mining Speculator service.

It’s your chance to get in on the biggest and best buying opportunity in junior gold and silver stocks… ever.

That’s right. The junior gold market is about to blast off, after a brutal beat-down sparked by the financial crisis. Truth is, it’s pushed many gold and silver stocks to new lows…

… Which is why you don’t want to wait a minute longer to position yourself in the Mining Speculator’s mining and precious metals portfolio. Our team of analysts scour the earth for opportunities in gold, as protection against the financial uncertainties engulfing the U.S. and world markets.

It’s the ultimate opportunity in a period of great crisis.

You see, as our government continues to lose control of its ability to manage and prop up markets, gold and silver will undoubtedly make meteoric moves that will stun the populace.

And just in case you still harbor doubts about gold, consider this… reported last week in the Financial Times…

“… Investors in gold are demanding ‘unprecedented’ amounts of bullion bars and coins and moving them into their own vaults as fears about the health of the global financial system deepen.”

And since gold bullion is getting harder and harder to come by, more investors are looking for the next best alternative, and that’s…

Precious Metals Mining Stocks

Bottom line: Junior mining stocks will begin to make major moves to the upside, rewarding those who got in early and held on… and those who get in now at what are, frankly, bargain share prices.

You see, nothing can keep gold from doubling up and hitting $2,000 an ounce… causing shares in our mining exploration companies to skyrocket.

I’m talking about junior mining stocks with the potential to double, triple—even quadruple!

Of course, many people have trouble accepting gold as an investment—even now that they’ve witnessed a financial upheaval that’s shaken our country by the shoulders.

But I also know that those who have heard me out-and followed through with my research and recommendations-have made extraordinary, life-altering returns.

Which is why I maintain…

There’s never been a better time-a more crucial time-to protect your portfolio with gold and precious metals.

And for a brief time, we’re making it easy to do just that… for as little as $25.

To get immediate inside access to the junior mining companies poised for major run-ups – the ones I’ve visited firsthand and carefully selected after exhaustive research and quality controls – simply take a trial of my Mining Speculator advisory.

When you sign up for Mining Speculator, I will immediately send you the free report on the new gold-backed currency mentioned in this editorial.

So, for only $25 you’ll begin to receive my Mining Speculator junior stock advisory… one that held an average 212% gain over five years… plus you’ll get our new special report on “The World’s Only 100% Backed-by-Gold Bank.”

All you have to do is click here to get started.

Good investing,

Greg McCoach, Investment Director, Mining Speculator
Luke Burgess, Editor, Gold World

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

My Note: I do not receive any renumeration or commissions for recommending either the Gold backed banking or the Mining Speculator. As Always be sure to do your own due diligence and read the prospectus before making any investments or deposits into financial institutions.-jschulmansr

Share this:

  • Reddit
  • Facebook
  • LinkedIn
  • More
  • Twitter
  • Pinterest
  • Tumblr
  • Print
  • Email

Like this:

Like Loading...

A Lesson In Geo-Political Energy + Gold News

05 Monday Jan 2009

Posted by jschulmansr in Bollinger Bands, capitalism, commodities, Copper, Currency and Currencies, deflation, diamonds, 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, Politics, precious metals, silver, small caps, Stocks, Technical Analysis, Today, U.S. Dollar

≈ 1 Comment

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, silver, silver miners, socialism, sovereign, spot, spot price, stagflation, Technical Analysis, timber, U.S. Dollar, volatility, warrants, Water

My Note- Today I present an interesting article about the Geo-Political ramifications of the Battle for the Caspian Seas, plus some of the latest Gold News. Gold today is making a much needed correction in prices, if Gold can hold here and/or we have any increase in tensions of the Middle East; I think the next leg will take prices into the $900-$950 range.- jschulmansr

Geopolitical Energy Centered on the Caspian Sea – Seeking Alpha

By: Michael Fitzsimmons of Musings From the Fitzman

I’ve just finished reading a fascinating book authored by Lutz Kleveman entitled The New Great Game. The book is about Kleveman’s visits to all countries surrounding the Caspian Sea and to the countries involved in actual and proposed oil and gas pipeline routes required to bring Caspian Sea energy assets to the world market. He interviews an amazing cast of intriguing characters along the way.

The investigative journalist delves deeply into the geopolitical implications of world powers struggling to control Caspian Sea energy reserves – some of the largest remaining oil and gas fields in the world. It is fitting the game of chess was invented by the Persians. It is worth purchasing The New Great Game just to gaze at the maps on the inside and backside covers…each central Asian country being ruled by a government or dictator who one minute moves diagonally like a bishop, only years later to morph into a rook and move horizontally and vertically like a knight, and every once in awhile going hay-wire and imitating the unorthodox movement of a knight. Who will win the great game? What will OPEC’s response be to non-OPEC oil production in the Caspian Sea region? How will China and Russia respond to American military might in the region? Only time will tell.

The map below shows the countries surrounding the Caspian Sea which are Russia, Kazakhstan, Turkmenistan, Iran, and Azerbaijan.

Most people are fairly familiar with the oil history of Baku, Azerbaijan dating back to Russian oil discovery and production in the early 1870s. Kleveman relates an interesting story of Swede Robert Nobel who was the older brother of factory owners Ludwig and Alfred Nobel who had become very wealthy producing arms and dynamite. Robert had been sent to Baku with 25,000 rubles to purchase Russian walnut to make rifle butts. Instead, he caught Baku oil fever and bought a small refinery. After only a few years, the Nobel Brothers Petroleum Producing Company vaulted over Rockefeller’s Standard Oil as the largest oil producer in the world. Later, the Nobel’s invented the first oil tanker in a story well told in Daniel Yergin’s The Prize, for which, ironically, Yergin won the Nobel Prize for non-fiction literature in 1992. And yes, the prize is named after the same Nobel family as those men seeking walnut wood for rifle butts in Azerbaijan.

Fast forward to today: Baku Azeri oil is being shipped to the Mediterranean Sea and world markets via the so-called BTC (Baku-Tbilisi-Ceyhan) pipeline. The picture below shows the pipeline’s route from Baku, Azerbaijan through Tbilisi Georgia, and finally to the Mediterranean Turkish port of Ceyhan.

This pipeline was hailed as the “Contract of the Century” by Azeri officials very much interested in getting their oil to market independent of Iranian and Russian involvement. Of course, the US was more than mildly interested in this solution as well. The pipeline is owned by a consortium of energy companies, among them:

  • British Petroleum (BP): 30.1%
  • State Oil Company of Azerbaijan (SOCAR): 25%
  • Chevron (CVX): 8.9%
  • StatOil (STO): 8.71%
  • ConocoPhillips (COP): 2.5%

BP is the BTC pipeline operator.

The big question in today’s energy riddle is how to route the large energy assets of the Caspian Sea to the world market and thereby offer America an alternative to OPEC supplies. Take the giant Tengiz oil field, discovered of the coast of Kazakhstan, as an example. Estimated at up to 24 billion barrels of oil Tengiz is the sixth largest oil field in the world. It is one of the largest oil discoveries in recent history. The Tengizchevroil (TCO) joint venture has developed the field since the early 1990’s. The partners are:

  • Chevron: 50%
  • ExxonMobil (XOM): 25%
  • KazMunayGas (Kazakhstan): 20%
  • LukArco (Russia): 5%

Chevron has predicted that Tengiz could potentially produce up to 700,000 barrels of oil per day by 2010. The field also contains large reserves of natural gas. On the downside, the oil is very high in sulfur content, once reason western technology was so desperately required. Currently the oil from the Tengiz field is piped from Kazakhstan through Russia to the Russian Black Sea port of Novorossiysk via the CPC (Caspian Pipeline Consortium). The BTC pipeline is a competing option, preferred by the US to bypass Russia, but is expensive: the oil must first be tanked across the Caspian Sea from Tengiz to Baku, and then offloaded into the BTC pipeline infrastructure. French energy giant Total is interested in developing a common sense alternative pipeline through Iran which everyone knows is obviously the most economically viable solution, withstanding the geopolitical climate in Iran. Of course the US does not favor this route at all.

The US’s long favored route for Caspian Sea energy was first suggested and studied by Unocal (now part of Chevron). This countries involved in this route are highlighted in color in the picture below.

This so-called Central Asian pipeline was to begin with a natural gas pipeline from huge Turkmenistan gas fields through western Afghanistan to the Pakistani deep water port of Gwadar on the Gulf of Oman (Indian Ocean). The natural gas pipeline was to be followed by an oil pipeline along the same route, serving not only the energy starved countries of Pakistan and India, but the world energy markets as well. The US believes this route, bypassing Russia and Iran, as well as the congested Straits of Hormuz, is in the strategic interest of the US as a secure non-OPEC source of oil.

But the key word in the last sentence was “secure”. Unilateral policy decisions by the US in Iraq and elsewhere have instigated a tide of central Asian anti-American resentment. The Taliban, once supported and funded by the US, are now in control of the pipeline’s route. The pipeline project has been delayed until “control” and “security” has been established. Anti-American opposition in Pakistan is also a problem, regardless of that countries dire need for the energy and potential income the pipeline could deliver.

The US’s oil centric foreign policy agenda is apparently to irritate the two major powers in the Caspian Sea region: Russia and Iran. With the USSR’s disintegration in 1991, all the former Soviet states in the region were being eyed for their energy reserves. At the same time, Russia still considers these former states as within their “sphere of influence”.

Instead of joining with the Russians in mutually beneficial energy projects, technology transfers, and contracts, the US instead decided to take the opposite approach: it first propped up a government in Georgia irritating the Russians. Then the US supported NATO membership for former USSR countries Ukraine and Georgia. The US also proposed missile defense systems on Russia’s western borders, further infuriating the Russians. Russia finally had enough and acted in Georgia as George Bush was attending the Olympics in China. Russian actions put exclamation points on the obvious – it can take out the BTC pipeline any time it wants, and is resentful of American military meddling in its backyard.

The prior secret agreements between Putin and Bush to fight the mutual “terrorists” foes appear to be in the distant past. Recent activities involving Russian natural gas transports through Ukraine underscore the vulnerability of Europe’s energy supplies. Europe currently imports some 40% of its natural gas from Russia, and this amount is bound to increase in the future. This further complicates the puzzle by placing US actions at odds with supposed allies in Europe.

With respect to Iran, the US has military forces in Iraq, Afghanistan, Uzbekistan, Kyrgyzstan and elsewhere in the region – completely surrounding Iran. The US has further tried to isolate Iran (to the dismay of the Europeans who vitally need Iranian energy) by imposing economic sanctions on the country. Iran was one of three countries with distinguished membership in George Bush’s “Axis of Evil”. These US actions have left the Iranians no choice but to develop nuclear weapons in order to protect themselves against the same kind of American aggression they have witnessed elsewhere in the region.

Meantime, flawed US/Israeli policy, combined with Israel’s recent activities in the Gaza strip and the powerful Jewish lobbying efforts in the US for military action in Iran, seem to increase the odds for more conflict in the region.

Have US foreign policy moves in Central Asia been successful? Yes and no.

One bright spot is Iraq. Iraq was always the priority in “the war on terror”, not because the terrorists were there (they are now…) but because Iraq holds the world’s second largest oil reserves after Saudi Arabia. Many of Iraq’s oil fields also have the important advantages of being sweet crude (high quality), are shallow, and are under pressure, making Iraqi production costs very low – in the neighborhood of $10/barrel. For those who actually believe the US government’s marketing job of WMDs, “freedom”, etc. as a pretext for invading Iraq, please note the recent announced that Iraq’s oil resources are now “open for business” and up for bidding. Western oil companies such as BP, ExxonMobil, Chevron, and Royal Dutch Shell (RDS.A) stand to benefit handsomely in Iraq while at the same time boosting the country’s oil production by some 2-3 million barrels over the new few year. So, Iraq can be considered a US success story assuming security is maintained and the oil can reach the market. A big if, but time will tell.

The BTC can also be considered a success. It has operated fairly reliably, and has shown to be a fairly secure source of Caspian Sea oil. This was a huge project, and many people in the oil business doubted its success and completion. But it’s up and running today and survived Russia’s recent invasion of Georgia. That said, the BTC’s continued success is extremely dependent on maintaining security in the area.

Now it’s time to head to Afghanistan and take care of business over there. Boy-oh-boy is that going to be one tough nut to crack. The Afghan/Pakistani issue is so deep I can’t even begin to cover it in enough detail to do the subject justice. Those who believe the US motives in Afghanistan are simply “terrorism” or “freedom” should take note that the US fully supported and funded the Taliban when it was decided they were the best option with respect to getting the Central Asian pipeline built. Unocal sponsored the Taliban on trips to Houston to stay at 5-star hotels and visits to NASA. It was only later when the Taliban wouldn’t “play ball” that the US stopped their support and labeled the Taliban terrorists. Even the US installed Afghani President Hamid Karzai worked as an advisor and consultant to Unocal during the initial Central Asian pipeline feasibility studies.

So, US policies have had some successes in the region as far as oil is concerned. From a humanitarian aspect, well, I’ll leave that up to the reader to figure out on his or her own. From an economic standpoint, one would have to make a detailed analysis of military spending versus the economic benefits in order to come to any conclusions. Perhaps I will write an article on this some day, but for now, I’ll sidestep that question as well.

For the US, I am not such an idealist to think for one minute the symbiotic “Pentagon-Petroleum” relationship will change anytime soon. Further, as a realist, I also understand how important the game being played in Central Asia is. I am aware of the actions the US and other world powers are taking in Central Asia in order to acquire the energy reserves they need to power their economies. My eyes are wide open.

What I continue to struggle with is why the US directs so many resources and dollars toward these overseas strategies while at the same time almost completely ignoring what steps could be taken to reduce our foreign oil requirements by adopting some fairly simple and obvious policy changes. It, quite simply baffles me. Even a cock-sure trader hedges his bets now and again. The most amateur investor knows some diversification is prudent. So, why does the US continue oil centric policies which are certain to lead to more conflict, more debt, more trade deficits, and a weaker economy and currency?

Most readers are very familiar with my proposed energy policy, but I will add the link yet again in the hopes that someday, someone out there with a bit of power and influence will read it and make it happen.

So what does all this have to do with investing you ask? In a word: everything. Where can US investors put their money these days? Financials? Consumer cyclicals? Auto makers? I think not. Despite current low oil prices, the recent strength in the US dollar, and the subject matter of this article, I continue to believe the best opportunity for US investors is to participate in energy companies and to buy gold. Now, I know that some of you who read my articles earlier in the year and went out and bought my recommended stocks got a hurt, and hurt bad, right along with me and everyone else. I’m truly sorry, and feel bad if my advice caused you any pain (at least realize I felt the pain as well!). That said, let’s look at the 2008 returns for some of my picks:

  • British Petroleum (BP): -36.1%
  • Chevron (CVX): -20.7%
  • ConocoPhillips (COP): -41.3%
  • ExxonMobil (XOM): -14.8%
  • Schlumberger (SLB): -57%

Not awfully bad, considering these returns (from this weekend’s WSJ) do not include the nice dividends some of these companies’ payout and the S&P500 was down 38.5% in 2008, its worst year since 1931. At the same time gold held up rather well, gaining 7% in the course of the year.

The bad news was some of my theme picks didn’t do well at all. Energy services, which at one point in 2008 were my “number one investment pick”, simply got hammered. Likewise, my advice to get into strategic metals via Vanguard Precious Metals (VGPMX) was a disaster as the stocks in this fund were sold off big time during the great leverage unwinding.

Making matters worse was the huge distribution VGPMX made at the end of the year which just infuriated me. I actually called Vanguard and asked them how a fund which lost over 60% for the year could possibly justify making a year end taxable distribution that equaled roughly 12% of the fund’s entire NAV?! I mean, if you sold enough to make such huge gains, why the hell is the fund down 60%? If you didn’t sell, and watched the stocks go down, why not sell the losers so that the losers and gainers cancel each other out so that no taxable distribution takes place? I was told I simply “didn’t understand”. They were right, I don’t! Seems to me even a moron could manage a fund better than that. The loss in the fund’s NAV I can understand. The huge year end distribution is simply inexcusable.

What I learned during the year is this: if a person wants to invest in precious metals, buy gold, take personal delivery of it, and bury it in the backyard and forget about it. Sure, people flock to the US dollar in times of crisis, but did anyone see the action in US treasuries last Thursday and Friday, as well as the headline in Barron’s this weekend? The financial mismanagement by the US government, Treasury, and Federal Reserve combined with the lack of a strategic long-term comprehensive energy policy must lead to a long-term weakening of the US currency. So, buy oil, buy gold. When inflation comes back, it will come back very quickly and these hard assets will once again take off like a rocket. I mean, how can the economy not re-inflate with the Federal Reserve printing US dollars as fast as the presses will print them?

My picks for 2009 are as follows: XOM, BP, CVX, COP, SLB and gold bullion, in particular American Eagles and Canadian Maple Leafs.

Goodbye 2008! Indeed, very soon we will be saying goodbye to George W. Bush as well. Let’s all hope that 2009 will be better than 2008. It won’t take much! Let’s also hope that the new administration hedges its foreign policies bets with a bet on the American people and what we can do at home by enacting a strategic long-term comprehensive energy policy. In the meantime, buy Kleveman’s book The New Great Game, enjoy, and learn. The last paragraph of the book sums up my feelings perfectly.

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

Get The Book: The New Great Game – by: Lutz Kleveman

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

Gold Due for a Pullback; Silver Approaching Resistance- Seeking Alpha

By: Jeff Pierce of Zen Trader

I like gold here as an investment going forward- I just liked it a whole lot better a few weeks ago. I think we at the top of this wedge formation and due for a pullback and the RSI could come back to the previous high around 50. That would be very constructive and bullish allowing this metal to bust through 900 on its next run. While I don’t have a specific price target for where I think it will correct to, the 20-day moving average seems like a reasonable guess.

Obviously if tensions heat up in the Middle East this could fuel another rise in gold and all bets are off. However I’ve learned in the past not to underestimate gold’s ability to correct quickly so I took my profits on Friday and will enter on a pullback. I wanted to be flat going into next week as anything can happen when all the fund managers get back from vacation.

gold

Silver has been up 6 straight days and is fast approaching resistance. I would rather it pause here and gather some strength to possibly break through the 11.75 area instead of shooting straight up using up all it’s firepower. Use any further strength to unload positions and wait for a pullback to add or establish new positions.

slv

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

Profiting From Bernanke’s Super-Fed and Obama’s Newer Deal – Seeking Alpha

By: Naufal Sanaullah of The Gotham Fund and Dorm Room Derivatives

The historic wealth destruction of 2008 was obviously deflationary. Defaults strip away wealth. Institutions respond by selling assets to raise capital. Widespread deleveraging leads to supply expansion in assets and contraction in money and credit (i.e. deflation).

Nevertheless, the response has been unprecedented in its own merit. Government debt held by the public was $5.51 trillion when September began; by the end of 2008, it had risen to $6.37 trillion. The more than $1 trillion expansion in Treasury borrowing surely partially serves to offset the $438 billion budget deficit. But what about the additional half a trillion dollars?

On September 17, the Treasury announced the creation of the the “Supplementary Financing Account” in the Federal Reserve. This is a capital reserve in Fed financed by the Treasury selling new debt and it greatly expands the Federal Reserve’s balance sheet, albeit stealthily. The excess capital is trapped in this Fed account and does not reach currency in circulation. As of January 2, $259 billion is in this Treasury-financed cash pool and counting the Treasury’s “General Account” with the Fed, there is a total of $365 billion sitting at the Fed. The capital itself is money borrowed by the public, so its immediate net effect is deflationary.

On top of that, the Fed in an unprecedented gesture has started incentivizing excess bank reserve deposits by issuing interest on these holdings. Rather than being lent out, liquidity provided to banks by the Fed is thus trapped as it earns interest deposited at the Fed. The Fed is essentially issuing debt, and banks are engaging in what amounts to be a dollar-based Fed vs. interbank carry trade. Banks borrow money from the Fed, deposit them back into the Fed (use borrowed dollars to purchase Fed debt), and profit from the differential between the fed funds and overnight rates (profit off of the difference between the interest rates offered by Federal Reserve and other banks).

Less than $40 billion a year ago, the excess reserve deposits held by the Federal Reserve has ballooned to $860 billion. The banks can also deposit printed money into a Fed category called “Deposits with Federal Reserve Banks, other than reserve balances,” which is what the Supplementary Financing and General Accounts also fall under.

The “Other” subsection of these deposit accounts, which can be construed to represent bank deposits, has increased from $281 million in September to $15 billion today. Both the reserve and non-reserve deposits comprise another huge pool of excess liquidity on the Fed’s balance sheet that doesn’t immediately affect circulated currency.

Another Fed-induced cash trap has been in the form of increased reverse repurchase agreements, which are up to $88 billion. Reverse repurchase agreements are the offering of collateral in exchange for a cash loan. The Fed has utilized reverse repurchase agreements in its liquification of banks. It buys off toxic defaulting assets in exchange for cash and immediately reclaims the cash by selling the banks T-bills. The Fed printed money to pay for these T-bills, so there is excess liquidity that is trapped in time-sensitive debt. But why would the Fed be taking liquidity away from the system?

The Fed’s balance sheet suggests it has been cranking the printing presses like mad. Fed liabilities have expanded to $2.26 trillion, up over 140% since September. However, currency in circulation is up only 7% in that same time period. Where is this “trapped” $1.37 trillion? The answer is the Fed has confined it into temporary cash pools, whether in the Supplementary Financing Account or excess reserve deposits or in time-sensitive T-bills. The Federal Reserve seems to be sequestering all of this cash to buy time for the Treasury to finish its funding activities. What is scary is this wave of future bailout funding is probably not even close to what will be needed for Obama’s infrastructure and stimulus spending, which will be comparable only to FDR’s and will be liquidity injected directly into the economy.

But who is going to keep funding this expansion Treasury debt issuance? The American public is broke and cannot offer its capital in return for terrible yields. Foreign nations don’t have the means or will to continue financing our debt. Commodity prices have collapsed, cutting deeply into foreigners’ export revenues. Oil is down from highs around $150/barrel this past summer to around $40/barrel now.

According to the CIA World Factbook, China has a $6 billion budget surplus. However, it announced a $585 billion economic stimulus package in early November to be invested by the end of 2010. The Chinese government agreed to provide only $170 billion of the the funds, in an effort to prevent an unreconcilable deficit. How will China raise the other $415 billion for continuous use until the end of 2010? Surely, local governments and private banks and businesses can’t finance such a large package in the midst of a historic recession.

The only reserve China can tap into to finance its stimulus package is its $1.9 trillion foreign exchange reserves, $585 billion of which is in US Treasury securities. Also, according to the Guangzhou Daily, in mid November, the People’s Bank of China began an effort to increase its gold reserves from 600 tons to 4500 tons to diversify risk held by its huge dollar debt reserves. Financing its stimulus package and gold purchases would require selling Treasury securities, but becoming a net seller of US debt could have disastrous economic, political, and even militaristic consequences for China, so it will be interesting to see how events unfold. What seems for certain, however, is that China can no longer purchase more American debt to finance the US Treasury (and consequently the Fed).

This is a problem echoed by the rest of the big creditor nations. After China, the biggest holders of American debt securities are Japan, the UK, Caribbean banking centers, and OPEC nations. Japan is facing enormous headwinds as its quality-focused exports are suffering massive demand destruction as its consumers abroad lose wealth at epic proportions in the economic crisis. Japan was a net seller of US Treasuries in 2008 and with the current wealth destruction, it is highly unlikely it will switch to a net buyer of American debt. The British demand for American debt represented Middle Eastern oil-financed investment, but with oil prices collapsing, it will be next to impossible for this proxy demand from the UK to rise and finance additional debt.

The demand for US debt by Caribbean banking centers is because of their tax laws and because of the dollar’s status as the international reserve currency. As the credit crunch leads to liquidity destruction in Caribbean banks and the dollar slowly loses its reserve status, these tax haven banking centers will no longer be able to buy additional US debt. OPEC nations’ US debt demand, similar to the UK’s, is tied to Middle Eastern oil revenues financing American consumption (of their oil exports). As oil prices tank, as will OPEC nations’ economies and they too will have no wealth to buy up more American debt.

Bernie Madoff is well-recognized as the biggest Ponzi scheme in history, at $50 billion. I beg to differ with that claim. The United States has financed debt with debt since the late 80s, when its external debt/GDP broke the 0 mark. Since then, it has risen to over 100% of its GDP (which in itself is quite artificially inflated because of manipulated hedonics-adjusted inflation figures), and now stands at $13 trillion. That is what’s called a debt bubble. Bernie who?

But the debt bubble appears ready to collapse. The literal pyramid scheme is finally running out of investors, and many Treasury ETFs (like SHY, TLT, IEF, and IEI) are showing classic parabolic topping patterns and the next few weeks should confirm or deny my suspicions. Interest rates are at an obvious floor at zero, so there is nowhere to go but up. That means bond prices have nowhere to go but down, and the way bubbles burst, the falling prices will cascade into more selling until the debt bubble deflates and all the spending is financed by quantitative easing. The minute the Treasury finishes its current funding activity, the debt bubble will begin its collapse. Judging by gold backwardation (discussed later) and the bearish charts on the bubbly debt ETFs, I think the debt monetization and dollar devaluation will begin within the next six weeks.

With an insolvent public and no foreign demand for Treasuries, the Federal Reserve will monetize debt to finance its continued bailouts and economic stimulus. This is purely created capital pumped right into the system. This is not anything new for the Fed– for the past two decades, it has kept interest rates artificially low and created massive artificial wealth in the form of malinvestment and debt-financing. In the past, the Fed has been able to funnel the inflationary effects of its expansionary monetary policy into equity values with its low rates, which discourage saving, causing bubble after bubble, in the form of techs, real estate, and commodities. The excess liquidity (the artificial capital lent and spent because of low interest rates and debt financing) was soaked up by the stock market, which gave the appearance of economic growth and production. With inflation being funneled into equity and real estate over the last two decades, illusionary wealth was created and the public remained oblivious to the inflationary risk and the much lower real returns than nominal.

Now that the “artificial wealth bubble” being inflated for the past two decades is finally collapsing, one of two scenarios can occur: capital destruction or purchasing power destruction. Capital destruction occurs when the monetary supply decreases as individuals and institutions sell assets to pay off debts and defaults and savings starts growing at the expense of consumption. This is deflation and the public immediately sees and feels its effect, as checking accounts, equity funds, and wages start declining. Deflation serves no benefit to the Federal Reserve, as declining prices spur positive-feedback panic selling and bank runs, and debt repayments in nominal terms under deflation cause real losses.

Purchasing power destruction is much more desirable by the Fed. Its effects are “hidden” to a certain extent, as the public doesn’t see any nominal losses and only feels wealth destruction in unmanageable price inflation. It breeds perceptions of illusionary strength rather than deflation’s exaggerated weakness. The typical taxpayer will panic when his or her mutual fund goes down 20% but will probably not react to an expansion of monetary supply unless it reaches 1970s price inflationary levels. In addition, the government can pay back its public debt with devalued nominal dollars, which transfers wealth from the taxpayers to the government to pay its debt. Inflation is essentially a regressive consumption tax, which the government wants and the Fed attempts to “hide”. Not only is the Treasury’s debt burden reduced, but the government’s tax revenues inherently increase.

The Fed, in an effort to minimize inflationary perception, has for the last two decades supported naked COMEX gold shorts to keep gold prices artificially low. The Fed, as well as European central banks, unconditionally supported these naked shorts to deflate prices and stave off inflationary perception, as gold prices stay artificially low. This caused gold shorts to be “guaranteed” eventual profit, by Western central banks offering huge artificial supply whenever necessary, causing long positions in gold to be wiped out by margin calls and losses.

Now that the economy is contracting, the Fed won’t be able to funnel the excess liquidity into equities or other similar assets. It also can’t allow the excess liquidity of today, which is different in both its size (already $1.37 trillion) and nature (it is printed “counterfeit” money and not malinvested leveraged and debt-financed capital), to be directly injected into the economy. That would prove to be immediately very inflationary, as more than three times the money is chasing the same amount of goods, technically leading to 300% price inflation. These figures are strictly based on monetization of the Fed’s current liabilities, not including any future deficit spending (which is sure to dramatically increase, especially with Barack Obama’s policies), the American external debt, or unfunded social programs that need payment as Baby Boomers retire.

In order to funnel the excess liquidity into a less harmful asset, the Fed appears to be abandoning its support for gold naked shorts, causing shorts to suffer their own margin calls and cause rapid price expansion in gold. On December 2, for the first time in history, gold reached backwardation. Gold is not an asset that is consumed but rather it is stored, so it is traditionally in what is called a contango market. Contango means the price for future delivery is higher than the spot price (which is for immediate settlement). This is sensible because gold has a carrying cost, in the form of storage, insurance, and financing, which is reflected in the time premium for its futures. Backwardation is the opposite of contango, representing a situation in which the spot price is higher than the price for future delivery.

On December 2, COMEX spot prices for gold were 1.99% higher than December gold futures, which are for December 31 delivery. This is highly unusual and it provides strong evidence to the theory that the Fed is abandoning its support for gold shorts. Backwardation represents a perceived lack of supply (in this case, the artificial supply the Fed would always issue at strategic times no longer existed), causing investors to pay a premium for guaranteed delivery. On May 21, when crude oil futures reached contango, I started waiting patiently for the charts to offer a short sell trigger because the contango represented a supply glut relative to perception and current pricing. Oil was priced at $133/barrel at that time and six weeks later, on July 11, oil topped at $147, and six days later crude broke its 50DMA on volume and triggered a large bearish position against commodities that resulted in some of my most profitable trades last year.

I consider gold’s backwardation as a similar leading indicator to the opposite effect—a dramatic increase in prices. Crude began its most recent backwardation in August 2007 at around $75/barrel and increased dramatically over the next nine months to $133/barrel at contango levels. Backwardation, especially in the case of gold prices, reflects a lack of supply at current prices and is very bullish.

But why would the Fed abandon its support for naked COMEX shorts? What makes gold such a desirable asset to attempt to direct excess liquidity into? The unique nature of gold and precious metals provides its desirability in this Fed operation. Gold has little utility outside of store of value, unlike most commodities (like oil, which is consumed as quickly as it’s extracted and refined), so its supply/demand schedule has unusual traits. Most commodities and assets go down in price as the public loses capital, because the public has less to consume with and that is reflected in demand destruction that leads to price deflation. Gold is not directly consumed and its industrial use and consumer demand (jewelry) is at a lower ratio to its financial/investment demand than almost any other asset in the world.

As a result, gold is relatively “recession-proof,” as evidenced by its relative strength in 2008. Gold prices rose 1.7% last year, which is quite spectacular considering equity values went down 39.3%, real estate values went down 21.8%, and commodity prices went down 45.0% in the same period (as determined by the S&P 500, Case-Shiller Composite, and S&P Goldman Sachs Commodity Indices, respectively). Because gold is not easily influenced by consumer spending, highly inflationary gold prices don’t do any direct damage to the public and are a good way to funnel excess liquidity without economic destruction.

Federal Reserve Chairman Ben Bernanke is a staunch proponent of dollar devaluation against gold and is very supportive of President Franklin D. Roosevelt’s decision to do so in 1934. In the past, manipulating gold prices to artificially low levels was beneficial because it prevented capital flight into a non-productive asset like gold and kept production, investment, and consumption high (even if it were malinvestment and unfunded consumption).

Bernanke’s continued active support of gold price suppression would lead to widespread deflation that would collapse equity values and cause pervasive insolvencies and bankruptcies. Insolvency in insurers removes all emergency “backups” to irresponsible lending and spending, which would surely ruin the economy. Bernanke’s plan seems to be to devalue the dollar against gold with huge monetary expansion, causing equity values to rise and economic stabilization. I’ve heard estimates of 7500 and 8000 in the Dow Jones Industrial Average as being minimum support levels that would cause insurers and banks to realize massive losses, causing widespread insolvencies in them and other weak sectors like commercial real estate that would irreversibly collapse the economy.

This gold price expansion, set off by the massive short squeeze, will continue until gold prices reflect gold supply and Federal Reserve liabilities in circulation. The “intrinsic” value of gold today (called the Shadow Gold Price), calculated dividing total Fed liabilities by official gold holdings, is about $9600/oz, compared to around $865/oz today. This gold price calculation essentially assumes dollar-gold convertibility, as is mandated by the US Constitution and was utilized at various periods of American history. The near-term price expansion in gold, mainly led by abandonment of gold shorts and the first traces of inflationary risk, should show $2000/oz by the end of this year. As the leveraged deals from the pre-crash credit craze mature, with the majority of them maturing in 2011-2014, there will be more monetary expansion for debt repayment, which will structurally weaken the US Dollar (which is inherently bullish for gold) and will also provide new excess liquidity to be funneled into precious metals. This leads me to believe gold will be worth $10,000/oz by 2012.

The US Dollar’s strength as the equity and commodity markets collapsed was due to deleveraging and an effect of the Fed’s temporary sequestration of dollars, taking dollars out of supply. That is over. Oil seems to be putting in a bottom on strong volume, no one is left to buy any more negative real yield securities the Treasury is issuing, and gold has started looking very bullish.

But a good speculator always considers all situations. Even if deflation is to occur, which I see as next to impossible, gold prices should still rise to $1500/oz levels next year, because it has shown relative strength as one of the most viable assets left to invest in. In addition, the short squeeze occurring in gold will provide substantial technical price expansion, even in the absence of dollar devaluation. Because of this, I suggest gold as an investment cornerstone for the foreseeable future.

I see the market breaking down from these levels to about the November lows, starting on Monday. Commercial real estate stocks like Simon Property Group (SPG), Vornado Realty Trust (VNO), and Boston Property Group (BXP) should lead the down move, as well as insurers like Allstate (ALL), Prudential (PRU), and Hartford (HIG), banks like Goldman Sachs (GS) and Morgan Stanley (MS), and retailers like Sears Holdings (SHLD). I recommend short positions (including leveraged bearish ETFs like SRS and FAZ) and buying puts against these stocks for the very near term. If the market indeed breaks down but shows bouncing/strength around 7500-8000 in the Dow Jones, that would confirm to me that the Fed is able and willing to inflate its way out of this crisis and I will sell my bearish positions and buy into bullish gold positions.

Because in inflation the dollar is devalued, I am a proponent of owning bullion and avoiding gold ETFs, but I do believe gold and gold miner stocks will provide great returns over the next few years. Royal Gold (RGLD), Iamgold (IAG), Jaguar Mining (JAG), Anglogold Ashanti (AU), Newmont Mining (NEM), Randgold (GOLD), Goldcorp (GG), and Barricks (ABX) are among my favorite gold equities at this early stage in the process. Their charts are all quite bullish and look to see much more upside. I believe gold will pullback for a few weeks as the market continues lower and deleveraging occurs, but like I said, I don’t believe the Fed will allow the markets to breach its November lows. If indeed deflation wins out and the Fed can’t prevent equity value collapse, I will just hold on to my aforementioned bearish positions and trade in particularly those securities for the foreseeable future, and I suggest you to do the same.

Literally the only thing that I find suspicious in all of this is the fact that I see so many inflationists out there and I even see commercials on TV about precious metals. I usually like to stay contrarian to the public, which I consider irrational and wholly incompetent. But this enormous debt and monetary expansion is a structural problem that common sense may provide better insight for than the most complex of models and theories.

I leave you with this, a quote from Fed Chairman Ben Bernanke about President Franklin D. Roosevelt’s 1934 Gold Reserve Act, which was the greatest theft of wealth I’ve aware of in American history:

“The finding that leaving the gold standard was the key to recovery from the Great Depression was certainly confirmed by the U.S. experience. One of the first actions of President Roosevelt was to eliminate the constraint on U.S. monetary policy created by the gold standard, first by allowing the dollar to float and then by resetting its value at a significantly lower level … With the gold standard constraint removed and the banking system stabilized, the money supply and the price level began to rise. Between Roosevelt’s coming to power in 1933 and the recession of 1937-38, the economy grew strongly.”

My predictions: gold at $2000/oz by the end of the year and $10,000/oz by 2012 and silver at $30/oz by the end of the year and $130/oz by 2012.

Disclosure: Long SRS, SRS calls, TBT, TBT calls, gold bullion.

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

Please Feel Free To Comment on any of these articles! – jschulmansr

Dare Something Worthy Today Too!

Share this:

  • Reddit
  • Facebook
  • LinkedIn
  • More
  • Twitter
  • Pinterest
  • Tumblr
  • Print
  • Email

Like this:

Like Loading...

Subscribe

  • Entries (RSS)
  • Comments (RSS)

Archives

  • March 2020
  • February 2020
  • January 2020
  • November 2012
  • October 2012
  • August 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • September 2009
  • August 2009
  • July 2009
  • June 2009
  • May 2009
  • April 2009
  • March 2009
  • February 2009
  • January 2009
  • December 2008
  • November 2008
  • October 2008
  • September 2008
  • August 2008
  • July 2008
  • June 2008
  • April 2008
  • December 2007
  • October 2007
  • September 2007
  • June 2007
  • May 2007
  • April 2007
  • March 2007
  • February 2007
  • January 2007

Categories

  • #(subject)
  • 10 year Treasuries
  • 17898337
  • 20 yr Treasuries
  • 2008 Election
  • 90 Day Challenge
  • @replies
  • Achievement
  • advertising
  • agricultural commodities
  • alternate energy
  • Alternate Fuel Sources
  • alternative Energy
  • ANV
  • appscout
  • ask for help
  • Austrian school
  • AUY
  • Bailout News
  • banking crisis
  • banking crisis banks bear market bull central deflation depression economic trends economy financial futures gold inflation crash Markets precious metals price protection recession safety silver plati
  • banks
  • Barack
  • Barack Dunham
  • Barack Hussein Obama
  • Barack Obama
  • Barry Dunham
  • Barry Soetoro
  • bear market
  • Bear Trap
  • Bernanke
  • best twitter apps
  • bible
  • Bildenberger's
  • bilderbergers
  • Body By ViSalus
  • Bollinger Bands
  • Bollinger Bands Saudi Arabia
  • bonds
  • Brad Zigler
  • Brian Tang
  • bull market
  • cancer
  • capitalism
  • categorize your tweets
  • CDE
  • CEF
  • cell phone
  • central banks
  • CFR
  • Chemotherapy
  • Chicago Tribune
  • China
  • Christian
  • cobalt
  • Columbia University
  • Comex
  • commodities
  • communism
  • computer security
  • Computers and Computing
  • Conservative
  • Conservative Resistance
  • Contrarian
  • Copper
  • Council on Foreign Relations
  • crash
  • Credit Default
  • Crude Oil
  • Currencies
  • currency
  • Currency and Currencies
  • CyberKnife
  • D.c. press club
  • Dan Norcini
  • Dare
  • DARE SOMETHING WORTHY TODAY
  • deflation
  • Dennis Gartman
  • depression
  • desktop client
  • DGP
  • DGZ
  • diamonds
  • Diet and Dieting
  • digsby
  • direct-messaging
  • dollar denominated
  • dollar denominated investments
  • Doug Casey
  • Dow Industrials
  • economic
  • Economic Recovery
  • economic trends
  • economy
  • EGO
  • Electoral College
  • Electors
  • Euro
  • Fed Fund Rate
  • Federal Deficit
  • federal reserve
  • Finance
  • financial
  • follow the money
  • follow the news
  • Forex
  • fraud
  • Free Speech
  • FRG
  • Fundamental Analysis
  • futures
  • futures markets
  • G-20
  • gata
  • GDX
  • gearlog
  • Geitner
  • GeoThermal Power
    • Geothermal Energy
  • GG
  • GLD
  • gold
  • Gold Bubble
  • Gold Bullion
  • Gold Investments
  • gold miners
  • Gold Price Manipulation
  • Government Spending
  • Green Energy
  • Greg McCoach
  • GTU
  • hacking
  • hard assets
  • Harvard Law School
  • hawaii
  • Health and Wellness
  • heating oil
  • hellotxt
  • Hepatitis C
  • HL
  • how to change
  • How To Invest
  • How To Make Money
  • how to use twitter
  • hyper-inflation
  • IAU
  • id theft
  • IMF
  • India
  • Indonesia
  • Indonesian Citizenship
  • inflation
  • Investing
  • investments
  • Iran
  • Israel
  • Japan
  • Jay Taylor
  • Jeffrey Nichols
  • Jim Rogers
  • Jim Sinclair
  • Joe Biden
  • Joe Foster
  • John Embry
  • John McCain
  • joyner
  • Jschulmansr
  • Julian D.W. Phillips
  • Junior Gold Miners
  • Keith Fitz-Gerald
  • kennedy
  • Latest News
  • legal documents
  • Liability
  • Long Bonds
  • majors
  • Make Money Investing
  • maltz
  • manipulation
  • Marc Faber
  • Mark Hulbert
  • Market Bubble
  • market crash
  • Markets
  • Michael Zielinski
  • mid-tier
  • mining companies
  • mining stocks
  • mobile client
  • monetization
  • monitter
  • Moving Averages
  • NAK
  • name change
  • NASDQ
  • natural born citizen
  • natural gas
  • Natural Resources
  • New World Order
  • NGC
  • Nouriel Roubini
  • Nuclear Energy
  • Nuclear Weapons
  • Nutrition
  • NWO
  • NXG
  • Oath of Allegiance of the President of the United State
  • obama
  • Occidental College
  • oil
  • Options
  • PAL
  • Paladium
  • PALL
  • palladium
  • pcmag
  • Peter Brimelow
  • Peter Grandich
  • Peter Schiff
  • Peter Spina
  • Phillip Berg
  • physical gold
  • platinum
  • platinum miners
  • pockettweets
  • Politics
  • poser
  • Positive Motivation Prayer Changes Lives
  • PPLT
  • pr
  • precious
  • precious metals
  • Presidential Election
  • price
  • price manipulation
  • prices
  • producers
  • production
  • promote
  • promotion
  • Prophecy
  • protection
  • Proton Beam Therapy
  • psycho-cybenetics
  • psychology
  • Quantitative Easing
  • rare earth metals
  • recession
  • Religion
  • resistance
  • retweetist
  • risk
  • Risk Reversal
  • RT
  • run on banks
  • S&P 500
  • safety
  • Sarah Palin
  • Saudi Arabia
  • Sean Rakhimov
  • search
  • search twitter
  • search.twitter.com
  • security
  • Security Suites
  • SEO
  • Short Bonds
  • Siliver
  • silver
  • silver miners
  • Silver Price Manipulation
  • simpleology
  • SLV
  • SLW
  • small caps
  • socialism
  • Something
  • sovereign
  • Sovereign Debt
  • spot
  • spot price
  • stagflation
  • Stimilus
  • Stimulus
  • stock market
  • Stocks
  • Strategic Metals
  • Strategic Minerals
  • Strategic Resources
  • SWC
  • tag
  • tag and search
  • TARP
  • Technical Analysis
  • Ted Bultler
  • text message
  • The Fed
  • Tier 1
  • Tier 2
  • Tier 3
  • timber
  • tiny url
  • TIPS
  • Today
  • top apps
  • top twenty twitter apps
  • top twitter apps
  • treason
  • Treasury
  • tricks
  • Twapps
  • tweepler
  • tweet
  • tweet from your phone
  • tweetburner
  • tweetdeck
  • Tweeting
  • tweets
  • tweetscan
  • tweetvisor
  • twhirl
  • twibs
  • twidroid
  • twistori
  • twitbin
  • twitdom
  • twitpic
  • twitpoll
  • twitstat
  • Twitter
  • Twitter Fan Wiki
  • twitter for beginners
  • twitterberry
  • twittercounter
  • twitterfall
  • twitterfeed
  • TwitterFox
  • twitterholic
  • twitterific
  • twitterverse
  • twittervision
  • TwitTown
  • twitturly
  • twtpoll
  • U.S.
  • u.s. constitution
  • U.S. Dollar
  • U.S. Government unfunded Debt
  • U.S. Treasury Dept
  • Uncategorized
  • uranium
  • Uranium Miners
  • use @
  • ViSalus
  • volatility
  • voter fraud
  • warrants
  • Water
  • we the people foundation
  • Website
  • Weight Loss
  • Worthy
  • XAU

Meta

  • Register
  • Log in

Blog at WordPress.com.

loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.
<span>%d</span> bloggers like this: