The Bear is Growling – Stocks to Be Devoured!

21 Tuesday Apr 2009

Posted by jschulmansr in Austrian school, banking crisis, banks, bear market, bull market, central banks, deflation, depression, economic, economic trends, economy, financial, futures, gold, inflation, market crash, Markets, physical gold, platinum, precious metals, price, price manipulation, protection, recession, risk, run on banks, safety, silver, sovereign, spot, spot price

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ANV, Austrian school, AUY, Bailout News, banking crisis, banks, bear market, Bollinger Bands Saudi Arabia, bonds, Brian Tang, bull market, CDE, CEF, central banks, China, Comex, commodities, Copper, crash, Currencies, currency, Currency and Currencies, deflation, Dennis Gartman, depression, DGP, dollar denominated, dollar denominated investments, Doug Casey, economic, economic trends, economy, EGO, Federal Deficit, financial, Forex, FRG, futures, futures markets, gata, GDX, GG, GLD, gold, Gold Bullion, Gold Investments, gold miners, Gold Price Manipulation, GTU, hard assets, HL, hyper-inflation, IAU, India, inflation, investments, Jeffrey Nichols, Jim Rogers, John Embry, Keith Fitz-Gerald, majors, Marc Faber, market crash, Markets, Michael Zielinski, mid-tier, mining companies, monetization, Moving Averages, NAK, NGC, NXG, PAL, palladium, Peter Grandich, Peter Schiff, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, protection, recession, risk, run on banks, safety, Sean Rakhimov, silver, silver miners, SLW, small caps, sovereign, spot, spot price, stagflation, SWC, Technical Analysis, TIPS, U.S., U.S. Dollar, volatility, warrants, XAU

Yes, my friends the Bear is hungry and growling, take your profits on regular stacks and financials now. Even if there is one more last spike up, you’ll be out and protected. I have taken positions in (SKF) and (SRS), first I don’t believe the banking industry is anywhere close to recovery, and in real estate the other shoe is about to drop. Iam also continuing to accumulate more Gold and Silver producers along with a few exploration companies. Gold on a technical basis is looking more and more like a major breakout to the upside. Volatiliy is increasing again and most of the scared crowd has been brought back into the markets; yes the Bear is hungry and growling. See Ya Tomorrow! – Good Investing! -jschulmansr

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Claim a gram of FREE GOLD today, plus a special 18-page PDF report;

Exposed! Five Myths of the Gold Market and find out:

·        Who’s been driving this record bull-run in gold?

·        What Happens When Inflation Kicks In?

·        Why most investors are WRONG about gold…

·        When and How to buy gold — at low cost with no hassle!

Get this in-depth report now, plus a gram of free gold, at BullionVault

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

Gold Set For a Huge Rally – Seeking Alpha

By: Peter Cooper of Arabian Money.net

The gold price is poised to break through $1,000 an ounce this week and could reach $1,500 before a price consolidation. On Monday gold and silver closed higher while global stock markets fell as the five-week rally ended.

This is an important trend reversal and marks a shift by investors to safe haven assets in advance of another plunge in equity values.The US dollar also strengthened across the board and bond prices rose. It is unusual to see both gold and the dollar rising together but again this normally signals an important trend reversal.

Money supply growth

The fundamental case for investment in precious metals has also become overpowering. Global bank bailout and stimulus packages have resulted in a huge increase in global money supply that has never had any effect except inflation in all history.

The gold supply by contrast is relatively fixed and production is actually falling. Supply is even tighter for silver – where stock levels are a hundredth of gold – and that is reason enough to expect the established pattern of silver outperforming gold will be repeated again.

As investors rotate their assets out of stocks and into alternative asset classes the best returns are therefore likely in precious metals, and such information tends to be self-fulfilling.

There are all sorts of minor trends supporting this basic trend, and like any true bull market there will be a compounding of supporting evidence: from a shortage of gold available for bank leasing to UK Prime Minister Gordon Brown’s call for IMF sales, often seen as a contrary indicator as his previous calls boosted gold prices.

Trend is your friend

However, in all investment markets it is the trend that is really your friend. The next dilemma will be how to best leverage the upside to the gold price.

This will start with a debate about silver as a better alternative. But then gold and silver stocks will come under the microscope, and the value of the bombed-out junior stocks brought into focus.

It can be little consolation that great days lie ahead for gold for this signals the failure of the conventional investment universe, and that means further horrors ahead for currencies, stocks, bonds and real estate.

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Focus on the Prospect Generators – The Gold Report

Source: The Gold Report

According to Matt Badiali, editor of S&A Oil Report, prospect generators represent the best opportunities in the mining sector. Instead of being cash-burning machines that dilute shareholder equity, they put up the initial investment on a property, “do the science,” and then turn it over to a partner who puts up the money to drill the projects. He calls the power of the prospect-generating model “astonishing,” and names some companies that he considers top-flight in the sector.

The Gold Report: Matt, even though you are the Editor of S&A Oil Report, you have said that as a geologist, you focus on other natural resources as well, including gold, silver, uranium, copper, natural gas, and water. Can you give us some insights into some of your favorites in the mining sector?

Matt Badiali: Right now juniors are my favorite group of the mining companies, and there are a couple of groups that I really like that have projects that are near-term, so a big mining company can swoop in and basically build the mine and start producing pretty quickly.

There has been about $3 to $4 billion raised in equity over the past couple of months among the big mining companies, and that to me is an astonishing amount. This is money that mining companies could not have borrowed; they couldn’t have gone to a bank and said, “I’d like to borrow a billion dollars to build a mine in Chile.” The bank would have said to them, “What are the risks? Go see somebody else.” So they went to the market, and the market said, “Sure. You’re going to build a gold mine? Here’s $4 billion.”

That’s pretty amazing. So, now they have cash, and it’s basically burning a hole in their pocket, and they’re looking around for something to do with it. And I think that the smart companies, the big companies, are going to look for projects that they can build that are actually 12 to 18 months away from pouring gold. And there are a couple in Africa that are interesting.

One is a company called Centamin Egypt Ltd. (TSX:CEE) (ASX:CNT), which is in partnership with the Egyptian government. This is a beautiful giant gold mine. I have been following these guys for several years now because the story is so great. The geologist actually used a map from the Pharaohs to find this. And what’s even better, the project just keeps getting bigger and bigger.

Another one that I’m following is Eurasian Minerals Inc. (TSX.V:EMX); it’s a tiny, tiny little company. They have a project in Haiti, which is an astonishing place. I think the United Nations was there in the ’70s and found all kinds of minerals. And then there was a coup, and a bunch of people were killed, and the UN left. Then, Newmont Mining Corp. (NYSE:NEM) came in and they explored, and then there was another coup, and they killed a bunch of people, and Newmont left.

And nobody has been back, but this little company, Eurasian Minerals, went back. They hired the economic geology professor from the University of Port-au-Prince, a world-renowned authority on economic geology and on Haiti, and he brought his graduate students with him to work, and they made some tremendous discoveries. And Newmont agreed to partner up with this little tiny company. So, you have massive Newmont partnering up with this $23 million junior that’s listed on the Toronto Venture Exchange.

A gentleman named David Cole runs Eurasian Minerals. Cole worked for Newmont for years and years, and he knew he could do it better, and he is. And Newmont is now his partner down in Haiti. The business model is far different from your traditional junior mining company, because these guys do the groundwork. So, they go out and they do mapping, and they do fundamental geology—field sampling, staking the ground—which doesn’t cost a lot of money.

So, they’ll spend $500,000 to make a discovery, but there’s all these junior mining companies out there who are what we call drill bit plays who need a good project to raise money around, to put the drill in the ground. They want to sell the story to investors, and the odds of making a discovery that’s going to become a mine is about one in three thousand. Your odds of buying the next Barrick in a drill bit play are really, really slim. So, what the prospect generators do is they make a discovery on the surface; they go into junior miners or in some cases they go into the majors, and they say, “Hey, look, this is the geology; this is the discovery; this is the geologic style. We’re looking for a partner to drill it.”

So, the partner company’s role is they have to pay cash or shares to own half of the project, and then they have to fund the exploration work for the next couple of years. So for a prospect generator, he puts out $300,000 – $400,000 -$500,000 to make the initial discovery, and then does the science, basically. Then they turn it over to a partner who puts up the $1 million or $2 million a year to drill these projects for the chance to make a discovery.

It takes a lot of time to develop a project. So, for the prospect generators, the more they find of these projects and partner off, the more likely they are to make and participate in a big discovery.

TGR: Can you share with us the names of some other prospect generators you find interesting?

MB: Sure. Altius Minerals Corporation (TSX.V:ALS) is the blueprint for the prospect-generating company. They invested $600,000 in a little uranium project that they joint-ventured with a partner. The partner made a massive discovery when they were drilling. Altius then liquidated its shares for $200 million. So they took a $600,000 investment and turned it into $200 million. That’s the power of the prospect-generating model. It’s astonishing.

Two other prospect generators I follow are Miranda Gold Corp. (TSX.V:MAD) and Rimfire Minerals Corp. (TSX.V:RFM). I spent several days in the field in Nevada with the Miranda team. They are among the finest geologists I’ve met. They don’t spend a lot of money keeping the lights on and they have just under $12 million in the bank. More importantly, CEO Ken Cunningham put together an experienced staff.

I traveled to Nevada because of the frequency of giant gold deposits all around Miranda’s properties. This is a tiny company looking for elephants in elephant country. While I was there, the geologists showed me a conceptual model of a potential deposit on one of their projects. They showed me gravity surveys, a drill core, and assay results to support their hypothesis. They have the right people in the right area. One successful drill hole will make shareholders ten times their money, practically overnight.

Rimfire Minerals also follows the prospect generator model (I need to disclose that I personally own shares of Rimfire.) Rimfire employs another fantastic group of exploration geologists. These are “boots on the ground” geologists. Teams are in the field looking for projects from scratch. That helps keep costs down and increases the company’s knowledge and understanding of the geology. That kind of preparation makes the projects highly desirable to partners.

Rimfire branched out into Australia while testing out a kind of “smart map.” A group of ex-Newmont geoscientists designed and developed a proprietary computerized exploration system, called a neural network. In simple terms this is many layers of geologic information—satellite imagery, land cover, geophysical data, geochemical data, and drilling information on one computerized map. Then, they used the computer to figure out what combination of data coincided with giant gold deposits.

Today, they are testing targets that the smart map found in the Lachlan Fold Belt of Australia. This is a prolific copper and gold region in New South Wales. It holds the Cadia Valley complex, which holds some 28.5 million ounces of gold and 3.8 million tons of copper.

The area holds giant deposit potential and Rimfire has a brand new technology to use there. That’s a popular technique in the oil industry—you bring new information to a proven oil region. As with Miranda, a multi-million ounce discovery would send Rimfire’s shares into orbit.

In the last three years, Rimfire has spent more than $20 million on exploration—85% funded by its partners. That means for every dollar the company spent looking for gold it only used 15¢ of its own money. Over the life of the company, partners funded 84% of the exploration costs. That is the power of the joint venture model at work—funding exploration with other people’s money. Today the company has 15 projects, 8 of which have partners working on them.

So, to contrast that to your standard junior mining company model, the junior miner has a project; they have something they want to drill. They have no income; they’re basically a cash-burning machine. These guys have to go out and raise more money to do the next round of drilling. The only thing they have to sell is part of your stake in the company. So, say their shares are 10 cents, they need to raise a million dollars, they have to double the amount of shares they have out. So your slice of the pie just got smaller by half. That’s the problem with being an early investor in these junior mining companies: you’re going to be diluted and diluted and diluted, as opposed to prospect generators, where they’re actually generating money. They’re not diluting their shareholders.

TGR: Any other comments on companies that you are following?

MB: I recently recommended a company called Northern Dynasty Minerals Ltd. (TSX:NDM) (NYSE.A:NAK). Northern Dynasty is a really interesting company because they’re one of the Hunter-Dickinson Group, and Hunter-Dickinson has this history of finding these projects, or buying these projects at an early stage, developing them, and selling them. And so the investors in Hunter-Dickinson projects often make 800% to 1500% on their investments.

And the interesting thing to me is these guys own half of the Pebble Project, which is a giant copper-gold project in Alaska, a mining friendly state. This is not up in the mountains far from anything. It is actually close to the tidewater, so it’s not going to be hard to build a road to get the ore out. And they have a partner that promised to spend $1.5 billion before Northern Dynasty has to spend another cent. Now, when I first started looking at Northern Dynasty, their share price was $4, and the market cap, I think, was $300 million, and they were going to own half an asset that another company had promised to spend $1.5 billion on. So, in terms of book value, the market said half of that project was worth the $750 million that the partnering company said it was worth. So these guys were going to own half of the cash spent on developing this project.

It looked like just an incredibly good opportunity for investors, and since then we bought it at $4, Northern Dynasty rode the rising gold price up to $7 and change recently. It’s come back down to $6.50 a share. So, we’ve already made pretty good money. But I still think that company’s going to be bought out at a premium, and we’re going to make at least double our money.

That’s one of several examples. I went out to visit another project in British Columbia, owned by Seabridge Gold Inc. (TSX:SEA) (NYSE.A:SA). They actually had a business model where they were buying gold projects that were not economic below $400/oz. gold, and they were willing to invest the time and money in pruning up a project and waiting for the price of gold to come up. Because that was always their thesis, that gold price had to come up.

And they were right in the gold price, and they were lucky in the projects. I think this was partly good geologic assessment and partly they really hit it big, but they have a project called Kerr-Sulphurets-Mitchell; they call it the KSM project. I’m a geologist by training, and from a geological perspective Mitchell is one of the coolest deposits I have ever visited because it was glaciated, and the glacier has retreated, but you haven’t had a chance for big trees to grow up and cover everything yet because the growing season up there is so short.

And so when you stand in the valley, you’re standing in the middle of a giant gold and copper deposit. It’s astonishing. I think they’ve come up with 30 million ounces of gold so far. It’s just an enormous deposit.

So, for me, for the investments that I’m looking at, these projects are interesting. I think there are some good values out there when you can get them very cheaply like we did with Northern Dynasty. But in terms of projects that are actually going to become a mine, I’m looking at smaller projects that have high grade, low infrastructure costs, and are going to be producing.

Another company I like is Royal Gold Inc. (Nasdaq:RGLD), a fantastic company from an intellectual point of view because it’s basically a cash flow of gold from mine. This is a company where miners spend all the money; they blast the rock and muck it out. They run it through a big mill and crush it down into dust, and then they treat it with chemicals that pull out the gold. And when they go to pick up the gold from the smelters, there are the guys from Royal Gold with their hands out. And they have to give Royal Gold a percent or two of all of the gold that they just worked to get. Because Royal Gold is smart enough to go to mining companies when they’re desperate.

So, you’re a mining company, and your mine is almost built, and you just need that little extra $150 million or $300 million to get you over the hump, and you have nothing to sell but your own shares. And all you’ve done all along is sell shares and sell shares, and the market is finally looking at you with kind of a jaundice eye. “You’re going to come to us again and try to finance again?” And Royal Gold rolls up with a checkbook and says, “We’ll give you that money; you just have to agree to give us 2% or 3% of the gold that you make and 2% or 3% that you make on all the land that you own all around this mine.” And the mining companies say yes.

I love Royal Gold. But the great thing about Royal Gold is when you do a back-of-the-envelope calculation about how much gold they have rights to, you can value it using a combination of the share price and the price of gold. You can see when the market is really excited about gold, gold share prices go through the roof. They get a really high price for their gold, and then when the market sentiment is low on the gold price, then you see Royal Gold shares price fall. The amount of gold really doesn’t change that much, so it’s really a measure of sentiment.

In the last couple of weeks, Royal Gold prices soared up to $47 at one point, and came back down to under $40. And so it’s very easy to figure out what the fair price is to pay for Royal Gold shares and then to sell covered calls against it. I predicted to my readers we could make 88% this year doing nothing but selling short-term covered calls on Royal Gold because the market is so volatile right now.

TGR: Thanks Matt. This has been very insightful. Much appreciated.

Matt Badiali is the editor of the S&A Oil Report , a monthly investment advisory that focuses on natural resources—from small exploration outfits, to equipment companies, to the biggest commodity companies in the world. In Matt’s own words, “as a geologist, I focus on all natural resources including silver, uranium, copper, natural gas, oil, water, and gold, just to name a few.” He’s also a regular contributor to Growth Stock Wire , a free pre-market briefing on the day’s most profitable trading opportunities. Matt has real-world experience as a hydrologist, geologist, and a consultant to the oil industry and he holds a master’s in geology from Florida Atlantic University

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Buyer Beware: The 30 Biggest Bankruptcy Risks – Seeking Alpha

By: Thomas Smicklas of Investing From The Right

The following companies are listed in order, based upon the credit-default swap spreads on five-year corporate bonds as of early April. The list is compiled from research provided publicly through MSN Money.

AbitibiBowater (declared bankruptcy on Friday) (ABH)
R. H Donnelly (RHDC.PK)
Visteon (VC)
General Motors (GM)
Six Flags (SIX)
Financial Guaranty Insurance
Hawker Beechcraft
Ineos Group
NXP Semiconductors
McClatchy (MNI)
Unisys (UIS)
CC Media
Beazer Homes USA (BZH)
YRC Worldwide (YRCW)
Hellas Telecommunications II
Lear (LEA)
Ono Finance
American Axle and Manufacturing (AXL)
Harrah’s Entertainment
Truvo Subsidiary
Ford Motor (F)
Rite Aid (RAD)
MBIA (MBI)
Freescale Semiconductor
Univision Communications
Arvin Motor (ARM)
Pioneer Electronics
Travelport

A very interesting, prioritized list of companies that may not be on any list one year hence.

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Claim a gram of FREE GOLD today, plus a special 18-page PDF report;

Exposed! Five Myths of the Gold Market and find out:

· Who’s been driving this record bull-run in gold?

· What Happens When Inflation Kicks In?

· Why most investors are WRONG about gold…

· When and How to buy gold — at low cost with no hassle!

Get this in-depth report now, plus a gram of free gold, at BullionVault

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

My Note: I use this site to do my analysis and it offers so much for the trader,

Check It Out you’ll love what you see! -jschulmansr

There are only a few quality sites out there that provide high quality trading content, but they are often hard to find and are usually littered with banners and ads. So when I found this page from MarketClub I knew it would be something I bookmarked and wanted to share with you. This page is loaded with educational videos on current markets (stocks, futures, and forex), latest blog posts on the market, and helpful insight into current trends. Visit the page here:

INO MARKET CLUB

Take some time and check it out as I’ve bookmarked the page and check it daily for new videos and postings, and I recommend you do the same!

Thanks for your time and I’ll keep an eye out for more quality tools for you…

INO MARKET CLUB

jschulmansr

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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/s, Do Your Due Diligence, Read All Prospectus/s and related information carefully before you make any investing decisions and/or investments. – jschulmansr

Are You Ready For This? – Stocks at Risk and Gold to Soar?

20 Monday Apr 2009

Posted by jschulmansr in ANV, Austrian school, AUY, Bailout News, banking crisis, banks, bear market, Bollinger Bands Saudi Arabia, bonds, Brian Tang, bull market, CDE, CEF, central banks, China, Comex, commodities, Copper, crash, Currencies, currency, Currency and Currencies, deflation, Dennis Gartman, depression, DGP, dollar denominated, dollar denominated investments, Doug Casey, economic, economic trends, economy, EGO, Federal Deficit, financial, Forex, FRG, futures, futures markets, gata, GDX, GG, GLD, gold, Gold Bullion, Gold Investments, gold miners, Gold Price Manipulation, GTU, hard assets, HL, hyper-inflation, IAU, India, inflation, investments, Jeffrey Nichols, Jim Rogers, John Embry, Keith Fitz-Gerald, majors, Marc Faber, market crash, Markets, Michael Zielinski, mid-tier, mining companies, monetization, Moving Averages, NAK, NGC, NXG, PAL, palladium, Peter Grandich, Peter Schiff, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, protection, recession, risk, run on banks, safety, Sean Rakhimov, silver, silver miners, SLW, small caps, sovereign, spot, spot price, stagflation, SWC, Technical Analysis, TIPS, U.S., U.S. Dollar, volatility, warrants, XAU

≈ Comments Off on Are You Ready For This? – Stocks at Risk and Gold to Soar?

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Well I was a few days off but right nevertheless. Hope you took some profits on Thurs-Fri of last week in your non-precious metals stocks. It now appears that intermediate wave has ended and the downward spiral to begin. For the Dow I don’t see any real strong support until 7500, however the 7800 level is featuring a crossover of the moving averages so we may see a little support there. If 7800 and 7500 are breached then we will be testing the recent bottom at 6500 level very quickly. Gold jumped nicely today and I hope you were able to accumulate more of the “shiny” stuff in whatever form. I did pick up a further position in (DGP) last Fri. to catch the next ride to at least $950-$980. Longer term I am still sticking with my call of Gold $1250-$1500 by year end, even higher, way higher if the middleast explodes. Did you notice that Ahmadinejad practically thumbed his nose at the whole world today, especially Isreal? It is like he is “daring” anybody to do something about it. Isreal is being put into a position of having to strike for its’ very survival, especially since Mr. Obama is not really standing up and doing anything about Iran. Big trouble brewing and if the war happens big shock to Stocks, Oil, and Precious metals. You can feel the “calm” before the storm right now. Take heed put yourself in a position to be protected should/ no, when this happens. On the home front, I hope you were able to catch on Twitter my live reporting (tweetup) of the Arizona Tea Party held at the state capital. It was awesome and for the first time in a long time, it was a gathering of young and old, republicans and democrats, libertarians and independents, all united together as Americans! For all the incumbents out there… look out next election you’re going down! Have a Great Evening and Good Investing! – jschulmansr

Follow Me on Twitter and be notified whenever I make a new post!

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

Claim a gram of FREE GOLD today, plus a special 18-page PDF report;

Exposed! Five Myths of the Gold Market and find out:

· Who’s been driving this record bull-run in gold?

· What Happens When Inflation Kicks In?

· Why most investors are WRONG about gold…

· When and How to buy gold — at low cost with no hassle!

Get this in-depth report now, plus a gram of free gold, at BullionVault

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

A Gold Market Squeeze – Seeking Alpha

By: Tim Iacono of The Mess That Greenspan Made

A lot has happened since the yellow metal was last talked about here. The flow of gold bars into the ETFs has reversed direction and, after a surge in scrap supplies and a buying strike, bullion has stopped moving out of India and imports have resumed.

As might be expected, prices have plunged, but things are looking up today. In this Business Bullet from the Telegraph, at least a few analysts think higher prices might be ahead.

Ambrose Evans-Pritchard files this report on a possible gold market squeeze, although there appears to be something wrong with that “inflation-adjusted” gold price of $1,560 in the second paragraph – based on U.S. inflation, the figure is closer to $2,200.

Charles Gibson, a gold expert at Edison Investment Research, argues in a new report that negative real interest rates (below inflation) in the US and beyond has upset the “leasing” machinery in the gold industry and led to a sustained market squeeze.

This is what occurred in the late 1970s, driving gold prices to $850 and ounce – roughly $1,560 in today’s terms. Gold finished last week at $870.

Mr Gibson said the powerful dynamic could lead to a second leg of this gold bull market, even though the metal has already enjoyed a torrid run over the last eight years.

In normal times, gold mining companies sell – or “hedge” – a chunk of their output in advance through bullion banks. These banks cover their positions by leasing gold from central banks. This bread-and-butter trade created excess supply of 500 tonnes each year until the start of this decade.

Low real interest rates have caused the process to reverse, creating a shortfall of about 500 tonnes. The process accelerates as rates turn negative, leading to a scramble by market players to find physical gold.

The gold market needs something to revive it these days.

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Inflationary Prognosis Leads Us Back To Gold- Seeking Alpha

By: Horatio Marquez of Monday Morning

For many millenniums, gold has been a barometer of financial health and the ultimate store of value. It’s long been considered the ultimate safe haven investment when all else fails, or when economic conditions seem too good to be true.

So now that gold has made a second major run – shooting from $600 an ounce to $900 an ounce after punching through the $1,000 plateau last year – is the “yellow metal” still a prudent profit play, or is it an investment that’s already played out?

To answer that question, we must first ask another: Is the global monetary mirage going to keep inflating, or are we already on a sound monetary footing?

Let’s find out.

The global financial crisis has all the world’s major currencies (the U.S. dollar, the euro and the Japanese yen) racing to devalue against each other. This phenomenon of competitive devaluations occurs when inefficiencies in one country weigh down its economy. Devaluing the currency is an old macroeconomic trick to quickly attain competitiveness against other trading partners. It’s a way of borrowing growth from a neighbor, taxing imports and subsidizing exports.

But this newfound competitiveness is short-lived if the devaluing country does not fix the underlying reasons that gave rise to the currency devaluation in the first place. Devaluing the currency makes imports more expensive, especially commodities. And higher commodity prices and less competition from imported goods gradually feed inflationary pressures into the system.

Those inflationary pressures eventually “eat up” the value of the devaluation. And at the end of this cycle, you are left not where you began, but poorer, because you have made the income and monetary savings of your population less valuable.

The U.S. Economy’s Uphill Climb

No doubt, we are facing a unique set of circumstances in the markets. We are facing a global recession that actually teetered on the brink of a depression.

While some might think that just recapitalizing the banks will allow the lenders to get back into the business of aiding growth by providing credit, the reality is that the financial blowup is a symptom of structural conditions that keep generating these imbalances over time.

Let me be more specific.

There are three important structural conditions afflicting the long-term economic health of America:

The U.S. auto industry has fallen to international competitors.
Huge Social Security imbalances and an out-of-control medical care system figure to siphon an increasing amount of capital out of the economy.
And the onerous and incomprehensible U.S. corporate tax system will cause enough friction to slow economic growth.

When the United States couldn’t sell cars and other products abroad, it stimulated its internal consumption in order to keep the economy going. The U.S. auto industry barely subsisted while the rest of America subsidized it with abnormally low interest rates and overpriced cars. Foreign carmakers could underprice them – and with better cars to offer – helping them book large profits, even when manufacturing in the United States.

Over time, the falling market share – in an industry where economies of scale are the name of the game – kept increasing the financial pressure on the U.S. car industry, which was technically insolvent by the year 2000. And up until recently, members of the U.S. industry declined to take the hard medicine and restructure their failing business models.

All the government money in the world couldn’t help the U.S. auto industry without a vital restructuring. The end result will be a trimmed-down, leaner industry whose workers will have less purchasing power. That is a strong change that will not be reversed.

Likewise with the banking industry, capital alone won’t do the trick unless the banks remove the cancer that is eating away at the very foundations of this country’s economic system. Therefore, we’ll see a pared-down, de-leveraged financial system that will produce less secular growth, lower profits and lower employment than its inflated predecessor.

In addition, although the industry has been “stabilized” with massive subsidies (zero interest rates, wide open discount windows and U.S. Federal Reserve programs designed to bolster asset values), significant losses are still ahead, which will continue to be painful.

There’s one last problem: The U.S. government has yet to address the elephants in the bazaar: The massive inter-generational Ponzi scheme of Social Security and the massive and unsustainable healthcare system.

If we do not address these two problems seriously, without political pandering and without making the very tough choices we need to make, let the last one leaving the U.S. turn off the lights, because the population pyramid is too narrow at its base to sustain the millions of baby boomers retiring.

The Obama administration is being proactive in addressing these problems, but the measures it is employing are inflationary.

The Government’s Inflationary Arsenal

In order to prevent a widespread economic depression from fully unfolding, the U.S. government and the Federal Reserve have resorted to a battery of very powerful measures.

These measures prevent the normal course that would have followed the blow-up of the huge unsustainable imbalances built over decades in the U.S. car industry, in the U.S. real estate market and more importantly in the Social Security and Medical Care systems.

In short, the Federal Reserve has resorted to:

Lowering interest rates to near a range of 0%-0.25%. This effectively is a subsidy from savers to the financial institutions.
“Quantitative easing.” That is, the Fed is buying U.S. Treasuries to drive their rates lower and to increase the money supply.

These are both merely ways of devaluing the dollar. Of course, the justification of engineering inflation is saving the U.S. banking industry and avoiding a dreaded deflationary spiral, a la Japan in the 1990s, which would mire us in 10 years of economic paralysis.

In effect, the U.S. government is trying to put out the fire with gasoline: Spending unconscionable amounts of money that it does not have, and financing that spending with record levels of debt. The short-term results of a boost in activity will be extremely costly.

Under this scenario, with a depression not in the cards, the market is rallying to adjust to mere recession pricing. But are we out of the woods? The rampant spending and overzealous monetary easing will result in – you guessed it – inflation.

The Fed’s claims that it is ready and willing to act quickly in order to contain inflation when it finally appears just don’t seem realistic at this point. As a central bank that had to resort to such extraordinary measures just to sidestep the death spiral, could you really risk tightening the reins too much and too soon? No way. The Fed will have to be very slow in taking back the liquidity with which it has just flooded the market.

After all, it is much easier to spike rates later to stop inflation than to deal once more with a crumbling financial system.

Monetary management is more of an art than a science. The Fed doesn’t really know how much time – and to what extent – it will take for their measures to impact economic activity. It is driving while looking into its rearview mirror. And with this amount of financial adrenalin and imbalances being corrected in the system, the likelihood of a monetary “soft landing” is slim to none.

This brings us back to gold.

With this prognosis, we know that the government’s policies will succeed in achieving what it truly intended: Creating inflation.

Therefore, gold is a necessary component of almost any portfolio. The problem is that the iShares SPDR Gold Trust ETF (NYSE: GLD) already has accumulated more gold than the rich countries of Switzerland or China. That means any move from the masses of investors to leave the metal will have a huge downward effect on it.

But, knowing this important technical risk, I would still be ready to invest if gold pulls back to the $800 an ounce level. From there, I’d keep building a prudent position, as we should see a price spike once inflation starts showing up in 12 months to 18 months.

Disclosure: Horacio Marquez holds no interest in iShares SPDR Gold Trust ETF.

Original post

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· What Happens When Inflation Kicks In?

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The Swan Dive- Next For Stocks?

14 Tuesday Apr 2009

Posted by jschulmansr in 10 year Treasuries, 20 yr Treasuries, agricultural commodities, ANV, Austrian school, AUY, Bailout News, banking crisis, banks, Barack Obama, bear market, Bear Trap, bilderbergers, Bollinger Bands, Bollinger Bands Saudi Arabia, bonds, Brian Tang, bull market, CDE, CEF, central banks, China, Comex, commodities, Contrarian, Copper, crash, Credit Default, Currencies, currency, Currency and Currencies, deflation, Dennis Gartman, depression, DGP, dollar denominated, dollar denominated investments, Doug Casey, Dow Industrials, economic, Economic Recovery, economic trends, economy, EGO, Fed Fund Rate, Federal Deficit, federal reserve, Finance, financial, follow the money, follow the news, Forex, FRG, Fundamental Analysis, futures, futures markets, G-20, gata, GDX, GG, GLD, gold, Gold Bullion, Gold Investments, gold miners, Gold Price Manipulation, GTU, hard assets, heating oil, HL, How To Invest, How To Make Money, hyper-inflation, IAU, India, inflation, investments, Jeffrey Nichols, Jim Rogers, John Embry, Jschulmansr, Junior Gold Miners, Keith Fitz-Gerald, Latest News, majors, Make Money Investing, Marc Faber, market crash, Markets, Michael Zielinski, mid-tier, mining companies, mining stocks, monetization, Moving Averages, NAK, natural gas, NGC, NXG, oil, PAL, palladium, Peter Grandich, Peter Schiff, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, protection, recession, risk, run on banks, S&P 500, safety, Sean Rakhimov, silver, silver miners, SLW, small caps, sovereign, spot, spot price, stagflation, Stimulus, stock market, Stocks, SWC, TARP, Technical Analysis, The Fed, Tier 1, Tier 2, Tier 3, TIPS, U.S., U.S. Dollar, volatility, warrants, XAU

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Well Mr. Obama said the same old, same old today and didn’t help the market at all… ANY of them! Mr. Obama what do you have against the market? I mean like your whole cabinet are all Good Ole Wall Street Boys!?! The Dow failed to maintain above 8000 today and that is a very bad sign or good depending which side of market you are on. It appears now the the intermediate wave (Elliott) is finished and stocks have climbed to the top of the diving platform. 1st attemp at a swan dive- difficulty easy. So wil it be a perfect 10 or a belly flop? Either Way the Dow is going down! My first target 7200-7500 and then a test of the 6500 level lows, (Called The “Bottom” recently). Gold and Precious Metals continue to consolidate getting ready to launch for a new test of $920, then $980, then the all time high. I think the news is going to be that bad and that dramatic. The Middle East is about to explode, N. Korea just threw out the inspectors, even the pirates are snubbing their noses at you Mr. Obama. So now the question is are you a man or a mouse? Squeak up! Copper is quietly having a nice rally, China is buying up all of our soybeans, and oil is getting ready to explode to the upside. Keep accumulating Gold and Precious Metals in any form, buy producers with production, you should jump into (DGP) with a little risk money too! In currencies my pick is the Aussie dollar, accumulate on dips because as Gold goes so will the Aussie Dollar. Good Investing! – jschulmansr

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Exposed! Five Myths of the Gold Market and find out:

·        Who’s been driving this record bull-run in gold?

·        What Happens When Inflation Kicks In?

·        Why most investors are WRONG about gold…

·        When and How to buy gold — at low cost with no hassle!

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My Note: I use these tools and they are great and they work! – jschulmansr

Subject: Two trending markets revisited and analyzed for you

Below are two free videos, one on Crude Oil and one on the S&P, that gives us an indepth technical look into these markets. Again the videos are free and very informatitive. Just Click on the Links Below…

S&P Video Analysis: Crude Oil Projections:

Here’s your chance to analyze that stock you have been thinking about adding to your portfolio. Just enter the ticker of any company, name of a commodity, or forex pair and get your complimentary technical analysis. It cost you nothing and and no payment info will ever be requested.

Click Here To Enter Your Symbol/s

My Note: I use these tools and they are great and they work! – jschulmansr

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Pros Say: Sharp Market Pullback This Week – CNBC

Source: CNBC.com

Encouraging numbers from an investment banking giant dominated discussion among the pros, who tied them to massive government stimulus efforts — and doubted they would carry ahead to economic numbers, or even to results from other investment banks.

Financials Show Surprising Strength; Consumers Still Look Weak

Scott Brown of Raymond James said there has been a real change in the attitudes and behavior of consumers, with fear now dominant. That is likely to be reflected in retail data this week, and there’s no likelihood that consumer spending will rebound any time soon. (click to watch the video).

Stocks ended near their session lows Tuesday after a report showed retail sales unexpectedly dropped in March and as worries about banks simmered ahead of some key earnings.

The Dow Jones Industrial Average tumbled 137.63, or 1.7 percent, to close at 7,920.18. The S&P 500 lost 2 percent, while the Nasdaq skidded 1.7 percent.

Retail sales tumbled 1.1 percent

last month, a big disappointment as economists polled by Reuters had expected a 0.3-percent increase. Excluding the volatile auto component, sales fell 0.9 percent. The two prior months were revised upward, offering some consolation, but the unexpected sharp drop rattled the market.

“The inescapable fact is that the U.S. consumer is faced with daunting fundamentals: Wage and salary income growth has evaporated, credit is very tight, home prices continue to decline … [which] makes it very likely that the U.S. consumer will remain a drag on economic activity in coming quarters,” MFR economist Joshua Shapiro wrote in a note to clients. “Fiscal stimulus will help to blunt this, but is unlikely to turn the tide completely.”

Markets are Overbought; Retail Numbers = Long Way to Go

Disappointing retail sales numbers in March, after two stronger-than-expected months, show the consumer has not turned the corner after all, and may “go back in his cocoon,” according to Art Cashin of UBS. The market is overbought and vulnerable to a pullback — perhaps even a sharp pullback over the next three days — with option expiration built in. He is hopeful we have set the lows for the cycle, although those lows may be tested, and he foresees a lot of “sideways churning for maybe months.

My Note: Unfortunately if sideways churning includes testing those lows then I absolutely agree if those lows hold. Unfortunately, I don’t think they will, can you say DOW 4500? – jschulmansr

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Oil and Gold to Figure Large This Week – Seeking Alpha

By: Brad Zigler of Hard Assets Investor

Real-time Monetary Inflation (per annum): 7.9%

Easter Mondays leave Yanks more time to leisurely ponder the week’s trading prospects, as many global bourses are closed. We get to trade – and talk, as Linda Richman used to suggest – amongst ourselves.

Gold and oil naturally figure large in this week’s scenario. Particularly, oil over gold, if you’ve been listening to commodity maven Jim Rogers. Rogers thinks the International Monetary Fund [IMF] is a likely seller of some of its 3,200-ton metal stash, so he’s talking up black gold over yellow.

It’s not as if the world finds this surprising. Whether the IMF sales take place or not, the world’s been spoiling for a showdown between the two commodities.

Let’s look at oil first. The nearby crude contract gathered strength in its 50% retracement of the February-March rally, and is now poised to challenge the run-up’s $54.64 high.

Nearby NYMEX WTI Crude

Nearby NYMEX WTI Crude

True, near-term fundamentals still indicate oversupply. The re-growth in the contango tells you that. The quarterly carry trade was pinched to 80 cents a barrel a month ago; now it’s in the $4-5 range. If you’ve got a carrying charge market, you’ve got commodity enough to carry into future deliveries.

No, this has been a rally built more on expectations of improving economic prospects – hand-in-hand with the equity market rally – than on a supply retraction. Oil inventories at the Cushing, Okla., terminus may be down from their peak, but supplies in other regions have ballooned to more than compensate for the off-take.

Now, about gold …

Momentum and sentiment have turned sour for the yellow metal. But you probably suspected that, right? The recent 30,000-contract downdraft in COMEX open interest was led mostly by fund sellers. Net long positions held by large speculators tumbled more than 18% last week.

COMEX Nearby Gold

COMEX Nearby Gold

Technically, gold’s very vulnerable. Pushed to test its 100-day moving average on the downside and weighed down by overhead resistance at the $888 level – formerly support for the February-March topping action – the nearby market’s squeezed. Gold spreads (as mentioned in “Another ‘Make It Or Break It’ Hurdle For Gold“) indicate plenty of liquidity in the lease market. Supply’s not the issue for gold either. At least not yet.

Oil’s technical strength over gold is readily apparent in the gold/oil ratio. A rising ratio, meaning gold’s price is gaining on oil’s, is indicative of poorer economic conditions to come. A decline, not surprising, signals the market’s forecast of better prospects. The ratio’s been testing the 17-to-1 level over the past couple of weeks. An oil breakout could put this indicator on course to look for support at the 15-to-1 level.

Gold/Oil Ratio

Gold/Oil Ratio

It seems traders are essentially anticipating a reflation trade by making one of the primary engines of inflation, oil, their target rather than gold, inflation’s classic beneficiary.

This should be an interesting week.

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My Note: Brad you need to remember this time the Miner’s have started to begin the rally not the bullion market. When that happens Gold always rises. But with the producer’s/miner’s leading we will have a much stronger and deeper rally this time, I’m looking for $1200 – $1500 by year’s end! Have a Great Evening, don’t forget tomorrow is National Tea Party Day! – jschulmansr

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Key Test for Stocks and Precious Metals on Monday!

10 Friday Apr 2009

Posted by jschulmansr in 10 year Treasuries, 20 yr Treasuries, Austrian school, banking crisis, banks, bear market, Bear Trap, bonds, Brad Zigler, bull market, CDE, CEF, central banks, CFR, China, commodities, Contrarian, Copper, Currencies, currency, Currency and Currencies, deflation, depression, DGP, DGZ, dollar denominated, dollar denominated investments, Dow Industrials, economic, Economic Recovery, economic trends, economy, EGO, Fed Fund Rate, Federal Deficit, federal reserve, Finance, financial, follow the money, follow the news, Forex, FRG, Fundamental Analysis, futures, futures markets, G-20, gata, GDX, GG, GLD, gold, Gold Bullion, Gold Investments, gold miners, Gold Price Manipulation, hard assets, How To Invest, How To Make Money, IAU, IMF, India, inflation, Investing, investments, Make Money Investing, market crash, Markets, mid-tier, mining companies, mining stocks, NAK, NASDQ, natural gas, oil, palladium, Peter Schiff, physical gold, platinum, precious metals, price, price manipulation, prices, protection, recession, risk, run on banks, safety, Short Bonds, silver, silver miners, small caps, sovereign, spot, spot price, stagflation, Stimulus, stock market, Stocks, SWC, TARP, Technical Analysis, The Fed, U.S. Dollar, volatility

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After having trading markets today closed for trading on Good Friday, stocks and precious metals are facing big tests on Monday and the Following Week. For the Dow, Must maintain and push a little higher over 8000 and extend the secondary Elliot Wave Rally. If it does next real test will be 8500 for the Dow. If it fails here and closses back beneath 8000 then lookout for a swan dive! For Gold and Precious Metals, Gold must maintain and close above the $880-$890 level. To confirm botttom in place from the retracement a close over $920 will be required. A close beneath $860 and we’ll see a definite test of $850. Personally with all that is happening, I would much rather be in Precious Metals than Stocks at this moment. Today’s articles feature Peter Schiff, Brad Zigler, Peter Cooper and Adrian Ash

-Have a Happy Easter!-jschulmansr

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Claim a gram of FREE GOLD today, plus a special 18-page PDF report;

Exposed! Five Myths of the Gold Market and find out:

· Who’s been driving this record bull-run in gold?

· What Happens When Inflation Kicks In?

· Why most investors are WRONG about gold…

· When and How to buy gold — at low cost with no hassle!

Get this in-depth report now, plus a gram of free gold, at BullionVault

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Peter Schiff: Reflating The Bubble- The Gold Report

Source: The Gold Report

Amid an “inflationary depression” in the U.S., Peter Schiff, president and chief global strategist of Euro Pacific Capital, sees opportunities in the maelstrom. Facing a massive redistribution of wealth, he advises investors to act quickly and “divest U.S. dollar assets into physical precious metals, other currencies and equities outside the United States.” In this exclusive interview with The Gold Report, the widely-quoted expert on money, economic theory and international investing discusses what led up to our current “phony economy” and how investors can actually profit from the crisis.

The Gold Report: Peter, you were one of few people to predict financial crisis that the U.S. and the world is now in the midst of. At a recent conference, you called the conditions that we’re facing “an inflationary depression.” Can you describe what you mean by that?

Peter Schiff: Well, basically, that is the condition that the government is creating here in the United States, and an inflationary depression is going to be a protracted period of economic decline accompanied by rapid increases in consumer prices. So, it’s going to be something like the stagflation of the 1970s, only much more stagnation, or outright contraction of the economy, with the cost of living increasing even more rapidly than it did then.

TGR: As we look at some of the things that Obama’s trying to put into place, is there anything the government could do now to avoid this?

PS: There’s nothing the government can do to avoid some serious short-term pain. The country is in a lot of trouble because of all of the monetary mismanagement of the past, the reckless government spending and the money creation that led to the phony economy.

We’ve spent a long time squandering wealth in this country. We’ve borrowed a lot of money and foolishly used it to consume. We’ve allowed our industrial base to disintegrate, and it’s going to be difficult to rebuild a viable economy. But we’re never going to rebuild one if the government stands in the way. What the government is doing now with their polices is trying to reflate the bubble; they’re trying to get Americans to borrow and spend even more money when we’re broke from the money that we shouldn’t have borrowed and spent in the first place. And the government is trying to get itself bigger. The government is trying to grow its size at a time when it needs to contract because we’re really too broke to afford a bloated government.

It was bad in the past—it was making us less competitive, but at least we could afford it; now we clearly can’t. So, we need less government. We need sound monetary policy. We need higher interest rates. We need to allow businesses to fail. We need to allow companies to go out of business or bankrupt. We need to allow foreclosures to take place. We need to allow people to lose certain jobs. We can’t try and interfere with that. And to the extent that we do, we’re going to create this depression; and if we keep printing money, we’re going to have massive inflation on top of it.

TGR: In your talks, you’ve said that printing money will cause massive inflation and the collapse of the U.S. dollar. Can you speak to that?

PS: People think you just create money and use it to spend. But when you create money you don’t create purchasing power. So, what happens is you have to pay more money; you create inflation. The way you get increased purchasing power is through increased production, and simply printing money doesn’t cause factories to appear. It doesn’t cause consumer goods to appear.

In order to have real increased consumption, we need to produce more, which means we need more savings and investment—and the government is discouraging that with its policy, not promoting it.

TGR: Will the government bailouts help increase production and ultimately purchasing power?

PS: No, no, the bailouts are destructive to the economy because the government is bailing out industries and companies that should be failing. They’re keeping nonproductive companies in business, which ultimately undermines the competitiveness and the productivity of our economy.

Bankruptcy is like when a body has an infection. It fights it off, and that’s what the free market is doing by trying to kill off noncompetitive companies. Bankruptcy is a positive force in an economy. Maybe it’s not positive for the entity going bankrupt, but it is positive for the economy as a whole because it’s purging from the body of the economy nonviable companies that are squandering our resources.

We need companies to fail so that more prosperous companies can succeed. By keeping certain businesses around, the government is preventing others from coming into existence that would have been more productive.

TGR: So, if the government would step back and let the free market systems work, how much sooner would they be able to make the turnaround, rather than having the government do it?

PS: We’re not going to turn around at all as a result of what the government is doing. We’d turn around a lot sooner if they would let free market systems work, but it wouldn’t be instantaneous. We’ve got to dismantle the phony economy before we can rebuild the viable economy. We’re going to have this transitionary pain. We have to get over all the damage that has already been done in response to the government and bad monetary fiscal policy. We had a bubble economy; we had an economy based on Americans spending money they didn’t have and buying products they couldn’t afford or that they didn’t make. We had an economy built on debt, consumer debt, and financial engineering, and our companies were generating profits from accounting rather than from production. And the whole thing was phony; the prosperity was phony. We need to address those problems, and get back on the road to economic viability.

TGR: Is this a U.S. phenomenon or is this worldwide?

PS: Well, it exists to lesser degrees in other countries, and certainly other countries are affected because they’re producing the goods that we’re consuming and they’re lending us the money to pay for it and, ultimately, we can’t pay them back. And so their economies are going to suffer as a result of all the wealth that has been squandered and all the resources that have been wasted on production for American consumers because we can’t afford to pay.

TGR: The government is printing money. What is going to be the impact of all that money coming into the economy?

PS: Well, it’s going to force up prices. Eventually real estate prices will start to rise, stock prices will start to rise; but Americans aren’t going to be richer because the cost of living is going to rise a lot faster. The price of food and the price of energy are going to rise much faster than the price of stocks or real estate.

TGR: Do you see a pending collapse in the U.S. dollar?

PS: I do see a collapse in the dollar. The dollar is already been losing value, but I think it’s going to lose a lot more.

TGR: What should investors be looking at as a safe haven for the money that they have now?

PS: Well, they should be looking at the traditional safe havens like gold and silver; they should also be looking at other commodities and at investments outside the United States. There are a lot of opportunities around the world. There are a lot of stocks that are extremely inexpensive, in my opinion, particularly in the Asian markets and the natural resource space.

There are a lot of stocks trading at valuations I have never seen; there’s a lot of pessimism built into the global markets right now, and there are fire sale prices. The world has overreacted to our problems and the way our problems have affected their economies. And in this market environment of de-leveraging and asset liquidation, prudent investors who do have cash can find tremendous bargains around the world. They can preserve their wealth and actually profit from what’s going on.

TGR: Can you share with us some sectors people might consider?

PS: In general, the productive sectors of the economy have companies that are manufacturing products and have good balance sheets, companies that operate within a resource sector that has tremendous reserves—whether it’s mining reserves or energy reserves—or companies that operate in various forms of agriculture. There are great opportunities there. Stocks are trading for very low, single-digit multiples off of depressed earnings. And you have a lot of companies offering dividend yields north of 10%, and these are real dividends paid from earnings. But, as an investor, you have to do your homework to find them. Bond rates are so low we can get incredible yields on equities, and this is a great opportunity, especially if those yields are going to be paid to us in currencies that I expect to strengthen significantly against the U.S. dollar.

TGR: What countries and currencies do you see emerging first from the recession?

PS: Well, ultimately, a lot of the currencies that are currently pegged to the U.S. dollar will be very strong, a lot of the Asian currencies. We already see a lot of the resource currencies starting to move back. We have seen rather substantial strength in the Australian and the New Zealand dollars in the past few weeks. I do think you’re going to see strength also in the Euro, as the Euro seems to be a good alternative to the dollar as far as a reserve-type currency. And the Europeans’ monetary policy is not nearly as bad as ours, so more of that type money will be attracted to the Euro and will probably benefit other Euro-zone type currencies—Scandinavian currencies, the Swiss Franc—those currencies will benefit, as well.

TGR: China and Russia and some other OPEC nations are calling for the IMF to come in with an international currency. I think they’re calling it special drawing rights.

PS: Yes, China was talking about trying to look for alternative reserve currencies to the dollar, and they’re floating a balloon of special drawing rights issued by the IMF. I don’t think that’s a good idea. Ultimately, China does indeed need to convince the world to look for another standard. China needs to find another reserve on its own and it can do that. The Chinese should start divesting U.S. dollars now. They can choose any currency they want as their reserve currency. When they do start divesting dollars it will impact the value of the dollar.

TGR: Will we see a return to a gold standard?

PS: Currencies need to have value and paper is not value. No fiat currency in history has ever survived. Everyone says this one is going fine but we’ve only been off the gold standard since 1971—it’s too soon to tell, but it’s sure not looking good.

TGR: Will you see a return to the gold standard in your lifetime?

PS: Yes, I will—it has to happen.

TGR: What investment advice do you have for our readers?

PS: Investors need to act quickly and take charge of their financial destiny. We’re facing the largest redistribution of wealth through inflation.

The hardest hit will be the savers and investors who will see their savings wiped out if they are kept in U.S. dollars. Dollars will be stolen from the savers to pay for these huge government-spending policies—for health care, education and the bailout.

I would divest U.S. dollar assets into physical precious metals, other currencies and equities outside the United States, and focus on companies that own real things that have a demand.

Peter Schiff is President & Chief Global Strategist of Euro Pacific Capital in Darien, CT. Mr. Schiff began his investment career as a financial consultant with Shearson Lehman Brothers, after having earned a degree in finance and accounting from U.C. Berkeley in 1987. A widely-quoted expert on money, economic theory, and international investing, Peter has appeared in the Wall Street Journal, New York Times, L.A. Times, Barron’s, Business Week, Time and Fortune. His broadcast credits include regular guest appearances on CNBC, Fox Business, CNN, MSNBC, and Fox News Channel. He also served as an economic advisor to the 2008 Ron Paul presidential campaign. His best-selling book, “Crash Proof: How to Profit from the Coming Economic Collapse” was published by Wiley & Sons in February of 2007. His second book, “The Little Book of Bull Moves in Bear Markets: How to Keep your Portfolio Up When the Market is Down” was published by Wiley & Sons in October of 2008.

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Another ‘Make It or Break It Hurdle For Gold- Seeking Alpha

By: Brad Zigler of Hard Assets Investor

Real-time Monetary Inflation (per annum): 8.1%

There’s a continuous – no, let me rephrase that – there’s an unending battle over the merits of technical analysis among traders. Those who forecast price trends using market fundamentals often think chartists are using the equivalent of chicken entrails to predict a commodity’s future.

I’m not going to step into the line of fire in this battle.

Suffice it to say that a market in which fundamentals are – how shall I put it? – screwy, technical analysis may provide the only reliable road map.

Take gold, for example. There are lots of reasons the price of the metal “should” be higher if one looks solely at the fundamentals. But there are forces holding the metal’s price in check.

Readers of this column know at least one chart is usually published with each day’s offering (today will be no different). Many of those charts, however, track fundamental elements of supply and demand. We figure there are benefits and drawbacks to both styles of analysis. For those times when fundamentals are murky, you must refrain from making market moves or try to glean insight from the charts. Obviously, some traders have to be in the market. Market makers, for instance.

Gold’s chart indicates that some serious technical damage has been inflicted in recent days. Just this week, we mentioned increased odds that the metal’s 100-day moving average would be tested (see “Gold’s Price Decline Brings Out Buyers“). That test is nigh, but the support previously provided at the nearby contract’s March low of $888 has now turned to overhead resistance.

COMEX Nearby Gold

COMEX Nearby Gold

Gold bears have the technical edge over the near term. They have the January low of $808 in sight, but need a spot close today under $874 to really grease the skids. April COMEX gold has weakened today, but has so far recovered from a dip to the $874 level.

Now, on the fundamental side are the clues offered by the London forward market. Three-month leases are down to 10 basis points (0.10%), brought low, however, more by an easing in LIBOR than in a nudging up of the metal’s forward rate. Still, the implication to be drawn is that there’s plenty of gold liquidity among commercial dealers, at least in the critical three-month lease segment.

For gold bulls, a close above $919 in the spot market is needed to marshal strength for an assault on the $956 resistance bump.

Traders will be closely watching key outside markets, i.e., U.S. dollar cross rates, crude oil prices and equities for further hints about gold’s near-term prospects.

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Will Silver Start to Outperform Gold? – Seeking Alpha

By: Peter Cooper of Arabian Money.net

Precious metal fans face a conundrum in choosing to buy silver rather than gold: silver prices are more volatile but have always outperformed gold prices in previous financial crises.

So you might sleep better as an investor in gold but ultimately lose out to silver. An equal split asset allocation is one way of hedging sleep and performance.

It is notable, for example, that the correction in silver prices since the peak of March 2008 has been larger than gold. Silver more than halved before rebounding while gold lost a third in price before coming back.

Looking forward

Then again if you had bought at the bottom point for both metals over the past year gold is now much closer to its March 2008 peak price than silver, and you would have made more money. What to do going forward?

The gold-to-silver price ratio is now 70 compared with a range of 30-100 over the past three decades, although it has been as low as 15 during periods when silver was used as money.

Given that currency competitive devaluations and inflation are the likely drivers of higher precious metal prices over the next few years that would seem to give the advantage to silver. It does tend to become a ‘poor man’s gold’ as gold prices rise, and in India there is already some evidence of this happening.

The real test for gold and silver will come in the next down leg of this bear stock market towards a capitulation phase. Will those finally giving up on equities shift their money into precious metals if they fear inflation is about to hit bonds?

Judgment call

It is possible, or there might be an intermediate phase in which gold and silver are temporarily sold down in a market crash – like last autumn – and only later find their role as a bond replacement.

However, history suggests silver will be the better performer, and stocks of silver are reckoned to be less than one-hundredth the size of gold reserves, so the supply and demand equation is already stacked in favor of silver. Monetize gold and silver and there will not be enough silver available and the price will go up.

There is a risk that gold and silver prices will fall as equity markets fall, or even a risk that foolish investors might send the stock market rally a little higher, but probably the biggest risk is being caught short of both precious metals when prices take off.

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What MC Hammer Did To Gold – The Gold Report

By: Adrian Ash of Bullion Vault

“U can’t touch $1,000 says the Hammer. But everyone’s got their deal price…”

“INVESTORS will drive the next leg of this bull market in gold,” said Philip Klapwijk, chairman of GFMS, at the London-based research consultancy’s Gold Survey launch in Canary Wharf on Tuesday, “setting a new high above $1,000 in 2009 and with a real possibility of $1,100 per ounce.”

Anyone pitching for $1,100 in short order, however, might have their work cut out for them. And all thanks to MC Hammer.

“We have seen people in Europe Buying Gold in quantities more typical of the Middle East and Asia…particularly in Germany and Switzerland,” Klapwijk went on. Because “Inflation is the inevitable consequence of today’s rapid money-supply growth and quantitative easing.” All told, reckons GFMS, the monetary response to the financial crisis will prove “extremely powerful medicine for Gold Investment.”

So far, so bullish. But why no new high, therefore, in the gold price already this year? Philip Klapwijk attributes gold’s failure at $1,000 back in February to the “astounding” flow of scrap metal coming from cash-strapped consumers worldwide. And GFMS’s raw numbers would suggest he’s right.

Scrap supplies previously lagged both gold-mining output and central-bank sales by a wide margin each year. But recycled tonnage actually overtook new jewelry demand worldwide at the start of 2009 according to GFMS’s analysis. That was after rising 27% in full-year 2008 to more than 1,200 tonnes.

Gold mining output, for comparison, came in at barely 2,500 tonnes, down yet again year-on-year despite the on-going rise in prices.

Come Q1 2009 and scrap supply surged further still, reaching above a massive 500 tonnes according to GFMS’s research. New jewelry demand, in contrast, halved to just 420 tonnes, as traditional importers – such as former world No.2 Turkey – became gold exporters in a shocking about-turn.

One attendee at the GFMS presentation even thought they under-played it, putting the flow of scrap metal far higher – and dwarfing world mining output – at perhaps 1,000 tonnes during the first quarter alone. Absurd as that sounds, world No.1 importer India took in next-to-no new gold at all between Jan. and March as the Bombay Bullion Association has reported.

That’s an event not seen since the Great Depression of the 1930s according to gold-market historian Timothy Green, also chipping into the Q&A at Tuesday’s GFMS presentation.

Most crucially for the new dynamic of gold demand-and-supply, the industrialized West has seen high-margin operations led by Cash4Gold – whose advert during this year’s Superbowl hardly needs spoofing, featuring as it did MC Hammer and former Tonight Show sidekick Ed MacMahon spoofing themselves – make selling gold much easier for cash-strapped consumers.

“I can get cash for this gold medallion of me wearing a gold medallion!” gasped the Hammer in Cash4Gold’s typically gag-laden Superbowl slot. The airtime alone reputedly cost $3 million, so based on the scrap market’s average mark-up of 40% – if not the 60% to 80% mark-ups reported in this “consumer crusade” against America’s No.1 – you’d have to guess they brought in a chunk of change…as did everyone else touting for scrap metal as the Christmas heating bills came due between Jan. and March.

Hence the “roadblock”, or so Klapwijk reckons, on gold breaking above $1,000 an ounce in late February. But we’re not so sure here at BullionVault.

First, Cash4Gold’s parent company, Albar Precious Metals, reports 775% growth for the last three years. So why the sudden impact on gold prices – an impact regularly dismissed in 2008 in favor of de-leveraged by crisis-hit hedge funds fleeing the futures and options market? More crucially, back in Feb. this year, gold still broke new all-time highs vs. the Euro, Sterling, Swiss Franc, Indian Rupee, Turkish Lira and pretty much everything else bar the Dollar and Yen. Which would suggest the failure at $1,000 was more currency-capped than supply-driven.

More critically still for gold-market analysts, how can we draw a line between “investment” and “jewelry” for those two billion Asians still without Main Street banks in which to keep their savings?

Either way, gold investors might still want to beware the Hammer. Because the only cap on Middle Eastern gold sales after the Jan. 1980 top, as Timothy Green recalled from his experience in Kuwait and Dubai, was the inability of jewelers to raise enough cash each day to buy all the scrap gold offered daily. Whereas Cash4Gold, the leading US scrap buyer, also runs its own refineries as well as collecting scrap metal by post and touting for metal online and on TV.

Looking ahead, an estimated 82,000 tonnes of gold exists as privately-owned jewelry worldwide, some 52% of the total above-ground supply. The vast bulk of recent tonnage has been added by emerging-market consumers, most often in the form of lumpy “investment jewelry” that carries little added-value from fabrication, but which can still lose 10-15% in dealing fees when it’s sold to raise cash. So how much of the 2008 and early-09 supply represented forced sales by truly cash-strapped gold hoarders – and how much represented “easy scrap” sales? You know, the really ugly old-fashioned stuff inherited from maiden aunts that the owners never much cared for, similar to that “rabbit gold” buried by generations of Frenchmen fearing (yet another) German invasion but now dishoarded by their grandchildren each year.

In the same way the earth yields up “easy gold” to open-cast mines, before forcing miners to start digging…and digging…down as far as four and even five kilometers below the surface in South Africa, the world’s former No.1 gold-mining nation…perhaps the emerging markets are now racing through their “easy scrap” gold. Or perhaps the decision to sell has already been tough, “spurred by losing your job, losing money in the stock market, bad luck, or just needing some extra cash for holiday spending,” as Cash4Gold laments on its website.

On the other side of the trade, meantime, GFMS now expects “concentrated buying” on any price dip to $800-850 per ounce. Down there, the consultancy says, pent-up demand will surge while scrap sales fall sharply, just as we’ve seen right throughout this bull market to date, with Indian jewelry demand triggered at ever-higher dips in the price.

And as Philip Klapwijk noted in London on Tuesday, if it weren’t for a surprise jump in gold-jewelry demand during the plunge to $700 an ounce and below in Oct. 2008, “it’s undoubtable that gold would have fallen further…down to $650 or lower.”

Everyone’s got their “deal price” in short – that level at which they’re either a buyer or seller, depending on where they last bought or sold. And also depending, of course, on their outlook for inflation from here.

Adrian Ash
BullionVault

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK’s leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – where you can Buy Gold Today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2009

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

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Claim a gram of FREE GOLD today, plus a special 18-page PDF report;

Exposed! Five Myths of the Gold Market and find out:

· Who’s been driving this record bull-run in gold?

· What Happens When Inflation Kicks In?

· Why most investors are WRONG about gold…

· When and How to buy gold — at low cost with no hassle!

Get this in-depth report now, plus a gram of free gold, at BullionVault

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Investor Beware! – Stocks vs Gold

08 Wednesday Apr 2009

Posted by jschulmansr in Austrian school, banking crisis, banks, bear market, bull market, central banks, China, Comex, commodities, Copper, Currencies, currency, deflation, depression, dollar denominated, dollar denominated investments, economic, economic trends, economy, financial, Forex, futures, futures markets, gold, gold miners, hard assets, India, inflation, investments, market crash, Markets, mining companies, palladium, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, protection, recession, risk, run on banks, safety, silver, silver miners, sovereign, spot, spot price, stagflation, U.S. Dollar, volatility

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Very Interesting day today especially for stocks. My question is how long are the “sheeple” going to believe that the bottom for stocks is in place? Even the Fed in it’s latest minutes said the economy is in a mess, and that was what prompted them to start buying treasuries. The bought more Bonds again today, once again with newly printed dollars. They say that Inflation is not high enough yet to propel the economy, that we face a real danger of futher disintergration. My outlook is still this 8000 for the Dow is the magic number. If it breaks and can successfully stay aboove that level then yes we’ll see another thrust to 8500. However in the face of the earnings season reporting starting with Alcoa, I don’t think enough fuel is there to launch much past 8000. I do think there could be one more try but I feel the odds are a lot greater that the market is like a drunk reeling closer and closer to the edge of a very steep cliff. I actually think we will see a test of the recent 6500 temporary bottom before we will ever see 9000 again. Now for Oil, it has creeped right back around to $50 barrel level and trade in the next few weeks between $45 and $55 barrel. Gold and Silver chart patterns are coiling tighter and tighter like a Jack in the Box about to pop! Keep accumulating all forms of precious metals since we definitely will see new all time records set again in pricing especially for Gold. Gold and Silver Stocks by the way (the producers), are moving up and I think regain their position as the leader offering better returns than bullion. However, you absolutely should be keeping at least 5-10% in Bullion for protection. After all George Soros (remember him) has just stated that Gold is a good place to be invested in. In light of all the manipulation wouldn’t it be very interesting if some big buyers came forth and started taking delivery of Gold and especially Silver. Can you say Short Squeeze? – See Ya Tomorrow – Good Investing! – jschulmansr

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· Who’s been driving this record bull-run in gold?

· What Happens When Inflation Kicks In?

· Why most investors are WRONG about gold…

· When and How to buy gold — at low cost with no hassle!

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Worsening economy forced FOMC’s hand: Minutes – Market Watch

By Rex Nutting, MarketWatch.com

WASHINGTON (MarketWatch) — A significantly worsening economic outlook forced the Federal Reserve’s hand in mid-March, leading the Federal Open Market Committee to commit to buy up to $1.25 trillion in long-term assets to goose the economy and prevent a slide into deflation, according to minutes of the March 17-18 meeting released Wednesday.

The summary of the meeting indicates little debate among the FOMC members on the question of buying longer-term Treasurys, with the major disagreement coming over how much to buy. Read the minutes.

All members of the committee agreed that “substantial additional purchases of longer-term assets … would be appropriate,” the minutes said. “Members agree that the monetary base was likely to grow significantly.”

Some members said that the worsening economic outlook and the specter of deflation argued for “very substantial purchases of longer-term assets,” while others said some of the heavy lifting could be accomplished by other Fed programs, particularly the new Term Asset-Backed Securities Loan Facility (or TALF).

Ahead of the meeting, most market participants believed the FOMC would not announce a plan to include Treasurys in its purchases.

Almost all members of the policy-setting committee of the U.S. central bank said risks were rising that the economy would worsen more than forecast, and they all agreed that inflationary pressures would remain subdued for some time, according to the heavily edited minutes.

“Several expressed the view that inflation was likely to persist below desirable levels,” the minutes said, a euphemism for disinflation or deflation.

The most notable development in the economic outlook since the January meeting was the “degree and pervasiveness of the decline in foreign economic activity.”

The staff economists at the Fed lowered their forecast for economic growth this year and next, raised their forecast for unemployment, and lowered their inflation forecast, the minutes said.

Some members of the committee noted some stability in some economic data, including housing starts and consumer spending. However, others said “strains on household balance sheets,” reduced credit and “the fear of unemployment” could lead consumers to increase their savings and thus reduce their spending. The predominant risks were on the downside, they said.

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From JSMineset.com

“Risk” came back into vogue today and with it up went the Euro, crude oil, most commodities and also gold. Down went the Dollar and up went the Yen as carry trades were favored. Copper topped $2.00 once again although it could not hold above that level on the close. Even lowly natural gas moved higher. Poor ol’ pork bellies were left out of the party however (folks – eat more bacon!).

Gold bulls have managed to push prices back above the broken neckline of the short-term bearish head and shoulders pattern shown on the daily chart. That is a minor victory but they will need to continue their push to get it back above $900 to give themselves a bit of breathing room. That would allow some chart interpreters to see a consolidation range trade set up especially after price bounced off of the 100 day moving average.

Gold is still caught in the tug of war between risk and risk aversion with traders unsure exactly how to trade it. Physical buying of gold from overseas, especially India, is strong below the $900 level but that is insufficient in and of itself to push prices higher. It can serve to put a floor under the market but to take gold higher, it is going to require strong investment interest. Interestingly enough, the reported holdings of the gold ETF, GLD, have remain fixed for some time now.

A side note here is that a case can be made for gold forming a bullish head and shoulders pattern on the longer-term weekly charts. That would requires a close above the $1000 level, preferably nearer the $1030 level. That would provide a target near the $1360 level. Of course before that could happen, gold would first have to get back above $930 so do not get too excited if you are a bull. Plenty of technical work remains for gold bulls as bears are still in charge of the market for the short term as there is always the risk of further long liquidation if gold were to move below the 100 day moving average.

There were no deliveries for April gold reported today.

Silver drawdowns out of the Comex continue on their torrid pace with another 2 million ounces coming out yesterday. Whoever is taking the silver out of the HSBC warehouses has managed to draw down stocks from near the 80 million ounce mark (registered category) in December of last year to yesterday’s 63 million ounce mark. That is no small feat. I think it no coincidence that the reported holdings of the silver ETF, SLV, have also shown a reported increase since the first of this year of some 52 million ounces. If SLV is sourcing silver from the Comex warehouses, the paper silver shorts at the Comex would do well to begin getting nervous. Still, silver is not yet acting like any of the shorts at the Comex are concerned – yet! This is a fascinating development to monitor. Keep in mind that the only way to effectively break the back of the paper shorts at the Comex is to strip the metal out of the warehouses. If this continues for silver, and that is a big “IF”, we are going to see just how effective that strategy will be. Only the risk of having to stand and deliver can force the shorts out of the game. They do not fear regulators.”- Dan Norcini, More at JSMineset.com

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Claim a gram of FREE GOLD today, plus a special 18-page PDF report;

Exposed! Five Myths of the Gold Market and find out:

· Who’s been driving this record bull-run in gold?

· What Happens When Inflation Kicks In?

· Why most investors are WRONG about gold…

· When and How to buy gold — at low cost with no hassle!

Get this in-depth report now, plus a gram of free gold, at BullionVault

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My Note: Did I say Buy Gold? Please do yourself and your loved ones a favor Buy Gold, Silver, and Precious Metals in any form and in any way YOU CAN!-jschulmansr

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Stupid Is as …

07 Tuesday Apr 2009

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Austrian school, banking crisis, banks, bear market, bull market, central banks, commodities, deflation, depression, dollar denominated, dollar denominated investments, economic, economic trends, economy, financial, futures, futures markets, gold, gold miners, hard assets, inflation, investments, market crash, Markets, mining companies, palladium, physical gold, platinum, precious metals, price, price manipulation, prices, protection, recession, risk, run on banks, safety, silver, silver miners, sovereign, spot, spot price, stagflation, U.S. Dollar, volatility

Well Gold and Precious Metals bounced off the 200 day moving average and made my (DGP) call yesterday look like pure genius. For Stocks it looks like we may have hit the end of the intermediate wave (Elliott), there may be one more push at 8000, if it fails watch out. Alcoa earning came in much worse than expected and I don’t think we will see too many bright spots in the coming earnings season. So be very careful on getting into US Stocks remember “Stupid Is As Stupid Does!”. Today I am including some warnings I received via Investor Underground and then an excellent piece from my friend Ted Butler on why you should also be buying Silver and buying it now!- Good Investing! – jschulmansr

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Exposed! Five Myths of the Gold Market and find out:

·        Who’s been driving this record bull-run in gold?

·        What Happens When Inflation Kicks In?

·        Why most investors are WRONG about gold…

·        When and How to buy gold — at low cost with no hassle!

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Notes From Investment Underground

Source: Crisis Strategy Alert.com

Is this the end of the sucker’s rally? Reality hits bulls hard… Banks’ losses to exceed those of the Great Depression… Will Alcoa’s earnings report mark the top? Why the government should stick to tending the lawns at Arlington Cemetery… Richard Russell: the primary trend is still down… Obama builds his house of cards ever higher… Insider rumors at the PPIP… A mysterious distortion in gold… And more!

*** Here at Notes we’ve been warning investors of that the recent rally in stocks was nothing more than a sucker’s rally. It’s been clear to us that although technical indicators showed that U.S. stocks were oversold – heavily oversold – economic fundamentals, or the primary trend, just didn’t support a sustained rally. At the time of writing, the Dow, the S&P 500 and the Nasdaq are all down over 1.5%.

*** The reason for the sell-off today and yesterday: reality. Yesterday, traders took fright Mike Mayo’s “sell” recommendation for banks. Mayo, who has a reputation for independence – a rare thing on Wall Street these days – reckons Geithner’s PPIP shell game won’t be able to prevent Wall Street’s losses exceeding those of the Great Depression. Today, it’s earnings, or lack thereof. How bad is the earnings picture? Bellwether aluminium producer Alcoa is expected to post a loss of 60 cents a share, against earnings of 44 cents a share at the same time a year ago. The first quarter is likely to show earnings at S&P 500 companies declined 37%, according to Thomson Reuters, the eighth straight decline in quarterly earnings. Go figure.

*** Will Alcoa’s earnings mark the top of this rally? It’s quite possible, says Investors Daily Edge financial analyst Rick Pendergraft. He even went so far as to provide us this handy chart to see the top in action.

Enable images to view this chart

This is what Rick told Crisis Strategy Alert ’s senior analyst, Charles Delvalle:

Alcoa’s results are due after the bell today. If Alcoa losses more than 60 cents a share (which is what analysts expect) or if Alcoa provides god awful guidance, expect this market to fall back on its face.

*** It has been a mark of this crisis that every rally in stocks sparked by a government announcement has eventually reversed. Traders clearly want to believe that government action can relieve their pain. It can’t. As my dad said yesterday in the Daily Reckoning , “Maybe the government should make sure there are enough parking places. It should probably make sure the grass is cut at Arlington Cemetery. But there’s no way it can do a better job of getting people what they want than they will do themselves. Even in a depression.”

*** Dad’s all flush after attending the big Richard Russell shindig last Saturday night. For those of you who don’t know, Russell is a doyen of the financial newsletter business. He’s been publishing his Dow Theory Letters for half a century now. And he’s one of the world’s leading experts on Dow Theory and U.S. stock markets in general. The People’s Bank of China subscribes to Russell’s letter. To say he’s a big hitter is an understatement. This is what Russell had to say recently about the rally in U.S. stocks (courtesy of the Daily Reckoning ):

People in this country don’t realize how bad things can be. I lived through the Great Depression. I remember people standing in bread lines. It was hard to get a job, any job, back then. But now, you see the restaurants are still full. People are still spending money. They may be worried and they may be beginning to save, but there’s no sense of urgency. And there’s a rally on Wall Street. You know, every bear market produces a rally. You can expect the market to retrace its steps by one- to two-thirds.

And every bear market has a surprise. I think the surprise is that this is going to be a lot worse than people expect.

Of course, you could bet against Russell’s 50 years experience. But here at Notes we won’t be joining you. “The primary trend is down,” says Russell. The bear market will continue until it “has fully expressed itself.” We couldn’t agree with him more.

*** That stocks are selling off shouldn’t surprise anyone. The financial sector led this rally, with spurious news of January and February profits at Citigroup. But the crux of the problem remains. As we said yesterday, banks are still marking the bulk of their toxic assets at 90-95%. This is deliriously optimistic nonsense. The assets are probably worth half that at best. There is roughly $8.1 trillion worth of loans at risk right now on the balance sheets of the U.S. banking and thrift system. So far, banks have taken $1.2 trillion in writedowns against these loans. The question is how many more trillions in writedowns are still in store.

*** Nouriel Roubini reckons total writedowns will reach $3.6 trillion. That’s another $2.4 trillion to go. The IMF forecasts that total writedowns of banks and insurers could reach $4 trillion – another $2.8 trillion. But the government, through its various guarantee programs, is now supporting 72% of banks’ total liabilities, which equates to a dollar amount far in excess of either Roubini’s or the IMF’s worst case scenarios for loan losses.

*** This is bad news for banks. It’s also bad news for America. That’s because U.S. deficits are increasing along with banks’ needs for more government backstops for their bad loans. Here’s how it works. The Treasury borrows money directly via its bond auctions. Or the Fed buys up U.S. government and agency debt and then uses the newly created money to plug banks’ balance sheets and fund the myriad federal economic support programs (which so far top $9 trillion). As this process accelerates (only a fraction of these $9 trillion in obligations are currently funded) the assets backing the banking system – U.S. Treasuries and the dollar – themselves become devalued. At this stage, all bets are off.

*** In other words, all that’s happening is the government is building the house of cards higher and higher. Government backing is responsible for any improvement in the credit markets. But take away that backing and there is no real improvement in risk. To put it another way, risk is being transferred from the corporate sphere (the banks) to the public sphere (the U.S. taxpayer). This is reflected in U.S. sovereign CDS widening, which reflects the market perception of the creditworthiness of the U.S. Today, the Financial Times reports that U.S. sovereign CDS widened 8% to 51.67bps.

*** Even George Soros – an initial supporter of the government’s interventions in the markets – thinks the U.S. is in for a surprise. A bad one that is. Speaking to Reuters Financial Television, Soros said the U.S. economy is in for a “lasting slowdown” and could face a Japan-style period of relatively low growth coupled with high inflation. Soros also articulated what most thinking investors already know. “The banking system, as a whole, is basically insolvent,” he said. Amen to that, brother.

*** Reuters reports that the U.S. Treasury Department is planning to delay the release of any completed bank stress test results until after the first-quarter earnings season, “in order to avoid complicating stock market reaction.” Think the Treasury made this decision because its stress tests are full of good news?

*** The Geithner-Summers “legacy loan” program (the PPIP) could end up costing taxpayers than even we expected here at Notes . According to Columbia University economics professor Jeffrey Sachs, inside bidding within the program could stitch up the taxpayer to the tune of trillions of dollars. This from the Sachs, writing in Huffington Post:

Consider a toxic asset held by Citibank with a face value of $1 million, but with zero probability of any payout and therefore with a zero market value. An outside bidder would not pay anything for such an asset. All of the previous articles consider the case of true outside bidders.

Suppose, however, that Citibank itself sets up a Citibank Public-Private Investment Fund (CPPIF) under the Geithner-Summers plan. The CPPIF will bid the full face value of $1 million for the worthless asset, because it can borrow $850K from the FDIC, and get $75K from the Treasury, to make the purchase! Citibank will only have to put in $75K of the total.

Citibank thereby receives $1 million for the worthless asset, while the CPPIF ends up with an utterly worthless asset against $850K in debt to the FDIC. The CPPIF therefore quietly declares bankruptcy, while Citibank walks away with a cool $1 million. Citibank’s net profit on the transaction is $925K (remember that the bank invested $75K in the CPPIF) and the taxpayers lose $925K. Since the total of toxic assets in the banking system exceeds $1 trillion, and perhaps reaches $2-3 trillion, the amount of potential rip-off in the Geithner-Summers plan is unconscionably large.

This may sound farfetched. (It certainly sounds like a huge scam.) But as Sachs points out, “Both BusinessWeek and the Financial Times report that the banks themselves might be invited to bid for the toxic assets, which would seem to set up just the scam outline above.”

*** Gold prices rose today as stocks continued their slide. The yellow metal rose to just over $883 an ounce – another bad omen for stocks. But this isn’t where the real story is at. The real story has to do with a strange distortion in the gold markets. The last time this distortion happened, investors made as much as 15,650% or more.

Well, it’s happening again. Investors around the world are snapping up gold bullion… mining stocks… gold ETFs, you name it. And for good reason: Our country’s spending binge is likely to cause massive inflation over the next few years. And gold is a great way to protect your wealth. Understand how the distortion works, and how to capitalize on it immediately, and you could make more money over the next 18 months than you’ve ever made in your life. Read this report to learn more.

*** Are we in a depression? Communities in Detroit, New York state, North Carolina and Massachusetts certainly think they are. They’re printing up Great Depression-style scrips (local currencies) to keep cash circulating. According to this article in USA Today, about a dozen local communities are printing up their own scrips.

*** Members of Crisis Strategy Alert had plenty of warning of the dangers of the sucker’s rally. On March 27, James Dale Davidson sent this alert to members:

Remain cautious. An inherent feature of capital markets during depressions is their ability to mislead. Most investors do not appreciate the demonic efficiency of market crashes in eradicating wealth in the wake of credit bubbles.

Consider the track record of the stock market after 1929. Many people recall that the Dow declined 89% from its peak in September 1929 to its trough in July 1932. This implies that it would have been easy to stay short and make a tremendous fortune while the market tanked. Wrong.

What is less appreciated is that the market found a way of wiping out bears as well as bulls.

The bears were busted by seven bear-killing rallies of 15% or more. The bulls were creamed by eight declines of 25% or more. Bulls, value investors, momentum traders – even the horoscope traders – if there were any, were wiped out. It did not matter what investment criteria impatient bulls applied, they were wiped out by premature calls of the bottom.

Any conventional investment plan was a failure. That is why Crisis Strategy Alert is a necessary addition to your investment arsenal.

It is your chance to take advantage of the years that I have spent studying past depressions.

Until tomorrow,

Will Bonner

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Now for Silver!

A Simple Decision

By: Ted Butler of SilverSeek.com

One thing you can say about the recent sharp sell-off in silver, at the very least, is that it forces you to think. In fact, my friend and mentor, Izzy Friedman, wrote an article with that title a couple of years ago. http://www.investmentrarities.com/07-03-07.html Nothing focuses an investor’s attention more than a sudden decline in price, especially in an item one thought was undervalued to begin with. This is as it should be.

I’m not going to completely rehash the premise of the original article, but instead try to simplify the lesson of this most recent sell-off in silver. Why did it occur? And what should you learn from it?

Was there any obvious real world developments in actual silver supply and demand fundamentals that caused the price to decline? Not from anything I‘ve observed. Investor demand for real metal remained strong for every measurable category from strong ETF flows and record coin production and sales, to dramatic COMEX warehouse withdrawals, to continued disruptions in silver production and refining. Industrial consumption, admittedly weak, didn’t suddenly plunge anew in the last few weeks.

The explanation for the sell-off was the same as it ever was – price rigging on the COMEX. The big commercial shorts engineered the market lower to force leveraged longs on margin to sell, in order for the big shorts to buy back futures and other derivatives. Once again, the derivatives market tail wagged the real world price of silver dog. The good news is that the concentrated short position, while still large and manipulative, appears to be just about as low as it’s going to get, after this recent sell-off and the engineered decline over the past 8 months.

OK, if that’s the answer to why silver sold off, what’s the lesson? The lesson is that you must approach silver in such a way that you are not a victim of the manipulators. Buy for cash, don’t borrow or go on margin. You can’t prevent silver from dropping due to these rigged sell-offs, but you can prevent your silver from being taken away from you by forced margin call selling.

There’s a simple decision that every silver investor must make. You must decide whether you believe that the price of silver is manipulated or if it is functioning as a free market. This may sound weird at first, but if you decide that silver is not manipulated in price, but is trading free from control, you shouldn’t buy it or continue to hold it as an investment, in my opinion.

That’s because if you believe that the price of silver is free from an active downward manipulation, you must believe it is priced in accordance with everything you see around you. You must believe that consistent record demand for an item should result in sharply lower prices. You must be comfortable with delays and rising premiums being compatible with lower prices. You must be able to disregard documented proof of an unprecedented concentrated short position as unconvincing, and regulator stalling and double-talk as reassuring. You must see something I don’t see.

Instead, if you do see manipulation permeating the silver market, that is the best reason for buying. If you see manipulation, you see an artificially depressed price, a price screaming to be bought. If you see manipulation, you see a condition that can’t last, that must end. If you see manipulation, then everything makes sense about silver’s price history and circumstances. If you see manipulation, you know the usual commentary about silver is nonsense. If you see manipulation, you can understand the sharp sell-offs. If you see manipulation, you know it will end explosively to the upside.

While deciding for yourself whether silver is manipulated or not, here are some additional reasons to consider silver at this time.

TEN REASONS TO BUY SILVER NOW

Amid all the recent attention I’ve placed on the continued manipulation in silver, some may mistakenly assume that diminishes the case for silver. Nothing could be further from the truth. I’m convinced that silver is a better buy than ever before. Here are detailed reasons why I believe that is the case.

One, the near-term emotional temperature of the market is low. There is no bullish “fever” where uniformed investors are driven to buy silver because of a sharply rising price. That will happen, but it’s not true now. While silver is still above the price lows of last fall and higher than year-end prices, the recent price action is nothing to write home about. The price has been below most of the important moving averages, causing silver to be “oversold.” This is a much better time to buy than when prices have already climbed and many are buying just because prices are rising. At those times the risk of a sharp sell-off is high. Now the risk of a prolonged price decline is much lower. Now is the time to buy low.

Two, leveraged speculators who normally buy COMEX futures contracts and Over The Counter (OTC) derivatives do not hold a historically significant number of long contracts. The big dealers have been so successful at forcing long speculators out of the market, that the speculative long position is at important low levels. This means that long speculators have already been forced to sell and no big selling from them appears probable. On any rise in price, they are likely to buy, adding a force to rising prices. Buy before they turn buyers.

Three, available wholesale silver inventories appear to be tight. These physical silver inventories are falling into stronger hands. For decades the world’s largest stockpiles of silver were the COMEX warehouse inventories. These COMEX inventories were considered mostly commercial in nature with some portion being held for investment purposes. The COMEX inventories peaked at around 280 million ounces in the early 1990’s, and accounted for 90% of all visible silver inventories. After the introduction of silver Exchange Traded Funds (ETFs), there was a profound shift in the location and structure of world visible silver inventories.

Now, the combined inventories in the ETFs and other investment vehicles tower over the holdings in the COMEX by almost 4 to 1. (Over 400 million ounces in the ETFs compared to 120 million oz in COMEX inventories). Given the long-term nature of ETF investment holdings, this massive and historic shift in inventory composition means much less silver is now available to the market. This will exert a strong upward influence on price.

Four, all signs indicate that physical investment demand for silver on both a retail and wholesale basis is strong and could surge further. Until a few years ago, there was no net silver investment buying for decades. That pattern has changed with a vengeance. Clearly, the introduction of the ETFs has played a major role in this investment transformation.

The strong buying that we have seen does not appear to be “hot” money, but sober and determined accumulation. It wasn’t surging prices prompting buyers over the last six months. It’s due to a growing awareness and conviction about silver’s real supply and demand fundamentals. Importantly, there has been practically no buying of silver on a leveraged or margin basis. It’s mostly been cash on the barrel. These strong silver buyers will wait for significantly higher prices before selling. With higher prices inevitable at some point, the hot-money crowd should come in and blow the doors off the price.

Five, silver production is tightening, given the byproduct-nature of silver mining. As I have written recently, base metals production like copper, lead and zinc appears to have fallen significantly, also reducing the production of silver as a byproduct.

Six, world economic and financial conditions appear lined up to favor higher silver prices, no matter what occurs. If financial conditions remain unsettled, flight to quality buying in silver appears likely. If the world does return to better economic growth patterns, silver will benefit as a result of increased industrial consumption. Heads silver benefits, tails it also benefits.

Seven, more investors than ever have come to realize that the silver market has been manipulated and the government regulators and exchange officials are unable to persuasively address the growing evidence of a silver manipulation. The manipulation debate has become widespread in metal circles. It isn’t going away. The best the regulators have been able to do is to stall and pretend to be investigating. Fewer people are being fooled by such actions. A scam like the silver manipulation can’t continue when so many know about it. This scam will end suddenly and sharply in a price jump to the upside.

Eight, industrial demand for silver will continue to grow in the years ahead. New uses for silver appear regularly. A robust worldwide economy will initiate a new phase of silver demand. Higher prices will not diminish this demand because small amounts of silver are used in each industrial application.

Reasons nine and ten, silver prices are cheap on several important objective measurements. Silver is cheap compared to its own recent price. It is down more than 40% from its highs of one year ago, in spite of the strongest physical demand in history. More investment silver has been purchased over the past year than at any other period in history. At precisely the same time that prices have declined so sharply, more ETF-type buying has occurred than ever before and more Silver Eagles have been sold by the US Mint than ever before. We have witnessed the highest premiums on all retail forms of silver in history. This isn’t just me saying silver is cheap, this is the investment world voting with its collective wallet. Clearly, there is something wrong with this picture that can only be explained by manipulation on the COMEX and the OTC market by a few giant financial institutions, led by JPMorgan.

Silver is cheap on a cost of production basis. Never have the net operating results of so many different silver miners been so poor. The common denominator is too low a price for their main product. Silver is up three-fold from the lows of a few years ago, yet the silver mining industry still suffers. That’s because the cost of production has risen faster than the price of silver. That must be rectified.

Silver is dirt cheap relative to gold. While there is less above ground silver than gold, silver’s price has rarely been this low compared to gold.

The manipulation that explains why silver is so cheap cannot exist in a bona fide physical shortage. If the price stays low, growing numbers of investors buy real silver. That makes it harder for the manipulators to keep the price contained with paper derivatives. Some fret the scam can be continued indefinitely. If it were just a question of printing more money or more paper derivatives, perhaps that might be true. But it’s not about an unlimited supply of paper silver, it’s about a limited supply of physical silver that guarantees the manipulation will end soon. The termination of controls on the price of silver will be something we look back upon and marvel over how long it existed. Just make sure you are looking back while holding as much real silver as you can.

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

Claim a gram of FREE GOLD today, plus a special 18-page PDF report;

Exposed! Five Myths of the Gold Market and find out:

· Who’s been driving this record bull-run in gold?

· What Happens When Inflation Kicks In?

· Why most investors are WRONG about gold…

· When and How to buy gold — at low cost with no hassle!

Get this in-depth report now, plus a gram of free gold, at BullionVault

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

See ya tomorrow! Good Investing – jschulmansr

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

Subject: Two trending markets, S&P and Crude Oil; revisited and analyzed for you…

S&P Video Analysis: Crude Oil Projections:

Click Here To Enter Your Symbol/s

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

Ouch! What’s Going on With Gold?

06 Monday Apr 2009

Posted by jschulmansr in Austrian school, Bailout News, banking crisis, banks, bear market, Bollinger Bands Saudi Arabia, Brian Tang, bull market, central banks, China, Comex, commodities, Copper, Currencies, currency, deflation, Dennis Gartman, depression, DGP, dollar denominated, dollar denominated investments, Doug Casey, economic, economic trends, economy, Federal Deficit, financial, Forex, Fundamental Analysis, futures, futures markets, gata, GDX, GLD, gold, Gold Bullion, gold miners, hard assets, hyper-inflation, IAU, India, inflation, investments, Jeffrey Nichols, Jim Rogers, Junior Gold Miners, Keith Fitz-Gerald, Latest News, majors, Make Money Investing, Marc Faber, market crash, Markets, Michael Zielinski, mid-tier, mining companies, monetization, Moving Averages, palladium, Peter Grandich, Peter Schiff, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, protection, recession, risk, run on banks, safety, Sean Rakhimov, silver, silver miners, SLW, small caps, sovereign, spot, spot price, stagflation, Technical Analysis, TIPS, Today, U.S., U.S. Dollar, volatility, warrants, XAU

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Ouch! Gold had a little mis-step today. Gold closed down $24.50 to close at $872.80. So what happened? Todays Articles will help show why and what to expect in the days ahead. First, Gold had to fill a gap created about 39 tradings sessions ago, gap filled and Gold held at the $865 level. Gold has 2 more strong resistance levels, first at $855 the 200day moving average and then at $845 which represents a 50% retracement of the last Bull run up to $1007 from $680.75 low in Oct 08. The market is starting to become very oversold and “the sheeple” are starting to give up on Gold. I personally added a little more (DGP) late today and if Gold is temporarily driven down to the next major support at $820-$825 will add even more. Long term all of the fundamentals are looking good for Gold although on a seasonal basis, barring any dramatic unforseen events, Gold will probably be locked in a $850 to $1000 sideways market range until the end of Aug. For stocks we have almost finished with secondary upward wave, we may see a burst for the DJIA to potentially 9000, then look out below! My calls, 1st 6500 then potentially as low as 4500; all based on Elliot Wave Theory. Right now the higher they push stocks up the more they will fall. It almost seems like everyone has forgotten about Oil which is still trading above $50 barrel. However once again barring any dramatic news, seasonally Oil will also probably trade in a sideways range between $40- $60 barrel. I am still adding more mid-tier and Junior Gold and Precious metals producers, look carefully there are still good bargains out there. For all the Gold bugs out there Don’t Give Up!, good, no awesome returns are coming as early as the end of this year, maybe sooner! I think we will hold at the 200 day moving average and then sideways between $850 to $1000 until Aug. Then Gold is going to take off. This prediction is also predicated on NO new bad news or crisis’s popping up, a purely seasonal prediction play. If we have majors news then Gold will take off much earlier and either way set new all time highs as it begins it’s next leg of Gold’s major Bull Market Run! – Good Investing! – jschulmansr

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Claim a gram of FREE GOLD today, plus a special 18-page PDF report;

Exposed! Five Myths of the Gold Market and find out:

· Who’s been driving this record bull-run in gold?

· What Happens When Inflation Kicks In?

· Why most investors are WRONG about gold…

· When and How to buy gold — at low cost with no hassle!

Get this in-depth report now, plus a gram of free gold, at BullionVault

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

Subject: Two trending markets, S&P and Crude Oil; revisited and analyzed for you…

S&P Video Analysis: Crude Oil Projections:

Click Here To Enter Your Symbol/s

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

Gold Falls below $870 on possible IMF gold sales, rising dollar – Marketwatch

By: Morning Zhou of MarketWatch

NEW YORK (MarketWatch) — Gold futures fell Monday for a third straight session to end near $870 an ounce, wiping out their yearly gains as traders shaved positions on worries that the 403 tons of gold sales by the International Monetary Fund will increase supply and depress gold prices.

Meanwhile, a stronger U.S. dollar also added downward pressures on gold prices.

“There is still this fear of a lot of selling coming from different central banks and the IMF,” said George Gero, a precious metals trader for RBC Capital Markets. “The perception is that ‘I am getting out of the way until all the sales are completed and let’s see how it’s absorbed.'”

Gold for April delivery fell $24.10, or 2.7%, to end at $871.50 an ounce in North American electronic trading. It dropped to as low as $865.10 earlier. The more active June contract also fell Monday, down 3.2% at $868.50.

Gold has lost nearly 6% since April 1 and is now down 1.4% for the year, partly out of optimism that collective actions by leaders of the world’s major nations may stem the global economic crisis.

In spot trading, the benchmark London afternoon gold-fixing price stood at $870.25 an ounce Monday, down $34.75, or 3.8%, from the previous day.

In other metals futures, silver for May delivery fell 4.9% to $12.11 an ounce. June palladium was up 0.4% at $225.75 an ounce, while April platinum fell 1.2% to $1,145.70 an ounce.

May copper dropped 2.1% to $1.959 a pound.

IMF gold sales

Leaders from the Group of 20 nations said last Thursday they endorse 403 tons of gold sales by the IMF. The proceeds will be used to provide finance for the poorest countries over the next two to three years.

The announcement came one day after the European Central Bank said it had completed the sale of 35.5 tons of gold.

The IMF’s plan to sell the gold still needs to be approved by an 85% majority vote from its 185 members. The U.S., which has 17% voting power in the fund, essentially holds veto power. See full story on IMF gold sales.

If the plan is approved, the gold selling will be implemented in coordination with major central banks to minimize the impact on the market, the IMF said.

The possible IMF gold sales helped gold prices move lower in the short turn, said Hussein Allidina, an analyst at Morgan Stanley. But he added he sees “any weakness in price as a buying opportunity as the sale would occur over years and be under the CBGA limit.”

The second Central Banks Gold Agreement, or CBGA, caps total gold sales of the signatories at 500 tons a year and expires in September. A third CBGA is expected to be signed before September. See related story about central bank gold selling.

Also helping gold move lower Monday, the U.S. dollar rose against most of its major rivals Monday, with the dollar index (DXY: 84.64, +0.48, +0.6%) up nearly 1% at 84.767. See Currencies.

A stronger greenback tends to push down dollar-denominated prices of commodities such as gold and crude. Crude futures fell nearly 4% Monday.

Falling ETF investment

Investment in gold exchange-traded funds also stalled recently. Holdings in SPDR Gold Shares (GLD 85.27, -2.32, -2.6%) , the biggest gold exchange-traded fund, stood at 1,127.37 tons Friday, down slightly from a day ago, according to latest data from the fund.

It’s the first drop in SPDR holdings in one month. The SPDR lost 2.2% to $85.68 on Monday.

Investors seeking investment safe haven had been buying gold earlier this year as deepening troubles in the economy pushed stocks to their lowest level in decades. But actions from the world’s major nations has boosted investment sentiment and reduced gold’s safe-haven appeal.

The U.S. government and the Federal Reserve have spent, lent or committed more than $10 trillion to stem the economic downturn since the financial crisis began. Fed Chairman Ben Bernanke said in a speech Friday that he expects the gradual resumption of sustainable economic growth is coming.

The recent weakness in gold prices is “a sure sign risk appetite has increased further following the actions of various governments and central banks as well as the combined efforts of the G20 nations last week,” said James Moore, a precious metals analyst at TheBullionDesk.com

Moming Zhou is a MarketWatch reporter based in New York.

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Gold Approaching 200-Day Moving Average – Seeking Alpha

Source: Bespoke Investment Group

With a decline of 3% today, gold is on the verge of testing its 200-day moving average for the first time since early January. With the exception of a one-day spike on the day the Fed said it would buy US Treasuries (3/18), gold has pretty much traded down in a straight line. Even though most observers said the Fed’s action would lead to inflation down the road, the price of gold is now lower today than it was before the announcement.

click to enlarge

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My Note: think we will hold at the 200 day moving average and then sideways between $850 to $1000 until Aug. Then Gold is going to take off. This prediction is also predicated on NO new bad news or crisis’s popping up, a purely seasonal prediction play. If we have majors news then Gold will take off much earlier and either way set new all time highs as it begins it’s next leg of Gold’s major Bull Market Run! – Jschulmansr

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Low Gold Price a Buying Opportunity – Seeking Alpha

By: Brad Zigler of Hard Assets Investor

Real-time Monetary Inflation (per annum): 8.1%

You could just see things ending badly for gold Friday. April COMEX gold settled at $895.60, near the low of the day, after near-term momentum turned bearish. This morning’s trade looks weaker still after London dealers marked bullion at $879.50.

Another soft New York close will likely set up a test of longer-term support at the 100-day moving average, now at $869.70.

COMEX Spot Gold

COMEX Spot Gold

London’s gold spreads, too, are painting a rather dreary tableau for bullion. The 12-month contango is shrinking against that of three-month forwards after gold’s previous run-up yielded only modest gains for bull spreaders.

Throw in the narrowing of credit spreads and the current resurgence of the equities market and the indifference to the metal is palpable. The three-month TED spread – that is, the difference between U.S. Treasuries and the London Interbank Offered Rate [LIBOR] – dipped below 100 basis points (1%) last week for the first time since February 26. The spread’s downward momentum through the week reflected an easing of the worries that had driven so much capital to seek the shelter of gold.

London Gold Forward Spread (3-Month Vs. 12-Month)

That’s not to say that gold’s run is over or that we’ve finally turned the corner on the financial crisis. There’s an ebb and flow to any market, even those that are strongly trending.

A market like this, in fact, seems to be providing opportunities for gold buyers with modestly bullish sentiments. Some were seen this morning trading gold puts on June COMEX contracts.

With June gold at $880, the $850 puts changed hands at $26 an ounce. Put sellers gave buyers the right to put, or to sell, June gold futures at $850 through May 26. For taking that right, put buyers paid a per-contract premium of $2,600.

Here’s the reason the put sellers took on the risk. It’s unlikely that the puts would be exercised until, and unless, June gold dipped below the puts’ $850 strike price, so the put sellers either hold a conviction that prices will remain above that level, or, if they in fact sink through it, that the excursion will be short-lived.

If the puts remain out-of-the-money for the next month, the sellers get to keep the premium and the put expires unexercised. If futures are instead put to the option grantors, they’d end up with a long position at an effective purchase price of $824. Subsequent price advances in June futures above $824, if they occur, would engender gains for the option writers. Of course, losses would be open-ended if prices collapse.

More glass-half-full optimism brought to you by your friendly neighborhood options marketplace.

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

Claim a gram of FREE GOLD today, plus a special 18-page PDF report;

Exposed! Five Myths of the Gold Market and find out:

· Who’s been driving this record bull-run in gold?

· What Happens When Inflation Kicks In?

· Why most investors are WRONG about gold…

· When and How to buy gold — at low cost with no hassle!

Get this in-depth report now, plus a gram of free gold, at BullionVault

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

Have A Great Afternoon & Good Investing! – jschulmansr

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Emergency Broadcast- Wake Up! It is Almost Too Late!

04 Saturday Apr 2009

Posted by jschulmansr in 10 year Treasuries, 20 yr Treasuries, ANV, Austrian school, AUY, Bailout News, banking crisis, banks, Barack, Barack Hussein Obama, Barack Obama, bear market, Bear Trap, Bildenberger's, Bollinger Bands Saudi Arabia, Brian Tang, bull market, capitalism, CDE, CEF, central banks, CFR, China, Comex, commodities, communism, Conservative, Conservative Resistance, Contrarian, Copper, Council on Foreign Relations, crash, Credit Default, Currencies, currency, Currency and Currencies, deflation, Dennis Gartman, depression, DGP, dollar denominated, dollar denominated investments, Doug Casey, Dow Industrials, economic, Economic Recovery, economic trends, economy, EGO, Federal Deficit, federal reserve, Finance, financial, follow the money, follow the news, Forex, fraud, FRG, Fundamental Analysis, futures, futures markets, G-20, gata, GDX, GG, GLD, gold, Gold Bullion, Gold Investments, gold miners, Gold Price Manipulation, GTU, hard assets, HL, How To Invest, How To Make Money, hyper-inflation, IAU, IMF, India, inflation, Investing, investments, Jeffrey Nichols, Jim Rogers, Jim Sinclair, John Embry, Jschulmansr, Julian D.W. Phillips, Keith Fitz-Gerald, majors, Make Money Investing, manipulation, Marc Faber, Market Bubble, market crash, Markets, Michael Zielinski, mid-tier, mining companies, mining stocks, monetization, Moving Averages, NAK, New World Order, NGC, NWO, NXG, obama, oil, PAL, palladium, Peter Grandich, Peter Schiff, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, protection, recession, risk, run on banks, S&P 500, safety, Sean Rakhimov, silver, silver miners, Silver Price Manipulation, SLW, small caps, socialism, sovereign, spot, spot price, stagflation, Stimulus, stock market, SWC, TARP, Technical Analysis, The Fed, TIPS, Today, U.S., U.S. Dollar, volatility, warrants, XAU

≈ 2 Comments

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ANV, Austrian school, AUY, Bailout News, banking crisis, banks, bear market, Bollinger Bands Saudi Arabia, Brian Tang, bull market, CDE, CEF, central banks, China, Comex, commodities, Copper, Currencies, currency, deflation, Dennis Gartman, depression, DGP, dollar denominated, dollar denominated investments, Doug Casey, economic, economic trends, economy, EGO, Federal Deficit, financial, Forex, FRG, futures, futures markets, gata, GDX, GG, GLD, gold, gold miners, GTU, hard assets, HL, hyper-inflation, IAU, India, inflation, investments, Jeffrey Nichols, Jim Rogers, John Embry, Keith Fitz-Gerald, majors, Marc Faber, market crash, Markets, Michael Zielinski, mid-tier, mining companies, monetization, Moving Averages, NAK, NGC, NXG, PAL, palladium, Peter Grandich, Peter Schiff, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, protection, recession, risk, run on banks, safety, Sean Rakhimov, silver, silver miners, SLW, small caps, sovereign, spot, spot price, stagflation, SWC, Technical Analysis, TIPS, U.S., U.S. Dollar, volatility, warrants, XAU

We are watching history unfold before our very eyes while being skillfully manipulated, distracted, and kept in the dark. This special edition has video’s, articles, and proof that we are being played for suckers and fools. “They” think if the can keep us hypnotized and asleep that they will succeed. What is needed today is a new generation of Paul Revere’s to sound the alarm for Americans. We have been invaded and are losing the war without so much as a whimper! NOW right now is the time to stop being Democrats, Republicans, Libertarians, now is the time to UNITE AS AMERICANS! WE NEED TO KEEP AMERICA FREE AND WE NEED TO START NOW! IT IS ALREADY ALMOST TOO LATE!

***PLEASE*** Do your own research and find out for yourself… Google Search the terms”New World Order”, “TriLateral Commission”, “Council on Foreign Relations”, and “Bildenberger’s” find out how many highly respected people are finally starting to warn you about this sinister and outright grab for world domination! After you finish this post, please pass/send the link to this post onto as many people as you can… before it is too late! -jschulmansr

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This was sent to me by Peter Grandich

Peter Grandich was the founder and managing member of Grandich Publications which published The Grandich Letter since 1984. His commentary on the mining and metals markets have been read by tens of thousands of subscribers and relied upon by major financial media around the world.

Here is his Latest Blog Post

Grandich Opens The Closet Door Again – Agoracom

By: Peter Grandich

When I came out of the closet, I made it known I would do more than just comment about markets here. I knew some would not like it then and I know some will not like it now.

From time to time during my 25 years in and around the financial industry, I would come across an individual or group who would preach about “A New World Order” or something to that effect. I found most of these people either “out in left field” or had an agenda to sell products and services to go along with their “views”. However in recent times, I’ve come across some very intelligent people and groups who have demonstrated to me they were neither kooks nor salesmen. Their thoughts and opinions were both logical and reasonable.

After watching and listening to what has unfolded at the G-20 this past week and what’s been evolving in Washington and throughout the United States, I no longer wonder is something along the lines of a “New World Order” possible, but rather how far long are we to one?

This is not a kook’s only video.

As an American, I’m extremely concern we’re losing (or already lost) what made this country once great. I believe our President and me see things much differently. I find what this gentleman portrayed in this video to be of keen interest to me and what I believe this country must do before it’s too late.

Finally, I’ve had more discussions with various people about what we can do if we’re truly entering a tribulation or a way of life totally different then our past generations. I tell them I worry too but then I try to remember this and to realize the battle may be near but the outcome has already been determined.

“Jesus said, I have told you these things so that in me you may have peace. In this world you will have trouble. But take heart! I have overcome the world.” John 16:33

Have a most blessed Holy Week!

Here is the Video…

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Next Comes From Alex Jones of Prison Planet.com

The Obama Deception HQ Full length version- You Tube

Source: You Tube

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This is From Bloomberg Financial News:

G-20 To Shapes New World Order With Lesser Role For U.S., Markets – Bloomberg.com

By Rich Miller and Simon Kennedy

April 3 (Bloomberg) — Global leaders took their biggest steps yet toward a new world order that’s less U.S.-centric with a more heavily regulated financial industry and a greater role for international institutions and emerging markets.

At the end of a summit in London, policy makers from the Group of 20 yesterday delivered a regulatory blueprint that French President Nicholas Sarkozy said turned the page on the Anglo-Saxon model of free markets by placing stricter limits on hedge funds and other financiers. The leaders also pledged to triple the resources of the International Monetary Fund and to hand China and other developing economies a greater say in the management of the world economy.

“It’s the passing of an era,” said Robert Hormats, vice chairman of Goldman Sachs International, who helped prepare summits for presidents Gerald R. Ford, Jimmy Carter and Ronald Reagan. “The U.S. is becoming less dominant while other nations are gaining influence.”

A lot was at stake. If the leaders had failed to forge a consensus — Sarkozy this week threatened to quit the talks if they didn’t back much tighter regulation — it might have set back the world’s economy and markets just as they’re showing signs of shaking off the worst financial crisis in six decades.

That’s what happened in 1933, when President Franklin D. Roosevelt torpedoed a similar conference in London by rejecting its plan to stabilize currency rates and in the process scotched international efforts to lift the world out of a depression.

More Conciliation

Seeking to avoid a repeat of that historic flop, President Barack Obama junked the at-times go-it-alone approach of his predecessor, George W. Bush, and adopted a more conciliatory stance toward his fellow leaders.

“In a world that is as complex as it is, it is very important for us to be able to forge partnerships as opposed to simply dictating solutions,” Obama told a press conference at the conclusion of the summit.

Stock markets rose in response to the steps taken by the G-20 leaders. The Standard & Poor’s 500 Index climbed 2.9 percent to 834.38. The Dow Jones Industrial Average added 216.48 points, or 2.8 percent, to 7,978.08. Both closed at their highest levels since the second week of February.

In an effort to promote harmony, Obama soft-pedaled earlier U.S. demands that the summit agree on a specific target for fiscal stimulus in the face of opposition from France and Germany. Instead, he settled for a vague pledge that the leaders would do whatever it takes to revive the global economy.

Repudiation of Past

The president also signed on to a communiqué that Nobel Laureate Joseph Stiglitz said repudiated the previous U.S.-led push to free capitalism from the constraints of governments.(See My Post From Yesterday For Actual Article)

“This is a major step forward and a reversal of the ideology of the 1990s, and at a very official level, a rejection of the ideas pushed by the U.S. and others,” said Stiglitz, an economics professor at Columbia University. “It’s a historic moment when the world came together and said we were wrong to push deregulation.”

In bowing to that view, the leaders conceded in a statement that “major failures” in regulation had been “fundamental causes” of the market turmoil they are trying to tackle. To make amends and to try to avoid a repeat of the crisis, they pledged to impose stronger restraints on hedge funds, credit rating companies, risk-taking and executive pay.

“Countries that used to defend deregulation at any cost are recognizing that there needs to be a larger state presence so this crisis never happens again,” said Argentine President Cristina Fernandez de Kirchner.

Financial Stability Board

A new Financial Stability Board will be established to unite regulators and join the IMF in providing early warnings of potential threats. Once the economy recovers, work will begin on new rules aimed at avoiding excessive leverage and forcing banks to put more money aside during good times.

German Chancellor Angela Merkel, who had unsuccessfully sought to convince the U.S. and Britain to sign on to similar steps before the crisis began in mid-2007, hailed the communiqué as a “victory for common sense.”

The U.S. did, though, take the lead in getting the summit to agree on an increase in IMF rescue funds to $750 billion from $250 billion now. Japan, the European Union and China will provide the first $250 billion of the increase, with the balance to come from as yet unidentified countries.

“This will provide the IMF with enough resources to meet the needs of East European nations and also provide back-up funding to a broader set of countries,” said Brad Setser, a former U.S. Treasury official who’s now at the Council on Foreign Relations in New York.

IMF Allocation

The G-20 also agreed to an allocation of $250 billion in Special Drawing Rights, the artificial currency that the IMF uses to settle accounts among its member nations. The move is akin to a central bank such as the Federal Reserve effectively creating money out of thin air, except it’s on a global scale.

The increase in Special Drawing Rights will allow countries to tap IMF money without having to accept changes to economic policies often demanded as a condition of aid. The cash is disbursed in proportion to the money each member-nation pays into the fund. Rich nations will be allowed to divert their allocations to countries in greater need.

The G-20 said they would couple the financing moves with steps to give emerging economic powerhouses such as China, India and Brazil a greater say in how the IMF is run.

Emerging Markets Benefit

Citigroup Inc. economists Don Hanna and Jurgen Michels called the summit agreement “a boon to emerging markets” in a note to clients yesterday.

Mexico said Wednesday it will seek $47 billion from the IMF under the Washington-based lender’s new Flexible Credit Line, which allows some countries to borrow money with no conditions.

Emerging-market stocks, bonds and currencies rallied yesterday on speculation other developing nations will follow Mexico’s lead. Gains in Polish, Czech and Brazilian stocks helped push the MSCI Emerging Markets Index up 5.6 percent to 613.07, the highest since Oct. 15.

In a bid to avoid another mistake of the depression era, G-20 leaders repeated an earlier pledge to avoid trade protectionism and beggar-thy-neighbor policies that could aggravate the decline in the global economy.

The Paris-based Organization for Economic Cooperation and Development predicted this week that global trade will shrink 13 percent this year as loss-ridden banks cut back on credit to exporters and importers.

Trade Finance

To help combat that, the G-20 said they will make at least $250 billion available in the next two years to support the finance of trade through export credit agencies and development banks such as the World Bank.

The summit took place amid speculation among investors that the deepest global recession in six decades may be abating. Data released yesterday showed orders placed with U.S. factories rose in February for the first time in seven months, U.K. house prices unexpectedly gained in March and Chinese manufacturing increased. Still, a report today is forecast to show U.S. unemployment at its highest in a quarter-century.

“If the economy turns more favorable, this meeting will probably be viewed as a milestone,” said C. Fred Bergsten, a former U.S. official and director of the Peterson Institute for International Economics in Washington.

The G-20 members are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the U.S., the U.K. and the European Union. Officials from Spain and the Netherlands were also present.

To contact the reporters on this story: Rich Miller in Washington rmiller28@bloomberg.net; Simon Kennedy in Paris at Skennedy4@bloomberg.net

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G20 ushers in a ‘new world order’- Globe and Mail

BOLD STEPS 8 Leaders shift from U.S. model of freewheeling finance, forming historic accord to regulate risk UNITED FRONT 8 Countries pledge $1-trillion in aid for struggling nations, but economists blast lack of new stimulus

ERIC REGULY AND BRIAN LAGHI

April 3, 2009

LONDON — The leaders of the Group-of-20 countries put on a show of unity yesterday to fight the global recession with pledges of more than $1-trillion (U.S.) in aid to help struggling countries and revive trade.

But their failure to unveil new stimulus spending was criticized as a “disappointment” by economists, who fear the global downturn will only deepen unless governments everywhere open the stimulus spigots even further.

The G20 countries also agreed to rein in the world’s financial system through the creation of international accounting standards, the regulation of debt-ratings agencies and hedge funds, a clampdown on tax havens and controls on executive pay. But the lack of details on these proposals suggests they will not become effective any time soon.

U.S. President Barack Obama, who had been calling for more stimulus spending, nonetheless welcomed the communiqué.

“The steps that have been taken are critical to preventing us sliding into a depression,” Mr. Obama told reporters after the close of the G20 gathering. “They are bolder and more rapid than any international response that we’ve seen to a financial crisis in memory.”

Characterizing the agreement as historic, British Prime Minister Gordon Brown, the summit’s host, said the agreement ushered in a new period of international co-operation while ending the era of the Washington consensus, a term from the late 1980s that has come to be equated with market fundamentalism.

“Today we have reached a new consensus that we take global action together to deal with problems that we face, that we will do what is necessary to restore growth,” he said.

Prime Minister Stephen Harper joined fellow leaders in the praise, saying new regulations will help the market work better. “The declaration is very clear that globalization, that open markets, that liberalized trade remain the essential base of our economic system and will be the basis of any recovery and future economic growth,” he said.

The agreement was the object of last-minute negotiations, and overcame the initial objections of German Chancellor Angela Merkel and French President Nicolas Sarkozy, who at one point threatened to leave the meeting if it did not agree with his position on stricter regulation of the financial world.

Ms. Merkel said she was pleased the group came to a broad agreement after such a short period of time. “We now have been able to rally around a message of unity,” she told a news conference.

Mr. Sarkozy said his alliance with Ms. Merkel worked well.

“We would never have hoped to get so much,” he said.

Yesterday’s agreement calls for the creation of a Financial Stability Board, which is designed to work with the International Monetary Fund to provide early warning of financial risks and the actions needed to reduce them. The agreement says the countries will take action against tax havens by slapping sanctions against offending nations. “The era of banking secrecy is over,” the communiqué said.

The $1-trillion-plus in emergency aid is anchored by a commitment to add $500-billion to the resources of the IMF, taking it to $750-billion, a level that should give it enough firepower to extend bailout loans to the hardest-hit countries. Of this amount, $100-billion will come from the European Union, $100-billion from Japan and $40-billion from China.

Another $250-billion will be given to the IMF to support special drawing rights, the organization’s own “basket” currency that can be used to boost global liquidity. Trade finance will be supported with $250-billion channelled through the World Bank and export agencies, though almost none of that amount has been committed yet. The IMF has also agreed to sell gold reserves to provide as much as $50-billion in aid to the poorest countries.

The G20’s IMF measures were more aggressive than expected and helped lift the world’s markets. Commodities such as oil and metals rose as traders evidently took the view that global growth would revive more quickly than they had expected. News of possible U.S. accounting changes of the mark-to-market rules, used to value assets, helped to trigger a bank rally.

“What is most encouraging for the G20 leaders summit in London today is the building evidence that the Lehman-related collapse in global demand seems to be coming to an end,” Derek Halpenny, the head of currency research at Bank of Tokyo-Mitsubishi UFJ in London said in a report yesterday.

The communiqué also called on countries to resist protectionist measures.

The regulatory changes agreed by the G20 countries are sweeping, but lacked detail about their scope and implementation, whether or not they could be enforced globally or nationally.

Mr. Brown said that hedge funds, whose failure can trigger a domino effect in the financial-services industry, would be subject to greater regulation and oversight. Pay and bonuses will have to adhere to “sustainable” compensation schemes.

“There will be no more rewards for failure,” Mr. Brown said.

The leaders, emboldened by the recent progress in prying open tax havens, said sanctions will be slapped on any sponsor country that refuses to sign international agreements to exchange tax information.

Mr. Brown said another G20 summit will take place late this year – city to be determined – to review the measures unveiled yesterday and at previous summits

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

Finally From Jim Sinclair

More of The Exact Same- JSMinset.com

My Dear Friends,

All that has changed is more of what caused this problem in the first place. You are being lied to yet again.

1. Gold is your lifeline, nothing else. I assure you of this.

2. When reality hits, as it will, it will be too late to seek a lifeline.

3. If you let go of your lifeline you have put more into harm’s way than just an investment or a portfolio item.

4. In the final analysis gold and the dollar are inverse to each other.

5. The dollar is only considered a lifeline when viewed from the intoxicants of spin.

6. Gold is a currency.

7. Gold currency is the monetary unit of last resort. Reality is that we all will require a last resort.

8. The G20 was not an intervention that can stop a downward spiral because it produced more of the stuff that caused the disaster in the first place, monetary inflation. 9. Monetary inflation is what the downward spiral is made of.

10. Be logical.

11. Stop being emotional.

12. Anything you can stare down, you can overcome. Stare down your foolish emotions and adhere to reason.

The following is hot air and fabrication. There is no new world. All that has occurred is the plan to create USD $1 Trillion in new monetary inflation. The G20 was all PR that produced more of what has caused the disaster in the first place, another one trillion in monetary inflation that has no means of being withdrawn ever from the international system.

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

Claim a gram of FREE GOLD today, plus a special 18-page PDF report;

Exposed! Five Myths of the Gold Market

Find out:

· Who’s been driving this record bull-run in gold?

· What Happens When Inflation Kicks In?

· Why most investors are WRONG about gold…

· When and How to buy gold — at low cost with no hassle!

Get this in-depth report now, plus a gram of free gold, at BullionVault

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

My Note: Protect Yourself, Help Claim America Back. Do your research on what is really going on try these searches in Google NWO- New World Order, CFR- Council On Foreign Relations, Bildenberger’s. Judge for yourself especially in light of what you watched in the videos. Buy Gold, and then take action to save our country! -jschulmansr

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Is The Party Over For Stocks? Part 3 –

02 Thursday Apr 2009

Posted by jschulmansr in 10 year Treasuries, 17898337, 20 yr Treasuries, ANV, Austrian school, AUY, Bailout News, banking crisis, banks, bear market, Bollinger Bands Saudi Arabia, bonds, Brian Tang, bull market, capitalism, CDE, CEF, central banks, China, Comex, commodities, Contrarian, Copper, crash, Currencies, currency, Currency and Currencies, deflation, Dennis Gartman, depression, DGP, dollar denominated, dollar denominated investments, Doug Casey, Dow Industrials, economic, Economic Recovery, economic trends, economy, EGO, Fed Fund Rate, Federal Deficit, federal reserve, Finance, financial, Forex, fraud, FRG, Fundamental Analysis, futures, futures markets, G-20, gata, GDX, GG, GLD, gold, Gold Bullion, Gold Investments, gold miners, Gold Price Manipulation, GTU, hard assets, HL, How To Invest, How To Make Money, hyper-inflation, IAU, IMF, India, inflation, Investing, investments, Jeffrey Nichols, Jim Rogers, John Embry, Jschulmansr, Keith Fitz-Gerald, majors, Make Money Investing, manipulation, Marc Faber, market crash, Markets, Michael Zielinski, mid-tier, mining companies, mining stocks, monetization, Moving Averages, NAK, NASDQ, NGC, NXG, oil, PAL, palladium, Peter Grandich, Peter Schiff, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, protection, recession, risk, run on banks, safety, Sean Rakhimov, silver, silver miners, Silver Price Manipulation, SLW, small caps, sovereign, spot, spot price, stagflation, Stimulus, stock market, Stocks, SWC, Technical Analysis, The Fed, TIPS, Today, U.S., U.S. Dollar, volatility, warrants, XAU

≈ Comments Off on Is The Party Over For Stocks? Part 3 –

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In today’s post you’ll find out what really started this upward move for the temporary bottom put in place around 6500 on the Dow. Plus you will find out why long term how dangerous this is for us as American Taxpayers! Otherwise, today is the big test day, is this the exhaustion push of the bear market rally or is it confirmation of the beginning of a new bull market? Could it simply be window dressing fir the end of the first Quarter? Fundamentally speaking we have some slight (very slight) signs of recovery for the economy. After all pumping in over 3 Trillion dollars into the economy you’d think we would be seeing more. Inflation is continuing to rise. If you don’t believe me go buy some groceries everything is at least $1 higher than 1 month ago There are also some serious rifts growing in the G-20. Who would have ever thought that our European allies would be lecturing us on economics. China is continuing to grow more nervous and is seeking more collateral for their loans to us. Here’s my take, today is the 3rd test at 8000, if we can successfully close over that mark then the next real test will be at 8500. Conversely, failure to hold this level will not bode well at all for stocks. and I think we will go back and test the lows in the 6500 levels. The “shorts” have sucked the “sheeples” money in. Once again my contrarian instinct is taking over as all of the talk is about this is it! “We have now begun the next great rally for stocks.” Even though you are not hearing much about it Inflation is already here and with the U.S. Dollar printing presses still running full steam and overtime, I believe that very soon we will be talking about not just inflation; but hyper-inflation. However with all the news machines telling you to get into stocks now or you will miss it; people are even pouring out of Gold currently $899 – $902oz. However if you push euphoria and hope aside, all of the fundamentals for stocks looks very grim indeed. I am continuing to load up on more Precious Metals producers mining stocks, have re-entered (DGP), and am in process of purchasing more physical gold. From a risk to reward ratio shorting the S&P 500 and Dow Indy’s is looking very interesting right now. Don’t get suckered into regular stocks unless they are in Oil and Precious Metals. Both markets have some exceptional companies selling for very cheap levels. If I am wrong, obviously the market will tell; but I can honestly say I am putting my own money where my mouth is… Good Investing! -jschulmansr

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Claim a gram of FREE GOLD today, plus a special 18-page PDF report;

Exposed! Five Myths of the Gold Market

Find out:

· Who’s been driving this record bull-run in gold?

· What Happens When Inflation Kicks In?

· Why most investors are WRONG about gold…

· When and How to buy gold — at low cost with no hassle!

Get this in-depth report now, plus a gram of free gold, at BullionVault

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

In the article that follows it is actually a report done on an article in the New York Times by Nobel Laureate Joseph Stiglitz a Nobel Prize winning economist. I highly reccomend that you read the complete article. But what follows below is an excellent synopsis with good commentary. This is the real reason why this rally has occured, Geitner’s Banking Plan is excellent for Wall Street and the Banks, for Investors, at the expense of U.S. Taxpayers! Read On… -jschulmansr

Nobel Laureate Stiglitz: The Administration’s Ersatz Capitalism – Seeking Alpha

By: Paul Haruni of Wall Street Pit

Nobel laureate in economics Joseph Stiglitz writes in The New York Times that Treasury Geithner’s $500 billion or more proposal to fix America’s ailing banks, described by some in the financial markets as a win-win-win situation, it’s actually a win-win-lose proposal: the banks win, investors win — and taxpayers lose.

The Treasury, argues the professor of economics at Columbia Univesity – hopes to get us out of the mess by replicating the flawed system that the private sector used to bring the world crashing down, with a proposal that has overleveraging in the public sector, excessive complexity, poor incentives and a lack of transparency.

In theory, the administration’s plan, continues Mr. Stiglitz, is based on letting the market determine the prices of the banks’ “toxic assets” — including outstanding house loans and securities based on those loans. The reality, though, is that the market will not be pricing the toxic assets themselves, but options on those assets.

Mr. Stiglitz uses the example of an asset that has a 50-50 chance of being worth either zero or $200 in a year’s time. The average “value” of the asset is $100. Ignoring interest, this is what the asset would sell for in a competitive market. It is what the asset is “worth.” Under the plan by Treasury Secretary Timothy Geithner, the government would provide about 92% of the money to buy the asset but would stand to receive only 50% of any gains, and would absorb almost all of the losses, Mr. Stiglitz says. Some partnership!

What the Obama administration is doing is far worse than nationalization: it is ersatz capitalism, the privatizing of gains and the socializing of losses. It is a “partnership” in which one partner robs the other. And such partnerships — with the private sector in control — have perverse incentives, worse even than the ones that got us into the mess.

Paying fair market values for the assets will not work. Only by overpaying for the assets will the banks be adequately recapitalized. But overpaying for the assets simply shifts the losses to the government. In other words, the Geithner plan works only if and when the taxpayer loses big time.

So what is the appeal of a proposal like this? Perhaps it’s the kind of Rube Goldberg device that Wall Street loves — clever, complex and nontransparent, allowing huge transfers of wealth to the financial markets. It has allowed the administration to avoid going back to Congress to ask for the money needed to fix our banks, and it provided a way to avoid nationalization.

But we are already suffering from a crisis of confidence. When the high costs of the administration’s plan become apparent, confidence will be eroded further. At that point the task of recreating a vibrant financial sector, and resuscitating the economy, will be even harder.

Essentially Stiglitz’s point is that Treasury Geithner, Wall Street’s new main operative after Paulson, and the administration itself for that matter want to bribe investors to buy up “toxic (junk, trash) assets” and guarantee their losses with taxpayer money. A calculative move since it would facilitate a vast and unprecedented transfer of wealth from the great majority of taxpayers (the working class) to the banks, bondholders and the wealthy.

Joseph E. Stiglitz, a professor of economics at Columbia who was chairman of the Council of Economic Advisers from 1995 to 1997, was awarded the Nobel prize in economics in 2001.

After Paul Krugman, Prof. Stiglitz is the second Nobel prize-winning economists to rightly criticize the administration’s plan for what it is. A massive, disguised theft.

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Hyper-Inflation: Central Banks Gone Wild – Investment U

By: Micheal Checkan of Asset Strategies International

Editor’s Note: Many of our long-time readers will remember our old friend and colleague Michael Checkan at Asset Strategies International, Inc. A specialist in precious metals and foreign currencies, today he takes a look at a unique “hyper-inflationary” economy and the havoc it plays on foreign currencies.

With the U.S. Government printing money like never before, the whispers of inflation float over the currency and bond markets. In fact, inflation has dropped to almost nothing after hitting a high of 5.6% in July of last year.

Within the past two weeks the Fed created one trillion dollars out of thin air. Apart from left or right wing rhetoric, this is reality.

History has taught us that governments can take a perfectly good piece of paper, put some ink on it, and make it totally worthless.

It happened in Hungary in 1946, Argentina in 1988 and today in Zimbabwe.

Since entering the foreign currency and precious metals business in the 1960’s, I’ve seen it happen more than a few times. But extreme examples of currency devaluation are rare. It can be compared to a slow motion train wreck you just can’t keep your eyes off.

Today, Zimbabwe looks to take its place in history with the most corrupt government and devalued currency for the record books. Apart from being just another economic disaster and newspaper headline, we can learn something from these extreme examples of central banks gone wild and why inflation is so important.

What is Hyper-Inflation?

I saw hyper-inflation first hand when I visited Argentina in 1988. At the time, their government was using the Austral as their currency and inflation was running at 387.7%.

Afterwards, the currency name was changed to the Peso and eventually the hard or new Peso. Visiting last year I still found a questionable government dealing with political, economic and social unrest. Unfortunately, currency devaluation is just one of their issues.

You can expect to see more changes in their currency in the years ahead.

Inflation is the rising cost of daily goods and services – usually based off the Consumer Price Index. There’s a humorous quote that says, “With inflation, everything gets more valuable except money.” But it’s a great way to explain why inflation needs to be managed. Hyper-inflation is simply runaway inflation.

Imagine a $2.00 gallon of milk spiking to $775.40 within a year – like in Argentina, 1988.

That’s no April Fool’s joke.

Some inflation is necessary for individuals to see a reason for investing their money. If your dollar was going to be worth a dollar “tomorrow,” you would be less inclined to risk it in an investment. Inflation eats away at purchasing power.

Central Banks and governments have a number of other tools at their disposal to influence inflation, but their main tools are to shrink the money supply and raise interest rates. On average the United States sees inflation at around 3-4%.

Argentina’s troubles are nothing compared to the state of Zimbabwean currency.

“The death knell for the Zimbabwean dollar came as it does for currencies in all hyper-inflationary markets. That is, people just refuse to use the money. It really is a nuisance. So it just disappears on you,” said Steve H. Hanke, a professor of applied economics at Johns Hopkins University.

Officially, Zimbabwe’s monthly inflation is an unfathomable 231 million percent.

And while outrageous, that figure may be far too small. In November, the last time reliable data was available, Hanke calculated it at 79.6 billion percent and proclaimed Zimbabwe “second place in the world hyper-inflation record books.” Currently, the largest note in circulation is a $100 trillion note.

Hyper-Inflation & The Zimbabwe Banknote – Collecting Funny Money

My good friend, David who also deals in banknotes and coins says,

“The situation with the Zimbabwe banknote is complicated because the new notes so rapidly become worthless it seems the Central Bank does not produce as many.

In any case I’ve managed to accumulate some and I am constantly working at it. You are aware that last August after getting up to 100 billion they started the new currency. The new currency has now had a short life. It is now being replaced with the “new” new currency.

I saw on the web site of the Reserve Bank of Zimbabwe the new, new, new banknotes. The only question is how long it will take before they get up to a quadrillion?”

Of course in these situations there’s always profit to be made. In this case, it’s exploiting the value of the physical coins and the value of the hyper-inflated notes.

“I happen to have a lot of one-cent coins from a few years back. The basic idea is to go to the bank with a 100 billion dollar note and request the 10 trillion 1 cent coins. Because the coin weighs about two grams, one would expect to receive 20 trillion grams of coins, which is 20 billion kilos or 20 million tons. The coin is made of steel with a copper coating. That is a lot of metal.”

It’s a physical impossibility for Zimbabwe to make good on their printing presses’ obligations in coins. From a far worse perspective, they are destroying their economy and global investment interest.

David tells me the Zimbabwean banknotes may be monetarily worthless, but they do have collector value. Some currency collectors are rushing to pick up as many of these “super-notes” as possible.

How many Americans can say they’ve held a 100 trillion dollar note? I prefer to think that a “trillionaire” should reach that status because of hard work and luck, not because their government can’t keep its hands off the printing presses.

It’s a sobering lesson on the dangers of too much money.

Good investing,

Michael Checkan

Editor’s Note: Michael is the President of Asset Strategies International and has been a Pillar One Partner with The Oxford Club for more than a decade. Asset Strategies is a consulting and broker/dealer investment firm specializing in precious metals, offshore wealth protection, inter-bank foreign currency transactions and banknote trading. To find out more about his free Information Line newsletter, go here.

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Next- More Evidence of Massive Collaberation and Central Banks Suppression of Gold Prices and actual Fraud? Securities lawyer Avery Goodman, writing today at Seeking Alpha, notes the coincidence of huge gold offtake at the Comex and a sudden huge sale of gold by the European Central Bank. He adds that evidence of gold market manipulation is so great that the authorities should start investigating it. But of course the manipulation is DONE by the authorities, so the investigation will have to be done by the financial press. (It would be nice if someone invented such a press soon.) Read On… – Can You Say “Short Squeeze” in the making! – jschulmansr

Did the ECB Save COMEX from Gold Default? – Seeking Alpha

By: Avery Goodman

On Tuesday morning, gold derivatives dealers, who had sold short in the face of a fast rising gold price, faced a serious predicament. Some 27,000 + contracts, representing about 15% of the April COMEX gold futures contracts remained open. Technically, short sellers are required to give “notice” of delivery to long buyers. However, in reality, buyers are the ones who control the amount of gold to be delivered. They “demand” delivery of physical gold by holding futures contracts past the expiration date. This time, long buyers were demanding in droves.

In normal times, very few people do this. Only about 1% or less of gold contracts must be delivered. The lack of delivery demand allows the casino-like world of paper gold futures contracts to operate. Very few short sellers actually expect or intend to deliver real gold. They are, mostly, merely playing with paper. It was amazing, therefore, when March 30, 2009 came and passed, and so many people stood for delivery, refusing to part with their long gold futures positions.

On Tuesday, March 31^st, Deutsche Bank (DB) amazed everyone even more, by delivering a massive 850,000 ounces, or 850 contracts worth of the yellow metal. By the close of business, even after this massive delivery, about 15,050 April contracts, or 1.5 million ounces, still remained to be delivered. Most of these, of course, are unlikely to be the obligations of Deutsche Bank. But, the fact that this particular bank turned out to be one of the biggest short sellers of gold, is a surprise. Most people presumed that the big COMEX gold short sellers are HSBC (HBC) and/or JP Morgan Chase (JPM). That may be true. However, it is abundantly clear that they are not the only game in town.

Closely connected institutions, it seems, do not have to worry about acting irresponsibly, in taking on more obligations than they can fulfill. Mysteriously, on the very same day that gold was due to be delivered to COMEX long buyers, at almost the very same moment that Deutsche Bank was giving notice of its deliveries, the ECB happened to have “sold” 35.5 tons, or a total of 1,141,351 ounces of gold, on March 31, 2009. Convenient, isn’t it? Deutsche Bank had to deliver 850,000 ounces of physical gold on that day, and miraculously, the gold appeared out of nowhere.

The announcement of the ECB sale was made, as usual, dryly, without further comment. There was little more than a notation of a sale, as if it were a meaningless blip in the daily activity of the central bank. But, it was anything but meaningless. It may have saved a major clearing member of the COMEX futures exchange from defaulting on a huge derivatives position. We don’t know who the buyer(s) was, but we don’t leave our common sense at home. The ECB simply states that 35.5 tons were sold, and doesn’t name any names. Common sense, logic and reason tells us that the buyer was Deutsche Bank, and that the European Central Bank probably saved the bank and COMEX from a huge problem. What about the balance, above 850,000 ounces? What will happen to that? I am willing to bet that Deutsche Bank will use it, in June, to close out remaining short positions, or that it will be sold into the market, at an opportune time, if it hasn’t already been sold on Tuesday, to try to control the inevitable rise of the price of gold.

Circumstantial evidence has always been a powerful force in the law. It allows police, investigators, lawyers and judges to ferret out the truth. Circumstantial evidence is admissible in any court of law to prove a fact. It is used all the time, both when we initiate investigations, and once we seek indictments and convictions. We do this because we deal in a corrupt world, filled with suspicious actions and lies, and the circumstances are often suspicious enough to give rise to a strong inference that something is amiss. Most of the time, when the direct evidence is insufficient to prove a case beyond a reasonable doubt, or even by a preponderance of direct evidence, circumstantial evidence fills the void, and gives us the conviction. We even admit evidence of the circumstances to prove murder cases. In light of that, it certainly seems appropriate to use circumstantial evidence in evaluating possible regulatory violations. The size and timing of the delivery of Deutsche Bank’s COMEX obligation is suspicious, to say the least, when taken in conjunction with the size and timing of the ECB’s gold sale. It is circumstantial evidence that the gold used by Deutsche Bank to deliver and fulfill its COMEX obligations, came directly or indirectly, from the ECB.

I’d sure like to know what the ECB’s “alibi” is. If I were an investigator for the Commodities Futures Trading Commission (CFTC), assigned to determine whether or not gold short sellers are knowingly violating the 90% cover rule, I’d be questioning the hell out of the ECB staffers, as well as employees in the futures trading division of Deutsche Bank. There is certainly enough evidence to raise “reasonable suspicion”. Reasonable suspicion is all that one needs to start a criminal investigation. It should be more than sufficient to prompt the CFTC, as well as European market regulators, to start a commercial investigation of the potential violation of regulatory rules by both the ECB and one of the world’s major banking institutions. That is, of course, if and only if, the CFTC staff really wants to regulate, rather than simply position themselves for more lucrative jobs inside the industry they are supposed to be regulating, after they leave government service.

It is quite important to determine whether or not Deutsche Bank was bailed out by the ECB because that will answer a lot of questions about allegations of naked short selling on the COMEX. If the ECB knew that its gold would be used as post ipso facto “cover” for uncovered shorting, staffers at the central bank might be co-conspirators. At any rate, if the German bank did sell short on futures contracts without having enough vaulted gold it sold a naked short. It also means that the ECB has facilitated a major rule violation in a jurisdiction (the USA) with which Europe is supposed to have extensive joint regulatory agreements, any number of which may have been violated by this action of the ECB. At the very least, naked short selling is a blatant violation of CFTC regulations, which require 90% cover of all deliverable metals contracts. If the delivered gold came directly, or indirectly, from the ECB, it means that Deutsche Bank’s gold short contracts were “naked” at the time they were entered into.

The 90% cover rule is very old rule, designed to prevent fraud on the futures markets. Its origin dates back into the 19^th century. Farmers, in that simpler age, were complaining that big bank speculators were downwardly manipulating grain prices on the futures exchanges. Nowadays, the CFTC has a predilection toward categorizing banks as so-called “commercials” or “hedgers”, rather than as the speculators that they really are. Traditionally, only miners and gold dealers whose business involves a majority of PHYSICAL trade in gold should qualify as commercials. However, the CFTC has ignored this for a long time, and qualified numerous banks and other financial institutions, whose main gold business is derivatives, as “commercial” entities, immunizing them from position limits and other constraints. As a result, just like the farmers of the 19^th century, today’s gold “cartel” conspiracy theorists revolve their theory around an allegation of downward manipulation, and heavy short selling concentration.

Manipulation can only take place when there is a disconnect between supply, demand, and trading activity on the futures exchanges. The 90% cover rule attempts to force a direct tie between the futures market and the availability of particular commodities, so that supply and demand become primary even on paper based futures markets, just as it is in trading the real commodity. Unfortunately, the modern CFTC has ignored or misinterpreted the purpose of the 90% cover rule for a very long time. This regulatory failure has allowed the current free-for-all “casino-like” atmosphere that now prevails at futures exchanges.

It would be helpful if some of my colleagues, within the public prosecutor and securities regulatory offices, in Europe, as well as the CFTC in America, filed complaints for discovery, to ferret out the truth. In the interest of transparent markets, the ECB should be forced to disclose who purchased the gold they sold in the morning of March 31, 2008 and why the sale was timed in a way that corresponded to the exact moment in time that Deutsche Bank had a desperate need for gold bullion.

Was it yet another bank bailout? Has another bank sucked up precious resources belonging, in this case, to the people of Europe? Gold is needed to bring confidence to the Euro currency, as often noted by Germany’s Bundesbank, which seems to be less kind to German banks than the ECB. Why should the ECB be permitted to sell gold to closely connected derivatives dealers, if the primary purpose is to save those dealers from the bad decisions they have made, and the end result is to reinforce moral hazard? Should banks like Deutsche Bank be allowed to take on more derivative risk than they can afford without involving publicly owned assets? Did Deutsche Bank issue naked short positions? Have innocent European citizens now had their currency placed at more risk, and some of their gold stolen from them, simply to enrich private hands? All of these questions are begging for answers.

European regulators are quick to condemn the Federal Reserve for its incestuous relationship to client “primary dealer” banks, special treatment of favored institutions at the expense of other non-favored institutions, propensity toward injecting dollars to artificially stimulate the stock market, seemingly endless bailouts of closely connected banks, and, now, the seemingly unlimited printing of new dollars. I’ll not attempt to excuse the Fed for its failures. Indeed, I believe that it is in the best interest of the American people to close down that malevolent institution, permanently. However, if any of the questions I have posed are answered in the positive, people might begin to understand that special favors, nepotism, corruption, and a failure to properly regulate are not confined to America. The real estate bubble, for example, was allowed to become much bigger in the U.K., Ireland, Spain, and eastern Europe, than it ever was in the USA. The collapse of real estate, in those countries, is going to be more severe, even though it is more recent in origin than the pullback in the USA. America happened to be the first nation affected, but it did not cause the world economic collapse. That was caused by the joint irresponsible policies in almost every major nation in the world.

Those who rely on the good faith of Angela Merkel, to keep the Euro inviolate, certainly have a right to get answers from the ECB and from Deutsche Bank. The answers will tell us a lot about the real proclivities of the ECB. As the U.S. dollar is progressively debased, in coming years, will the Euro be any better? Is the ECB merely a European copy of the Federal Reserve “slush fund”, utilized by well connected European banks, for the purpose of private financial gain, much as the Federal Reserve’s assets are utilized by its primary dealers? If the ECB is willing to bail out a major trading institution from the mismanagement of its derivatives operations, who could honestly claim that it would hesitate to competitively debase the Euro against the dollar? Having the answers to the questions I have posed would give everyone the knowledge needed to make important decisions. That is exactly the reason that, in all likelihood, we will never get these answers. Maybe, Europeans and others ought to be dumping Euros just as fast as they are now dumping dollars, and buy gold and silver, instead.

Aside from the regulatory issues, if we did discover that Deutsche Bank got its gold from the ECB, one glaringly strong inference arises. When a major derivatives dealer goes begging for gold, to the ECB, it is very strong circumstantial evidence that not enough physical gold is available for purchase on the OTC wholesale market. Up until now, bearish gold commentators have steadfastly denied that wholesale gold shortages exist. Instead, they have insisted that all shortages are confined to retail forms of gold. Now, when combined with the circumstantial evidence, however, common sense tells us that they are wrong.

Decision: There is sufficient evidence for this case to go to a full scale investigation. The CFTC and similar securities regulators in Europe need to properly investigate the gold conspiracy allegations. That has never been done to date. They must determine who is buying central bank gold and whether or not it is simply being sold into the open market, or channeled into the hands of favored financial institutions who then use it to cover naked short selling. The investigation must include detailed vault audits and explore all paper trails.

Disclosure: Long on gold.

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My Final Note: Did I say buy Gold? Do It Now in any form or investment, be patient and you will be REWARDED! – Good Investing – jschulmansr

Follow Me on Twitter and be notified whenever I make a new post!

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Claim a gram of FREE GOLD today, plus a special 18-page PDF report; Exposed! Five Myths of the Gold Market and find out:

· Who’s been driving this record bull-run in gold?

· What Happens When Inflation Kicks In?

· Why most investors are WRONG about gold…

· When and How to buy gold — at low cost with no hassle!

Get this in-depth report now, plus a gram of free gold, at BullionVault

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

The Party Is Over For Stocks

30 Monday Mar 2009

Posted by jschulmansr in 10 year Treasuries, 20 yr Treasuries, ANV, Austrian school, AUY, Bailout News, banking crisis, banks, bear market, Bollinger Bands, Bollinger Bands Saudi Arabia, Brian Tang, bull market, CDE, CEF, central banks, China, Comex, commodities, Contrarian, Copper, Credit Default, Currencies, currency, Currency and Currencies, deflation, Dennis Gartman, depression, DGP, DGZ, dollar denominated, dollar denominated investments, Doug Casey, economic, Economic Recovery, economic trends, economy, EGO, Fed Fund Rate, Federal Deficit, federal reserve, Finance, financial, follow the news, Forex, FRG, Fundamental Analysis, futures, futures markets, gata, GDX, GG, GLD, gold, Gold Bullion, Gold Investments, gold miners, Gold Price Manipulation, GTU, hard assets, HL, How To Invest, How To Make Money, hyper-inflation, IAU, IMF, India, inflation, Investing, investments, Jeffrey Nichols, Jim Rogers, Jim Sinclair, John Embry, Jschulmansr, Junior Gold Miners, Keith Fitz-Gerald, Latest News, Long Bonds, majors, Make Money Investing, Marc Faber, Market Bubble, market crash, Markets, Michael Zielinski, mid-tier, mining companies, mining stocks, monetization, Moving Averages, NAK, NGC, NXG, oil, PAL, palladium, Peter Grandich, Peter Schiff, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, protection, recession, risk, run on banks, safety, Sean Rakhimov, Short Bonds, silver, silver miners, Silver Price Manipulation, SLW, small caps, sovereign, spot, spot price, stagflation, Stimulus, Stocks, SWC, TARP, Technical Analysis, The Fed, Tier 1, Tier 2, Tier 3, TIPS, U.S., U.S. Dollar, volatility, warrants, XAU

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Looks like the party is over! Major follow thru selling today, the Dow currently down 280 points and below 7500 at 7492. The resistance at 8000 was just to much and I think we have put in the top of this Bear Market rally/correction. As I mentioned before a lot of foolish sheeple are going to be panicking very quickly. I have been telling you to buy Gold and Precious Metals for a long time now and today’s articles will give you some more good reasons you should listen. Silver currently is flashing a Big BUY signal and when everything is said and done, I believe Silver will well outperform Gold on a percentage basis. I am using this opportunity to continue loading up on producers and I’m telling you, (CDE) Couer D’Alene Mines under a buck ($1) is looking mighty good! As always consult your financial advisor, read the prospectus, and do your due diligence before making any investments. Don’t be a “sheeple”. I also do my trend analysis thru INO.com and below is why… Good Investing! – jschulmansr – Follow Me on Twitter and be notified whenever I make a new post!

Subject: Two trending markets revisited and analyzed for you

Last week I watched a video analysis of the S&P and Crude Oil markets. The technical analysis was right on at the time, but those markets have changed quite a bit in the last few days. The S&P had a huge rally and Crude seemed to steady out, so what’s the new analysis? Glad you asked!

Below are two free videos, one on Crude Oil and one on the S&P, that gives us an indepth technical look into these markets. Again the videos are free and very informatitive. Just Click on the Links Below…

S&P Video Analysis: Crude Oil Projections:

Here’s your chance to analyze that stock you have been thinking about adding to your portfolio. Just enter the ticker of any company, name of a commodity, or forex pair and get your complimentary technical analysis. It cost you nothing and and no payment info will ever be requested.

Click Here To Enter Your Symbol/s

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

Claim a gram of FREE GOLD today, plus a special 18-page PDF report; Exposed! Five Myths of the Gold Market and find out:

·        Who’s been driving this record bull-run in gold?

·        What Happens When Inflation Kicks In?

·        Why most investors are WRONG about gold…

·        When and How to buy gold — at low cost with no hassle!

Get this in-depth report now, plus a gram of free gold, at BullionVault

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

As History Repeats Itself, Time to Buy Gold and Silver – Seeking Alpha

By: Peter Cooper of Arabian Money.net

History does not repeat but it does rhyme, said Mark Twain. For an excellent

assessment of what a stock market crash can mean for the future we have only to turn to The Great Crash 1929 by Professor JK Galbraith.

It is all there, a complete repeat of the run up to the stock market crash of last autumn, and its consequences – thus far. There was the Florida real estate crash as a prelude to the main act, and then a 50 per cent plunge in the Dow Jones in late 1929, just like the one in 2008.

March rally

March 1930 saw a huge rally in stock prices. March 2009 has just given us the biggest rally since 1974 (a previous market crash year). But hold on a minute, what does JK Galbraith tell us happened next?

In 1930 stocks weakened a little in April and then moved sideways into June when they plunged down again. Then they continued falling month after month for the next two years.

Our governments know this, and it does help explain the rush to push money into the economy by means fair and uncertain. The aim is clearly to break the cycle and avoid the down trend.

But will it be successful? Nobody really knows. Is it worth trying? Yes, but the evidence so far is that the Great Recession is tracking a course that is out-of-control, or rather following a pattern last seen in the 1930s.

Perhaps we should be more optimistic, and think that something more like the 1970s ‘lost decade’ is upon us. 1974 was a terrible year for global stock markets and was followed by stagflation – a mixture of low growth and high inflation.

Inflation

Indeed, inflation is the only way to bail out an economy consumed by debt. In the 1930s debt deflation was allowed to take its disastrous course with public spending cuts and trade barriers making an already deteriorating cycle considerably worse.

However, anybody who has just bought into the stock market rally should really think about selling and staying out for a while. This is a time to park money in gold and silver and even exit cash, although you might care to note that cash and precious metals were the best performing asset class of the 70s, while in the 30s gold was the real star.

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Silver is Quietly Flashing a Buy Signal, But Buyer Beware- Seeking Alpha

By: Harold Goodman

Anyone who follows the silver market knows that the fundamentals of silver are incredibly strong, long term. Since most silver is mined as a byproduct of base metal mining, and base metal prices are currently depressed by the global recession, inventories of base metals are high, and silver supply is shrinking. Many less profitable mines are closing down. Silver recently went into backwardation, which could indicate delivery problems are imminent in the physical silver market.

The US government currently holds no silver bullion at all, down from five billion ounces immediately after WWII. Above ground silver supplies are currently estimated to be one billion ounces, compared to five billion ounces of gold. This includes silver in tableware, jewelry, and other sources that will never be available on the open market.

For the purposes of this analysis, I will use SLV, the silver ETF, because it is convenient and easy to chart, but keep in mind, this is paper silver, not bullion, and its investment characteristics are completely different. It is supposed to be backed by silver bullion, but if you read the fine print, it may also hold futures, cash, and is allocated to custodians and sub-custodians which cannot be audited. It is designed to track the spot price of silver, but when the spot price of silver falls significantly below the mean, you will find that physical silver dealers will increase their premium over spot rather than drop the price. Holders of SLV cannot demand delivery of the underlying physical silver bullion bars.

On August 25^th, 2008 the 50 day moving average of SLV crossed and fell below the 200 day moving average. This is know by technical analysts as the “death cross” and signifies a coming fall in price. SLV closed that day at $13.33

On October 27^th, the price of SLV closed at $8.85 during the panic selling of autumn 2008, a 33.6% drop in two months.

Last Friday, March 27^th, 2009, for the first time since August 25^th, the 50 day moving average of SLV crossed back above the 200 day MA, which could signal a coming runup in price. SLV closed at $13.15

I don’t know what term the technical analysts use for that, so I will call it the “life cross” until someone tells me the correct term.

If SLV’s 50 day MA stays above the 200 day MA, rather than bouncing off it, this is an extremely bullish sign for SLV, and astute investors should be keeping a close eye on it for the next week. But here’s the rub.

Silver is the most highly manipulated market in existence, bar none, and the price of silver has been suppressed for many years. Gold is second to silver. The reason that silver is first apparently is that it is a much smaller market than gold, and can be manipulated using a much smaller number of silver futures contracts. Gold prices can be suppressed both by shorting gold futures, and by actual bullion sales by central banks, but these sales are becoming fewer and smaller as central bank gold reserves are reportedly running low, and even those nations with ample supplies of bullion won’t be willing to part with it at the suppressed price, now that governments worldwide are printing money like it’s going out of style.

The best body of work on silver manipulation by far is the writings of Ted Butler, available here.

Check out his articles on February 8, 2009 and March 16, 2009.

Short term traders like to follow the 12 day EMA and 26 day EMA.

On July 29^th, 2008 the 12 day EMA of SLV crossed below the 26 day EMA, signaling a coming drop in price. SLV closed that day at $17.19 Three months later, SLV hit its bottom of $8.85 on October 27^th, a drop of 48.4% in three months.

On December 12^th, 2008 the 12 day EMA of SLV crossed back above the 26 day EMA, signaling a coming runup in price, and has been above it ever since. SLV closed that day at $10.14

On February 23^rd, 2009 SLV peaked out at $14.34, an increase of 41.4% in 2 ½ months.

On March 17^th, 2009 the 12 day EMA of SLV bounced off the 26 day EMA, and has remained above it ever since, a bullish sign. SLV closed that day at $12.60, and its most recent close on March 27^th was $13.15

If the 12 day EMA can stay above the 26 day EMA, look out above!

The following chart shows the long and short positions of various commodities on the Comex as reported by the CFTC for the week of March 16, 2009. Thanks to Mark J Lundeen for the chart. It shows that the net long/short position in silver is 100% short, compared to gold at 63%. I would consider this as prima facie evidence that the CFTC is not doing their job in preventing manipulation of the commercial silver market.

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Concentrated Shorts Proven To Supress Gold and Silver – GATA

Source: GATA.org – Gold Anti-Trust Action Committee

Dear Friend of GATA and Gold (and Silver):

GATA Board of Directors member Adrian Douglas, editor of the Market Force Analysis letter (http://www.marketforceanalysis.com/), has combined data from the U.S. Commodity Futures Trading Commission and the Office of the Comptroller of the Currency to show that the suppression of the prices of gold and silver in the last several years correlates exactly with the growing concentration of the short positions held by two U.S. banks, JPMorgan Chase and HSBC.

Short of the official admissions of the gold price suppression scheme collected and published by GATA over the years, Douglas’ report is probably the best proof yet, and certainly the most detailed. Douglas’ report is titled “Pirates of the COMEX” and you can find it in PDF format at GATA’s Internet site here:

http://www.gata.org/files/PIRATES-OF-THE-COMEX.pdf

GATA’s supporters may be wearying of our many similar requests, but only persistence pays off, so we ask you to print copies of Douglas’ report and send them — by regular mail, not e-mail, which is ignored — to your U.S. senators and representatives with a covering letter requesting an explanation as to why nothing is being done to stop this market manipulation. For our friends outside the United States, please send copies with similar letters to your own national legislators.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and

you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

=========================================================My note: As my friend Trader Dan says-

“Nothing will unnerve the paper gold shorts more quickly and do more to undercut their confidence than to strip them of the real metal and force them to come up with more hard gold bullion to make good on deliveries. “Stand and Deliver or Go Home” should be the rallying cry of the gold longs to the paper gold shorts.” –Trader Dan Norcini

I think it’s time for a “short squeeze” and take back some of the money the “pirates” have stolen

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That’s it for now-Have a Great Monday!- Good Investing- jschulmansr

Follow Me on Twitter and be notified whenever I make a new post!=========================================================

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/s, Do Your Due Diligence, Read All Prospectus/s and related information carefully before you make any investing decisions and/or investments. – jschulmansr

The Birthers’ Are Back – And At The Supreme Court!

25 Wednesday Mar 2009

Posted by jschulmansr in 2008 Election, Barack, Barack Dunham, Barack Hussein Obama, Barack Obama, Barry Dunham, Barry Soetoro, capitalism, Chicago Tribune, Columbia University, Credit Default, Currencies, currency, Currency and Currencies, D.c. press club, dollar denominated, dollar denominated investments, economic, Economic Recovery, economic trends, economy, Electoral College, Electors, Fed Fund Rate, Federal Deficit, federal reserve, Finance, financial, fraud, Free Speech, gold, Harvard Law School, hawaii, hyper-inflation, id theft, IMF, Indonesia, Indonesian Citizenship, inflation, 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, obama, Occidental College, Phillip Berg, Politics, poser, Presidential Election, Sarah Palin, socialism, stagflation, Stimulus, Stocks, The Fed, Today, treason, U.S., u.s. constitution, U.S. Dollar, voter fraud, we the people foundation

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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, voter fraud, we the people foundation

I am not a “birther” unless- my asking Mr. Obama to provide his Birth Certificate for everyone to see- qualifies me as one. The idea that Mr. Obama refuses to do so borders on unbelievable! Now he is facing “criminal” charges because he hasn’t. Please don’t tell me he already has, he hasn’t. The certificate of live birth is not the same as a Birth Certificate, and even that was proven to be a forgery! Next why is he refusing to let anyone see anything about his personal past history, like school records,and anything where then he had to show some kind of identification to be registered and be enrolled. Mr. Obama, what are you hiding? Could it actually be that you really aren’t qualified and eligible to be the President? I have some real concerns and now the rest of America is starting to share those concerns! Could your meeting with the Supreme Court Justice’s was really about that very issue? Something like, hey guys I’m not actually eligible to be President, so if you ‘hear any of the “eligibility” cases’ and this is found out (not eligible to be President)- it will cause widespread rioting and destruction; along with a complete loss of trust by the American people. Is that what really transpired? Mr. Obama prove your eligibility! Another concern I have is what you are doing to this country. You say you inherited this mess from President Bush and a 1 Trillion Deficit mess. Yet your cure is to spend 10 Trillion of American money (to supposedly fix the problem), more money total, than every President from Washington to Bush Jr. combined! Our own allies are even imploring you to stop this disastrous course. China is warning you that they are going to buy less, if any at all of our new debt you are having issued, and are afraid they are going lose big time on their investments in our debt because of it. Your policies are destroying the American dollar or is that part of your plan? You continue to have your agents in the Fed and treasury illegaly try to artificially supress precious metals prices, especially Gold and Silver prices by leasing out or outright selling of America’s Gold at a negative basis. Why is their no transparency and accounting of where and how America’s gold is being used. China and Russia are calling for a new reserve currency run by the IMF and where the U.S. Dollar would only represent 40% of the value of the currency basket. One minute you are against that along with Geitner and the next you are both saying that that might be a good idea? Real time inflation. not the conjured, manipulated reports (like yesterday’s durable goods); currently the inflation rate is at 8.5% up another point in just the last month! China and Russia are aware of this and are buying up and increasing their Gold Reserves to protect themselves from Inflation and a falling Dollar. Next you are mortgaging my kids, grandchildren. and great grandchildren’s futures under an onerous, outrageous levels of debt. . So I ask based on these facts alone – Mr. Obama where is your Birth Certificate? If you don’t have anything to hide then why not, just order the State of Hawaii to provide (unseal) the Birth Certificate? What are you afraid of? Mr. Obama prove your eligibility to be the President of the United States…

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Justice, Supremes confirm getting Eligibility Challenge- World Net Faily

By: Bob Unruh of World Net Daily

The U.S. Supreme Court and the U.S. Justice Department today confirmed that documentation

challenging Barack Obama’s eligibility to be president has arrived and soon will be evaluated.

Confirmation came from Defend Our Freedoms, the foundation through which California attorney

Orly Taitz has been working on a number of cases that raise questions over Obama’s qualification to be president under the Constitution’s demand that the office be occupied only by a “natural born” citizen.

Taitz was informed by Karen Thornton of the Department of Justice that all of the case documents and filings have arrived and have been forwarded to the Office of Solicitor General Elena Kagan, including three dossiers and the Quo Warranto case.

“Coincidently, after Dr. Taitz called me with that update, she received another call from Officer Giaccino at the Supreme Court,” the website posting said. “Officer Giaccino stated both pleadings have been received and [are] being analyzed now.”

The report from the Supreme Court said the documents that Taitz hand-delivered to Chief Justice John Roberts at his appearance at the University of Idaho a little over a week ago also were at the Supreme Court.

WND has reported on dozens of legal challenges to Obama’s status as a “natural born citizen.” The Constitution, Article 2, Section 1, states, “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.”

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 340,000 others and sign up now!

Some of the legal challenges question whether he was actually born in Hawaii, as he insists. If he was born out of the country, Obama’s 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.

Other challenges 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. The cases contend the framers of the Constitution excluded dual citizens from qualifying as natural born.

Further, others question his citizenship by virtue of his attendance in Indonesian schools during his childhood and question on what passport did he travel to Pakistan three decades ago.

Adding fuel to the fire is Obama’s persistent refusal to release documents that could provide answers. While his supporters cite an online version of a “Certification of Live Birth” from Hawaii, critics point out such documents actually were issued for children not born in the state.

WND reported earlier on a proposal by U.S. Rep. Bill Posey, R-Fla., and the criticism he’s taking for suggesting that the issue be avoided in the future by having presidential candidates supply their birth certificate.

“What you should do is stop embarrassing yourself and take the Reynolds Wrap off your head,” MSNBC commentator Keith Olbermann suggested to Posey.

U.S. Rep. Neil Abercrombie, D-Hawaii, has asserted Posey’s judgment is skewed.

“The citizenship of someone who has reached the point of running for president of the United States is not really an issue,” Abercrombie said.

Posey said he made the suggestion because he’s seeking the truth, and “the more and more I get called names by leftwing activists, partisan hacks and political operatives for doing it, the more and more I think I did the right thing.”

Hawaiian officials have confirmed they have a birth certificate on file for Obama, but it cannot be released without his permission, and they have not revealed the information it contains.

John Eidsmoe, an expert on the U.S. Constitution working with the Foundation on Moral Law, told WND a demand for verification of Obama’s eligibility appears to be legitimate.

Eidsmoe said it’s clear that Obama has something in the documentation of his history, including his birth certificate, college records and other documents that “he does not want the public to know.”

Officials for the Obama campaign repeatedly have refused to comment on the questions, relenting only once to call the concerns “garbage.”

Other members of Congress have been reading from what appears to be a prepared script in response to queries about Obama’s eligibility:

Among the statements from members of Congress:

Sen. Jon Kyl, R-Ariz.: “Thank you for your recent e-mail. Senator Obama meets the constitutional requirements for presidential office. Rumors pertaining to his citizenship status have been circulating on the Internet, and this information has been debunked by Snopes.com, which investigates the truth behind Internet rumors.”
Sen. Mel Martinez, R-Fla.: “Presidential candidates are vetted by voters at least twice – first in the primary elections and again in the general election. President-Elect Obama won the Democratic Party’s nomination after one of the most fiercely contested presidential primaries in American history. And, he has now been duly elected by the majority of voters in the United States. Throughout both the primary and general election, concerns about Mr. Obama’s birthplace were raised. The voters have made clear their view that Mr. Obama meets the qualifications to hold the office of president.”
Sen. Sherrod Brown, D-Ohio: “President Obama has provided several news organizations with a copy of his birth certificate, showing he was born in Honolulu, Hawaii on August 4, 1961. Hawaii became a state in 1959, and all individuals born in Hawaii after its admission are considered natural-born United States citizens. In addition, the Hawaii State Health Department recently issued a public statement verifying the authenticity of President Obama’s birth certificate.”
U.S. Rep. Rush Holt, D-N.J.: “The claim that President Obama was born outside of the United States, thus rendering him ineligible for the presidency, is part of a larger number of pernicious and factually baseless claims that were circulated about then-Senator Obama during his presidential campaign. President Obama was born in Hawaii.” The response provided no documentation.

Taitz had approached Justice Antonin Scalia during his appearance in Los Angeles before meeting with Roberts at his Idaho appearance. She’s suggested that there was misbehavior at the Supreme Court because some of her earlier papers were not filed properly, nor were they returned to her.

Hers was just one of the issues reportedly presented to the Supreme Court justices in conference for an evaluation on whether a hearing should be held. No hearing ever has been held at that level on the evidence involved. Her Quo Warranto case is pending at the Justice Department. It essentially raises a demand for proof by what authority Obama has assumed the powers of president.

Here is a partial listing and status update for some of the cases over Obama’s eligibility:

New Jersey attorney Mario Apuzzo has filed a case on behalf of Charles Kerchner and others alleging Congress didn’t properly ascertain that Obama is qualified to hold the office of president.
Pennsylvania Democrat Philip Berg has three cases pending, including Berg vs. Obama in the 3rd U.S. Circuit Court of Appeals, a separate Berg vs. Obama which is under seal at the U.S. District Court level and Hollister vs. Soetoro a/k/a Obama, (now dismissed) brought on behalf of a retired military member who could be facing recall to active duty by Obama.
Leo Donofrio of New Jersey filed a lawsuit claiming Obama’s dual citizenship disqualified him from serving as president. His case was considered in conference by the U.S. Supreme Court but denied a full hearing.
Cort Wrotnowski filed suit against Connecticut’s secretary of state, making a similar argument to Donofrio. His case was considered in conference by the U.S. Supreme Court, but was denied a full hearing.
Former presidential candidate Alan Keyes headlines a list of people filing a suit in California, in a case handled by the United States Justice Foundation, that asks the secretary of state to refuse to allow the state’s 55 Electoral College votes to be cast in the 2008 presidential election until Obama verifies his eligibility to hold the office. The case is pending, and lawyers are seeking the public’s support.
Chicago attorney Andy Martin sought legal action requiring Hawaii Gov. Linda Lingle to release Obama’s vital statistics record. The case was dismissed by Hawaii Circuit Court Judge Bert Ayabe.
Lt. Col. Donald Sullivan sought a temporary restraining order to stop the Electoral College vote in North Carolina until Barack Obama’s eligibility could be confirmed, alleging doubt about Obama’s citizenship. His case was denied.
In Ohio, David M. Neal sued to force the secretary of state to request documents from the Federal Elections Commission, the Democratic National Committee, the Ohio Democratic Party and Obama to show the presidential candidate was born in Hawaii. The case was denied.
Also in Ohio, there was the Greenberg v. Brunner case which ended when the judge threatened to assess all case costs against the plaintiff.
In Washington state, Steven Marquis sued the secretary of state seeking a determination on Obama’s citizenship. The case was denied.
In Georgia, Rev. Tom Terry asked the state Supreme Court to authenticate Obama’s birth certificate. His request for an injunction against Georgia’s secretary of state was denied by Georgia Superior Court Judge Jerry W. Baxter.
California attorney Orly Taitz has brought a case, Lightfoot vs. Bowen, on behalf of Gail Lightfoot, the vice presidential candidate on the ballot with Ron Paul, four electors and two registered voters.

In addition, other cases cited on the RightSideofLife blog as raising questions about Obama’s eligibility include:

In Texas, Darrel Hunter vs. Obama later was dismissed.
In Ohio, Gordon Stamper vs. U.S. later was dismissed.
In Texas, Brockhausen vs. Andrade.
In Washington, L. Charles Cohen vs. Obama.
In Hawaii, Keyes vs. Lingle, dismissed.

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

Federal Criminal Complaint contends Obama Ineligible – WND

By Bob Unruh
© 2009 WorldNetDaily

An ex-military officer has raised the stakes in the ongoing dispute over Barack Obama’s eligibility to be president, filing a criminal complaint against the “imposter” with the U.S. attorney’s office for the Eastern District of Tennessee.

Retired U.S. Navy officer Walter Francis Fitzpatrick III, who has run a campaign for two decades to uncover and try to correct what he believes are criminal activities within the military, accused the president of “treason.”

In his complaint addressed to Obama via U.S Attorney Russell Dedrick and Assistant U.S. Attorney Edward Schmutzer, Eastern District, Tennessee, Fitzpatrick wrote: “I have observed and extensively recorded invidious attacks by military-political aristocrats against the Constitution for twenty years.

“Now you have broken in and entered the White House by force of contrivance, concealment, conceit, dissembling, and deceit. Posing as an impostor president and commander in chief you have stripped civilian command and control over the military establishment.”

He cited the deployment of “U.S. Army active duty combat troops into the small civilian community of Samson, Ala.,” and said, “We come now to this reckoning. I accuse you and your military-political criminal assistants of TREASON. I name you and your military criminal associates as traitors. Your criminal ascension manifests a clear and present danger. You fundamentally changed our form of government. The Constitution no longer works.

“I identify you as a foreign born domestic enemy,” he wrote.

The 1975 graduate of the U.S. Naval Academy in Annapolis told WND that a short time after his complaint was filed he was visited by two U.S. Secret Service agents, but they left after telling him they perceived no threat to the president in the document.

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 some 350,000 others and sign up now!

Officials with the Knoxville office of the Secret Service told WND the only person who could release information to the media was on vacation and they would not comment on the issue.

Likewise, officials with the U.S. attorney’s office declined to respond to a WND request for a comment.

Fitzpatrick told WND the U.S. Justice Department needs to look into the issue.

WND reported this week that officials at the Justice Department, along with those at the Supreme Court, confirmed that documentation in a case challenging Obama’s eligibility had arrived and was scheduled for an evaluation.

That case is being handled by California attorney Orly Taitz, who is working through her Defend Our Freedoms Foundation to handle several cases raising questions over Obama’s qualification to be president under the Constitution’s demand that the office be occupied only by a “natural born” citizen.

Fitzpatrick said he has devoted his career fulltime to investigating issues in military justice and defending wrongly accused soldiers, sailors and Marines. His own career was torpedoed by a court-martial more than 20 years ago over his authorization of the use of a ship’s fund to sent an officer to the funeral for his brother, who had been killed by terrorists.

Fitzpatrick’s situation has been described not only on his own website but forum pages on other websites that deal with military issues.

He alleges his case was fabricated and even his signature was forged by officials connected to his case. He points to the fact that he ultimately retired and was awarded a military pension as support for his allegations.

But he says the new complaint against Obama should define the issue of the president’s eligibility.

“They either have to come and get me or get Mr. Obama’s eligibility proved. He has an officer in his military saying he is guilty of trespass on the Constitution,” Fitzpatrick told WND.

“They can recall me against my will to active duty,” he said. “I would refuse. It’s an illegal order by a man who is not by commander in chief.”

WND has reported on dozens of civil case legal challenges to Obama’s status as a “natural born citizen.” The Constitution, Article 2, Section 1, states, “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.”

Further, others question his citizenship by virtue of his attendance in Indonesian schools during his childhood and question on what passport did he travel to Pakistan three decades ago.

Hawaiian officials have confirmed they have a birth certificate on file for Obama, but it cannot be released without his permission, and they have not revealed the information it contains.

John Eidsmoe, an expert on the U.S. Constitution working with the Foundation on Moral Law, has told WND a demand for verification of Obama’s eligibility appears to be legitimate.

Officials for the Obama campaign repeatedly have refused to comment on the questions, relenting only once to call the concerns “garbage.”

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

My Note: Mr Obama, show us you are eligible, where is your birth certificate? – jschulmansr

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The Battle is Still Raging!

24 Tuesday Mar 2009

Posted by jschulmansr in 10 year Treasuries, 20 yr Treasuries, ANV, Austrian school, AUY, Bailout News, banking crisis, banks, bear market, Bollinger Bands, Bollinger Bands Saudi Arabia, Brian Tang, bull market, capitalism, CDE, CEF, central banks, China, Comex, commodities, Contrarian, Copper, Currencies, currency, Currency and Currencies, deflation, Dennis Gartman, depression, DGP, dollar denominated, dollar denominated investments, Doug Casey, economic, Economic Recovery, economic trends, economy, EGO, Fed Fund Rate, Federal Deficit, federal reserve, financial, follow the news, Forex, FRG, Fundamental Analysis, futures, futures markets, gata, GDX, GG, GLD, gold, Gold Bullion, Gold Investments, gold miners, GTU, hard assets, HL, How To Invest, How To Make Money, hyper-inflation, IAU, IMF, India, inflation, investments, Jeffrey Nichols, Jim Rogers, John Embry, Jschulmansr, Junior Gold Miners, Keith Fitz-Gerald, Latest News, majors, Make Money Investing, Marc Faber, market crash, Markets, Michael Zielinski, mid-tier, mining companies, mining stocks, monetization, Moving Averages, NAK, NGC, NXG, oil, PAL, palladium, Peter Grandich, Peter Schiff, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, protection, recession, risk, run on banks, safety, Sean Rakhimov, Short Bonds, silver, silver miners, SLW, small caps, sovereign, spot, spot price, stagflation, Stimulus, Stocks, SWC, TARP, Technical Analysis, The Fed, Tier 1, Tier 2, Tier 3, TIPS, U.S., U.S. Dollar, volatility, warrants, XAU

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ANV, Austrian school, AUY, Bailout News, banking crisis, banks, bear market, Bollinger Bands Saudi Arabia, Brian Tang, bull market, CDE, CEF, central banks, China, Comex, commodities, Copper, Currencies, currency, deflation, Dennis Gartman, depression, DGP, dollar denominated, dollar denominated investments, Doug Casey, economic, economic trends, economy, EGO, Federal Deficit, financial, Forex, FRG, futures, futures markets, gata, GDX, GG, GLD, gold, gold miners, GTU, hard assets, HL, hyper-inflation, IAU, India, inflation, investments, Jeffrey Nichols, Jim Rogers, John Embry, Jschulmansr, Keith Fitz-Gerald, majors, Marc Faber, market crash, Markets, Michael Zielinski, mid-tier, mining companies, monetization, Moving Averages, NAK, NGC, NXG, PAL, palladium, Peter Grandich, Peter Schiff, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, protection, recession, risk, run on banks, safety, Sean Rakhimov, silver, silver miners, SLW, small caps, sovereign, spot, spot price, stagflation, SWC, Technical Analysis, TIPS, U.S., U.S. Dollar, volatility, warrants, XAU

My apologies for the 2 day gap in posts, was attending some high-level economic conferences and was unable to make any posts. Well the rest of the retracement has occurred for the Stock Market so we are at a citical juncture here. Personally I think this is a huge Bear Trap. It is a pretty normal bull retracement in a bear market. everyone wants to believe the bottom is in and I better get in now while I can before I “miss” it. Everyone keeps forgetting what is about to happen. The dreaded “I” word. The hidden tax on all of our money, inflation. If you listen carefully the ones “in the know” are already preparing for it. Today’s first article shows the fact that inflation is coming and our biggest holder of U.S. debt is growing very concerned. On the gold and precious metals charts we are seeing a drop today which I think is mostly exuberance spilling over from the stock market with investors seeling some of their Gold to play the Stock Market. We may have a head and shoulders forming after a double top which would be bearish for Precious Metals and convince a lot of weak knees to give up and exit out of the markets. However I think this is going to be a reverse of the Stock Market and prices are consolidating while waiting for the buig Inflation shoe to drop. For my own portfolio I am hanging tight and using this as an opportunity to accumulate more shares in the Precious Metals Producers, and also slowing shifing some funds back into Oil related investments. One market that has some real potential soon will be Natural Gas as it has been lagging so far behind Crude and Gasoline. Be Patient and choose wisely! On that note I have recently found and became a member of INO.com. With their patented “triangle technology” trend analysis has never become easier! INO TV offers free – yes that’s right Free trading courses, news and video delivered right to your computer screen. INO Market Club offers brand new talking charts- charts that actually talk to you! Awesome! Good Investing! – jschulmansr

Now Check this Out… Talking Charts!

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

Sneak Peek At Our New

MarketClub Charts

March 20, 2009 · By Adam · Filed Under MarketClub Tips & Talk

This week we have something very special to show you. We are pulling back the curtains to give you a sneak peek at MarketClub’s new charting program.

There’s nothing to buy, so all you have to do is look and listen. Did I say listen? How can you listen to a chart? Well, these patent pending charts include our new “Talking Chart” feature.

Can you imagine a chart that actually talks to you and tells exactly what’s going on in any market you are looking at or following? Well, now you don’t have to imagine anymore as this is valuable feature is available at no extra cost in the latest version of MarketClub.

In addition to our “Talking Chart” feature, we have also improved our “Trade Triangle” technology so that it is even more powerful than before.

I think you’ll be impressed. Please take a few minutes out of your day to see how our new charts are revolutionary in many ways.

Please feel free to contact us on our blog about these new charts. We expected to go live with them any day now and you’re going to love them.

All the best,

Adam Hewison

President, INO.com
Co-creator, MarketClub

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

Claim a gram of FREE GOLD today, plus a special 18-page PDF report;

Exposed! Five Myths of the Gold Market and find out:

· Who’s been driving this record bull-run in gold?

· What Happens When Inflation Kicks In?

· Why most investors are WRONG about gold…

· When and How to buy gold — at low cost with no hassle!

Get this in-depth report now, plus a gram of free gold, at BullionVault

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

Source: Financial Post

Drop U.S. dollar as reserve: China

IMF asset instead

Alan Wheatley, Reuters Published: Tuesday, March 24, 2009

China proposed yesterday a sweeping overhaul of the global monetary system, outlining how the U. S. dollar could eventually be replaced as the world’s main reserve currency by the IMF’s Special Drawing Right.

The SDR is an international reserve asset created by the International Monetary Fund in 1969 that has the potential to act as a super-sovereign reserve currency, said Zhou Xiaochuan, governor of the People’s Bank of China.

“The role of the SDR has not been put into full play, due to limitations on its allocation and the scope of its uses. However, it serves as the light in the tunnel for the reform of the international monetary system,” he said.

Mr. Zhou diplomatically did not refer explicitly to the U. S. dollar. But his speech spells out Beijing’s dissatisfaction with the primacy of the U. S. currency, which Mr. Zhou says has led to increasingly frequent global financial crises since the collapse in 1971 of the Bretton Woods system of fixed but adjustable exchange rates.

“The price is becoming increasingly high, not only for the users, but also for the issuers of the reserve currencies. Although crisis may not necessarily be an intended result of the issuing authorities, it is an inevitable outcome of the institutional flaws,” Mr. Zhou said.

Jim O’Neill, chief economist at Goldman Sachs in London, said “over time, as the world is taken off the steroids of the over-leveraged U. S. consumer, you can’t have the same dollar dependence as we have had. But who can provide it? And the answer is, if it functioned properly, maybe the SDR could have a much bigger role,” he said.

A super-sovereign reserve currency would not only eliminate the risks inherent in fiat currencies such as the dollar — which are backed only by the credit of the issuing country, not by gold or silver — but would also make it possible to manage global liquidity, Mr. Zhou argued.

“When a country’s currency is no longer used as the yardstick for global trade and as the benchmark for other currencies, the exchange-rate policy of the country would be far more effective in adjusting economic imbalances. This will significantly reduce the risks of a future crisis.”

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

My Note: If you read between the lines, this does not bode well for the Treasury and Fed Debt offerings which will have to be issued to pay for all of the bailout, Tarp, and economic stimulus packages. This also doesn’t bode well for the U.S. Dollar in particular, but the other currencies also. As the largest holder of our debt, China is not happy about their investments losing value as the dollar depreciates. Next, China along with Russia are both buying and adding to their respective gold reserves! They are expecting massive inflation, why are we not hearing any talk about that in the nightly news?-jschulmansr

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Gold Stocks’ Time To Shine- Seeking Alpha

By: Brad Zigler of Hard Assets Investor

Real-time Inflation Indicator (per annum): 8.6%

In a recent column (“Gold Traders Whipsawed” at), we said we’d let you know when the gold/mining stock ratio tipped in favor of the miners. Well, we’re telling you now. The GLD/GDX ratio decisively broke through its 200-day moving average late last week.

The SPDR Gold Shares Trust (NYSE Arca: GLD) is a grantor trust affording its holders an undivided interest in vault bullion. The Market Vectors Gold Miners Index ETF (NYSE Arca: GDX) is a portfolio comprising nearly three dozen mining issues. With GLD’s price in the numerator, a decline in the quotient represents appreciation in gold stocks relative to gold itself.

Gold (GLD)/Gold Stocks (GDX) Ratio

Gold (<a href=

Both bullion and mining shares are higher for the year – GLD’s up 8.2% and GDX has risen 10.8% – but the momentum, for now at least, is with equities. Buoyancy in the broader equity market is providing lift for the miners, but it’s good to keep in mind that there’s a 75% correlation between GDX and GLD. Gold is, for the most part, gold.

Gold’s rising price has a leveraged effect on the stocks, as every dollar above a miner’s production cost flows to its bottom line.

Back in February, we highlighted one GDX component with very low production costs (“A Particularly Healthy Gold Stock“).

Is this the time to buy miners? Well, if you believe there’s more upside in gold (keep that correlation in mind) and want to ride the draft of the current equity market rally, perhaps. Taking a whack at GDX removes some of the stock-picking risk.

Reflation Update: The Real-time Inflation Indicator spiked 1.3% higher last week, reaching a level not seen since January.

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

Gold Holders – Be Patient – Seeking Alpha

By: Jordan Roy-Byrne of Trendsman Research

In the wake of the Fed’s announced record monetization, some gold bugs remarked about the significance of the date and decision. Moreover, the airwaves were littered with commodity bulls (not the familiar faces). There were a few non-gold bug analysts on live television showing currency from Zimbabwe and relating the Fed decision to what has transpired in Zimbabwe. Hyperbole aside, Fed policy of currency debasement and inflation of the money supply is hardly anything new. News is important in that it highlights and reinforces trends. It doesn’t create them.

Keen market watchers and seasoned Fed observers were hardly surprised at the Fed action. We all knew it was coming. The question was when. Remember, news highlights trends. Commodities had been forming a bottom for five months. Just two weeks prior we wrote about our positive near term view on commodities. How about Gold? It rose from trough to peak over 40% in just four months. It seems that only the shorts were surprised.

Now to expound upon last week’s missive, reflation isn’t always so advantageous for the precious metals, especially gold. That holds true for both the economy and markets. With stocks and commodities now recovering, money is to be put to work in those markets and also potentially diverted away from gold. We aren’t expecting a full-blown correction in Gold but rather a consolidation that, for a matter of time diverts attention (like an idling engine) away from itself as it prepares for major liftoff.

This is a temporary respite in a bear market and in an economy stuck in deflation. The first period of deflation (and strengthening dollar) in the Great Depression lasted three years. The Yen increased nearly 100% from early 1990 to early 1995. This bout of deflation isn’t even one year old yet. In other words, don’t expect commodities to enter a cyclical bull market anytime soon. There isn’t enough demand on the horizon. The recession and accompanying deflation should last into 2010. It may be a while before both run their course, thereby allowing an inflationary recovery to begin in earnest.

In conclusion, be aware that the current rebound in stocks and commodities, though large, is just a temporary recovery. A single news event won’t change that nor alleviate the current deflationary pressures on the economy. Finally, holders of gold and gold shares should be patient. The major breakout will occur this year, though not within the time expectations of the gold bugs.

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

My Note: When Gold and Precious Metals prices do take off and they will, it will be faster than anyone has anticipated. Use this time to buy now, increase your holdings. -Good Investing – Jschulmansr

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

Claim a gram of FREE GOLD today, plus a special 18-page PDF report; Exposed! Five Myths of the Gold Market and find out:

·        Who’s been driving this record bull-run in gold?

·        What Happens When Inflation Kicks In?

·        Why most investors are WRONG about gold…

·        When and How to buy gold — at low cost with no hassle!

Get this in-depth report now, plus a gram of free gold, at BullionVault

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

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/s, Do Your Due Diligence, Read All Prospectus/s and related information carefully before you make any investing decisions and/or investments. – jschulmansr

Lift-Off for Gold!

19 Thursday Mar 2009

Posted by jschulmansr in ANV, Austrian school, AUY, Bailout News, banking crisis, banks, bear market, Bollinger Bands Saudi Arabia, Brian Tang, bull market, CDE, CEF, central banks, China, Comex, commodities, Copper, Currencies, currency, deflation, Dennis Gartman, depression, DGP, dollar denominated, dollar denominated investments, Doug Casey, economic, economic trends, economy, EGO, Federal Deficit, financial, Forex, FRG, futures, futures markets, gata, GDX, GG, GLD, gold, gold miners, GTU, hard assets, HL, hyper-inflation, IAU, India, inflation, investments, Jeffrey Nichols, Jim Rogers, John Embry, Jschulmansr, Keith Fitz-Gerald, majors, Marc Faber, market crash, Markets, Michael Zielinski, mid-tier, mining companies, monetization, Moving Averages, NAK, NGC, NXG, PAL, palladium, Peter Grandich, Peter Schiff, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, protection, recession, risk, run on banks, safety, Sean Rakhimov, silver, silver miners, SLW, small caps, sovereign, spot, spot price, stagflation, SWC, Technical Analysis, TIPS, U.S., U.S. Dollar, volatility, warrants, XAU

≈ Comments Off on Lift-Off for Gold!

Tags

ANV, Austrian school, AUY, Bailout News, banking crisis, banks, bear market, Bollinger Bands Saudi Arabia, Brian Tang, bull market, CDE, CEF, central banks, China, Comex, commodities, Copper, Currencies, currency, deflation, Dennis Gartman, depression, DGP, dollar denominated, dollar denominated investments, Doug Casey, economic, economic trends, economy, EGO, Federal Deficit, financial, Forex, FRG, futures, futures markets, gata, GDX, GG, GLD, gold, gold miners, GTU, hard assets, HL, hyper-inflation, IAU, India, inflation, investments, Jeffrey Nichols, Jim Rogers, John Embry, Jschulmansr, Keith Fitz-Gerald, majors, Marc Faber, market crash, Markets, Michael Zielinski, mid-tier, mining companies, monetization, Moving Averages, NAK, NGC, NXG, PAL, palladium, Peter Grandich, Peter Schiff, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, protection, recession, risk, run on banks, safety, Sean Rakhimov, silver, silver miners, SLW, small caps, sovereign, spot, spot price, stagflation, SWC, Technical Analysis, TIPS, U.S., U.S. Dollar, volatility, warrants, XAU

It’s here, after the Fed’s decision to leave Interest Rates unchanged and to buy $300 billion in Treasuries, plus another $750 billion minimum in buying mortgage backed securities; the markets woke up this morning to the realization Inflation is coming back. Gold which closed down $29 yesterday but immediately shot up after the announcement on spot pricing. Today the market has caught up and as I speak Gold is up $66.90 at $956 oz. I hope you have been listening to this blog and have gotten in. If you were on the sidelines- this is the time to still get in as $1050 first target. After that $1250 oz so get in while you can. We have Lift-Off! – Good Investing- jschulmansr

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

Claim a gram of FREE GOLD today, plus a special 18-page PDF report; Exposed! Five Myths of the Gold Market and find out:

· Who’s been driving this record bull-run in gold?

· What Happens When Inflation Kicks In?

· Why most investors are WRONG about gold…

· When and How to buy gold — at low cost with no hassle!

Get this in-depth report now, plus a gram of free gold, at BullionVault

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

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Where is the Dollar heading? Part 1 — A Must See!

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

Gold rallies over 7% as Fed move fuels inflation fears

By Moming Zhou, MarketWatch Last update: 1:14 p.m. EDT March 19, 2009




NEW YORK (MarketWatch) -- Gold futures climbed to top $950 an ounce after 
the Federal Reserve pledged to purchase as much as $1.15 trillion in U.S. bonds 
and mortgage-backed securities to encourage lending, sparking worries of inflation 
ahead. "Looking ahead, we fear inflation. It may be that Dr. Bernankenstein has 
created a monster beyond his control," Michael Farr, president of Farr, Miller & 
Washington, said of Fed Chairman Ben Bernanke. 

The U.S. dollar's losses in the wake of the Fed's move also lifted gold prices, 
with investors buying gold as a hedge against inflation and a weaker dollar. 

Gold for April delivery surged $66.5, or 7.6%, to $955.6 an ounce on the 
Comex division of the New York Mercantile Exchange. It climbed to $963.5 
earlier in the session, the highest level in nearly one month. Gold's gain came 
after it lost $27.70 to end at $889.10 Wednesday, the lowest closing level 
in two months. 

Wednesday's floor trading ended before the Fed announced its decision. 
George Gero, a precious metals trader for RBC Capital Markets, called gold's 
quick reverse from an nearly $30 dollars to up more than $60 "shock and awe." 
The Fed's plan "could change [the] inflation outlook and result in a greater 
trading range," he added. 

Silver prices marked an even bigger rally. Silver for May delivery jumped 
12.7% to $13.445 an ounce. 

'Gold is well-placed to re-challenge $1,000 an ounce.'
— -- James Moore, TheBullionDesk.com

The Fed said it would buy longer-term Treasury bonds to help arrest a 
deepening slide in the U.S. economy, a surprise move that also sent stocks 
soaring and triggered violent moves in other markets. 

The Fed's move, one of several actions taken Wednesday aimed at making 
it less expensive to borrow money, doubled the amount of money the central 
bank has poured into the economy to try to stimulate economic activity. 
Read: The Fed Minutes. 

"The Fed's announcement of further quantitative easing triggered renewed 
inflation fears," wrote James Moore, a precious metals analyst at 
TheBullionDesk.com. "Gold is well-placed to re-challenge $1000 an ounce." 

Holdings in SPDR Gold Shares (GLD94.15, +1.06, +1.1%) jumped to 
1,084.33 tons Wednesday, up 15.28 tons from a day ago, according to 
the latest data from the fund. The total is nearly 80 tons higher than 
a month ago. 

In economic news Thursday, the number of people collecting 
state unemployment benefits jumped by 185,000 to a record seasonally-
adjusted 5.47 million in the week ending March 7, while new claims dipped 
by 12,000 to 646,000 in the week ending March 14, the Labor Department 
reported Thursday. See Economic Report on weekly jobless claims. 

On Wall Street, stocks meandered between gains and losses following 
Wednesday's rally. Asian and European stocks also moved higher. In energy 
trading, crude jumped more than 7% to about $52 a barrel. 

 

Moming Zhou is a MarketWatch reporter based in New York.
 
 


========================================================
 
Gold, T-Bonds, and Russia's Tu-160 Bombers -Seeking Alpha





A torrid tale of politics, gossip and a shiny, yellow threat to world peace...

Germany in 1944 could buy materials during the war only with gold. 
Fiat money in extremis is accepted by nobody...

- Alan Greenspan, then-Fed chairman, May 1999


FOR A WORLD-LEADING MARKET turning over $60 billion per day, 
London's wholesale gold dealers sure spook easy sometimes.


"I've just heard central banks have been selling. You hear anything?" 
asked one breathless contact of BullionVault on Wednesday... just 
before the Federal Reserve's $1.25 trillion shot in the arm gamed 
the gold price so hard, so fast, the conspiracy theorists at GATA 
should demand a Congressional hearing into Ben Bernanke's 
long Comex position.
 
More often than not, however, professional dealers get all 
aflutter about rumors of central-bank buying, not selling. In 
late 2008, it was supposed to be the Saudis. Last month it was 
the Russians – or so gossip claimed. Gossip that the Kremlin 
was only too happy to buoy.
 
Come mid-March, the People's Bank of China (PBoC) fired up 
the tittle-tattle – and again, as if on purpose – by forecasting 
that despite "safe haven" demand for the US dollar in 2009, 
gold prices would "fluctuate at high levels...possibly 
breaking through previous highs..."
 
Now this week a report by the oh-so-sexily-named 
Central Banking Publications says that out of 39 reserve 
managers controlling $3.2 trillion in official currency and 
bullion hoards – some 42% of the world total – well over 
one-in-two feels Buying Gold would make a smarter move 
today than it did this time last year.
 
So are the emerging powers hoarding gold today or not? 
What's a private citizen trying to look after his or her own 
to make of this chatter?
 
Well, as a rule, it means little or nothing for the price of gold 
day-to-day. And like GATA's claims – 
highly detailed, much derided – that Western governments 
regularly fix the gold market to cap its ascent, rumors of 
central-bank buying never prove quite as dramatic as 
central-bank action to either defend or debase the 
currencies against which it's priced instead.
 
Raise overnight interest rates to double digits, for instance 
as the Federal Reserve's Paul Volcker did in the early 1980s 
and non-yielding gold will tumble against high-yielding cash. 
 
Cut and hold rates at zero, in contrast...while creating, say, 
$1 trillion of fresh money in a 425-word statement, as Ben 
Bernanke did Wednesday...and you'll send Gold Prices higher, 
just as surely as the Maestro's apprentice strolling into London 
and buying 50 tonnes on his own account.
 
Investment-house analysts, meantime, are more focused on 
the possible 400-tonne sale mooted to help save the world-
saving International Monetary Fund (IMF). Yet the really big 
driver so far this year remains mutual-fund managers buying 
paper-shares in ETF trusts. Western coin buyers paying 
10% mark-ups (or more...!) are meantime wrestling with Asian 
scrap-jewelry sellers as to who can tip the balance of apparent 
supply and demand.
 
Large-scale gold purchases by Beijing or the Kremlin would 
anyway come at the pit-head, rather than on the open market, 
as they look to "slow and steady accumulation" in the words 
of UBS's highly-regarded John Reade recently, quoted by the 
Financial Times. 
 
Buying gold direct from domestic miners was 
how South Africa more than doubled its official reserves in the 
late 1960s. China and Russia now stand first and fourth among 
the world's gold-producing nations. Why announce their 
intentions, sticking a premium onto their dealer's offer, 
by going through the open market?
 
But behind the dealing-room noise, however, the cold facts 
of Asian, Middle East and Russian gold hoarding point to a 
deeper trend – an ugly if grand historical shift that finds its 
last cyclical turn almost 10 years ago to the day.
 
In mid-1999, the Swiss, European and UK central banks 
announced gold sales that did indeed shake the market. 
Back then, the Gold Price had been tumbling for the best 
part of two decades – thanks first to those double-digit US 
rates, and then to the fast-growing number of high-return 
alternatives for investment cash that sprouted worldwide 
as interest rates began to fall back but remained well north 
of the rate of inflation.
 
Prompted by investment-bank advisors and analysts, the 
late 20th century's heavy selling by West European 
governments coincided not only with both a multi-year 
low in the gold price and a bubble in earnings-free tech stocks. 
 
It also came together with Francis Fukuyama's "end of history" 
and Tony Blair – the UK prime minister then guilty of bombing 
neither Belgrade nor Baghdad – declaring his to be "the first 
generation [in Europe] that may live our entire lives without 
going to war or sending our children to war."
 
Put Blair's cant to one side (if you're not retching). Why did 
Europe's central banks have so much gold to sell in the first 
place? As BullionVault has noted before, the continent's 30-
year scrap between its big nation states was preceded and 
worsened by frantic gold hoarding amongst the major players. 
 
Because a government must trust in another's long-term survival 
when accepting its paper as payment. Whereas gold bullion, as 
former Fed chief Alan Greenspan famously said – and just before 
the UK announced its 415-tonne sales back in May 1999 as it 
happens – "still represents the ultimate form of payment in 
the world.
 
"Germany in 1944 could buy materials during the war only with 
gold. Fiat money in extremis is accepted by nobody. Gold is 
always accepted."
 
Why else did the Nazis march straight to seizing the central-bank 
vaults on reaching Vienna, Prague and Warsaw? Why else did the 
United States grow its hoard from 500 tonnes in 1900 to almost 
20,000 by the eve of World War Two...nationalizing privately-held 
gold on pain of a $10,000 fine or imprisonment when F.D.R. took 
office at the depths of the Great Depression? (See 
Hoarding for War, Vaulting for Victory for more...)
 
Now, two generations later, China's official gold reserves remain 
unknown and unknowable to outside observers. But it has become 
the world's No.1 gold-mining state thanks to the collapse in South 
African output. And the fresh deluge of US money debasement only 
confirms why Beijing's bankers "hate you guys" as one policy-maker, 
Luo Ping – director-general of 
China's Banking Regulatory Commission – put it last month.
 
"Once you start issuing $1 trillion or $2 trillion," he said to the 
Financial Times, five weeks before the Fed issued...ummm...$1.25 
trillion of new cash..."we know the Dollar is going to depreciate.
 
"So we hate you guys but there is nothing much we can do. Except for 
US Treasuries, what can you hold? Gold? You don't hold Japanese 
government bonds or UK bonds. US Treasuries are the safe haven. 
For everyone, including China, it is the only option."
 
Further west (but only a little, politically), Russia's official gold reserves 
have swelled by one-half this decade on the IMF's data, with new 
purchases peaking in August 2008 – just as the 58th army rolled into 
Georgia to defend South Ossetia's illegal, breakaway republic.
 
Under Vladimir Putin, the Kremlin said it wanted gold to grow from 
2.5% to fully one-tenth of its foreign currency reserves, meaning 
four-fold growth of its bullion hoard if not a collapse in its paper a
ssets. Just last month, the central bank stated that it was Buying Gold. 
On the available data, it had already added 109 tonnes to its hoard in the 
15 months starting Jan. 2007 at a cost of some $27 billion.
 
Oh sure, that's peanuts compared to the total $4 trillion-worth of gold 
now thought to be above-ground at today's prevailing prices. But the 
vast bulk of that gold is held as jewelry, not monetary units like coins 
or bars. And according to Tsar Putin himself back in 2007, before this 
burst of gold-hoarding really got started, the ratio of 
Russian government debt to its national gold reserves was already 
stronger than for any other state in Europe.
 
Never mind how wide of the mark that metric was; Putin's claim shows 
how much Gold Bullion matters to Russia's political confidence – a 
swagger only called into use when debt and foreign currencies slide 
into crisis. And then this week, the current Kremlin incumbent, Dmitry 
Medvedev, goes and announces that he's "rearming" Russia, using the 
very word – "rearmament" – that Europe fretted over and feared all 
through its short 20-year peace between the first and second world wars.
 
Specifically, "[I will] increase the combat readiness of our forces, first 
of all our strategic nuclear forces," Medvedev declared Tuesday, piling 
historical weight onto Monday's more Cold-War-style news that 
Roscosmos, the Russian space agency, is planning a manned lunar 
mission for 2015.
 
Oh, and then there was Sunday's news from Venezuelan socialist 
crackpot Hugo Chavez that Russia's long-range Tu-160 "Black Jack" 
bombers – each capable of carrying 12 nuclear warheads – are welcome 
to use the Caribbean island of La Orchila. You know, just for re-fuelling, 
cleaning the windscreen, emptying the ash-trays...but not ever as a 
permanent base.
 
So this isn't the Cuban missile crisis. Not yet at least. But the Kremlin's 
new saber rattling must still have caused a shock at the White House – 
just as it shocked anyone not tracking Russia's fast-growing gold reserves. 
Either that, or Team Obama is so smart, they were expecting some kind of 
pre-emptive strike ahead of the Fed's nuclear blast in the T-bond market.
 
"Foreign demand for long-term Treasuries has disappeared over the last 
few months," writes Brad Setser – an ex-US Treasury and IMF official, 
former economist for Nouriel Roubini's doom-and-gloom funsters at RGE 
Monitor, and a visiting or associate fellow pretty much everywhere worth 
having deep thoughts on big subjects. Studying the latest official data 
(released Monday) in his blog for the Council for Foreign Relations, "It is 
striking that for all the talk of safe haven flows to the US, foreign demand 
for all long-term US bonds has effectively disappeared," he explains. 
 
In particular, "Over the past three months, almost all the growth in 
China's Treasury portfolio has come from its rapidly growing holdings of 
short-term bills, not from purchases of longer-term notes...and it is also 
still selling [mortgage] Agency bonds."
 
All told, China continued to buy US Treasury debt; it is "the only 
option" for China, Russia and everyone else at this stage of the game, 
as Luo Ping wailed  to the FT last month. But of the $12.2 billion China 
purchased in January, fully 95% were short-term bills. "Russia also, 
interestingly, added to its holdings of short-term Treasury bills," Setser 
says.
 
And then, with the latest Treasury fund-flow data revealed...BOOM! 
The Federal Reserve explodes the Dollar by printing $300bn to buy 
30-year US debt, plus another $750bn to buy mortgage-agency bonds.
Someone's got to buy this stuff, and the forced buyers of this decade-
to-date are starting to tire. They might just be looking to Buy Gold for 
much more than "portfolio diversification" as well.
 
There. How's that for a gold-market rumor...?


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

Claim a gram of FREE GOLD today, plus a special 18-page PDF report; 

Exposed! Five Myths of the Gold Market and find out:

·        Who's been driving this record bull-run in gold?

·        What Happens When Inflation Kicks In?

·        Why most investors are WRONG about gold… 

·        When and How to buy gold — at low cost with no hassle!

Get this in-depth report now, plus a gram of free gold, at BullionVault 

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

Where is the Dollar heading? Part 1 - A Must See!

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

 

My Note:  Rumors or not Gold is up $69.70 On the Day! - 
Good Investing - Jschulmansr

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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/s, Do Your Due Diligence, Read All Prospectus/s and related information 
carefully before you make any investing decisions and/or investments. –  jschulmansr







 
 

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Scammed Again By Uncle Sam?

18 Wednesday Mar 2009

Posted by jschulmansr in 10 year Treasuries, 20 yr Treasuries, Bailout News, banking crisis, banks, bear market, central banks, China, Copper, Currencies, currency, Currency and Currencies, depression, dollar denominated investments, economic, Economic Recovery, economic trends, economy, Fed Fund Rate, Federal Deficit, federal reserve, Finance, financial, follow the news, Forex, Fundamental Analysis, futures, futures markets, gata, GLD, gold, Gold Bullion, Gold Investments, gold miners, Gold Price Manipulation, hard assets, How To Invest, How To Make Money, hyper-inflation, IMF, India, inflation, Investing, investments, Japan, Jschulmansr, Latest News, Long Bonds, majors, Make Money Investing, manipulation, Market Bubble, market crash, Markets, mid-tier, mining companies, mining stocks, monetization, oil, palladium, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, recession, Saudi Arabia, Short Bonds, silver, silver miners, Silver Price Manipulation, spot, spot price, stagflation, Stimulus, Stocks, TARP, Tier 1, Tier 2, Tier 3, TIPS, Today, U.S., U.S. Dollar

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ANV, Austrian school, AUY, Bailout News, banking crisis, banks, bear market, Bollinger Bands Saudi Arabia, Brian Tang, bull market, CDE, CEF, central banks, China, Comex, commodities, Copper, Currencies, currency, deflation, Dennis Gartman, depression, DGP, dollar denominated, dollar denominated investments, Doug Casey, economic, economic trends, economy, EGO, Federal Deficit, financial, Forex, FRG, futures, futures markets, gata, GDX, GG, GLD, gold, gold miners, GTU, hard assets, HL, hyper-inflation, IAU, India, inflation, investments, Jeffrey Nichols, Jim Rogers, John Embry, Jschulmansr, Keith Fitz-Gerald, majors, Marc Faber, market crash, Markets, Michael Zielinski, mid-tier, mining companies, monetization, Moving Averages, NAK, NGC, NXG, PAL, palladium, Peter Grandich, Peter Schiff, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, protection, recession, risk, run on banks, safety, Sean Rakhimov, silver, silver miners, SLW, small caps, sovereign, spot, spot price, stagflation, SWC, Technical Analysis, TIPS, U.S., U.S. Dollar, volatility, warrants, XAU

Today Gold dropped $27.70 down to support at the $885 – $890 levels. We need to ask ourselves why? I would like to propose that we are absolutely being “Scammed by Uncle Sam!”. Let me explain… Again today Gold Lease Rates (1 month) are negative. “So what’s the big deal about that?” you are asking. The big deal is this, when the lease rate is negative it means that someone will actually pay you a fee in addition to giving a Gold loan. Now you or I or anybody with a sane mind is not going to make a loan to you for a fee (they have to pay), to borrow Gold from them. This doesn’t even count the risk of never being repaid and losing the Gold! However, (and you can read more detail in today’s first article); this provides a way for someone to supress Gold prices if they wanted to, and you guessed who – “Scammed Again By Uncle Sam”. While the first article today explains “the how”, I am going to venture the “why”. Right now if you pay attention to what is going on, the U.S. and the Fed desperately need to appease some large holders of our debt and dollars by making a way for them to convert their dollar holdings into Gold. They also realize that their current (US) monetary policies are going to force Precious metals prices (especially Gold) much higher than today’s $1000 level while at the same time deteriorating the value of the U.S. dollar. By supressing the price of Gold temporarily the Fed and Treasury will benefit as follows. First as the foreign holders sell off their Treasuries and Bonds this creates a demand for U.S. Dollars to fulfill the transactions. This in turn brings those Dollars back into our economy helping to create more liquidity. Now depending on the velocity of money, that can be in itself inflationary. However with the velocity of money being dependent on Capital Investment, what are we currently seeing? Right now there is no real demand for new goods and services, which means that there is no real incentive to invest in New Factories, Expanding current production levels, or even opening new businesses. So then what happens? The holders instead of sitting on their dollars look for safe places to park those dollars until the economy turns around again. Where do they park the money, banks have proven to be risky?, the stock market? even riskier still, so they park their money in a “safe haven”, buying up Treasuries and Bonds. This helps to offest the selling pressure on Treasuries caused from the original U.S. Debt holder’s sales, and it also creates further demand for U.S. Dollars. With the unprecendented spending currently going on by Mr. Obama and cohorts, the Fed and the Treasury needs to create an increased demand for all of the new Debt Issuances coming into the market. ( They are also creating further false demand buy buying up their own new debt (300 Billion purchase just announced today). In my mind these purchase in the long term will also create more inflation. So currently the U.S. government has every reason to keep trying to artificially depress the Gold Prices. Sooner or later however their Gold price manipulation will explode in their faces as already seen in a smaller degree, the demand for Gold is snatching up all of the physical gold being dumped. That is why we will bounce off of these price levels for the fourth time. When it breaks and when inflation (already here- currently running 8% to 15%) is officially acknowledged,watch out Gold will shoot up like the latest Space shuttle launch! Use this limited time frame to keep adding to and accumulating your long positions in Precious Metals- Good Investing! – jschulmansr

ps- For complete details and Information on how Gold Prices are being manipulated and the Silver market also- go to GATA.org.

pps-****NEWS FLASH****

Gold is now up $26.60 New York Spot at $942.50 after Fed Announcement of Leaving Interest Rates Unchanged!

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

Claim a gram of FREE GOLD today, plus a special 18-page PDF report; Exposed! Five Myths of the Gold Market and find out:

· Who’s been driving this record bull-run in gold?

· What Happens When Inflation Kicks In?

· Why most investors are WRONG about gold…

· When and How to buy gold — at low cost with no hassle!

Get this in-depth report now, plus a gram of free gold, at BullionVault

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

A new site that is in pre-launch state that will become a virtual world – chat, shop, play, videos, etc. Anyways they are giving free shares (that should become actual company shares) to anyone who signs up and more shares if you refer people. To Sign up (Free) and receive your shares click here.

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Gold Price Manipulation More Blatant- Numismaster.com

By: Patrick A. Heller of Numismater.com

On Friday, March 6, gold lease rates turned negative for the day. What that means is that anyone who wanted to lease gold would actually be paid a fee in addition to getting a free gold loan.

No sane person would choose to lose money loaning physical gold, in addition to the risk of never getting the gold back from the other party. However, if someone (such as the U.S. government) wanted to suppress the price of gold, this is one tactic to try to accomplish that purpose.

I can come to no other conclusion than that a large quantity of physical gold surreptitiously appeared on the market on March 6 with the sole purpose to drive down the price of gold. The quantities were large enough that they almost certainly could not come from private parties. With most of the world’s central banks now being net buyers of gold reserves, they would not be the source of this gold. By process of elimination, the suspicion falls upon the U.S. government as the ultimate party responsible for this blatant action to manipulate the price of gold.

Of course, the U.S. government would not want to be identified as the cause of this leasing anomaly. Instead, such manipulation was almost certainly conducted by multiple trading partners of the U.S. government.

This sledge hammer tactic worked at driving the price of gold further away from the $1,000 level – at least temporarily. Last week, spokesmen for a number of troubled U.S. companies were suddenly issuing statements about a return to profitability (such as Citigroup and JPMorgan Chase) or not needing further government bailouts (such as General Motors). Stock values climbed as gold’s price retreated.

But (and there was always a but), these massive efforts to suppress the price of gold seem to be running out of steam. First off, these “positive statements” had serious qualifiers such as the chairman of Citigroup claiming that, ignoring extraordinary items like bad loans, the bank earned an operating income in the first two months of 2009.

Then insurance company AIG bowed to pressure and revealed that a huge portion of the $150+ billion in bailout funds it had received had really been passed along as bailout money to other companies (including Citigroup and JPMorgan Chase). In fact, almost all of this money was redirected to the U.S. government’s trading partners who probably have been complicit in the manipulation of the gold price.

Once the public learned that such companies have received more federal government bailout money that previously revealed, the stock market rally stalled. The price of gold started to recover. Unless the U.S. government can come up with another tactic quickly, I expect the price of gold to generally rise over time.

In the meantime, demand for physical gold has taken off again. The U.S. Mint is so far behind at meeting demand for bullion gold and silver American Eagle issues that it last week announced an indefinite suspension of plans to strike 2009-dated proof and uncirculated versions for collectors. Even further, the U.S. Mint also announced that it would not even accept orders from primary distributors for any gold or silver Eagles this week.

On the wholesale market, supplies of gold and silver American Eagles quickly disappeared. The premiums of these coins shot upward. Some retailers now have to decline orders as they don’t know when they might be able to fill them or what premiums they will have to pay to acquire merchandise. My earlier prediction that by the end of April it would become almost impossible to find any physical gold or silver bullion-priced items for reasonable delivery is starting to come true.

At the American Numismatic Association’s National Money Show in Portland, Ore., this past weekend, demand for U.S. gold $10s and $20s was still solid. With some such collector coins now trading at all-time high prices, however, some dealers are advising their customers to consider selling or swapping for gold bullion. As a consequence, I think most of the surge in prices has already occurred. It might be a good time to take a profit.

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

My Note: Very Interesting Advice! “take profit on collector coins and buy bullion”-jschulmansr

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

What’s Another $1.5 Trillion? – Seeking Alpha

By: Tim Iacono of Iacono Research

The Federal Reserve announced today that they will join the central banks of England and Switzerland, printing money out of thin air to buy long-term government debt so as to keep interest rates low and boost lending in their ongoing attempt to revive an economy that is faltering badly due to an orgy of credit and debt a few years ago.

Apparently the gold market and currency markets have heard the news (the chart to the right will be updated as needed over the next hour or so – update #1 from $925 to $932 already complete).

The printing presses will be working ’round the clock to fund purchases of up to $300 billion in long-term Treasuries over the next six months which, in combination with an increase in purchases of mortgage backed securities and agency debt also announced today (an additional $850 billion total), should see the Fed’s balance sheet swell to once unthinkable levels.

Lest anyone think that any of this is getting a bit out of control, the central bank also provided assuring words that they will keep an eye on the “size and composition” of their balance sheet in light of economic developments.

In what appeared to be just an afterthought, relegated to the third paragraph after occupying the top spot for years, the Fed also announced that short-term interest rates will be left at the freakishly low level of between zero and 0.25 percent and that they won’t be going up anytime soon.

And if this doesn’t work, we might just see the Fed’s balance sheet hit that $10 trillion level that someone mentioned the other day.

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

“Nothing will unnerve the paper gold shorts more quickly and do more to undercut their confidence than to strip them of the real metal and force them to come up with more hard gold bullion to make good on deliveries. “Stand and Deliver or Go Home” should be the rallying cry of the gold longs to the paper gold shorts.” –Trader Dan Norcini

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

My note: Only one answer to being scammed buy more! Please take advantage of the price now, they may try to bump it down one more time, but we are going back and testing all time highs $1050 level, if a “short squeeze” develops then $1250. Jump aboard now! -Good Investing – jschulmansr

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

Claim a gram of FREE GOLD today, plus a special 18-page PDF report; Exposed! Five Myths of the Gold Market and find out:

·        Who’s been driving this record bull-run in gold?

·        What Happens When Inflation Kicks In?

·        Why most investors are WRONG about gold…

·        When and How to buy gold — at low cost with no hassle!

Get this in-depth report now, plus a gram of free gold, at BullionVault

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

A new site that is in pre-launch state that will become a virtual world – chat, shop, play, videos, etc. Anyways they are giving free shares (that should become actual company shares) to anyone who signs up and more shares if you refer people. To Sign up (Free) and receive your shares click here.

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

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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/s, Do Your Due Diligence, Read All Prospectus/s and related information carefully before you make any investing decisions and/or investments. – jschulmansr

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Are You Ready To Rock?

17 Tuesday Mar 2009

Posted by jschulmansr in ANV, Austrian school, AUY, Bailout News, banking crisis, banks, bear market, Bollinger Bands Saudi Arabia, Brian Tang, bull market, CDE, CEF, central banks, China, Comex, commodities, Copper, Currencies, currency, deflation, Dennis Gartman, depression, DGP, dollar denominated, dollar denominated investments, Doug Casey, economic, economic trends, economy, EGO, Federal Deficit, financial, Forex, FRG, futures, futures markets, gata, GDX, GG, GLD, gold, gold miners, GTU, hard assets, HL, hyper-inflation, IAU, India, inflation, investments, Jeffrey Nichols, Jim Rogers, John Embry, Keith Fitz-Gerald, majors, Marc Faber, market crash, Markets, Michael Zielinski, mid-tier, mining companies, monetization, Moving Averages, NAK, NGC, NXG, PAL, palladium, Peter Grandich, Peter Schiff, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, protection, recession, risk, run on banks, safety, Sean Rakhimov, silver, silver miners, SLW, small caps, sovereign, spot, spot price, stagflation, SWC, Technical Analysis, TIPS, U.S., U.S. Dollar, volatility, warrants, XAU

≈ Comments Off on Are You Ready To Rock?

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As I have mentioned before, we are going to see the calls that the stock market bottom is in place and everybody is going to give up on precious metals. Yesterday, I showed you proof of my predictions on the Stock Market side, today’s articles include proof of the hasty exit of all the so called “Gold Bulls”. Being a contrarian by nature this is a heaven sent gift! So I ask are You, yes You! Ready To Rock? This is the time to BUY, BUY, Buy! Gold, Silver, Platinum and Paladium. Oh- don’t forget to start putting in your positions in Oil too! By the end of the year as I said yesterday, $1250 – $2000 Gold, $25-$75 Silver, I think approximately $250 – $400 Paladium, and Platinum $2250 -$3000. Dare Something Wiorthy Today Too! Buy Precious metals and Oil , all forms from Stocks, to Bullion, to Coins, and to Etf’s. Each one will truly bring you returns you’ll be able to brag about to your children, grandchildren, and great-grandchildren. Plus even if they all don’t rise so high you still have yourself a nice little hedge against the Hyper maybe even Stagflation! Get in with at least 10% – 30% of your portfolio dollars, cost average if you like, the important thing is to get in and get in now! Are You Ready To Rock? As Always, Good Investing! – jschulmansr

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

Claim a gram of FREE GOLD today, plus a special 18-page PDF report; Exposed! Five Myths of the Gold Market and find out:

· Who’s been driving this record bull-run in gold?

· What Happens When Inflation Kicks In?

· Why most investors are WRONG about gold…

· When and How to buy gold — at low cost with no hassle!

Get this in-depth report now, plus a gram of free gold, at BullionVault

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

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Gold Timers are Running for the exits, which is a good sign – MarketWatch

By: Mark Hulbert of MarketWatch

ANNANDALE, Va. (MarketWatch) — Call it the retreat of the gold bugs.

Over the past three weeks, the editor of the average gold timing newsletter I monitor has hastily jumped off the bullish bandwagon. And a not insignificant number have taken the occasion to furthermore jump onto the bearish bandwagon.

At least from the point of view of contrarian analysis, this is good news for gold.

Consider 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. The HGNSI’s latest reading is minus 16.5%, which means that the editor of the average gold timing newsletter is recommending that his subscribers allocate 16.5% of their gold portfolios to shorting the market.

Three weeks ago, in contrast, the HGNSI stood at 60.9%. So in just 15 trading sessions, the average recommended gold market exposure has fallen by more than 77 percentage points.

What sins did gold bullion commit to elicit this huge of a reaction? Failing to rise convincingly above the psychologically important $1,000 barrier, apparently: Spot gold in the futures market was able to close above that level for just one day (Feb. 20), and only barely at that ($1,001.70). And it then dropped.

Still, gold didn’t fall off a cliff. It’s currently just 8% below its Feb. 20 close, after all. Declines of that magnitude typically do not lead to such marked shifts in sentiment from bulls to bears.

Just take sentiment in the stock market. The Dow Jones Industrial Average ($INDU:

To be sure, the 4.5 percentage point drop in recommended stock market exposure is itself surprisingly modest, which is one of the reasons that contrarians suspect that the bear market is not yet over. (Read my March 2 column.)

But the plunge in gold sentiment has been as exaggerated as the drop in stock sentiment has been muted. Contrarians therefore believe that gold’s recent decline is more likely to prove a correction within a longer-term up move than the beginning of a major bear market.

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: Are You Ready To Rock? Now for Silver…

Gold bullishly buoyed by news: – Got Gold Report- Stockhouse.com

By: Gene Arensberg of Gold Newsletter.com

Silver taking cues from gold

ATLANTA — Whether or not gold actually responds to it short term, potentially bullish news surfaced for gold and silver this past week. The Swiss National Bank stunned the European capital and forex markets, hammering their own currency in the first salvo of probable competitive currency debasement across the pond. Who would have thought the Swiss – Switzerland! – would fire the first shot in the battle to weaken their own currency?

Apparently the price of chocolate and fine watches is going up in Zurich.

Swiss currency intervention, along with the U.K. currency printing presses in overdrive are sure to lend more, not fewer investors to seek a safe haven from the paper currencies of the world. Swiss devaluation of the franc is an open invitation to other central banks in Europe to follow suit.

Sooner or later the purchasing power of government paper of all descriptions should be taking a back seat to gold on such news. Gold, the one pure “currency” and always trusted measure of value for over four millennia, cannot be printed by fiat and can’t be produced fast enough to flood the market with too much of it, no matter the price.

To add supreme insult to injury, the Swiss are also apparently capitulating to international pressure and will now relax their formerly air-tight bank secrecy regulations to the great consternation of anyone who holds funds there in special, formerly uber-secret, numbered accounts.

China Syndrome meets “Rollover”

This past week Wen Jiabao, China Prime Minister, reportedly said in remarks following his annual press conference, “We have lent a massive amount of capital to the United States, and of course we are concerned about the security of our assets.”

So the Chinese prime minister is publicly voicing the obvious. China probably now wishes it had invested a bit larger portion of its nearly $2 trillion in forex reserves in gold metal rather than in government paper promises. Rumors of Chinese gold buying are already crawling around the internet. With statements like that from high Chinese officials those rumors will grow wings.

Jiabao continued, “To speak truthfully, I do indeed have some worries… I would like, through you (the press), to once again request America to maintain their credit worthiness, keep their promise and guarantee the safety of Chinese assets.”

China certainly knows that if it were to sell off their U.S. bonds too quickly they would only be hurting themselves, but isn’t it rather bullish for gold to know that the Chinese are openly worried about their approximately $1.4 trillion in U.S. debt instruments? Is it more or less likely that China will be adding a higher percentage of gold to their now tiny reserves knowing that? It won’t be all that much of a wonder should gold seem to have a firmer bid under it for some time to come under the circumstances.

Moving on to other anecdotal news, think people are not changing their behavior during this global financial crises? Well, consider that according to news reports gun sales in the United States are at 20-year highs and some types of ammunition have become scarce as people become more fearful of the potential for civil unrest. We have a bullet bull market underway.

Among other gold bullish news, last week we saw a confrontation in international waters between a U.S. intelligence gathering ship and the Chinese navy. In yet another test of the new U.S. president Russia provocatively said they “could use bases in Cuba and Venezuela” for their long-range strategic bombers and that’s just a taste of what the wire services were serving up.

Gold and silver more or less moved sideways over the past week. The Big Markets staged an old fashioned bear market short covering rally up from way-oversold, but the news sure seemed more, not less supportive for precious metals since the last Got Gold Report. It makes one want to dive into the indicators to see what they are, well, indicating.

Gold ETFs

Gold once again tested the $890s and was once again repelled upward from that zone. That is the third time in six weeks that gold has tested the $890s and bounced. As we note that, we also have to take note that cash prices turned in a lower high for the week and a slightly lower low. The $890s have now become the gold bull’s defensive zone and the bear’s prime target. (See the gold chart linked below for more technical commentary.)

SPDR Gold Shares, [GLD], the largest gold ETF, added another 27.83 tonnes of allocated gold bars to its gold holdings over the past week. So far this year GLD has added a stunning 276.59 tonnes of gold to show 1,056.82 tonnes of gold bars held for its investors by a custodian in London. As of the Friday 3/13 close the metal held by the trust was worth $31.5 billion.

Source for data SPDR Gold Trust

Repeating from the last full report two weeks ago: “Clearly the majority of GLD investors are not convinced there is material weakness ahead for gold – at least not yet.”

Indeed, as gold retraced from the $1,000 mark to the $890s, instead of abundant selling pressure forcing GLD to redeem shares and sell gold, we have to take note of the opposite. It is quite clear that investors have so far taken advantage of the dip in gold prices to add more GLD, not less.

So that the price of each share of GLD tracks very closely with the price of 1/10 ounce of gold (less accumulated fees), authorized market participants (AMPs) have to add metal and increase the shares in the trading float when buying pressure strongly outstrips selling pressure. The reverse occurs when selling pressure overwhelms buying pressure.

Barclay’s iShares COMEX Gold Trust [IAU] gold holdings declined a small 0.92 tonnes to 66.86 tonnes of gold held for its investors. Gold holdings for the U.K. equivalent to GLD, Gold Bullion Securities, Ltd. added 1.23 tonnes over the past week, to show 130.89 tonnes of gold held as of Friday, reversing a similar reduction the week prior.

All of the gold ETFs sponsored by the World Gold Council showed a collective increase of 29.54 tonnes to their gold holdings to 1,229.42 tonnes worth $36.7 billion USD as of the Friday 3/13 cash market close.

SLV Metal Holdings

Silver consolidated its downward thrust, turning in an “inside week” with a slightly lower high ($13.41) and a slightly higher low ($12.48), while bouncing neatly off the popular 50-day moving average which is currently rising through the $12.40s. The white metal closed the week on an advance with a last Friday 3/13 trade of $13.20 on the cash market. (See the silver chart linked below).

For the week metal holdings for Barclay’s iShares Silver Trust [SLV], the U.S. silver ETF, held steady at 7,898.37 tonnes of silver metal held for its investors by custodians in London. SLV reported a reduction in metal holdings of 159.42 tonnes the prior week.

Source for data Barclay’s iShares Silver Trust.

Still no new custodian for SLV

As of Friday, March 13, SLV still had not filed an amendment either naming an additional custodian or increasing the amount of silver storage available under the current custodian agreement with JP Morgan Chase London.

We remain vigilant, because there is very little “room” under the current custodian agreement for SLV to add additional silver as we reported in the last Got Gold Report. There is no doubt ample silver available in London (for now) from one of the other London Bullion Market Association (LBMA) members with large metal holdings in London warehouses, but so far we don’t know whom SLV will name as the additional custodian or sub-custodian and we don’t know how much silver “storage” that new custodian will be able to provide.

U.S. banks dominate the COMEX

While those of us with a long bias can take some comfort in the larger reductions of net short positioning by the commercial traders (covered in the full Got Gold Report), we need to remember that as of right now the short side of the market is literally dominated by just two big U.S. banks. When the regulators, the Commodities Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC), consent to allow just two traders to take overly large positioning on either side of a particular market, it leads to mistrust and angst among the public and market commentators. Such overwhelmingly large positioning also provides ammunition to conspiracy-minded commentators who constantly blame price movements of silver (and gold) on deliberate action by sinister members of a secretive “cartel” intent on suppressing the price of gold and silver.

Some of the individuals advancing the notion of a conspiracy to suppress precious metals prices are bright, articulate and bring compelling evidence and research to the discussion regularly. We’ll undoubtedly have much more about that in future reports, but for now it has become increasingly difficult for the industry and regulators to ignore the so-called “conspiracy camp” and its growing legions of members.

Regardless if one believes in menacing cartel theories, and regardless of whether or not one takes the opposite view, (that most or all of the very large net short positioning of the two very large U.S. banks in silver futures are actually legitimate hedges offsetting long positions in OTC markets on behalf of the various clients of the banks), the current positioning by the two banks in COMEX silver futures is an example of an enormously concentrated futures position.

According to the latest Bank Participation in Futures and Options Markets report, as of March 3, 2009, two U.S. banks held zero long and 30,838 contracts short with silver then at $12.83 and with 93,051 COMEX 5,000-ounce contracts open. So, just two banks held net short positions equal to 33.14% of all the open contracts on the largest futures bourse in the world. The chart below shows the net positioning of the U.S. banks relative to the total number of all open contracts for silver on the COMEX, division of NYMEX.

According to CFTC COT reports, during that 3/3 reporting week all COMEX commercial traders as a group – all of them – were collectively net short a total of 38,704 contracts, so just two very large U.S. banks held a shocking 79.68% of all the commercial net short positioning on the COMEX. The graph below shows the two U.S. banks net short positioning relative to all COMEX commercials net short positioning since 2006.

One potential problem with allowing overly-large positioning by just a few players is the potential for those elite traders to get into the position of having to trade in a particular direction in order to protect their position. The incentive for a trader running 1,000 contracts to try to move the market with the weight of his own trading would certainly be much less than a trader (or two traders in this case) with 30,000 contracts of one-way exposure.

Sure, the COMEX is not the only market for silver in the world, but trading on the COMEX does indeed influence the trading for silver on all the other world markets, including the larger OTC markets based primarily in London. And sure, if silver were to be man-handled too low for too long buyers, acting in their own self interest, would step in and buy it back up to reality over time. Haven’t they already done exactly that in the real physical silver markets given the insanely high premiums for most physical silver products?

One could argue the silver market is relatively small, and therefore prone to manipulation because it doesn’t take all that much capital to move the futures markets. Perhaps over short periods of time it actually is. But, this report leans toward the idea that the silver market is global and deep enough to discourage even the larger players from messing around with it too much or too long.

On the other side of that silver coin, we also believe that the amount of physical silver available for investment by new investors is rapidly approaching a critical inflection point in the not-too-distant future. If we know it, anyone who would short the market knows it even better. We have to conclude that anyone who would consistently attempt to manipulate the silver market downward in the face of obvious and material supply constriction is either very stupid or is a phantom of coincidence.

With that in mind, in an era when regulators allowed the Bernard Madoff scam to go unchecked for many years, even though they were handed the scamster on a silver platter by others in the same business eight or nine years ago, a scam ruining hundreds or thousands of innocent investors; in a period when ANY silver product being sold on the street carries with it extremely high premiums due to overwhelming public demand; in a period when investors have had their confidence severely shaken in all markets; can the COMEX continue to allow such one-sided and concentrated trading action to continue? Perhaps more to the point, shouldn’t the COMEX explain publicly why it has allowed that very concentrated short positioning by just two U.S. banks?

Perhaps with more clarity would come more confidence.

Got Gold Report Charts

2-year weekly gold

2-year weekly silver

3-year weekly HUI

2-year weekly Gold:HUI ratio

That’s it for this excerpt of the full Got Gold Report. GoldNewsletter.com subscribers enjoy access to all the Got Gold Report technical analysis and commentary as well as Brien Lundin’s timely advice and analysis of specific resource companies.

Until next time, as always, MIND YOUR STOPS.

The above contains opinion and commentary of the author. Each person should study the issues carefully and, as always, make their own informed decisions.

Disclosure: The author currently holds a long position in iShares Silver Trust, net long SPDR Gold Shares and holds various long positions in mining and exploration companies.

Are You Ready To Rock? – Good Investing! – jschulmansr

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A new site that is in pre-launch state that will become a virtual world – chat, shop, play, videos, etc. Anyways they are giving free shares (that should become actual company shares) to anyone who signs up and more shares if you refer people.

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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/s, Do Your Due Diligence, Read All Prospectus/s and related information carefully before you make any investing decisions and/or investments. – jschulmansr

Claim a gram of FREE GOLD today, plus a special 18-page PDF report; Exposed! Five Myths of the Gold Market and find out:

· Who’s been driving this record bull-run in gold?

· What Happens When Inflation Kicks In?

· Why most investors are WRONG about gold…

· When and How to buy gold — at low cost with no hassle!

Get this in-depth report now, plus a gram of free gold, at BullionVault

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

Dow Jones Industrial Average

$INDU 7,225.89, +8.92, +0.1%) dropped a comparable amount — 8%– between Feb. 26 and March 9. But the average recommended stock market exposure among short-term stock market timing newsletters fell over this period by a grand total of just 4.5 percentage points. That’s a far cry from the 77 percentage points by which gold sentiment fell during its recent 8% decline.

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How to Catch A Fool

16 Monday Mar 2009

Posted by jschulmansr in ANV, Austrian school, AUY, Bailout News, banking crisis, banks, bear market, Bollinger Bands Saudi Arabia, Brian Tang, bull market, CDE, CEF, central banks, China, Comex, commodities, Copper, Currencies, currency, Dan Norcini, deflation, Dennis Gartman, depression, DGP, dollar denominated, dollar denominated investments, Doug Casey, economic, economic trends, economy, EGO, Federal Deficit, financial, follow the news, Forex, FRG, Fundamental Analysis, futures, futures markets, gata, GDX, GG, GLD, gold, Gold Bullion, Gold Investments, gold miners, GTU, hard assets, HL, How To Invest, How To Make Money, hyper-inflation, IAU, India, inflation, Investing, investments, Jeffrey Nichols, Jim Rogers, Jim Sinclair, Joe Foster, John Embry, Jschulmansr, Junior Gold Miners, Keith Fitz-Gerald, Latest News, majors, Make Money Investing, Marc Faber, market crash, Markets, Michael Zielinski, mid-tier, mining companies, mining stocks, monetization, Moving Averages, NAK, NGC, NXG, oil, PAL, palladium, Peter Grandich, Peter Schiff, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, protection, recession, risk, run on banks, safety, Sean Rakhimov, silver, silver miners, SLW, small caps, sovereign, spot, spot price, stagflation, Stimulus, Stocks, SWC, TARP, Technical Analysis, Ted Bultler, TIPS, Today, U.S., U.S. Dollar, volatility, warrants, XAU

≈ Comments Off on How to Catch A Fool

Tags

ANV, Austrian school, AUY, Bailout News, banking crisis, banks, bear market, Bollinger Bands Saudi Arabia, Brian Tang, bull market, CDE, CEF, central banks, China, Comex, commodities, Copper, Currencies, currency, deflation, Dennis Gartman, depression, DGP, dollar denominated, dollar denominated investments, Doug Casey, economic, economic trends, economy, EGO, Federal Deficit, financial, Forex, FRG, futures, futures markets, gata, GDX, GG, GLD, gold, gold miners, GTU, hard assets, HL, hyper-inflation, IAU, India, inflation, investments, Jeffrey Nichols, Jim Rogers, Joe Foster, John Embry, Keith Fitz-Gerald, majors, Marc Faber, market crash, Markets, Michael Zielinski, mid-tier, mining companies, monetization, Moving Averages, NAK, NGC, NXG, PAL, palladium, Peter Grandich, Peter Schiff, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, protection, recession, risk, run on banks, safety, Sean Rakhimov, silver, silver miners, SLW, small caps, sovereign, spot, spot price, stagflation, SWC, Technical Analysis, TIPS, U.S., U.S. Dollar, volatility, warrants, XAU

A new week and I have a new warning… What I mentioned before in previous posts is starting to happen. We are now starting to hear the “bottom” is coming in place for Stocks and the Economy, everyone from Benanke to many “name” financial advisors are starting to jump on the bandwagon. Sure enough this morning the “sheeple” started to put their money back into stocks. The Dow is currently up 70 points and Gold was down $13.00. Nasdaq hasn’t ever gotten out of the negative yet today. This is how I see it- we will probably have a nice rally at least this morning as smaill investors pile in thinking “we are close to the bottom or at it so lets get in now so we won’t miss it!” My key resistance points for the Dow, are around 7300- 7320 and the S&P 500, 770-775. If those are cleared we have the potential for a really big up day. However if the markets can not successfully get above those points, Bang! the Bear Trap is sprung!. Be careful out there and Buy Gold now while you can still catch the market before we run to $1050, and later by end of year $1250-$1500, maybe even higher as inflation will really be clicking in from all the money flooding the world economies now. I especially like the Precious Metals producers as a whole many good bargains to be found out there. Even bullion bought now should produce minimum $100+ oz. gain over the next few months. Be a wise and prudent investor – not a “fool”. Remember a “fool” and his money are soon parted! Good Investing- jschulmansr

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Claim a gram of FREE GOLD today, plus a special 18-page PDF report; Exposed! Five Myths of the Gold Market and find out:

· Who’s been driving this record bull-run in gold?

· What Happens When Inflation Kicks In?

· Why most investors are WRONG about gold…

· When and How to buy gold — at low cost with no hassle!

Get this in-depth report now, plus a gram of free gold, at BullionVault

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

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Guru’s Say Bottom Near – Financial Times

Source: Financial Times

Gurus say bottom near

By Pauline Skypala

Published: March 15 2009 09:36 | Last updated: March 15 2009 09:36

He said much the same in October last year, so in a video interview, FTfm asked why he thought he was right this time. Opening with the remark that it is “very difficult” to get market timing right, Mr Bolton said he looked at three factors: the history of bull and bear market cycles; sentiment – how investors are behaving and thinking; and valuations. Those reached an extreme back in November that he thought might have marked the final low, and again in the first week of March.

“That is why I think we are pretty near the end of this pretty awful bear market,” he said.

He is not talking about a bear market rally, he added, but the start of a new bull market. Mr Bolton, and Fidelity International, generally advise against trying to time markets. Investors should hold on through thick and thin to avoid missing out on the best days that often come when the market turns, they have frequently said.

Mr Bolton now appears to be timing markets. He admits to being “a bit foolhardy going against my own advice” but remains consistent in putting out the message that it is hard to time markets and most private investors should employ a buy and hold strategy.

He believes all risk assets are now attractive, not just equities. The only one that looks less attractive is government bonds, where there could be a bubble building, he says.

He is not alone in his assessment. Jeremy Grantham, co-founder of GMO, told clients in a newsletter last week to adopt a reinvestment plan and stick to it.

GMO made one very large reinvestment move in October and has a schedule for further moves contingent on future market declines, he says, in the belief that a few large steps are better than many small ones.

Mr Grantham is not brimming with confidence but says it is vital to have a battle plan, otherwise paralysis sets in. He points out that in June 1933 the US market rallied 105 per cent in six months long before all the bad news had played out. Similarly, in 1974, the UK market jumped by 148 per cent in five months. “How would you have felt then with your large and beloved cash reserves?” he asks.

In common with Mr Bolton, he advises the market is a powerful discounting mechanism. Investors who wait for light at the end of the tunnel will miss the upturn.

The market turns “when all looks black, but just a subtle shade less black than the day before”.

Copyright The Financial Times Limited 2009

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Fed’s Bernanke sees recession ending ‘this year’ – Market Watch

Source: Market Watch

Calls health of banks key, but worries about lack of ‘political will’

By Jeffry Bartash, MarketWatch

WASHINGTON (MarketWatch) — The chairman of the Federal Reserve said in a rare interview televised Sunday that the U.S. recession will come to an end “probably this year,” but he also warned that the nation’s 8.1% unemployment rate will continue to rise.

Appearing on the CBS network’s “60 Minutes,” Fed Chairman Ben Bernanke told correspondent Scott Pelley that concerted efforts by the government likely averted a depression similar to the 1930s. He also said the nation’s largest banks are solvent and that he doesn’t expect any of them to fail.

At the same time, Bernanke expressed concern the U.S. might lack the political will to take further measures to shore up the financial system. Although he said he believes the largest banks are solvent and that “they are not going to fail,” Bernanke said a full recovery won’t take place until the system is stabilized.

“The lesson of history is that you do not get a sustained economic recovery as long as the financial system is in crisis,” he said. Bernanke noted that banks are unable to raise cash from private investors as is normally the case because of fears about their solvency.

The 15-month recession, which began in December 2007, is set to become the longest in the post-World War II era. The downturn took a sharp turn for the worst last September after the collapse of the Wall Street brokerage Lehman Brothers.

“Lehman proved that you cannot let a large internationally active firm fail in the middle of a financial crisis,” Bernanke said.

The same error was made 80 years ago when the U.S. government let thousands of banks fail, contributing to the Great Depression, said Bernanke, a former economics professor who’s extensively studied the 1930s. Another big mistake the Fed made back then was to let the supply of money contract, he said.

Since the crisis exploded last fall, Bernanke has sought to avoid both mistakes. The Fed and Treasury have committed hundreds of billons to the bailouts of banks, insurers, mortgage lenders and other entities. While Bernanke said he understood the public’s outrage at the cost, he said they were necessary to prevent a more severe contraction and steeper job losses.

Bernanke also pointed out the bailout aid doesn’t come directly from taxpayers and is “more akin to printing money than it is borrowing.” He said the Fed can adopt that approach because the economy is very weak and inflation is low.

Once the economy begins to recover, Bernanke said, the Fed will have to raise interest rates and reduce the supply of money to “make sure we have a recovery that does not involve inflation.”

The Fed chairman said the recovery won’t begin until early 2010 and will take time to gather steam. He reiterated his call for an overhaul of the nation’s financial regulations — the first in decades — to prevent similar financial conflagrations.

Bernanke is the first sitting Fed chairman to conduct a television interview in 20 years.

Jeffry Bartash is a reporter for MarketWatch in Washington.

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What Do Those Who Called The Downturn Think? – MarketWatch

Source: MarketWatch

OUTSIDE THE BOX

A few who got it right

Commentary: What do those who called the

downturn think?

By Howard Gold

ORLANDO, Fla. (MarketWatch) — The financial markets are littered with the broken reputations of so-called “experts” who failed to anticipate the global financial crisis, or the recession and bear market that have followed.

Finance ministers, central bankers, Wall Street strategists, famed economists, hotshot hedge-fund bosses, former star mutual fund managers and, yes, journalists and cable-television bloviators all dropped the ball big time in the years leading up to the current meltdown.

But a handful of brave souls got it right. Economist Nouriel Roubini, analyst Meredith Whitney and some others have gone on to fame and fortune for warning about the disaster to come.

They weren’t alone. Economist Gary Shilling, options specialist Larry McMillan, strategist Sandy Jadeja and market technician Dan Sullivan all saw a big bear market ahead and advised moving money to the sidelines before the roof collapsed. We caught up with them in the midst of this week’s rally to get their take on what’s ahead.

Most believe we’re getting pretty close to a market bottom, but we’ll have to go through more pain before we get there. None thinks the current rally is for real.

Shilling, a longtime Cassandra and publisher of “Insight,” has warned about the housing and credit bubbles for years and repeatedly predicted that the current recession would be deep. His 13 predictions for 2008 were right on the money.

Excess housing

And guess what? He’s still bearish on housing. Shilling estimates there’s excess inventory of 2.4 million homes on the market and “it’s taking a long time to work that [down.]”

That’s why home prices have a way to go before they bottom: He’s looking for a peak-to- trough decline of 40% in housing prices nationwide. As of the fourth quarter, the 20-city Standard & Poor’s/Case-Shiller home price index had fallen 27% from its high in 2006.

At the bottom, Shilling expects some 25 million borrowers will be underwater on their mortgages. That’s half of all mortgages and one-third of all owned houses in the U.S. Similarly, he doesn’t think the current recession will end until at least early 2010. That would make this the longest recession by far since World War II.

He thinks the market might actually bottom some time this summer at around 600 on the S&P 500 – at 15 times estimated earnings of $40 — six months or so before the economy does. But he doesn’t see prosperity just around the corner.

“It took about 30 years to build up the credit bubble,” he says. “My guess is, five to ten years to unwind this.”

“What it probably means,” he explains, “is longer and deeper recessions and shorter recoveries — and reflecting that, shorter, less exuberant rallies and more frequent and deeper bear markets.”

Thanks, Gary.

Short-term concerns

Options specialist Larry McMillan, president of McMillan Analysis Corp., typically looks at trading patterns over weeks and months rather than years. But he still doesn’t like what he sees.

“I don’t see a bottom in this leg here,” he says. “I find this market to be strangely calm. People have not panicked. All the pros are picking the bottom.”

That, he argues, means investors haven’t capitulated yet, the true sign of a market bottom.

McMillan has been cautious since late 2007, although he has traded in and out of rallies. He can’t say where the ultimate bottom will be. “I don’t have a target,” he says. “I’m looking for a spike in volatility that washes this thing out.”

He’s waiting for the Chicago Board Options Exchange’s volatility index, or VIX, to shoot up into the 60s from the 40s and 50s now, and then fall back. “That to me would be capitulation,” he says.

Until then, he advises being out of the market — or staying short.

Market projections

Technical analyst Sandy Jadeja, chief market strategist for ODL Markets in London, did have a target: 6425 in the Dow Jones Industrial Average. On March 9, the Dow hit 6440 at one point before Tuesday’s massive rally.

He thinks Wednesday’s higher close for the Dow is a good sign for the short run. The Dow was up nicely Thursday morning on retail sales data that were slightly better than expected. He’s looking for a rally that would take the Dow back up to 8300.

But don’t count on much more than that, he cautions.

He says 6400 is “a critical level going back to 1987, the 1930s and the 2002 lows.” He expects it to be retested, and if the market can’t hold that support level, then it could go a lot lower.

He thinks the bear market could hit bottom in 2010 or even 2011 or 2012. “5300 is the most probable low,” he says. But Fibonacci and Elliot Wave analysis — tools used by technical analysts — may point toward 3700-3800 as the ultimate bottom. Ouch.

Less gloomy

Another prominent technician isn’t quite that gloomy. Dan Sullivan, who has published “The Chartist” newsletter for four decades and has beaten the market consistently over the last 25 years, according to the “Hulbert Financial Digest,” advised clients to go 100% into cash as early as January 2008.

He, too, is looking for a 15%-20% rally that would take us into the 800s on the S&P 500, but then he says we’ll retest Monday’s S&P close of around 676.

“I think it’s a bear-market rally, so I’m advising subscribers to sell into the rally [or stay on the sidelines],” he tells me.

Like Shilling, he expects to see a market bottom or new buy signal some time during the summer. But for now, he says, “this is not a good time to buy.”

That’s my take, too. Although the Dow and S&P have lost more than half their value — no doubt the lion’s share of what we’re going to see in this bear market — I think we have more to go on the down side in view of the knotty problems we face.

So, if you’re young and saving for a distant retirement, this isn’t a bad time to make regular contributions to a 401 (k) plan.

But if you’ll need that money sooner, I’d keep my powder dry, and wait for those who really got it right to change their minds.

Howard R. Gold is executive editor of MoneyShow.com. The opinions expressed here are his own.

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Joe Foster: Chemistry Is Good For Gold – Seeking Alpha

Source: SeekingAlpha and The Gold Report

In this exclusive interview with The Gold Report, geologist Joseph M. Foster—a Van Eck Associates portfolio manager who also leads its International Investors Gold Fund—sees nothing but good news for gold in the months and years to come. Joe isn’t holding his breath for mania to set in, but he does see a mix blending that will get gold “firing on all cylinders.” Once a declining dollar, increasing inflation and an improving economy fill the combustion chamber, all it will take is a sustained spark of optimism for gold to forge ahead.

The Gold Report: We appreciate the opportunity to talk with you fresh from site visits in Mexico and the BMO Global Metals & Mining Conference in Florida. What do you see for gold in ’09 and ’10?

Joe Foster: Our outlook is quite favorable. We’re into a new phase of this bull market that’s been going on since 2001. The credit crisis, everything that’s happening to the global economy and the reaction of the governments and the monetary authorities set up a very, very positive environment for gold, not only in the near term, but going out many, many years.

TGR:What launched this the new phase?

JF: Earlier in the cycle, it was more an inverse dollar play. We’ve had a bull market in gold. The dollar had embarked on a bear market and gold reacted to the inverse of that. What’s changed is that the level of risk to the financial system has elevated dramatically and we’ve come into an environment where even if we have a strong dollar, we can also have a strong gold price. Investors are genuinely frightened and it’s brought a whole new dynamic to the gold market.

TGR:Where do you see this taking gold?

JF: I’d have to split it into a near-term and a longer-term outlook. First of all, looking at the near term, gold is finding support now because we are in crisis mode. The financial system has not been fixed yet. The economy is in decline. In that environment, investors are seeking gold as a safe haven. They’re also seeking out the U.S. dollar as a safe haven. So that’s creating investment demand for the metal.

Jewelry demand, however, has fallen off a cliff—it’s almost non-existent right now and a lot of scrap is coming into the market. Two dynamics in the gold market are pulling against each other: strong investment demand and very weak jewelry demand. I would see gold somewhat range-bound as long as we’re in crisis mode, being pulled by these two factors. We test $1,000, we pulled back, we’re sitting here around $940 an ounce. It wouldn’t surprise me to see it range-bound between $800 and $1,100 an ounce for the next six months or so until we see some sort of resolution to the situation.

As we look further out, you have to wonder if everything the government is doing will work and whether the laws of unintended consequences play out down the road. Will all this stimulus create inflationary pressure looking out into 2010 and beyond as the economy starts to get back on track? I happen to think it will. At some point, it will come time for the government to withdraw the liquidity they’ve put in the system. However, I think we’ll be in a slow-growth environment that will make that very, very difficult.

We won’t have the access to credit that we had in the past. Credit creation fueled a lot of the growth over the last decade. That will be missing in the next growth phase, so I think we’ll be faced with a low-growth environment that will make it difficult for the Fed to raise rates and rein in liquidity. As the velocity of money begins to pick up when the economy starts to grow a bit, I think we will see some serious inflationary pressures. That will give gold the next leg to stand on and lift it to the next level, which I think will be much higher than what we’ve seen so far.

TGR: In essence, aren’t we going back to an inverse play based on the U.S. dollar? That was the first phase. Now we’re in this crisis phase. As we move into an inflationary era, aren’t we just hedging against the dollar at that point?

JF: Yes, that’s another aspect of what I’m talking about, too. How does the dollar play out in this scenario? As long as we’re in crisis mode, people think of the dollar as a safe haven. As soon as we see a bit of light at the end of the tunnel, equities and other investments will begin to attract investment dollars. At that point, I think money flows out of the dollar. So the dollar could resume its downward trend with a better economic outlook and that would be positive for the gold market.

TGR:So we’d go back to dollar going down, gold going up.

JF: Yes, back to that situation. And then when you layer some inflationary expectations on that, you get gold firing on all cylinders.

TGR:Is that when we begin to see mania or is that the next phase?

JF: As markets go, there probably will be a mania in the gold market as well, but I would guess that’s a number of years off. Who knows? But at least several years off.

TGR: What will trigger the mania? If we’ve made it through the banking and financial and economic crises, and are looking for money to fly back into equities and devalue the dollar, why is mania several years off? Why wouldn’t it be happening as these other shifts begin to occur?

JF: The economy needs to be doing better. Money is too tight. I just don’t think there’s enough liquidity, frankly, to support a mania in the current environment. We need a more positive economic environment to get a true mania going and pull everybody from mom and pop up to the high net worth investors to the institutions, everybody jumping in with both feet. I don’t think there’s enough liquidity in the system at this point, or perhaps it’s all on the sidelines.

TGR: How interesting. So maybe fear won’t spark the mania. You’re almost saying the mania will start when there’s a little bit more optimism.

JF:That’s right, if it happens it will probably occur with more optimism and more entrenched inflationary expectations.

TGR:When you talk about gold, are you talking about bullion or gold stocks?

JF: I’m talking about both, definitely. There’s a different dynamic playing out with the gold stocks because we have to look at earnings and operating risk and political risk and all these other things, but historically there’s been a very high correlation between gold and the gold shares, and I expect that to continue throughout this market.

TGR:Will we see more of that in inflation or in crisis mode?

JF: As far as gold shares go, their crisis was the second half of 2008. They got caught up in the downdraft of the credit crisis and the equities collapse. The stocks have roughly doubled since they bottomed in October of 2008. Gold is up roughly 25% to 30% and we’re seeing money come into the gold sector. A lot of equity financing amongst the gold companies lately tells you there are investment dollars available to the sector. So I think the gold market and gold equities are out of crisis mode. They’re being recognized as an alternative, as a safe-haven hedge.

TGR:And an inflation play, I imagine.

JF: Yeah. The inflation play, or at least a flavor of it, will be with us. People see the Fed printing money to support the financial system, which creates a level of inflationary fear already—and it’s very, very early days. Then the next phase will be if and when we get evidence that inflation is actually taking place, when we see various economic measures telling us that inflation is starting to pick up. Those fears will intensify then. Even though we’re in a deflationary environment at the moment, the seeds of inflation it are already there.

TGR:How do you see silver reacting relative to gold?

JF: Looking at its performance over the last three or four months, I think it’s shown itself to be a currency hedge and a currency alternative like gold. Silver had a tough time last year. It tumbled with the base metals. But again, since October, the performance has been good and we’re seeing high demand for the silver ETF, a shortage of coins and bars. So it’s acting as a currency alternative just like gold now.

TGR:What do you make of the shortage of the coins and the premiums to the spot price?

JF: It’s a small but growing corner of the market, so to me it’s an indicator of investor sentiment. It’s not that big a demand driver. When you look at the tonnage, it’s modest. But it tells me that the sentiment among investors, especially individuals, is very positive. From what I hear, it’s mainly high net worth individuals who are buying the stuff up with a long-term view. It’s quite a leap to go out and invest in physical gold. If a few are actually doing it, then many, many more are probably considering it.

TGR:Would you like to talk about some companies you currently own and think other investors should be considering?

JF:

Growth is a common theme among the larger companies that we overweight. We like a growth story because good news flow comes with growth. Hopefully, we can find managements that can deliver the growth and meet expectations for production and costs. Among the large caps, one of our favorites in that category would be

Goldcorp

(GG). They’re mining mainly throughout the Americas. Most of their mines are in politically safe areas. They’re great operators and are developing some deposits—one in Mexico, called Penasquito; and the other one in a JV with

Barrick Gold Corporation

(ABX) in the Dominican Republic, called Pueblo Viejo. They’re going to drive Goldcorp’s growth for the next several years, and we see some good numbers coming out of Goldcorp looking forward.

TGR:And moving down the ladder?

JF:Going down into the mid-tier group, I guess Randgold Resources Ltd. (GOLD) would be our favorite in that category. Their operations are in West Africa. Randgold’s growth has come organically, which is really the best kind of growth. They discovered the properties where they’re mining and developing, and that’s the cheapest way to add ounces to the portfolio. Currently they’ve got a developing property in Senegal, which is early days but we see it turning in to a significant mine. Perhaps looking out three or four years, that will add significantly to their bottom line. It’s another internal discovery, so very cheap ounces coming on line for that company. Also, we’ve been to West Africa and Randgold is probably the best connected, knows the Continent probably better than any other company out there. So they’re one of our top mid-tier companies.

Going down to the small caps, we’re seeing exciting plays in several areas with the small caps, mainly in the Americas, particularly Canada. There’s been a resurgence of activity in Canada in some of the old mining camps. We’re seeing new discoveries and new developments that we’re very excited about. Mexico and other parts of Latin America look very favorable to us as well.

In Canada, one of the emerging producers would be Lake Shore Gold Corp (LSGGF.PK). In the Timmins camp, they’ve made a discovery where nobody thought to look before. And Timmins is historically one of the largest producing camps in North America, so there’s still gold to be found there. Lake Shore is developing an underground mine there that we think will be very profitable and should come on line over the next couple of years.

Another Canada small cap is Osisko Mining Corp (OSKFF.PK). They’re in the Val d’Or camp, an old mining camp. They’ve found a very large low-grade deposit that they’re developing there and I guess it will be the first large-scale, low-grade, world-class deposit that’s been developed in Val d’Or. The company just raised enough money to develop it. It’s going to be expensive, costing north of a half a billion dollars, but investors have shown confidence in the company and that they raised over $300 million just this month to build it. They’re well on their way to becoming the next gold producer.

TGR:Does Osisko have a 43-101 on that Val d’Or property?

JF: Yes, it has. After going through several iterations of their resource estimate, more recently they found a new zone they call the Barnett Zone. It’s higher grade than what they’ve found in the past, so it appears to be shaping as a sweetener that will enable them to get a more rapid payback once they begin production. The project is getting better as it moves along.

TGR:Does your website list the stocks you’re invested in?

JF: We publish the full portfolio twice a year with our semi-annual and annual reporting, so for the most recent you’d have to pull up our December 2008 report. Also, our website publishes our top 10 every month.

TGR:Do we do that through the site or we can find that on the site?

JF:Just go to vaneck.com and you can bring up a PDF. (http://vaneck.com/sld/vaneck//offerings/factsheets/IIG_Factsheet.pdf )

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

Be cautious out there, especially if going back into Stocks (even mining stocks), do your due diligence and stay tuned for more of the best news and views personally handpicked for my most valued readers! – Good Investing! – jschulmansr

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

Claim a gram of FREE GOLD today, plus a special 18-page PDF report; Exposed! Five Myths of the Gold Market and find out:

·        Who’s been driving this record bull-run in gold?

·        What Happens When Inflation Kicks In?

·        Why most investors are WRONG about gold…

·        When and How to buy gold — at low cost with no hassle!

Get this in-depth report now, plus a gram of free gold, at BullionVault

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A new site that is in pre-launch state that will become a virtual world – chat, shop, play, videos, etc. Anyways they are giving free shares (that should become actual company shares) to anyone who signs up and more shares if you refer people.

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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/s, Do Your Due Diligence, Read All Prospectus/s and related information carefully before you make any investing decisions and/or investments. – jschulmansr

Investment gurus are lining up to call the bottom of the market. Anthony Bolton of Fidelity International did so last week, telling delegates at a pensions conference markets were at or near lows.

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13 Friday Mar 2009

Posted by jschulmansr in 10 year Treasuries, agricultural commodities, alternate energy, Bailout News, banking crisis, banks, Barack, Barack Hussein Obama, Barack Obama, bear market, bull market, capitalism, CDE, CEF, central banks, China, Comex, Contrarian, Copper, Currencies, currency, Currency and Currencies, deflation, depression, DGP, dollar denominated, dollar denominated investments, economic, Economic Recovery, economic trends, economy, Fed Fund Rate, Federal Deficit, Finance, financial, follow the news, Forex, Fundamental Analysis, futures, futures markets, gata, GDX, GLD, gold, Gold Bullion, Gold Investments, gold miners, GTU, hard assets, How To Invest, How To Make Money, hyper-inflation, IAU, IMF, India, inflation, Investing, investments, John Embry, Jschulmansr, Latest News, majors, Make Money Investing, market crash, Markets, mid-tier, mining companies, mining stocks, NAK, oil, palladium, physical gold, platinum, platinum miners, precious metals, price, prices, producers, production, rare earth metals, recession, risk, safety, Saudi Arabia, silver, silver miners, Silver Price Manipulation, spot, spot price, stagflation, Stimulus, Stocks, TARP, Technical Analysis, The Fed, Tier 1, Tier 2, Tier 3, TIPS, Today, U.S. Dollar, uranium, Uranium Miners, XAU

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Wow! again what a week in all of the markets. Gold is continuing to slowly build into a major rally, look for $1050 to go down this time! We have seen the retracement in the stocks (normal retracement) in a very bear marketas I also mentioned earlier. I still have my 720 Sp 500 puts and look for a nice pop before next weeks expiration. Continue to accumulate more mining stocks and I hope you got in to DGP when I did and let you know via twitter on Monday. The winner if you haven’t guessed is Gold! We have a new player entering into the melee. Crude Oil has finally flashed it’s first buy signal in 18 months. Look for strong resistance at the $50 mark. If it clears then we’re back to $80 minimum, probably $100 in the first leg. I would play this one slowly as there still is a huge pool sitting out there in tankers to be used up first before we can get into a serious rally in Crude Oil and distillates. One thing to mention is our President Obama, at least he waited until the close of markets before speaking yesterday, it almost seems he is determined to drive the stock markets down. If the Dow doesn’t hold here then the 5000 range for the Dow is not out of the question in fact a very real possibility; a full 70% retracement would actually take us down to the 4500 level. Protect yourself and Buy Gold any form and BUY it NOW! Good Investing! jschulmansr

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· Who’s been driving this record bull-run in gold?

· What Happens When Inflation Kicks In?

· Why most investors are WRONG about gold

· When and How to buy gold — at low cost with no hassle

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A new site that is in pre-launch state that will become a virtual world – chat, shop, play, videos, etc. Anyways they are giving free shares (that should become actual company shares) to anyone who signs up and more shares if you refer people. me2everyone.com

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

Can the U.S. survive $80 crude oil?- INO.COM

Source: INO.com

For the first time since September of 2007, the crude oil (NYME_CL) market has flashed a positive signal that it is headed higher. This is the first buy signal that we have seen in over 18 months in the energy markets.

The big question is, if crude oil is headed higher, how much of a price increase can the US economy afford and withstand?

Here is a raw commodity that is used by everyone and the US has no control over. This key commodity to commerce just happens to be in areas that are normally hostile to the US. If we see a hiccup in the supply chain that changes this market dynamic, even for a short time period, we could see oil move back to the $80/barrel range in a heart beat.

So how will this affect the US equity markets? If crude oil heads back to the $75-$80 range, I expect that the major indices will head south. I call it the 551 syndrome. 5000 on the Dow, 500 on the S&P 500, and finally 1000 on the NASDAQ.

In this short video I will share with you the potential target zones we could see in the next 6 to 12 months in crude oil.

So with the trend in crude oil in a positive trajectory and the trend in the US equity markets in a negative trajectory, I think the two will feed off themselves. Look for traders and hedge funds to move aggressively in both these areas with abandon.

Lastly with no reinstatement of the up-tick rule, expect stocks to once again get pummeled to oblivion.

Enjoy the video and all the best in trading,

Adam Hewison
President, INO.com
Co-founder, MarketClub

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Sell the Swiss Franc, Buy Gold- Seeking Alpha

Source: FP Trading Desk

“Forceful relaxation” – it brings to mind a trader at a Mexican beach resort, not Swiss monetary policy, but that is exactly what the Swiss National Bank (SNB) announced in its Monetary Policy Assessment Wednesday, joining a growing chorus of central banks engaging in quantitative easing. Sell the franc and buy gold.

The SNB cut its target range for three-month Libor by 25 basis points to a range of 0–0.75% and announced plans to purchase domestic bonds from the private sector and sell francs in the open market. The resulting biggest ever one-day drop in the franc versus the euro and dollar is likely to be followed by franc depreciation over the next year.

Swiss lending to foreigners brings new meaning to Lord Polonius’s advice to Laertes to “neither a borrower nor a lender be.” The Swiss risk losing more than the friendship of the Hungarians who borrowed extensively in Swiss Franc between 2006 and 2008. They also risk losing their money as Eastern Europe struggles under a mountain of debt. All told, Swiss banks claims on foreigners rose from five times Swiss GDP in 2000 to roughly eight times GDP in mid-2007, according to the Bank for International Settlements (BIS).

The majority of these claims are denominated in US dollars, and that factor will continue to put pressure on the franc versus the dollar over the next year. Swiss banks’ net US dollar books approached $300 billion by mid-2007, according to the BIS.

Now that the SNB is actively trying to push the franc down to raise inflation expectations in Switzerland, watch out. This policy raises the prospects for franc depreciation and increases the case for owning gold versus all reserve currencies.

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Related: This is one of a multitude of reasons to Buy Gold-see next article below – jschulmansr

Swiss Action sparks talk of ‘Currency War’ – Financial Times

Source: Financial Times

By Peter Garnham in London

Published: March 12 2009 20:14 | Last updated: March 12 2009 20:14

The Swiss National Bank moved to weaken the Swiss franc on Thursday, the first time a big central bank has intervened in the foreign exchange markets since Japan sought to weaken the yen in 2004.

The bank’s move, which sparked fears that other countries could follow suit, comes as the value of the Swiss franc has soared as investors seek a haven from the recent market turmoil. In October, after the collapse of Lehman Brothers, it rose to a record high of about SFr1.43 against the euro, a level it has come close to again in recent weeks.

But it fell to its lowest level this year on Thursday after the SNB said the currency’s strength represented an “inappropriate tightening of monetary conditions” as it battled against a slowdown in the Swiss economy.

“In view of this development, the SNB has decided to purchase foreign currency on the foreign exchange market to prevent any further appreciation of the Swiss franc against the euro,” the central bank said.

The Swiss franc dropped 2.6 per cent to SFr1.5192 against the euro and dropped 3.2 per cent to $1.1894 against the dollar.

Analysts said the move was likely to increase talk that countries were set to engage in a bout of competitive devaluation.

“Let the currency wars begin,” said Chris Turner at ING Financial Markets.

Countries around the world faced with the constraint of zero interest rate levels might feel it was acceptable to intervene to weaken their currencies in order to ease monetary conditions, he said, adding that other export-dependent economies such as Japan would “probably be at the head of the queue”.

Michael Woolfolk at Bank of New York Mellon agreed.

“Market intervention by a major central bank such as the SNB opens up the door for other central banks, namely the Bank of Japan, to follow suit,” he said. “The yen is widely perceived in Japan to be overvalued.”

The SNB also cut its interest rates by 25 basis points, taking its three-month Libor target range down to zero to 0.75 per cent, and announced plans to adopt a quantitative easing approach to monetary policy.

Analysts said the move towards quantitative easing was sparked by a drastic revision to the central bank’s forecast for growth, which is now expected to fall between 2.5 and 3 per cent in 2009, much worse than its previous forecast of a drop of between 0.5 and 1 per cent.

The SNB said economic conditions had deteriorated sharply since its last policy meeting in December and that there was a risk of deflation over the next three years.

“Decisive action is thus called for, to forcefully relax monetary conditions,” the central bank said.

Additional reporting by Haig Simonian in Zurich

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

John Embry: Gold and Silver Are the Ultimate Insurance Policy- Seeking Alpha

By: Andrew Mickey of Q1 Publishing

John Embry: Exclusive Interview with Canada’s Foremost Gold Investor

Is gold the next “hot” investment? Or will it never break through the $1,000 threshold?

Some of the world’s leading investors are currently placing their bets.

For instance, hedge fund manager David Einhorn recently bet big on gold. Einhorn manages $6 billion at Greenlight Capital and has averaged a 20% annualized return by booking only one losing year since 1996 (last year). His fund recently bought more than $200 million of SPDR Gold Trust ETF (NYSE:GLD) and more than $75 million worth of Market Vectors Gold Miner ETF (NYSE:GDX).

On top of that, the big money managers have already pumped billions of dollars directly into gold mining companies to fund takeovers and new mines and expansion.

It’s looking like a lot of smart and big money is betting on gold. And as the financial markets, economy, and future outlook worsen, gold is holding up as a last bastion of hope for many investors.

How can you get in on it? Is it just gold? What about silver? Where are the real values to be had? What about other hard assets – water, agriculture, etc.?

It’s best to start getting prepared now.

Most recently, Q1 Publishing’s own Andrew Mickey, editor of the Prosperity Dispatch, had a private one-on-one conversation with John Embry, one of the leading gold investors in the world.

Embry has been following the gold sector for 35 years (that’s since the early 1970’s) and is one of the leading authorities on gold. Embry is currently the Chief Investment Strategist for Sprott Asset Management – a legendary name to long-time gold investors.

Prior to joining Sprott, Embry oversaw more than $5 billion in assets including the Royal Precious Metal Fund as VP, Equities and Portfolio Manager for RBC, a top-tier Canadian bank. Under his watch, the Royal Precious Metals Fund returned 153% in 2002 and was ranked #1 across all funds in Canada (remember 2002 was a horrible year for stocks as tech stocks continued to fall).

Andrew Mickey: Precious metals have been getting a lot of attention lately. But it seems like there has been a divergence between gold and silver. We’ve been watching the gold to silver ratio (the number of ounces of silver which can be bought for an ounce of gold) get wider and wider. Gold to platinum too. Do you see the divergence tied to the industrial aspect of metals like platinum and silver, gold is the supreme precious metal, or is there something else going on behind the scenes?

John Embry: No – it’s a very strong manipulative aspect at work. If you go to the COMEX and look at the trading patterns and the short positions and such, clearly the prices are being messed around with.

Silver is a smaller market and can be messed around with more easily. I think silver probably has a bit more upside potential because the price is so far behind where it should be.

Andrew Mickey: So do you see silver as one of the bright spots?

John Embry: Oh yeah, it’s an extreme bright spot. I could easily see it three times where it is now in the not-that-distant future.

Andrew Mickey: As far as gold supply, there is one period in the world gold supply where gold production kind of crested around 2007 or 2008. Are we facing a “Peak Gold” kind of situation?

John Embry: Yeah, we have most assuredly crested in terms of mine supply without question.

Andrew Mickey: So, when you look at five, ten years out…let’s say in a world where gold is $2000 or $3000 or higher, how much more gold can realistically be produced in a year?

John Embry: Zero, I think. In fact, I think you probably need a lot more lead time – maybe five to ten years.

Just look at what happened in the ‘70s. The gold price went from $35 to $800 and, believe it or not, gold production was at a lower level worldwide after that 10-year period.

Now, the big question is what will happen this time? Number one, a lot of the existing mines are being depleted quite rapidly. Number two, when the gold price goes up a lot, mines generally tend to sort of drop the grade they mine because they can make a lot of money with lower grade and they can keep the good stuff for the bad times.

So by definition, they will be mining in the same number of tons but they will be taking the gold grade out of it, so collectively they will be mining less gold. They will make more money because the price is up but they will be mining less.

The other problem is that so many of the new interesting deposits that may or may not be developed in the future are located in these God-awful third world countries. They are having a real battle now with the governments, getting permitting, deciding who makes the money out of the mine, environmental issues etc. The gold deposits are all over the place and the governments are going to delay projects.

Say you find an ore body today. It would probably take a minimum of five years before the gold hits the market with all the attendant problems there are getting it into production. So all that’s already baked in the cake. The gold price could be doing anything it wanted for the next four or five years…gold production isn’t going to increase much – if any – at all.

Andrew Mickey: Amazing, gold production declining in the last great bull market for gold. So what does this mean for gold stocks, from your perspective? Where should we focus our investments across the whole range – from explorers all the way up to the majors?

John Embry: Right now, I think the majors are reasonably priced compared to the overall list. People have sort of focused on liquidity so they have gone after the majors and they bid them up aggressively and left a lot of the more illiquid situations behind.

That will all change. As gold becomes more popular and the price rises, at that point, money will filter down the food chain from the larger companies and they will go looking for the good quality smaller ones.

I particularly like some of the smaller producers now for a lot of reasons.

For one, they are going to make a ton of money in the current environment, particularly if they are producing outside the United States. Like some of the ones that are producing in Canada. The gold price yesterday was I believe $1,230 Canadian.

Another reason is because all of the costs of gold mining are dropping right now. Energy costs, steel prices, and all the things that went up so much and really hurt gold miners’ profitability. They are all going the other way now and at the same time the price of gold is going up. So I think that people are going to be pleasantly surprised going forward by the profitability of some of these mines, which have struggled up until recently.

So I am pretty bullish on small producers and anybody who has got a legitimate ore body that can be exploited sometime within the foreseeable future. I think they are going to be viewed positively too.

But the key thing to focus on is when their production will begin. If they don’t have to worry about getting through the environmental hurdles and getting the finance and et cetera, et cetera, they are going to make a lot of money.

Andrew Mickey: What do you see as the potential risks of politics and environmental concerns preventing anyone from starting production?

John Embry: They are not necessarily preventing a company from going into production, but they are certainly delaying it.

My favorite example is that probably the best ore body that’s been discovered in the last 10 years is Aurelian’s in Ecuador; which was subsequently acquired by Kinross (KGC). But the fact is, as long as the current government in Ecuador stays in power…I just don’t see the thing entering production.

So that’s what I am talking about. It’s such a fabulous mine if it were in a good geopolitical environment. It would be being built as we speak, but there is no progress towards building it at this point.

Andrew Mickey: The gold ETF (like the GLD) has been the number one recommended way to invest in gold in the U.S.

It’s a hot subject of debate by those who are new to gold and those which have been following it for while. The new people to gold always recommend the GLD. What are your thoughts?

John Embry: Well, they are just plain wrong in my opinion.

I think gold and silver are the ultimate insurance policy. When things got really bad in the system you want to make sure the vehicle you own has the gold and silver that it allegedly is supposed to have.

Now, I may buy gold and have it in my own possession. I know I have it. And then there are other gold and silver vehicles like Central Fund of Canada (NYSE:CEF) or Central Gold-Trust (NYSE:GTU), to cite a couple, where the gold is allocated. It’s in a vault and there are regular audits to prove everything that’s behind the vehicle is in fact there. So you are getting what you pay for.

Now, in the case of the ETF I am not totally sure. I mean if you read their prospectuses closely enough you’ll see there is some wiggle room. What they are trying to do is just track the gold price so you don’t necessarily need the physical gold. They could be using paper derivative types of products to back the stock.

What really made me kind of uncomfortable recently, was there was this dramatic ramp up in the amount of money going into the GLD ETF in particular. I looked around and I am going like, where is gold coming from?

As you know, the gold market is acknowledged by virtually everybody to be tight. I know mine supply is falling, I know that – I didn’t see any appreciable change in any of the inventory levels or any of the recognized exchanges like COMEX etc., and there was no particular acceleration in the Central Bank dispositions. So my question is, if suddenly all this new buying appeared because of the ETF having to sort of stock up, where did the gold come from?

I am not sure it bought any gold. I think they might have gone to COMEX and just bought a paper contract.

I don’t know. I just think there are better vehicles than ETFs.

Andrew Mickey: Switching gears a little bit here, let’s talk about the big picture. Everyone wants to know what’s going on.

It’s a crazy time. What’s your take? What going on in the general markets and where are we headed?

John Embry: I think we are probably headed for the worst economic debacle since the Depression – if not worse than that.

And the response for that by governments around the world is going to be, I think, a blizzard of paper money creation. They will run massive deficits, trying to prop up these economies.

So I think the major development is going to be ongoing issues of currency debasement. The value of paper money against real tangible assets is going to fall considerably. Right now, we are going through this deflationary scare. It won’t last. It will change into a hyperinflationary environment in the not too distant future.

Andrew Mickey: A kind of stagflationary situation like we saw in the 1970’s?

John Embry: No, worse than that. I think the inflation would be more intense. The decline in economic activity will probably be worse.

Andrew Mickey: What are the kinds of conditions that bring us to that state? Is it avoidable?

John Embry: Basically, we have already put the conditions in place. We ran economies with constantly too much leverage and debt.

Eventually, you reach a certain point where you can’t really add any more debt because the capacity for the system to handle it has been exhausted. Once it reverses, it’s very hard to change. They are going to try to change it by simply debasing the money.

Andrew Mickey: You seem to focus on the debasement of currencies as a government “solution” – for lack of a better term – to the problem. What are some of the best ways to protect ourselves from this situation? Which are you employing?

John Embry: Our strategy is pretty simple. What we really like is the monetary precious metals gold and silver. We don’t like anything in the financial sphere at this time. The companies that we like are the more solid companies providing basic services and what have you. We like the ones which don’t have overly leveraged balance sheets.

Andrew Mickey: What about other real asset classes. There are other sectors I know you follow outside of precious metals like agriculture. That’s the one thing that I’ve been completely excited about for years, but had to turn and run from over the summer. What’s your take on it now? Is it time to wade back in?

John Embry: Well, I am with you on agriculture. It’s a necessity that we must eat.

I guess one of the positive aspects of global growth is that the third world became a bit more affluent. Improvement in their diets put more demand into the world for basic food stuffs. Now that’s slowed down a bit.

I think the real arbiter in the short run might be the climate. I see a lot of industry people bringing this up, changing sunspots. These changes in the sunspots suggest that we may be facing drought conditions in a lot of the world all at the same time.

If that’s the case, I think you are going to see massive food shortages which would underrate a considerable price appreciation in the food because there will be a real fight for it.

Andrew Mickey: So, I don’t want to get too technical with this subject, I assume that you’re referring to increasing activity in sunspots?

John Embry: Yes, there is increasing activity in sunspots; which apparently, sort of cools the world out. It’s really interesting because there has always been, as you know, there is debate about global warming.

I do believe that all this carbon release is creating global warming, but at the same time, we have this mass of long cycles in nature which sort of move from the ice age then back to a period where it gets too hot. In that cycle, we are headed towards cooling again and the sunspot is just one aspect of it.

Andrew Mickey: Can the sunspots cause some of the farming areas to change?

John Embry: Yes, they do. They have a role – for whatever reason – they have a major impact on increasing odds of getting hit by a drought. We have a lot of droughts going on in the world currently. There are droughts in Australia, South America, Northern China and Africa. But Africa has always had a drought.

There is a lot of food supply interruption. If a drought were to strike North America then that would really create a problem. I have seen some work suggesting that we are due for a drought based on certain cycle work.

Andrew Mickey: Okay, this is more or less an agricultural cycle that you are referring to I imagine. How long is this kind of agriculture cycle? Is it like an 80-year almost Dust Bowl scenario type?

John Embry: Well, yes…I hesitate to go there because…it’s like Murphy’s Law, “everything goes wrong at the same time.” And with the financial world right now in a mess the last thing we need is a sort of replay of the ‘30s in the agricultural space.

The pessimists among us think that there is a good probability that drought conditions could strike North America, and that would be the last thing I want to see.

Andrew Mickey: What about farmland then? It’s an asset class which has had extremely consistent returns over the past 50 to 60 years. But, we’ve been waiting for a time like this.

John Embry: Farmland prices have fallen off a cliff. I just saw a guy in Minneapolis; again, he was saying that farmland is on offer everywhere right now.

This is a great thing. I am now in favor of buying farmland at the right price and that price is probably – as we are cleaning this whole mess up – the right price is going to be reached.

Andrew Mickey: The same is true for all kinds of natural resources. Oil, natural gas, copper, iron ore, uranium, etc. They’re all over the world and the government s which control them are in position to really inhibit or assist private companies who want to exploit them.

Recent US policy changes favor certain alternative energies. The one that really concerns me is uranium. In your opinion, when we look at uranium, should we look at it as declining uranium supply from current mines and or how new power plants can come on line if they can’t get it? Which is the real problem? Or is it both?

John Embry: Excellent question. I do think there is a problem. The Cigar Lake up in Northern Saskatchewan has gone through all sorts of problems. Another major problem area is with the Olympic Dam mine in Australia. It has been having problems too.

So again, there’s an issue with existing production.

In that light, I think that’s going to make new discoveries. Quality discoveries in uranium which are really worthwhile and the problem, again, is how long it’s going to take to exploit them. There just aren’t too many good deposits. We had that huge run in uranium a couple of years ago, but a lot of the deposits were really junky.

The great advantage in uranium is that the true cost of producing the power, is in building the reactor. So, there’s a lot of flexibility there. They don’t care about what they have to pay for uranium just as long as they can get it.

So I think that’s one of the aspects I like about uranium. The price is sort of inelastic in that sense. Just because the price goes up doesn’t mean it’s going to start to reduce demand.

Andrew Mickey: With respect to potash, nitrogen and phosphate, where do you see opportunities there? Most people are familiar with potash, the high capital costs to build a mine and the like. Are there any opportunities in nitrogen and phosphate because it’s too easy, how do you guys kind of look at those

John Embry: Well, we actually – we meaning our Sprott Resource Corp – have been looking around for interesting opportunities in phosphate and what have you. We believe that as this whole agricultural thing unfolds that it will be a good business.

But right now, farmers are having trouble getting money like everybody else is. So really, there is a bit of a low in the fertilizer business. Looking for longer term opportunities, the short term is going to be a little problematic.

Andrew Mickey: Are there any other things that you think individual investors should keep in mind as this is the first time in a long time that any of us had to go through a downturn like this?

John Embry: Well, it’s downright ugly out there. I was born in United States and I am a huge admirer of the U.S. I think what’s happened is tragic. Consequently, people are looking to protect themselves and I really do think that precious metals in particular and solid commodity opportunities are going to be one way that’s going to pay off in the end.

Andrew Mickey: What’s your take on all the stimulus packages and infrastructure building and everything that’s going on there?

We have been really bearish on infrastructure companies. How can the government support these businesses which are mostly private?

John Embry: I think that you are right. Typically, the market overacts to these things and obviously the infrastructure spending is partly implied; because, it’s been neglected to such a great extent in North America.

We have the same problem in Canada. Our roads are falling apart. Really, they could spend a ton of money in the sector. Problem is, they don’t have the money. They are going to have to create it out of thin air.

Andrew Mickey: One last thing. Are you currently looking at or investing in water? If so, would you be looking into water rights or a pipe manufacturer for example?

John Embry: We haven’t done as much as we should have. I think water is going to be a major issue going forward.

As for ways to invest in water, I’m more interested in water rights. The good thing about Canada is, there is lots of water up here. The problem is going to be down in the U.S., particularly in Southwest and other areas. I just look at that and I shake my head.

Andrew Mickey: Well, thanks very much for spending some time with us. Is there anything else that you would like to add?

John Embry: Just that I think that it’s important that your readers know all this. The world is a lot different than it was 10 years ago.

Andrew Mickey: And probably it will be a lot different in another 10 years.

John Embry: Well, it would be a lot different looking back from five years from now too, you bet, but I think we will be stood in good stead, certainly being in precious metals and end products, I think those are the two that I like the best.

Andrew Mickey: Well, thanks for your time, I appreciate it.

John Embry: My pleasure. Anytime.

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

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They’re At it Again? – Who’s Going to Win?

10 Tuesday Mar 2009

Posted by jschulmansr in 10 year Treasuries, 20 yr Treasuries, bear market, bull market, central banks, China, Comex, commodities, Contrarian, Copper, Credit Default, Currencies, currency, Currency and Currencies, DGP, dollar denominated, dollar denominated investments, economic, Economic Recovery, economic trends, economy, Finance, financial, follow the news, Forex, Fundamental Analysis, futures, futures markets, gata, GDX, GLD, gold, Gold Bullion, Gold Investments, gold miners, Gold Price Manipulation, hard assets, How To Invest, How To Make Money, hyper-inflation, IAU, IMF, India, inflation, Investing, investments, Jschulmansr, Junior Gold Miners, Latest News, majors, Make Money Investing, manipulation, Market Bubble, Markets, mid-tier, mining companies, mining stocks, oil, palladium, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, protection, recession, silver, silver miners, Silver Price Manipulation, small caps, spot, spot price, stagflation, Stimulus, Stocks, Technical Analysis, Tier 1, Tier 2, Tier 3, Today, U.S., U.S. Dollar, XAU

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Sorry, I missed everyone yesterday, it was a very interesting day making this one wonder if we are not seeing more hidden central bank selling in a desperate measure to hold Gold Prices down. Sooner or later the shorts will have to fill which I believe will happen somewhere around the $1050 – $1100 range giving a big pump up. Meanwhile today’s action, we are once again seeing continued downward pressure with Gold holding at the $890 to $900 range. Personally, I think we will hold here at the $880 to $900 level, build strength after the Gold coming on the market is absorbed. If we don’t hold here then $850 is the next very strong support level. We’re having a nice little upward correction in the stock markets and this may be the 20% retracement rally traders have been looking for. Mark my words we will soon here remarks like the “bottom is in place for stocks” and “now” is the time to get in at these low levels. After they sucker everyone in then we will see the Stock markets continue in their downward channel. In the meantime take advantage of this to load up on your Gold. Especially since we’ll hear the “double top” formation is in place comments and everyone will be giving up on Gold and Silver. I personally think we are forming a new pennant formation like the one that was formed around the $700- $750 level which then took off to $1000+. Based on that this formation should be the launch pad up to the $1250 level. I am aggressively buying Precious Metals Miners with current or about to come on line production, accumulating some more physical holdings and hanging tight. When I have confirmation I will be re-entering DGP for another ride to at least $1000. I will post when I enter that trade and if you are following me on Twitter you’ll be the first to know. Good Investing! -jschulmansr

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Here you go- Bottom Calling For the Stock Market already!Barron’s Calls a Bottom – Seeking AlphaSure, stocks could slide much further — but they probably won’t. By most measures, they are downright cheap.

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

By: Eli Hoffman Senior Editor Seeking Alpha

Barron’s cover story this weekend basically calls a bottom to the bear, though not in quite so many words.

After blaming Obama for much of stock market woes (“The lousy economy is the main factor, but stocks haven’t been helped by Obama administration proposals … It doesn’t help that the Street is calling this an “Obama bear market” and that some investors are looking to “Obama-proof” their portfolios…), Barron’s concedes that the president did get at least one thing right: stocks are cheap for investors with patience.

Barron’s says its research bears that out. Here’s why:

Stocks are cheap relative to P/E – a Citigroup economist’s 2009 earnings estimate for S&P 500 components puts their collective P/E ratio at more than 13, which is where a bunch of bear markets bottomed – except 1974, ’82 and ’87 when P/E went as low as 8.5. If we get down to 10, S&P could fall another 25% to 500 and DJIA around 5,000. But that probably won’t happen, because in previous downturns Treasury yields were much higher, and because another Citigroup analyst says he’s seeing signs of panic.
Stocks are cheap relative to GDP – at 60% of the $14T GDP, stocks are their cheapest relative to economic output since the early ’90s. But they’re still well higher than the lows of about 30-35% seen in the ’70s and early ’80s. Stocks are also cheap relative to book value – about 1.3 down from a high of 5 during the dot-com bubble.
Stocks are cheap relative to gold – S&P 500 is now worth about 75% of the price of an ounce, vs. a peak of more than 5x in 2000. Over the past 40 years, the average stocks-to-gold ratio has been 1.6.

There’s also a lot of cash on the sidelines, Barron’s says, noting money-market funds now hold $4T – almost half of the market cap of U.S. stocks, and double the amount in money-market funds two years ago.

Barron’s expects stocks in defensive industries like drugs (PFE, LLY, MRK, BMY, SGP) and consumer goods (HNZ, KFT, PG, KO, GIS) to benefit from a return of confidence.

For those prone to bottom calling, or not, here’s some more food for thought:

Babak notes pessimism, as measured by the American Association of Individual Investors’ weekly survey, is at record highs. A contrarian buy signal.
Todd Sullivan says that a couple weeks of positive economic data could cause extreme pessimism to make a rapid about-face.
Jason Schwartz thinks we’re in another bubble – one of uncertainty. Forget about buy-and-hold, he says – but short term gains on oversold stocks could be massive.
Meanwhile Mike Stathis, while noting stocks are very close to “fair value,” for what that’s worth, doesn’t mean the market won’t go lower. In fact, it probably will.

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

Here’s a nice piece with some good info about one of my personal longs (ABX).

Gold Mining or Gold Bullion Stocks for 2009? Seeking Alpha

By: Preston Poulter of PrestonPoulter.com

With Obama’s outrageous stimulus plans where the federal government is going to give out billions of dollars of handouts to the demand side of the economy, it’s no wonder gold is gaining ground while stocks have been falling. However, the question remains when is it time to buy? The answer is now. Gold has been consistently in an uptrend since October of last year. This is shown in the chart (click to enlarge) of a major gold ETF (GLD) [GLD: 90.57, -1.72 (-1.86%)] below. As you can see, gold is making a short short term pullback which signals a time to buy. With more talk of spending, including a world wide stimulus package, there is only further pressure on leading countries, currencies such as the U.S. dollar. These inflationary pressures may push gold to break the 2008 highs of around $1056.

But I’m not content just to park my money in physical gold and leave it at that. The trader in me wants to make a leveraged play to make the most off of gold’s bright future. Gold mining shares would seem an excellent play then. Not only do you get exposure to the gold market, but you get the benefits of stock ownership. In the past, whenever I would introduce the idea of owning gold as a form of investment, people would laugh my suggestion off because they just couldn’t imagine how anything would be better than owning “stocks for the long run.” Of course, they aren’t saying that anymore.

Gold mining shares are a nice compromise in terms of investment philosophy. If the American dollar does fall from grace as we goldbugs suggest, then owning shares of a gold mining company will be a tremendous boon. If the dollar continues to stubbornly hang on, and we somehow manage to resume normal economic growth, then I still own equities and should get the traditional benefits of equity appreciation.

The theory of owning gold mining equities is pretty easy, but the reality can be rather treacherous. Should you chose an established company with a lot of reserves or a junior company that mainly has a lot of promising prospects? One is more dependable and the other has the potential to be far more rewarding. It’s a similar discussion to blue chip versus tech stock debate we saw towards the end of last century.

For myself, I wanted an established company. Junior mining companies need a healthy amount of credit to develop their mining operations, and that wasn’t a chance I was prepared to take given the credit collapse of last year. That narrowed my focus down to just a couple of companies: Newmont Mining (NEM) and Barrick Gold (ABX). I chose Barrick because it was the largest mining operation in the world and because, at the time, it was trading at a lower PE ratio than Newmont. As of this writing, Newmont has held up better over the last twelve months as shown in the graph below.

The relative stock performance of the two companies

Really the two companies were performing in tandem until the last month or so. Then Barrick shares had a rather sudden loss of value. Part of this loss of value is probably related to the loss Barrick announced for its fourth quarter. The company was able to sell its gold at a good profit margin, despite the temporary fourth quarter fall in the price of gold, but the company also wrote off a large portion of the value of an oil company it had acquired in the prior year. Like so many decisions that turn out wrongly, it seemed like a good idea at the time. Oil is a significant cost in the mining of gold, so it would make sense to buy an oil company in a rising oil market as a hedge against an increase in the cost of mining. Oil’s subsequent fall caught even Warren Buffett by surprise.

Having to write off the value of an oil company due to a collapse in the oil market seems like a one time event. So let’s instead compare Barrick and Newmont on their forward PE ratios, rather than the past twelve months. Barrick closed yesterday trading at a forward Price-to-Earnings (PE) ratio of 15.71 compared to Newmont’s 16.43, which shows that you’re getting a discount for Barrick’s earnings over Newmont’s. The dividend ratio is even better: Barrick yields 1.4% compared to Newmont’s 1.0%. That’s 40% more money in your pocket for owning Barrick. Looking at these figures suggests Barrick is clearly the better company to own at these prices.

Going forward, it’s only a matter of time before the inflationary policies of the world’s central banks start forcing the gold price higher. However, Barrick will not perform well this year if we don’t see a return in the price of copper. There’s a significant amount of copper tied up in the gold ore that Barrick mines and in the past Barrick has been able to refine and sell it at a nice profit to held reduce the cost of its gold operations. For the year 2006-2008, Barrick was able to sell its copper at over $3 a pound and make a profit of over 50% on the sale. Yesterday copper closed around $1.65. If copper stays at that price the entire year, Barrick’s results will suffer. I’ve run a few simulations in a spreadsheet and here’s the numbers I get:

If gold averages the year at $950 an ounce and copper stays at $1.65 a pound, Barrick will earn $.94 a share.
If gold averages $1050 an ounce and copper stays at $1.65 a pound, Barrick will earn $1.78 a share.
If gold averages $950 an ounce and copper returns to $3 a pound, Barrick will earn $1.51 a share.

As you can see, the return of copper to its former levels is going to be just as significant to Barrick’s earnings as gold appreciating in value.

Since analysts estimate a 2009 EPS of $1.85, Barrick could suffer a significant down year if we don’t start to see copper return soon.

Looking beyond a year, I believe Barrick is positioned well. It is set to make money from an appreciation in copper, oil, or gold. That makes it a great place to be as we feel the effects of inflation, but in the short term gold bullion may represent a better investment.

Disclosure: Barrick common stock represents a significant portion of my investment portfolio.-Preston Poulter

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

Gold Continues to Gain Ground – Seeking Alpha

Source: Bullish Bankers – Justin DiPietro

Given the massive amount of money being pumped into the global economic system, higher prices down the road are a given. It’s possible that prices may fall in the short term, but no currency can withstand a determined onslaught by its own central bank and national government for long. I consider gold a no brainer in this environment. It’s a store of value that does well both in inflationary times and, as we saw last year, in deflationary times.

-Justin DiPietro

Disclaimer: None.

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

My Note: See the nice little wedge we are forming in the above chart, a little patience and then bang! $1250 here we come! – jschulmansr

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Claim a gram of FREE GOLD today, plus a special 18-page PDF report; Exposed! Five Myths of the Gold Market and find out:

·        What’s been driving this record bull-run in gold?

·        Why most investors are WRONG about gold

·          What Happens When Inflation Kicks In?

·          How to buy gold — at low cost with no hassle

Get this in-depth report now, plus a gram of free gold, at BullionVault here…

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

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/s, Do Your Due Diligence, Read All Prospectus/s and related information carefully before you make any investing decisions and/or investments. – jschulmansr

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BooYah! What Happened? – Cramer Strikes Again!

04 Wednesday Mar 2009

Posted by jschulmansr in Comex, commodities, Currencies, currency, Currency and Currencies, DGP, DGZ, economic, Economic Recovery, economic trends, economy, follow the news, Forex, Free Speech, Fundamental Analysis, futures, futures markets, gata, GDX, GLD, gold, Gold Bullion, Gold Investments, gold miners, Gold Price Manipulation, How To Invest, How To Make Money, hyper-inflation, IAU, Investing, investments, Jim Sinclair, Latest News, mid-tier, mining companies, mining stocks, palladium, physical gold, platinum, platinum miners, precious metals, price, prices, producers, production, silver, silver miners, spot, spot price, Technical Analysis, Tier 1, Tier 2, Tier 3

≈ Comments Off on BooYah! What Happened? – Cramer Strikes Again!

Tags

ANV, Austrian school, AUY, Bailout News, banking crisis, banks, bear market, Bollinger Bands Saudi Arabia, Brian Tang, bull market, CDE, central banks, China, Comex, commodities, Copper, Currencies, currency, deflation, Dennis Gartman, depression, DGP, dollar denominated, dollar denominated investments, Doug Casey, economic, economic trends, economy, EGO, Federal Deficit, financial, Forex, FRG, futures, futures markets, gata, GDX, GG, GLD, gold, gold miners, hard assets, HL, hyper-inflation, IAU, India, inflation, investments, Jeffrey Nichols, Jim Rogers, Keith Fitz-Gerald, majors, Marc Faber, market crash, Markets, Michael Zielinski, mid-tier, mining companies, monetization, Moving Averages, NGC, NXG, PAL, palladium, Peter Grandich, Peter Schiff, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, protection, recession, risk, run on banks, safety, Sean Rakhimov, silver, silver miners, SLW, small caps, sovereign, spot, spot price, stagflation, Technical Analysis, TIPS, U.S., U.S. Dollar, volatility, warrants, XAU

I had mentioned in a previous posts (here and here), that I am somewhat of a contrarian and get nervous when everyone is shouting Buy! from the rooftops. BooYah! it happened, Jim Cramer touted Gold as a buy and BANG! Gold dropped faster than a lead balloon. Go figure… As for my outlook on Gold it is still long term bullish. You should be taking this breather to accumulate more of the Gold producers, especially Mid-Tier and the Juniors. They are still selling at very attractive levels. Gold I feel is building a nice base here at the $900 level. If $880 level is broken then we’ll go directly to $850 potentially as low as $800. However that said, I think realistically we are going to see some more base building at this level and then launch for a test of the $1033 all time high within the next month to month and a half on normal market action. However since normal is not normal any more, adjust your positions and get ready for the next launch, the countdown has begun…-Good Investing! jschulmansr

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Here’s a very Interesting Piece from Jim Sinclair…

Gold’s Role During Periods Of Monetary Stress

By: Jim Sinclair of JSMineSet.com

Gold’s job is, and will always attempt to during periods of monetary stress, balance the INTERNATIONAL Balance Sheet of the USA.

Putting the Numbers Into The Equation:

$3,125,000,000,000 / 260,272,000 ounces of gold = $12,006.67 per ounce of gold.

In the early 70s I put an advertisement in Barrons predicting gold would rise to $900. When it got near that level, I left for 21 years.

I reappeared officially when Forbes published an article on my career December 10th of 2001. Click here to view the Forbes article…

The mathematics behind the $900 number came from the following equation plus reasonable trend estimates on the number going into the future.

You will note the number today fits in nicely with Alf’s high levels.

Major ONE up from $256 to $1,015 (actually 4 times the $255 low);
Major TWO down from $1015 to $699, say $700 (a decline of 31%);
Major THREE up from $700 to $3,500 (a Fibonacci 5 times the $500 low);
Major FOUR down from $3,500 to $2,500 (a 29% decline);
Major FIVE up from $2,500 to $10,000 (also a 4 fold increase, same as ONE)

I would not have revealed this unless a recognized expert who has a 100% track record such as Alf Fields predicted it first.

I did not wish to yell “fire in the theatre.”

It certainly make the Comex manipulators, who could easily be stopped, look long-term silly today.

Jim

See the following two links as support:

http://research.stlouisfed.org/fred2/data/FDHBFIN.txt

http://en.wikipedia.org/wiki/Official_gold_reserves

In the past, I believe you have said that the price of gold could reach a level whereby in dollar terms this equation will hold:

Oz’s of Gold Held by US x $ Price of Gold = External Debt

From the above links we find:

Federal Debt held by Foreign Investors = $3,125,000,000,000 (as of 12/31/08)

Official US Gold holdings = 8,133.5 tonnes (or 260,272,000 oz’s)

Putting the #’s into the equation:

$3,125,000,000,000 / 260,272,000 = $12,006.67 per ounce of gold

My question is – what is the mechanism or thought process that makes the equation true?

(I guess that I am looking for the why?)

Thank you for your time.
CIGA Rich Gold

My Note- $3500 oz. I could definitely handle that!- jschulmansr

Catch the New Bull! – Buy Gold Online – Get 1 gram free just for opening account– just click here and then again on the Gold Bar!, no minimums – Buy Safely, quickly, and at low prices, guaranteed! – Bullion Vault.com

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

Gold Seeker Closing Report – Gold Seeker

Source: Gold Seeker.com

Gold Seeker Closing Report: Gold and Silver End Mixed While Stocks Rebound
By: Chris Mullen, Gold-Seeker.com

— Posted Wednesday, 4 March 2009 | Digg This Article Digg It!

| Source: GoldSeek.com

	Close	Gain/Loss
Gold	$906.85	-$7.20
Silver	$12.85	+$0.14
XAU	113.48	+0.02%
HUI	272.12	-0.94%
GDM	863.35	-0.80%
JSE Gold	2677.92	+107.77
USD	88.56	-0.38
Euro	126.36	+0.72
Yen	100.90	-0.87
Oil	$45.38	+$3.73
10-Year	3.011%	+0.073
T-Bond	125.0625	-0.703125
Dow	6875.84	+2.23%
Nasdaq	1353.74	+2.48%
S&P	712.87	+2.38%

Buy Gold Online

The Metals:

Gold fell $8.25 to $905.80 in early London trade before it rose as much as $8.70 to $922.75 in early New York trade, but it then fell back off into the close and ended near its new session low of $904.80 with a loss of 0.79%. Silver dropped $0.05 to $12.66 in Asia before it rose to see a gain of 2.7% or $0.34 at $13.15 at about 9AM EST in New York, but it also fell back off into the close and ended with a gain of just 1.1%.

Euro gold fell to about €719, platinum gained $15 to $1041, and copper gained roughly 9 cents more to about $1.69.

Gold and silver equities rose roughly 3% at the open before they fell back off to see about 2% losses by a little after 2PM EST, but they then rallied back higher in the last two hours of trade and ended mixed and near unchanged.

The Economy:

Report	For	Reading	Expected	Previous
ADP Employment	Feb	-697K	-630K	-522K
ISM Services	Feb	41.6	41.0	42.9

“The Obama administration kicked off a new program Wednesday that’s designed to help up to 9 million borrowers stay in their homes through refinanced mortgages or loans that are modified to lower monthly payments.”

The fed’s Beige Book showed that the fed is not expecting an upturn in the economy until late 2009 or early 2010.

Tomorrow at 8:30AM EST brings fourth quarter Productivity expected at 1.1%, Unit Labor Costs expected at 3.8%, and Initial Jobless Claims for 2/28 expected at 650,000. At 10AM is the Factory Orders report for January expected at -3.5%.

The Markets:

Charts Courtesy of http://finance.yahoo.com/

Oil prices rose 9% as inventories fell and hopes for increasing demand from China increased after rumors surfaced about a second stimulus package from them soon. Oil inventories fell 700,000 barrels, gasoline inventories rose 200,000 barrels, distillates rose 1,700,000 barrels, and refinery utilization rose 1.7% to 83.1%.

The U.S. dollar index fell as the euro rose ahead of tomorrow’s ECB and BOE meetings that are expected to see cuts of 50 basis points each. All eyes and ears will be on Trichet’s speech following the expected cuts as it may indicate a possible change in policy heading forward.

Treasuries fell as the Dow and S&P rebounded from yesterday’s 12-year closing lows “on word of a possible Chinese economic stimulus package and an Obama administration plan to help struggling homeowners.”

Among the big names making news in the market today were GE, Costco, BJ’s, Toll Brothers, Liz Claiborne, Exxon, and SunTrust.

The Commentary:

“Dear CIGAs,

Gold’s job is, and will always attempt to during periods of monetary stress, balance the INTERNATIONAL Balance Sheet of the USA.

Putting the Numbers Into The Equation:

$3,125,000,000,000 / 260,272,000 ounces of gold = $12,006.67 per ounce of gold.

In the early 70s I put an advertisement in Barrons predicting gold would rise to $900. When it got near that level, I left for 21 years.

I reappeared officially when Forbes published an article on my career December 10th of 2001. Click here to view the Forbes article…

The mathematics behind the $900 number came from the following equation plus reasonable trend estimates on the number going into the future.

You will note the number today fits in nicely with Alf’s high levels.

Major ONE up from $256 to $1,015 (actually 4 times the $255 low);

Major TWO down from $1015 to $699, say $700 (a decline of 31%);

Major THREE up from $700 to $3,500 (a Fibonacci 5 times the $500 low);

Major FOUR down from $3,500 to $2,500 (a 29% decline);

Major FIVE up from $2,500 to $10,000 (also a 4 fold increase, same as ONE)

I would not have revealed this unless a recognized expert who has a 100% track record such as Alf Fields predicted it first.

I did not wish to yell “fire in the theatre.”

It certainly make the Comex manipulators, who could easily be stopped, look long-term silly today.”– Jim Sinclair, JSMineset.com

“Dear CIGAs,

General long liquidation and some fresh short selling continues to occur in the paper gold market at the Comex as short term oriented traders express disappointment in the lack of a reported increase in holdings in the gold ETF, GLD. Gold is still probing for a low from which to base. See the chart for some comments on the various technical levels where that might be found.

Gold moved inversely to the equity markets today as stock prices moved higher in a bit of a relief rally after being down for 5 straight days in a row. Chatter was that China was on the verge of an economic recovery and what is therefore good for China is good for the entire global economy. The surge in copper prices today after yesterday’s strong move higher also fed into that theory. What those espousing the “copper theory” do not understand apparently is arbitrage. Copper prices in Shanghai and London were and are trading at two different price levels and arbitragers are taking advantage of that price discrepancy. That has copper flowing to China and drawing down supplies in London which is being interpreted as signs that China is going to recover first. My view is that once arbitrage corrects the price discrepancy and the Chinese are finished restocking at bargain prices, the drawdown in LME copper stocks will come to an abrupt halt. China is certainly planning on using some of that copper with its own economic stimulus plan but one has to wonder if that sort of thing is going to produce lasting economic gains seeing that part of the problems in China are excessive production and supply capacity. I guess we will find out…”– Dan Norcini, More at JSMineset.com

“April Gold closed down 6.9 at 906.7. This was 1.2 up from the low and 16.3 off the high.

March Silver finished up 0.205 at 12.9, equal to the high and equal to the low.

The gold market clearly was undermined by several developments that seemed to deflate the flight to quality angle in the marketplace. Clearly the Chinese stimulus news was a major catalyst behind an improvement in macro economic sentiment and that in conjunction with what appeared to be a key reversal in the Dollar seemed to turn up the long liquidation pressure on the gold market. It is also possible that additional US government offerings served to tamp down fears that the US wasn’t in control of its future, as the idea that things were about to get out of control was certainly part of the reason gold prices recently managed to rise above $1,000. While anxiety might not stay tamped down, the gold market on Wednesday certainly seemed to be fearful of that happening in the near term.

The silver market clearly diverged with the gold market and that seemed to be the result of silver tracking its physical commodity factors, while the gold market was seeing financially orientated long liquidation pressure. With the copper market adding almost 10 cents per pound today and up 20 cents from this week’s lows, it was clear that interest in industrial metals was serving to lift the fortunes of silver. Certainly the Chinese stimulus package was a large source of support for silver but in retrospect the strength in the equity market had to give some silver buyers an incentive.”– The Hightower Report, Futures Analysis and Forecasting

GATA Posts:

Liberty Dollar founder on Fox News today

TheStreet.com notes complaints of manipulation of silver

The Statistics:

As of close of business: 3/04/2009

Gold Warehouse Stocks:	8,655,661	-60,200
Silver Warehouse Stocks:	125,113,047	+993,769

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

	Product name	Total Tonnes	Total Ounces	Total Value
New York Stock Exchange Arca (NYSE Arca) AND Singapore Exchange (SGX) AND Tokyo Stock Exchage (TSE) AND Hong Kong Stock Exchange (HKEx)	SPDR® Gold Shares	1,029.29	33,092,632	US$ 30,228m
London Stock Exchange (LSE) AND Euronext Paris AND Borsa Italiana AND Frankfurter Wertpapierbörse (Deutsche Börse )	Gold Bullion Securities	129.99	4,179,259	US$ 3,792m
Australian Stock Exchange (ASX)	Gold Bullion Securities	12.49	400,456	US$ 364m
Johannesburg Securities Exchange (JSE)	New Gold Debentures	28.62	920,227	US$ 840m
NASDAQ Dubai	Dubai Gold Securities	0.16	5,000	US$ 5m

Note: Change in Total Tonnes from yesterday’s data: 2.85 tonnes were removed from the trust.

COMEX Gold Trust (IAU)

Profile as of 3/3/2009
Total Net Assets	$1,989,312,763	Ounces of Gold in Trust	2,179,187.377
Shares Outstanding	22,150,000	Tonnes of Gold in Trust	67.78

Note: Change in Total Tonnes from yesterday’s data: 0.02 tonnes were removed from the trust.

Silver Trust (SLV)

Profile as of 3/3/2009
Total Net Assets	$3,253,553,515	Ounces of Silver in Trust	256,600,428.100
Shares Outstanding	260,250,000	Tonnes of Silver in Trust	7,981.17

Note: Change in Total Tonnes from yesterday’s data: 3.02 tonnes were removed from the trust.

The Miners:

ITH’s (THM) closed financing, Northgate’s (NXG) fourth quarter earnings, Great Basin’s (GBG) priced offering, Agnico Eagle’s (AEM) exploration update, New Gold’s (NGD) and Western Goldfields’ (WGW) business combination, MAG’s (MVG) corrected estimation error in its resource estimate, and Ecuador’s plans to allow miners to restart operations were among the big stories in the gold and silver mining industry making headlines today.

WINNERS

1. Northern Dynasty	NAK +16.30% $4.78
2. Freeport	FCX +13.38% $32.21
3. Anglo American	AAUK +10.82% $7.27

LOSERS

1. New Gold	NGD-13.97% $1.54
2. MAG	MVG -7.78% $4.15
3. Harmony	HMY-3.33% $11.04

Winners & Losers tracks NYSE and AMEX listed gold and silver mining stocks that trade over $1.

All of today’s gold and silver stock news:

Quri Resources Launches a University Assistance Program – More
– March 04, 2009 | Item | E-mail

Zoloto Resources announces closing of non-brokered private placement – More
– March 04, 2009 | Item | E-mail

International Tower Hill Mines Ltd. Closes $10,500,000 Bought Deal Equity Financing – “International Tower Hill Mines Ltd. (“ITH” or “the Company”) (CDNX:ITH.V – News)(AMEX:THM – News)(Frankfurt:IW9.F – News) is pleased to announce that, on March 4, 2009, it closed its previously announced private placement through a syndicate of underwriters (“Underwriters”) and sold an aggregate of 4,200,000 common shares of the Company (“Shares”) at a price of $2.50 per Share for gross proceeds of $10,500,000 on a bought deal basis in Canada and a concurrent private placement in the United States to accredited investors (the “Offering”).” More
– March 04, 2009 | Item | E-mail

Consolidated Thompson Comments on Recent Stock Activity – More
– March 04, 2009 | Item | E-mail

Uranium Hunter Corporation, Corporate Updaate – More
– March 04, 2009 | Item | E-mail

The Economy:

Report	For	Reading	Expected	Previous
ADP Employment	Feb	-697K	-630K	-522K
ISM Services	Feb	41.6	41.0	42.9