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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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

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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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

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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

Stupid Is as …

07 Tuesday 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 Stupid Is as …

Tags

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

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

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

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

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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

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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

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

Subject: Two trending markets revisited and analyzed for you

S&P Video Analysis: Crude Oil Projections:

Click Here To Enter Your Symbol/s

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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

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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

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

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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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.

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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.”

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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

≈ Comments Off on The Battle is Still Raging!

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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!

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Sneak Peek At Our New

MarketClub Charts

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

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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

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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?

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

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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.”

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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.

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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.

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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

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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

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

≈ Comments Off on Scammed Again By Uncle Sam?

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

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.

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“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

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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

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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.

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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

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

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

Schedule automatic tweets, Thankyou for following me messages and much more! Be More Productive- Free signup… TweetLater.com

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.

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

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

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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, 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

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

Follow Me on Twitter and be notified whenever I make a new post!Schedule automatic tweets, Thankyou for following me messages and much more! Be More Productive- Free signup… TweetLater.com

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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.

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

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.

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

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.

Schedule automatic tweets, Thankyou for following me messages and much more! Be More Productive- Free signup… TweetLater.com

Nothing in today’s post should be considered as an offer to buy or sell any securities or other investments; it is presented for informational purposes only. As a good investor, consult 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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And the Winner Is…

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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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 here…

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

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

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

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.

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

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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Why did Gold Drop After $1000 & Why It’s Going Back!

06 Friday Mar 2009

Posted by jschulmansr in 10 year Treasuries, 20 yr Treasuries, Bailout News, banking crisis, banks, bear market, Brad Zigler, bull market, capitalism, CDE, central banks, China, Comex, commodities, Contrarian, Copper, Credit Default, Currencies, currency, Currency and Currencies, depression, DGP, DGZ, dollar denominated, dollar denominated investments, Economic Recovery, economic trends, economy, Fed Fund Rate, Federal Deficit, federal reserve, Finance, follow the news, Forex, Fundamental Analysis, futures, futures markets, gata, GDX, GLD, gold, Gold Bubble, Gold Bullion, Gold Investments, gold miners, Gold Price Manipulation, Greg McCoach, hard assets, How To Invest, How To Make Money, hyper-inflation, IAU, IMF, India, inflation, Investing, investments, Jschulmansr, Junior Gold Miners, Long Bonds, majors, Make Money Investing, manipulation, market crash, Markets, mid-tier, mining companies, mining stocks, monetization, NAK, palladium, Peter Brimelow, physical gold, platinum, platinum miners, precious metals, price manipulation, prices, producers, production, recession, silver, silver miners, Silver Price Manipulation, spot, spot price, stagflation, Stimulus, Stocks, The Fed, Tier 1, Tier 2, Tier 3, TIPS, U.S. Dollar, XAU

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Sorry for no post yesterday, was traveling. Just why did Gold Drop basically $100 oz after hitting the $1000 price level? Was it Mr. BooYah Jim Cramer giving his recommendation? That helped, but what was the real reason? Today’s articles give you the answer along with the reason Gold is heading right back. Gold closed over it’s 20 day moving average so 1st resistance gone, next big resistance around $980, then we are back to testing the all time high. I took this pullback as an opportunity to accumulate some more Mid-tier producers, two of my fav’s actually, (NAK) and (CDE). I chose (CDE) because everyone seems to have forgotten Silver and I personally think on a percentage basis will in the end bring greater returns than Gold. The other “forgotten metal is Platinum and (SWC) has been beat up so badly I couldn’t resist accumulating a little more. I will put out a special weekend edition so be on the lookout for that. You will be the first to know if you are following me on Twitter. Have a Great Weekend!- Good Investing! – jschulmansr

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Here is the answer to the question why Gold dropped $100 oz. I highlighted the section which explains why? As I mentioned in my post where I challenged Brad Zigler, my fear/concern came to fruition.

The Silly People- Le Metropole Cafe – GoldSeek.com

Source: GoldSeek.com

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

By: Bill Murphy, Le Metropole Cafe, Inc., LemetropoleCafe.com

As veteran Café members know, it is my opinion the financial market press, who follow and comment on gold, rate at best mental midget status, as exhibited by this gold recap headline yesterday afternoon…

Gold Falls Most in Seven Weeks as Equities Rally; Silver Drops – Bloomberg, Mar 3 2009 3:18PM

***

HUH? The DOW closed at its lowest level since 1997.

A few of The Muppets on CNBC have been pointed to the copper and oil charts as potential indicators that the economy might be about to show some life and that the market may be ready for a rally … from extremely oversold conditions. In particular, they are referring to their rounding bottom formations, which were followed today by breakouts, especially copper…

April crude oil, $45.78 per barrel, up $3.73
http://futures.tradingcharts.com/chart/CO/49May copper, $1.6940, up 8.95 cents.
http://futures.tradingcharts.com/chart/QC/59So, gold is supposedly liquidated for “margin call” reasons, in a deteriorating economic scene all over the world, yet oil and copper are not. Makes a lot of sense.

Then, this morning the DOW, S&P and the DOG were all called a fair amount higher on this news…

Stocks Rise Around the World; Commodities Gain, Treasuries Fall

March 4 (Bloomberg) — Stocks rose around the world, commodity prices rallied and Treasuries fell on speculation China will broaden efforts to boost growth in the world’s third-largest economy. The Shanghai Composite Index jumped the most in four months.

BHP Billiton Ltd. and Alcoa Inc. added more than 2 percent as copper and aluminum climbed on optimism metals consumption in China will increase. Aluminum Corp. of China Ltd. surged 9 percent as a former statistics chief said China’s Premier Wen Jiabao will announce a new stimulus package tomorrow. Volkswagen AG, the biggest overseas carmaker in China, gained 3.9 percent.

The MSCI World Index added 0.3 percent to 707.74 at 1:23 p.m. in London. The deepening global recession, a third government rescue for Citigroup Inc. and dividend cuts at companies from General Electric Co. to JPMorgan Chase & Co. have sent the of 23 developed countries to a 23 percent drop this year, the worst start since the gauge was created in 1970.

“The Chinese are about to come up with another huge fiscal push,” said Philip Manduca, who oversees $1 billion as head of investments at ECU Group in London. “They are going to pump an enormous amount of money in. This will help in the long term,” he said in a Bloomberg Television interview….

-END-

Perhaps coming Chinese economic stimulation is MORE than necessary as the true state of Chinese and Asian economic activity is not properly understood. The latest from my friend since 1980, Frank Veneroso…

Global Economy
Asian Black Hole Again
The Economic Collapse In Asia Points To A Deep Contraction In China

March 3, 2009

Executive Summary

1. The industrial collapse on a global scale has almost no precedent. Why has it happened?2.

The history of economic cycles tells us that industrial collapses like this one tend to be associated with two industrial excesses: massively excessive accumulations of inventories and manias in fixed investments

3. We have just gone through the biggest inflation adjusted commodity bubble in recorded world history both in terms of amplitude and duration. History tells us there was probably global goods hoarding; in other words, there may have been an inventory cycle of immense amplitude, much of it unrecorded, which is now being unwound violently.

4. If excessive inventory building and excessive fixed investment has been partly responsible for the amazing speed of decline in global industrial production, where in the world were these excesses concentrated?

5. China has embarked on a massive increase in its distribution chain. There was an associated massive inventory build in stores that remain void of shoppers. There may also have been a speculative accumulation of inventories.

6. China is also the economy where the world’s greatest fixed investment excess occurred. The ratio of fixed investment to GDP has been well above 40% for a half decade. No such investment excess ever occurred in any major economy since the onset of the industrial revolution.

7. We are now hearing stories about immense overcapacity in construction of all kinds.

8. Exports to China from China’s trading partners is all important, since it gives us some insight into the Chinese economy which the Chinese garbage statistics prevent us from seeing clearly.

9. Year over year exports for Japan have now fallen an amazing 46% in January. Exports to China fell at the same rate as overall exports, suggesting a contracting Chinese economy.

10. Japanese exports of capital goods to China have collapsed. German and Korean exports of capital goods to China have done the same. All this points to a sharp contraction in unsustainably high Chinese private fixed investment.

11. Taiwanese GDP fell an 8.36% rate in the fourth quarter non-annualized. I have never heard of an industrial contraction at such a devastating rate.

12. Exports were a cause. Taiwan’s exports fell at a 42.7% rate year over year in January. Exports to mainland China and Hong Kong fell at an even faster rate.

13. The odds are that Taiwanese firms operating in China have drastically curtailed their fixed investment on the mainland – another indication of a bust in unsustainable private business fixed investment in China.

***Neither commentary is mutually exclusive. If the Chinese go all out here because they are in such a mess, they will need a lot of oil and copper, etc. Better their people have shovels than guns.

This is a roundabout way to get into covering my field, gold and silver. Gold was bombed for 7 days in a row … from top to bottom $100+. Two weeks ago the world was falling apart and it was THE safe haven play. By yesterday the price drop had many of its advocates stumbling and the press was quickly ready to pan it as a GO TO investment.

This really is silly people stuff. Twenty to Thirty years from today people won’t believe the garbage reasons offered for gold doing what it does … emanating from the press and The Muppets. In a bigger picture sense it is equivalent to those who thought the world was flat some 500 years ago.

Gold is more a safe haven play than ever and the price is going to the moon, along with silver. The only reason we have seen and endured a stunning 10% drop in the price of gold in 7 days is because the US Government/Gold Cartel ordered the price down. Once they set the fall in motion, it led to normal technical selling by funds, as most follow money management/stop loss principles. The Gold Cartel has been feeding on these folks and the likes of momentum trader Dennis Gartman for the 10½ years The Café has been open.

Gold is now in its 9th year of making new highs; and still, many pundits and Muppets are questioning it as an investment because it has no yield. Another huh? Yep, and it has no counterparty risk either, nor has it lost 50% of its value like the DOW over the past 12 years.

There are so many dingbats out there who relate back to the 1980 gold high and say it has gone nowhere, or little to nowhere, which is more silly people stuff. Tell that to those who bought the DOW over the past 12 years, who are at best even, with most EVERYONE losing money, while gold has soared.

Silly, silly, silly.

On that note, veteran Café members will remember Neal Ryan (had not heard from him in 6 months or more) who spearheaded the Blanchard & Co. lawsuit against Barrick and JP Morgan. He just checked in with CP and me this morning. Forget the mental midget, Muppet gold commentary. This is the real deal and the main reason for gold’s $100+ price drop…

Gents,
hope all is well on your end. I must profess that I haven’t kept track of things in the metals markets much recently, but did some quick work for a friend who was looking to invest and asked about bank selling. Just an FYI since I was trying to explain to him why when central bank activity ramps up it’s the time to buy….Euro CB’s have dumped over 220 tonnes of gold on the market in the last 3 weeks…ie. they’ve met nearly half their yearly selling quota in 3 weeks. Hadn’t seen anybody mentioned anything like that in any news lately, though hadn’t been looking either. It’s always the interesting stuff that no one in the mainstream media seems to notice.

keep up the good fight!
Neal

Neal, who is so well connected and really knows his stuff, what? … the press getting to the gold truth? Explaining it to the bewildered public?

Oh well what fun!!! From MIDAS yesterday (referring to JB’s ECB selling numbers)…

“But the key point of the note is that this 38 tonnes of selling is dwarfed over a two month period by the 249 tonnes GLD has supposedly bought over the same period of time (see Adrian below). Hmmm.”

Which if Neal’s info is correct, means The Gold Cartel dumped 211 tonnes SURREPTITIOUSLY as part of their gold price suppression scheme and was THE real reason gold fell like it did. It all fits.

Oh, so many of the mainstream gold world folks is a bunch of shallow nincompoops!

CNBC’s Jim Cramer was jumping up and down about silver last night. It was quite a lengthy segment on silver. However, as bullish as he was, he said that gold and silver were going DOWN first, so buyers should scale in at intervals on the downside. Silver popped early to $13.17 but gradually fell apart, while gold was smothered for no apparent reason again, except for The Gold Cartel’s reasons. Gold roared early up to $922.30, then was nailed by the bums to $905 before stabilizing. We have witnessed this pattern (the cabal slams gold after an early burst) over and during the past (now) 8 days of successive losses. Perhaps we have a double bottom above $900. With so many buyers lurking out there between $880 and $900, that would not be a surprise. Then again, there is a horrendous US jobs report coming on Friday and gold is always nailed around that report. Perhaps that was part of what this takedown was all about and the major damage has been done already.

Silver was aided in the morning by the VERY firm copper and oil prices. The hoopla over the Chinese stimulus comments didn’t hurt either.

The gold open interest only fell 2,071 contracts to 365,271 (not much liquidation there), while the silver OI went up a slight 15 contracts to 93,051.

The yield on the 10 yr T note is 3%. The dollar fell .73 to 88.57. The dollar/gold relationship has taken on an entirely new dimension for the time being.The CRB came back from the dead, gaining 7.78 to 211.45.

AM gold goodies from John Brimelow…

Indian ex-duty premiums: AM (S15.63) PM ($8.79) with world gold at $913.58 and $911.80. Basis Delhi – well below legal import point. After a soft start, the rupee managed a rally at last, closing at $1 = R51.35 (Tuesday R51.95). This had a notable effect on the PM premium situation. The stock market also managed an up day. Closing 0.23% above Tuesday.

A rally in the rupee could have an important influence on world gold at this point.

In a somewhat confusing development, The Gartman Letter today speaks of cutting another unit of gold from its model portfolio, by my reckoning eliminating its position. But the portfolio summary reflects neither today’s nor yesterday’s action.

Nevertheless, the attitude towards gold now held by this well-informed and influential commentary is clearly unenthusiastic.

Of interest is that MarketVane’s Bullish Consensus for the S&P, which is normally very sticky, slipped a point last night to 32%.. In the past couple of years it has been lower only 3 days, October 8-10 last year, when it bottomed at 29% (and then saw a 10 point rally. On some reckonings (Hays), that remains the “internal low” of the market.

Since very recently selling in gold appears to have been linked to stock market weakness, this could be important to gold’s friends.

***

MIDAS note: there will be JB evening input (more gold goodies) between 5 and 7 Eastern Standard Time unless otherwise notified.

And here it is…Tuesday’s deep $34 intraday Comex sell-off and down $26.40 loss (2.8%) saw only a minor fall in open interest. Only 2,071 lots were shed (0.6%). In the first instance this implies there continues to be a substantial short interest in the market, and that the widely reported long-liquidation is exaggerated, at least as far as Comex is concerned.

Today a promising early Comex rally was reversed on heavy volume – by 10am 62% of the day’s estimated volume had traded and gold was $10 off its high. Gold then drifted down to a floor close loss of $6.90. Only 99,266 lots were estimated to have traded – switch effect 8,734.

A great deal of attention is now being paid to the slack Asian demand/scrap reflux situation with wider discounts on kilo bar being reported, especially in the Far East (50c HK, 75c Tokyo). See

http://in.reuters.com/article/businessNews/idINIndia-38330720090304?pageNumber=2&virtualBrandChannel=0

On the other hand, a survey of US coin and bullion dealer sites this afternoon suggests that US premiums have widened slightly, and remain very high.

MarketVane’s Bullish Consensus for gold slipped a point to 74%.

The GLD ETF achieved a fifth day running with reported gold holdings static at 1,029.29 tonnes.

While this is the 8th down day in a row for Comex gold, the bears cannot be said to have really pressed their advantage, with volume fading away once the early rally attempt was blocked. Neither the HUI (down 0.94%) nor the XAU (up 0 02%) lost their curious gains of yesterday. Some will see the apparent exit of The Gartman Letter as a positive sign.

The market remains interesting.

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Now we know Gold has come roaring back but I couldn’t agree more “Very Interesting”!-Jschulmansr

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Gold: Entering an Accelerated Trend Channel – Seeking Alpha

By: Olivier Tischendorf

Gold has history on its side. It is a proven way to preserve one’s wealth over time. It acts like an insurance and it is highly unlikely mankind’s behavior during the last 6,000 years is going to change anytime soon. Some things never change. Two of those things are human nature and gold’s capacity to preserve one’s purchasing power.

That said gold has recently reached new highs in various foreign currencies. The chart of gold in Euro terms tells the story of what is to come. Don’t take this lightly. This is an important event as new highs typically attract more buying. If the Europeans start allocating more funds to physical bullion demand will increase drastically and gobble up supply. It is reasonable to expect additional upward pressure for the price of gold. Physical accumulation is accelerating on a worldwide basis. Keep in mind gold is a very tiny market compared to the equities market. A change in asset allocation resulting in a small increase to bullion exposure could easily double worldwide demand for gold bullion investment purposes.

A story hitting the wires recently is that: Greenlight Capital’s founder, David Einhorn, is finally taking his grandfather’s advice. The $5.1 billion hedge fund is buying gold for the first time amid the threat of inflation from increased government spending. Einhorn fund’s recent decision to invest in physical gold bullion is testament to increased awareness of gold’s bullish long term trend and it looks like this is only the beginning to added buying pressure for gold bullion.’ For full coverage of the story click here.

It looks like the price of gold in US Dollar terms is merely lagging other currencies as the US Dollar has been very strong lately. It is still early to draw conclusions as the US Dollar could stay stronger than most people expect but the new accelerating trend channel looks to be a valid one.

So what it all comes down to is that worldwide accumulation of physical gold is accelerating. Hence the odds the gold price is going to accelerate as well are rather high.

If you haven’t built a physical bullion position yet now is a good time to think about doing so. I typically recommend holding at least 5% of one’s liquid net worth in gold bullion held in your own possession. Increasing that percentage up to 20% isn’t that bad an idea either. Although the markets look like they might want to stage some kind of rally right now taking a longer term perspective indicates the gold trend is going to make you more money than buying the S&P500 via the SPY.

Gold should reach new highs in US Dollar terms soon following the lead of foreign currencies like the Euro, the Canadian Dollar, the Australian Dollar, the Swiss Franc and the British Pound Sterling to name a few. As long as the lower trend line of the new dotted trend channel is not breached ‘the trend is your friend’ and you should hold on to your gold bullion position. You could use that level to protect your position with a stop loss.

If you want to be more aggressive you should consider buying silver bullion. The silver market is much smaller than the gold market so the market is considered to be a riskier one. But once the public is going to stress silver’s monetary significance as opposed to viewing it simply as another commodity silver prices will increase significantly and should ultimately outperform gold. I recommend closely watching the gold – silver ratio for clues. Historically the ratio has showed to be lower than the actual one. Watch for the ratio to go back to the 55 level and overshooting to the downside as soon as silver garners more interest.

You can easily keep track of the three charts and how they evolve over time by visiting my public list.

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My Note: Remember even with the $100 oz drop Gold came nowhere close to breaking out of even it’s upward accelerated channel! Patience my friends!

! 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

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Greg McCoach: Gold $2000/oz by Year’s End? – The Gold Report

Source: The Gold Report

Successful entrepreneur turned bullion dealer Greg McCoach brings more than 20 years of business experience, a vast network of mining contacts and his unique precious metals industry insights to the mining investment newsletter he launched in 2001, The Mining Speculator. In this exclusive interview with The Gold Report, Greg outlines the ‘new’ criteria for junior miners, explains why he favors the juniors over more senior producers and advises a combination of both physical metal and stocks for investors to protect themselves in today’s market.

The Gold Report (TGR): In your January newsletter, there’s a table that shows how the HUI Gold BUGS Index over 10 years was the top asset class. Can you talk about gold as the top asset class compared to these others?

Greg McCoach (GM): We see by the statistics that the HUI Index, which is a measure of gold and silver precious metal stocks, has performed better than any other asset class in the past 10 years. Now what’s interesting is that we’re still in the process of watching this gold bull unfold. In terms of the four stages of a bull market, we are probably past the midway point and heading into the latter stages. This is where the parabolic moves in the precious metals will start to happen. And with all that is unfolding in the world economic scene, it’s not difficult to see why gold will soon be soaring.

TGR: So you definitely think this bodes well for the next phase of the gold bull market; there will be a parabolic move?

GM: Yes. This is where you’re going to see gold really go to levels that people can’t even comprehend. Up to this point, gold has been a surprise to many in the mainstream media. What investors need to understand about the bull market in gold thus far is that the numbers that we’re dealing with, $960 an ounce gold right now, is nowhere near the 1980 high in gold of $875 an ounce.

You have to inflation-adjust those 1980 numbers for 28 years of true inflation. If you did that, the $875 high in gold would have to be $6,500 an ounce in inflation-adjusted terms. For silver, it’d be $400 dollars an ounce. So when you see silver at its current rate of $14 an ounce and gold at $960 an ounce, in real inflation-adjusted terms, those prices are still dirt cheap, relatively speaking, compared to where they’re going to be going.

As we see the world financial system continue to unravel, the dollar along with all fiat currencies will just implode leaving gold as the currency of last resort. Gold, and silver will go into the stratosphere as this happens. People need to remember that what took gold and silver to their all-time highs in 1980 pales in comparison to what we are dealing with now. The world has never witnessed the likes of the financial destruction that is now underway. It is truly frightening.

TGR: You say in your “Greg’s Crystal Ball” section that you think the mania phase is going to start happening sometime next year, in 2010.

GM: I think by the end of this year things are going to be so bad worldwide that gold is going to become headline news and that will become the driving force towards the parabolic moves. What’s happening right now is that the big money is still playing the paper game of musical chairs. “Paper musical chairs,” I call it. When the music stops, people run from one chair to the other chair looking for safety. They run from bonds to dollars to Euros, etc., trying to find the safest place. But they’re not finding it. Why? Because the paper system as we’ve known it is unraveling. So people are trying to chase safety. Well, they can’t find it because it doesn’t exist. They go into dollars, and they feel comfortable there for a little while; then suddenly the dollar tanks again, and then they run out of the dollar to another paper currency.

Ultimately, when the music stops, they’re not going to run to a chair; they’re going to run for the exits. When that happens, they’re going to discover the asset class known as gold. That’s when these parabolic moves are going to happen. As that happens of course, the select precious metal mining stocks will move up accordingly. The leverage investors can get will be phenomenal during such a scenario.

TGR: You say the key is to own the physical metal, as well as the stocks. What do you recommend as far as percentages in a portfolio?

GM: Right now my personal portfolio is 25% cash, 25% physical metals. I take physical delivery of gold and silver. I have 35% in select precious mining stocks, junior mining stocks mostly, and then the balance is in Canadian oil and gas trusts that pay a monthly dividend check.

TGR: You favor the juniors over the more senior producers simply because of the growth potential?

GM: Yes. The leverage is better. For me, personally, I’m willing to take the extra risk with the juniors because I feel like I know what I’m doing and I’m confident about it, so I feel comfortable in being able to identify the juniors that are going to perform very well. The seniors will do well, but they won’t do as well on a percentage basis. In other words, there’s not as much leverage with the seniors as there is with the quality juniors. But the big problem for the average investor is trying to understand what a quality junior is. There’s so many of these companies out there, 80% of which are nothing but moose pasture, and it’s very difficult to sort through all the promotions and scams to find the real jewels. That’s my job as a newsletter writer; that’s what I do. I travel the world trying to sort through all the garbage to find the real opportunities that can deliver the big returns.

TGR: What do you see right now with the juniors? Some of them definitely are climbing back up.

GM: I think it’s nice to see them recover a little bit. This is a very good learning situation for investors of mining stocks. Look at the companies that are rebounding. If we have another implosion, which companies do you want to buy? The ones that rebounded the quickest and the most in the past several weeks, months.

Since the bottom in late November, early December, we’ve had companies that have doubled, tripled, and even quadrupled if you had enough courage, or any cash, to buy back then. But there are other companies that haven’t moved at all, and they’re just stuck in the mud. So, obviously, you have been given a great opportunity to see the companies that are more quality oriented, that have the value, that have what the market is looking for, and those companies are the ones you want to really pay attention to.

Since a lot of the stocks on our list bottomed out, the top 10 list, in particular, has had some of the stocks do quite well. Some of them have doubled, tripled, and have bounced back quite nicely from the bottom. Unfortunately, most of us probably bought at a higher level and so we’re not even up to the point where we’re at break-even again. Obviously, we’re still waiting for higher levels.

Now what I’ve been saying is that, unfortunately, with the severity of the world economic events, up to this point our mining shares have been sucked down the drain, so to speak, when world stock markets sell off. Every day that the world stock markets have had a bad day, the mining stocks have had a bad day as well. What we’re looking for is the precious metal prices to help us disconnect from that activity. It hasn’t happened yet. I’m still worried that the next downturn in the world markets could affect our junior mining stocks again. I’ve been looking for this key disconnect moment, where the precious metal prices take us into another realm and help protect and insulate our select junior mining stocks. You have to use ‘select’ because so many of the juniors are going nowhere. It’s only the select companies that are going to be protected or insulated from other market activity that’s going in the wrong direction. So I’m looking for that moment our quality junior stocks start to move on their own accord.

TGR: Can you give us an overview of what you consider a select company? What is the criteria?

GM: The criteria is this. They have to exceptional management. In other words, out of all the management teams that exist out there, there’s probably only a small handful that really have the quality background and experience to do what they say they’re going to do. Most of these other people are just managers or lawyers who don’t have experience or are hoping to get involved with a hot sector. They’re highly promotional, and most often are only looking out for themselves.

So you look for the people that have the right resumes, the ones who have worked for the majors for 10, 15, 20 years or more and have the experience (paid their dues so to speak), learned the business, understand what they’re doing and what they are trying to accomplish. Do they have experience in doing this specific task such as find gold? Did they mine gold or silver before? If they were mining for uranium their whole career and they jump into gold, well, that doesn’t sound too good to me.

So you have to have the experience and the knowledge base. That’s key. The way we’ve been playing this market the last eight years is no longer as valid as it once was. We need to adjust to the new rules on how to play this game and win.

What the market is looking for is very specific. If you make a good gold discovery, it has to be in an existing mining camp. It has to be in an area where the development costs aren’t very large. If you make a big gold discovery, and it’s in an area that’s out in the middle of nowhere, the development costs are going to be too high. No one’s going to fund it; no one’s going to finance a project like this with the new market environment. It doesn’t matter how good the results are.

So you have to find these discoveries in good jurisdictions that have short permitting times that have existing infrastructure. If it doesn’t have those things, forget about it. There are plenty of great discoveries that I know of. They’re just in the wrong area. Some examples would be Romios Gold Resources Inc. (TSX.V:RG), Copper Fox Metals Inc. (TSX:CUU), who have tremendous discoveries but are unfortunately in the wrong area. It takes too much money to develop such a desolate area as we have seen with NovaGold Resources Inc. (TSX:NG) (AMEX:NG) in their effort to get the Galore Creek deposit in production. The cost overruns were so enormous, they had to shut the whole thing down. Well, the market’s not interested in those kind of projects anymore. I choose to invest in areas that have what the market wants.

Look in the areas that have plenty of existing mines and infrastructure. This is where plenty of experienced mining people already live and juniors who can make a discovery will most likely be bought out by a major who is in the area.

Now certain jurisdictions are better than others. The political risk now is more intense than it was. Political risk is always a big factor, but the political risk now is just amazing, so you have to be very careful where you’re willing to invest your money. For me, I’m getting to the point where there are only a few jurisdictions that I’m willing to look at. Certain parts of Canada where there’s existing mining camps, certain parts in the United States, and Mexico which still looks very good. That’s about it. Everything else is no longer as attractive as it once used to be.

We’re also looking for higher-grade resources vs. lower grade. We’re looking for low-cost development situations vs. high-cost development situations. We’re looking for economic deposits that can be financed.

Here’s another situation—within mining, the different kinds of discoveries. A large copper-gold porphyry system is known to house large amounts of gold and silver,; but, unfortunately, it’s also known to have very high development costs. Who’s going to finance that? I’m not as interested in those kinds of stories as I once was. You’re better off looking for the higher grade— “epithermal”—smaller vein, higher grade, near-surface deposits that will have an easier time of actually going the whole distance and getting into production.

TGR: Let’s talk about some of the companies on your top 10 list. Pediment Exploration Ltd. (PEZ:TSX) (PEZGF:OTCBB) (P5E:FSE) is at the top; can you give us an update?

GM: Since they bottomed, Pediment has more than doubled. They’re hanging around the dollar trading range, which some people have been disappointed with. But what I say is, look, Gary Freeman, the CEO, is just weighing his options right now. He’s not making much in the way of news. That’s okay. He’s lying low, he’s looking at his options right now, and this is a company that is about to release a new 43-101 that will have more than 2 million ounces of gold in the ground. This is a verified situation. That’s a significant number because once a company, a junior, crosses the 2 million ounce gold mark, it gets on the radar screens of the majors.

Gary has a lot of things he’s weighing out. After the market meltdown, he decided to reduce costs, get things trimmed down, and get the burn rate really low to conserve cash. So, in the last few months there has not been much in the way of news. The company is lying low for now, but I think you’re going to see that change as PEZ announces their new 43-101 resource calculation. At that point I think you’re going to see Pediment start to have a lot of news flow, which should be very good for the share price.

He’s got the Baja property we just talked about that’s going to have the new 43-101. I don’t see how it’s not at least 2 million ounces based on my back-of-the-envelope calculations, but you never know with these things until they actually come out. I would guess it’s going to be over 2 million and there’s plenty more to be discovered there In my opinion, this deposit could be greater than 3 million ounces before all is said and done. Well, that’s a major discovery. It’s in the right jurisdiction, with very low development costs and it’s in an existing mining area, so it should do very well.

Now, Pediment also has a project called La Colorada that could be a near-term producer. It’s the old open pit that El Dorado Gold Corporation (ELD.TO) (AMEX:EGO) produced from, which really made El Dorado Gold what they are today—what launched them—that discovery and putting it into production. Pediment now controls it and other people are interested in it. Should Gary vend it out to somebody else, take the cash and run, or should he develop it himself? He has lots of options. He has lots of cash. He has lots of great properties. Gary has many different things he can consider at this point, so I think he wisely just stepped back, started to look through everything that he has and what options are available. We’ll see what happens but the prospects for the company look very good..

I’m sure there’s been interest by majors already on the Baja Project. He’s probably gotten plenty of calls, where the majors are already saying, “hey, look, what if we just take you out at this price?” Is it high enough? Is it worth taking the money now and running, letting somebody else deal with it? Or is it better for the company to go down the road a little bit further, develop it themselves in the hopes of getting a much higher price later on? These are things we all have to weigh out. Is it better for us as shareholders to take the money and run right now, even though we might get a lower price for it? Or should we wait a little bit longer, and get a higher price when they develop it? These are things we have to look at. So, with that being said, in my opinion, as we see these higher gold prices and with the news that’s about to come out, I think Pediment’s a two dollar stock in the next six to eight weeks.

TGR: Capital Gold Corp. (TSX:CGC) is also on your list, correct?

GM: Yes, and as Capital Gold runs up to the 90 cent level—it was recently in the 80 cent range—as it gets close to 90 cents Canadian, I’m telling people to start selling, start taking some profit. What’s going to happen is the company is going to do a reverse stock split, which is going to be a minimum 4:1 stock split. These stock splits are always negative for current shareholders. Let’s just say they decide to do the reverse split at a dollar. They’ll reduce their outstanding shares by 75% and the stock would be at four dollars at that point, which would get them their AMEX listing (which is a good thing), and that’s why they want to do it. But, typically, what happens, after they do a reverse split, the stock gets hammered. The four dollar share price gets leveled and it usually retracts to a level that is very damaging to current shareholders. So this is why I’m saying take some profit as Capital Gold gets over 90 cents, hold the cash.

I think Capital Gold is worth holding in the portfolio, but wait ‘til after the reverse split and the detrimental effects that reverse splits typically have on share prices. Wait for the share price to retract, and then buy in again because I think Capital Gold will be a good company to hold. I just think you should take some profits at this point.

TGR: What about SilverCrest Mines Inc. (TSX.V:SVL)?

GM: Silvercrest is a great story. Their production scenario at Santa Elena in Mexico is a high-grade silver-gold kind of scenario. They just came out with their resource update. The resource is growing and the project should be in production by the end of 2009. Things are looking very good so I’m going to keep the company in my portfolio. This resource should grow with time. It’s got all the things that the market’s looking for—precious metals-oriented in Mexico, near-term production and the company should have cash flow.

TGR: Riverside Resources Inc. (TSX:RRI) just joined your top 10 list, right?

GM: Yes, they made their entry into the top 10 because they have shown me that they know how to manage the prospect generator model with success. The CEO, whom I like very much, really watches and guards the treasury and watches out for shareholders. He’s managing his properties very well, and I think he’s got not just one but possibly multiple discoveries. And this is what you want with a junior exploration stock. Some people say, “Greg, don’t you want to have people who have a production cash flow?” Yes. We’re going to have some of those in the portfolio, but the exploration companies—the good ones that can make the discoveries—is where you get the biggest leverage of all. And I think Riverside is in that category. So they are now number nine on our top 10. I like them very much and I think it’s a good play.

TGR: Can you talk about another from your top 10 list— Allied Nevada Gold Corp. (TSX:ANV) (ANV)?

GM: Allied Nevada is a good story because they’re getting the Hycroft mine back into production. It’s going very, very well. The stock price has rebounded very nicely, and I think it’s probably poised to make a new high. Now we saw some selling pressure, some people were taking profits in January and early February as the stock was recovering; but now I think that selling pressure is gone and the stock is back up over the $6 level again. With higher gold and silver prices, I think you’re going to see Allied make a new all-time high and I wouldn’t be surprised to see the stock at $7 or $8. So there could be a profit opportunity on that one coming up here.

TGR: Now Vista Gold Corp. (TSX:VGZ) (AMEX:VGZ) is not on your top 10 list, but you cover them, correct?

GM: Yes, I like Vista Gold. Allied Nevada and Vista used to be one company before they did the split. The better properties I thought went with Allied Nevada, but Vista Gold still has plenty of good situations. Their model of acquiring cheap gold ounces in the ground, increasing the value of them in a market where gold prices are going higher, is a very valid market. They have a good share structure, they have cash in the bank, and they’re a very well-managed company with top management talent. So, with higher gold prices, that model should do very, very well.

They’ve got multiple projects with big gold deposits in Australia at the Mt. Todd deposit, which is a 6 million ounce gold resource. They’ve got the Awak Mas property in Indonesia that is a very large holding of gold. And higher gold prices make these kinds of projects worth more and more. They’ve also got some great projects in Mexico next to Pediment’s project on the Baja. They have the Paredones Amarillos Project, which is kind of waiting on a permit situation that they thought was already done years ago that seems to have had a little glitch there, but that’ll get worked out. And they’ve got some other good projects in Idaho and one other one (I can’t think of it off the top of my head), but it’s a good scenario and that model should work well. If you believe in higher gold prices, Vista Gold should do very well.

TGR: Greg, this has been great. We appreciate your time.

Greg McCoach is an entrepreneur who has successfully started and run several businesses the past 22 years. For the last eight of these years he has been involved with the precious metals industry as a bullion dealer, investor, and newsletter writer (Mining Speculator). Greg is also the President of AmeriGold, a gold bullion dealer.

Greg’s years of business experience and extensive personal contacts in the mining industry provide unique insights that have generated an impressive track record for The Mining Speculator since its inception in 2001. He also writes a weekly column for Gold World.

Want to read more exclusive Gold Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Expert Insights page.

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! 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

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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A Challenge! What is Gold going To Do?

27 Friday Feb 2009

Posted by jschulmansr in 10 year Treasuries, 20 yr Treasuries, Bailout News, banking crisis, banks, Barack Obama, Brad Zigler, bull market, capitalism, China, Comex, commodities, Contrarian, Copper, Credit Default, Currencies, currency, Currency and Currencies, depression, DGP, DGZ, economic, Economic Recovery, economic trends, economy, Fed Fund Rate, Federal Deficit, federal reserve, Finance, financial, Forex, Fundamental Analysis, futures, futures markets, gata, GDX, GLD, gold, Gold Bubble, 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, Junior Gold Miners, Latest News, 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, precious metals, price, price manipulation, prices, producers, production, recession, risk, run on banks, silver, silver miners, Silver Price Manipulation, small caps, spot, spot price, stagflation, Stimulus, Stocks, TARP, Technical Analysis, The Fed, Tier 1, Tier 2, Tier 3, Today, U.S., U.S. Dollar, warrants, XAU

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This morning I posted a challenge to Brad Zigler of Hard Assets Investor, I asked him point blank, “Pontificating aside, where do you stand in relation to Gold? Both short term and long term? No charts or arguments just a simple statement I believe Gold will…”. This was in relation to the 1st article below and comments (included); our answers back and forth (highlighted).

Today Gold is trading currently up $4.40 at $947 (April Contract). It has been as high as $17 up and as low as $946 currently trading at the lower end. We have strong support at the $930 level and if we close above $950 today then I believe next week we’ll see a return to test the $1000 level again.

The 2nd article is from GATA and government intervention/supression of Gold prices. Read my comment after Brad’s article for my short to long term call for Gold. I am getting ready to re-enter my DGP trade again and will be watching the market closely. If we do break resistance here then I will actually go short (buy DGZ) on the Gold market for a very short term trade as I think (if the resistance is broken) then we will go back and test support at $925 and then $880-$890 level. If we close above the $955 level then I will go long for the test of the $1000 level then the next test at $1033 all time high.

Disclosure: I am long in a couple of Precious Metals Mutual Funds, long Gold and Silver Bullion, and many of the Tier 1, 2, and junior mining stocks. Otherwise,as you can see I use DGP or DGZ for the short term moves in gold.

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Here is where I buy my Bullion, get one free gram of Gold just for opening an account! 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.comNow the article by Brad…

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Gold’s Devilish Advocate – Seeking Alpha

By: Brad Zigler of Hard Assets Investor.com

In certain circles I’m known as a curmudgeon. Yeah, that’s right. Crusty, irascible and cantankerous. Hard to believe, isn’t it?

The funny thing is that people on both sides of the hard assets spectrum share that point of view. To so-called gold bugs, my under-exuberance for wildly optimist gold forecasts is anathema. Monetarists, on the other hand, grouse about my metering of the dollar’s value against bullion.

No matter what side you line up on, you can’t have ignored the $300 rally in gold prices since late October. For the February COMEX contract, that amounts to a 46% increase; pretty much a replay of the run-up that ended last March. That should prompt you to wonder about the odds of gold topping out again.

No doubt, the answer to that depends upon your gold Weltanschauung. But let’s play devil’s advocate for the moment. What factors argue for a gold sell-off? Or, at least, for keeping a lid on the metal’s ascendance?

The Dollar/Gold Dyad

This year, the dollar’s provided as much refuge for worried investors as gold. Ordinarily, there’s an inverse relationship between gold and the dollar. In the current global disinflationary environment, though, the greenback is proving to be the best nonmetallic haven for global capital. Rising dollar interest rates will enhance the buck’s attractiveness. At least until a cyclical reflation of the currency. Yes, there will be a lot of dollars out there. But right now, there are a lot of representations of the dollar-bills, notes and bonds-awaiting redemption.

The dollar’s prior inflationary pace was braked well before the price of gold peaked last March. We’ve yet to see the leading edge of reflation.

U.S. Monetary Inflation And Gold

Dollar interest rates bottomed just before the Obama inauguration and have steadily gained ground since then. Rising rates are like lipstick: A judicious dose can enhance the beauty of a currency; too much, and it looks tawdry. There’s nothing tawdry, though, about the 18-point rise in the dollar LIBOR over the last month. It’s sustainable and makes the buck even more attractive.

Dollar Interest And Gold Lease Rates

Gold Liquidity

The gold lease market belies the shortage scenario played up by many market pundits. Gold lease rates have been falling precipitously as the contango reflected in forward rates has been rising. Contango exists when supplies are plentiful. The current oil market provides testimony of that. The gold market – at least the commercial gold market – gives every indication of being well-supplied.

Overbought Market

Relative strength in gold futures crossed into overbought territory when the spot contract topped $1,000 last week. The peak, if not exceeded, would represent an interim double top and confirmation that the March 2008 high is likely to hold.

COMEX Futures Open Interest

Speculative Aggressiveness

Commercial hedgers are still driving gold futures pricing. Aggressiveness on the part of large speculative buyers has actually waned as prices moved higher. Over the past month, net long speculative positions rose 34% while commercial net shorts picked up 40%.

Essential Question

Think back to the events surrounding gold’s March 2008 peak and ask yourself this: “Have economic conditions improved or worsened since then?” I think it’s fair to say our financial troubles have deepened. If that’s true, and if gold is a safe haven, why hasn’t the metal made new highs?

This is by no means an exhaustive analysis, but it does raise essential questions that gold bulls should be prepared to address when making their case for higher prices.

Don’t expect to hear the answers in the late-night infomercials hawking gold, though.

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Comments:

JudeJin

Comments
one cannot decipher a puzzle without having all the pieces.i think you lack a lot of other data to put together a whole picture of where gold stands.there are quite a few people in the world who have collected the all pieces of the puzzle and deciphered the truth behind gold! you are obviously not one of them.i think either you purposely hand-pick the set of charts with very limited time frame to drive your point home or ……

Feb 27 06:10 AM

Look at the article’s premise: to play devil’s advocate against a widely held bullish sentiment.

Feb 27 07:13 AM |Report abuse| Link | Reply

+30

You’re offering a complaint, not a refutation. What, specifically, is wrong with the arguments advanced?

On Feb 27 06:10 AM JudeJin wrote:

> one cannot decipher a puzzle without having all the pieces.
>
> i think you lack a lot of other data to put together a whole picture
> of where gold stands.
>
> there are quite a few people in the world who have collected the
> all pieces of the puzzle and deciphered the truth behind gold! you
> are obviously not one of them.
>
> i think either you purposely hand-pick the set of charts with very
> limited time frame to drive your point home or ……

JudeJin—– I would be interested (very interested) to hear all of the pieces if you would please. If you are one of those people please enlighten us.

I would add the deflation/economic contraction argument. People have less money to spend and they will spend less on everything, including gold.

I do not have all the pieces of the puzzle, and I am no expert either, but a few things catch my eye and beg an explanation (or maybe they are the explanation). I see all fiat currencies devaluing, all at the same time more or less, and all for different reasons. For instance, the dollar and euro are devaluing as governments print money like there is no tomorrow, while the yuan and yen devalue to keep the economies from drowning as exports shut down. So everyone is sinking to the bottom. You would expect in that scenario that “something” would retain value. I see why gold bugs may think it is gold (finite amount in existence, finite production, and no use whatsoever other than financial instrument). And that is the clincher, why would something with no other use keep value? how about things that are useful and very much needed? shouldn’t those be appreciating? water, food, energy…why are they not? Sometimes I feel we are all watching the wrong movie and trying to interpret what is happening through the wrong lens…I think this is a systemic readjustment as the value/remuneration among nations in a globalized economy takes its course…but that is the subject for another post…..

Brad- your article really opens my eyes- but I am not clear on a few things and I hope you will school me- you say at the Gold top a few days ago that there were signs the price would drop after the high- you said gold futures were in overbought territory- how did u know this and how do people know to sell at this high? I certainly want to learn how to sell my gold before it turns down? What do you mean the peak if not exceeded- double top etc? does it mean that gold will hold at this high? Please explain how a person can know gold will drop after reaching the $1000 price. Also I have noticed that gold has not dropped enough for me to buy back in if I sell at today’s price- I have to sell at $950 to be at least even and then I have to believe gold will go higher in order for me to buy back in. Where do you think gold will go in the next 6 months as Obama’s money plan reveals itself to be a failure-? If Jim Rogers thinks gold will continue higher because of fundamentals- what do you think of the fundamentals in a 1 or 2 year time frame?

Brad- could gold be controlled by governments leasing gold and selling to keep lid on prices?–please explain double top and overbought

Brad.. listen gold has held up better than any commodity like oil or
and any equity or real estate investment.

It could drop.. I’m not that smart to predict.
IMO the drop is after the economy recovers and that could take years at
this point. It’s a safe haven and a trade against the dow.. I see the dow
much lower.. so gold should at minimum hold it’s ground and perhaps
rise towards 1500-2000, based on historical trends.
In troubled times we humans tend to get religion and go back to
ancient methods of survival.. gold fits that scenario.

Couple more data points:

1. NYMEX open interest for April exceeds open interest for all other months. ETF effect?

2. India is not importing gold anymore. Regular buyer of 30% physical gold is out of the market.

Brad; Pontificating aside, where do you stand in relation to Gold? Both short term and long term? No charts or arguments just a simple statement I believe Gold will…

Thanks!

Jeff Schulman Sr aka jschulmansr

No one, of course, “knows” gold will drop or rise from any particular price level. T

here are, however, technical indicators such as the Relative Strength Index and stochastics which identify certain market levels as overbought or oversold.

A double top is a price level reached a couple of times by a market as it attempts to rally higher but can’t be hurdled. The failure sets up a decline.

About gold leases. Often, nefarious intente is ascribed to central bank swap activity. But leasing can be simply a way to garner a return on an otherwise sterile asset as well as a way to stimulate lending and investment activity.

Outright borrows of bullion by bank customers tend to increase when bearish sentiments prevail. In essence, the borrower doesn’t want to face the prospect of buying back gold at a higher price to close out the loan.

With that in mind, the market may already favor shorts BEFORE leasing.

On Feb 27 09:25 AM craigdude wrote:

> Brad- could gold be controlled by governments leasing gold and selling
> to keep lid on prices?–please explain double top and overbought

Brad;
Ps- I guess I should have added I think your articles are very well written and thought provoking. I make mention of and use your stuff on my blog quite often, but recently I have not heard your outlook for Gold. I do agree we are at a crossroads here, we may see more retracement. I think we are about to see Gold go and test it’s all time highs. Failure there I think will mean a retracement potentially as low to $880 to $890. If we clear due to manipulaton and where the short interest got in at there will be sttrong pressure to bring down prices at the $1050 level. If that hurdle is cleared I think that the banks who are short will give up and cause a very violent spike upwards “shortcovering rally”. After all they can afford to give in now as they figure they can get their money back thru Government stimulus, TARP, and bailout funds. Long term however, I do feel with inflation runnng a tad higher than what you are currently stating,and the fact that the monetary printing presses are running full steam round the clock; that longer term we will see inflation even hypr and/or stagfaltion. In other words get your wheelbarrow to haul your money around to go shopping for a “loaf” of bread. I truly think that prices of $2000 to $3500 oz are not unrealistic given the aforementioned scenario. What is your opinion in regards to this? Maybe even a special article?- Thanks Again- Jeff Schulman Sr aka jschulmansr

Feb 27 11:29 AM |Report abuse| Link | Reply

+10

Don’t read too much into the large open interest in April futures. There are certain delivery months for gold that are traditionally more active than others. April is one of them (February, June, August, October and December are the others).

Feb 27 11:31 AM |Report abuse| Link | Reply

+10

As February’s expiry approached, open interest rolled to the next active month in the cycle–April. Yes, some of that is ETF interest (namely, DBG, the PowerShares DB Gold ETF). It doesn’t, however, include the SPDR Gold Shares (GLD) or the iShares COMEX Gold Trust (IAU). These trusts hold physical metal, not futures.

On Feb 27 10:31 AM Alex Filonov wrote:

> Couple more data points:
>
> 1. NYMEX open interest for April exceeds open interest for all other
> months. ETF effect?
>
> 2. India is not importing gold anymore. Regular buyer of 30% physical
> gold is out of the market.

Speculating on the price of gold has always been risky, never more so than now. If you’re in this trade to turn a quick profit, you have more guts or brains than me.

Feb 27 11:48 AM |Report abuse| Link | Reply

+10

But as “melt-down” insurance, gold has performed exactly as advertised. I see no indication that it will somehow stop acting this way. If the markets fall off another cliff, obviously gold will do well.

Diversification has always been a prudent strategy. That hasn’t changed, but gold’s importance to a diversified portfolio has changed. Some investors have recognized this out of prudence, not panic, and acted accordingly.

I’m long, but if gold goes to $500 from here, you won’t hear me whining about it.

Brad; Thanks for your answer, I am sure you are aware of GATA, that is really were one of my main concern lies. The continued manipulation of prices by both governmental and banks. It will be very interesting to see what the CFTC and Comex are going to do with their investigations in both the Silver and Gold markets. Also long term I think we have a couple of big plays coming up with Silver and Oil. That’s what I love about the markets, sheer boredom puncuated by moments of either sheer elation or sheer terror! Thanks again! – Jeff Schulman Sr aka jschulmansr

Feb 27 12:03 PM |Report abuse| Link | Reply

+10

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Now to “Market Price Manipulation…

Ex-Treasury official Confirms Gold Suppression Scheme – Gata

Source: Gold Anti-Trust Action Committee (Gata)

Ex-Treasury official confirms gold

suppression scheme

Submitted by cpowell on Tue, 2009-02-24 22:13. Section: Daily Dispatches

5p ET Tuesday, February 24, 2009

Dear Friend of GATA and Gold:

In an essay published today at Counterpunch.org, former Assistant Treasury Secretary Paul Craig Roberts confirms that the U.S. government has been leasing gold to suppress its price and support the dollar. The admission is made in the last paragraph of the essay, which is appended.

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

* * *

Doomed by the Myths of Free Trade: How the Economy Was Lost

By Paul Craig Roberts
Tuesday, February 24, 2009

http://www.counterpunch.org/roberts02242009.html

The American economy has gone away. It is not coming back until free trade myths are buried 6 feet under.

America’s 20th century economic success was based on two things. Free trade was not one of them. America’s economic success was based on protectionism, which was ensured by the union victory in the Civil War, and on British indebtedness, which destroyed the British pound as world reserve currency. Following World War II, the US dollar took the role as reserve currency, a privilege that allows the US to pay its international bills in its own currency.

World War II and socialism together ensured that the US economy dominated the world at the mid-20th century. The economies of the rest of the world had been destroyed by war or were stifled by socialism [in terms of the priorities of the capitalist growth model: Editors.]

The ascendant position of the US economy caused the US government to be relaxed about giving away American industries, such as textiles, as bribes to other countries for cooperating with America’s cold war and foreign policies. For example, Turkey’s US textile quotas were increased in exchange for overflight rights in the Gulf War, making lost US textile jobs an off-budget war expense.

In contrast, countries such as Japan and Germany used industrial policy to plot their comebacks. By the late 1970s, Japanese auto makers had the once dominant American auto industry on the ropes. The first economic act of the “free market” Reagan administration in 1981 was to put quotas on the import of Japanese cars in order to protect Detroit and the United Auto Workers.

Eamonn Fingleton, Pat Choate, and others have described how negligence in Washington aided and abetted the erosion of America’s economic position. What we didn’t give away, the United States let be taken away while preaching a “free trade” doctrine at which the rest of the world scoffed.

Fortunately, the U.S.’s adversaries at the time, the Soviet Union and China, had unworkable economic systems that posed no threat to America’s diminishing economic prowess.

This furlough from reality ended when Soviet, Chinese, and Indian socialism surrendered around 1990, to be followed shortly thereafter by the rise of the high speed Internet. Suddenly American and other First World corporations discovered that a massive supply of foreign labor was available at practically free wages.

To get Wall Street analysts and shareholder advocacy groups off their backs, and to boost shareholder returns and management bonuses, American corporations began moving their production for American markets offshore. Products that were made in Peoria are now made in China.

As offshoring spread, American cities and states lost tax base, and families and communities lost jobs. The replacement jobs, such as selling the offshored products at Wal-Mart, brought home less pay.

“Free market economists” covered up the damage done to the US economy by preaching a New Economy based on services and innovation. But it wasn’t long before corporations discovered that the high speed Internet let them offshore a wide range of professional service jobs. In America, the hardest hit have been software engineers and information technology (IT) workers.

The American corporations quickly learned that by declaring “shortages” of skilled Americans, they could get from Congress H-1b work visas for lower paid foreigners with whom to replace their American work force. Many US corporations are known for forcing their US employees to train their foreign replacements in exchange for severance pay.

Chasing after shareholder return and “performance bonuses,” US corporations deserted their American workforce. The consequences can be seen everywhere. The loss of tax base has threatened the municipal bonds of cities and states and reduced the wealth of individuals who purchased the bonds. The lost jobs with good pay resulted in the expansion of consumer debt in order to maintain consumption. As the offshored goods and services are brought back to America to sell, the US trade deficit has exploded to unimaginable heights, calling into question the US dollar as reserve currency and America’s ability to finance its trade deficit.

As the American economy eroded away bit by bit, “free market” ideologues produced endless reassurances that America had pulled a fast one on China, sending China dirty and grimy manufacturing jobs. Free of these “old economy” jobs, Americans were lulled with promises of riches. In place of dirty fingernails, American efforts would flow into innovation and entrepreneurship. In the meantime, the “service economy” of software and communications would provide a leg up for the work force.

Education was the answer to all challenges. This appeased the academics, and they produced no studies that would contradict the propaganda and, thus, curtail the flow of federal government and corporate grants.

The “free market” economists, who provided the propaganda and disinformation to hide the act of destroying the US economy, were well paid. And as Business Week noted, “outsourcing’s inner circle has deep roots in GE (General Electric) and McKinsey,” a consulting firm. Indeed, one of McKinsey’s main apologists for offshoring of US jobs, Diana Farrell, is now a member of Obama’s White House National Economic Council.

The pressure of jobs offshoring, together with vast imports, has destroyed the economic prospects for all Americans, except the CEOs who receive “performance” bonuses for moving American jobs offshore or giving them to H-1b work visa holders. Lowly paid offshored employees, together with H-1b visas, have curtailed employment for older and more experienced American workers. Older workers traditionally receive higher pay. However, when the determining factor is minimizing labor costs for the sake of shareholder returns and management bonuses, older workers are unaffordable. Doing a good job, providing a good service, is no longer the corporation’s function. Instead, the goal is to minimize labor costs at all cost.

Thus “free trade” has also destroyed the employment prospects of older workers. Forced out of their careers, they seek employment as shelf stockers for Wal-Mart.

I have read endless tributes to Wal-Mart from “libertarian economists,” who sing Wal-Mart’s praises for bringing low price goods, 70 per cent of which are made in China, to the American consumer. What these “economists” do not factor into their analysis is the diminution of American family incomes and government tax base from the loss of the goods producing jobs to China. Ladders of upward mobility are being dismantled by offshoring, while California issues IOUs to pay its bills. The shift of production offshore reduces US GDP. When the goods and services are brought back to America to be sold, they increase the trade deficit. As the trade deficit is financed by foreigners acquiring ownership of US assets, this means that profits, dividends, capital gains, interest, rents, and tolls leave American pockets for foreign ones.

The demise of America’s productive economy left the US economy dependent on finance, in which the US remained dominant because the dollar is the reserve currency. With the departure of factories, finance went in new directions. Mortgages, which were once held in the portfolios of the issuer, were securitized. Individual mortgage debts were combined into a “security.” The next step was to strip out the interest payments to the mortgages and sell them as derivatives, thus creating a third debt instrument based on the original mortgages.

In pursuit of ever more profits, financial institutions began betting on the success and failure of various debt instruments and by implication on firms. They bought and sold collateral debt swaps. A buyer pays a premium to a seller for a swap to guarantee an asset’s value. If an asset “insured” by a swap falls in value, the seller of the swap is supposed to make the owner of the swap whole. The purchaser of a swap is not required to own the asset in order to contract for a guarantee of its value. Therefore, as many people could purchase as many swaps as they wished on the same asset. Thus, the total value of the swaps greatly exceeds the value of the assets.* [See footnote.)

The next step is for holders of the swaps to short the asset in order to drive down its value and collect the guarantee. As the issuers of swaps were not required to reserve against them, and as there is no limit to the number of swaps, the payouts could easily exceed the net worth of the issuer.

This was the most shameful and most mindless form of speculation. Gamblers were betting hands that they could not cover. The US regulators fled their posts. The American financial institutions abandoned all integrity. As a consequence, American financial institutions and rating agencies are trusted nowhere on earth.

The US government should never have used billions of taxpayers’ dollars to pay off swap bets as it did when it bailed out the insurance company AIG. This was a stunning waste of a vast sum of money. The federal government should declare all swap agreements to be fraudulent contracts, except for a single swap held by the owner of the asset. Simply wiping out these fraudulent contracts would remove the bulk of the vast overhang of “troubled” assets that threaten financial markets.

The billions of taxpayers’ dollars spent buying up subprime derivatives were also wasted. The government did not need to spend one dime. All government needed to do was to suspend the mark-to-market rule. This simple act would have removed the solvency threat to financial institutions by allowing them to keep the derivatives at book value until financial institutions could ascertain their true values and write them down over time.

Taxpayers, equity owners, and the credit standing of the US government are being ruined by financial shysters who are manipulating to their own advantage the government’s commitment to mark-to-market and to the “sanctity of contracts.” Multi-trillion dollar “bailouts” and bank nationalization are the result of the government’s inability to respond intelligently.

Two more simple acts would have completed the rescue without costing the taxpayers one dollar: an announcement from the Federal Reserve that it will be lender of last resort to all depository institutions including money market funds, and an announcement reinstating the uptick rule.

The uptick rule was suspended or repealed a couple of years ago in order to permit hedge funds and shyster speculators to ripoff American equity owners. The rule prevented short-selling any stock that did not move up in price during the previous day. In other words, speculators could not make money at others’ expense by ganging up on a stock and short-selling it day after day.

As a former Treasury official, I am amazed that the US government, in the midst of the worst financial crises ever, is content for short-selling to drive down the asset prices that the government is trying to support. No bailout or stimulus plan has any hope until the uptick rule is reinstated.

The bald fact is that the combination of ignorance, negligence, and ideology that permitted the crisis to happen still prevails and is blocking any remedy. Either the people in power in Washington and the financial community are total dimwits or they are manipulating an opportunity to redistribute wealth from taxpayers, equity owners and pension funds to the financial sector.

The Bush and Obama plans total 1.6 trillion dollars, every one of which will have to be borrowed, and no one knows from where. This huge sum will compromise the value of the US dollar, its role as reserve currency, the ability of the US government to service its debt, and the price level. These staggering costs are pointless and are to no avail, as not one step has been taken that would alleviate the crisis.

If we add to my simple menu of remedies a ban, punishable by instant death, for short selling any national currency, the world can be rescued from the current crisis without years of suffering, violent upheavals and, perhaps, wars.

According to its hopeful but economically ignorant proponents, globalism was supposed to balance risks across national economies and to offset downturns in one part of the world with upturns in other parts. A global portfolio was a protection against loss, claimed globalism’s purveyors. In fact, globalism has concentrated the risks, resulting in Wall Street’s greed endangering all the economies of the world. The greed of Wall Street and the negligence of the US government have wrecked the prospects of many nations. Street riots are already occurring in parts of the world. On Sunday February 22, the right-wing TV station, Fox “News,” presented a program that predicted riots and disarray in the United States by 2014.

How long will Americans permit “their” government to rip them off for the sake of the financial interests that caused the problem? Obama’s cabinet and National Economic Council are filled with representatives of the interest groups that caused the problem. The Obama administration is not a government capable of preventing a catastrophe.

If truth be known, the “banking problem” is the least of our worries. Our economy faces two much more serious problems. One is that offshoring and H-1b visas have stopped the growth of family incomes, except, of course, for the super rich. To keep the economy going, consumers have gone deeper into debt, maxing out their credit cards and refinancing their homes and spending the equity. Consumers are now so indebted that they cannot increase their spending by taking on more debt. Thus, whether or not the banks resume lending is beside the point.

The other serious problem is the status of the US dollar as reserve currency. This status has allowed the US, now a country heavily dependent on imports just like a third world or lesser-developed country, to pay its international bills in its own currency. We are able to import $800 billion annually more than we produce, because the foreign countries from whom we import are willing to accept paper for their goods and services.

If the dollar loses its reserve currency role, foreigners will not accept dollars in exchange for real things. This event would be immensely disruptive to an economy dependent on imports for its energy, its clothes, its shoes, its manufactured products, and its advanced technology products.

If incompetence in Washington, the type of incompetence that produced the current economic crisis, destroys the dollar as reserve currency, the “unipower” will overnight become a third world country, unable to pay for its imports or to sustain its standard of living.

How long can the US government protect the dollar’s value by leasing its gold to bullion dealers who sell it, thereby holding down the gold price? Given the incompetence in Washington and on Wall Street, our best hope is that the rest of the world is even less competent and even in deeper trouble. In this event, the US dollar might survive as the least valueless of the world’s fiat currencies.

*(An excellent explanation of swaps can be found here.)

—–

Paul Craig Roberts was assistant secretary of the treasury in the Reagan administration. He is coauthor of “The Tyranny of Good Intentions.” He can be reached at PaulCraigRoberts@yahoo.com.

* * *

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Have a Great Weekend! Keep your eyes open for a special weekend post. Good Investing! jschulmansr

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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

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Is the Glitter Fading?

25 Wednesday Feb 2009

Posted by jschulmansr in Austrian school, Bailout News, banking crisis, banks, bear market, bull market, capitalism, China, Comex, commodities, Contrarian, Copper, Currencies, currency, Currency and Currencies, deflation, depression, DGP, dollar denominated, dollar denominated investments, Doug Casey, economic, Economic Recovery, economic trends, economy, Fed Fund Rate, Federal Deficit, federal reserve, Finance, financial, Forex, futures, futures markets, GDX, GLD, gold, Gold Bubble, Gold Bullion, Gold Investments, gold miners, Gold Price Manipulation, hard assets, How To Invest, How To Make Money, hyper-inflation, IAU, India, inflation, Investing, investments, Jschulmansr, Junior Gold Miners, Latest News, majors, Make Money Investing, Market Bubble, market crash, Markets, mid-tier, mining companies, mining stocks, monetization, oil, palladium, physical gold, platinum, platinum miners, precious, precious metals, price, price manipulation, prices, producers, production, run on banks, safety, silver, silver miners, Silver Price Manipulation, spot, spot price, stagflation, Stimulus, Stocks, TARP, Technical Analysis, The Fed, Tier 1, Tier 2, Tier 3, Today, U.S., u.s. constitution, U.S. Dollar, volatility, warrants, XAU

≈ 1 Comment

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As I write Gold is down $3.00 at $966 (nearest futures month). It is still holding around the $960 to $965 support levels. However, I want to assert this, Gold is in a long term upward trend. The only thing that would change my thinking would be a close under the $880 which represents the bottom level of the long term uprward channel. We may however in the short term see a correction downward to even as low as $900 to $910. I will be watching very closely as this may be a “bear trap” in an upward market. One thing however I am somewhat of a contrarian. Last week almost every analyst under the sun was touting Gold as the ONLY investment. When I see that I get very nervous and know that a correction is about to happen. For those who remember the day silver hit $50 oz., Walter Cronkite announced on his evening new that “It’s time for everyone to go out and buy some silver”! The very next day the silver market tanked like a lead balloon. So a little downside action here will be a good thing to shake out the “nervous nellies” and “johnny come lately’s” out of the market. Because I have seen it time and time again as soon as that happens “Kaboom” the market takes of and does not look back. I will be watching very carefully here and will let you (those who have subscribed to this blog and are following me on twitter), when I get out of the DGP trade. I got in at $890 oz and think a little patience here will pay off. Given the current state of things Gold could still easily hit $1050 this week as well as have a price correction. Be sure to subscibe in the top right corner and/or follow me on twitter to be kept up to date…

The best investment in my opinion right now is to continue accumulating the Junior and Mid-tier Gold and Precious Metals mining companies. Once again there are many still selling at or near book value levels. Remember to choose companies who currently have production or are about to start producing. One exception might be those companies who have made some big strikes, are sitting on huge “proven” reserves, and have plenty of cash and financing to bring those reserves into production in the future. Another play is to investigate “Warrants” which give you the right to buy a stock at a given price for a certain timeframe. There are many out there which could give your portfolio a couple of “home runs” gains of 2-3000%. Either way do your own good due diligence, check the companies out, their balance sheets, prospectus/s and consult your own financial advisors before making any trades.- Good Investing! -jschulmansr

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Panic=Gold – Seeking Alpha

Source: Hard Assets Investors

It’s axiomatic that gold has a role as safe haven for many investors. That this is largely a matter of collective psychology is irrelevant – it has worked for centuries, and it’s unlikely to stop working tomorrow.

But lately, gold been more than a mere market hedge; it’s been a panic hedge.

Current Gold

Gold briefly nudged over the $1,000 mark to $1006.43 on Friday, February 20, before settling back down to close at $993.25. It was the first time since last March that gold crossed the insignificant but satisfyingly round $1k level. Technical geeks would point out that it’s still below the high of $1012.55 hit March 18^th, but that’s splitting hairs.

Of course, gold didn’t stay above $1,000/ounce for long last March; it quickly reversed course and traded down all year, before bottoming at $712.41 on November 20^th. Since then, gold has risen 39.4%; it was up 13.4% in January alone.

The last time I wrote about gold (Demanding Gold) was just before that November bottom. Back then I discussed the underlying demand for gold – because one of the great things about commodities is that ultimately, they’re always about supply and demand. And with the gold-bug’s most important supply and demand report out for 2008, it’s the perfect time to revisit the subject. (The full link to the World Gold Council’s Supply and Demand Statistics for Q4 and Full Year 2008 report is here.)

Looking At Demand

Gold demand can be broken into three main areas of interest – jewellery, which accounted for roughly 58% of identifiable demand in 2008, industrial and dentistry demand, and finally identifiable investment demand.

On the whole, gold saw demand grow 4% from 2007 to 2008, but the picture is a bit more complex than just that.

Not everything was rosy for gold in 2008. As we predicted, jewellery demand was down significantly. In 2007 around 68% of gold demand was attributed to jewellery consumption. In 2008, that number dropped to 58%.

At the end of December, The World Gold Council released a report entitled “What Women Want: Global Discretionary Spending Report 2008“. In it, the WGC details the values and significance different countries attribute to gold jewellery and why people buy it. One new thing the study uncovered is that gold jewellery is now competing with items such as cell phones and other everyday items for discretionary spending.

The report also states that “confidence that gold will hold its value has waned,” reflecting in part the volatility gold prices have experienced in the past year. With gold rising and falling by 30% in a single year, it’s no wonder people are feeling less comfortable with it as a store of value.

Demand on the jewelry front appears to be price elastic. In India, the largest consumer of gold jewellery, demand in the fourth quarter more than doubled compared to Q4 of 2007. While this would seem to buck the year-long numbers, it’s likely due to the fact that lower gold prices occurred precisely at the time of the Diwali festival – a peak gold-buying time in India. In 2007, gold prices were high during the festival, which depressed demand. For the full year of 2008, jewellery demand in India dropped 15%.

China was one of the only countries that posted an increase in demand for jewellery, up 8% from 2007. Much of this demand was for 24-karat jewelry, which commonly implies jewellery purchases that are doubling as investments.

The Big Stick: Gold Bugs

According to the World Gold Council report, gold demand for investment rose from 663.7 tonnes in 2007 to 1090.7 tonnes in 2008 – a somewhat staggering year-on-year increase of 64.3%. Retail investment – things like bar hoarding, official coins, medals/imitation coins and other kinds of retail investment – almost doubled, going from 410.3 tonnes in 2007 to 769.3 tonnes in 2008. That gives some credence to the wide scale anecdotal evidence throughout the year that gold coins were virtually impossible to obtain in many countries.

Exchange-traded funds and similar products also showed a large increase, from 253.3 tonnes to 321.4 tonnes (a 26.9% increase). This trend has continued into 2009. The SPDR Gold ETF (NYSE: GLD) – the largest physical gold trust – now has 1,028.98 tonnes in its vaults. This is a trust that started 2009 with 780.23 tonnes, meaning its gold horde has risen 31.9% in less than two months. To put that in perspective, 249 tonnes is over 10% of the total amount of gold mined in all of 2008. This acceleration happened almost entirely in a dramatic surge mid-February.

Net-net, however, if you offset the huge rush in gold investments with the significant drop in jewelry demand, the net gain in tonnage terms was just 4%.

There is, however, another way to look at things. When viewed through the (occasionally depressing) lens of the dollar, gold demand seems endless:

Gold Supply in Flux

With the demand part of the picture in hand, it’s time to turn to supply. The third quarter of 2008 saw a huge supply deficit with demand far outreaching supply. In the fourth quarter, supply rose 19%, almost entirely due to an increase in gold scrap. Yes, that’s right: Those late night commercials offering to buy your old tangled gold necklaces were on to something, and people were selling.

Scrap sales for 2008 ended up 17% higher than 2007, and that along with slightly higher total mine supply just about offset lower central banks sales so that in the end, 2008 ended the year with only 1% less total supply than 2007 – practically even.

The moral of the story is simple: supply and demand remain incontrovertible laws. The unbelievable demand vs. the stagnant (mine) and dwindling (central bank) supply created a vacuum, and a new source came on line to fill the need. Thus, at least indirectly, gold went from the scrap heap into brand new shiny gold coins, just when the market needed them the most.

Which brings up the question: how long can consumers fill their own demand through scrap? And what price level is needed to support the tremendous scrap levels already in place?

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Five Weeks of Silver Backwardation – Seeking Alpha

By: Trace Mayer of Run to Gold.com

During an interview with Contrary Investors Cafe on 24 February 2009 I discussed both gold backwardation and silver backwardation. After the interview I was asked why more commentators are not discussing this issue. I do not know.

Regarding money there are two competing views: (1) money is determined by the market or (2) chartalism which asserts that ‘money is a creature of law.’ Governments can only manage money if they create it. Obviously, the market determines money because money existed before governments were created.

Regarding gold there are two competing paradigms: (1) gold is a commodity and (2) gold is money. Paradigm (1) asserts that gold is a hedge against inflation and there is no monetary demand for gold. On the other hand, paradigm (2) asserts that gold is a hedge against currency collapse and the primary demand for gold is monetary. I subscribe to the second paradigm and assert that at all times and in all circumstances gold remains money.

WHAT IS SILVER’S ROLE

Under which paradigm does silver fall? Is silver a commodity or is silver money? For a commodity to be money its primary demand must be monetary.

Like gold, for thousands of years silver functioned as money in the market. The term dollar, as used in Article 1 Section 9 Clause 1 and the Seventh Amendment of the US Constitution, is defined as 371.25 grains of fine silver under Section 9 of the Coinage Act of 1792. Governments stockpiled billions and billions of ounces. However, on 24 June 1968 the United States government defaulted on their silver certificates. Over the decades, silver, like gold, has been demonetized in ordinary daily transactions. Supposedly there are large stockpiles of gold in central bank vaults. Unlike gold there are no reported large above ground stockpiles of silver stashed in central bank vaults. Additionally, a large portion of silver demand is industrial as it is used in cell phones, refrigerators, dental equipment, computers, etc.

Therefore, it appears that silver is confused about its role. In other words, silver functions as a commodity and as quasi-money.

FIVE WEEKS OF SILVER BACKWARDATION

While similar, there are differences between future and forward contracts. For example, future contracts are traded on exchanges, use margin and are marked to market daily. In contrast, forward contracts are generally traded over-the-counter (OTC derivatives) and are not marked to market. Therefore, forward contracts are subject to greater counter-party risk than future contracts.

Because the primary reason backwardation arises is counter-party risk and because forward contracts are impregnated with greater counter-party risk than future contracts, therefore it is highly likely that backwardation would appear in the forwards markets before the futures markets.

This is precisely what has happened. While the COMEX silver futures contract have not been in backwardation the LBMA Silver Forward Mid Rates have been in backwardation for five consecutive weeks. Of particular interest is the 6 month contract.

SO WHAT?

What does all this mean? Well, I think the backwardation reflects the market’s uncertainty of silver’s role as money. The chronic silver backwardation began on 8 December 2009, the same day I wrote about gold in backwardation, and silver was priced about $9.60. Currently silver is trading about $13.82. Predictably, the gold/silver ratio is narrowing. If the backwardation persists it will be interesting to see if silver’s price in illusory FRN$ continues rising.

In my opinion, as the great credit contraction grinds on and intensifies, the commodity silver will reassert itself as money and eventually currency. As I mentioned during the interview with Contrary Investors Cafe what would be really interesting is if the central banks decide to start hoarding silver!

In the meantime it may behoove those who are bullish towards silver to increase the pressure on physical silver delivery. For example, I purchased some beautiful Austrian philharmonics at the Cambridge House Investment Conference and Silver Summit over the weekend. The beautiful coin cost $20 which was an amazing $5.50 over spot.

While there are cheaper ways to purchase physical silver bullion, like GoldMoney, these huge premiums over spot beg the question: What is the real silver price? With the specter of counter-party risk driving silver into backwardation if there is a failure to deliver then it will likely cause the silver price to shift from the COMEX just like a failure to deliver would cause the gold price to shift from the COMEX.

Bottom line: Do not get caught with your paradigms down!

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Doug Casey: What to Do in “The Greater Depression” — Seeking Alpha

Source: The Gold Report

Bullion and oil appear in the lineup of power players that Doug Casey thinks investors can count on as the world slips deeper and deeper into what he calls the “Greater Depression.” Despite the raging economic storm and Doug’s doubts that Western civilization’s governments will take the actions needed to quell it, though, the Chairman of Casey Research is nowhere close to calling the game. In fact, he sees silver lining in the clouds of crisis—opportunity—and expresses optimism that technological advances, coupled with capital rebuilding once over-consumption runs its course, will prevail eventually. The Gold Report caught up with the peripatetic author, publisher and professional international investor between polo matches in New Zealand, one of several nation-states he calls home from time to time.

The Gold Report: You’ve been discussing what you’re calling “crisis and opportunity,” and in fact have a summit by that same name coming up in Las Vegas next month. Could you give us a high-level overview of what you foresee?

Doug Casey: We’ve definitely entered what I describe as the Greater Depression. It’s not coming; it’s here. It’s going to get much, much worse as far as I’m concerned and unfortunately, it’s going to last a long time. It doesn’t have to last a long time, but the root cause is government intervention in the economy and everything they’re doing now is not just the wrong thing, it’s the opposite of what they should be doing. It’s almost perverse.

The distortions and misallocations of capital and the uneconomic patterns of production and consumption that have been going on for over a generation need to be liquidated and changed, but everything the government’s doing is trying to maintain these patterns. So it’s going to be horrible. In addition, the government is necessarily directing more power toward itself with all of its actions. If I were you, I’d rig for stormy running for a good long time.

TGR: By “a long time,” do you mean a couple of years, a decade, a generation?

DC: This is, in some ways, uncharted territory. Let me say that for the long run I’m very optimistic. Why? Two things act as the mainsprings of progress. Number one is technology and that’s going to keep advancing, so that’s very good. Second is capital and savings. Individuals will solve their own problems and, therefore, they will stop consuming more than they produce, which is what they’ve been doing for years, and they’ll again start producing more than they consume. The difference is savings; that builds capital.

So technology and capital are going to solve the depression. But the government can do all kinds of stupid things to make it worse. Look at the Soviet Union. They suffered a depression that lasted 70 years from its founding. Look at China. The whole reign of Mao was one long economic depression. That could certainly happen in the U.S., too, where the government misallocates capital in such a way that technology doesn’t advance as it could and people can’t build individual capital the way they would. I’m optimistic, but anything can happen.

TGR: But didn’t China and the Soviet Union have governmental structures very different from those in Western Europe and the U.S., and those structures allowed for more intervention? Are you projecting that we might slip into an era where Western civilization will allow their government to run themselves like the Soviet Union and China did?

DC: It seems to be going in that direction. Of course, Europe is going to be hurt much worse than the U.S. Europeans are much more heavily taxed and much more heavily regulated. The average European is much more reliant upon the state psychologically as well as economically. So it’s all over for Europe and this doesn’t even count the problems that they’re going to have in the continuing war against Islam, which are much more serious for Europe than they are for the U.S. So, no, Europe is fated to be nothing but a source of houseboys and maids for the Chinese in the next generation.

TGR: So do you think that societies in Western Europe—and even the U.S.—will allow themselves to be governed in the same fashion as the Soviet Union and China were during their depressions?

DC: Oh, totally. I don’t see why that would not be the case. Even Newsweek says we’re all socialists now. That seems to be the reigning ideology. In addition, psychologically, the average American—just like the average European—looks to the government to solve things. This is very bad. Most people are unaware that Homeland Security, which is one agency that should be abolished post-haste, is building a 400-acre campus in southeast Washington, D.C., where initially they’re going to put 25,000 employees. That’s as many as the Pentagon has and with 400 acres, Homeland Security has a lot more room to grow. Ironically, the property is at the site of St. Elizabeth’s Hospital, the first federal insane asylum in the United States. Once a bureaucracy has a piece of real estate and builds buildings, it’s game over. They’re just going to accrete and grow and grow, so that’s one indication. The trend is clearly in motion.

It’s all over for the U.S. In fact, let me say this. America doesn’t exist anymore. What is left is not even these United States. That was decided in the 1860s. It’s the United States. America, which is basically an idea, a concept, is dead and gone. The United States is just another of 200 awful little nation-states that have spread across the face of the earth like a skin disease. There’s no longer any difference that I can tell between the U.S. and any other country.

TGR: How would you describe the concept that America was based on that is now gone? And is there another country in the world embracing that concept? Will there be a new America?

DC: No, there is no other place. I’ve been to 175 countries and lived in 12. My feeling is that the best thing that you can do is set your life up so that you’re not to be considered the property of any one government. You might have a passport or several passports and, therefore, that government thinks they own you. But if you don’t spend time in a country, practically speaking, there’s nothing they can do about it.

So, no, there is no real haven for freedom in the world today. The best you can do is go where the governments are so unorganized that they can’t control you effectively. That’s one reason I like to spend time in Argentina. They have an incredibly stupid government, but they’re also very inefficient and ineffective. So it’s wonderful as a place to live. I also spend time in Uruguay, because it’s a tiny little country with no ambitions to conquer the world. The nice thing about New Zealand, where I am now, is that it’s a small country, only 4 million people, lots of open land. It’s got some severe problems, but it’s pleasant. I think the U.S. is going to be the epicenter of a lot of problems in the years to come.

TGR: Few of our readers are probably in positions where they could live in 12 different countries, but they have amassed assets here in the United States. What advice would you give them to safeguard those assets?

DC: The key is to remember that we’re going to have a long and deep depression, so most things that worked well over the last 20 years are unlikely to work well in the future. I’d been predicting the real estate collapse for a long time. It’s still got a way to go, too, because a lot of real estate debt remains that has to be liquidated. There’s a lot of leverage out there and there’s been a huge amount of overbuilding. So it’s far too early to get into real estate, at least in North America or Europe.

It’s also way too early to get into the general stock market, for all kinds of reasons. Dividend yields are still extremely low. Earnings are going to collapse. Government bonds are perhaps the worst single thing to be in, because with the government printing up money literally by the bushel basket, the dollar is going to start losing value radically and interest rates are going to start going up radically at some point. So you have to rule out most stocks.

I’m afraid that the most intelligent thing you can do is to own a lot of gold, preferably gold coins in your own possession. And I think speculation in gold stocks makes sense at this point, because gold stocks are about as cheap as they’ve ever been relative to other assets, really, in history. Now is an excellent time to do that as well. But that’s in terms of speculation.

Investment risk is tough enough, but the biggest problem is political risk. That’s what you have to watch out for. That means you have to diversify internationally. This is harder for most people, harder psychologically, and it takes more assets to make international diversification viable. But if you’re in a position to do it, it’s the most important thing you can do.

TGR: Since you mentioned having coins in your own possession, should we assume you’re not a big fan of the ETFs or some of these other paper gold promises, if you will?

DC: ETFs are okay for the convenience that they offer and for significant amounts of money, but gold coins should be first on your list, no question about that. If you’re only talking about $50,000 or $100,000, or $200,000, coins are fine to keep in your own possession. They won’t take up much room and you can put them in some safe place (which, incidentally, is not a bank safe deposit box).

TGR: Are you recommending putting all of your investment in gold into the bullion or are you also recommending some portion in producing junior and explorations?

DC: Both, but look at the stocks as being speculative. Most of your money should be in gold with a bit of silver, too. Silver is basically an industrial metal, but it has monetary characteristics. Now is the time to be very overweight in the metals and I think owning gold stocks is a good idea. They’re very cheap.

TGR: Anything else investors can do to preserve whatever may remain of their wealth?

DC: Owning real estate in some foreign countries is a very good idea—from a lifestyle point of view, an asset diversification point of view, and a possible capital gains point of view, too. They can’t make you repatriate foreign real estate. Having some U.S. dollar cash while we’re going through this deflationary period is very wise as well, but that’s not going to last. Eventually the U.S. dollar is going to reach its intrinsic value.

TGR: Not that you have a crystal ball, but how would you see the rest of ’09 playing out?

DC: Nothing goes straight up or straight down, but it seems that ’09 is going to see much higher gold prices and much lower stock prices and much lower bond prices, too. But remember, the worst is yet to come.

You haven’t heard an awful lot about people losing their pensions yet, but that’s going to happen because what are pensions invested in? They’re mostly invested in stocks and bonds and commercial real estate. All three of those things are disaster areas, and bonds are the big disaster area yet to come. So I think it’s going to be nothing but bad news in 2009. What happened in 2008 was just an overture to what I think is going to happen in ’09 and ’10.

TGR: Even into 2010?

DC: Yes. This isn’t going to be cured overnight, mainly because of what the government’s doing. As I said, it’s perversely exactly the opposite of what they should be doing, which is abolishing all the agencies and freeing up the economy. They’re passing lots of new regulations, they’re going to have to raise lots of taxes eventually, and they’re inflating the currency. So it has to last, at least into 2010. It’s going to be quite dismal, actually.

TGR: And what happens with the unfunded Medicare liabilities?

DC: They’re not going to be funded. They’re going to be defaulted on and, actually, that’s the best thing that could happen. That’s one of the things that should be done now; the U.S. government should default on its debt. This is shocking for people to hear, but it wouldn’t be the first time the U.S. government has done that. It did that almost at its founding in continental days.

This debt represents a tax liability that’s being foisted off on the next generations who have no moral obligation to pay and should not pay. I think as an ethical point, the U.S. should default on this debt. It’s impossible to pay it back, and it won’t be paid back. It’s more honest to acknowledge that bankruptcy now as opposed to pretend it’s going to be paid back. Defaulting even might forestall runaway inflation in the dollar, which would be a catastrophe of the first order. So it’s the smart and moral thing to do, and it’s going to happen eventually anyway. All the real wealth will still be here; a lot of it will just change ownership. The big losers will be those who lent to the State, thereby enabling its depredations, and they deserve to be punished.

But even a default tomorrow will do no good unless you put the U.S. government into reverse and disband all of these ridiculous, destructive agencies that have grown like a cancer for years. Taxes should be cut 50% to start with, just out of hand. And the defense establishment—it’s a misnomer; it’s not defense at all but rather foments wars around the world—should be cut hugely. Not with a butcher knife; but a chain saw. But none of this is going to happen; in fact, just the opposite. That’s why I’m so pessimistic now that the tipping point’s finally been reached.

TGR: Are we at the tipping point?

DC: Yes, we’ve absolutely gone over the edge. The consumer is no longer in a position to consume. Everybody is going to cut consumption to the bone and hopefully find something to produce instead. It would be better for people to start viewing themselves as producers than consumers. That would be a step in the right direction to get them psychologically more in line with reality.

TGR: In last fall’s meltdown, gold held up, but the stocks didn’t. Quite a few producers and soon-to-be producers, and some companies making discoveries, seem to have bottomed out in November and December. But worry persists in the market. Suppose another shoe drops or another black swan appears? Richard Russell (Dow Theory Letters) and others have been talking about the Dow going down to 5,000. What would that do to the gold stocks?

DC: Gold stocks are also stocks, and the best environment for gold stocks historically has always been when both gold and the stock market are going up. But since the last gold stock bull market came to an end, I think it’s entirely possible to see a bubble develop in gold stocks with all the money being created. I certainly hope so. I’m actually optimistic for gold stocks just because they’re so cheap relative to everything else.

TGR: They have been beaten down.

DC: Yes. And that fact, along with the waves of money being printed around the world and the much higher gold prices we are going to see, could cause a speculative mania to develop in the gold stocks. Nobody’s even thinking about that possibility right now, because they’re so battered. But this is the time to get into the right ones because it’s likely to happen in the future.

TGR: The ’29 crash—which was really the preamble, because ’30, ’31, ’32 and ’33 were certainly bigger—is when gold stocks such as Homestake did their best. How do you see that playing out this time around? Is it different this time or do you expect a similar pattern?

DC: You know what they say, “History doesn’t repeat itself, but it rhymes.” I think that, first of all, the gold mining industry is a much worse industry now than it’s ever been in the past, because just as all the easily defined light sweet oil basically has been discovered, all the easy-to-find high-grade gold basically has been discovered. Most mines that are going into production are low-grade, which means that you have to move a lot of dirt, which means that they’re much more capital-intensive than in the past. So gold mining’s a worse industry from that point of view.

Also, politically speaking, with the rise of the green movement, there are people who don’t want any oil burned, any dirt moved, any trees cut. They don’t want to see anything happen. This makes it much harder to do gold from a permitting and political point of view. We’re in a much higher tax environment than in the past. So it’s a tough industry. It really is. It’s just a 19th century choo-choo train type of industry that interests me only as a speculative vehicle. You’ll notice that gold went from lows of about $300 to highs of about $900 and none of these gold companies are making any money because their costs actually went up faster than the price of gold. So I’m not saying gold mining is a great business. It’s not. It’s a crappy business. Still, we could have a bubble in the stocks. I’m hoping we do.

TGR: Aren’t we going to see a change in that in ’09? Oil, which is one of the large components of that cost, has come down dramatically. A lot of these producers must be locking in oil at these lower prices. Won’t that translate into year-over-year earnings increases for the gold producers?

DC: That’s possible. The producers actually may show increases for the next couple of years. I don’t doubt that. But I don’t think oil will stay where it is. I think oil’s eventually headed back to $150 a barrel or more.

TGR: So why wouldn’t you own oil as well as gold?

DC: It’s a good idea, but we weren’t really talking about oil. I’d say that oil is a good thing to own. Oil is a real buy now. It’s as good a buy at $40 as gold is at $900 right now. Maybe a better buy; who knows?

TGR: If we go into worldwide depression, will oil continue to be a good buy or will it self-regulate around this $40 a barrel?

DC: I am bullish on oil. Although I’m philosophically not very sympathetic to the peak oil theory, I think it’s a geological fact. Also, China and India and the other developing parts of the world don’t use a whole lot of oil now. As they develop, they will to want—and almost need—to use a lot more oil. That’s going to keep pressure up on the demand side. But the supply side actually finally is constrained, so it’s going to mean higher prices. In a depression-type environment, U.S. and Western oil consumption could drop a lot, but the third world would take up most of that slack. So I have to be bullish on oil.

TGR: Are you bullish on any other sectors or commodities?

DC: I’m bullish on agricultural commodities. They ran way up last year and then collapsed again. I think a good case can be made that most of the soft commodities are quite cheap and will go higher, so I’d look at those, too. I think gold definitely, oil in the years to come has the potential to go much, much higher, and the agricultural commodities have a lot of potential.

TGR: Gold appears to be uncoupling from the dollar. Historically, when the dollar was strong, gold would be weak. But we’ve had a couple of recent instances in which both the dollar and gold have been strong. Obviously, we’ve seen a total decoupling of gold from oil. It used to be when oil was running, gold was running and vice versa, but that no longer seems to be the case. Is that just an old wives’ tale or is something going on?

DC: I’ve never seen any necessary relationship between gold and oil, just like there’s no necessary relationship between rice and natural gas, or nickel and soybeans. All these commodities tend to move together, all the currencies tend to move together and stock markets tend to move together, but they all have their own dynamics. I think it makes sense to compare the relative prices of various commodities and see what may be cheap or dear relative to other things based on the fundamentals.

On any given day, somebody may have to buy or somebody may have to sell a huge amount of almost anything. It’s unpredictable and you can’t tell what constraints are out there in the market. I don’t even pay attention to day-to-day fluctuations because they’re just random noise. I watch the big trend. It’s been shown that if you just made one correct trade and stuck with it at the beginning of every decade for the last four decades, you would have realized something like 1,000 times on your money. To me, this is the proper approach to the markets, not to try to second-guess from day-to-day what’s going to happen. That’s foolish because you get chewed up with commissions and bid-ask spreads and double-thinking your own psychology and so forth.

I really just like to look at long-term trends. In terms of long-term trends, you’ve got to be long gold, long silver, long oil; you’ve got to be short bonds. I think that’s really all you need to know. The other things we mentioned such as agricultural commodities and so forth are worthy of attention. But, as I said, I’m not a day-to-day trader. I think that’s very foolish.

TGR: Are these the themes that you and your group of speakers will focus on in Las Vegas?

DC: They are. I certainly want to invite anybody who reads this interview to join us. We put on very small, very classy seminars. They’re not gigantic mob scenes, so it’s possible to get to know individual speakers and fellow attendees in a very collegial atmosphere. I think it’s something that anybody who’s seriously interested in these kinds of things should consider.

The Casey Research Crisis & Opportunity Summit, will be held March 20 – 22, 2009, at the Four Seasons Resort in Las Vegas.

A citizen of the world in more ways than most of us can imagine, Doug Casey, Chairman of Casey Research, LLC, is the international investor personified. He’s spent substantial time in about 200 different countries so far in his lifetime, living in 12 of them (currently New Zealand and Argentina). And Doug’s the one who literally wrote the book on crisis investing. In fact, he’s done it twice. After The International Man: The Complete Guidebook to the World’s Last Frontiers in 1976, Doug came out with Crisis Investing: Opportunities and Profits in the Coming Great Depression in 1979. His sequel to this groundbreaking book, which anticipated the collapse of the savings-and-loan industry and rewarded readers who followed his recommendations with spectacular returns, came in 1993, with Crisis Investing for the Rest of the Nineties. In between, his Strategic Investing: How to Profit from the Coming Inflationary Depression (Simon & Shuster, 1982) broke records for the largest advance ever paid for a financial book. Bill Bonner (The Daily Reckoning) describes Doug as “smart, hard-working, and extremely knowledgeable” with “an instinct about investments that has made him and many of those around him very rich.”

Doug, who now spends more time as an expatriate than he does on American soil, has appeared on NBC News, CNN and National Public Radio. He’s been a guest of David Letterman, Larry King, Merv Griffin, Charlie Rose, Phil Donahue, Regis Philbin and Maury Povich. He’s been the topic of numerous features in periodicals such as Time, Forbes, People, US, Barron’s and the Washington Post – not to mention countless articles he’s written for his own various websites, publications and subscribers.

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That’s all for Today- Enjoy! jschulmansr

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Support At the Pit Stop

24 Tuesday Feb 2009

Posted by jschulmansr in banks, bull market, Comex, Currencies, currency, Currency and Currencies, deflation, depression, DGP, dollar denominated, dollar denominated investments, Economic Recovery, economic trends, economy, Federal Deficit, federal reserve, Finance, financial, Forex, Fundamental Analysis, futures, futures markets, GLD, gold, Gold Bubble, Gold Bullion, Gold Investments, gold miners, Gold Price Manipulation, How To Invest, How To Make Money, hyper-inflation, IAU, inflation, Investing, investments, Junior Gold Miners, Latest News, majors, Make Money Investing, Market Bubble, Markets, mid-tier, mining companies, mining stocks, oil, palladium, physical gold, platinum, platinum miners, precious metals, price, price manipulation, producers, production, silver, silver miners, spot, spot price, stagflation, Stimulus, Stocks, Technical Analysis, The Fed, Tier 1, Tier 2, Tier 3, U.S. Dollar, Uncategorized, 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, 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

Gold is resting today, taking a quick pitstop allowing people to jump in on the next rally to $1033 and then if clear that $1050+. All of this talk of the Gold bubble. Bubble or not there is some serious money to be made here- even at these levels. Have some stories to tell your Grandchildren and Great Grandchildren of how you “caught” the Gold Bull. Get in now or you will regret it! Gold currently holding above the key support level of $985. Gold needs to clear the $1026 to $1033 level to be sustained in it’s upward rally. A note of caution if it fails at $1033, retracement back down to $900 is possible, I would put in a trailing stop to protect your current profits. I recommend a 20-25% trailing stop so you don’t get caught in a whipsaw market action. Stay tuned as I am still long DGP and will tell you when I am getting out. Good Investing! – jschulmansr

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

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Protecting Yourself from a Gold ETF Bubble- Seeking alpha

BY: Tom Lydon of ETFT Trends

Are gold ETFs entering a bubble? More and more people seem to think so.

Last week, we noted a story that contained 12 reasons to short gold. Barron’s raises the question, too, now that gold is priced above $1,000 an ounce. The price is equivalent to more than 25 barrels of oil, a ratio that has rarely been exceeded in the last 35 years, says Michael Santoli for Barron’s.

There are two sides to the argument:

Owning gold seems logical now, given that the turmoil has gone completely global. Gold has also been rising, even as the U.S. dollar is gaining strength, too.

On the other hand, SPDR Gold Shares (GLD) is now routinely turning over $2 billion worth of trading each day, which might give investors pause. Is it becoming a herd mentality?

Meanwhile, Brett Arends for The Wall Street Journal gives the ins and outs of gold investing, including that gold is volatile and no one knows its true worth. For that reason, the mania is to be taken with a pinch of salt, he says.

While gold can be a volatile metal, right now, the trend is there. You can’t fight it. But if you’re in gold, have an exit strategy at the ready (we get out either 8% off the recent high or when it falls below the 200-day moving average). This will help protect investors from further losses, and may even preserve some gains that might have been made.

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My Note: The reason I put my stops at a greater percentage than 8% is from my days as a futures trader. Traders on the floor love tight stops of 5%, 10%, and even 15% and will often bid a commodity down 10%-15% to catch people’s stops and then let the market rise and pocket the money. This happens especially on days of lower volumes of trades. Watch carefully and his idea about exit after a close below the 200 day moving average is sound, remember though that it is a daily close (end of day) below the moving average not intraday trading. For those who already know this remember I have readers who are newbies and don’t know all the ins and outs, this is for them as I care about all my readers! – jschulmansr

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Next Here is the Article mentioned above…

Gold: Where to Invest and What to Avoid – Wall Street Journal

Source: Brent Arends of WSJ.com

Great news. The next bubble has already begun!

We’re still in intensive care from the stock market, housing and credit bubbles, but a gold bubble is now underway.

The precious metal crossed $1,000 per ounce on Friday, as investors around the world rushed to “shelter” their money from financial meltdown and spendthrift governments. And many people think it may rise to $2,000 or even $3,000.

Ordinary investors are jumping aboard. They’re buying gold coins or the gold exchange-traded fund, GLD.

I’m not against investing in gold-mining stocks. I recommended them here a few months ago — just before they began skyrocketing. It could certainly make sense to put 5% or 10% of a portfolio in the right precious metals fund. I have one suggestion below.

But look out before buying actual coins, bullion, or the ETF. This is risky.

First: Gold is incredibly volatile. It can halve, or double, in short order. This is not like a normal mutual fund.

Second: No one really knows what gold is worth, because it generates no cash flow. Any numbers are pure guesswork.

And third: Investing directly in gold violates the old adage that you should never get into bed with anyone crazy. Gold fanatics are far-out nuts. No kidding. If you met these people you’d run a mile.

Even some intelligent, and otherwise sensible, people aren’t immune from the madness. They will pound the table and insist gold is the only “real” money because it’s been coveted since ancient Egypt, if not before.

Please. Ancient superstition is no argument. People around the world used to think only a monarchy could be a “real government”. Sorry, I’m not buying the Divine Right of Gold any more than I buy the Divine Right of Kings.

Ancients coveted gold for three reasons. It was pretty. It’s really soft, so it was easy to manipulate with primitive tools. And they didn’t have many other material things worth desiring, like split-level oceanfront homes or flat screen TVs or first-class tickets to Hawaii. The ancients were short on opportunities for retail therapy.

The world has changed since, so take gold mania with a certain pinch of salt.

Associated Press

Gold ingots from Switzerland, America and Germany are shown on display at The Coin Broker store, in Palo Alto, Calif.

Nonetheless gold has some value. So do other precious metals. (I think the long-term case for platinum is stronger – but that’s another column.)

Every government on the planet is printing money in the trillions to stave off a prolonged depression, and they’re going to continue to do so until it works. Precious metals cannot be manufactured in the same way. So you can expect them to rise in price.

Shares in the big gold miners, like Barrick and Newmont, have been booming for a few months.

But the smaller ones are still looking very cheap – especially compared to the gold price. (See chart.)

These stocks got absolutely crushed last year, along with gold prices and small company stocks.

Although they have started rallying too, they have much further still to go. Ordinary retail investors haven’t started buying them – yet.

Don’t go it alone. Investing in gold minnows is tricky.

One mutual fund worth a look: US Global Investors’ World Precious Minerals Fund. It’s one of the few to focus mainly on smaller gold stocks.

Manager Frank Holmes, a 20-year industry veteran, agrees the juniors are comparatively cheap. And he sees takeovers starting as well. “Eventually the seniors will have to gobble (the juniors) up,” he says. “They can’t find enough gold to replenish their production.”

Write to Brett Arends at brett.arends@wsj.com

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My Note: What Have I been telling you about the juniors? Remember as a general rule I buy those junior miners which currently are producing or are about to start production in the very near term. These companies I believe are the ones who will be the most attractive takeover candidates. My disclosure: I am Long GLD, UNPWX, along with many of the juniors too-jschulmansr

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Are you going to let them do this?

23 Monday Feb 2009

Posted by jschulmansr in 10 year Treasuries, 20 yr Treasuries, Austrian school, Bailout News, banking crisis, banks, bear market, capitalism, Comex, commodities, Copper, Credit Default, Currencies, currency, Currency and Currencies, deflation, dollar denominated, 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, GDX, GLD, gold, Gold Bullion, Gold Investments, gold miners, Gold Price Manipulation, inflation, Investing, investments, Junior Gold Miners, Latest News, Make Money Investing, manipulation, market crash, Markets, monetization, palladium, physical gold, platinum, platinum miners, precious metals, price manipulation, prices, producers, production, run on banks, Short Bonds, silver, silver miners, Silver Price Manipulation, spot price, stagflation, Stimulus, Stocks, TARP, Technical Analysis, Ted Bultler, The Fed, U.S., U.S. Dollar, XAU

≈ Comments Off on Are you going to let them do this?

As I write there is selling pressure or maybe price manipulation on the gold market right now. Are we going to let them do this? Especially with everything else in the markets i.e. the dollar, banks, stock markets in chaos and dissarray? The best way to fight back is to keep buying gold especially on Comex and taking delivery. That would catch them and for once the little guy wins! The Gold price is holding steady at $990 oz after being tested early this morning, Gold bounced right off the $975 – $977 support and is now holding steady. Today’s articles do talk about the manipulation going on in the Gold and Silver markets. To date the largest short positions and majority of the short interest on Comex consists of a few banks who went short in the $750 to $950 range ( I know a large spread but they have been cost averaging their positions). If all the longs would start taking possesion of their gold and silver off of Comex, I am telling you this, we would have one of the largest “Short Squeezes” in history! – Good Investing! -jschulmansr

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Catch the New Bull! – Buy Gold Online – Get 1 gram free just for opening account– just click on the Gold Bar!, no minimums – Buy Safely, quickly, and at low prices, guaranteed! – Bullion Vault.com

This is an older article which explains the manipulations which have been going on. The same banks still hold teir positions of as last published Comex reports.– jschulmansr

Chris Powell: Gold and Silver Market Manipulation Update – Gold Anti Trust Action Committe GATA

Submitted by cpowell on Fri, 2008-11-14 20:51. Section: Essays

Good afternoon and thank you for being here. It’s an honor to get to speak with so many interested in silver, especially at such an interesting time in history. I’m going to ramble a bit, and try not to get too detailed and save some time for questions where you can get specific.

Remarks by Chris Powell, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
New Orleans Investment Conference
New Orleans Marriott Hotel
Thursday, November 13, 2008

A year ago it was still a struggle to persuade some people that the gold and silver markets were being manipulated by Western central banks. Now, after months of financial turmoil around the world and constant central bank intervention in the markets, to believe that the gold and silver markets are not being manipulated by central banks you have to believe that those markets are the only markets not being so manipulated.

Why are the gold and silver markets manipulated by governments and the financial houses that serve as their agents? Because gold and silver are competitive currencies and because their value greatly influences interest rates, which ordinarily governments like to keep low.

Last year at this conference I reviewed in detail the official documentations and admissions of the gold price suppression scheme. Those documentations and admissions remain posted at GATA’s Internet site:

http://www.gata.org/node/5654

Today I’d like to review some evidence that has turned up more recently, as well as some related developments.

Maybe most interesting have been the studies of the U.S. Commodity Futures Trading Commission market reports done by silver market analyst Ted Butler and by Gene Arensberg, a market analyst for ResourceInvestor.com. Butler and Arensberg reported that as of August just two banks held more than 60 percent of the short positions in silver on the New York Commodities Exchange. This was an unprecedented and seemingly illegal concentrated short position, and it implied that the smashing down of silver was very much a manipulation by one or two very rich and powerful market participants, a destruction of the free market. Complaints about this concentrated short position prompted the CFTC to undertake still another investigation of the silver market, this time by a different division of the commission, its enforcement division. Further, CFTC Commissioner Bart Chilton has told GATA that the agency is investigating the gold market as well.

This week Arensberg found that the CFTC’s latest report shows that just three or fewer banks now hold half the short positions in gold on the Comex and more than 80 percent of the silver short positions.

Also this week Butler obtained a copy of a letter from the CFTC to U.S. Rep. Gary G. Miller, R-California, that sought to explain the concentrated short position in silver. The CFTC’s letter implied that this extreme short position resulted from JPMorganChase’s acquisition of Bear Stearns in March. If we construe the CFTC’s letter correctly, that would make MorganChase the big short in silver now and imply that, in financially underwriting MorganChase’s acquisition of Bear Stearns, the Federal Reserve was also underwriting MorganChase’s assumption of that short position in silver.

Of course MorganChase was also the bullion banker to Barrick Gold, the biggest gold shorter over the last decade. In 2003 Barrick told U.S. District Court Judge Helen Berrigan right here in New Orleans that, in shorting gold, Barrick had become the agent of the central banks in regulating the gold market and thus should share their sovereign immunity against lawsuits.

MorganChase is also the world’s biggest issuer of interest-rate derivatives, instruments by which interest rates are suppressed.

All this causes GATA to believe that MorganChase is in effect an agency of the U.S. government, or rather, perhaps, that the U.S. government is an agency of MorganChase. In any case, MorganChase has had an intimate relationship with the U.S. government since the days of J. Pierpont Morgan himself.

Incidentally, Jean Strouse’s 1999 biography of Morgan, which won the Bancroft Prize for American History and Diplomacy, recounts that Morgan’s first big triumph in finance was to corner the gold market in New York in 1863 during the Civil War. Nearly 150 years later there really may be nothing new under the sun.

Also lately raising suspicion about surreptitious government intervention in the precious metals markets has been the refusal of the Federal Reserve and the Treasury Department to release to GATA hundreds of pages of government documents about the disposition of the U.S. gold reserve. The Fed has told GATA’s lawyers that the documents are being withheld in part because their release might compromise information that is proprietary to private companies. Why anything about the U.S. gold reserve should be considered proprietary to anyone is beyond those of us at GATA — unless, of course, the reserve is being used to manipulate markets surreptitiously.

But we at GATA do not feel picked on by the Fed and the Treasury. For the Fed and the Treasury seem to be treating everybody as if the disposition of public assets is nobody’s business but Wall Street’s. This week Bloomberg News Service reported that the Federal Reserve is refusing to disclose how much it has lent to particular banks and exactly what sort of collateral the Fed has accepted for those loans, which have reached hundreds of billions of dollars. For example, is the Fed valuing the same kind of collateral from different borrowers the same way, and lending against it at the same rate? Or is the Fed giving advantages to certain borrowers and not others, depending on their political influence and straitened circumstances? That is, are the Fed and the Treasury Department now being operated as the greatest patronage and market-rigging schemes in history? The government is concealing the evidence.

Since we last gathered here in New Orleans many of us been cowering under the prospect of more official-sector gold sales, particularly gold sales by the International Monetary Fund, which has approved a plan of selling gold to raise cash to replace the income it is no longer getting from interest on loans to developing countries. But despite more than a year of loud talk about it, the IMF has not sold any gold yet, and GATA suspects that the IMF really does not have the 3,200 tonnes it says it has, only a tenuous claim on the gold reserves of its member nations, particularly the United States, which has a veto on any IMF gold sales and has not approved any yet.

Back in April I tried to engage the IMF in a dialogue about its gold and I had an exchange by e-mail with an IMF publicist, Conny Lotze.

My first question was: “Your Internet site says the IMF holds 3,217 metric tons of gold ‘at designated depositories.’ Which depositories are these?”

Conny Lotze of the IMF replied, but not specifically. She wrote: “The fund’s gold is distributed across a number of official depositories,” adding that the IMF’s rules designate the United States, Britain, France, and India as depositories.

My second question was: “If you’d prefer not to identify the depositories for security reasons, could you at least identify the national and private custodians of the IMF’s gold and the amounts of IMF gold held by each?”

Conny Lotze replied, again incompletely: “All of the designated depositories are official.”

My third question was: “Is the IMF’s gold at these depositories allocated — that is, specifically identified as belonging to the IMF — or is it merged with other gold in storage at these depositories?”

Conny Lotze replied, still not very specifically: “The fund’s gold is properly accounted for at all its depositories.”

My fourth question was: “Do the IMF’s member countries count the IMF’s gold as part of their own national reserves, or do they count and identify the IMF’s gold separately?”

Conny Lotze replied a bit ambiguously: “Members do not include IMF gold within their reserves because it is an asset of the IMF. Members include their reserve position in the fund [the IMF] in their international reserves.”

This sounded to me as if the IMF members are still counting as their own the gold that supposedly belongs to the IMF — that the IMF members are just listing the gold assets in another column on their own books.

My fifth question was: “Does the IMF have assurances from the depositories that its gold is not leased or swapped or otherwise encumbered? If so, what are these assurances?”

Conny Lotze replied: “Under the fund’s Articles of Agreement it is not authorized to engage in these transactions in gold.”

But I had not asked if the IMF itself was swapping or leasing gold. I had asked whether the custodians of the IMF’s gold were swapping or leasing it.

This prompted me to raise one more question for Conny Lotze. I wrote her: “Is there any audit of the IMF’s gold that is available to the public? I ask because, if the amount of IMF gold held by each depository nation is not public information, there doesn’t seem to be much documentation for the IMF’s gold, nor any documentation for the assurance that its custody is just fine. Without any details or documentation, the IMF’s answer seems to be simply that it should be trusted — that it has the gold it says it has, somewhere.”

And Conny Lotze … well, she never wrote back to me again. After all, I had uttered the dirtiest word in government service: A-U-D-I-T.

That the International Monetary Fund refuses to account for the gold it claims to have should be potential news for the financial media. It would be nice if the financial media pursued that issue before their next attempt to scare the gold market with stories about IMF gold sales.

But even if such sales by the IMF should be undertaken, they might not be much for gold investors to worry about. For a month ago I happened to attend in New York City the annual fall dinner of the Committee for Monetary Research and Education, and it had an unscheduled speaker, Columbia University Professor Robert Mundell, who, as you may recall, won the Nobel Prize in economics in 1999 and is regarded as the father of the euro. Through great luck I got to sit next to Mundell on the platform and so heard him clearly as he went out of his way to join the discussion of my topic, gold. Mundell remarked that if the IMF sold any gold, China should buy all of it to diversify its foreign exchange reserves. Since Mundell is a consultant to the Chinese government, the Chinese government surely heard this advice from him long before the CMRE meeting did.

You can do a lot of market rigging when you can print legal tender to infinity, pass out huge amounts of it to your friends, and induce them to use derivatives to siphon speculative demand for real stuff away from actual possession of that real stuff. But in the end printing legal tender and contriving promises to deliver real stuff don’t produce real stuff. With infinite legal tender and derivatives you can push the futures price of a commodity below its production costs and below its free-market price for a while, but you risk causing shortages. And of course that’s what we have in gold and silver right now — falling prices for the paper promises of metal even as little real metal is to be had and the spread between the futures price and the real price grows. Last night a GATA supporter in Bangkok, Thailand, who long has been in the silver business e-mailed me that real silver there is priced at $18 per ounce for orders of 1 kilo or more and $23 per ounce for smaller orders. Our friend in Bangkok added that when he shows silver dealers there the New York silver futures price on the Internet, they laugh at him. Shortages can have various causes but generally they are their own cure. When shortages persist, they well may result from government intervention in markets.

Of course prices always have been determined to a great extent by the volume and velocity of money and credit, and so the creation of money and credit is, all by itself, inevitably an intervention into markets. But lately money and credit have been disappearing and reappearing in a flash in the billions and trillions. How can so much come and go so quickly? Maybe because what passes for money and credit today is a bit too ephemeral, having little connection to reality and a lot of connection to politics.

That is why market advice today is more doubtful than ever: Markets have become more politicized than ever. Supply and demand and profitability are no longer the primary determinants of markets. No, the primary determinant of markets is now politics: Which countries will cut interest rates the most? Which countries will subsidize their banks and corporations the most? Which countries will get IMF and World Bank loans? Which countries will be given unlimited currency swap lines and which won’t? Which companies will get bailed out and which won’t? How much more dishoarding of gold will central banks do to keep the price down, and which central banks? When will central banks run out of gold or decide to stop spending it this way? Most importantly, when will the world decide to stop financing the wild irresponsibility of the United States by lending the U.S. money that can never be repaid?

These are all political questions, and only political decisions will answer them. Some of these questions may be answered as soon as this weekend at the international conference in Washington. Answers to some of the other questions probably will be conveyed in advance to certain insiders — like the financial houses that serve as the market agents of the central banks — and those insiders will get richer. As good as this conference is, you will not be hearing from any of those insiders here.

But we may gain some confidence from politics too, since we know that governments are no longer shy about intervening in the markets and since central banking was invented precisely to inflate, to avert debt deflation, to devalue the currency when that is deemed necessary or convenient by those in power — which is most of the time. We know that the world is now drowning in debt, and in a research paper published in May 2006 a British economist, Peter W. Millar — founder of Valu-Trac Research in London, formerly an executive with the Abu Dhabi Investment Authority — forecast that to avert debt deflation and to increase the value of their monetary reserves, central banks would need to increase the value of gold by at least 700 percent and maybe by as much as 2,000 percent. This could be done easily, for to increase the value of their monetary reserves central banks need only to stop selling and leasing gold and to stop subsidizing the sale of gold derivatives by their agents, the financial houses. Revalued high enough, gold could cover all government debts and let the world start over again.

Millar kindly has given GATA permission to post his research paper at our Internet site, and you can find it here:

http://www.gata.org/files/PeterMillarGoldNoteMay06.pdf

When Millar made his forecast about such an upward revaluation of gold — 2 1/2 years ago — gold had just reached $700 per ounce, not far from where it is now. Multiplied by 700 percent, that would mean a gold price of about $5,000 per ounce. Multiplied by 2,000 percent … well, if that happens, we may be able to afford to hire someone to do the math for us — if, of course, those of us who do not live in free countries like China and Russia are allowed to keep our gold. But that is still another political question.

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Gold’s Assault on the Clueless – Rick’s Picks

By: Rick Ackerman of Rick’s Picks

We’ve been monitoring gold’s vital signs closely, since any foray above $1000 is cause for nervousness. The yellow stuff has always been free to roam, and even to misbehave, below that threshold; but once above $1000, the bankers regard each rally with a glower of malice. While it is clear that debt deflation’s overwhelming power has rendered the central banks impotent in their efforts to arrest the collapse of the global economy, the bankers still retain the ability to crush any hint of rebellion by gold bulls who would deign to challenge the monetary order. With their relatively large stocks of physical gold, and the complicity of institutional agents such as JP Morgan to help suppress “paper gold” in futures markets, the bankers and the IMF have enough influence over bullion’s price to temporarily suspend the laws of supply and demand.

The politicians are on board, of course, although not as conspirators. They are all knee-jerk Keynesians at the moment, either too stupid and/or lacking in imagination to understand why fiscal spending, no matter how much of it, cannot possibly extricate the economy from a deflationary black hole. They have put their trust in eggheads and MBAs to fix things, even if most of us have begun to suspect that throwing yet more trillions of dollars into the maw of deflation will not solve anything. And although our elected leaders might not feel so strongly about gold as Keynes, who was appalled by the popular appeal of “that barbarous relic,” they are nonetheless dumbfounded as to why anyone would prefer gold-backed currency to the Monopoly money that The Government has empowered as legal tender.

Concerning our immediate outlook for gold, we have identified 1025.20 as the next significant point of resistance for the Comex April contract. The number is yet another in a series of Hidden Pivots that have told us unequivocally and at each step along the way whether buyers were ready to forge effortlessly higher. So if 1025.20 gives way easily, as other points of resistance already have, we’re ready to infer that the benighted acolytes of Keynes are about to get fragged by investors who are growing increasingly restless, if not to say panicky, about The Government’s apparent powerlessness to ameliorate economic distress.

(If you’d like to have Rick’s Picks commentary delivered free each day to your e-mail box, click

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Only Seller Left? – Silver Seek

Source: Silver Seek Author: Ted Butler

Another week, another data release from the CFTC proving manipulation in the silver market. The most recent Commitment of Traders Report (COT) provides additional compelling evidence that the COMEX silver market is manipulated. The new report proves manipulation so clearly, as to make it almost undeniable. In recent weeks and months, it appears that all the additional short sales of COMEX silver futures contracts are coming from one entity. If true, there could be no clearer proof of manipulation.

I am going to try to make this as simple as possible, but it does involve different facts and figures. It is very clear and simple to me, but that is because I have spent decades studying this data. I hope I can make it clear enough for both you and the CFTC to understand. This is not about whether silver is manipulated, as that’s a given. This is about whether I can explain and prove it.

The COT, for positions as of the close of business February 10, the total commercial net short position increased by 1864 contracts for the week. However, the net short position of the 4 largest traders increased by 2832 contracts. This means that of all the commercial traders, the only short selling came from the 4 largest traders, with all other commercial traders (the 5 through 8 largest traders and the raptors, the 9+) buying. This was very unusual, in that the commercials generally operate as one cohesive unit, all buying on the way down in price and selling on the way up.

Even more unusual is that this pattern has persisted back to the December 22, COT report. On an almost $2.50 rise in the price of silver since then, the total commercial net short position has increased by 4357 contracts, yet the big 4 have increased their net short position by 5396 contracts. This means all new short selling in COMEX silver has come from the biggest traders, for the first time in memory. That should be enough for any semi-alert regulator to conclude manipulation, as such concentrated short selling by so few participants should have every alarm and whistle blaring at CFTC headquarters. After all, there could be no clearer motive for such selling – the capping of price for the purpose of protecting already obscenely large short positions.

But even while it is easy to conclude that all new short selling is coming from the same four or less large traders, where do I get off suggesting it is one entity behind all the new silver short selling over the past 7 weeks? Here we have to look at another CFTC data source, the Bank Participation Report. Since the Bank Participation Report (BP) is a monthly publication, while the COT is weekly, we must make appropriate calibrations between the reports. The two most recent BP reports are as of January 6 and February 3. Using those two reports, plus the COTs of the exact same dates, this is what the reports show. Between those two dates, the COT indicates that the total commercial short position increased by 2253 contracts, with the big 4 category increasing by 2256 contracts, once again accounting for more than the entire increase in the commercial category.

The Bank Participation Reports corresponding to January 6 and February 3 indicate that the two U.S. banks increased their net short position by 2500 contracts in that same time period. This proves, at least during this specific period of time, that one or two U.S. banks accounted for more than 100% of all the commercial short selling and all the selling in the big 4 category. One or two entities, accounting for more than 100% of all total short selling for more than a month is manipulation. Period. It can only have occurred to attempt to cap the price and protect the existing short position.

Please remember that while I have been documenting the incremental changes in the concentrated short position of what may be one large trading entity, those changes are small compared to the total short position of this entity, which I estimate to be back above 30,000 contracts, or 150 million ounces. That’s more than 22% of the entire annual world mine production of silver. It is impossible for such a large concentrated short position not to be manipulative.

I’m fed up with the CFTC and their so-called investigation. They claim to be investigating , while the manipulation grows more obvious. I think we’ve passed the point where we can eliminate incompetence as the explanation for their inaction. I have a good idea of what is behind their refusal to right a very obvious wrong, although I won’t get into those details here. Let me just remind them that while they may fear the possible ramifications of a truly free silver market, after decades of manipulation, the greatest damage is their abandonment of the rule of law.

(Editor’s note – here’s a detailed report of Ted Butler’s past and present dealings with the CFTC regarding the silver manipulation –

http://www.investegate.co.uk/invarticle.aspx?id=66705)

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Silver, Past, Present, Future – Phoenix Silver Summit Speech – Silver Seek

Source: SilverSeek.com

By: Theodore Butler

I’d like to acknowledge a few people who are not here that had an awful lot to do with me being here today. First, I’d like to thank Jim Cook, from Investment Rarities in Minneapolis, for his sponsorship of my work for more than eight years. It was this support that enabled me to devote all my time to studying and contemplating everything I could about silver. Thanks, Jim.

Second, I’d like to thank my friend of 25+ years, Israel Friedman. It was Izzy, who back in 1984, issued to me the challenge to prove him wrong in his analysis of silver. Although I had traded and invested in silver for years before his challenge, I admit to never having studied it in depth. Izzy’s claim that the world was and had been consuming more silver than was being produced seemed so at odds with the price at that time, that I took up his challenge. I also admit that I thought it would be easy to prove him wrong, although I was well aware of his buying of silver in the $4 range and then selling it in the $40 range a few years later. When I discovered that he was correct, it set off a thought process that I couldn’t satisfy. I couldn’t reconcile how there could be greater demand for an item than there was current production with prices not moving higher. I’m sure that many had also been deeply perplexed with that puzzle.

For some reason, rather than to simply dismiss and put out of mind something I couldn’t figure out, I thought long and hard about the silver supply/demand/pricing enigma. It was that thought process, plus my background as a commodity broker, that led me to the conclusion that the silver market was manipulated by excessive short selling on the COMEX. The actual Eureka Moment came one day as I reading the Wall Street Journal Commodity Tables. It wasn’t an accidental discovery. I was looking for something wrong. I was looking for anything that was different about silver that could account for it’s very different behavior compared to other commodities. After all, we were all taught that when consumption is greater than production, price must rise. Yet silver didn’t. The light bulb went off in my head when I realized that COMEX open interest, when converted into real world supplies was completely out of line with every other commodity. This meant that the derivatives market in silver was larger than the underlying host market from which it was derived. A complete absurdity. The paper market tail was wagging the physical market dog. This is something that has remained constant in the subsequent 25 years of manipulation.

Much later, I would come to understand the role of leasing in the silver manipulation, which answered a lot of open questions in my mind. It was Izzy who caused me to be bitten by the silver bug, just as I may have, in turn, infected others, who in turn infected still more. The good news about this silver virus is that instead of giving you the flu or killing you, it could make you rich. For introducing me to silver, thanks Izzy

Finally, I’d like to thank my wife, Mila, who has been subjected to my preoccupation of silver for the entire duration. While I have both suffered along the way and enjoyed the journey, it was always my choice to continue or not. I know it was much harder for Mila as a partner, and a I marvel at her ability to persevere where I know I could not, were our roles reversed. Thanks Mila.

The Past.

The silver story goes back, quite literally, for thousands of years. You won’t find many stories of longer duration, except if you’re an archeologist. For those thousands of years, it was prized as money and jewelry and for ornamental objects and as a measurement of wealth. Silver’s history is similar to its precious metals brother, gold. Both precious metals were the cause of exploration and the discovery of new worlds, and instrumental in the development and formation of nations, including war. Both gold and silver were dug out of the ground and held and accumulated throughout the ages. For use as money, governments for hundreds of years assigned a fixed ratio of roughly 15 to 16 ounces of silver being worth one ounce of gold. This made sense, because that ratio was close to the rate at which silver came out of the ground compared to gold. There was a lot more silver accumulated above ground than gold, so it further made sense that 16 ounces of silver was equal to one ounce of gold. In the late 1800’s tremendous new silver production came to market, due to the massive supplies from the Comstock Load in the western US. Coupled with a demonetarization of silver, but not gold, by many world governments the price of silver plummeted and with that the amount of silver needed to buy one ounce of gold rose to 100 ounces in the 1920’s. The world was truly awash in silver.

Coincident with these developments, starting about 100 to 150 years ago, around the same time that the world found itself awash in silver, something else dramatic was occurring. We began to enter the industrial age. Inventions and devices of all kinds began to be introduced, impacting the world as never before. Electricity came into wide use. The automobile was born. Photography was introduced. As dramatic as this overall change was to how people lived, the transformation in silver was even more dramatic. It turned out that the substance that the world was awash in, the substance that had been accumulated for thousands of years, had properties that no one could have contemplated through the vast sweep of history. This largely too abundant material was a perfect fit for the rapidly transforming modern and industrial world. Silver was, and is, the best conductor of electricity, the best heat transfer agent, the best reflector of light, a marvelous lubricant, a versatile catalyst and alloy for a wide range of industrial applications, including medical. Silver was the key ingredient that made photography possible. All these uses, plus abundant supply and cheap prices. It was the perfect consumption set up. And consuming silver is something the world took to in a very big way, until this very day.

It was the push into the modern age that caused a parting of the ways between silver and gold in how they were used. Gold has many potential industrial applications, although not near as many as silver. But because gold was, and is, so high-priced compared to silver, it wasn’t practical to use it in widespread industrial applications. Because silver was so cheap and abundant, it was used extensively. So extensively, that not only did the world begin to consume every ounce of silver that was taken from the ground, it also began to consume the accumulated inventory from the past.

In 1940, there were approximately 10 billion ounces of silver above ground in the world, with half owned by the US Government. At that time, there was about a billion ounces of gold. Ten times more silver existed in the world than gold. After more than 60 years of over-consumption of silver, of drawing down and depleting the inventories built up over hundreds and even thousands of years, the relationship of how much silver exists above ground compared to gold has flipped. Now there is much more gold left in the world than silver. Currently there are up to 5 times more gold in the world than silver, depending on how you define inventory. Silver inventories have declined from 10 billion ounces in 1940 to 1 billion today. The U.S. government, the largest owner of silver in 1940, with over 5 billion ounces, now owns zero ounces. Gold world inventories, including jewelry, have increased from 1 billion ounces in 1940 to 5 billion today, according to all reputable sources like the World Gold Council.

I ask you to think about that for a moment, there being more gold than silver aboveground, as this is one of the most important factors in silver today. It is also one of the least known facts, even though it is easily verifiable and has evolved over such a long time. When people first hear or read it, they instinctively disbelieve it. 99.9% of the people on the planet, to this day, would tell you that it can’t possibly be true that there is more gold than silver in the world. Or even that there is an equal amount of gold and silver. None of this 99.9% has ever taken even a minute to think about it or read or try to verify how much of each remains above ground. They don’t have to. Their verification comes everyday, as it has everyday for decades, from one simple source – the daily price of each. The price of silver and gold is broadcast constantly, to every nook and cranny around the world, that there are 60 to 70 to 80 times more silver in the world than there is gold. That’s what 99.9% of the people in the world think. And I’m not just talking about uneducated people in third world countries. I would include the most sophisticated, wealthy and educated people, who have come to believe that the price doesn’t lie. I do hope 99% of the people here don’t think that.

It is this simple fact, that the relative price of silver compared to gold is so distorted, relative the their respective quantities in existence, that is all anyone needs to know to buy silver. This is not a knock on gold. I will stipulate to and accept as true every bullish argument that anyone could make on gold. You could spend hours or days lecturing me on all the good things that gold has going for it, and I will accept them without dissent. When you are done giving all the bullish gold arguments, I would just add two things. One, all those arguments apply to silver as well, and two, there is less silver than gold.

I’m compressing hundreds and even thousands of years of silver history into a few minutes of time. For many centuries, the world dug up and used silver for money and beauty and wealth. In the last century or so, we discovered incredible new uses for this age-old material and continued to dig it out of the ground, in ever increasing quantities, basically consuming all the newly mined silver plus almost all of the old stuff as well. And even though this is a fairly easy set of facts to verify, only an infinitesimal amount of people are aware of how little silver remains. And in spite of the growing rarity of this age-old cherished and desired material, its price, on any objective measure, is dirt cheap. There is less silver in the world on a per capita basis, than in history, yet the price still reflects super abundance. At the risk of over using a statement I’ve made in the past, I couldn’t make this up if I tried.

The Present

I’m going to include the 5 years or so, maybe even a little longer, as part of the present. Today, thanks to the Internet and other means of communication, including conferences like this, the true silver story is coming out. I think I’ve played some role in that. Investors, in ever growing numbers are grasping the disconnect between the price and the true value existing in silver. It is this disconnect that presents an exciting investment opportunity.

Perhaps the most unique and attractive characteristic about silver is its dual role as a vital industrial material and its history and desirability as an investment asset. No other commodity comes close to silver in this regard. Of course, we need copper and zinc and lead for industrial purposes, but they have never been considered popular investments in their pure metal state. Same with other natural resources, like oil. None of these commodities can be practically held in one‘s personal possession. Gold is the primary investment metal, but its high price prevents widespread industrial use. Platinum and palladium are both precious metals and are used extensively in industrial applications, but have not evolved into broad and popular investment assets.

As the true dual role material, silver stands alone. In its industrial consumption role, silver demand has been so strong for the past 60 years, that it has depleted inventories that took hundreds of years to accumulate. Now that industrial demand has been interrupted by current bleak economic circumstances, investment demand is stepping in to take up the slack. And make no mistake, the evidence clearly indicates that an investment rush is developing in silver.

The introduction of the silver and gold ETF’s (Exchange Traded Funds) has been the single most important factor on the investment side of silver’s dual role. Since the introduction of the first silver ETF, less than three years ago, over 300 million ounces have been absorbed by the various silver ETF’s. That is remarkable and much more than I ever thought they could accumulate. More importantly, these ETF’s will turn out to be, in my opinion, what my friend Carl Loeb has nicknamed, the Death Star, in that they may absorb all the world’s available silver.

Lately, I’ve noticed quite a bit of suspicion and criticism concerning the legitimacy of the ETF’s, particularly the gold ETF’s, with the criticism centered on whether the real metal exists that is said to be on deposit. I’d like to add my two cents. Quite frankly, I don’t understand this criticism. If someone would prefer to own metal in his own possession or control, they should do so. It’s an easy choice. Certainly, this has always been my advice. And it’s not like the ETF’s are beyond criticism, and I have publicly done so in the past when I detected massive unreported short selling in the big silver ETF, SLV. I think that’s fraud, and I think there is currently a big unreported short position in SLV.

But that’s not what the current criticism of the gold ETF’s is all about. The current criticism revolves around allegations that the metal said to be deposited is not really there, even though serial numbers and weights of all bars are listed. It seems some are claiming that the big quantities of gold flowing to the ETF’s are beyond anything reasonable. Where can all this metal be coming from? While I can’t personally guarantee the metal is in the ETF’s, nor do I wish to, I don’t understand this line of thinking. The gold ETF’s have been accumulating gold for more than 4 years. In that time, roughly 50 million ounces have been absorbed by the all the gold ETF’s. That’s one percent of all the gold in the world. Even if you reduce the 5 billion ounce gold inventory by 60%, and say there is 2 billion ounces of gold in good-delivery bullion bar form, the 50 million ounces in gold ETF’s is only 2.5% of that 2 billion ounces. Is it so hard to imagine 2.5% of anything being accumulated over 4 years and with more than a doubling in price? After all, the silver ETF’s have accumulated almost 30% of total world bullion inventories and little is said of that by gold people.

The fact is, for the most part, the investors who buy the silver and gold ETF’s are institutional investors who probably wouldn’t buy the metal if the ETF’s didn’t exist. You would think the gold analysts criticizing the ETF’s would recognize that. The buying in the silver and gold ETF’s are a very big reason behind the doubling in price in a few years. You would think metal people would be cheering the ETF’s on, instead of complaining. Go figure. Look, I understand that investment demand in mining shares has probably suffered as a result of buying in ETF’s, but that’s a different issue and is no reason to claim that the gold ETF’s don’t have the metal. Metals prices wouldn’t have climbed if there was no metal demand from the ETF’s.

Back to silver investment demand. Aside from ETF demand, the past year has seen other compelling evidence of an investment rush into silver. For the first time in any of our lifetimes, we have witnessed a persistent retail investment shortage, characterized by soaring premiums and delays in product delivery. I have to laugh when some people say there is no retail shortage, as the very definition of a shortage is rising premiums and delays in deliveries.

Also, we have witnessed, for twelve straight months, something never seen before. The US Mint, even after doubling its production capacity, hasn’t been able to fully supply Silver Eagles in the quantities demanded, for the first time in the 23 year history of the program. There is no doubt in my mind that my friend Izzy is responsible for kicking off the rush into Silver Eagles with his article in December 2007. I know of no one else who recommended Silver Eagles, then or now.

The current economic collapse has resulted in a sharp drop in industrial consumption of all commodities, including silver. Production, while falling, has not yet fallen as much. It will, given silver’s byproduct production profile. So, temporarily, we have a “surplus” of silver. Unlike other industrial materials, the surplus in silver is being gobbled up as an investment. Instead of being dumped into exchange warehouse inventories, like copper, zinc, or other industrial metals. Once production of all these metals falls sufficiently enough to balance with industrial consumption, as it must, there should be a shortage in silver that will seem unreal.

The economic condition of the world is dreadful. That it came like a thief in the night makes it more ominous. When and how we turn this around, I haven’t a clue. Many of us have worried about this for 30 years or more, hoping it would never come. Despite that hope, the wolf has come to the door. We must deal with it. Fortunately for silver, these scary economic times rev up investment demand. The worse economic conditions become, the more silver investment demand should grow. Silver is positioned well for whatever economic conditions prevail.

The Future

I want you to do me a favor. I want you to play a little game of imagination with me. It may sound silly at first, but try to play along, as I want to make the central point of the day. I want you to imagine that in this room, right there, in the space between you and me, is a giant elephant. Not a regular elephant, mind you, but the biggest elephant ever documented. A 26,000 lbs African Bush Elephant, 14 feet tall in the shoulders, with absolutely massive tusks. I looked this up, so I‘m not misstating the dimensions. Not only is this the biggest elephant ever recorded, it’s loud, agitated and it stinks to high heaven, flapping its ears and swinging its giant trunk. And it’s right there and has been right there the whole time. I want you to imagine that you’ve been sitting there, listening to me talk about silver with this 13 ton elephant right there, interrupting my speech all along and scaring the dickens out of you. And the kicker is that we’re all trying our best to ignore the elephant. Pretending it’s not there, speaking around it. We’re all trying to act like it’s perfectly normal to be in a room speaking about silver with this giant elephant and trying to act like it’s not there, when it clearly is there.

The African Bush Elephant in the room is the silver manipulation. But whereas the elephant is imaginary, the silver manipulation is as real as rain. But like the imaginary elephant, most are doing their best to pretend that the silver manipulation doesn’t exist. Not me, of course, as the manipulation is the most important pricing factor in silver, and I write on it continuously. I sense I have convinced many thousands of readers that silver is manipulated and maybe many in this room. But it is absolutely amazing to me how so few analysts and industry people publicly speak out on the manipulation.

I’m talking of people working for the financial firms and banks whose job it is to follow and write about silver. I’m speaking of those in the mining industry and in particular the Silver Institute. I’m not complaining about this lack of manipulation talk. Maybe at one time it upset me to be so alone, but not anymore. Now it’s just amusing. I read everything there is to read on silver and 95% of what I read never refers to the manipulation in any way. I find that bizarre. I find that to be the real life equivalent to my previous imaginary exercise of the elephant and pretending it’s not in the room.

I’m not demanding that anyone agree with me about silver being manipulated. I’m human and I reserve the right to be wrong. Besides, it’s better for me to be the only making this the main issue. In the past, many did challenge and attempt to refute my allegations of manipulation, especially those in the mining industry, which never made much sense. But as the issue has become so specific as to the documented facts about the concentration, I’m not even hearing lately anyone explaining why I am wrong or answering simple questions, even on the Internet. If there is one thing I have learned about the Internet, because of its shield of anonymity, many love to tell you why you are wrong and they are right, and in generally a rude manner to boot. But I’ve asked the question for 6 months for how can one or two U.S. banks being short 25% of the world silver production not be manipulative, with no response. I was seriously considering running a contest with a reward for every legitimate answer.

Stranger still in the collective avoidance of even talking about a potential market manipulation is that the prime regulator, the CFTC, has initiated a formal investigation into my allegations of manipulation in silver. This is the third silver investigation in less than five years, and the first by their Enforcement Division. This has never occurred in any other commodity. Regardless of the outcome of the investigation, the fact that there is another investigation is extraordinary, in and of itself. Nothing could be a more important issue than whether any market is manipulated or free. You would think that there would be wide discussion on the potential outcome or the merits, pro and con, on the investigation itself. Instead, mum’s the word. That so many establishment analysts and mining and industry people can pretend that everything has been completely aboveboard in silver is more bizarre than my elephant in the room example. Especially now that the CFTC has stated that they are investigating.

Like all manipulations, the silver manipulation has resulted in an artificial price level. Unlike most manipulations, the one in silver is a downward price manipulation. Admittedly, that does make it harder for folks to grasp the issue. But the saving grace to this manipulation is that those not involved in the manipulation can take advantage of the artificially depressed price. The special essence of this manipulation is that outsiders can profit from it in a simple and easy manner. All you have to do is buy and wait.

Like all manipulations, the silver manipulation will end suddenly and the price must move sharply in the opposite direction of the manipulation. In this case, the price of silver will explode upwards, once the manipulation is terminated. Those holding silver when that occurs will be rewarded. This is not complicated.

But what happens if the CFTC’s investigation ends with them, once again, finding that no manipulation exists in silver? It doesn’t matter. The silver manipulation must end, suddenly and violently, to the upside, no matter what the CFTC says or does. I wouldn’t be no naïve as to depend on the CFTC for doing the right thing. The price, having been depressed so low and for so long, must result in a shortage. The shortage has been clearly evident in the retail market for more than a year. Not as clearly, but present nevertheless, are strong signs of a wholesale shortage in the unreported shorting of SLV shares and other wholesale indications. When this shortage hits in earnest, no one will be able to stop the sudden demise of the silver manipulation.

You might further ask, “If the manipulation in silver will end regardless of what the CFTC may or may not do, why do you (meaning me) persist in focusing on this issue? Why not just sit back and let it happen? Well, I have no choice in waiting to let it happen, so I guess the question is whether to keep quiet about it. The answer to that is while the manipulation presents the strongest reason for buying silver, it is a market crime of the highest order. There is no more serious market crime than manipulation. It is the equivalent to Murder One, Treason or kidnapping.

In addition to providing the most compelling reason for buying silver, the manipulation is a crime in progress. As such it offends my sense of what is right and wrong. Being the best reason for buying silver and being a crime in progress are not mutually exclusive. Just like recommending that people buy silver and write to the regulators and lawmakers complaining about the manipulation is mutually exclusive. And I am gratified that so many have taken the time to contact the regulators, as it has really made all the difference in the world.

In conclusion, the supply/demand set up in silver, which has evolved over an incredibly long period of time, has been one continuous process promising to culminate in an explosion in price at some point. Quite simply, we are rapidly approaching that defining moment when there just won’t be enough physical material to go around at anything but rapidly escalating prices. Those escalating prices will encourage and drive others, including industrial consumers, to enter what should become a buying frenzy. Superimpose upon that the sudden destruction of a decades-old downward price manipulation and you have all the necessary ingredients for price event that will be referred to forever.

Thank you and I’d be happy to take any questions you might have.

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My Final Note for today: How long are we going to continue to let 1 or a few Banks disctate the prices of Gold and Silver. If you read their short position is 22% MORE than world’s production in Silver! Everyone needs to be contacting Comex, CFTC, FTC, SEC,and the Federal Justice Dept and screaming their outrage at this! Plus it being allowed to continue! The other action step is to take physical delivery! Sooner or later by bringing all these pressures to bear, (no pun intended), we will see the “Short Squeeze of the Century” as these traders/manipulators will be forced to cover their Short Positions. Just how long are we going to let them do this to us? Good Investing – Jschulmansr now you can also follow me on twitter just click here and be notified every time I make a post and the best part it is absolutely free!

! Catch the New Bull! – Buy Gold Online – Get 1 gram free just for opening account– just click on the Gold Bar!, no minimums – Buy Safely, quickly, and at low prices, guaranteed! – Bullion Vault.com

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WOW! What a week- Gold!

20 Friday Feb 2009

Posted by jschulmansr in 10 year Treasuries, 20 yr Treasuries, agricultural commodities, Bailout News, banking crisis, banks, bear market, bull market, capitalism, central banks, Comex, Copper, Currencies, currency, Currency and Currencies, Dan Norcini, deflation, DGP, diamonds, dollar denominated, dollar denominated investments, economic, Economic Recovery, economic trends, economy, Fed Fund Rate, Federal Deficit, federal reserve, Finance, financial, Forex, Fundamental Analysis, futures, futures markets, gata, GDX, GLD, gold, Gold Bullion, Gold Investments, gold miners, hard assets, How To Invest, How To Make Money, hyper-inflation, IAU, IMF, inflation, Investing, investments, Jim Sinclair, Jschulmansr, Julian D.W. Phillips, Junior Gold Miners, Latest News, Long Bonds, Make Money Investing, market crash, Markets, mid-tier, mining companies, mining stocks, oil, palladium, Peter Spina, physical gold, platinum, platinum miners, precious metals, price, prices, producers, production, silver miners, sovereign, spot, spot price, stagflation, Stimulus, Stocks, TARP, Technical Analysis, The Fed, Tier 1, Tier 2, Tier 3, TIPS, U.S. Dollar, XAU

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We’re sooo close! $1033 all time high. When I reported this morning we did break the Feb Contract high of $1003, and Gold closed just $4.50 short of the Mar. 2008 high of $1003.70. Look for some more big things as the rally gathers steam. Here is a weekly Market Wrap courtesy of Gold-Seeker.com. Have a Great Weekend! Good Investing! – jschulmansr

Here is where I buy my Bullion, get one free gram of Gold just for opening an account! Catch the New Bull! – Buy Gold Online – Get 1 gram free just for opening account!, no minimums – Buy Safely, quickly, and at low prices, guaranteed! – Bullion Vault.com

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Gold Seeker Report – Weekly Wrap Up- Gold and Silver Gain Over 6% on the Week While Dow Falls Over 6%.

By: Chris Mullen, Gold-Seeker.com

	Close	Gain/Loss	On Week
Gold	$999.20	+$24.55	+6.28%
Silver	$14.465	+$0.48	+6.13%
XAU	132.64	+3.73%	+1.34%
HUI	321.45	+3.66%	+3.31%
GDM	1018.70	+4.03%	+3.63%
JSE Gold	2905.93	+45.49	+7.12%
USD	86.49	-1.09	+0.55%
Euro	128.45	+1.70	-0.27%
Yen	107.34	+1.19	-1.28%
Oil	$38.94	-$0.54	+3.81%
10-Year	2.772%	-0.085	-3.82%
Bond	127.59375	+1.328125	+1.04%
Dow	7365.67	-1.34%	-6.17%
Nasdaq	1441.23	-0.11%	-6.07%
S&P	770.05	-1.14%	-6.87%

The Metals:

Gold and silver remained near unchanged at about $970 and $14 in Asia and then screamed higher in London to as high as $998.92 and $14.56 by about 9AM EST before they retraced to about $990 and $14.40 in later morning New York trade, but they then rallied to new session highs of $1006.07 and $14.607 in the last couple of hours of trade and gold ended with a gain of 2.52% while silver topped that performance with a gain of 3.43%.

Gold closed just $4.50 from its record high close of $1003.70 set on March 18^th of 2008 while silver remains well short of its 27 year high of $20.64 set on March 5^th of 2008. Gold and silver’s intraday highs set on March 17^th of 2008 are $1031.85 and $21.34.

Euro gold rose to a new record high at about €778, platinum gained $12.50 to $1081.50, and copper fell over 5 cents to about $1.41. Platinum’s record high of $2255 was set on March 5^th of 2008.

Gold and silver equities rose about 3% at the open before they pared their gains slightly midmorning, but they then rose to news highs heading into the afternoon and the miners ended with roughly 4% gains on the day. The all-time closing highs set on March 14^th 2008 are 206.87 for the XAU, 514.89 for the HUI, and 1553.31 for the GDM. While all three indices have more than doubled from their lows of four months ago, they still remain about 50% from those all-time highs. For more on the gold stocks, please see Adam Hamilton’s article posted today at http://news.goldseek.com/Zealllc/1235149548.php.

The Economy:

Report	For	Reading	Expected	Previous
CPI	Jan	0.3%	0.3%	-0.8%
Core CPI	Jan	0.2%	0.1%	0.0%

More homeowners say homes depreciated: survey Reuters

Dodd Says Short-Term Bank Nationalization Might Be Necessary Bloomberg

Roubini: Nowhere near end of crisis Reuters

All of this week’s other economic reports:

Leading Indicators – January

0.4% v. 0.2%

Philadelphia Fed – February

-41.3 v. -24.3

Initial Claims – 2/14

627K v. 627K

PPI – January

0.8% v. -1.9%

Core PPI – January

0.4% v. 0.2%

Industrial Production – January

-1.8% v. -2.4%

Capacity Utilization – January

72.0% v. 73.3%

Housing Starts – January

466K v. 560K

Building Permits – January

521K v. 547K

Import Prices – January

-1.1% v. -5.0%

Import Prices ex-oil – January

-0.8% v. -1.1%

Export Prices – January

0.5% v. -2.3%

Export Prices ex-ag. – January

0.0% v. -1.9%

Net Long-Term TIC Flows – December

$34.8B v. -$25.6B

New York Manufacturing Index – February

-34.65 v. -22.2

Next week’s economic highlights include the S&P/CaseShiller Home Price Index and Consumer Confidence on Tuesday, Existing Home Sales on Wednesday, Durable Goods Orders, Initial Jobless Claims, and New Home Sales on Thursday, and GDP, Chicago PMI, and Michigan Sentiment on Friday.

The Markets:

Charts Courtesy of http://finance.yahoo.com/

The U.S. dollar index reversed early gains and ended markedly lower on speculation over US bank nationalization and also on rumors of new European intervention/stimulation that lifted the euro in afternoon trade.

Oil fell while treasuries rose on persistent worries about the economy and the sustainability of the entire financial system that also sent the Dow, Nasdaq, and S&P markedly lower at times. The Dow fell below yesterday’s 6 year lows while the S&P was barely able to hold above its late November 2008 intraday/closing lows of 741.02/752.44 and the Nasdaq remained roughly 100 points above its lows of 1295.48/1316.12. All three indices rallied back higher in the last two hours of trade to actually end the day with only modest losses after having traded roughly 3% lower earlier in the day, but uncertainty still remains quite high as to what will happen next as bank nationalization rumors work through their cycle of being floated and subsequently denied.

Among the big names making news in the market Friday were Bank of America and Citigroup, Lowe’s, J.C. Penney, and Saab.

The Commentary:

“Gold is pushing its record highs from last year, resistance will be formidable, but whether it does it in the next few weeks or in a few months, gold is clearly headed higher, much higher. $1,200 and higher gold is now a possibility in the short-term. Pullbacks will see continued strong investment demand, both from institutional and retail investors. At the rapid rate global paper currencies are being diluted, the destruction of trust and integrity within the financial and banking system and destabilizing consequences such actions will promote, gold and silver are going to attract record amounts of capital seeking wealth preservation.”– Peter Spina, www.goldforecaster.com

“As we saw the gold price attack the $1,000 level for the second time, but with far more force, institutional investment demand continued to drive the gold price, forcing the closure of ‘short’ positions [selling when the seller doesn’t have the gold] on COMEX and stunting both jewelry and Indian demand, where higher prices have at least temporarily sidelined these buyers.

The demand for the shares of the gold Exchange Traded Funds is so high that the U.S. based SPDR [gold Exchange Traded Fund] fund has surpassed all records. If one adds just the Barclays Gold Trust shares to World Gold Council based gold Exchange Traded Funds across the world then the total has surpassed the gold holdings of Switzerland making these holding the 6th largest in the World behind the USA, the I.M.F., Germany, France and Italy.

Nothing else can describe the fears about monetary stability better than these facts.

A mindset change is taking place regarding gold as its virtues are standing in stark contrast to the disturbing financial scene in most countries.

We do not believe these price levels will deter long-term institutional investors. Expect more of the same in the days ahead.”– Julian D.W. Phillips, www.goldforecaster.com

“Dear CIGAs,

Gold hit the magical number of “$1,000” in today’s trading session in the front month April contract at the Comex and immediately registered newswire flashes across the various services. This is something guaranteed to garner the attention of that section of the public who are still somehow oblivious about the metal not realizing its role as a safe haven and the ease with which it may be bought or sold. Perhaps they have been too busy lining up waiting for the government handouts that are proliferating faster than the flu virus in winter. Either way, those who have been attempting to hold back the metal, got what they did not want – headlines and interest!

Keep in mind that this is only the second time in its history that gold has shot up above the $1,000 level. Generally short-term oriented traders like to book profits when such things occur so it will not be unexpected to see a bit of a pullback from here.

I know this does not sound like the words of an inspired market genius but one of two things will happen here. We will get the scenario that I just outlined or the market will shoot sharply higher. If it is the latter, it will be quite telling as it will reveal just how determined, eager or downright terrified people are becoming. Market action of that kind of nature speaks thusly: “get me in at any price – I simply don’t care – I want in”. Or in the case of trapped shorts: “Get me out at any price – I am terrified of getting wiped out”. In other words, the latter scenario will give us a measure of market intensity. The former will show that there is not yet any panic buying occurring in the gold market even though overall demand is very strong.

If the market does set back, I do not expect any subsequent price retracement to be very deep this time around – things have changed since last March 2008 ( a year ago), the last time gold was over $1,000. The price rise this time has been measured, it has been steady, and most importantly, it has not been driven by a rush of hot fund money into the market. The open interest is 60% of what it was the last time the price of gold peaked – while there is a sizeable long position in the Comex gold market, it is well off the levels it reached at that last peak. Also, the reported holdings in the gold ETF, GLD, show that investment money is steadily flowing into this sector. The last time gold was over $1,000 back in March, the reported gold holdings were only 663 tons. As of yesterday, holdings were reported at 1029 tons. Obviously a much larger share of the public is moving into gold. I am hard-pressed to see a reason why all this money would suddenly decide to abandon gold unless of course an economic miracle recovery were to immediately commence. Perhaps the Obama administration will discover a new method of creating money that sees it miraculously fall out of the heavens so deep around us that we do not even have to bend over to pick it up. First time something like this occurred, it was quail. At least you could eat that. Paper does not sound particularly appetizing to me.

I should note here that gold priced in British Pound terms and in Euro terms has set brand new all-time highs the last four days in a row. BP gold is closing in on the 700 level and was fixed at 690.353 while Euro-gold is steadily heading towards the €800 level as it was fixed at €782.437 today. Both charts are absolutely stunning to behold. Europe has reached the point where you might say that confidence in paper money has been lost. Eastern Europe is still a major overhang and fears about a regional default are probably not out of line.

Also, we are not yet through the month of February, but gold is on track to put in its highest monthly CLOSE ever. Coincidentally, that occurred back in February 2008 when the front month closed at $975. Next Friday’s close is going to be interesting to say the least. One more thing – gold in inflation adjusted terms is still well off its all time high which on an inflation adjusted basis is over $2,000. The case could me made that even at current levels, gold is not particularly expensive.”– Dan Norcini, More at JSMineset.com

“My Dear Friends,

Please be advised on the following concerning the Swiss Franc:

1. There is an ongoing battle between the US/GB and Switzerland over the full disclosure of the total 19,000 names on the books of UBS wherein tax evasion is said to have been solicited and abetted. In truth, very few of these accounts have been fully revealed and the US/GB wants all 19,000.

2. Since hedge funds pry on each other we are getting few very fat international hedge funds. They play the currency market in a big way as it is one of the few markets now able to absorb their interest.

As a result of both number one and two much of the media and expert commentary on the Swiss Franc is the use of media for dirty tricks as this is the major tool of these large funds and governments in conflict.

I would suggest in this case decision on the future of the Swiss Franc is better made on the 35 year technical price analysis. A short seeking to cover, which generally seems quite correct now amongst the weak versus dollar units, should and is taking place.

Negative media and short covering has gone hand in hand in this bear market. Was it not the same in all recent major market failures?

Why should currency be any different?

Respectfully,”– Jim Sinclair, JSMineset.com

“April Gold closed up 25.7 at 1002.2. This was 12.7 up from the low and 2.8 off the high.

March Silver finished up 0.555 at 14.49, 0.085 off the high and 0.085 up from the low.

The gold market traded sharply higher pushing through the psychological $1,000 per oz price level as escalating anxiety regarding the health of the global economy and financial sector put equity markets in a tailspin for most of the session. Panic selling in the equities market pushed April gold above the July high and to the highest price level since March of last year. Ongoing concerns over rising risk to European banks due to their high exposure to eastern European economies added to the safe haven buying in gold. Strong investment buying interest continued to flow to the gold market on rumors that the government may consider nationalizing some banks. A sharp reversal in the dollar during the selling may have provided some additional support. Gold trimmed gains on profit taking after comments by the White House supporting a private US banking system triggered a sharp bounce in equities.

The silver market rallied sharply on strong investor safe haven buying interest that took the May contract to the highest price level since last August. The dive in equity prices and the uncertainty surrounding the health of the economy and banking system triggered the safe haven buying in silver. The reversal action in the dollar added to bullish sentiment. It was impressive to see silver retain most of its gains despite a late session recovery in equity market.”– The Hightower Report, Futures Analysis and Forecasting

The Statistics:

As of close of business: 2/20/2009

Gold Warehouse Stocks:	8,458,484	–
Silver Warehouse Stocks:	124,743,230	–

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 Exchange (TSE) AND Hong Kong Stock Exchange (HKEx)	SPDR® Gold Shares	1,028.98	33,082,801	US$ 32,432m
London Stock Exchange (LSE) AND Euronext Paris AND Borsa Italiana AND Frankfurter Wertpapierbörse (Deutsche Börse )	Gold Bullion Securities	132.12	4,247,645	US$ 4,234m
Australian Stock Exchange (ASX)	Gold Bullion Securities	12.49	400,508	US$ 400m
Johannesburg Securities Exchange (JSE)	New Gold Debentures	28.63	920,348	US$ 902m

Note: Change in Total Tonnes from yesterday’s data: SPDR added 4.89 tonnes to a new record high holding and the LSE added 0.13 tonnes.

COMEX Gold Trust (IAU)

Profile as of 2/19/2009
Total Net Assets	$2,189,768,426	Ounces of Gold in Trust	2,243,824.921
Shares Outstanding	22,800,000	Tonnes of Gold in Trust	69.79

Note: No change in Total Tonnes from yesterday’s data.

Silver Trust (SLV)

Profile as of 2/19/2009
Total Net Assets	$3,617,484,283	Ounces of Silver in Trust	253,738,517.300
Shares Outstanding	257,250,000	Tonnes of Silver in Trust	7,892.15

Note: Change in Total Tonnes from yesterday’s data: 18.4 tonnes were added to the trust to a new record high holding.

The Stocks:

Barrick’s (ABX) fourth-quarter loss, Buenaventura’s (BVN) increased economic interest in El Brocal, Timberline’s (TLR) receipt of notice from the NYSE, Teck’s sold Hemlo stake to Barrick, Aurizon’s (AZK) renewal in mineral reserves and increase its mineral resource estimate, Anglo American’s (AAUK) job cuts, and Orezone’s (OZN) obtained final court approval for the IAMGOLD (IAG) transaction were among the big stories in the gold and silver mining industry making headlines Friday.

WINNERS

1. Alexco	AXU +23.85% $1.61
2. Silver Wheaton	SLW +11.53% $7.35
3. Minefinders	MFN +9.66% $6.13

LOSERS

1. Anglo American	AAUK -15.09% $7.43
2. Entree	EGI -3.33% $1.16
3. Ivanhoe	IVN -1.78% $4.42

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:

Buenaventura Increases Economic Interest in El Brocal to 46% – “Compania de Minas Buenaventura S.A.A. (“Buenaventura”) (NYSE: BVN; Lima Stock Exchange: BUE.LM), Peru’s largest publicly traded precious metals mining company, announced today an agreement with Teck Cominco Metals Limited (“Teck”) to purchase the 19.8% interest in Inversiones Colquijirca, the holding company that owns a 51.06% stake in Sociedad Minera El Brocal.” More
– February 20, 2009 | Item | E-mail

Explor Resources Inc.: Private Placement – More
– February 20, 2009 | Item | E-mail

Queenston Announces $18 Million Financing – More
– February 20, 2009 | Item | E-mail

Pacific Gold Corp. Announces Stock Dividend – More
– February 20, 2009 | Item | E-mail

Hana Mining Reports Exploration and Corporate Update at Ghanzi Copper-Silver Project in Botswana – More
– February 20, 2009 | Item | E-mail

Barrick takes loss on writedown but output strong – “A $773-million charge to write down assets pulled Barrick Gold (ABX.TO) to a fourth-quarter loss, the gold miner said on Friday, but its core earnings came in around estimates on strong copper and gold output.

Stripping out the writedowns, which covered three mines in Tanzania and Australia as well as last year’s acquisition of Cadence Energy, Barrick, the world’s top gold miner, earned 32 cents a share. This compared with analysts’ forecasts of 30 cents a share, as polled by Reuters Estimates.” More
– February 20, 2009 | Item | E-mail

Timberline Announces Receipt of Notice From the NYSE Alternext US LLC Regarding Minimum Listing Requirements – “The Exchange based their analysis on Timberline’s September 30, 2008 financial statements which report stockholders’ equity of $3.55 million. As of Timberline’s interim financial statements for the three months ended December 31, 2008, Timberline’s stockholders’ equity had already increased to $4.62 million and Timberline’s management believes that it will continue to make significant progress in the rest of the fiscal year towards meeting the requisite standards to ensure its continued listing on the Exchange. Timberline intends to submit a plan to the Exchange by March 13, 2009 outlining the steps the Company expects to take in order to bring stockholders’ equity into compliance with the continued listing standards of the Exchange.” More
– February 20, 2009 | Item | E-mail

Affinity Gold Corp. Enters Into Letter of Intent With Peruvian Company to Acquire Mining Concession Rights – More
– February 20, 2009 | Item | E-mail

Tiomin Invests in Kivu Gold Corp. – More
– February 20, 2009 | Item | E-mail

Orezone Obtains Final Court Approval for IAMGOLD Transaction – “IAMGOLD Corporation (Toronto:IMG.TO – News)(NYSE:IAG – News)(BOTSWANA: IAMGOLD) and Orezone Resources Inc. (Toronto:OZN.TO – News)(AMEX:OZN – News) (“Orezone”) jointly announced today that the Ontario Superior Court of Justice has issued a final order approving the terms of the arrangement with IAMGOLD.” More
– February 20, 2009 | Item | E-mail

NWT Uranium announces grant of options – More
– February 20, 2009 | Item | E-mail

Inmet Mining presentation at BMO Capital Markets 2009 Global Metals and Mining Conference – More
– February 20, 2009 | Item | E-mail

Tombstone Exploration Receives Layne Christensen Proposal for 2009 Drill Program – More
– February 20, 2009 | Item | E-mail

Blue Note Subsidiary Obtains Creditor Protection – More
– February 20, 2009 | Item | E-mail

Symbol Change: CGFIA.OB, Minority Shareholders RULE! Colorado Goldfields Inc. Issues B Shares and B Warrants Exclusively to Beneficial Owners – More
– February 20, 2009 | Item | E-mail

Barrick Gold posts loss after writedowns – “Barrick Gold Corp (ABX.TO) reported a fourth-quarter loss on Friday as it took a non-cash charge of $773 million, mostly related to goodwill writedowns at four assets.

The world’s top gold miner lost $468 million, or 53 cents a share, compared with a profit of $537 million, or 61 cents a share, a year earlier.” More
– February 20, 2009 | Item | E-mail

Clifford M. James acquires beneficial ownership of additional common shares of TVI Pacific Inc. – More
– February 20, 2009 | Item | E-mail

Cadillac Closes $2.3 Million Financing – More
– February 20, 2009 | Item | E-mail

JNR Announces Drilling Program Underway at Way Lake Uranium Project – More
– February 20, 2009 | Item | E-mail

TVI Pacific announces issuance of common shares to discharge certain pre-existing obligations – More
– February 20, 2009 | Item | E-mail

Teck Cominco sells Hemlo stake to Barrick – “Teck Cominco (TCKb.TO) has agreed to sell its 50 percent stake in the Hemlo gold operations to joint venture partner Barrick Gold (ABX.TO) as part of Teck’s plan to raise cash and pay down debt, the companies said on Friday.” More
– February 20, 2009 | Item | E-mail

Kinbauri Announces Private Placement – More
– February 20, 2009 | Item | E-mail

Minority Shareholders RULE! Colorado Goldfields Inc. Issues B Shares and B Warrants Exclusively to Beneficial Owners – More
– February 20, 2009 | Item | E-mail

AuEx Ventures, Inc.: Klondike North Drill Results – More
– February 20, 2009 | Item | E-mail

Mountain Capital Acquires the Inco Lithium Property – More
– February 20, 2009 | Item | E-mail

Canasia Industries Corporation: Rodren Drilling Ltd. to Drill the Reed Lake Prospect – More
– February 20, 2009 | Item | E-mail

Aurizon reports mineral reserve renewal and mineral resource update for Casa Berardi mine – “Aurizon Mines Ltd. (TSX: ARZ; NYSE Alternext: AZK) is pleased to report a renewal in mineral reserves and an increase in the mineral resource estimate for its Casa Berardi mine, located in north western Quebec, Canada.” More
– February 20, 2009 | Item | E-mail

Barrick Gold: Cash Flow Rises to a Record $2.2 Billion in 2008 – “Barrick reported record operating cash flow of $2.21 billion for 2008, a 27% increase over $1.73 billion in the prior year. Net income was $0.79 billion ($0.90 per share) compared to $1.12 billion ($1.29 per share) in the prior year. Adjusted net income rose 60% to $1.66 billion ($1.90 per share)(1) compared to $1.04 billion ($1.19 per share) in the prior year period.” More
– February 20, 2009 | Item | E-mail

Anglo American cuts 19,000 jobs as profits fall – “Mining company Anglo American PLC said Friday it will cut 19,000 jobs this year and suspend dividend payments after reporting a 29 percent drop in 2008 profits. The company said it hoped to cut the jobs — 10 percent of its managed work force — through layoffs, natural attrition and scaling back contractor arrangements.” More
– February 20, 2009 | Item | E-mail

– Chris Mullen, Gold Seeker Report

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

Look for a Special Edition This Weekend, Until then Good Investing! – jschulmansr

Catch the New Bull! – Buy Gold Online – Get 1 gram free just for opening account!, no minimums – Buy Safely, quickly, and at low prices, guaranteed! – Bullion Vault.com

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

Going For The Gold!

20 Friday Feb 2009

Posted by jschulmansr in banks, bull market, capitalism, central banks, China, Comex, Copper, Currencies, currency, Currency and Currencies, deflation, diamonds, dollar denominated investments, economic, Economic Recovery, economic trends, economy, Fed Fund Rate, Federal Deficit, federal reserve, Finance, financial, Forex, Fundamental Analysis, futures markets, GDX, GLD, gold, Gold Bullion, Gold Investments, gold miners, How To Invest, How To Make Money, hyper-inflation, IAU, inflation, Investing, investments, Iran, Israel, Japan, Jeffrey Nichols, Jim Sinclair, Jschulmansr, Junior Gold Miners, Latest News, majors, Make Money Investing, market crash, Markets, mid-tier, mining companies, mining stocks, oil, palladium, Peter Grandich, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, silver, silver miners, small caps, sovereign, spot, spot price, stagflation, Stimulus, Stocks, TARP, Technical Analysis, Tier 1, Tier 2, Tier 3, Today, U.S. Dollar, XAU

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As I write Gold today has touched a high so far of $1000.30! If it breaks this level and holds then $1025-$1050 will be the next stop. At this point I would buy on any dips. This run is going to take us at least to $1050 oz. cont…

**********We officially just broke the $1003 all time high! *************** ******************Market up $28.50 to 1005.00!!!***********************

cont…

After that then we will probably see a retracement potentially down to previous resistance levels now support levels.

I would not be worried at all if we go as low as $940 – $960. That would be normal market action. However a note of caution, as Gold is not necessarily following normal market action as evidenced by the dramatic run to $1000 and then down to $690 approximately.

I am still a buyer on any dips and at this point I am holding my physical gold and still getting in to some of the Gold and Silver producers who are still selling at or near book values. As far as DGP goes I am still holding my position and will let you know when I exit that trade.

Remember in the worst case scenario with Gold, you are still locking in the “buying power” of your current dollars. With Bernake running the monetary printing presses at full steam, we will see inflation return. Already the true (not government manipulated figures) inflation rate is running at 6% – 9% depending on who you are following. However, when I go to the grocery story and see a package of hot dog buns that I could buy a few months ago at $1.00 for a package of 8, now selling for as high as $4.00 for the same package; it would seem that the true inflation rate is way higher up around 12% – 18% already!

So I am still looking at “protecting my dollars”, by converting them into Gold. You would be wise to do the same, because soon the manipulated value of the dollar will come crashing down; along with all the other major currencies as all of the central banks are printing money and trying to flood their markets with liquidity.

As I mentioned in yesterday’s post Gold is on a major Bull Market run and all of the movement is based on current financial pressures, still without any major news like a new war/conflict especially in the Middle East (i.e. Israel taking out Iran’s nuclear reactor), or major terrorist act. Buy gold “wholesale” thru Comex, take physical delivery, if we all do this we’ll be putting major pressure on the “shorts” and potentially cause a “short squeeze”! Then you see Gold bid up to some amazing levels and be able to jump in and make some quick profits.

Otherwise, hang on to your hats as the “Gold Express” has left the station and is barreling down the tracks! – Good Investing! – jschulmansr

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

Gold Pole Vaults to $1000 – Market Watch

By Polya Lesova, MarketWatch

Last update: 10:07 a.m. EST Feb. 20, 2009

NEW YORK (MarketWatch) — Gold futures topped the key $1,000 mark for the first time in nearly a year on Friday, as global financial and economic worries boosted the safe-haven appeal of the precious metal.

In recent action, gold for April delivery traded at $995.30 an ounce, up $19.50, or 2%, on the day. It earlier touched a high of $1,000.30.

Stocks fell to fresh bear-market lows in early action on Wall Street, with the Dow Jones Industrial Average ($INDU:

“There is a risk here of a panic sell-off in stock markets and the next leg down in the stock bear market looks imminent, as the ills of the global financial system virulently infect the global economy,” said Mark O’Byrne, executive director at Gold and Silver Investments Limited, in a research note.

“While gold has become overbought in the short term, its medium and long term fundamentals are as sound as ever,” he said.

Gold for February delivery, the front-month contract which registered very little volume, was last up $19.30, or 2%, at $995.40 an ounce on Globex. The February contract expires on Feb. 25. Earlier, February gold hit an intraday high of $999.50 an ounce.

On Thursday, the Dow industrials finished at 7,465.95, down 89.68 points to end at the weakest level since Oct. 9, 2002.

“The price slide of U.S. equities, with the Dow Jones Industrial Average falling to its lowest level since October 2002, should result in a continued positive mood of investors on gold,” said Eugen Weinberg, an analyst at Commerzbank.

Also on Globex Friday, March silver futures rose 46 cents, or 3.3%, to $14.39 an ounce, and April platinum futures gained $12.50, or 1%, to $1,089.00 an ounce.

March palladium futures gained 40 cents, while March copper futures fell 5 cents, or 3.5%, to $1.42 a pound.

Polya Lesova is a New York-based reporter for MarketWatch.
==============================

Gold has a “True Bull Run” – Financial Post

Source: MineWeb.com

Gold was, at the time of writing, close to $1,000 again. It would seem this level is inevitable sooner rather than later and this time the yellow metal may spend rather more time in the four figure area.

Author: Lawrence Williams
Posted: Friday , 20 Feb 2009

LONDON –

As this article was commenced, the gold price was at $997 and seemingly inexorably headed towards breaching the US$1,000 level once again. Indeed by the time you read this it may well already have done so. April futures had already marginally gone through the $1,000 level.

The big question is, assuming spot gold does push through $1,000, will this be third time lucky for the gold bugs? Gold has breached $1,000 twice beforehand and on each occasion its climb into the four figure level was shortlived. This time it may well be a different situation with the likelihood that the price is poised to go higher still – and maintain its position above $1,000 for some little time to come.

Gold’s dollar high of $1,033.90 was achieved seemingly a very long eleven months ago but only remained at this exalted level for a few days , before crashing back. Indeed as stock markets began to collapse and then plunged in the second half of the year, much confidence was lost in gold as an ‘insurance policy’ as it fell back to the high $600s at one stage, but the realisation came about that the main reason for the price decline was that funds and institutions were having to liquidate any tradable assets to meet their commitments, and gold s nothing if not tradable at any price.

Gold soon recovered and started a steady run back up to current levels despite rising markets and a strong dollar – usually both signs of a likely weakness in the gold price. Indeed gold broke new price records in virtually all currencies other than the US dollar and now it looks highly likely to do so in terms of the now not-so-mighty greenback itself. Meanwhile stock markets in general have started to fall back again as the world realises that the various stimulus packages worked out by clutching-at-straw governments are unlikely to improve matters drastically and much of the world heads for depression – or something approaching one. There is no doubt we are already in recession in the West and depression is just the next, and infinitely more dangerous, phase of the current reality.

Gordon Brown has certainly not saved the world, and Barack Obama’s deification status is already tarnished after only a few days in office. It is becoming apparent that what the politicians and economists with clout feel could be remedies to what is facing us ahead are nothing but untried and unproven stopgaps which patently are not working – or not at least yet.

Meanwhile banks are digging themselves further and further into the mire with more collapses and nationalisations likely, countries will default on their commitments and matters will continue to deteriorate unless some financial miracle happens.

Indeed the only world saviour may yet be China, but at what cost? There are indications that the Chinese may have been in part responsible for the depth of the fall in commodity prices by halting industrial plants and infrastructure spending ahead of the Olympic Games and not resurrecting it afterwards as it could see an advantage in keeping prices down. But the Chinese did not foresee the collapse in the western financial system exacerbating the situation dramatically and the global downturn came back to bite the Chinese in the bum as its exports crashed and huge numbers of people were thrown out of work – a potential cause of serious unrest.

Beijing has since taken steps to resurrect its infrastructure programmes. Projects which were lying idle are at full swing again, but this is too little too late for much of the rest of the world. It may serve to keep China itself out of recession – and perhaps throw a lifeline to commodity producers to help them maintain output and support prices, but it’s definitely too late for much of the rest of the global economy which is in a frightening downward spiral.

But – with regards to securing commodity supplies and controlling future markets we are seeing China, with its huge funding capabilities, tieing up supplies, making major strategic investments in mining and metallurgical companies – and also in some other important western entities – and also providing loans to enable what they see as potential strategic partners stay in business. But again, as we saw in yesterday’s European Nickel announcement on finance, there are China-benefiting clauses in most of these ‘strategic’ agreements.

It was Alfred Lord Tennyson in one of his Arthurian epic poems who used the phrase “The old order changeth, yielding place to new” and that is extremely apposite phraseology for what is happening now. US economic imperialism has started to be replaced by a Chinese version.

But what has this to do with the gold price? Because the Chinese were perhaps too late in re-implementing their own stimulus, which could have mitigated the global downturn at an earlier stage and possibly eased its speed, depth and perception, the realisation that gold could actually be the best way of protecting one’s assets began to filter through to previous unbelievers in the yellow metal.

This has shown itself in the unprecedented inflow into metal purchases and ETF holdings which seem to be accelerating as the crisis deepens. Never mind the fall-off in Eastern investment grade jewellery demand and the big rise in gold scrap sales. ETFs are picking all this up (and global gold production is falling anyway). But no matter, investment strength is always driven perhaps more by perception than by fundamentals (at least in full-scale bull or bear markets) and the current thought seems to be gaining more and more ground that gold is about the only serious safe haven out there. The dollar may have proved to be a good bet of late, but everyone knows that pumping out money will ultimately be inflationary – and gold is traditionally a great inflation hedge too.

Indeed what gold is doing now is demonstrating that all western currencies are weak, rather perhaps than that gold fundamentals are strong, and the currencies are all devaluing against gold which is regaining its position as ultimate money – a position which believers say has never gone away!

So what of the performance of gold while this article was being written. Well the price pulled back a little from the brink of bursting up through the $1,000 level and is, at the time of writing, sitting at $994 again, but the overall upwards drive for the moment seems unstoppable as financial news elsewhere continues to deteriorate. Once gold goes through $1,000 this time it is not unreasonable to suggest it should perhaps stay there for a lot longer than last time – and maybe there is the prospect of a far higher peak. Gold metal, ETFs, stocks and funds could have a way to run yet.

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Have A Great Day! – Good Investing! – jschulmansr

Catch the New Bull! – Buy Gold Online – Get 1 gram free just for opening account!, no minimums – Buy Safely, quickly, and at low prices, guaranteed! – Bullion Vault.com

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Gold has a ‘true bull run’

This ‘bubble is still being blown up,’ analyst says

Jonathan Ratner, Financial Post Published: Thursday, February 19, 2009

Safe-haven demand and a lack of investment alternatives continue to help gold break from its traditional trading relationships, rising toward a new record, despite a strong U. S. dollar and weak crude oil prices.

In fact, analysts at Genuity Capital Markets noted that gold has been trading more than US$200 per ounce above its normal value relative to the greenback. The firm also pointed out that the opportunity cost of holding bullion has diminished, with treasury yields at record lows and demand fundamentals deteriorating in the broader commodity and equity markets.

“Gold’s run since autumn, 2008, has been a true bull run, rising despite the strength of the U. S. dollar and outperforming virtually every other commodity and currency class,” said Canaccord Adams analyst Steven Butler. He told clients that bullion has set recent new highs in euros, pounds and Canadian dollar currency terms, among others.

Canaccord raised its peak gold price by another US$150, to US$1,100, now that gold has broken through the firm’s previous target of US$950.

“It is fair enough that gold may be in a bubble, but we think the bubble is still being blown up,” Mr. Butler said.

While credit risk has fallen from its recent highs, he noted that it is as elevated as during gold’s first peak last March, which coincided with the collapse of Bear Stearns. However, gold is still below the US$1,003 high set about a year ago.

Meanwhile, inflation may not be registering yet in terms of near-term expectations, but Canaccord believes that it and a general devaluation of paper currencies will be the result of the concerted monetary and fiscal policies to reflate the global economy.

Gold is known as a measure of real assets value because of its ability to preserve value during inflationary times. However, during disinflationary times like these, the current global growth and demand landscape also supports the notion of too many dollars chasing too few gold ounces, according to Ashraf Laidi, chief market strategist at CMC Markets in London.

He noted that the equity/ gold ratio has fallen about 85% from its 1999 peak, which occurred when gold stood at 20-year lows and equities reached their highs at the top of the dot-com bubble. Just as the equity/gold ratio stands at 18-year lows, the ratio of total financial assets to physical gold is near the low end of its historical range.

Mr. Ashraf also pointed out that the world’s available gold stock stands at only 5% to 6% of total global stock and bond market valuation.

Sustained investor interest in gold throughout 2008 helped push U. S. dollar demand for bullion to US$102-billion, a 29% annual increase, according to the World Gold Council. Its Gold Demand Trends report said identifiable investment demand for gold, which incorporates exchange-traded funds (ETFs), bars and coins, rose 64% last year. This is equivalent to an additional inflow of US$15-billion.

Genuity noted that holdings of the largest gold ETF, SPDR Gold Trust (GLD/NYSE), have increased by 26% since the beginning of 2009. So while bullion held in depositories on behalf of gold ETFs continues to grow from record levels, price volatility is an important consequence on both the upside and downside.

The ease of investing in gold via ETFs is matched by the ease of disinvestment, said Jeffrey Nichols, managing director of American Precious Metals Advisors.

“Just as quickly as gold-ETF depository holdings have grown, so might they shrink when sentiment changes,” he told clients.

This has already contributed to short-term volatility and may do the same for the long term, given that gold’s ultimate peak could be much higher than many had expected.

jratner@nationalpost.com

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Gold stocks are flavour of the month again amongst major analysts – MineWeb

Source: MineWeb.com

The recent strong performance of the gold price vis a vis weak stock markets in general is again making gold stocks attractive to institutional and individual investors.

Author: Steve James and Euan Rocha – Analysis
Posted: Friday , 20 Feb 2009

NEW YORK (Reuters) –

The prospects for equity markets and numerous sector indexes have dimmed during the global recession, but gold and the companies that mine it have not lost their luster.

With gold prices nudging their all-time high and energy and other costs falling, mining company profit margins are widening, making their shares attractive, analysts said on Thursday.

“Within the next year, we will see the gold stocks sell at significant premiums to traditional earnings measures or net asset value measures,” said Robert Lutts, chief investment officer of Cabot Money Management in Salem, Massachusetts, which manages $400 million of client assets.

“I have owned Barrick Gold for one reason only — because it has the biggest pile of gold in the ground,” Lutts said of the world’s biggest gold producer, Canada’s Barrick Gold (ABX.N Quote)(ABX.TO: Quote).

“New interest continues in this increasingly attractive sector,” JPMorgan analyst John Bridges wrote in a note. “We feel all funds should have a core long position in the metal or the equities.”

Moreover, analysts expect acquisitions in the gold sector to accelerate, as larger players pounce on their cash-strapped smaller colleagues, in a bid to grow their asset base.

“I believe in investing in both bullion and stocks,” said Jeffrey Nichols, managing director of American Precious Metals Advisors. “Large companies with strong cash positions are in a good position to take advantage” of a higher gold price.

Lower fuel, raw materials and equipment costs, combined with weaker Canadian and Australian dollars and a flight to gold as a safe haven, have spurred gold miners’ stocks recently.

The gold and silver index , which comprises major U.S. and Canadian gold mining stocks, has more than doubled over the last four months. Spot gold was selling for $978.80 per ounce in New York on Thursday, closing in on its all-time high of $1,030.80 from last March 17.

“At these levels, we’d encourage new investors to begin by buying a little Newmont,” Bridges wrote, after Newmont Mining Corp (NEM.N: Quote), the world’s No. 2 gold producer, reported better- than-expected fourth quarter results.

Since most major gold players no longer hedge production, they stand to gain from the recent run-up in gold prices.

Nichols touts Barrick and its Canadian peer, Goldcorp Inc (G.TO: Quote). “In general, I like Barrick and Goldcorp because they are well managed, with management you can trust, providing a good return on investment.”

Credit Suisse analyst David Gagliano saw Newmont as an attractive investment after its solid fourth-quarter results.

“Newmont is entering the sweet spot,” he wrote in a research note noting higher production, lower costs and lower capital expenditures due to the proposed start-up of Boddington, which will be Australia’s biggest gold mine.

“Add to this the favorable gold backdrop and declining raw material costs, and we believe Newmont is set up nicely for a strong 2009,” wrote Gagliano.

Peter Spina, who operates Goldseek.com, a website for investors, said now is the time to invest in gold miners.

“I think mining companies are looking a lot better,” he said. “With costs down, the profit margins are expanding and people are saying: ‘Where should I invest in this market?’ The gold mining companies are the place to be.”

Spina noted that capital markets appear to be opening up.

“We are now seeing more competition for capital where three months ago it was impossible,” he added.

Spina likes the junior players, such as Denver-based Gold Resource Corp (GORO.OB: Quote), which is developing projects in Mexico.

Genuity analyst Tony Lesiak expects larger gold players to swoop in on some of the smaller miners.

“Merger and acquisition activity in the gold sector could be poised to accelerate,” Lesiak said.

He cited the improved outlook for precious metals, the disconnect between larger companies and cash-starved juniors, and a paucity of internally available quality growth projects.

Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier, favored unhedged miners.

“Most producers have an unhedged book, but rising production, such as at Goldcorp and Kinross (Gold Corp (KGC.N: Quote)(K.TO: Quote,) are what come to mind,” he said.

(Reporting by Steve James, Euan Rocha and Frank Tang in New York and Cameron French in Toronto; Editing by Andre Grenon)

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In a previous post I gave you a partial list of Tier 1, Tier 2, and Tier 3 mining companies and their websites. Then in another post I gave you questions you should ask when you are doing your due diligence before making any investment in the stocks of these companies and those mentioned in today’s post. Clicks on the links to view.- jschulmansr

Catch the New Bull! – Buy Gold Online – Get 1 gram free just for opening account!, no minimums – Buy Safely, quickly, and at low prices, guaranteed! – Bullion Vault.com

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Gold Sector: Mergers and Acquisitions Set to Soar – Seeking Alpha

Source: FP Trading Desk

The gold sector could see a flurry of takeover activity in the coming months, according to Genuity Capital Markets analysts Tony Lesiak, Christine Healy and Michael Gray. With that backdrop, they have broken down a number of potential targets.

They believe that 2009 could be a big year for gold M&A for a number of reasons: rising bullion prices, the growing valuation disconnect between juniors and seniors, recent financings by the seniors, and a shortage of internal growth projects for the seniors.

So who could get bought? The analysts ranked 10 junior gold producers and 20 junior development companies on the unusual measure of estimated total acquisition cost per attributable, recoverable ounce.

On that basis, the top three producer targets are Allied Nevada Gold Corp., Mineral Deposits Ltd., and Kirkland Lake Gold Inc. (KGLIF.PK), while the top junior development targets are Andean Resources Ltd. (ANDPF.PK), Colossus Minerals Inc. (CSIMF.PK), Comaplex Minerals Corp. (CXMLF.PK), Gabriel Resources Ltd. (GBRRF.PK), and Osisko Mining Corp. (OSKFF.PK).

“We recommend a basket approach to investing in any of these names given the speculative and single-asset nature of the companies,” they wrote in a note to clients.

With the exception of Gabriel, these are all companies that are often considered takeover targets. Gabriel has problems with NGO opposition in Europe, but the analysts figure that if the company can ever get government approval for its Rosia Montana project, it would be a logical target for Newmont Mining Corp. (NEM).

The most likely North American buyers in this market include Newmont, Barrick Gold Corp. (ABX), Kinross Gold Corp. (KGC), Eldorado Gold Corp. (EGO), and Alamos Gold Inc. (AGIGF.PK), they wrote.

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Decoding What Gold is Telling Us – Seeking Alpha

By: Simit Patel of Informed Trades.com

Well, gold bugs around the world have been having a good chuckle of late, as the market is re-affirming the often eccentric and practically religious views of gold bugs: gold is up over 11% for the year in US dollars, and up over 4% over just the past five trading days. Which begs the question: why? There are a few possible answers to this question:

1. Deflation. This crisis is global, and everyone is flying to safe stores of wealth. Over the big picture of human history, gold has served as the best store of wealth — and thus gold is rising. In many ways this is the classic “gold is money” argument, one typically championed by Austrian economists. Robert Blumen has offered an excellent explanation of this argument.

2. Inflation. Gold is typically a hedge against inflation concerns, and as the US federal government continues to aggressively “stimulate” the economy, the rally in gold may be a reflection of increased concerns regarding inflation.

So which one is it?

In my opinion, both. With that said, I view inflation as the larger concern, as I have said many times before. If the environment were truly deflationary, Treasury bonds would be the true recipients of flight to quality, as well as dollar holdings in FDIC insured banks. Instead, 20+ year Treasury bonds have fallen by more than 13% thus far (as measured by TLT). Negative correlation between TLT and precious metals suggests inflation, not deflation. The chart below illustrates.

click to enlarge

Deflationists will point to the fact that the US dollar may be strengthening relative to other fiat currencies — although this is not necessarily a reflection of deflation, as it could simply be interpreted as weakness of all global currencies, all of which are falling against gold. More relevant may be the rise in PPI and energy prices in January of 2009. While one month alone does not provide sufficient evidence for a substantive reversal in macroeconomic trends, it is not consistent with deflation, and may suggest that the Fed’s inflationary actions in the second half of 2008 may be kicking in.

Conclusions for Trading

The recent activity in the market has led me to make the following revisions:

1. The forex market is increasingly a trader’s environment, perhaps even a daytrader’s environment.

2. Gold and silver may retrace, perhaps even by several hundred dollars, though I would view it as an opportunity to buy on dips. The global economy is getting worse and conditions are being aggravated by the actions of central bankers. As a result, the fundamental case for gold and silver will get stronger.

3. Counterparty risk is rising — this strengthens the argument for increasing the physical delivery portion of one’s precious metals portfolio.

4. Because of inflation concerns, my bias is against short positions in all asset classes. If I were a trader of stocks or commodities, I might look into shorting positions relative to a broader index (i.e. short a particular stock while going long the sector ETF, under the rationale that the stock will do worse than the entire sector).

5. Oil’s behavior has been quite peculiar; I’ve yet to find a convincing explanation for why it’s moving the way it is. As it escapes my fundamental analysis, and as I find it less appealing than currencies from a technical analysis perspective, I’ll stay away from oil.

6. As gold becomes too expensive for many, silver will grow in appeal. And as silver fell more than gold during the second half of 2008, it may be set for a larger rally.

Disclosure: Long gold and silver.

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Short Stories: Anglo American, Rio Tinto, Xstrata, Alcoa – Seeking Alpha

By: Jessica Johnson of Short Stories

Anglo American (AAUK), the mining and natural resource company, presents its results today and according to the Financial Times, its CEO, Cynthia Carroll, may face some tough questions. Falling platinum, diamond and copper prices have taken their toll on Anglo’s profit margins, and analysts will be looking for signs of progress from Ms. Carroll’s cost-cutting drive.

As you can see from this graph of Anglo’s shares outstanding on loan (%SOOL), there has been a recent increase in the short position of the stock, which, over the last ten weeks, is up from 1% to 2.2%. However, this is still a small percentage, compared to Xstrata (XSRAF.PK) (for example), which has just under 10% of its SOOL. Xstrata and Anglo’s other rival Rio Tinto [RIO/LSE] (RTP) have recently used a rights issue and a cash injection from China to shore up their balance sheets, whereas Anglo has manageable debt levels. RIO currently has 1.5% SOOL, which is up from 0.7% in January and down from 2.7% in December.

Anglo American:

click to enlarge

Xstrata:

click to enlarge

Rio Tinto (UK Listing)

click to enlarge

The S&P 500-listed stock Alcoa Inc. (AA), which produces aluminum (partly through the mining industry), has seen a rise in its %SOOL. It is up from 2% in October, but down from 8% ten days ago and currently stands at to 6%. This is in line with a fall in its share price, which over the last six months has fallen from $30 to $7. A particularly severe fall in price occurred between September and October when the stock fell from $30 to $10. Since that time, short investors have continued to take profits as the price ebbs around the $10 mark.

click to enlarge

Disclosure: None

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My Note: With the exception of Alcoa, I think some of these Short traders are going to lose their shirts especially as Gold continues it’s Bull Stampede!- jschulmansr

Catch the New Bull! – Buy Gold Online – Get 1 gram free just for opening account!, no minimums – Buy Safely, quickly, and at low prices, guaranteed! – Bullion Vault.com

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Third time lucky for gold – the ultimate money? – MineWeb

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