Are You Ready To Rock?

17 Tuesday Mar 2009

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

≈ Comments Off on Are You Ready To Rock?

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, 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

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

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

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.

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

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

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

Gold Timers are Running for the exits, which is a good sign – MarketWatch

By: Mark Hulbert of MarketWatch

ANNANDALE, Va. (MarketWatch) — Call it the retreat of the gold bugs.

Over the past three weeks, the editor of the average gold timing newsletter I monitor has hastily jumped off the bullish bandwagon. And a not insignificant number have taken the occasion to furthermore jump onto the bearish bandwagon.

At least from the point of view of contrarian analysis, this is good news for gold.

Consider the Hulbert Gold Newsletter Sentiment Index (HGNSI), which reflects the average recommended gold market exposure among a subset of short-term gold timing newsletters tracked by the Hulbert Financial Digest. The HGNSI’s latest reading is minus 16.5%, which means that the editor of the average gold timing newsletter is recommending that his subscribers allocate 16.5% of their gold portfolios to shorting the market.

Three weeks ago, in contrast, the HGNSI stood at 60.9%. So in just 15 trading sessions, the average recommended gold market exposure has fallen by more than 77 percentage points.

What sins did gold bullion commit to elicit this huge of a reaction? Failing to rise convincingly above the psychologically important $1,000 barrier, apparently: Spot gold in the futures market was able to close above that level for just one day (Feb. 20), and only barely at that ($1,001.70). And it then dropped.

Still, gold didn’t fall off a cliff. It’s currently just 8% below its Feb. 20 close, after all. Declines of that magnitude typically do not lead to such marked shifts in sentiment from bulls to bears.

Just take sentiment in the stock market. The Dow Jones Industrial Average ($INDU:

To be sure, the 4.5 percentage point drop in recommended stock market exposure is itself surprisingly modest, which is one of the reasons that contrarians suspect that the bear market is not yet over. (Read my March 2 column.)

But the plunge in gold sentiment has been as exaggerated as the drop in stock sentiment has been muted. Contrarians therefore believe that gold’s recent decline is more likely to prove a correction within a longer-term up move than the beginning of a major bear market.

Mark Hulbert is the founder of Hulbert Financial Digest in Annandale, Va. He has been tracking the advice of more than 160 financial newsletters since 1980.

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

My Note: Are You Ready To Rock? Now for Silver…

Gold bullishly buoyed by news: – Got Gold Report- Stockhouse.com

By: Gene Arensberg of Gold Newsletter.com

Silver taking cues from gold

ATLANTA — Whether or not gold actually responds to it short term, potentially bullish news surfaced for gold and silver this past week. The Swiss National Bank stunned the European capital and forex markets, hammering their own currency in the first salvo of probable competitive currency debasement across the pond. Who would have thought the Swiss – Switzerland! – would fire the first shot in the battle to weaken their own currency?

Apparently the price of chocolate and fine watches is going up in Zurich.

Swiss currency intervention, along with the U.K. currency printing presses in overdrive are sure to lend more, not fewer investors to seek a safe haven from the paper currencies of the world. Swiss devaluation of the franc is an open invitation to other central banks in Europe to follow suit.

Sooner or later the purchasing power of government paper of all descriptions should be taking a back seat to gold on such news. Gold, the one pure “currency” and always trusted measure of value for over four millennia, cannot be printed by fiat and can’t be produced fast enough to flood the market with too much of it, no matter the price.

To add supreme insult to injury, the Swiss are also apparently capitulating to international pressure and will now relax their formerly air-tight bank secrecy regulations to the great consternation of anyone who holds funds there in special, formerly uber-secret, numbered accounts.

China Syndrome meets “Rollover”

This past week Wen Jiabao, China Prime Minister, reportedly said in remarks following his annual press conference, “We have lent a massive amount of capital to the United States, and of course we are concerned about the security of our assets.”

So the Chinese prime minister is publicly voicing the obvious. China probably now wishes it had invested a bit larger portion of its nearly $2 trillion in forex reserves in gold metal rather than in government paper promises. Rumors of Chinese gold buying are already crawling around the internet. With statements like that from high Chinese officials those rumors will grow wings.

Jiabao continued, “To speak truthfully, I do indeed have some worries… I would like, through you (the press), to once again request America to maintain their credit worthiness, keep their promise and guarantee the safety of Chinese assets.”

China certainly knows that if it were to sell off their U.S. bonds too quickly they would only be hurting themselves, but isn’t it rather bullish for gold to know that the Chinese are openly worried about their approximately $1.4 trillion in U.S. debt instruments? Is it more or less likely that China will be adding a higher percentage of gold to their now tiny reserves knowing that? It won’t be all that much of a wonder should gold seem to have a firmer bid under it for some time to come under the circumstances.

Moving on to other anecdotal news, think people are not changing their behavior during this global financial crises? Well, consider that according to news reports gun sales in the United States are at 20-year highs and some types of ammunition have become scarce as people become more fearful of the potential for civil unrest. We have a bullet bull market underway.

Among other gold bullish news, last week we saw a confrontation in international waters between a U.S. intelligence gathering ship and the Chinese navy. In yet another test of the new U.S. president Russia provocatively said they “could use bases in Cuba and Venezuela” for their long-range strategic bombers and that’s just a taste of what the wire services were serving up.

Gold and silver more or less moved sideways over the past week. The Big Markets staged an old fashioned bear market short covering rally up from way-oversold, but the news sure seemed more, not less supportive for precious metals since the last Got Gold Report. It makes one want to dive into the indicators to see what they are, well, indicating.

Gold ETFs

Gold once again tested the $890s and was once again repelled upward from that zone. That is the third time in six weeks that gold has tested the $890s and bounced. As we note that, we also have to take note that cash prices turned in a lower high for the week and a slightly lower low. The $890s have now become the gold bull’s defensive zone and the bear’s prime target. (See the gold chart linked below for more technical commentary.)

SPDR Gold Shares, [GLD], the largest gold ETF, added another 27.83 tonnes of allocated gold bars to its gold holdings over the past week. So far this year GLD has added a stunning 276.59 tonnes of gold to show 1,056.82 tonnes of gold bars held for its investors by a custodian in London. As of the Friday 3/13 close the metal held by the trust was worth $31.5 billion.

Source for data SPDR Gold Trust

Repeating from the last full report two weeks ago: “Clearly the majority of GLD investors are not convinced there is material weakness ahead for gold – at least not yet.”

Indeed, as gold retraced from the $1,000 mark to the $890s, instead of abundant selling pressure forcing GLD to redeem shares and sell gold, we have to take note of the opposite. It is quite clear that investors have so far taken advantage of the dip in gold prices to add more GLD, not less.

So that the price of each share of GLD tracks very closely with the price of 1/10 ounce of gold (less accumulated fees), authorized market participants (AMPs) have to add metal and increase the shares in the trading float when buying pressure strongly outstrips selling pressure. The reverse occurs when selling pressure overwhelms buying pressure.

Barclay’s iShares COMEX Gold Trust [IAU] gold holdings declined a small 0.92 tonnes to 66.86 tonnes of gold held for its investors. Gold holdings for the U.K. equivalent to GLD, Gold Bullion Securities, Ltd. added 1.23 tonnes over the past week, to show 130.89 tonnes of gold held as of Friday, reversing a similar reduction the week prior.

All of the gold ETFs sponsored by the World Gold Council showed a collective increase of 29.54 tonnes to their gold holdings to 1,229.42 tonnes worth $36.7 billion USD as of the Friday 3/13 cash market close.

SLV Metal Holdings

Silver consolidated its downward thrust, turning in an “inside week” with a slightly lower high ($13.41) and a slightly higher low ($12.48), while bouncing neatly off the popular 50-day moving average which is currently rising through the $12.40s. The white metal closed the week on an advance with a last Friday 3/13 trade of $13.20 on the cash market. (See the silver chart linked below).

For the week metal holdings for Barclay’s iShares Silver Trust [SLV], the U.S. silver ETF, held steady at 7,898.37 tonnes of silver metal held for its investors by custodians in London. SLV reported a reduction in metal holdings of 159.42 tonnes the prior week.

Source for data Barclay’s iShares Silver Trust.

Still no new custodian for SLV

As of Friday, March 13, SLV still had not filed an amendment either naming an additional custodian or increasing the amount of silver storage available under the current custodian agreement with JP Morgan Chase London.

We remain vigilant, because there is very little “room” under the current custodian agreement for SLV to add additional silver as we reported in the last Got Gold Report. There is no doubt ample silver available in London (for now) from one of the other London Bullion Market Association (LBMA) members with large metal holdings in London warehouses, but so far we don’t know whom SLV will name as the additional custodian or sub-custodian and we don’t know how much silver “storage” that new custodian will be able to provide.

U.S. banks dominate the COMEX

While those of us with a long bias can take some comfort in the larger reductions of net short positioning by the commercial traders (covered in the full Got Gold Report), we need to remember that as of right now the short side of the market is literally dominated by just two big U.S. banks. When the regulators, the Commodities Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC), consent to allow just two traders to take overly large positioning on either side of a particular market, it leads to mistrust and angst among the public and market commentators. Such overwhelmingly large positioning also provides ammunition to conspiracy-minded commentators who constantly blame price movements of silver (and gold) on deliberate action by sinister members of a secretive “cartel” intent on suppressing the price of gold and silver.

Some of the individuals advancing the notion of a conspiracy to suppress precious metals prices are bright, articulate and bring compelling evidence and research to the discussion regularly. We’ll undoubtedly have much more about that in future reports, but for now it has become increasingly difficult for the industry and regulators to ignore the so-called “conspiracy camp” and its growing legions of members.

Regardless if one believes in menacing cartel theories, and regardless of whether or not one takes the opposite view, (that most or all of the very large net short positioning of the two very large U.S. banks in silver futures are actually legitimate hedges offsetting long positions in OTC markets on behalf of the various clients of the banks), the current positioning by the two banks in COMEX silver futures is an example of an enormously concentrated futures position.

According to the latest Bank Participation in Futures and Options Markets report, as of March 3, 2009, two U.S. banks held zero long and 30,838 contracts short with silver then at $12.83 and with 93,051 COMEX 5,000-ounce contracts open. So, just two banks held net short positions equal to 33.14% of all the open contracts on the largest futures bourse in the world. The chart below shows the net positioning of the U.S. banks relative to the total number of all open contracts for silver on the COMEX, division of NYMEX.

According to CFTC COT reports, during that 3/3 reporting week all COMEX commercial traders as a group – all of them – were collectively net short a total of 38,704 contracts, so just two very large U.S. banks held a shocking 79.68% of all the commercial net short positioning on the COMEX. The graph below shows the two U.S. banks net short positioning relative to all COMEX commercials net short positioning since 2006.

One potential problem with allowing overly-large positioning by just a few players is the potential for those elite traders to get into the position of having to trade in a particular direction in order to protect their position. The incentive for a trader running 1,000 contracts to try to move the market with the weight of his own trading would certainly be much less than a trader (or two traders in this case) with 30,000 contracts of one-way exposure.

Sure, the COMEX is not the only market for silver in the world, but trading on the COMEX does indeed influence the trading for silver on all the other world markets, including the larger OTC markets based primarily in London. And sure, if silver were to be man-handled too low for too long buyers, acting in their own self interest, would step in and buy it back up to reality over time. Haven’t they already done exactly that in the real physical silver markets given the insanely high premiums for most physical silver products?

One could argue the silver market is relatively small, and therefore prone to manipulation because it doesn’t take all that much capital to move the futures markets. Perhaps over short periods of time it actually is. But, this report leans toward the idea that the silver market is global and deep enough to discourage even the larger players from messing around with it too much or too long.

On the other side of that silver coin, we also believe that the amount of physical silver available for investment by new investors is rapidly approaching a critical inflection point in the not-too-distant future. If we know it, anyone who would short the market knows it even better. We have to conclude that anyone who would consistently attempt to manipulate the silver market downward in the face of obvious and material supply constriction is either very stupid or is a phantom of coincidence.

With that in mind, in an era when regulators allowed the Bernard Madoff scam to go unchecked for many years, even though they were handed the scamster on a silver platter by others in the same business eight or nine years ago, a scam ruining hundreds or thousands of innocent investors; in a period when ANY silver product being sold on the street carries with it extremely high premiums due to overwhelming public demand; in a period when investors have had their confidence severely shaken in all markets; can the COMEX continue to allow such one-sided and concentrated trading action to continue? Perhaps more to the point, shouldn’t the COMEX explain publicly why it has allowed that very concentrated short positioning by just two U.S. banks?

Perhaps with more clarity would come more confidence.

Got Gold Report Charts

2-year weekly gold

2-year weekly silver

3-year weekly HUI

2-year weekly Gold:HUI ratio

That’s it for this excerpt of the full Got Gold Report. GoldNewsletter.com subscribers enjoy access to all the Got Gold Report technical analysis and commentary as well as Brien Lundin’s timely advice and analysis of specific resource companies.

Until next time, as always, MIND YOUR STOPS.

The above contains opinion and commentary of the author. Each person should study the issues carefully and, as always, make their own informed decisions.

Disclosure: The author currently holds a long position in iShares Silver Trust, net long SPDR Gold Shares and holds various long positions in mining and exploration companies.

Are You Ready To Rock? – Good Investing! – jschulmansr

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

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.

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

How to Catch A Fool

16 Monday Mar 2009

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

≈ Comments Off on How to Catch A Fool

Tags

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

A new week and I have a new warning… What I mentioned before in previous posts is starting to happen. We are now starting to hear the “bottom” is coming in place for Stocks and the Economy, everyone from Benanke to many “name” financial advisors are starting to jump on the bandwagon. Sure enough this morning the “sheeple” started to put their money back into stocks. The Dow is currently up 70 points and Gold was down $13.00. Nasdaq hasn’t ever gotten out of the negative yet today. This is how I see it- we will probably have a nice rally at least this morning as smaill investors pile in thinking “we are close to the bottom or at it so lets get in now so we won’t miss it!” My key resistance points for the Dow, are around 7300- 7320 and the S&P 500, 770-775. If those are cleared we have the potential for a really big up day. However if the markets can not successfully get above those points, Bang! the Bear Trap is sprung!. Be careful out there and Buy Gold now while you can still catch the market before we run to $1050, and later by end of year $1250-$1500, maybe even higher as inflation will really be clicking in from all the money flooding the world economies now. I especially like the Precious Metals producers as a whole many good bargains to be found out there. Even bullion bought now should produce minimum $100+ oz. gain over the next few months. Be a wise and prudent investor – not a “fool”. Remember a “fool” and his money are soon parted! Good Investing- jschulmansr

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

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

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

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

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

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

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

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

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

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.

Share this:
Reddit
Facebook
LinkedIn
More
X
Pinterest
Tumblr
Print
Email
Like Loading...

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

≈ Comments Off on And the Winner Is…

Tags

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

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

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

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…

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

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.

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

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…

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

Have a Great Weekend!-jschulmansr

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

Schedule automatic tweets, Thankyou for following me message 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

They’re At it Again? – Who’s Going to Win?

10 Tuesday Mar 2009

Posted by jschulmansr in 10 year Treasuries, 20 yr Treasuries, bear market, bull market, central banks, China, Comex, commodities, Contrarian, Copper, Credit Default, Currencies, currency, Currency and Currencies, DGP, dollar denominated, dollar denominated investments, economic, Economic Recovery, economic trends, economy, Finance, financial, follow the news, Forex, Fundamental Analysis, futures, futures markets, gata, GDX, GLD, gold, Gold Bullion, Gold Investments, gold miners, Gold Price Manipulation, hard assets, How To Invest, How To Make Money, hyper-inflation, IAU, IMF, India, inflation, Investing, investments, Jschulmansr, Junior Gold Miners, Latest News, majors, Make Money Investing, manipulation, Market Bubble, Markets, mid-tier, mining companies, mining stocks, oil, palladium, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, protection, recession, silver, silver miners, Silver Price Manipulation, small caps, spot, spot price, stagflation, Stimulus, Stocks, Technical Analysis, Tier 1, Tier 2, Tier 3, Today, U.S., U.S. Dollar, XAU

≈ Comments Off on They’re At it Again? – Who’s Going to Win?

Tags

ANV, Austrian school, AUY, Bailout News, banking crisis, banks, bear market, Bollinger Bands Saudi Arabia, Brian Tang, bull market, CDE, central banks, China, Comex, commodities, Copper, Currencies, currency, deflation, Dennis Gartman, depression, DGP, dollar denominated, dollar denominated investments, Doug Casey, economic, economic trends, economy, EGO, Federal Deficit, financial, Forex, FRG, futures, futures markets, gata, GDX, GG, GLD, gold, gold miners, hard assets, HL, hyper-inflation, IAU, India, inflation, investments, Jeffrey Nichols, Jim Rogers, Keith Fitz-Gerald, majors, Marc Faber, market crash, Markets, Michael Zielinski, mid-tier, mining companies, monetization, Moving Averages, 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

Sorry, I missed everyone yesterday, it was a very interesting day making this one wonder if we are not seeing more hidden central bank selling in a desperate measure to hold Gold Prices down. Sooner or later the shorts will have to fill which I believe will happen somewhere around the $1050 – $1100 range giving a big pump up. Meanwhile today’s action, we are once again seeing continued downward pressure with Gold holding at the $890 to $900 range. Personally, I think we will hold here at the $880 to $900 level, build strength after the Gold coming on the market is absorbed. If we don’t hold here then $850 is the next very strong support level. We’re having a nice little upward correction in the stock markets and this may be the 20% retracement rally traders have been looking for. Mark my words we will soon here remarks like the “bottom is in place for stocks” and “now” is the time to get in at these low levels. After they sucker everyone in then we will see the Stock markets continue in their downward channel. In the meantime take advantage of this to load up on your Gold. Especially since we’ll hear the “double top” formation is in place comments and everyone will be giving up on Gold and Silver. I personally think we are forming a new pennant formation like the one that was formed around the $700- $750 level which then took off to $1000+. Based on that this formation should be the launch pad up to the $1250 level. I am aggressively buying Precious Metals Miners with current or about to come on line production, accumulating some more physical holdings and hanging tight. When I have confirmation I will be re-entering DGP for another ride to at least $1000. I will post when I enter that trade and if you are following me on Twitter you’ll be the first to know. Good Investing! -jschulmansr

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

Would you like to get some Free shares of a start-up company?

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

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

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

·        Why most investors are WRONG about gold

·          What Happens When Inflation Kicks In?

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

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

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

Here you go- Bottom Calling For the Stock Market already!Barron’s Calls a Bottom – Seeking AlphaSure, stocks could slide much further — but they probably won’t. By most measures, they are downright cheap.

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

By: Eli Hoffman Senior Editor Seeking Alpha

Barron’s cover story this weekend basically calls a bottom to the bear, though not in quite so many words.

After blaming Obama for much of stock market woes (“The lousy economy is the main factor, but stocks haven’t been helped by Obama administration proposals … It doesn’t help that the Street is calling this an “Obama bear market” and that some investors are looking to “Obama-proof” their portfolios…), Barron’s concedes that the president did get at least one thing right: stocks are cheap for investors with patience.

Barron’s says its research bears that out. Here’s why:

Stocks are cheap relative to P/E – a Citigroup economist’s 2009 earnings estimate for S&P 500 components puts their collective P/E ratio at more than 13, which is where a bunch of bear markets bottomed – except 1974, ’82 and ’87 when P/E went as low as 8.5. If we get down to 10, S&P could fall another 25% to 500 and DJIA around 5,000. But that probably won’t happen, because in previous downturns Treasury yields were much higher, and because another Citigroup analyst says he’s seeing signs of panic.
Stocks are cheap relative to GDP – at 60% of the $14T GDP, stocks are their cheapest relative to economic output since the early ’90s. But they’re still well higher than the lows of about 30-35% seen in the ’70s and early ’80s. Stocks are also cheap relative to book value – about 1.3 down from a high of 5 during the dot-com bubble.
Stocks are cheap relative to gold – S&P 500 is now worth about 75% of the price of an ounce, vs. a peak of more than 5x in 2000. Over the past 40 years, the average stocks-to-gold ratio has been 1.6.

There’s also a lot of cash on the sidelines, Barron’s says, noting money-market funds now hold $4T – almost half of the market cap of U.S. stocks, and double the amount in money-market funds two years ago.

Barron’s expects stocks in defensive industries like drugs (PFE, LLY, MRK, BMY, SGP) and consumer goods (HNZ, KFT, PG, KO, GIS) to benefit from a return of confidence.

For those prone to bottom calling, or not, here’s some more food for thought:

Babak notes pessimism, as measured by the American Association of Individual Investors’ weekly survey, is at record highs. A contrarian buy signal.
Todd Sullivan says that a couple weeks of positive economic data could cause extreme pessimism to make a rapid about-face.
Jason Schwartz thinks we’re in another bubble – one of uncertainty. Forget about buy-and-hold, he says – but short term gains on oversold stocks could be massive.
Meanwhile Mike Stathis, while noting stocks are very close to “fair value,” for what that’s worth, doesn’t mean the market won’t go lower. In fact, it probably will.

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

Here’s a nice piece with some good info about one of my personal longs (ABX).

Gold Mining or Gold Bullion Stocks for 2009? Seeking Alpha

By: Preston Poulter of PrestonPoulter.com

With Obama’s outrageous stimulus plans where the federal government is going to give out billions of dollars of handouts to the demand side of the economy, it’s no wonder gold is gaining ground while stocks have been falling. However, the question remains when is it time to buy? The answer is now. Gold has been consistently in an uptrend since October of last year. This is shown in the chart (click to enlarge) of a major gold ETF (GLD) [GLD: 90.57, -1.72 (-1.86%)] below. As you can see, gold is making a short short term pullback which signals a time to buy. With more talk of spending, including a world wide stimulus package, there is only further pressure on leading countries, currencies such as the U.S. dollar. These inflationary pressures may push gold to break the 2008 highs of around $1056.

But I’m not content just to park my money in physical gold and leave it at that. The trader in me wants to make a leveraged play to make the most off of gold’s bright future. Gold mining shares would seem an excellent play then. Not only do you get exposure to the gold market, but you get the benefits of stock ownership. In the past, whenever I would introduce the idea of owning gold as a form of investment, people would laugh my suggestion off because they just couldn’t imagine how anything would be better than owning “stocks for the long run.” Of course, they aren’t saying that anymore.

Gold mining shares are a nice compromise in terms of investment philosophy. If the American dollar does fall from grace as we goldbugs suggest, then owning shares of a gold mining company will be a tremendous boon. If the dollar continues to stubbornly hang on, and we somehow manage to resume normal economic growth, then I still own equities and should get the traditional benefits of equity appreciation.

The theory of owning gold mining equities is pretty easy, but the reality can be rather treacherous. Should you chose an established company with a lot of reserves or a junior company that mainly has a lot of promising prospects? One is more dependable and the other has the potential to be far more rewarding. It’s a similar discussion to blue chip versus tech stock debate we saw towards the end of last century.

For myself, I wanted an established company. Junior mining companies need a healthy amount of credit to develop their mining operations, and that wasn’t a chance I was prepared to take given the credit collapse of last year. That narrowed my focus down to just a couple of companies: Newmont Mining (NEM) and Barrick Gold (ABX). I chose Barrick because it was the largest mining operation in the world and because, at the time, it was trading at a lower PE ratio than Newmont. As of this writing, Newmont has held up better over the last twelve months as shown in the graph below.

The relative stock performance of the two companies

Really the two companies were performing in tandem until the last month or so. Then Barrick shares had a rather sudden loss of value. Part of this loss of value is probably related to the loss Barrick announced for its fourth quarter. The company was able to sell its gold at a good profit margin, despite the temporary fourth quarter fall in the price of gold, but the company also wrote off a large portion of the value of an oil company it had acquired in the prior year. Like so many decisions that turn out wrongly, it seemed like a good idea at the time. Oil is a significant cost in the mining of gold, so it would make sense to buy an oil company in a rising oil market as a hedge against an increase in the cost of mining. Oil’s subsequent fall caught even Warren Buffett by surprise.

Having to write off the value of an oil company due to a collapse in the oil market seems like a one time event. So let’s instead compare Barrick and Newmont on their forward PE ratios, rather than the past twelve months. Barrick closed yesterday trading at a forward Price-to-Earnings (PE) ratio of 15.71 compared to Newmont’s 16.43, which shows that you’re getting a discount for Barrick’s earnings over Newmont’s. The dividend ratio is even better: Barrick yields 1.4% compared to Newmont’s 1.0%. That’s 40% more money in your pocket for owning Barrick. Looking at these figures suggests Barrick is clearly the better company to own at these prices.

Going forward, it’s only a matter of time before the inflationary policies of the world’s central banks start forcing the gold price higher. However, Barrick will not perform well this year if we don’t see a return in the price of copper. There’s a significant amount of copper tied up in the gold ore that Barrick mines and in the past Barrick has been able to refine and sell it at a nice profit to held reduce the cost of its gold operations. For the year 2006-2008, Barrick was able to sell its copper at over $3 a pound and make a profit of over 50% on the sale. Yesterday copper closed around $1.65. If copper stays at that price the entire year, Barrick’s results will suffer. I’ve run a few simulations in a spreadsheet and here’s the numbers I get:

If gold averages the year at $950 an ounce and copper stays at $1.65 a pound, Barrick will earn $.94 a share.
If gold averages $1050 an ounce and copper stays at $1.65 a pound, Barrick will earn $1.78 a share.
If gold averages $950 an ounce and copper returns to $3 a pound, Barrick will earn $1.51 a share.

As you can see, the return of copper to its former levels is going to be just as significant to Barrick’s earnings as gold appreciating in value.

Since analysts estimate a 2009 EPS of $1.85, Barrick could suffer a significant down year if we don’t start to see copper return soon.

Looking beyond a year, I believe Barrick is positioned well. It is set to make money from an appreciation in copper, oil, or gold. That makes it a great place to be as we feel the effects of inflation, but in the short term gold bullion may represent a better investment.

Disclosure: Barrick common stock represents a significant portion of my investment portfolio.-Preston Poulter

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

Gold Continues to Gain Ground – Seeking Alpha

Source: Bullish Bankers – Justin DiPietro

Given the massive amount of money being pumped into the global economic system, higher prices down the road are a given. It’s possible that prices may fall in the short term, but no currency can withstand a determined onslaught by its own central bank and national government for long. I consider gold a no brainer in this environment. It’s a store of value that does well both in inflationary times and, as we saw last year, in deflationary times.

-Justin DiPietro

Disclaimer: None.

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

My Note: See the nice little wedge we are forming in the above chart, a little patience and then bang! $1250 here we come! – jschulmansr

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

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

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

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

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

·        Why most investors are WRONG about gold

·          What Happens When Inflation Kicks In?

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

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

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

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

Share this:
Reddit
Facebook
LinkedIn
More
X
Pinterest
Tumblr
Print
Email
Like Loading...

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

≈ 1 Comment

Tags

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

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

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.com

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

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.

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

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

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

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.

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

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

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

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.

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

! 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.

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

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

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

≈ 1 Comment

Tags

ANV, Austrian school, AUY, Bailout News, banking crisis, banks, bear market, Bollinger Bands Saudi Arabia, Brian Tang, bull market, CDE, central banks, China, Comex, commodities, Copper, Currencies, currency, deflation, Dennis Gartman, depression, DGP, DGZ, 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

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.

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

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…

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

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.

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

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

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

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.

* * *

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/.

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

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

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

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

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

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

Tags

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

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

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

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

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

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?

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

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

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!

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

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

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.

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

That’s all for Today- Enjoy! jschulmansr

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

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

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

≈ 1 Comment

Tags

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

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!

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

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.

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

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

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

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

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

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

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

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

≈ Comments Off on Going For The Gold!

Tags

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

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.

“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

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

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

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.

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

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

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

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

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

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

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

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)

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

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

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

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.

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

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.

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

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

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

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

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

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

Dow Jones Industrial Average

S&P 500 Index

$INDU 7,336.68, -129.27, -1.7%) off more than 100 points, or 1.5%, at 7,357, and the broad S&P 500 index ($SPX: $SPX 764.48, -14.46, -1.9%) down 10 points, or 1.4%, at 768.

METALS STOCKS

Gold tops $1,000 for first time in nearly a year!

Need A Second Chance?

19 Thursday Feb 2009

Posted by jschulmansr in 10 year Treasuries, 20 yr Treasuries, Bailout News, banking crisis, bull market, capitalism, China, Comex, commodities, Copper, Credit Default, Currencies, currency, Currency and Currencies, deflation, depression, DGP, dollar denominated, dollar denominated investments, economic, Economic Recovery, economic trends, economy, Fed Fund Rate, Federal Deficit, federal reserve, Finance, financial, Forex, Fundamental Analysis, 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, India, inflation, Investing, investments, Iran, Israel, Jschulmansr, Junior Gold Miners, Keith Fitz-Gerald, Latest News, majors, Make Money Investing, market crash, Markets, mid-tier, mining companies, mining stocks, palladium, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, recession, risk, silver, silver miners, spot, spot price, stagflation, Stimulus, Stocks, TARP, Technical Analysis, The Fed, Tier 1, Tier 2, Tier 3, Today, U.S., U.S. Dollar, volatility

≈ Comments Off on Need A Second Chance?

Tags

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

Gold today is trading on Feb Contract between $975 – $985 oz, a little more consolidation and base building before the launch to $1000+. Currently Gold is up $3.80 at $982.00. The push to $1000 could come as early as today. Do you need a second chance? Well here it is- get into Gold now or you’ll be kicking yourself later. If Gold breaks the $1003 all time high then we’ll see at least $1050 gold, if it breaks that we have a straight shot to $1100 – $1250. This is without any major news, such as Israel attacking Iran nuclear facilities, or China moving in and taking back the disputed territories in India, or a major terrorist attack event like 911. If any of those happen then $1500 or greater. True Inflation Rate while still roughly 7-8% could easily jump to 12 – 18% or higher, as the printing presses around the world are spinning out of control around the world. This eventually will lead to even more devaluation of all the currencies as Governments are madly trying to stop Deflation. The Gold market is saying the stimulus packages around the world are failing. Buy a wheelbarrow to haul your cash around and Gold to preserve the buying power of your Dollars. Even if you only allocate 10% of your portfolio- BUY GOLD NOW! As Always Good Investing – jschulmansr

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

Gold Continues to Climb as Economic Catastrophe Looms – Seeking Alpha

By: John Browne of Euro Pacific Capital

Last week, when Congress passed its $787 billion stimulus package, the size of the plan caused many observers to forget the water that has already passed under the bridge. Fewer still are wondering what havoc will erupt when all this liquidity eventually washes ashore.

With gold prices only 7% away from their record highs and the main equity indices 45-50% below their highs, an analysis of the equity/gold ratio is amid the many rationalizations for prolonged gains in the precious metal. The equity/gold ratio highlights a commonly used measure of corporate market value versus a decades-long measure of real asset value. Gold is known as a measure of real assets value because of its ability to preserve value during inflationary times. But during these disinflationary times, the current global growth/demand landscape also supports the notion of too many dollars chasing too few gold ounces.

The questions can be separated into three general topics: Corporate, Projects, and Capital.

How did the company get started?
What are the company’s near-term, mid-term, and long-term goals?
How much experience does the management, board of directors, and technical team have in achieving the company’s goals? Is there a past history of success?
How does management plan to market and promote the company? Does the company plan to go on road shows? Do they plan to do newsletter, magazine, or website advertising?
How much of experience does management have in promotion?

Projects

How many gold projects does the company have? Are all of the gold projects considered assets?
Where are they located? Are they located in geopolitically safe regions? Are they easily accessible? Is there a labor force nearby? Is there easy access to power and water?
What stage is each property in: Grassroots? Exploration? Development? Production?
For grassroots stage projects, why does the company wish to pursue exploration? Has there been any historic evidence of gold on or near the projects? What does the company have planned for the future of its grassroots projects?
For exploration stage projects, what kind of exploration progress have been made so far? How much has the company drilled? What have been the results? What kind of exploration is planned for the future? Is there currently a resource estimate? Will there be one in the future?
For development stage projects, what is the status of development? When will the project become a gold producing mine?
For production stage projects, how much gold does the mine produce? What are the future production and revenue expectations? How long is the life of the mine?
What is the resource or reserve status of each property?
What, if any, royalties are or will be due?

Capital

What is the company’s cash flow, if any?
What is the company’s cash position?
Does the company have any debt? How much and what kind of debt does the company have?
Will the company need to raise new capital for future projects? How much money will the company need to raise? How much experience does management have in raising new capital?
How much capital will the company need to reach its 12-month goals? How will they get the money?
What is the company’s monthly burn rate? Are they being responsible spending it?
How many shares of the company’s stock are issued and outstanding?
How many shares of the company’s stock are there fully diluted? At what price are the warrants and options set?

This is not a stock-specific list, so these questions are best used as a guideline to form your own questions for investor relations.

This is also not a complete list, but should definitely be enough to get you started. If you like a company’s answers to the questions above, it should be more seriously considered as a position in your junior gold stock portfolio.

Good Investing,

Luke Burgess and the Gold World Staff

P.S. The opportunities in the gold market have already proven to be huge winners for readers of our Mining Speculator advisory service. As a matter of fact, for five years running the Mining Speculator portfolio had an average gain of 212%! Most of these gains can be attributed to Greg McCoach’s expertise in picking junior gold mining stocks, which, as we’ve just discussed, are getting ready to explode. And we’re expecting even bigger gains from the gold mining stocks in the Mining Speculator portfolio over the next 24 months. That means there’s never been a better time to become a member of Mining Speculator and get in on the tips and information for which some people invest millions of dollars with hedge funds. Click here to find out how you can join us in the Mining Speculator for as little as $25.

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

EGO: A Particularly Healthy Gold Stock – Hard Assets Investor

By: Brad Zigler of Hard Assets Investor

Real-time Inflation Indicator (per annum): 7.5%

We wrote about gold stocks last week (“Whither Gold Stocks”) , waving a $38 red cape for the Market Vectors Gold Miners ETF (NYSE Arca: GDX) in front of a four-month-old bull market. Yesterday, as gold picked up $10, GDX’s horns got close. Very close.

Intraday, the ETF traded as high as $37.80 before falling back to close at $37. The fund is working itself into the target area nicely, thankyewverymuch. One of GDX’s better-performing component stocks, in fact, might be a herald of the fund’s future.

El Dorado Gold Corp. (NYSE Alternext: EGO) has risen 11.4% this year, just barely ahead of the 9.2% gain posted by GDX. Oh sure, a 2.2% performance difference may seem significant now, but given the relatively low volatility in both securities, the spread seems unlikely to widen much. Barring something unforeseen, of course.

Gold Miners ETF (GDX vs. El Dorado Gold (EGO)

GDX Graph

The good news for EGO and, indirectly, GDX, is EGO’s cost structure. For fiscal 2008, EGO’s cash cost of gold is only $257 an ounce. Volatility in bullion prices is least likely to impact EGO, compared to its peers.

E-G-O could spell peerless performance for GDX.

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

My Disclosure: Long EGO (El Dorado Gold)- jschulmansr

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

Gold Breaks from Traditional Trading Versus Oil and USD, Looks Strong – Seeking Alpha

Source: Financial Post Trading Desk

Safe haven demand and a lack of investment alternatives continues to help gold break from its traditional trading relationships, rising despite a strong U.S. dollar and weak crude oil prices. In fact, analysts at Genuity Capital noted that gold is more than $200 per ounce above its normal value relative to the greenback.

Meanwhile, sustained investor interest in gold throughout 2008 helped push dollar demand for bullion to $102-billion, a 29% annual increase, according to World Gold Council’s Gold Demand Trends. The organization also 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 $15-billion.

Genuity 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.

Concerns about the stability of the global banking system and credit rating of the U.S. Treasury has been a major driver of physical demand for gold. Until clear evidence of stabilization in the global financial system emerges, analysts at Genuity expect this trend to continue.

“If the U.S. dollar weakening resumes in the medium term, as we believe it shall, and oil prices improve, gold should continue to prosper,” they said in a research note. As a result, Genuity continue to recommend gold over base metals in the near term.

Aram Shishmanian, CEO of World Gold Council, said:

The economic downturn and uncertainty in the global markets, that has affected us all, is unlikely to abate in the short term. Consequently, I anticipate that gold, as a unique asset class, will continue to play a vital role in providing stability to both household and professional investors around the world.

North American gold equities have risen more than twice as much as gold itself in the past month, showing stronger than typical leverage. Silver has also begun to outperform.

Genuity highlighted Silver Wheaton Corp. (SLW) was a name that provides leverage to the metal and has the potential for a re-rating.

The firm’s top gold picks in the intermediate space are Allied Nevada Gold Corp. (ANV), IAMGOLD Corp. (IAG) and Northgate Minerals Corp. (NXG). It also favours seniors Goldcorp Inc. (GG) and Yamana Gold Inc. (AUY). The firm also raised its target prices for gold stocks by an average of 28% to reflect higher price assumptions for the metal.

Genuity said:

While our target multiples are now mainly near the top of the typical valuation range (1.0x to 1.7x), we believe that continuing positive momentum in the gold price should support further outperformance from the gold equities.

With the arrival of fourth quarter and year-end earnings season, one area of reporting that will see additional focus is the updates on gold reserves.

RBC Capital Markets expects gold producers to increase the gold price assumption used to calculate reserves from the previous range of $550-$575 per ounce to $675-$725. This will better match the three-year historical gold price as suggested for use by the SEC.

“With this increase, we expect most producers should be able to more than replace gold reserves mined during 2008, and show net gains from the end of 2007,” RBC analysts told clients.

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

My Disclosure: Long AUY, NXG, SLW – jschulmansr

Need a Second Chance? – Well Here It Is – Buy Gold and Invest In Yourself…

Good Trading! -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

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

Gold prices are quickly on their way to breaking another all-time high this year.

“uhhh…yeah…sure….this is investor relations”

In whatever form you find investor relations, they should be able to give you all of the most up-to-date information. Or they should at least be able to tell you where to find any information they don’t have.

To help you get the most out of speaking to investor relations of junior gold companies, Gold World has made a basic list of questions that you should be sure ask.

And an expected parabolic rise in investment demand will throw the gold bull market into the long-awaited mania buying phase, which should last between 6 and 12 months and could push gold prices as high as $3,000 to $5,000 an ounce, maybe higher.

That means right now is the time to start seriously researching and buying back all those quality junior gold stocks that have collapsed over the past few months.

How To Pick the Right Junior Gold Stocks

The best place to start research on a company is its website. There, you’ll generally find most of the information that you need. However, more often than not, you won’t be able to find all of the detailed information. And that’s when you need to call the company’s investor relations department.

Investor relations for junior gold companies are sometimes one or two in-house employees of the company. Other times investor relations is contracted out to a third party. Or sometimes it will be a member of management. And sometimes there is no formal investor relations at all; sometimes investor relations is just whoever picks up the phone…

Corporate

click to enlarge

The equity/gold ratio (using the Dow or S&P500) 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. Since the 1920s, the equity/gold ratio has peaked twice at nearly 35-year intervals: 1929 to 1965, and 1965 to 1999. After each of those three peaks, stocks descended in multiyear sell-offs, accompanied by a rally in gold. But the converse was not true when stocks recovered in 2003-2007. As the above chart shows, the 2002-3 start of the commodity-wide bull market failed to prevent the equity/gold rally from extending its decline.

The 100 years of equity/gold analysis indicate each peak in the ratio was followed by a full retracement back to the preceding lows. The emerging fundamentals indicate a recurrence of this trend and the equity/gold ratio has further declines ahead until a possible recapture of the 1980 lows. In 2002-2007, the falling ratio emerged on a rally in both equities and gold, albeit a faster appreciation in the latter. From 2008 to the present, the persistent decline in the ratio emerged on a combination of a divergence in the pace of declines (slower fall in gold than in equity indices) or divergence in the direction (rising gold and falling/neutral equities).

In assessing the interaction between gold and monetary assets, it is worth weighing in on the current gold rally by comparing the amount of gold available versus the creation of monetary assets. 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. Additionally, The world’s available gold stock stands at a mere 5-6% of total global stock and bond market valuation, which is about 4 times lower than in the 1980s. It is no coincidence that the difference between today’s gold/equity ratio and that of the 1980 low was also 6 times greater.

The Road Ahead

A return in the equity/gold ratio towards the cyclical lows of 1980 is highly plausible. Rather than simply arguing this point on the basis of further declines in equities (see Tuesday’s note in my website on long term equity cycles), the prospects for prolonged gold rallies are emboldened by the refuge towards the metal as a yield substitute resulting from emerging depreciation in the secular value of currencies. And as we have seen in 2005-7, returning rate hikes pose no challenge to gold.

Instead, higher rates are accompanied by improved global growth, resurging demand for industrial commodities and a broader backdrop for the precious metal. The all time lows of 1980 in the Dow/gold and S&P500/gold ratios stood at 1.33 and 0.18 respectively, compared to the current levels of 7.8 and 0.81. Assuming a return in the ratios to their 1980 lows, these would have to fall by another 75%-80%. Taking a more conservative scenario of a 50% decline in the equity/gold ratio and a target gold price of $1,250-1,300/ounce, the implied value of the Dow and the S&P500 would stand at 4,500-5000 and 500-520 respectively.

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

How To Pick Junior Gold Stocks – GoldWorld

Source: GoldWorld.com

The latest spending, signed into law yesterday by President Obama, came on top of $300 billion committed to Citigroup (C), $700 billion for TARP 1, $300 billion for the FHA, $200 billion for TAF and some $300 billion for Fannie (FNM) and Freddy (FRE). Just over the last six months, which excludes the initial Bush stimulus and several massive, unfunded Federal guarantees, nearly $5 trillion has been committed by the government to the financial industry. Rational observers cannot be faulted for concluding, despite Administration claims to the contrary, that the government is merely throwing money at the problem.

Although the rhetoric has managed to convince many observers of the possibility of success, the gold market appears to clearly understand the implications of this unprecedented spending.

The feeling that the government has no idea how to proceed has created palpable panic. In response, pragmatic investors are seeking the ultimate store of wealth. In 2009, as has occurred countless times throughout history, that store will be stocked with gold. Thus, whether the Federal government’s interventions will succeed or fail will be anticipated by the price of gold. Right now, the market is screaming failure.

Prior to the latest round of Federal spending, the Federal government had committed $4 trillion to postpone bank collapses and to lay the groundwork for subsequent restructuring. But has any of this activity actually rescued the banking system? In light of the evidence of deepening recession, is it likely that the additional $787 billion in the latest stimulus will instill enough confidence to restore economic growth? If not, what damage will it do to the eventual recovery?

Congressional rescue packages rarely work. Nevertheless, Congress is turning up the heat with previously unimaginable increases of government debt to fund stimulus and rescue packages. Senator McCain rightly describes the scheme as “generational theft”. Each package of debt will encumber many future generations, halt restructuring and also threaten latent hyperinflation.

While Congress claims that the seriously over-leveraged economy is in desperate need of restructuring, it appears blind to the fact that deleveraging will encourage such restructuring. Instead, Congressional leaders actively seek to increase leverage and add debt. They warn of fire, while pouring petrol on the flames.

The seriousness of the situation is magnified by the rapidly increasing scale of the problem. Just today, the release of the latest minutes of the Federal Reserve confirmed that even that bastion of eternal optimism is sobering. The American economy, which shrank by 3.8 percent in the last quarter of 2008, is forecast to decline by some 5.5 percent in the first quarter of this year. In some pockets, the unemployment rate is already in double figures. Despite massive Government spending on rescue and stimulus, the American consumer clearly is becoming increasingly nervous, and the credit markets show few signs of recovery.

With bad news only getting worse, investment markets are turning into quagmires. The Dow Jones Average is testing new lows, and the commodities markets show few signs of life. In such times, the price of gold should fall along with the prices of other assets and commodities. But, the reverse has occurred. In the past two months, gold has staged a remarkable rally. This is despite the activity of price-depressants such as official gold sales by the IMF and official ‘approval’ for massive naked short positions to be opened by new ‘bullion’ banks.

Not only have gold spot prices risen in the face of such selling pressure, but the price of physical gold is now some $20 to $40 per ounce above spot. This would indicate that investors are now so nervous that they are insisting on taking physical delivery.

Make no mistake, the economy will not turn around soon. When the recovery fails to materialize, look for governments around the world, and especially in the U.S., to send another massive wave of liquidity downriver. When it does, the value of nearly everything, except for gold, will diminish. Don’t be intimidated by the recent spike in gold. Buy now while you still can.

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

As I have been saying Buy Gold Now! – 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

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

Equity / Gold Ratio’s 40 Year Cycle – Seeking Alpha

By: Ashraf Laidi of AshrafLaidi.com

Twitter and Tweeting – The Basics plus Gold Update

18 Wednesday Feb 2009

Posted by jschulmansr in Bailout News, banking crisis, bull market, Comex, commodities, Copper, Currencies, currency, Currency and Currencies, DGP, dollar denominated, dollar denominated investments, economic, Economic Recovery, economic trends, economy, Finance, financial, Forex, futures markets, GDX, GLD, gold, Gold Bullion, Gold Investments, gold miners, hard assets, How To Invest, How To Make Money, IAU, inflation, Investing, investments, Junior Gold Miners, Latest News, majors, Make Money Investing, market crash, Markets, mid-tier, mining companies, mining stocks, palladium, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, recession, resistance, risk, run on banks, silver, silver miners, spot, spot price, stagflation, Stimulus, Stocks, TARP, Technical Analysis, The Fed, Tier 1, Tier 2, Tier 3, TIPS, Today, Tweeting, Twitter, U.S. Dollar, XAU

≈ Comments Off on Twitter and Tweeting – The Basics plus Gold Update

Tags

#(subject), @replies, advertising, appscout, ask for help, Austrian school, Bailout News, banking crisis, banks, bear market, Bollinger Bands Saudi Arabia, Brian Tang, bull market, categorize your tweets, cell phone, central banks, China, Comex, commodities, Copper, Currencies, currency, deflation, Dennis Gartman, depression, desktop client, DGP, direct-messaging, dollar denominated, dollar denominated investments, Doug Casey, economic, economic trends, economy, Federal Deficit, financial, follow the news, Forex, futures, futures markets, gata, GDX, gearlog, GLD, gold, gold miners, hard assets, how to use twitter, 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, mobile client, monetization, Moving Averages, palladium, pcmag, Peter Grandich, Peter Schiff, physical gold, platinum, platinum miners, pockettweets, pr, precious metals, price, price manipulation, prices, producers, production, promote, promotion, protection, recession, risk, RT, run on banks, safety, Sean Rakhimov, search, search twitter, search.twitter.com, silver, silver miners, small caps, sovereign, spot, spot price, stagflation, tag, tag and search, Technical Analysis, text message, tiny url, TIPS, tricks, tweet from your phone, tweetdeck, Tweeting, tweets, twhirl, twidroid, twitpic, Twitter, twitter for beginners, twitterberry, TwitterFox, twitterific, twitterverse, U.S., U.S. Dollar, use @, volatility, warrants, XAU

Have you ever Tweeted? In this Special Edition of Dare Something Worthy Today Too!, In this special edition I am including articles dedicated to Twitter and Tweeting Basics. In my earlier post today I stated Gold was consolidating for another thrust to test the All Time High of $1003 an oz. Gold was trading around the $965 level. Now checkout what happened… – Good Investing and Good Tweeting! -jschulmansr

ps-after today’s action it seems like every “forecaster” is now finally heralding a “New” Bull market in Gold. How much money do these guys charge? If you have been following this blog and my notes you would be up $150+ oz in Physical Gold, not to mention some excellent gains in Gold Stocks too, and for Free! Remember you heard it here first! – jschulmansr

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

Gold tops $980 as safety buying continues – MarketWatch

Source: MarketWatch

METALS STOCKS

Gold up for second day as safety

buying continues

By Moming Zhou, MarketWatch

Last update: 2:24 p.m. EST Feb. 18, 2009

NEW YORK (MarketWatch) — Gold futures rose Wednesday for a second session, ending at the highest level in seven months after briefly hitting $980 an ounce, as safe-haven buying continued.

Meanwhile, holdings in the biggest gold exchange-traded fund surpassed 1,000 tons for the first time ever, according to latest data.

Gold for February delivery ended up $10.70, or 1.1%, at $977.70 an ounce on the Comex division of the New York Mercantile Exchange, the highest closing level for a front-month contract since July 15, when gold closed at the same price.

The February contract, which expires on Feb. 25, rose to $980.80 earlier. Trading more actively, the April contract also ended higher at $978.20.

Gold is now about $26 below its all-time high above $1,003 an ounce, hit in March 2008. Talk of “gunning for the $1,000 level” should keep buyers at the helm, said Jon Nadler, senior analyst at Kitco Bullion Dealers.

Helping gold prices hold firm Wednesday was more gloomy news from the U.S. economy.

Construction on new U.S. housing units plunged 16.8% to a seasonally adjusted annual rate of 466,000, the Commerce Department reported Wednesday, with housing starts now far below the weakest levels of construction in the post-World War II era.

Such news tends to boost gold prices, as some investors buy the metal as a safe haven against economic troubles.

Meanwhile, the Obama administration released details Wednesday of a program to help millions of at-risk homeowners modify their mortgages. See full story on Obama housing plan.

Demand surpasses $100 billion

Demand for gold surpassed $100 billion last year for the first time ever, amid increased industrial and jewelry consumption and investors’ purchase of the metal as a safe haven, the World Gold Council reported Wednesday.

Gold demand — including jewelry consumption, industrial demand and identifiable investments such as bars, coins and gold exchange-traded funds — hit $102 billion in 2008, up 29% from a year ago.

In tonnage terms, gold demand rose 4% to 3,659 tons, the WGC said

Gold holdings in SPDR Gold Shares, the largest gold exchange-traded fund, rose to 1,008.80 tons Tuesday, surpassing the 1,000 ton level for the first time, according to latest data from the fund. The total was up more than 200 tons from a month ago.

The SPDR Gold Trust GLD 96.44, +0.99, +1.0%) gained 1.1% to $96.45.

In spot trading, the London afternoon gold-fixing price — a benchmark for gold traded directly between big institutions — stood at $964 an ounce Wednesday, down $4 from the previous day.

Other metals, equities

In other metals trading, March copper rose 1% to $1.436 a pound, while March silver gained 2% to $14.29 an ounce.

March palladium added 0.5% to $219.10 an ounce, and the April contract for sister metal platinum rose slightly to $1,098.90 an ounce.

In equities, shares of Barrick Gold Corp. (ABX 37.88, +0.59, +1.6%) , the world’s largest gold-mining company, added 2.2% to $38.13, while Goldcorp Inc. (GG 32.14, +0.30, +0.9%) gained 1.6% to $32.36, and South Africa’s Gold Fields Ltd. (GFI 11.79, -0.04, -0.3%) was up 0.3% to $11.85.

The Amex Gold Bugs Index (HUI 320.54, +1.35, +0.4%) , which tracks the share prices of major gold companies, gained 0.7% to 321.41.

The iShares Gold Trust ETF (IAU 96.48, +0.94, +1.0%) rose 1% to $96.50, while the iShares Silver Trust ETF (SLV 14.20, +0.21, +1.5%) rose 1.4% to $14.18.

Moming Zhou is a MarketWatch reporter based in New York.

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

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

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

Twitter and Tweeting – The Basics

Top 10 Twitter Tips for Beginners – PC Magazine

by Sean Ludwig

Ready to jump into Twitter, but don’t know how to get started? Follow these 10 tips and you’ll fit right in.

Is it finally time to take the Twitter plunge? The free service that lets users micro-blog 140 characters at a time had accumulated around 1.9 million users as of December 2008, according to comScore. If you are just now jumping on the Twitter bandwagon, or are intimidated by your inexperience with Twitter etiquette and acronyms, allow us to share some Twittery tips that will make your experience easier and more enjoyable.

1. Shrink Your URLs

One of the most common uses of Twitter is sharing links. But you only have 140 characters to work with, so instead of sharing a long URL, use one of several URL-shortening services to shrink that link. Some of our favorites include tinyurl.com, is.gd, ow.ly, and bit.ly.

2. RT = Retweet

If you want to copy and paste someone else’s tweet, that’s totally accepted and appreciated, as long as you give the original tweeter credit for it. Just put “RT @name” in front of their tweet and post it yourself.

3. Direct Messaging

With Twitter’s direct-messaging (DM) function, you can send a private 140-character message to another user, kind of like abbreviated e-mail. However, you can only direct message Twitter users that are following you.

4. Use the @ Sign

To create a reply or to give someone props on Twitter, simply place an @ sign in front of their Twitter name. If it is a reply, the @ sign must be the first character of the tweet. To see replies to your own tweets, click on @Replies from your profile page.

5. Search For Your Friends

Search.twitter.com works well for finding your friends, celebrities, or organizations, or for searching for specific topics you’re interested in.

6. Categorize Your Tweets for Added Visibility

If you’re tweeting about a popular subject (Obama, Lost, etc) putting a # in front of the subject makes it easy for others to find your tweet, and perhaps they will want to follow you. For example, when the plane crashed into the Hudson River in January, #flight1549 became a popular tag and search term.

7. Share Pictures

People love sharing their photos with the world, and some even break news with them, like Janis Krums, who used TwitPic to post one of the first up-close photos of Flight 1549 on his Twitter feed. Services like TwitPic let users easily upload their photos and post them directly to Twitter.

8. Tweet from Your Phone

Twitter allows you to update your status and receive updates via text message. Under Settings, go to the Devices tab and enter your phone number to start sending and receiving mobile tweets. If your incoming tweets/texts are overwhelming you, disable this option by going back to the same panel and following the instructions.

9. Pick a Good Desktop Client

With desktop clients such as TweetDeck, Twhirl, and TwitterFox, you can receive tweets in a much more manageable fashion, especially if you follow a lot of people, respond often, and use direct messages a lot. TweetDeck, for example, allows you to create specific groups, if you want to split your feed into individual columns.

10. Download a Mobile Client

If you have a BlackBerry, an iPhone, or another smartphone with Wi-Fi or 3G access, a mobile client might be a better option than using text messages. Mobile Twitter clients worth checking out include Twitterific, TwitterBerry, PocketTweets, and Twidroid. You can even follow PCMag on Twitter! Find us at http://twitter.com/pcmag, and follow AppScout and Gearlog too!

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

My Note: you can follow me on Twitter too!

http://twitter.com/jschulmansr or click here.

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

Six Ways to Make Twitter Useful – PC Magazine

Source: PCMAG.com by Nick Douglas

02.17.09

Twitter’s usefulness goes far beyond finding out what strangers ate for lunch. Read breaking news, get customer service, or even chat with your favorite celebrities.

Twitter is vapid, Twitter is narcissistic—Twitter is actually terribly useful if you can ignore knee-jerk backlash. The casual, instant nature of the service lends itself to solving small problems quickly, distributing live-on-the-scene news reports, and keeping track of people. Here are six easy ways to transform Twitter from a time sink into an indispensable tool.

Follow the News

In general, the Web at large is still a more complete news source. Twitter is for keeping track of one niche you care about, staying informed on a news-heavy day, and getting live updates from Twitter users on the scene (like from an Apple keynote or a plane crash in the Hudson River). @CNN posts headlines with story links, but I prefer the one-sentence story summaries on the unofficial @cnnbrk. @NYTimes posts headlines and links too, but it also follows the accounts of 80 NYT sections and writers. Other popular news feeds include @BreakingNewsOn, @nprnews, @weirdnews, @macrumors, @MarsPhoenix, @Astronautics, and several feeds from Digg. PCMag offers a feed for tech news, as do Gearlog and AppScout. You can also hand-roll feeds from a news site’s RSS using Twitterfeed, but don’t publicize it too hard lest the site owners complain.

Get Better Customer Service

Conducting customer service on Twitter doesn’t make much sense—for the company. It just won’t scale well once Twitter gets another ten million users. But right now you can get more attention than you deserve as a single customer by talking to one of these companies on Twitter: Zappos, Starbucks, Whole Foods, JetBlue, and many, many others. Next time you have a customer complaint, just Google the search string “[Company name] Twitter” to see if you can make your case in 140 characters. Or just post a gripe about the company or product and wait for someone in the Twitterverse to respond.

Ask for Help

As with blogs and forums, Twitter is a great place to ask questions you’re too lazy to find the answers for yourself. And the service is absolutely perfect for asking favors (“Can anyone help me move on Friday?”), gathering opinions (“Do organic bananas taste better?”), or getting advice (“How much RAM should I get for my new MacBook?”) Twitter takes a problem you can solve by spending 5 minutes at a computer and makes it solvable in 10 seconds from the produce aisle. Of course, this works best when your real-life friends are following you, as developer Owen Winkler explains. Especially if you ask your followers to help you lose weight. The flip side is that Twitter communication is meant to be two-way. Build your network of followers and your Twitter karma by jumping in with answers and help of your own.

Promote Your Work/Company

Again, Twitter isn’t the first service to solve this problem; the immediacy of the service just makes it a good option. If you don’t abuse it, you can use an occasional link to promote an app you’ve built, an article you’ve written, or a longer plea for someone to please, please help you move on Friday. Just keep it to three links a week; any more and you’ll alienate followers who already know about your work or couldn’t care less.

Keep Up with Friends

Other than entertaining strangers, this is my favorite use of Twitter. One message at a time, knowing who has a cold or who got in a fender bender is dull. But in aggregate, skimming your Twitter feed gives you a sixth sense about what your social circle is up to, what moods they’re in, whether they’re free for a drink that night and whether you’d better offer to pay. Unlike the more intense location-based services, Twitter still has a built-in casualness: You’re not necessarily asking people to meet you right here right now, you’re just asking if anyone’s free for lunch.

Meet Celebrities

Not all of the most-followed Twitter users pay attention to messages from their followers, but Brent Spiner (Star Trek‘s Data) is pretty friendly, as is comedian Stephen Fry. And if you have heroes in the tech media world, you’re set for life here.

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

Final Note: Get involved in investing in precious metals whatever form, i.e. bullion, stocks, etf’s and etc. NOW!

I can be tweeted @jschulmansr or jschulmansr

Enjoy and Have A Great Evening! -jschulmansr

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

Catch Me If You Can!

18 Wednesday Feb 2009

Posted by jschulmansr in 10 year Treasuries, 20 yr Treasuries, banking crisis, banks, bull market, central banks, China, Comex, commodities, Currencies, currency, Currency and Currencies, DGP, 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, India, inflation, Investing, investments, Japan, Jschulmansr, Junior Gold Miners, Latest News, majors, Make Money Investing, market crash, Markets, mid-tier, mining companies, mining stocks, monetization, palladium, physical gold, platinum, platinum miners, precious metals, price, price manipulation, prices, producers, production, Saudi Arabia, silver, silver miners, spot, spot price, stagflation, Stimulus, Stocks, Technical Analysis, The Fed, Tier 1, Tier 2, Tier 3, Today, U.S., U.S. Dollar

≈ Comments Off on Catch Me If You Can!

Tags

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, futures, futures markets, gata, GDX, GLD, gold, gold miners, hard assets, 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, 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, small caps, sovereign, spot, spot price, stagflation, Technical Analysis, TIPS, U.S., U.S. Dollar, volatility, warrants, XAU

As I write this Gold is taking a breather and consolidating at the $960 level, this is before I believe the next launch to test the $1000 mark+ which can easily come in the next few days. Gold is certainly saying “catch me if you can!”. Todays articles include several different vehicles with which to cash in on gold! Good Investing – jschulmansr

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

Jschulmansr Recommended:

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

Riding the Gold and Silver Uptrend with ETF’s – Seeking Alpha

By: The Sun of The Sun’s Financial Diary

As I mentioned earlier, gold has had a tremendous run lately. The main force behind the gold rally is the deterioration of economies around world. Despite the passage of the $789 billion economic stimulus package over the weekend, gold price has continued to climb since the holiday.

Currently, spot gold is traded at $967 an ounce, up more than $10 from last Friday’s close, breaking the key $950/ounce level. That’s the seven-month high for gold. Also, major stock benchmarks are likely to test the November lows amid jitters in the financial sector.

Even though there are predictions that gold could back fall after the stimulus plan became a law, that hasn’t happened. In contrast, investors are increasing their holdings of gold as a safe haven to preserve their wealth while the stock market continues to decline. Right now, gold is trading well above its 50- and 200-day moving averages, a clear indication of the uptrend of gold. (click to enlarge)

Investors’ appetite for physical gold, such as bars and coins, has driven up share prices of exchange-traded funds (ETFs) specializing in precious metal as well. For instance, take a look at SPDR Gold Trust Shares (GLD), the world’s largest gold-backed ETF. GLD gained 3% in 2008 and 6.9% so far in 2009.

The reason investors are also chasing GLD is that it offers investors an easy way to invest in the bullion without having to hold the metal themselves (you will have many more things to consider, such as storage and insurance, if you want to hold physical gold yourself). If you invest in GLD instead, your investment will reflect directly the price of gold because GLD’s share price is determined based on 1/10th of an ounce of gold. SPDR Gold Trust buys and stores physical gold to back GLD prices. In fact by tracking holdings of SPDR Gold Trust, you can get a sense of the demand for gold. Currently holding 985.86 tonnes of gold, a record level for GLD, the indication is that demand is strong.

If you are interested in investing in precious metal ETFs, check out these funds in gold and silver:

SPDR Gold Shares
iShares COMEX Gold Trust (IAU)
Market Vectors Gold Miners ETF (GDX)
PowerShares DB Gold (DGL)
iShares Silver Trust (SLV)
PowerShares DB Gold Double Long ETN (DGP)
PowerShares DB Precious Metals (DBP)
PowerShares DB Silver (DBS)

Among them, GLD has the largest daily trading volume according to Morningstar data, followed GDX and SLV. Remember, volume matters when trading an ETF. Not only because of the bid/ask spread, but also for the survival of the fund.

Stock chart from INO Stock Analysis

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

My Disclosure: Long DGP and GLD – 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

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

Want a Way Out of the Economic Stupidity? Buy Gold – Seeking Alpha

By: Adam Lass of Wave Strength Options Weekly

For every analyst arguing one side of the above arguments, you have another analyst strongly arguing the opposite. And often you have the majority of analysts taking one position in the above arguments and then flip-flopping like a politician to the opposite position just two months later if things move the opposite way from their predictions.

Make 203% as Washington becomes a global laughing stock

According to our nation’s new “Intel Czar,” the economy is the number one threat to the U.S. right now.

In testimony before the Senate Intelligence Committee, National Intelligence Director Dennis Blair warned that: “The longer it takes for the recovery to begin, the greater the likelihood of serious damage to U.S. strategic interests.”

Now, one ought to keep in mind that Blair was addressing the committee just a day or so before Congress would be disgorging the bolus known as the 2009 Stimulus Act. As such, Blair, with his 49-page statement, was just one more player in the administration’s full court press.

Our Own Worst Enemy

Still, Blair does make some interesting points: Suddenly, al-Qaeda is no longer the top-listed actor. Indeed, most of the “Axis of Evil” has fallen several notches down the old hit parade.

North Korea’s current or Iran’s future nukes? Still salient, but not “Number One with a Bullet,” as old Casey Kasem used to say. Russian territorial belligerence and Chinese currency intransigence? Worrisome in the long run, but still not the top threat.

No, Washington’s Numero Uno spy tells us that our worst problems stem from the rot within. Or, to quote the ever-so-sage Walt Kelly: “We have met the enemy, and he is us.”

Our Newest Secret Weapon: The Dollar Bomb

The grand economic downturn (wow, that is such an elaborate way to avoid saying “depression”) presents two key security issues. The first seems obvious enough: We need cash to fully fund our military.

I suspect that this is less of a problem than it seems at first blush. Coming up with more dollars these days is actually remarkably easy: Washington just prints as many as it wants.

In fact, this may even turn out to be a bit of a blessing in disguise (okay, it’s a really good disguise, but bear with me here). A great way to get more bang for your newly imagined bucks would be to hand them off to military contractors, who could then hire more workers to build more armored troop carriers, which could then be blown up in Afghanistan. Then we just do it all again!

Bingo: You’ve cut unemployment and sopped up excess industrial capacity in one fell swoop! Hey, it worked for LBJ and Nixon, right? Right? Hey, stop throwing those “Whip Inflation Now” buttons at me!

The Price of Weakness

Let’s move on to issue two: The longer this debacle continues, the more folks in odd corners of the world might get the idea that maybe those “‘Mericans ain’t so smart after all.”

Much like Britain in its day (an apt comparison, since we pretty much bought our empire used from the Brits at the end of WWI), global control pretty much depends on the projection of the image of power. When that image falters, suddenly café agitators round the world have a much easier time persuading recruits to run around with Kalashnikovs and C4 undergarments.

And indeed, if you dig deep into Admiral Blair’s report, he does mention that al-Qaeda’s successful recruitment of Westerners over the past two years is making it increasingly difficult to play “Spot the Terrorist” at airports.

Hard to March When You’ve Shot Yourself in the Foot

But a mere economic downturn could not make us look but so dumb. Seriously, these things happen all the time, without risking national security. No, what makes us look inane and weak is the way in which our ineptitude has exacerbated a downturn into a full-blown crisis.

An example: Over the past few days, Justice and I have both bemoaned the current Secretary of Treasury’s glacial pace. It’s not so much that we want to see trillions in funny money dumped on us. It’s just that we wish they would rip the damn bandage off and move on already.

After weeks of promising to reveal his latest scheme, the best we got was a promise to come up with a schedule for formulating a plan, along with some vague threats to further “stress test” banks that have obviously already failed any sort of common sense test.

“It’s the Other Guy’s Fault. Oh Wait, I Am the Other Guy”

After calming down a bit, I actually went so far as to check with some connections I have in Washington as to why Geithner is moving so slowly. The current excuse coming out of the Treasury? The “New Team” has been unable to hire adequate expertise to figure out what to do next.

As I pointed out last week, the “New Team” is pretty much the “Same Old Team” that screwed things up in the first place. Indeed, the whole reason we were told to tolerate them was because their prolonged exposure supposedly ensured their expertise on the topic.

No wonder folks outside our borders are beginning to think we are stupid.

Turning Ineptitude Into Gold

There is one place where they are treasuring our fiscal inanities. Canada is enjoying a (relative) boom at our expense. Whereas the benchmark drop for most of the world’s markets has been hovering around 7.3% so far in 2009, Toronto’s TSX composite is down a mere 2.7%.

What’s propping things up north of the border? Gold, my friends.

Barrick Gold (ABX) and 11 of their fellow miners are up some 5.2% as a group this year. And it looks like this boom is nowhere near clapped out.

And why should it be, when guys like Euro Pacific Capital’s Peter Schiff are calling for gold to increase another 60% before the dust settles. Think that’s a speculative call? Heck, you can make a pure value argument for these guys.

After being bludgeoned by 14 months of recession and a 47% share price crash, one might imagine that U.S. stocks ought to be pretty darned cheap right now. And despite all this damage, the S&P 500’s trailing P/E is hanging out around 29.1, some 40% higher than at the market’s absolute top back in October 2007. Barrick’s P/E of 18.88 beats that by some 35%!

Now if you were looking for a way to turn our foolishness into treasure, you could simply do as the Canadians do, and buy shares of ABX. That increase in gold ought to bump up the share price some $20 between now and mid-summer.

If you were interested in a bit of leverage, you could easily pick up mid-dated ABX call options. That same $20 spike would offer you gains as high as 203%.

Disclosure: no positions- Adam Lass

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

My Note: Of course I agree with the above article but “no positions?”. You gotta play if you want to get paid!… – 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

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

The following is a Very Interesting Article! – jschulmansr

In Today’s Enviroment, Neither Technical Nor Fundamental Analysis Alone Will Work-Seeking Alpha

By: J.S. Kim of SmartKnowledgeU

In an extremely difficult investment environment, it is often difficult to know who to believe. Deflation or inflation? Have financial stocks bottomed or do they have much more to fall? When gold corrects sharply, is the gold bull over or still alive? Is oil heading to $20 a barrel or $80 a barrel?

For example, when we look at oil prices, oil has plunged from $147 a barrel to less than $35 a barrel in 7 months! During this time, the deflationists have been out en masse in the mainstream media, claiming that plunging oil prices were directly attributable to plunging demand worldwide from economies that were stagnant. For example, here’s a link to a story that seems to infer that plunging oil prices are caused primarily by plunging U.S. demand and growing U.S. inventories. Though it would be ignorant to ignore the effect of a slowing global economy on demand for crude oil and its effect on lower crude oil prices in the futures markets, it would be equally ignorant to attribute the majority of crude oil’s plunge to a shrinking global economy as well.

How many people really believed that when we had $147 a barrel crude oil prices that this price was solely attributable to skyrocketing demand?

Instead, I can assure you that these stories have been planted to distract you from the real culprit of plunging oil prices –fraud, manipulation of crude oil futures, and political scheming to try to save the U.S. dollar. The plunge in oil prices, after the fraud that caused the run-up to $147 a barrel, is most likely more significantly attributable to the root of this global crisis – a monetary crisis – than slowing GDP rates of world economies. There is much more to the story of any continuing and extended weakness in the United States Oil Fund, LP (NYSE:USO) than just sluggish demand from slowing world economies. Has global demand really shriveled so drastically to account for a 76% free fall in crude oil futures prices?

I’ve taken the stance for a long time now that the extreme volatility we have experienced in gold, silver, and oil futures markets is most likely nearly entirely driven by Wall Street manipulation and free market interventions executed by the U.S. Treasury and the U.S. Federal Reserve. For years, I’ve argued that Central Bank and government intervention into these markets have created massive distortions. In fact, the free-market interventions are so obvious now that even mainstream investment figures such as Donald Coxe, chairman and chief strategist of Harris Investment Management in Chicago, have made similar claims in recent months.

Unfortunately, if you rely solely on technical analysis and fundamental analysis in today’s investment arena without accounting for or anticipating government and Central Bank interference into free markets, you will not understand how to make money. The problem with U.S. regulatory agencies is that they have been asleep at the wheel for the last decade and have been non-responsive to those individuals that have been awake. Repeated requests to investigate fraud in stock markets and commodity markets have been ignored over the past decade by top U.S. regulatory agencies, even when the requests were accompanied by overwhelming evidence.

U.S. Representative Gary Ackerman [D, NY] demonstrated his understanding of the worthlessness of these regulatory agencies when he berated the SEC for aiding and abetting massive fraud in U.S. Securities markets. (Click to view)

I strongly believe that fraud on a similar scale is taking place right now and has taken place for years on the COMEX gold and silver futures markets. In the future, if U.S. Congressmen finally realize this, you will see U.S. Congressional hearings of a similar contentious nature occur with the U.S. Commodity Futures Trading Commission. Currently, there is a mountain of circumstantial evidence of very large players attempting to manipulate gold and silver futures contract prices, even during this recent spike in gold and silver futures prices.

Remember, Harry Markopolos presented evidence of the Bernard Madoff $50 billion fraudulent Ponzi scheme to the SEC over a period of 9 years and was repeatedly stonewalled and ignored by the SEC (Securities Exchange Commission). Markopolos stated in testimony before the U.S. Congress that the SEC was protecting fraudsters instead of prosecuting them and “that’s why they shy away from the big cases.”

Asked by lawmakers if his warnings to the SEC could have been more explicit, Markopolos said, “I even drew pictures so I don’t know how I could’ve been more explicit.” He added the agency “roars like a lion and bites like a flea…The SEC was never capable of catching Mr. Madoff. He could have gone to $100 billion” without being discovered, Markopolos testified. “It took me about five minutes to figure out he was a fraud.”

Just like Markopolos, it did not take me long to conclude that massive fraud is and has been occurring in the New York-based gold and silver futures COMEX markets. And just like Markopolos, I also presented what I believed to be strong evidence of this fraud to the commissioners of the overseeing regulatory agency, the Commodities Futures Trading Commission [CFTC]. While my efforts were acknowledged by the CFTC, in their own words, as “great info”, no action has been taken upon my request for an investigation into fraudulent activity in the gold futures markets. I felt that I certainly presented enough compelling circumstantial evidence enough to warrant an investigation, but so did Markopolous, and he was ignored for nine years.

On the other hand, Ted Butler’s tireless efforts in presenting fraudulent COMEX activity to the CFTC has resulted in an internal investigation but as of yet, there still has been zero action as a result of this investigation. In the end, all investigations are ultimately worthless to the common investor unless the investigations are sincere. As Markopolos stated in recent U.S. Congressional testimony, he believes that the regulatory agencies’ intent will never be sincere until a drastic overhaul of the agencies occurs.

Markopolos hit the nail on the head for the biggest reason why the efforts of people such as myself and and many others to expose fraud in certain markets is being ignored by regulatory agencies: “What you’ll see is the [regulatory agencies are] busy protecting the big financial predators from investors and that’s their modus operandi right now.” In the case of gold and silver futures markets, when the agencies involved in the fraud most likely include the U.S. Treasury and the U.S. Federal Reserve, you will never see a true investigation materialize. So if, as investors, we are all fighting an uphill battle against fraud that has been imprinted within the “system” for a while, what is my point, right? My points are the following:

(1) Fraud has been part of the system for a while now, it will continue to be part of the system, and every investor needs to anticipate fraudulent activity to be profitable in these markets. Reliance on technical and fundamental analysis only will most likely lead to poor analysis.

(2)During periods of great economic crisis such as the one we are facing today, fraudulent activity will increase.

(3) Fraudulent activity manifests itself in the form of great distortions in stock markets and commodity markets. Why do you think you have seen financial stocks bounce around from $40 a share one month to $85 two months later, back down to $30 a share six months later, and up to $90 a share one month later? Why do you think you’ve seen gold plunge from over $1,000 an ounce in futures markets to $680 an ounce and then climb right back to more than $950 an ounce?

So the lessons to be learned are these:

(1) Volatility, due to massive fraud and free market intervention, is here to stay.

(2) To know how to play this volatility, you have to be able to analyze the situations properly and understand if fraudulent schemes are sustainable over the long-term or if they are only sustainable over the short-term.

(3) By taking step (2) into consideration above, you will know if rising financial share prices are a house of cards ready to tumble again or if they are a good long term play; if tumbles in gold prices should be interpreted as the end of a gold bull or a great buying opportunity; if oil prices are likely to remain low for a while or if a rapid spike in prices is likely in the future; and so on.

Do this, and you can make volatility your friend and not your enemy, because for now, volatility is here to stay.

My Note: I highly Recommend visiting SmartKowledgeU and signing up for the free newsletter, I did… – jschulmansr

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

One other note: In Comex Silver it is a few large banks which represent over 90% of the short interest, and Gold has a similar situation where the shorts there are in on an average around $750 – $850oz, where the short positions where initiated. How long will they be able to hang in there? If Comex actually follows thru along with the CFTC in their investigation and these positions come to light… Wow what a potential “Short Squeeze”! We could see a frenzy where Gold will shoot to $1500 and Silver to $25-$50 oz easy. – We will see… – 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

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

Gold Around the Globe: Setting Records – Seeking Alpha

Source: Monday Morning

Gold’s performance in 2008 could look like a real yawner.

After all, it only managed to eke out a 5.7% gain. Not the kind you’d normally brag about over cocktails.

As we rang in the 2009 New Year, gold at $850 an ounce (in U.S. dollars) was roughly 15% below its all-time record high, set in March 2008.

But everything in life is perspective. In a year when oil lost 59%, the Standard & Poor’s 500 Index was down 38%, and the Dow Jones Industrial Average gave back 30%, things could certainly be worse for gold bullion investors. Much worse, in fact. Just ask the typical investor about his portfolio: He’s likely to grumble, and change the subject.

As it turns out, 2008 marks the eighth consecutive year that gold has clocked a positive annual return. It’s now starting to look like the trade of the decade.

Truth be told, many are disappointed with gold’s behavior during the October-November stock-market panic, too. But here again, it’s all relative. When we compare the Standard & Poor 500 Index (a proxy for the market) with the SPDR GLD Trust (an ETF proxy for Gold) (GLD), we know where we’d rather have our money.

As this chart shows, from September to December, gold, despite its volatility, ended essentially flat in U.S. dollar terms, yet shows a marked recovery since the end of November. The S&P, on the other hand, looks like an Alpine ski hill heading for Jackson Hole. The divergence between the two is remarkable.

During last fall’s violent stock market downdraft, the U.S. Dollar Index (USDX) put on a spectacular, unprecedented two month – 15% rally. Spectacular, because to get even a 10% move over an entire year is a big deal for any major currency.

But gold is still (mistakenly) considered by many as the “anti-dollar.” So its behavior during a U.S. dollar rally does not come as a complete shock in hindsight.

Yet the gold price we see is misleading in two significant ways.

First, try going out there and buying an ounce of physical gold. In normal times, the average coin dealer will charge in the neighborhood of 3% above spot price. This past November, that premium shot up by 3-5 times, with many charging 10%-15% above spot, plus eight weeks or more for delivery. So when buying an ounce of gold, how realistic is the spot price, especially during a panic? In the midst of the mayhem, one larger Canadian precious metals dealer, Kitco, saw its list of products shrivel overnight from about 16 items to merely three, due to a lack of supply.

Second, gold is quoted in U.S. dollars around the world. But India is the single-largest gold market, with the rest of Asia showing a strong affinity for the universally cherished yellow metal. Throw in Europe and Latin America, and you can see how most of the world looks at gold through entirely different lenses – through their own currencies.

To be fair, let’s gain some distance from our own provincial viewpoint by taking a small trip around the globe. This way, we can get a handle on how the price of gold has behaved elsewhere.

Euro Gold

During the anomalous spike in the U.S. dollar last fall, the European euro lost considerable ground against it. So gold priced in euros shot up. March saw the record of near € 650 gold bettered in September by € 670 gold. Europeans were clearly happy with gold’s behavior, which currently sits around an all-time euro high of € 720.

UK Gold

Gold priced in British pounds sterling has performed astoundingly well. Brits saw gold at £500 per ounce in March, then £530 in September, and £600 by year’s end. Gold, now at £650, is still setting new record levels, dating back to 1717 when they began keeping records.

Canadian Gold

Canadian gold investors have few gripes. In March of last year, gold was trading at C$1,003; by late September, the price was up by nearly C$50. And right now, it hovers at a record C$1,160 level. Despite the amazing strength the Canadian dollar has shown in recent years, gold has performed very well in this resource-based currency.

Brazilian Gold

Brazil is the most populous country in Latin America. And gold’s performance in the Brazilian real did not disappoint either. The record set in March at R$ 1,719 per ounce was easily surpassed in September with a sharp spike to R$2,069. Today, it sits at R$2,115; which is R$415, or 24%, above its March levels.

Indian Gold

India’s currency is the rupee (INR). And for traditional, cultural, and even practical reasons, Indians are the biggest gold investors on the planet. As in much of the rest of the world, gold set a record near INR41,000 in March. It then pulled back in July, but spiked to a new record near INR43,000 in September. At roughly INR45,800 today, gold is priced way above its previous March and September 2008 record levels.

Chinese and Japanese Gold

If anyone should be disappointed with the performance of gold over the past year, it is investors in China and Japan. Gold’s record in March, at CNY (yuan) 7,050, has not been bettered yet. September saw a spike back near the CNY6,250 level, and gold currently rests at a price of roughly CNY6,400 per ounce.

Japan’s gold price hasn’t fared much better. The March record near ¥100,000 per ounce remains unchallenged. Gold managed a rally to ¥95,000 in September, but has since fallen back to the ¥84,850 level.

So as the U.S. dollar rose late last year, the Chinese yuan and Japanese yen were the two major currencies that tagged along, making gold investors relative losers in those nations. The Chinese and Japanese 2008 gold experience differs little from the American one. And yet, gold in U.S. dollars is currently just 8% shy of its all time record at $1,023.50.

Despite the recent American, Chinese and Japanese gold experience, most of the rest of the world’s gold investors are a happy lot. When converting the price back into their home currency, those investors are basking in its glow, while gold sits at or near all-time record highs.

For now, however, gold is still priced in dollars for many market participants. The same is true for all other commodities. I expect that will change over the next several years. Scores of foreign central banks have indicated their intentions to lower levels of dollar-denominated reserves to reduce exposure. Meanwhile, Kuwait has dropped its dollar peg, opting instead for a basket of currencies. And Iran already trades some of its oil for non-U.S. dollar currencies.

As the U.S. dollar continues to lose value – and hence, its influence – on the world stage, commodities are increasingly likely to be priced either in local money, or to be quoted in a variety of currencies.

Heck, commodities may even be priced in quantities of gold before this is all over. Gold investors can only hope. For now, as new price records are regularly being established, most aren’t complaining about the value of their gold.

With their sights set on breathtaking new heights to come, American, Chinese, and Japanese gold investors are sure to see their patience rewarded, as have already so many of their fellow investors the world over.

Original post

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

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

In yesterday’s post I included a partial list of tier 2, tier 3 junior mining companies to check out, and after doing your due diligence; potentially invest in. Some Bargains in there at or near book values.

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

Look to Junior Miners as Gold Feeding Frenzy Ensues – Seeking Alpha

By: James West of Midas Letter

Ever seen what happens to a piece of meat thrown into a tank full of vicious piranhas?

The water is whipped into a froth and within seconds the meatless bone sinks to the bottom. There’s virtually nothing left.

The same thing is about to happen in the gold bullion market.

After some apparent weakness in Asian markets, gold powered higher Monday as news of the Japanese economic rout sent global markets into freefall. The only thing that stopped it from happening in the Unites States was the mixed blessing of a holiday keeping markets closed.

I say mixed, because a second day of selling overseas means the American market will have two days of pent up selling pressure to be unleashed as the market opened Tuesday morning.

The news keeps getting worse out of global G7 economies, and that has investors flocking to gold in recognition of its safe haven role.

ETFs are the biggest consumers of physical gold right now, and last week global ETFs took down the equivalent of 5% of the annual world gold production in just one week.

SPDR Gold Trust GLD.PGLD.A, popularly known as GLD, said the gold bullion it owned rose by more than 100 tonnes to 970.57 tonnes as of Thursday, which marked the biggest weekly gain in the history of the gold-backed exchange-traded fund.

One does want to bear in mind that all ETFs are not created equally. There are very few, in fact, that hold their full portfolio worth completely in physical bullion. It is incumbent upon the investor to read carefully the information provided by ETF vendors. While there has yet to be an instance of ETF-related fraud (that I’m aware of), ETFs are nonetheless a paper representation of the physical bullion, and therefore presents the opportunity for subterfuge.

This is the phase of the secular gold bull that silences all gold critics, and puts smiles on the faces of gold bugs that is so wide their heads threaten to fall in half! This is also the phase where the herd mentality starts to get folks looking around for the nearest bandwagon to jump on. Most of the bandwagons have rattled off into the sunset, though, so there will be a lot of head scratching as the left behind try to figure out how to get in the game.

Investors need to beware though. As gold demand increases so will volatility, as the sheer number of investors means profit-taking is likely to cause same-day leaps and drops by as much as $100 per ounce.

That’s because there are a lot of investors who will be taking profit off the table as the price ratchets higher, and the see-saw effect threatens tender hearts with life-threatening cardiac sincerity.

If you’re late to the game, the trick might be to a look a little further down the road than where the vultures are already fighting over the last few American Eagles or Krugerrands to what will inevitably be the next meal for the hungry mob – mining companies.

In particular, mining companies that boast near-to-production Canadian National Instrument 43-101 compliant resources. There are more than a few of them out there. With the intense interest that will follow a gold price spike, these companies will be able to raise a lot of capital at premium levels, and that will speed up the timeline to production in a lot of cases.

Other companies are not going to themselves go into production, and instead are developing huge deposits for joint venture or outright sale to major and mid-tier mining companies. Important here is the existence of agreements with aboriginal groups (if applicable) and stable democratic jurisdictions. Projects in Canada, the United States, Australia, and Mexico rank highest, with those in Peru, Chile, Colombia and Argentina, followed by African nations. Highest risk are those with socialist governments or military regimes, such as Ecuador, Venezuela, Russia, Mongolia.

Information is the key to successfully investing in the juniors, and keeping abreast of developments on a day-by-day basis is the secret to not losing your shirt.

Investing in juniors is risky, but in the current environment, investing in blue chip stocks, treasuries, mutual funds and financials is far riskier.

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

Gold Set To Rise Even Higher – Seeking Alpha

By: Mark O’Byrne of Gold and Silver Investments

After another strong week last week (both gold and silver were up some 3%) despite falling stock markets, gold continues its outperformance of other asset classes due to safe haven demand. It has surged again overnight in Asia and is now at 7 month highs and looks very likely to target its record high of $1,000/oz in the coming days.

Resistance at $950/oz was sailed through very easily overnight and the next level of resistance is $980/oz prior to a likely challenge of $1,000/oz in the coming days.

click to enlarge

With the global economy slowing very sharply, international demand remains very strong as seen in gold coin, bar, certificate and exchange traded fund demand. ETF holdings of the world’s largest gold-backed exchange-traded reached a record 985.86 tonnes as of February 13, up 15.29 tonnes or 1.6% from the previous day. The trust’s gold holdings are up a very significant 205 tonnes, or 26% in just the first six weeks of the year (see chart below).

Besides increasing retail, pension and institutional demand, many central banks are increasingly favourable to gold. Russia’s central bank has increased gold’s share in reserves, and plans to continue this trend in 2009, first deputy chairman told Reuters in an interview on Monday. The ECB Eurosystem’s reserves of gold and gold receivables increased EUR 1 million to EUR218.320 billion in the week ended Jan. 30.

Gold’s strength in recent days is particularly impressive as it comes in conjunction with a stronger dollar. However, this “strength” is more a function of a weakening in most fiat currencies internationally versus the dollar.

Gold has risen above £675/oz and €760/oz reached new record highs in many other currencies such as the South African rand and the Canadian dollar.

This bodes well for gold prices in the coming weeks as when the dollar begins to weaken again in the coming weeks, which seems very likely, then gold should rise even more sharply and target levels above $1,200/oz in the coming months.

Importantly, the commonly quoted COMEX gold price is actually lagging considering the extent of international demand as seen in the charts above.

And this marked rise in demand comes at a time when world gold production is actually falling.

While investment demand remains very strong and is increasing, there are growing fears about the declining supply of gold – the world’s mine gold supply has been falling in recent years and it fell to 2,385 tonnes last year, down 3.6 per cent from 2007 (despite the rise in prices in recent years).

This is a recipe for markedly higher prices in the coming months and the inflation adjusted high of some $2,400/oz looks more and more likely in the next few years.

Disclosure: no positions

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

Gold -“Catch Me If You Can” – Whichever way you invest remember to do your due diligence especially if investing in the “junior” gold mining companies. I usually only invest in those companies which have production or are set to start producing in the very near term future… – 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

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

Wake Up Call!

16 Monday Feb 2009

Posted by jschulmansr in 10 year Treasuries, 20 yr Treasuries, Bailout News, banks, Barack Obama, bear market, bull market, capitalism, central banks, China, Comex, commodities, Copper, Currencies, currency, Currency and Currencies, depression, dollar denominated, dollar denominated investments, economic, Economic Recovery, economic trends, economy, Federal Deficit, federal reserve, Finance, financial, Forex, Fundamental Analysis, futures markets, GDX, GLD, gold, Gold Bullion, Gold Investments, gold miners, hard assets, How To Invest, How To Make Money, hyper-inflation, inflation, Investing, investments, Japan, Jschulmansr, Junior Gold Miners, Latest News, majors, Make Money Investing, market crash, Markets, mid-tier, mining companies, mining stocks, monetization, palladium, Peter Brimelow, physical gold, platinum, platinum miners, precious metals, price, prices, producers, production, rare earth metals, recession, resistance, risk, run on banks, safety, Saudi Arabia, silver, silver miners, small caps, spot, spot price, stagflation, Stimulus, Stocks, The Fed, TIPS, Today, U.S. Dollar, uranium

≈ 1 Comment

Tags

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, dollar denominated, dollar denominated investments, Doug Casey, economic, economic trends, economy, Federal Deficit, financial, Forex, futures, futures markets, gata, GDX, GLD, gold, gold miners, hard assets, hyper-inflation, 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, 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, small caps, sovereign, spot, spot price, stagflation, Technical Analysis, TIPS, U.S., U.S. Dollar, volatility, warrants, XAU

The U.S. Markets are closed today yet something very interesting is starting to happen. Can you sense it? The shift from deflation to inflation. The “smart money” big investors are sensing it and starting to jump into Gold in a big way! Gold Prices are holding steady overseas above the $935 support level. Todays articles show the why and how of this move by big money into Gold, read on… and Good Investing! – jschulmansr

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

Something still stirring in precious-metals pond – Market Watch

By: Peter Brimelow of Market Watch

With some wild swings, gold gained about 3% on the week, closing Friday at $941. The Phx Gold Silver Index (XAU:

Technicians were impressed. Long-term chartist Martin Pring is deflationary-minded at present. Two weeks ago, he remarked that if certain trend lines were broken, “I would be dragged kicking and screaming into the bullish camp”. But now he simply says in his recent weekly Intermarket Review: “Not much to add to my recent bullish comments. Both the metals and shares recently broke out of giant patterns … With our Global Gold Index at a new all-time high – enjoy the ride!”

Pring also flags a powerful conceptual reason for the gold move. Discussing a chart of the inflation proofed Treasuries, and using the iShares:Lehm TIPS TIPT as a proxy, Pring says: “Here we see the inflation protected bonds, or TIPs. Who needs these in a deflation? But look, the price just broke to the upside … and volume is expanding! When we look at the longer term we see it’s still in a primary bear market … However this week’s breakout suggests a turn is likely.”

In other words, the bond market is getting seriously concerned about inflation. See Website

The Privateer, being Australian, is even more direct in its weekly remarks: “Why is gold going up? It is certainly not in spite of the global mania for bailout programs now sweeping the world. It is because of these programs. The more ‘liquid’ the global financial powers that be make their money — by creating it in ever larger swathes — the more they run the risk that the world starts to look elsewhere for a viable and trustworthy way to exchange goods and services.”

The Privateer’s invaluable $US 5X3 point and figure chart has now broken above its last downtrend, although its proprietor would like more progress: “This week the chart got up to and just above the second of the two downtrends. The ‘poke’ above the line which came with Gold’s close above $U.S. 945 on Feb. 12 is not yet decisive, a close above $U.S. 960 would be.” See Website

Silver, which I reported last week was exciting the gold bugs by showing unusual leadership characteristics, persisted — rising 3.5% on the week, including on Friday despite gold’s fall, and pushing the Gold/Silver ratio to 68.9 from last week’s 69.5.

But the star of the week was the reported bullion holdings of Spdr Gold Trust. (GLD:

GLD is regarded with deep suspicion by the radical gold bugs who think the metal’s price is manipulated. But at the least it has to been seen as a measure of the Western Hemisphere investment appetite for gold.

In contrast, Le Metropole Cafe monitors Indian gold imports and reports that, unusual in the past few years, the world’s largest gold consumer is standing aside for now. See Website

Interestingly, two sentiment indicators did not react much this past week. Mark Hulbert’s HGNSI on Friday stood unchanged at 60.90%. MarketVane’s Bullish Consensus actually lost a point on Friday to 78%, gaining only 3 points on the week. See Website

In serious gold moves, MarketVane excursions into the 90s are reportedly common.

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

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! – Buy Safely, quickly, and at low prices, guaranteed! – Bullion Vault.com

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

Major Investors Piling into Gold – Seeking Alpha

By: James West of Midas Letter

Endeavour Financial Corp (TSX:EDV) closed a $100 million equity offering last week, and several other “bought deal” financings point to a strengthening trend: major investors are piling into gold.

The Offering was underwritten by a syndicate co-led by GMP Securities L.P. and Canaccord Capital Corporation (the “Underwriters”). Endeavour will use the funds to support its investment activity in the mining sector with an emphasis in the short term on precious metals.

The first quarter of 2009 has seen well over $1 billion flow into near term and existing mining companies, which is a reflection of the strong gold price amid safe haven demand. With estimates of U.S. government spending reaching as high as $2 trillion, large value investors are increasingly deterred by U.S. Treasury related securities in favour of precious metals.

Newmont Mining (NYSE:NEM), one of the world’s largest gold mining companies, raised US$1.7 billion in a combined common share/convertible debt deal which it will use primarily to fund the acquisition of the remaining 33.33% interest in the Boddington project in Western Australia that it does not already own and the additional capital expenditures that will result from its increased ownership in the Boddington project, as well as for general corporate purposes. Citigroup Global Markets and J.P. Morgan Securities led the placement.
Freeport McMoran Copper and Gold (NYSE:FCX) raised US$740 million through the issuance of 26.8 million common shares at $28 per share;
Kinross Gold Corporation (KGC) announced a “bought deal” financing for US$360 through the issuance of 24,035,000 million common shares US$17.25 per common share. The underwriters were led by UBS Securities Canada Inc.;
Osisko Mining Corporation (OSKFF.PK) entered into another “bought deal” led by Thomas Weisel Partners and BMO Capital Markets. The offering of 77 million units at $CA4.55 a share will gross CA$350.4 million. Osisko is developing the 6.28 million ounce Canadian Malartic Project Quebec.

Smaller deals are becoming more common for junior emerging gold companies as well. Among the recent actions:

Centamin Egypt (CELTF.PK) raised $CA69 million through the issuance of 106.2 million shares at CA$0.65 per share for development and construction of the Sukari Project in Egypt. This financing was led by Thomas Weisel Partners and Cormark Securities.
Romarco Minerals Inc. (TSX.V:R) announced a bought deal Friday worth $20 million for the development of the Haile Gold Mine in South Carolina. Romarco issued 54 million units at $0.38 each. The financing was led by a syndicate of underwriters led by Macquarie Capital Markets Canada Ltd. and including Paradigm Capital Inc. and GMP Securities L.P.
International Tower Hill Mines (THM) sold 2 million common shares at $2.50 per share for gross proceeds of CA$5 million, which will be directed towards further development of its projects in Alaska and Nevada. The placement was a “bought deal” led by a syndicate of underwriters led by Canaccord Capital Corporation and including Genuity Capital Markets and GMP Securities L.P.
Exeter Resource Corporation (AMEX:XRA) raised CA$25.2 million at $2.40 a share for development of its assets in Argentina and Chile.

And it isn’t just gold that is attracting big financing. On February 10th, Uranium One (SXRZF.PK) announced a $270 million investment by a Japanese Consortium comprised of Tokyo Electric Power Company, Incorporated (TKECF.PK), Toshiba Corporation (TOSBF.PK), and The Japan Bank for International Cooperation.

Concurrently with the execution of the subscription agreement, Uranium One has also entered into a long-term off-take agreement and a strategic relationship agreement with the Japanese consortium, both of which will become effective upon closing of the private placement.

The off-take agreement provides the consortium with an option to purchase, on industry-standard terms, up to 20% of Uranium One’s available production from assets in respect of which Uranium One has the marketing rights.

Junior Uranium company First Uranium Corp. (FURAF.PK) was also the beneficiary of a bought deal financing led by Macquarie Capital Markets this week, which saw First Uranium place 20.5 million units of its shares at $3.00 per unit for gross proceeds of $61.5 million. First Uranium will direct the funds towards the development of the Ezulwini Mine in South Africa.

Endeavour Financial is followed by many analysts and newsletter writers for its robust project pipeline.

Brien Lundin, who publishes the Gold Newsletter, says one of the main reasons he follows Endeavour Financials is because of management – especially Mr. Frank Giustra. He says this team now senses a market bottom, as they are raising capital to go after assets that now cost a fraction of what they did last year, or even six months ago. He intimates strongly that his subscribers should do the same, using Endeavour as their proxy. A mix of entrepreneurial expertise and value investing, he outlines what the smart money is doing now.

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

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

Gold: Now Demonstrating Trust in Obama – Seeking Alpha

By: Boris Sobolev of Resource Stock Guide

Gold is Starting to Believe the Obama Administration

Despite making loud headlines about stimulating the economy, the US government has been unable to raise the level of optimism among the general public, while the stock market seemed to drop into a deep state of apathy.

Last week we received the long-awaited economic stimulus packet as well as the so-called plan for the rescue of the US financial system. We have already voiced our skepticism regarding the structure of the stimulus and its potential effect on the economy in a prior article.

As far as the size of the $787 billion package, it is clear that it is too small and too spread out into 2010 and beyond to be called a stimulus. $787 billion is just 5.6% of the GDP and when spread over two years will account for just 2.8% at a time when many industrial economies around the world are contracting by 5-10% per year. It can only be called a life support package, not a stimulus.

Japan, which got into a deflationary spiral as a result of a real estate bust, spent much more than 100% of its GDP since 1991 just to see its economy stagnate. Construction related investment alone ate up $6.3 trillion of public funds over the 17 years since 1991. Infrastructure spending accounted for $350 billion to $400 billion per year for the first half of the 1990s for an economy half the size of the United States.

The results of the Japanese fiscal stimulus were unimpressive, although it could be argued that without this stimulus, it could have been much worse.

With the United States facing similar post bubble dynamics as Japan did twenty years ago, how can we expect greater effectiveness of the Obama stimulus plan when it is insufficient and much of is clearly misdirected?

In reality, this economic stimulus package has to be viewed as only the first one of many yet to come. By having the US dollar as a world reserve currency, the US government can be much more effective than its Japanese counterpart in printing its own currency.

We will soon be quantifying the size of the government stimulus plans in trillions rather than in billions. Within the next 3 to 4 years, government spending can easily reach $10 trillion, doubling the size of the US government debt.

One of the main problems with this crisis is that the majority of the debt bubble is related to residential real estate, which does not produce cash flow, but only seems to eat it up. As home prices decline and unemployment rises, debt serviceability is worsening dramatically.

In order to avoid social unrest and to maintain popularity, the Democratic majority will face two realistic options which could begin to address the economic disaster:

Forgive portions of mortgage debt which cannot be serviced. But who will pay for the losses – clearly not the weak banks. Uncle Sam would pick up the tab by printing more currency.

Print new dollars to increase the nominal income of the indebted population through tax cuts, job creation, jobless benefits and various social spending.

There is no other politically possible way out of this mess other than to run the printing press. The way of the free market via bankruptcies is not popular so there is no sense to even discuss it.

Within hours President Obama will sign the stimulus into law, but we are sure that this is just the beginning of the government spending campaign.

As far as the US banks, the new US Treasury Secretary seems to be mimicking his predecessor, Hank Paulson. The essence of the announced “plan” is as follows: “We are absolutely sure that we will save our banking system, but are yet unsure of how we will do so. We will find out very soon, however. Stay tuned”.

While not knowing what to do with the banking system, the government is trying to temporarily act as one. The only specific point in Geithner’s announcement is the plan to increase the Term Asset-Backed Securities Loan Facility (TALF) facility from $200 billion to $1 trillion. This joint initiative with the Federal Reserve expands the resources of the previously announced, but not yet implemented TALF.

In essence, TALF will support the purchase of loans by providing the financing to private investors. In theory, this should help unfreeze and lower interest rates for auto, small business, credit card and other consumer and business credit. Treasury will use $100 billion to leverage $1 trillion of lending from the Federal Reserve. The TALF, which will potentially have greater effect than the stimulus plan, passed in a blink of an eye without any debate.

The markets around the world have deteriorated in deep state of indifference to the first round of actions of the new US government. Only gold is starting to demonstrate its trust in the Democratic majority. Since the inauguration, investors poured $6 billion into gold purchases through GLD alone. This is an increase of 210 tonnes in gold holdings or 24% in less than a month.

click to enlarge

Huge investment demand around the world has put an end to a steep gold correction of the second half of 2008. Most intermediate and long term technical indicators for gold have turned decisively bullish. A test of new highs by gold is very probable this spring.

In sum, gold investors are starting to believe that the Obama Administration sees one way out of economic problems which will for sure resurrect inflation.

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

My Note: Did you catch that? They’re believing alright, not that Obama will get the situation fixed, just that he will cause inflation; yes even hyper-inflation , maybe even stagflation! Jump into Gold now before it’s too late… -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! – Buy Safely, quickly, and at low prices, guaranteed! – Bullion Vault.com

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

Moody’s, S&P Dole Out Global Downgrades – Time to Go Gold? – Seeking Alpha

By: Mark O’Byrne of Gold and Silver Investments

Gold rose again on Thursday, briefly rising above $950/oz and was up 0.6% on the day. Determined selling on the open in Asia saw gold fall and profit taking has seen gold fall in Asia and in early trading in London. This is to be expected as gold had risen by more than 15% in less than a month.

US, UK Credit Ratings Look Set to Be Downgraded

The credit rating agency Moody’s has said that the UK and US credit ratings were being “tested”. In a novel and somewhat bizarre departure, Moody’s has split various “AAA” sovereign countries into three categories based on their strength in weathering the economic storm, denoting Ireland and Spain as the weakest, with the UK and US somewhere in the middle and Germany, France, Canada and the Scandinavian nations at the top.

This will in time be seen as gimmickry. Standard and Poor’s have already downgraded Spain to AA+ and did not create sub grades within the credit rating system.

Some have criticized Moody’s for being “unfair” to Ireland, Spain, the UK and US and have argued that these agencies previously gave almost everybody good ratings, and underestimated risks, but were now going to the other extreme.

This is errant nonsense and the unfortunate fact is that Moody’s, the other credit rating agencies and the vested interests in the financial services industry continue to underestimate risks, as they have done for months and years.

Given the massive deterioration in the public finances and economies of these nations, by right they should be downgraded and unfortunately in the coming months they will inevitably be downgraded.

But Moody’s and all the rating agencies realize that this would compound an already disastrous financial and economic crisis. Many pension funds internationally have mandates or investment guidelines to only invest in “AAA” rated government bonds and if these countries bonds were downgraded, they would be forced to sell those bonds en masse. This would likely see a crash in the already very overvalued government bond markets and see long term interest rates rise quickly and sharply.

The creditors of the US in Russia and China have rightly criticized the ratings agencies for their highly irresponsible practices in recent years and are increasingly nervous about their US denominated assets.

Ratings agency Standard and Poor’s in January downgraded Spain’s sovereign debt rating to “AA+” from “AAA” in January, citing insufficient means to deal with weak growth and a ballooning budget deficit. As they did the sovereign rating of New Zealand. The fiscal position in the UK and US is arguably much worse than in these two countries (Martin Wolf of the Financial Times recently said that major US banks, with their humongous Wall Street liabilities, are insolvent) and thus it seems inevitable that the UK and US will be downgraded in the coming months.

If the US is downgraded, then in effect the reserve currency of the world is being downgraded and this has huge implications for the international monetary system. Not surprisingly there have been op-ed pieces in the Financial Times and the Wall Street Journal calling for a return to some form of gold standard.

The governments of the world are nationalizing and socializing the meltdown in the shadow banking system and the international system with potentially disastrous consequences for us all.

Conditions are set to get markedly worse before they get better and the experience of Argentina and other previously wealthy South American countries may be instructive. The IMF is called in and there are structural adjustments, social services are affected or discontinued, banks nationalized, savings inaccessible, food and energy insecurity rise.

This is a potential reality for large western economies, especially if governments keep trying to inflate their way out of the current crisis. This is leading to massive currency debasement and will potentially lead to very significant stagflation and maybe even what could be called hyper stagflation.

Now more than ever, it is essential that individual savers and investors, companies, pension funds and sovereign wealth funds have an allocation to and directly own actual physical gold bullion. Paper exchange traded funds with all the attendant counter party, custodian, sub custodian, auditing and indemnification risk are speculative trading vehicles and not physical gold.

In these unprecedented economic times, it is irresponsible and extremely high risk not to have an allocation to gold bullion in an investment portfolio.

Disclosure: no positions

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

My Note: No Positions??? Mr. O’Byrne I think you need to follow your own advice above! 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! – Buy Safely, quickly, and at low prices, guaranteed! – Bullion Vault.com

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

Is Gold the only salvation from this Financial Armageddon? – MineWeb

Source: MineWeb

Indications are that the global financial situation could yet get far worse before it starts getting better – particularly in Europe – and gold may again prove to be the only real way of protecting wealth in a continuing global financial meltdown.

Author: Lawrence Williams
Posted: Monday , 16 Feb 2009
LONDON –

“It ain’t over ’til its over” is one of the best known quotations from baseball catcher and coach Yogi Berra and as the global financial crisis unwinds it is very apposite yet again. We ain’t anywhere near the end yet and possibly the worst is yet to come as far as European banks in particular are concerned. Markets have breathed sighs of relief as various banks have been bailed out and stimulation packages are being approved if not already implemented.

But, one gets the feeling that any relief is premature. The debt situation in a huge number of debtor nations – virtually the whole of Eastern Europe falls into this category – is dire and has not really yet fallen into the sights of the investment world – but bankers must be quaking in their shoes as surely they are aware of the potential financial Armageddon that still lies ahead.

And this time it is the already shaky Western European banking sector that is most at risk. US Banks, accused of starting this all, maybe far less vulnerable to the times ahead. True the US financial sector may have got us into this mess, but European bankers followed suit and, in the event, may be shown to have behaved far more recklessly than their American counterparts. It would seem that some of the potential shortfalls being faced would be beyond the financial ability of Central Banks, Governments and transnational agencies like the IMF to sort out. The system is like a house of cards. One major failure could bring the whole house tumbling down.

This is the kind of situation that leads to global nightmares – wars even. Radical extremists get elected to positions of power – as with the rise of National Socialism in Germany after the crash of the Weimar Republic with its hyperinflation. We could be in for a very sticky time ahead as the real implications, and depth, of the financial meltdown catch up with us.

The problems ahead may not be beyond the wit of man to devise a solution which can ‘save the world’, but that is unlikely to come from UK Prime Minister Gordon Brown who appears to have laid claim to this cachet in a freudian moment of rhetorical madness. Don’t forget this is the same Gordon Brown who decimated the UK’s gold reserves by selling half of them off (395 tonnes) at gold’s low points from 1999-2002 – amounting to some $12bn at today’s prices – a sum the UK treasury would give its eye teeth for in the current financial crisis, although this is small beer relative to the sums squandered by the UK banks. But it is an indicator of Gordon Brown’s acumen, or lack of it, in dealing with global financial trends.

Indeed Gordon Brown’s thinking is probably echoed by many others in the European and perhaps the US financial hierarchy which doesn’t bode well for any rescue package that will actually work to stem the flow of toxic debt which has built up all around the world and may almost certainly amount in total to a greater sum than all the world’s financial reserves combined, But then that is the nature of banking. It only takes a run on almost any bank to bring the whole institution crashing down, and to allow any country to fail – and there are signs that the European Central Bankers may let some Eastern European states go under, thus triggering a domino effect of defaults worldwide, to bring the world banking system to its knees – or worse. There are even fears that past high flyers like the Irish Republic could be forced to default on its debts, and undoubtedly the situation for, say, the Baltic states is far worse still.

What solution is there out there. Printing money on an unprecedented scale will expose the world to huge inflationary pressures for years to come, but this may be the only way forward using more conventional solutions. Perhaps a huge revaluation in the price of gold could help bolster some treasuries and bring some confidence back into the system. And, as with any bank run it is confidence which is needed to stem the tide, not necessarily actual money!

But where does all this leave the investor? Not in a happy position. The logic of further financial collapses and bank failures would be to knock the markets down and down, which in turn takes wealth out of the system and decimates pensions upon which an increasingly aging society is dependent.

Buy gold may be an answer to protect oneself, but as we saw last year, gold too can be vulnerable as in times of reduced liquidity funds and individuals have to sell any liquid assets to cover their positions. But then gold is probably not as vulnerable as other assets – again as we have seen over the past year. Those who were invested in gold at the beginning of 2008, for example, and did not sell during the year, at least maintained the value of their holdings while virtually all other investment options crashed, although this was not true of most gold stocks.

Now we are seeing professional and institutional investors moving into gold in a big way just to try and protect their, and their clients’ wealth. As we have pointed out here frequently, gold ETFs are seeing an unprecedented inflow of funds, although there are those out there who would say it is better to hold physical gold than any form of paper gold because of a growing distrust of financial institutions and paper solutions.

And perhaps rather gold than other precious metals – notably silver. Silver would be sure to be dragged up on gold’s coattails, but perhaps not as much this time – even though history tells us that silver’s volatility leads it to perform better than gold in percentage terms on the upside and worse on the downside. We are in a different situation with silver not really a monetary metal any longer. Industrial demand pressures on silver may well mitigate any price rises here.

Gold’s performance, though, is perhaps also dependent on investment demand outstripping a fall off in the jewellery market and an increase in liquidation of such holdings into the scrap sector. If the big Asian economies like India and China, where mark-ups on gold jewellery are minuscule compared with the West, falter significantly then reduced demand and increased supply from this sector will need to be soaked up by the investment sector. At the moment this seems to be capable of doing this hence the recent gold price strength, but unless sentiment changes in India in particular, where buyers seem to be waiting for lower prices, the fall in gold purchases there may limit global gold price growth. If liquidity becomes a problem in the North American markets again, this could also dent upward movement.

But overall, physical gold, gold ETFs and selected gold stocks would seem to be the best wealth protectors out there. As commentators have pointed out, prices may remain relatively volatile, but currently the overall price trend tends to be upwards movement, followed by stabilisation, before the next upwards resistance levels are tested. Gold does look to be steadily climbing back towards the psychological $1,000 an ounce level but it has had trouble sustaining increases beyond this level in the past. Perhaps it will be third time lucky for the gold bulls.

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

My Note: Prudence dictates at least 10% of your portfolio should be in Gold. Personally, I have that and also a lot of my discretionary funds invested in precious metals Stocks, ETF’s, Bullion…jschulmansr

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

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

GLD

GLD, , ) GLD . These rocketed a startling 13.7% to 985 tonnes, setting records each day.

XAU

Delayed quote dataHUI, , ) added 1.36% to 311.16. The stock market, in case you missed it, lost ground.

Commentary: Gold’s gains for week catch bugs’ interest

By Peter Brimelow, MarketWatch

NEW YORK (MarketWatch) — Something was indeed stirring in the precious metals pond, as I reported a week ago. Key investment letters say it still is. See Feb. 8 column

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

Taking a Quick Breather? – Gold and Silver News Today!

13 Friday Feb 2009

Posted by jschulmansr in 10 year Treasuries, 20 yr Treasuries, bull market, capitalism, central banks, China, Comex, commodities, Copper, Currencies, currency, Currency and Currencies, DGP, dollar denominated, dollar denominated investments, economic, Economic Recovery, economic trends, economy, financial, Forex, GDX, GLD, gold, Gold Bullion, Gold Investments, gold miners, How To Invest, How To Make Money, hyper-inflation, India, Investing, investments, Jschulmansr, Junior Gold Miners, Latest News, majors, Make Money Investing, Markets, mid-tier, mining companies, mining stocks, monetization, physical gold, platinum, platinum miners, precious metals, price, prices, producers, production, silver, silver miners, small caps, spot, spot price, stagflation, Stimulus, Stocks, Technical Analysis, U.S. Dollar

≈ Comments Off on Taking a Quick Breather? – Gold and Silver News Today!

Tags

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, dollar denominated, dollar denominated investments, Doug Casey, economic, economic trends, economy, Federal Deficit, financial, Forex, futures, futures markets, gata, GDX, GLD, gold, gold miners, hard assets, hyper-inflation, 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, 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, small caps, sovereign, spot, spot price, stagflation, Technical Analysis, TIPS, U.S., U.S. Dollar, volatility, warrants, XAU

As I am writing this post, Gold is taking a breather off $11.00 oz to $937 but still above the all important $930 to $940 level. I would say that we have a definite confirmation of a bull market rally in place should Gold close above $940 for the week. After all everyone deserves a breather once in a while! Today’s articles look at the dollar, gold-silver ratio, and more… Good Investing! – jschulmansr

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

Catch the New Bull! – Buy Gold Online – Get 1 gram free! – Buy Safely, quickly, and at low prices, guaranteed! – Bullion Vault.com

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

Dollar Rises Gold Stays Up – Seeking Alpha

By: Dr. Duru of Dr. Duru One-Twenty

If you had told me late last year that we would soon see both the dollar and gold rally, I would have dismissed you as nuts. But this is exactly what happened after the dollar made a short-term bottom in mid-December. In early December, I suggested that the dollar had formed a double-top making it likely the dollar was headed lower. The dollar did sell-off, but it quickly rallied right back to the resistance formed by the double-top (click on chart to enlarge).

At the same time, gold has finally broken out of the pattern of lower lows and higher highs. It is now up almost 10% for the year. Last year, I said that gold would be my favorite place to be in 2009. So far, so good.

While gold was working off late 2008’s downtrend (click on chart to enlarge), I was fascinated by skeptics who observed that gold had “every reason to blast higher” given the world’s economic chaos and yet had done nothing. From a short-term trading perspective, such contrast certainly takes the gold trade off the table. But from the perspective of longer-term capital preservation on a planet where currencies are growing (or will be growing) on trees, the disconnect simply meant there were more immediate things on the collective minds of investors.

But we are only just getting started. It is nearly impossible to say when inflation will become a problem, only that it will likely be a problem once credit finally gets converted into investment and purchases again to take advantage of all the liquidity facilities being provided by the Federal Reserve. Some point out that Japan is an example where massive liquidity accomplished very little, and the same fate awaits the U.S. But from what I understand about the yen carry trade that took advantage of the low borrowing costs in Japan, Japan essentially EXPORTED inflation to the rest of the globe.

Investors took advantage of Japan’s cheap money to inflate assets all over the world where there was appetite to borrow, consume, and repeat. (Please correct me if I am wrong!). I am not yet clear how the U.S can export its inflation away when more and more central banks are dropping rates to rock bottom levels. In this scenario the supply of gold relative to paper money is rapidly decreasing. Moreover, America has been a global pioneer in financial engineering. I have full confidence that smart bankers are already mapping out long-term strategies for generating profits that will help drive future reflation.

I am focused now on just two other commodity plays for core positions: silver (SLV) and copper (FCX as an approximate proxy). SLV is up 20% this year while Freeport McMoran (FCX) has chopped around in a trading range. Late last year, I was premature in making bets in the falling knives of commodities like copper and steel. I ended up with a lot of profit in puts, but not quite enough to eliminate the pains in the related stocks. I plan to pick my spots for steel very selectively and for shorter-term moves. So far this year, I have liked playing Cliff’s Natural Resources (CLF) and Nucor (NUE) after sell-offs. I thought I would include U.S. Steel (X

) on this list, but it has been stuck drifting in a downtrend all year. My thinking is that I will not be smart enough or fast enough to time the switch from deflation to inflation; I just know I want to have at least a small core position ready for whenever that time comes. Outside of that, I am mainly biased short for now.

I will end with a quick look at the S&P 500. Since I still believe fresh 52-week lows are coming in the near future – news and rumors of government economic plans notwithstanding – I tread very carefully and selectively with any longs.

In the past month, we have had three separate high-volume selling events that have attempted to break the support that still holds from the “the December wash.” Each bounce from support seems to produce more hope that we are building a base for a sustainable bottom (click on chart to enlarge). There are also a good number of stocks that have hit fresh highs for the year just in the past week. But once it is clear that a modest recovery in the 2nd half of the year will not make its annually scheduled appearance, the major indices will be sold to fresh lows (I may have to make an exception for the NASDAQ which has proven particularly resilient so far in 2009). In the meantime, the stock market will continue to predict this imminent (soon to be elusive) recovery over and over and over again.

*All charts created using TeleChart

Be careful out there!
=================================

Gold: nothing succeeds like success – MineWeb

Source: MineWeb.com

Listed gold (and silver) stocks continue to deliver price increases at an astounding pace, underpinned by continually robust gold bullion prices.

Author: Barry Sergeant
Posted: Thursday , 12 Feb 2009

CAPE TOWN –

Listed gold stocks continue to lead the attempted recovery in global stock markets, supported on Wednesday by a dollar gold bullion price that moved to seven-month highs, above USD 945 an ounce. Measured on an absolute basis, the market value of gold stocks listed around the world moved to well above USD 200bn, the highest level seen since October 2008, a month after erstwhile Wall Street investment bank Lehman Bros. filed for bankruptcy, triggering yet another stage of the most intense crisis in world credit and equity markets seen in decades.

Seen as a commodity, gold bullion has surrendered the least of its record price, seen in March 2008, and currently trades just 9% below that record price of just short of USD 1,033 an ounce. The ongoing recovery of gold bullion prices -which have moved below USD 700 an ounce since making record highs – has underpinned a recovery in listed stock prices for companies representing the metal, from explorers to miners. The extent of the recovery has left the vast majority of other mining stocks (with the narrow exception of silver stocks), and stocks of any other kind, far behind. While the MSCI Barra dollar index for all global equities has moved 12% above its lows, seen late in 2008, and emerging market stocks have “bounced” up by 26% from lows, gold stocks, measured on the weighted average value of 250 listed names, have risen 128% from low points, seen just months ago.

The Tier II gold stock grouping, led by names such as JSC Polymetal, Centerra, and heavyweights such as Yamana and Agnico-Eagle, has risen by a fantastic 173% from low points, also within just a few months. Silver stocks have outperformed gold stocks as an overall group, with a weighted average increase of 147% from lows, led by the likes of Fresnillo, and Silver Standard.

Spot silver prices are trading 36% below record highs, also seen in March 2008, but listed silver stocks have long traded in sympathy with trends in gold stocks, tending, however, to overshoot on the rise and also on the fall. However, while the global market value of listed gold stocks runs at well above USD 200bn, silver stocks are worth well short of USD 20bn.The majority of silver is produced as a by-product at mines primarily focused on other metals.

Seen as a grouping, listed uranium stocks are also outperforming most mining stocks, with First Uranium among those names that continue to deliver exceptional price increases. Meanwhile, the SPDR Gold Shares exchange traded fund (ETF), a security that holds physical gold on behalf of its investors, continues to attract significant investor inflows. The security, the biggest gold bullion EFT in the world, currently holds nearly 900 tons of physical gold, valued at nearly USD 27bn. In line with the price performance of dollar gold bullion, the SPDR Gold Shares ETF is currently just 8% below its record highs.

INDICES		From	From
	Points	high*	low*
MSCI world equities USD	846.42	-46.0%	11.5%
MSCI emerging markets USD	561.38	-55.2%	25.9%
S+P 500	828.08	-42.5%	11.7%
DJ Stoxx 600	192.11	-42.3%	7.9%
KBW banks	27.41	-69.5%	9.9%

STOCK	Value	From	From
GROUPS	USD bn	high*	low*
Dow Jones Industrial	2598.66	-42.6%	17.4%
Top 100 miners	873.36	-63.4%	78.7%
Oil stocks	1998.86	-48.4%	33.2%
S + P 500 Energy	1039.73	-46.3%	33.4%
Gold Tier I	160.36	-44.4%	117.2%
Gold Tier II	41.58	-45.3%	173.3%
Gold overall	225.39	-46.7%	127.7%
Silver stocks	12.46	-63.0%	147.4%
World banks (80)	1713.03	-62.6%	30.1%
Uranium stocks	14.95	-58.0%	81.8%
* 12-month
Source: market data; analysis by Barry Sergeant===================================================Catch the New Bull! – Buy Gold Online – Get 1 gram free! – Buy Safely, quickly, and at low prices, guaranteed! – Bullion Vault.com======================================= The Gold:Silver Ratio – pointing to higher prices all round – MineWeb Source: MineWeb.com

Silver defies its fundamentals in maintaining a price ratio which relates to gold and the movement in this is taken by many silver investors as a guide to forward prices.

Author: Rhona O’Connell
Posted: Friday , 13 Feb 2009

LONDON –

Back in biblical times gold and silver prices were at parity although by the Roman era the ratio had widened to between 15 and 16. Silver backed major currencies right the way through to the nineteenth century although as economies evolved it tended to become the norm that silver was used for intra-national payments while gold was used for international transactions. India and China were among the last countries to remove the silver backing from their currencies, which is the reason why there have been substantial government sales of the metal from these two nations in particular although these sales have dwindled somewhat over the past two years or so. It is also the primary reason why the markets are uncertain as to the level of silver stocks, private or public, that lie in countries such as these.

Net government sales into the market reached a recent peak of 2,743 tonnes in 2003 (GFMS figures), but had halved by 2007 and it looks as if they halved again in 2008, with further reductions looking likely in the future, although since these sales currently comprise less than 5% of silver supply their further erosion is unlikely to make much of a difference to silver prices per se.

What has been making something of a difference recently is the rejuvenation of gold: silver ratio trading. Technical analysts have been looking favourably on silver since the start of the year and the gold: silver ratio has come increasingly onto the radar screens. Technically-driven trading of the ratio has also been important, with the ten-day and twenty-day moving averages defining the upper boundary of the ratio’s path. Once the ratio had severed support at 72 this trading gained considerable traction and within two days we were at 69, en route for a test of 67, the lowest since late September, when gold was at $740 and silver at just less than $11.

This time the activity in the market brought silver up to $13 while gold was easing from $920 to just below $900 and since then gold has taken up the reins to test $950 while silver has approached $14 then retreated towards $13.40. and the ratio has settled at around 70.

Obviously the ratio, of itself, does not drive markets. It is normally a result of the inter-related moves of both gold and silver, but every now and then it does have an impact on the metals’ prices – much more so on silver than on gold.

What has lain behind the changes in the ratio this time? Certainly not the silver market’s fundamentals in terms of marginal costs of production against the balance between industrial supply and demand (and this includes jewellery demand but not investor interest), which are not looking favourable. Silver may often be regarded as a precious metal by virtue of its historic connection with currencies and its lingering jewellery market but jewellery, silverware and coins+medals between them comprise less than 30% of silver demand as against more like 80% in the gold market); on a purely fundamental basis, therefore, silver belongs in the industrial camp.

Sentiment and perception are important market elements, however and silver’s long-standing relationship with gold is a vital influence on prices and investment activity. Essentially, because of silver’s intrinsically higher volatility than gold, some speculators and investors use exposure to silver as a means of gearing up their exposure to the latter. If gold is going up, silver typically goes up further, so a combination of the two is a stronger performer than gold on its own. This does not work for the whole time, obviously, but it is a well-entrenched mechanism and has been playing an important part in silver’s price performance over the past two months since the gold: silver ratio briefly exceeded 80.

This has been no more evident than in the exchange traded funds and the London ETC. When the gold:silver ratio reached its maximum in mid-December 2008, these funds harboured 7,661 tonnes of silver in their coffers. In the two months since then this has shot up to 8,734 tonnes, an increase of 1,073 tonnes and on annualised basis this is the equivalent of 6,096 tonnes per annum (196 million ounces) or almost 25% of global industrial demand. Over this period the silver price has increased by 21%, from just over $11 to just less than $13.40. Gold has risen by 13% and copper, 12% over the same period.

With this degree of uptake it is not surprising that silver has outshone gold recently and left copper some way behind. Although gold and copper have improved by similar amounts, silver’s correlation coefficient with gold over the period has been a healthy 90%, while that with copper, although still impressive, has been lower at 63%.

Speculative exposure on COMEX over the same period has also been increasing, although it is important to remember that this does not involve physical metal – but it can be very important in terms of price discovery. The net long speculative position rose from 3,849 tonnes on 9^th December to 5,158 tonnes on 3^rd February (latest available figures), with a goodly size of fresh longs entering the market, and only a small degree of short covering.

There is an old adage in the market that the gold:silver ratio only really counts in two places; the COMEX floor and the Indian market. In India it is by no means unusual for jewellery and investment holders to switch between gold and silver when they perceive that the prices are out of line. Certainly recently there has been a very healthy market in old gold scrap, but silver demand has remained slack in response both to high outright prices and the economic environment.

Silver’s outright fundamentals do not justify prices at these levels, but for as long as the market retains its bullish stance and investors keep coming for the metal then any industrial surplus this year stands a good chance of being absorbed and when investors like the look of gold, some of them will like the look of silver even more. This metal is, however, flying almost as high as Icarus and when that ratio starts to rise, then silver speculators had better be watching very closely.

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

Catch the New Bull! – Buy Gold Online – Get 1 gram free! – Buy Safely, quickly, and at low prices, guaranteed! – Bullion Vault.com

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

Will Big Money Interest Propel Gold over Its Final Hurdle? – Seeking Alpha

By: Andrew Mickey of Q1 Publishing

Bloomberg declares:

Gold Soars to Highest Since July.

A Wall Street Journal headline proclaims:

Gold is Flirting with $1,000, Again; ‘There’s No Sign of the Market Tiring.’

On Wednesday, gold surged another $30 an ounce, surpassing $930 and now, the mainstream media is getting on board in a big way.

We can spend all day debating whether this is the time gold runs back to $1,000 and beyond, or whether this is just another short-lived bounce which could run out of steam at any moment. Frankly, the exceptional volatility of the gold market has taught me that only time will tell.

What I can tell you is that there has recently been a change in gold – a dramatic change -at least the perception of gold. This change could set gold and gold stocks on a long march higher, yet, the mainstream media have completely glossed over it. Let me explain.

Gold Goes Big

You see, gold’s a funny thing. It elicits such an emotional response. Gold has had a pretty volatile year. In 2007, the yellow metal started attracting a lot of attention when it passed the highs set in the early 80s and has been up and down since, although lately, it has had more ups than downs. Despite all the recent attention, we’re right back where we were a year ago, when gold passed the $900 mark.

Whether you’re an all out “gold bug” who has been waiting a long time for this run, you question the value of gold because it has very little industrial use (ala Warren Buffett), or somewhere in between, you’ve got to take a look at what has happened to gold in the past few weeks.

But here’s the thing, this time around there’s interest from some very big money investors, as it is now considering gold to be a viable investment again. It’s not just the hyperactive, hot money hedge funds batting around gold anymore. Now pension funds, mutual funds, and other institutional investors are betting on gold – in a big way.

That is the big difference this time around. The big money interest hasn’t been there for decades, and it looks like that’s quickly starting to change.

Big Money Bets on Gold

Unprecedented sums of money have been pouring into gold in the past few months. While many funds are licking their wounds from the recent downturn and facing ongoing redemptions, some still have money. Those that do are at least putting some of it, into gold.

Just look at the recent money, which has been put into gold companies across the board. They’re all getting new cash. Major miners looking for extra cash to fund takeovers, exploration, and mine development, along with small gold companies looking for one more financing to put themselves into production, are all getting it. There’s money out there for gold.

For instance, Newmont Mining (NYSE:NEM) is expecting at least $1.7 billion (or more depending on the final terms of agreement) in new cash in its coffers. The cash infusion will come from the sale of stock and convertible notes. That’s billion – with a ‘B.’

Leading the charge in putting this financing together was Citigroup (C), J.P. Morgan (JPM), and the Bank of Montreal (BMO). They’re the big money, and except for BMO, they wouldn’t have given gold the time of day when private equity players were chasing after real estate, Chinese companies, and other “hot” sectors over the past few years.

Of course, it’s not just one big deal though. It’s lots of them. Industrials may be going under because they can’t get financing, but when it comes to gold companies, suddenly, there appears to be plenty of available money. Over the past few months, there have been a slew of financings of gold companies. Yamana (NYSE:AUY), Agnico-Eagle (NYSE:AEM), and Kinross Gold (NYSE:KGC), combined have attracted more than $800 million in new money.

Even gold companies, which were pretty much left for dead during the credit crunch are getting the cash they need. Shares of Osisko Mining [TSX:OSK] dropped well below $2 per share in November amid concerns the company wouldn’t be able to get the cash necessary to move forward with its prospective gold mine. Three months later, its shares are trading above C$4 after hitting highs of over C$5 per share, and it now has the money it needs. NovaGold (AMEX:NG) went through a similar ordeal. Its shares dropped all the way to $0.37 only to climb back to close at $3.52, on Wednesday.

These are just some of the bigger deals. We could highlight the dozens of smaller deals which are or are about to get some new capital, but you get the point. There’s big money backing gold now. In a way, the whole gold situation may have changed.

A “Frightening” Change

Two weeks ago Peter Munk, the Chairman of Barrick Gold (NYSE:ABX) – the world’s largest gold mining company – identified an “unpleasant and frightening” trend. In an interview with Bloomberg, Munk said:

He has received an increasing number of calls from wealthy investors looking for ways to buy bullion. While that is positive for the metal market, it is a “sad part of a civilized society.”

“That’s not where you want to be, it’s alarming. Do I personally believe gold will break through $1,000? It’s not a question of if; it’s a question of how soon.”

You’ve got to remember that Munk is the chairman and founder of a gold company, so he has a lot of experience in gold. He has access to the inner workings of the gold market, and benefits from rising gold prices, as well.

Despite the potential conflict of interest, he is definitely correct in saying that change has taken place.

What Really Matters About Gold

As long time Prosperity Dispatch readers know, I hate talking about gold. When it comes to gold, everyone has an opinion, and it’s usually a very strong one, as there’s very little middle ground when it comes to gold.

Just to be clear though, I’m not a gold bug. I’m not about to predict gold is going to $1,000 before it goes to $800, as there are just too many variables driving gold lately. I think a world with $200 gold is a much better place to live in than a world with $2,000 gold, but the recent big money push into gold could mark a significant change in the prospects for gold.

In the end, it all comes down to whatever the markets believe. Perception is reality, and a lot of money is betting gold will be perceived as more dearly down the road, whether deflation or inflation, wins out.

Over the past few months, deflation vs. inflation has been a popular subject of debate. While $60 trillion of wealth has been wiped out in this downturn, central banks are going all out to print enough new money to prevent the inevitable deflationary effects of the losses. And as we’ve noted before, all speculative bubble-booms end in deflation.

That doesn’t matter now. The current theory is gold will win either way – deflation or inflation, it doesn’t matter. Gold wins during inflation because it’s a store of value, and it wins in deflation as central banks debase their currency. As a result, there’s demand from both the inflation and deflation camps. In the end, the perception of value is what really matters for gold (and every other financial asset for that matter).

For decades, the big money refused to view gold as anything other than something horded by conspiracy theorists. The lack of big money interest was a huge hurdle for gold. Now, with the billions of dollars headed into gold from leading U.S. institutions, it appears the hurdle may have finally been passed.

Disclosure: None

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

Catch the New Bull! – Buy Gold Online – Get 1 gram free! – Buy Safely, quickly, and at low prices, guaranteed! – Bullion Vault.com

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

ps- Gold is inching back now only down $7.00 to $942

Have a Great Weekend and Happy Valentines Day! – jschulmansr

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

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

Even if the velocity of money takes forever and a day to build up to inflationary speeds, I strongly suspect that the Federal government will attempt to inflate its way out of its massive debt. When the bills come home for all the financial repair work being done in this country, there will be little appetite for increasing taxes enough to pay down this debt in any significant way. The economic multiplier from stimulus programs will also not provide sufficient tax revenues. America’s biggest and most cooperative foreign creditor, China, has probably just served us notice that they will not help us more than they already are helping

. China currently holds 12% of the $5.75 trillion in U.S. marketable debt. Inflation will be the indirect tax that will confront lower legislative hurdles.

The fear of deflation and other assorted global economic calamities had everyone focused on taking shelter in U.S. Treasuries and the dollar. But as those fears slowly (very, very slowly) subside, more and more attention has turned to gold.

Shock and Awe! – Doug Casey

12 Thursday Feb 2009

Posted by jschulmansr in 10 year Treasuries, 20 yr Treasuries, Bailout News, banking crisis, banks, Barack Obama, bear market, Bollinger Bands Saudi Arabia, Brian Tang, bull market, capitalism, central banks, China, Comex, commodities, Contrarian, Copper, Credit Default, Currencies, currency, Currency and Currencies, Dennis Gartman, 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, Fundamental Analysis, futures, futures markets, gata, GDX, GLD, gold, Gold Bullion, Gold Investments, gold miners, hard assets, how to change, How To Invest, How To Make Money, hyper-inflation, IMF, India, inflation, Investing, investments, Jeffrey Nichols, Jim Rogers, Jschulmansr, Keith Fitz-Gerald, Latest News, Long Bonds, majors, Make Money Investing, Marc Faber, market crash, Markets, Michael Zielinski, mid-tier, mining companies, mining stocks, monetization, Moving Averages, palladium, Peter Grandich, Peter Schiff, physical gold, platinum, platinum miners, precious, precious metals, price, price manipulation, prices, producers, production, protection, rare earth metals, recession, resistance, risk, run on banks, safety, Sean Rakhimov, SEO, Short Bonds, silver, silver miners, small caps, sovereign, spot, spot price, stagflation, Stimulus, Stocks, TARP, Technical Analysis, The Fed, TIPS, U.S., U.S. Dollar, uranium, volatility, warrants, XAU

≈ Comments Off on Shock and Awe! – Doug Casey

Tags

Bailout News, Bollinger Bands Saudi Arabia, Brian Tang, China, Comex, commodities, Copper, Currencies, currency, Dennis Gartman, dollar denominated, dollar denominated investments, Doug Casey, Federal Deficit, Forex, futures, futures markets, gata, GDX, GLD, gold miners, hard assets, hyper-inflation, India, investments, Jeffrey Nichols, Jim Rogers, Keith Fitz-Gerald, majors, Marc Faber, 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, small caps, sovereign, spot, spot price, stagflation, Technical Analysis, TIPS, U.S., U.S. Dollar, volatility, warrants, XAU

Late Breaking: I came across this from the Contrarian Master Himself- Mr. Doug Casey. Here is his take for 2009 a must read for investors- especially Gold Bugs! Enjoy and Good Investing! – jschulmansr

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

Catch the New Bull! – Buy Gold Online – Get 1 gram free! – Buy Safely, quickly, and at low prices, guaranteed! – Bullion Vault.com

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

2009: Another Year of Shock and Awe – Seeking Alpha

By: Jeff Clark of Casey Research

In their annual forecast edition, the editors of BIG GOLD asked Casey Research Chairman and contrarian investor Doug Casey to provide his predictions and thoughts on issues everyone’s thinking about these days. Read what he has to say on the economy, deficits, inflation, and gold…

The $1.1 Trillion Budget Deficit

My reaction is that the people in the government are totally out of control. A poker player would say the government is “on tilt,” placing wild, desperate bets in the hope of getting rescued by good luck.

The things they’re doing are not only unproductive, they’re the exact opposite of what should be done. The country got into this mess by living beyond its means for more than a generation. That’s the message from the debt that’s burdening so many individuals; debt is proof that you’re living above your means. The solution is for people to significantly reduce their standard of living for a while and start building capital. That’s what saving is about, producing more than you consume. The government creating funny money – money out of nothing – doesn’t fix anything. All it does is prolong the problem and make it worse by destroying the currency.

Over several generations, huge distortions and misallocations of capital have been cranked into the economy, inviting levels of consumption that are unsustainable. In fact, Americans refer to themselves as consumers. That’s degrading and ridiculous. You should be first and foremost a producer, and a consumer only as a consequence.

In any event, the government is going to destroy the currency, which will be a mega-disaster. And they’re making the depression worse by holding interest rates at artificially low levels, which discourages savings – the exact opposite of what’s needed. They’re trying to prop up a bankrupt system. And, at this point, it’s not just economically bankrupt, but morally and intellectually bankrupt. What they should be doing is recognize that they’re bankrupt and then start rebuilding. But they’re not, so it’s going to be a disaster.

The U.S. Economy in 2009

My patented answer, when asked what it will be like, is that this is going to be so bad, it will be worse than even I think it’s going to be. I think all the surprises are going to be on the downside; don’t expect friendly aliens to land on the roof of the White House and present the government with a magic solution. We’re still very early in this thing. It’s not going to just blow away like other post-war recessions. One reason that it’s going to get worse is that the biggest shoe has yet to drop… interest rates are now at all-time lows, and the bond market is much, much bigger than the stock market. What’s inevitable is much higher interest rates. And when they go up, that will be the final nail in the coffins of the stock and real estate markets, and it will wipe out a huge amount of capital in the bond market. And higher interest rates will bring on more bankruptcies.

The bankruptcies will be painful, but a good thing, incidentally. We can’t hope to see the bottom until interest rates go high enough to encourage people to save. The way you become wealthy is by producing more than you consume, not consuming more than you produce.

Deflation vs. Inflation

First of all, deflation is a good thing. Its bad reputation is just one of the serious misunderstandings that most people have. In deflation, your money becomes worth more every year. It’s a good thing because it encourages people to save, it encourages thrift. I’m all for deflation. The current episode of necessary and beneficial deflation will, however, be cut short because Bernanke, as he’s so eloquently pointed out, has a printing press and will use it to create as many dollars as needed.

So at this point I would start preparing for inflation, and I wouldn’t worry too much about deflation. The only question is the timing.

It’s too early to buy real estate right now, although a fixed-rate mortgage could go a long way toward offsetting bad timing. It would let you make your money on the depreciation of the mortgage, as opposed to the appreciation of the asset. Still, I wouldn’t touch housing with a 10-foot pole – there’s been immense overbuilding, immense inventory. And people forget: a house isn’t an investment, it’s a consumer good. It’s like a toothbrush, suit of clothes, or a car; it just lasts a little bit longer. An investment – say, a factory – can create new wealth. Houses are strictly expense items. Forget about buying the things for the unpaid mortgage; before this is over, you’ll buy them for back taxes. But then you’ll have to figure out how to pay the utilities and maintenance. The housing bear market has a long way to run.

The U.S. Dollar and the Day of Reckoning

It’s very hard to predict the timing on these things. The financial markets and the economy itself are going up and down like an elevator with a lunatic at the controls. My feeling is that the fate of the dollar is sealed. People forget that there are 6 or 8 trillion dollars – who knows how many – outside of the United States, and they’re hot potatoes. Foreigners are going to recognize that the dollar is an unbacked smiley-face token of a bankrupt government. My advice is to get out of dollars. In fact, take advantage of the ultra-low interest rates; borrow as many dollars as you can long-term and at a fixed rate and put the money into something tangible, because the dollar is going to reach its intrinsic value.

The Recession

This isn’t a recession, it’s a depression. A depression is a period when most people’s standard of living falls significantly. It can also be defined as a time when distortions and misallocations of capital are liquidated, as well as a time when the business cycle climaxes. We don’t have time here, unfortunately, to explore all that in detail. But this is the real thing. And it’s going to drag on much longer than most people think. It will be called the Greater Depression, and it’s likely the most serious thing to happen to the country since its founding. And not just from an economic point of view, but political, sociological, and military.

For a number of reasons, wars usually occur in tough economic times. Governments always like to find foreigners to blame for their problems, and that includes other countries blaming the U.S. In the end, I wouldn’t be surprised to see violence, tax revolt, or even parts of the country trying to secede. I don’t think I can adequately emphasize how serious this thing is likely to get. Nothing is certain, but it seems to me the odds are very, very high for an absolutely world-class disaster.

Gold’s Performance in 2008

The big surprise to me is how low gold is right now. It’s well known that even if we use the government’s statistics, gold would have to reach $2,500 an ounce to match its 1980 high. I don’t necessarily buy the theories that the government and some bullion banks are suppressing the price of gold. Of course, with everything else going on, the last thing the powers-that-be want is a stampede into gold. That would be the equivalent of shooting a gun in a crowded theater; it could set off a real panic. But at the same time, I don’t see how they can effectively suppress the price. Either way, the good news is that gold is about the cheapest thing out there. Remember, it’s the only financial asset that’s not simultaneously someone else’s liability. So I would take advantage of today’s price and buy more gold. I know I’m doing just that.

Gold Volatility

Gold will remain volatile but trend upward. I don’t pay attention to daily fluctuations, which can be caused by any number of trivial things. Gold is going to the moon in the next couple of years.

Gold Stocks

Last year, it seemed to me that we were still climbing the Wall of Worry and that the next stage would be the Mania. But what I failed to read was the public’s indirect involvement through the $2 trillion in hedge funds. On top of that, while the prices of gold stocks weren’t that high, the number of shares out and the number of companies were increasing dramatically. Finally, the costs of mining and exploration rose immensely, which limited their profitability.

The good news is that relative to the price of gold, gold stocks are at their cheapest level in history. I still have my gold stocks and the fact is, I’m buying more. I’m not selling, because I think we’re starting another bull market. And this one is going to be much steeper and much quicker than the last one. I’m not a perma-bull on any asset class, but in this case I’m forced to go into the gold stocks. They’re the cheapest asset class out there, and the one with the highest potential.
=========================================

Catch the New Bull! – Buy Gold Online – Get 1 gram free! – Buy Safely, quickly, and at low prices, guaranteed! – Bullion Vault.com

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

Enjoy and Good Investing – jschulmansr

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