Filed under: USAWatchdog.com
Courtesy of Greg Hunter’s USAWatchdog.com
I am hearing more and more questions about how to buy gold and silver:
- How do you buy it?
- Why should I buy gold and silver?
- What kind of gold and silver should I buy?
- What is the difference between numismatic and bullion coins?
- Which of these should I buy?
- Where can I buy gold and silver?
- Will the government confiscate my gold and silver?
- Can the government make owning gold illegal?
- How do I know if my gold and silver dealer is reputable?
- Do buyers get some kind of confirmation that what they are buying from these shops is real and certified?
Why You Should Own Gold and Silver
First off, why should you own precious metals? Read this:
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the “hidden” confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”
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Posted: Dec 13 2010 By: Dan Norcini Post Edited: December 13, 2010 at 3:19 pm
Filed under: Trader Dan Norcini
Dear Friends,
Please take the time to carefully examine the following charts and when you do, realize that the commodity sector has now completely erased all of the losses it incurred beginning back in the summer of 2008 when Lehman Brothers collapsed and started the domino effect of a derivative chain meltdown.
The Fed has gotten exactly what it has wished for – deflation is dead and buried but in the process, they have now set the stage not only for an outbreak of inflationary pressures which are going to boggle the mind, but one that can very easily end up in runaway hyperinflation.
Note that the CCI (Continuous Commodity Index) has run to its current level WITHOUT the participation of crude oil which at the time it made its all time high back in 2008 was trading close to $150. It is currently below $90. That is what is terrifying. We are in effect looking at the prices of food and metals in this CCI doing all the heavy lifting in the commodity sector. Heaven help us if energy prices, particularly natural gas which has been extremely cheap, take off.
Note also the separate chart of copper which is now within a whisker of taking out the 2008 high in price.
You will also note that the S&P 500 has effectively retraced all of its losses since Lehman collapsed as well.
What the Fed has accomplished is to push the price of paper assets higher and inflate the commodity sector while the employment picture remains bleak and wages remain stagnant. Oh, and don’t forget, long term interest rates are now rising even as the housing market remains mired in foreclosures and delinquencies.
While the hedge fund world is partying today because China did not hike interest rates again, I suspect that their partying is going to be short-lived. The Bernanke-led Fed has unleashed the inflation monster upon China and if China does not move to try to quell it, they are going to be amazed at how rapidly prices are going to rise in their land. Food inflation in China is a serious political issue and the authorities are going to attempt to nip it, if they can. Short term they can knock prices down but unless the world produces some bumper crops in this next crop year, the trend in food prices is higher. We have a storm brewing globally folks.
Please know that the price of certain commodities is not moving higher because of supply/demand factors. If that were the case, copper would be much lower. Prices are moving higher because speculative hot money flows, created by the Fed and the Western Banking world QE programs, is indiscriminately mangling a host of various commodities. Commodities are now officially back in bubble territory but as long as the easy money flows, they will track higher. It is investment demand, rather hot money flow demand, that is pushing copper higher for example, not demand from the construction end of things. Wall Street in its greed has created a whole cornucopia of ETF’s that are commodity related and that is where much of the demand is coming from.
The nature of these flows is that they are extremely fickle and quite vulnerable to any news or action on the part of monetary authorities to go after the speculators. I am not sure that there is much any of them can do as long as we have free money available for leveraged plays so while the party goes on, enjoy it. Just be careful. Too much of this demand is artificial.
Click any chart to enlarge in PDF format with commentary from Trader Dan Norcini
Posted: Dec 13 2010 By: Jim Sinclair Post Edited: December 13, 2010 at 2:45 pm
Filed under: In The News
Dear CIGAs,
When I got to Dar es Salaam this afternoon, Joseph Kahama had kindly arranged for me to go to the VIP lounge. That is a really nice thing as customs and passport details are handled for you. What I want to report to you is that there were so many Chinese there that the lounge was overflowing.
The West is throwing away the most important asset they could have in Africa – raw materials. The Chinese are picking them up as fast as they can.
The West only cares about pushing around paper, primarily OTC derivatives, to produce funny money. China plans to dominate via the controlling of raw materials for advanced products and high tech. O’Neill agrees with me.
O’Neill bullish on Africa as strong EM strategy By Bradley Gerrard
Published Monday , December 13, 2010
Jim O’Neill has identified Africa as an intriguing emerging market investment opportunity, supported by developed country policy on infrastructure plans on the continent.
Speaking in Clear Path Analysis’s Investing in Frontier Markets report,Goldman Sachs Asset Management’s chairman said while it was difficult to choose which emerging or frontier market would be the hottest prospect at this point in time, he thought Africa had strong fundamentals.
"I don’t know [which market will perform best] because of the fact the Fed is being so generous with its liquidity, its tough to tell whether the performance of some are due to the Fed’s generosity or whether things are just generally domestically well."
But he said Africa was set to be supported in its development by countries around the globe.
"Developed country policymakers are focusing more and more on trying to provide, let’s call it, self help, to Africa," he said.
"In fact the G20 statement has done exactly that as well as trying to place a framework for these countries to help themselves through infrastructure and communications [and the like].
"In that regard, the growth of the mobile telephone is a fantastic thing for Africa and it gives them a better chance of getting out of their historic and poor economic record."
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Jim Sinclair’s Commentary
Only 85 billion?
Ireland looks to Persian Gulf to buy its banks
Top Irish officials have approached Persian Gulf sovereign wealth funds to gauge interest in the sale of Ireland’s banks after the €85 billion (Dh412.26bn) bailout from European governments and the IMF.
John Bruton, a former Irish prime minister, is leading a delegation from the country on a whistle-stop tour of the region as Ireland prepares to sell assets.
Irish officials are visiting sovereign funds in the UAE, Qatar, Bahrain and Saudi Arabia, where they have already met Prince Alwaleed bin Talal bin Abdulaziz Al Saud, the chief of Kingdom Holding and one of the world’s 20 richest men. Mr Bruton is the head of the International Financial Services Centre in Ireland, which aims to attract financial companies to set up there.
“The message was ‘our banks are for sale to any investors, foreign or local’,” said one executive at a UAE sovereign wealth fund who met the delegation this week.
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Jim Sinclair’s Commentary
You cannot create what you are not yourself.
How Hedge Funds Create Criminals 9:58 AM Monday December 13, 2010
by Lynn Stout
Hedge funds are playing the role of Wall Street villain again. This time, the charge is rampant insider trading. First came the 2009 arrest of Raj Rajaratnam, founder of the Galleon Group. Then came the November 22, 2010 raids of three hedge fund headquarters by FBI agents who seized documents and confiscated BlackBerries. Now authorities are serving subpoenas on other, larger hedge and mutual funds. Attorney General Eric Holder has announced the government’s widening investigation is "ongoing" and "very serious." (Recently, though, Jesse Eisenger in the New York Times called these investigations a "side show.")
These events raise suspicion that many hedge fund traders may have succeeded at beating the market not through careful research and original analysis but by breaking the law. The question, then, is, Why does a large slice of the hedge fund industry seem to have succumbed to illegal behavior?
I would argue that it’s not so much about misaligned incentives, as we might guess from standard economic theory, but rather because, from a behavioral perspective, hedge funds are "criminogenic" environments that can turn even ethical people into conscienceless sociopaths.
The Science of Prosocial Behavior
Economic theory treats people as rational, selfish actors who would not hesitate to break the law or exploit others when it serves their material interests. Luckily, behavioral science (and everyday experience — mostly) teaches this trope simply is not true. Innumerable experiments and field studies have proven that people often act "prosocially" — unselfishly sacrificing opportunities for personal gain to help others or to follow ethical rules. Few people steal their neighbor’s newspapers or shake down kindergartners for lunch money.
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Jim Sinclair’s Commentary
QE to infinity is a reality.
Wonkbook: Senate to move on tax deal today; bill might keep 2 million out of poverty; Senate still dysfunctional By Ezra Klein
Posted at 6:42 AM ET, 12/13/2010
The tax deal is expected to pass its first test in the Senate today, reports Shailagh Murray: "The Senate will hold a key test vote Monday on the tax package President Obama negotiated with Republicans to prevent rate increases from hitting most American workers starting Jan. 1…Reid spokesman Jim Manley said Reid and Senate Minority Leader Mitch McConnell (R-Ky.) will discuss on Monday whether to allow any amendments to the legislation, a decision that will determine how quickly a final vote can be held. The bill is co-sponsored by Reid and McConnell, a first for two leaders who are typically adversaries, Manley said…The Senate is hoping to complete work on the tax bill on Tuesday, sending it to the House, where Democrats have proved less receptive to the Obama-GOP compromise."
And to keep 2 million people out of poverty, writes Arloc Sherman: "The three provisions are a temporary payroll tax cut and temporary extensions of the 2009 Recovery Act improvements in the Child Tax Credit (CTC) and Earned Income Tax Credit (EITC). In 2011, they would keep the family incomes (after subtracting federal income and payroll taxes) of 2.4 million Americans, including 1.2 million children, above the official poverty line, and
lessen the severity of poverty for 19.4 million poor Americans, including 7.2 million children, by lifting their incomes closer to the poverty line."
The Senate is failing to pass basic legislation, reports Philip Rucker and David Fahrenthold: "Last week, the U.S. Senate failed for the first time in 48 years to pass an annual bill authorizing money for national defense – not over disagreement about the part of the bill that would repeal a ban against gays serving openly in the military but on procedural grounds. Moderate lawmakers inclined to support the bill balked Thursday when a vote was called what they considered to be too soon… An institution designed to chew over legislation slowly, refining and moderating bills passed by the House, now routinely chokes on them…Says Julian Zelizer, a professor of history at Princeton University: ‘Partisanship, combined with the rules of the Senate, make for an institution that doesn’t like…to act at all.’"
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Jim Sinclair’s Commentary
CIGA Green Hornet suggests that if the Indian authorities regulated US ETFs there would be none.
SEBI to monitor ETF gold stocks Author: Joanne Young
ETFM| 08 Dec 2010 | 11:48
The Securities and Exchange Board of India (SEBI) intends to verify all physical gold stores held by ETFs.
In a circular issued on Monday, the board revealed that as of April 2011 all gold bullion underlying ETFs will have to be examined by statutory auditors on a biannual basis.
Confirmation of the stores will then form part of the half yearly report presented by trustees to SEBI.
Gold ETFs are an increasingly popular investment in India, with figures compiled by the Association of Mutual Funds in India (AMFI) showing monthly sales of over 3bn rupees in November.
According to AMFI, assets in gold ETFs stood at 34.6bn rupees as at the end of last month, a growth of almost 300% year on year. This compares to a growth of just 7bn rupees across all other ETFs in India during the same period.
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Jim Sinclair’s Commentar4y
God help us all because credit default derivatives are sure to fail when called upon to perform.
U.S. Firms Cry Out for Relief from Swap Rules
U.S. companies told regulators they should not be forced to set aside funds to help manage their derivatives as doing so would divert vital cash needed to grow their operations. By Reuters DECEMBER 13, 2010
WASHINGTON – U.S. companies on Friday told regulators they should not be forced to set aside funds to help manage their derivatives as doing so would divert vital cash needed to grow their operations.
Representatives from firms including Morgan Stanley and Chesapeake Energy said they support the new measures to reduce market risk but margin and capital requirements could hurt economic growth by curtailing investments in items such as new oil wells.
"We think it’s more important to keep the money in the business than someone else’s pocket," Jim Heis, a risk management director with Noble Energy, said at a public meeting hosted by regulators.
Elliot Chambers, assistant treasurer with Chesapeake Energy, told regulators posting cash to counterparties rather than expanding "would be disastrous" for the long-term health of the business.
Regulators are required to implement dozens of rules as part of a broader push to overhaul the $600 trillion over-the-counter swaps market as mandated under the Dodd-Frank financial law enacted in July. Credit derivatives were blamed for aggravating the global economic crisis.
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