Silver Set For All Time Record Quarterly Close - Gold To Silver Ratio On Way To 17 To 1 As Per 1980?

Submitted by Tyler Durden on 03/31/2011 07:27 -0400

‘Poor man’s gold’ is set for a record nominal quarterly close which will be bullish technically and set silver up to target psychological resistance at $40/oz and then the nominal high of $50.35/oz . Silver’s record quarterly close was $32.20/oz on December 31st, 1979. While silver is up 22 percent this year and is heading for a ninth straight quarterly advance, its fundamentals remain very sound. With gold above its nominal record of 1980, poor man’s gold continues to be seen as offering better value. To the masses in India, China and Asia, silver is the cheap alternative to gold and an attractive store of value and hedge against inflation and debasement of paper currencies. Increasing global investment and industrial demand in the very small and finite silver bullion market is a recipe for higher prices. Thus, as we have long asserted the gold silver ratio is likely to revert to its long term average of 16 to 1. A return to a ratio of 16 to 1 is likely due to basic supply and demand and the geological fact that there are 16 parts of silver for every one part of gold in the earth’s crust. 

 

 

 

Broker Talk: "Very Large Selling In All European Bonds: Spain, Italy, France"

Submitted by Tyler Durden on 03/31/2011 08:46 -0400

Remember when we said March would be the cruellest month for Europe? Looks like someone did, at least on a NPV basis, and is now preparing for the next phase of the European Crisis. According to Newedge, there is very large selling on dealer screens in "all kinds of bonds: Spain, Italy, and France." It seems at least one trader is not waiting around to see what the Irish stress test results indicate, and the expectation is that, as Bloomberg noted earlier, bondholder haircuts will be fast and furious.
Today should be fun.

Initial Claims 388K, Miss Expectations, Previous Revised Naturally Higher To 394K, Would Have Missed Too

Submitted by Tyler Durden on 03/31/2011 08:31 -0400

And so we find that last week's surprising beat was actually a miss as is this week's, which came at 388K on expectations of 380K, last week revised from 382K to 394K. Snow not blamed as this number sets a big question mark on tomorrow's NFP number. Continuing claims last week was also revised higher from 3,721K to 3,765K, with this week missing expectations (3,705K) as well at 3,714K. And the 99 week cliff is impacting more and more as persons claiming benefits on all programs, including EUC and Extended Benefits, increased by just 4,372. A US Labour spokesman says nothing unusual in last week's claims, and revisions showed mild upward shift. 

 

 

 

 

Japanese Economic Collapse Confirmed By PMI Plunge From 52.9 To 46.4, Largest Drop Ever

Submitted by Tyler Durden on 03/31/2011 08:08 -0400

In the first economic metric since the Japanese earthquake struck, Japanese manufacturing activity slumped to a two-year low in March and posted its steepest monthly decline on record, confirming all the worst fears about supply chain disruptions and production operations, according to the Japanese PMI released on Thursday. From Need to Know News: "The 6.5-point drop in March was the largest on record, surpassing the falls seen after the collapse of Lehman Brothers in September 2008 and the U.S. terror attacks in September 2001, MarkIt Economics said, adding that the March PMI index was the lowest since 41.4 marked in April 2009. Kohei Okazaki, economist at Nomura Securities, said March industrial output due out on Apr. 28 is expected to show a m/m fall of at least 10%. The PMI index is closely correlated to industrial output released by the Ministry of Economy, Trade and Industry. Markit, a UK-based research firm, conducted the latest survey between March 11 and March 25, and only 67% of those polled responded. It releases manufactures PMIs for 25 areas in the world every month." And in addition to all the collapse in all output metrics, adding insult to injury is the confirmation that inflation is now ravaging the land: the input price index increased to 65.2, the highest since September 2008, due to higher costs of raw materials such as crude oil and naphtha. It now appears that Japan is about to have the worst stagflationary episode in its history ever. 

 

 

 

One Minute Macro Update: Irish Banks Might Need Some Luck

Submitted by Tyler Durden on 03/31/2011 07:56 -0400

Markets mostly negative this morning in anticipation of early results from Ireland’s bank stress tests and an announcement from Portugal’s president. Compelled by lawsuits emerging from the Freedom of Information Act, today the Fed will release details about its discount window lending activities during the recent financial crisis. The Fed announced yesterday that it will auction $5B in 28 day term deposits next Monday in an attempt to reverse the liquidity injected into the economy during the 2008 crisis. Early Irish bank stress test results began leaking yesterday afternoon, but will formally be announced later today. The Irish government will need to take up the slack in banks’ capital needs, which may translate to further Euro zone aid or bondholder hits. ECB’s Weber reportedly said that creditors may be sharing the burden on bank losses. The Irish government is also contemplating a merger between two of its biggest banks as a restructuring tool. The latest nuclear news out of Japan highlights the possibility of chain reactions from the Fukushima power plant. The Nomura PMI showed Japan’s first post-earthquake manufacturing figures with a sharp drop to 46.4 v 52.9 prior, the first contraction since last October (a score of 50 indicates no growth) 

 

 

 

European Inflation Comes At 29 Month High Of 2.6%, Well Above Expectations, Sends EURUSD Above 1.42

Submitted by Tyler Durden on 03/31/2011 07:21 -0400

Earlier Eurostat released its February European CPI number which was higher than January (2.4%) and consensus (2.4%), coming at 2.6%. That is the fastest inflation growth in more than two years in March as European Central Bank policy makers prepared to raise interest rates to fight increasing price pressures.Per Bloomberg: "Inflation in the 17-nation euro region quickened to 2.6 percent from 2.4 percent in February, the European Union’s statistics office in Luxembourg said today in an initial estimate. That’s the fastest since October 2008 and exceeds the ECB’s 2 percent limit for a fourth month. Economists forecast inflation to hold at 2.4 percent, the median of 32 estimates in a Bloomberg News survey showed." The primary reason for the jump in inflation are energy costs, leading to such paradoxes as $9/gallon gasoline, as Europe is far more expose to Brent prices than the US which has spiked this year: "Crude oil prices have surged 15 percent this year as output from Libya slumped. An armed conflict between Libyan leader Muammar Qaddafi’s troops and rebel forces has forced companies including Total SA and ConocoPhillips to suspend operations and evacuate staff. Crude was trading at $105.30 a barrel today." The result of the release was a kneejerk jump in the EURUSD to 1.423 as a modest hike by the ECB seems now virtually assured. Of course, a hike in rates means that the already cooling Economy will deteriorate even more. What that means for a continent that is now harboring increasingly more insolvent nations only Trichet (and Bernanke) knows.

Europe About To Be Hung Out To Dry (Liquidity Wise)?

Submitted by Tyler Durden on 03/31/2011 08:55 -0400

Two rather unpleasant headlines for the Old World from Reuters:

• There has been disagreement in ECB governing council over new liquidity facility
• ECB will not announce plans for a new liquidity facility to help Irish banks on Thursday

EURUSD has now erased all of the CPI-beat gains. Bond selling picking up.

In The News Today

Posted: Mar 30 2011     By: Jim Sinclair      Post Edited: March 30, 2011 at 11:23 pm
Filed under: In The News

"…There is no nation on earth powerful enough to accomplish our overthrow. … Our destruction, should it come at all, will be from another quarter. From the inattention of the people to the concerns of their government, from their carelessness and negligence, I must confess that I do apprehend some danger. I fear that they may place too implicit a confidence in their public servants, and fail properly to scrutinize their conduct; that in this way they may be made the dupes of designing men, and become the instruments of their own undoing." –Daniel Webster, June 1, 1837


My Dear Friends,
Truth be told, the major theme of JSMineset has been one of self reliance in a monetary, physical and Emersonian sense. Our focus has been on your assets, your debt positions, legal matters and investment.
I have, with my dear friends here at JSMineset, tried to share what we know with you. We also pride ourselves in that we not only talk the talk, but also walk the walk.
Has Trader Dan not moved from Houston to an undisclosed location in Idaho? I am writing to you from a farm in North Western Connecticut, a rural part of the state. We provide our own water, can provide our own power, have a radio system fallback for communication, satellite phones, furnaces that burn coal or oil, an indoor pistol range that can take up to .50 calibre cartridges into a Detroit bullet trap, perimeter lighting, 16 camera day and night camera security and much more.
We have focused on conservative financial structures which were in truth taking you into the position of being your own central bank.
I have received from many people on my 70th birthday greetings plus small letters telling me how they have benefited from this link. Let me mention but two. A lady in the minerals industry lost her job and is the mother of two children and only bread winner in the house. She had very little money, but saved up a nest egg. She admits she did speculate but used the Angels. She now has $2,000,000 and has finished her period of speculation.
Chris from Canada told me that his portfolio, now mostly fully paid gold and silver, is worth $5,000,000. It was nowhere near that when he started.
Every effort here was to make you your own central bank which resulted in financial self reliance for many.
There is one more step that you really need to consider. The housing market is in a black hole from which it very well might not recover for generations. Land is cheap. When homes or small farms have been foreclosed on, resulting in bank owned property, they are sold in a fire sale to buyers with cash in hand.
Do as I have done. Do as Trader Dan has done.
The pictures below are on my maple syrup operations and my build it yourself greenhouse. The vegetables for my garden are already sprouting. I have fruit trees and am adding mature nut trees.
I strongly suggest that if you have benefitted from JSMineset, as many of you have, consider buying yourself a hobby farm and seriously go for the exercise of self reliance. I am certain that if even to cut costs you are going to need it.
The financial system is screwed up beyond any repair. On top of that there is no desire to repair anything because the wise guys know it is impossible. It is the world that the flushing of Lehman Bros. has created. It is not a brave new world. It is more like an audition for a world of Mad Max and the Day After.
It does not matter whether or not there is more QE. The damage is done and there is no solution.
Earth shaking events are taking place in the Middle East that the media would have you believe is a spontaneous outburst of democracy. Like hell it is. It is a move from some sort of rule, like it or not, to chaos.
Now that you are financially in good shape, please get physically self reliant.
Regards,
Jim



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