Another Raid/Gold Falls/Silver rises:

posted by Harvey Organ at Harvey Organ's - The Daily Gold and Silver Report - 1 hour ago

Good morning Ladies and Gentlemen: Gold closed down $11.80 to $1495.00 with all of the drop occurring after London and the physical markets were put to bed.  The price of silver did not follow its cousin an...

 

 

 

 

Druckenmiller Calls Out The Treasury Ponzi Scheme: "It's Not A Free Market, It's Not A Clean Market", Identifies The Real Bond Threat 

Submitted by Tyler Durden on 05/14/2011 10:28 -0400

We hadn't heard much from legendary investor Stanley Druckenmiller since last August when he decided to shut down his Duquesne Capital hedge fund. Until today. In a must read interview, the man who took on the Bank of England in 1992 and won, says that he join the camp of Bill Gross et al, making it all too clear that all the recent fearmongering about the lack of a debt ceiling hike by the likes of Tim Geithner, Ben Bernanke and, of course, all of Wall Street, is misplaced, and that the real threat to the country is the continuation of the current profligate pathway of endless spending. From the WSJ: "Mr. Druckenmiller had already recognized that the government had embarked on a long-term march to financial ruin. So he publicly opposed the hysterical warnings from financial eminences, similar to those we hear today. He recalls that then-Secretary of the Treasury Robert Rubin warned that if the political stand-off forced the government to delay a debt payment, the Treasury bond market would be impaired for 20 years. "Excuse me? Russia had a real default and two or three years later they had all-time low interest rates," says Mr. Druckenmiller. In the future, he says, "People aren't going to wonder whether 20 years ago we delayed an interest payment for six days. They're going to wonder whether we got our house in order." Which begs the question: if interest rates are so low today, is the market not appreciating the current path of "financial ruin"? And here is where Druckenmiller joins the Grosses and the Granthams of the world. Asked if the future is not so bad judging by today's low bond rates he says, "Complete nonsense. It's not a free market. It's not a clean market." The Federal Reserve is doing much of the buying of Treasury bonds lately through its "quantitative easing" (QE) program, he points out. "The market isn't saying anything about the future. It's saying there's a phony buyer of $19 billion of Treasurys a week." Of course, there is another name for this type of arrangement and so far only Bill Gross has used it: Ponzi Scheme.

Weekly Chartology And The Amazing Levitating Corporate Profit Margins 

Submitted by Tyler Durden on 05/14/2011 09:38 -0400

The core topic of this week's chartology (in addition to all the charts that Goldman sees it fit to print), is the amazing never shrinking corporate margin, which continues to hit new all time highs, despite a "tepid economy" and surging input costs. As Goldman's David Kostin points out, it primarily has to do with the ability of companies to gradually pass on costs to consumer, indicating once again that the primary variable in this economy has nothing to do with the jobs picture, or even wage inflation (a key variable that many have said is necessary for inflation to return), but with the ongoing green light by the administration and big banks to allow a substantial number of Americans to live mortgage free (as disclosed previously up to 900 days in the states of New York and New Jersey, a number which actually is 7 years if one considers the backlog in the judicial system, as we will shortly demonstrate), thus removing the primary use of funds for the American household, and allowing a substantial demand price inelasticity for key consumption products such as gasoline, and iPads. As long as the deadbeat rent component in the economy is in the high double digit billions, it will translate in quarter after quarter of surprise margin beats, and latent price increases which for lack of a better word translate into inflation. 

 

 

 

 

 

Miners pare their hedging positions as gold soars 

 

Getting Closer to a Modernized Gold Standard

  

 

 

 

In The News Today

May 13, 2011, at 5:08 pm
by Jim Sinclair

“Jim Sinclair said the other day, “The drop at this time will in retrospect be seen as the foundation for gold trading not at $1,650, but rather at $5,000 an ounce.” –Wealth Daily



Dear CIGAs,

I am preparing to leave tomorrow for Tanzania and Oman. There is no departure whatsoever from what Wealth Daily quoted today. Technical damage requires technical repair because today algorithms are the major participant in metals markets. The technical repair will take place and gold will trade to a minimum of $1764.
The Federal Reserve Balance Sheet was piled full of the worst garbage that financial institutions had. There was no Fed review of the junk OTC derivatives that make up these so called assets that were purchased. I suspect that is why the nice lady expert on the board retired. The banks just poured in all their losers. If the international public knew what that inventory was, the US dollar would be well below the .7200 level on the USDX.
The ability to reduce the assets by selling them would indicate that what has been a loser has miraculously become valuable. In my opinion it was the bad side of the Lehman flush that makes up a great deal of the assets of the Federal Reserve.
The remaining balance is US Treasury Instruments purchased by the simple creation of electronic paper. This also constitutes a great reason why QE (by that name or another) must continue. If the Fed did not have their QE check book open, I believe the Fed would be broke, having taken it on from the banks.


U.S. Fed balance sheet approaches $2.729 trillion Thu May 12, 2011 4:43pm EDT
NEW YORK, May 12 (Reuters) – The size of the U.S. Federal Reserve’s balance sheet reached another record in the latest week, due to the central bank’s plan to spur economic growth, Fed data released on Thursday showed.
The balance sheet — a broad gauge of Fed lending to the financial system — expanded to $2.729 trillion in the week ended May 11 from $2.703 trillion the previous week.
The central bank’s holding of U.S. government securities grew to $1.466 trillion on Wednesday from last week’s $1.442 trillion total.
The Treasuries purchases were part of the Fed’s second phase of quantitative easing, dubbed QE2, a $600 billion purchase plan meant to stimulate investment and growth.
The central bank has signaled it will complete QE2 at the end of June, but will continue to reinvest proceeds from the bonds as they mature.
The Fed’s ownership of mortgage bonds guaranteed by Fannie Mae , Freddie Mac and the Government National Mortgage Association (Ginnie Mae) totaled $927.02 billion, unchanged from the previous week.
The Fed’s holdings of debt issued by Fannie, Freddie and the Federal Home Loan Bank system totaled $125.12 billion, also unchanged from a week earlier.
More…




Jim Sinclair’s Commentary

Here is the latest from ShadowStats.com’s John Williams.

- April Year-to-Year Consumer Inflation: 3.2% (CPI-U), 3.6% (CPI-W), 10.7% (SGS)
- Fed’s Dollar Debasement Efforts Boost Three-Month CPI Inflation into 6% to 7% Range
- Official Double-Digit Consumer Inflation Possible in Third-Quarter
- With Rising Prices Dominating Sales Gains, “Core” Retail Sales Were Unchanged in April
"No. 368: April Inflation, Retail Sales, Trade Deficit"
www.ShadowStats.com