Silver: From $30/oz to over $500 by 2020 (And from $500 to $5000 by 2030!)




Pimco Predicts Greece Will Default




If Greece Defaults, What Happens to Portugal, Ireland & Spain?




Changes in Futures Trading Confirms Silver Shortage




Fitch Sees Risk of Greece, US Debt Defaults




29 Reasons to be Angry or Scared




Oil Rises As Fed Acknowledges Economy's Slow Pace




End of QEII, Impact on Treasury Market

Guest Post: Inevitable Catastrophe - The Fruits Of Moral Hazard On A Global Scale 

Identify the common characteristic of these three statements:

1. The Federal Reserve will never let the stock market decline, i.e. the "Bernanke put"

2. The Chinese government will never let property prices decline

3. The European Central Bank will never let Greece default

The answer of course is moral hazard: a person who is insulated from risk will have an insatiable appetite for risky bets because any gains will be theirs to keep but any losses will be covered by the central bank or government. The global financial authorities’ success in propping up assets (stocks in the U.S., real estate in China, banks in Europe, etc.) over the past three years has strengthened this asymmetric disregard for systemic risk into a dangerously quasi-religious faith that central banks and governments have essentially unlimited power to keep asset prices aloft via printing money, manipulation of markets and financialization of their economies.

What Does The SPR Release Mean For Gold Trading 

Submitted by Tyler Durden on 06/24/2011 18:09 -0400

Is it a coincidence that the government announced the release of crude from the SPR just days after it was disclosed that Dodd-Frank will make trading in OTC spot products illegal? Perhaps. On the other hand if there is indeed a concerted and very politicized effort by the government to encroach and "centrally plan" yet more industries, the implications for precious metals trading could be substantial. FMX Connect summarizes these as follows: "Our two cents are as follows. It does not pay to fight the government right now. Even though Bernanke can’t print more oil it is clear that we are entering into a new phase of a centrally planned economy. To us this smacks of price controls. When you combine it with the Dodd-Frank bill prohibition of OTC gold trading, you might see that we are setting up for something worse. Tin Foil Hat Alert: All gold will trade through exchanges and while we don’t think ownership will be prohibited it may be taxed to death."

Guest Post: What's Really Driving House Prices In Canada? The Must-See Graph Of The Day... 

Submitted by Tyler Durden on 06/24/2011 18:56 -0400

My position has long been that the driver of house price appreciation in Canada over the past decade has been primarily the result of the unprecedented expansion in debt caused by the loosening of CMHC mortgage insurance requirements and the removal of the maximum insurable mortgage ceiling....facilitated by a falling interest rate environment, a new mass perception of the 'investment worthiness' of real estate as an asset class, and the emergence of housing as a form of conspicuous consumption. But if we boiled them all down into one word, it would be this: DEBT! And the pace of debt accumulation is not sustainable... ergo, the pace of house price appreciation is not sustainable. Nor are house prices at current levels relative to underlying fundamentals. Not convinced? Behold!....presented without further commentary... 

 

 

 

 

 

Paulson Announces Firm's Losses On Sino-Forest Are $468 Million In June; $574 Million In 2011 

Submitted by Tyler Durden on 06/24/2011 20:06 -0400

Whereas Paulson has been scrambling recently to put out PR flames now that it has been made clear that the hedge fund skimps on due diligence when it comes to Chinese fraudcaps (and who knows what else now that the ability to reverse engineer the creation of "made to explode" CDOs is taken away), and his latest attempt at mitigating investors is to use cost basis accounting to account for massive investment failures, the sad truth for investors is that just as Zero Hedge predicted, the firm just announced that its has lost $468 million on the Chinese investment in June and $574 million in 2011 (we are unclear if this is only for the Advantage Plus equity exposure or also for the fund's credit position in Sino as well). But not to worry, "net realized losses were C$105 million" claims Paulson. Too bad that fact is completely irrelevant when observing daily and YTD P&L (a loss of over 20% YTD), which Paulson knows all too well is the only metric that is relevant for a hedge fund (unless of course Paulson cares about his tax basis as well for investor pitches, and/or plans on becoming a private equity fund now that his stint as a mutual fund is over). Perhaps Paulson also needs a reminder that some other far more critical concepts to a hedge fund are the high water mark and terminal redemption requests. So what is next for up for Paulson's remaining LPs: maybe they can look forward to letters explaining how the fund's $450 million YTD loss in Bank of America (and we won't even touch Citigroup), is really an unrealized profit of $75 million since inception. 

 

 

 

 

 

The Papas And The Papas: Greece's First Family 

Submitted by Tyler Durden on 06/24/2011 20:38 -0400

With the resurgence of Greece back to the top of global news, incompetence and labor strikes charts (just like back in 2010 at roughly this time, which is to be expected since 2011 has been following the 2010 script to the dot) there has been far too little focus in the mainstream media on the family whose actions were responsible for Greece's rise to glory and subsequent collapse into default. As Associates Press notes in its report the ruling family, "One family has dominated Greek politics for more than half a century: the Papandreous." For all those who are wondering who the men behind the curtain, or as the case may be, front and center, are, the following expose is for you. 

 

 

 

 

 

 

 

Guest Post: Deconstructing Algos, Part 1 

The third part of the series on information theoretic methods of analysis for dynamic systems is taking longer than anticipated. Crunching the numbers is killing me. So I'll take a break from it and look a little farther forward--how we can use the methods I have been describing so far to forensically examine the algorithms used in various high-frequency trading events of the recent past. As seen on Nanex and Zero Hedge, there has recently been a lot of strange, algorithmically driven behaviour in the pricing of natural gas and individual stock prices on very short time frames. In an earlier article I pointed out that the apparent simple chaos we observe in the natural gas price appeared to be an emergent property of at least two duelling algorithms. In this series of articles we will begin analysis of the algorithms involved. Today's discussion will mostly focus on framing the issues that must be addressed in order to study unknown algorithms on the basis of their time-varying outputs. Future articles will present results from the various analyses. 

 

 

 

 

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