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11 Silver Investor Mentality Shifts

The Petulant Teleprompter: Obama "Abruptly" Walks Out Of Debt Negotiations 

Update: OBAMA: "THIS MAY BRING MY PRESIDENCY DOWN BUT I WILL NOT YIELD ON THIS" -- REPUBLICAN AIDE; Perhaps Obama may want to put the country ahead of his own interests this one time...
So far the Moody's threat is having precisely zero impact on the debt ceiling farce, with just 8 days left until July 22. But the latest development is certain to jar both S&P and Fitch, not to mention Dagong, out of hibernation. Reuters reports that President Barack Obama abruptly ended a tense budget meeting on Wednesday with Republican leaders by walking out of the room, a Republican aide familiar with the talks said. The aide said the session, the fourth in a row, was the most tense of the week as House of Representatives Speaker John Boehner, the top Republican in Congress, dismissed spending cuts offered by the White House as "gimmicks and accounting tricks." Either Congress has become the best orchestrated reality TV show in history or, and this is a big or, the market should really consider panicking soon.

uest Post: How An Equity Market Prices In Recession 

Recently I compared the 2007 equity topping pattern to that of the current market. The premise being today as in 2007 the US economy is quite possibly entering economic recession. Long gone are the days of equity markets being forward looking as proven in 2007 when they peaked just two months before contraction began. A similar pattern is also playing out in the 10 year treasury. I suspect a topping market is more a function of psychology and less technicals or macro data. The money making bull is slowly dying while the bears are eager for their turn to shine. The result of this clash of views and buying power is dictated more by emotional, whipsawing action where convictions in one's position and volatile price action make coexistence difficult if not impossible. 

 

 

 

 

 

New York Sun knocks Bernanke's dissembling on gold

Dear Friend of GATA and Gold (and Silver):
The New York Sun tonight takes Federal Reserve Chairman Ben Bernanke apart for his doddering performance before the House Financial Services Committee and his dissembling response to U.S. Ron Paul’s question as to whether gold is money. The Sun’s editorial is headlined "Bernanke: Gold Isn’t Money" and you can find it here:
http://www.nysun.com/editorials/when-gold-isnt-money/87421/
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Today we had Ben Bernanke on the hill today testifying.
In one of the questions asked by Ron Paul was simply this: Is gold money

His response:  no. 

It is amazing that the Fed are certainly using gold as money as they use gold swaps for currency

and leasing of the metal for currency. 

For gold to be money it must have these 6 attributes:

1.  a store of value. ie. rare.  It must have value on its own merits. Paper money is nothing but a piece of paper derived from a bark of a tree. Paper if fiat  (value by decree)

2.  fungible.  Each unit of weight is equal to another equal unit of weight. (diamonds are different and therefore cannot be money but they are rare and valuable)

3. divisible. It must be divisible into smaller parts and easily tradeable. Gold is easily malleable and can be cut into many tiny pieces.

4. act as a medium of exchange. Gold can surely act as a medium of exchange like paper money, but paper money has none of the above attributes.

5. easily recognizable and difficult to counterfeit.  Paper money can easily be counterfeited.

Gold is harder to counterfeit.

6. it must be easily transportable to be money.

Here is a famous quote from a banker and that banker is not other than John Pierpont Morgan:

"Gold is Money. Everything Else is Credit." … J.P. Morgan.

Jim Sinclair’s Commentary

JB Slear, our gold and silver delivery man, makes the following keen observation.
China uses pictures to help explain the last media induced hype we’re forced to observe… geee I wonder who that big bear is?? Looks like he’s gonna eat them both, unless that’s a Mother Bear of debt. Hmm, I wonder who that could be representing…



Jim Sinclair’s Commentary

Moody’s is playing with dynamite.

Moody’s Places U.S. on Review for Downgrade As Debt Talks Stall By John Detrixhe – Jul 13, 2011 3:01 PM MT
Moody’s Investors Service put the U.S. under review for a credit rating downgrade as talks to raise the government’s $14.3 trillion debt limit stall, adding to concern that political gridlock will lead to a default.
The Aaa ratings of financial institutions directly linked to the U.S. government, including Fannie Mae, Freddie Mac, the Federal Home Loan Banks, and the Federal Farm Credit Banks, were also put on review for cuts, Moody’s said in a statement today.
The U.S., rated Aaa since 1917, was put on review for the first time since 1995 on concern the debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes even though the risk remains low, Moody’s said. The rating would likely be reduced to the Aa range and there is no assurance that Moody’s would return its top rating even if a default is quickly cured.
“It certainly underscores the importance of passing the debt ceiling and not putting us in default status, and making sure there’s a longer term fiscal plan to contain spending and the deficit we’ve been running up over the last few years,” said Anthony Cronin, a Treasury bond trader at Societe General SA in New York, one of the 20 primary dealers that trade with the Federal Reserve. “Maybe it’s the impetus to say we’ll need more of a concession.”
More…





Read and Learn My Friends... 
 

Fed Chairman Bernanke Says "Gold Is Not Money" ... But His Predecessor Alan Greenspan Disagrees

Submitted by George Washington on 07/13/2011 14:25 -0400

• Agency Paper
 
• Alan Greenspan
 
• Ben Bernanke
• Central Banks
 
• Federal Reserve
 
• Federal Reserve Bank
 
• Goldbugs
 
• John Exter
 
• New York Times
• Precious Metals
 
• World Bank
 

→ Washington’s Blog

Fed Chairman Bernanke told congress today:

‘Gold isn’t money’

But Bernanke's predecessor - former Fed chair Alan Greenspan - disagrees.


As I noted in 2009:

Professor Emeritus of Mathematics Antal Fekete has argued for years that gold is the ultimate - and only - safe haven when things really hit the fan.

For example, in 2007 Fekete wrote:

The grand old man of the New York Federal Reserve bank’s gold department, the last Mohican, John Exter explained the devolution of money (not his term) using the model of an inverted pyramid, delicately balanced on its apex at the bottom consisting of pure gold. The pyramid has many other layers of asset classes graded according to safety, from the safest and least prolific at bottom to the least safe and most prolific asset layer, electronic dollar credits on top. (When Exter developed his model, electronic dollars had not yet existed; he talked about FR deposits.) In between you find, in decreasing order of safety, as you pass from the lower to the higher layer: silver, FR notes, T-bills, T-bonds, agency paper, other loans and liabilities denominated in dollars. In times of financial crisis people scramble downwards in the pyramid trying to get to the next and nearest safer and less prolific layer underneath. But down there the pyramid gets narrower. There is not enough of the safer and less prolific kind of assets to accommodate all who want to "devolve”. Devolution is also called "flight to
safety”.

Darryl Schoon makes the same argument.

Here's a visual depiction Exeter's inverted pyramid, courtesy of FOFOA:

(Click here for full image)

Are Exeter, Fekete and Schoon right?

I don't know. But Alan Greenspan just lent some support to the theory.

Specifically:

Gold prices that jumped above $1,000 an ounce this week are signaling that investors are buying metals to hedge against declines in currencies, former Federal Reserve Chairman Alan Greenspan said.

The gains are “strictly a monetary phenomenon,” Greenspan said today at an investment conference in New York. Rising prices of precious metals and other commodities are “an indication of a very early stage of an endeavor to move away from paper currencies,” he said...

“What is fascinating is the extent to which gold still holds reign over the financial system as the ultimate source of payment,” Greenspan said.

In other words, Greenspan is saying that investors are moving out of the second-to-lowest step on the pyramid (currencies and government bonds) and into the lowest step (gold).

Greenspan is also verifying what goldbugs like Exeter, Fekete and Schoon have been claiming: that "the barbarous relic" still holds an important place in the modern investor's psyche.

Moreover, as I reported last year:

Alan Greenspan told the Council of Foreign Relations last week:

Fiat money has no place to go but gold.

Greenspan also said that supply and demand explanations treating gold like other commodities “simply don’t pan out."

Greenspan also spoke of how, during World War II, the Allies going into North Africa found gold was insisted on in the payment of bribes, and said:

If all currencies are moving up or down together, the question is: relative to what? Gold is the canary in the coal mine. It signals problems with respect to currency markets. Central banks should pay attention to it.

As I pointed out last month:

Utah has declared gold and silver to be legal tender - with the value of the coin determined by the weight of precious metal it contains

As the New York Times notes:

The law is the first of its kind in the United States. Several other states, including Minnesota, Idaho and Georgia, have considered similar laws.

World Bank president Robert Zoellick notedlast year:

Although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today.

Moreover, as FT reported last year:

Intercontinental Exchange, the US futures exchange group, has followed rival CME Group by allowing its European clearing house to accept gold bullion as collateral for transactions.

Zero Hedge notes:

JP Morgan Accepts Gold Bullion As Collateral.

And Phoenix Capital Research argues that central banks are themselves loading up on gold because they know that the entire fiat money scam will soon collapse.

end.

 

 

Don't miss this commentary from James Turk: Huge Base Will Propel Silver to Record Highs With Gold.

Moody's Considers Downgrading U.S. Credit Rating Amid Stalemate Over Debt Limit

 

 

20% Drop in Housing to Cause Recession in 2012, Says Gary Shilling.

Analyst: Even Dollar Stores Struggling in ‘Obama Depression’

 

 

Gerald Celente:  Arab Spring + European Summer = Winter Of Discontent




Rampant Unemployment = The Death Of The Middle Class - 40 Facts That Prove The Working Class Is Being Systematically Wiped Out 




Could Silver One Day Be Worth More Than Gold?




Killer Combo of High Gas, Food Prices are Here 




Greece Set to Default on Massive Debt Burden 

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