Guest Post: Don’t Store Your Gold In The United States

Faber had a very clear message: that everyone should own *physical* gold… and what’s more, they should store it outside of the United States: “I prefer if investors hold physical gold in a safe deposit box, ideally outside the US, in various locations… Switzerland, Singapore, Hong Kong, Australia, Canada… I think it’s important in today’s very uncertain world to diversify, not only the various asset classes… but also the custody of your assets should be in different jurisdictions.” His hosts couldn’t believe it. -NOT- store in the United States, the bastion of freedom and security??!?! What lunacy! CNBC: “Uh, so do you thus not trust US banks or US custodians? Do you think they might fail or abscond with the gold?” Guffaws and incredulous snickers emerge from the hosts. Faber: “I don’t trust anyone.” Uncomfortable silence. CNBC: “Hmmm. Interesting.”

 

 

Bank Of America Hilarious Denial #2

This is just hilarious: According to Bloomberg, Bank of America’s main hesitation was taking Warren Buffett’s money when bank had said it didn’t need capital, CNBC reports without saying where it obtained the information. It adds, the symbolic value of investment worth boost to confidence; "$5b not lot to raise" - also apparently "Terms better than public market." Here is our retort: Bank of America could have told Buffet: "No thank you" and leaked it. Instead it confirmed what Zero Hedge has been saying since October 2010 - that it is absolutely desperate for capital. Also, as to the saying that "terms were better than the public market" - why of course they are - the bank has absolutely no access to the public market. BAC IS LOCKED OUT! But at least we will soon see just how efficient Dodd-Frank's bank insolvency contingency is in real life. Because we have a feeling the brilliant legislation penned by Barney Frank and Countrywide's senator, may fall just a little short...

 

 

 

Bank of America Is Back Under $8, And Why BAC Shareholders Should Be Selling Into This Strength

And BAC retraces 50% from its pop. An 81 year old Buffett should really stick to washing himself while in the bathtub, flying in private jets with Becky Quick, and contemplating ways to have everyone in America pay more taxes, and maybe even consider retirement every now and then, than making "Long-Term" investment decisions.

Presenting Cramer's "Massive Multiday Short-Covering Rally In Financials"

First, myth from Comcast's financial clown channel (the actual source is more than clear): "this is a turning point, Buffett's bailout marks the beginning of a massive multiday short-covering rally in the financials." And here's reality...

Price Discovery Era Coming To An End As Spain, France, Belgium, Greece Extend Short Selling Ban "Due To Market Conditions" (Update: And...

Kiss the free market goodbye. Spain's and France's regulator have both just announced that the short selling ban, which was supposed to expire tomorrow, has now been extended until the end of September 30, and November 11, respectively. Add to this Belgium and Greece whose regulators announced they will lift its own short selling ban "when conditions allow", or some time in October, in and we can pretty much be confident that the European market rout seen earlier is due to someone leaking the news that price discovery in Europe is now officially over.

Obama's Latest Stimulus: Handing Out Jobless Benefits To Striking Workers

One of the oddities that seemed out of whack in this morning's weekly Unemployment Claims update was the explanation for the spike in this week's receipents of government generosity: apparently it had to do with the BLS handing out weekly benefits checks to striking Verizon workers. We will repeat the key word from that sentence because it bears repeating: "striking." Now, we may be wrong here, but if one is striking, one is not u-n-e-m-p-l-o-y-e-d, and hence the US government should probably not be using taxpayer money to double pay such individuals who have singlehandedly decided to forgo pay in return for making a labor statement. Otherwise, it kinda kills the whole "sacrifice" thing. And, lo and behold, as it turns out, we are not wrong. From JP Morgan: "Striking workers are generally not eligible to receive unemployment insurance benefits, but it looks like about half of the total amount of striking workers filed claims over these two weeks to formally determine their eligibility." Generally... except when the administration is willing to hand out money to anything and everything with a pulse. After all, there is that massive $2.2 trillion Bank of America balance sheet that has to be funded. And with direct reserve funding already failed, as per QE1 and 2, the only other possible way is via deposit increases. Alas, by the time this money could possibly be saved, it has been spent 5 times, the other 4 hitting Bank of America's bad credit card receivables department.

Mayor Bloomberg Tells Newyorkers To Prepare For Evacuation

Anyone living in New York may want to read tis Bloomberg article as this is important stuff, unlike anything coming out of Jim Cramer, who told everyone an hour ago that "this is a turning point, Buffett's bailout marks the beginning of a massive multiday short-covering rally in the financials" - naturally the XLF is about to turn red.

Gold As "Ultimate Bubble" Overshadowing Bullish Technical Setup In Silver

Eric De Groot at Eric De Groot - 1 hour ago

Gold as the "ultimate bubble" has been a nice diversion from the undeniably bullish action in silver since mid July. The (manufactured) downside gap on 5/5/11 has been cleared and tested several times. RE(E), a measure of trend energy, has been tracing out a pattern of higher highs and lows since late May. While investors fret about gold as portrayed in the headlines, they ignore the bullish... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

News That Matters

Posted by: thetrader

Post date: 08/25/2011 - 08:02

All you need to know 

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Gold $3,000?

Eric De Groot at Eric De Groot - 2 hours ago

Gold $3,000 will not be enough. At least someone is recognizing reality, though. Headline: Gold $3,000? Commentary: If gold is like the Nasdaq, it could go up 60% from here While I’ve been on leave, gold has surged from around $1,500 an ounce to nearly $1,900. And the investing world has finally started to wake up to the inconvenient facts that (a) the U.S. government is broke, (b) the... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

And In The Meantime, The German Stock Market Plummets

While Buffett is forced to bailout America's most insolvent bank, which just confirmed our prediction that it will need to raise capital (although this capital raise was far lass than what will be finally needed), Europe has realized that it has no kindly-looking, ukulele-playing, no-income-tax-paying billionaire equivalent to bailout Intesa, SocGen, UniCredit, etc, etc, oh, and tomorrow, the short-selling bank is supposed to expire. End result: DAX flash crashes, and no rebound yet. 

Buffett Bailout Of BAC Sends Stock To Early August Levels, Changes Nothing

The Buffett bandaid move, coming 48 hours after Buffett's conversations with Obama, and which also comes oddly enough just 24 hours before Bernanke was expected to announce QE3, succeeds in temporarily sending the stock back to early August levels. It also succeeds in sending the financial sector higher, which as we explained yesterday is the main reason for why the 2s10s had to be steepened, so as a result Operation Twist now can go back to its original formulation of broad 2s30s flattening and result in purchases of bonds across the board. As for what to expect with this surprising move out of Omaha? Absolutely nothing. The $5 billion in cash, unlike Buffett's investment in Goldman, will be laughably insufficient, considering that the bank's mortgage exposure is in the tens of billions, while its litigation liability is another $20-30 billion. This does nothing to change our thesis that BAC will need to come to the market again and again to raise capital. However, as this "raise" confirmed, BAC only has access to private investments: we hope Buffett has very deep pockets to keep doubling down. The other news to come out of this - Paulson will be saved with another deus ex machina and will not need to sell his gold or GLD holdings, removing the liquidation overhang from spot gold. The only good news out of all of this: the taxpayer bailout of Bank of America, when it comes, will be $5 billion less.

Bank Of Berkshire America: Buffett To Buy $5 Billion In Preferred Stock In Bank Of America

Goldman bailout part 2 is here. And so the Octogenarian of Omaha doubles down on another taxpayer bailout. At least we can put aside all the lies that Bank of America did not need capital. It needed capital: $5 billion of it. It also confirmed it was completely locked out of both debt and equity public capital markets - the bank's only recourse was a private raise with a crony capitalist who is once again doubling down on the global ponzi.

Gold Down Further 2% – Chorus of ‘Gold Bubble’ Callers Out in Force Again

Short term support may be seen at the psychological level of $1,700/oz but momentum traders and Wall Street players with concentrated short positions may press their advantage and manipulate prices to lower levels whereby they may close some of their short positions - pocketing a tidy short term profit. Strong support can be seen between the 144 day moving average at $1,522/oz and the 100 day moving average at $1,571/oz. Interestingly $1,571/oz was previous resistance and therefore could now become support. However, given the extent of global demand for physical bullion due to massive macroeconomic, systemic and monetary risk facing us today, there is the real possibility that gold’s correction is more shallow with the 50 day moving average of $1,630/oz providing support. The gold bears have jumped on the ‘gold bubble bandwagon’ again after a long period of silence.

Initial Claims Surge Far Higher Than Consensus, 1.2 Million Americans Have Dropped Off Extended Benefits Claim In Past Year

After taking a quick detour into pseudo-positive economic data, the BLS sends us right back into the depression, with an initial jobless claims number of 417, far higher than consensus of 405K (in fact higher than the highest number in the forecast range), and higher than last week's upwardly revised 412K. Naturally, the BLS is there to provide a justification for the spike, with 8500 jobs apparently "lost" due to the Verizon strike: "Special Factor: As a result of a labor dispute between Communications Workers of America and Verizon Communications, at least 12,500 initial claims were filed in the week ending 8/13/2011 and at least 8,500 initial claims were filed in the week ending 8/20/2011." In other news this is week 20 out of 20 with one or two exceptions of 400K+ prints. And to think that the August NFP number is due in just one week. In other news, continuing claims came below expectations of 3700K at 3641K, a number that will be revised higher as was last week's from 3702K to 3721K. The collapse in extended benefits, as the 99 week cliff claims more and more, means that 20K people fewer collected post Continuing Claims benefits, with those on EUC and extended benefits down from 5.8 million a year ago to 3.6 million: this is 1.2 million Americans that no longer can collect anything from Uncle Sam.

Gold And Greeks: Some Perspectives On How To Trade The Next Move

So what to do now? We maintain the forecast we made in 2002 that gold will rise to >$3,000 (and we believe it could be by a wide margin as it is expected to become (it is not yet) a bubble). For the short-medium-term, B. Bernanke speech tomorrow could (we insist on could as we would not be surprised if it is a non-event) be strongly bullish for gold but on the other hand with Paulson funds loosing almost 40% Ytd in some of his funds and the future exchanges around the world hiking margin on gold and silver, we could see further liquidation in the near-term. Liquidation risk is also restraining us from recommending to buy all the gold producers stocks you can at the present time (but we will do it probably this autumn as our gold stock models are on strong buy modes with historic >100% 6 months return).
What would we do? We would sell part of the implied volatility hedge in place (at least 50%) and then we would (using GLD as the basis) risk buy September 160 puts and sell September 150 puts. We would also sell September 180 calls and buy September 192 calls.

Euro, Futures Rise Overnight Despite Greek Two Year Bonds Soaring To Record High 46.38%

If we crossed through some spacetime vortex that brought us back in time just two short months ago, to July of this year, today's confirmation that the second Greek bailout has now failed, following the Finnish finance minister's comments that the country will defy Germany and will not give in to demands to abandon its deal for Greek collateral, which in turn has sent the Greek 2 year bond bidless, its yield up 227 bps to an all time record 46.38%, would have been enough to send the futures and the EURUSD plunging. Not today. Instead, the EURUSD soared to a high of 1.4475 overnight, on two things that indicate no marginal improvement in the situation, but no deterioration either, namely: that the ECB continued to buy Italian and Spanish bonds, pushing their spreads to Bunds tighter on the day, and since tighter is the opposite of wider, the market can safely stick its head under the sand. A just as big factor was that borrowing under the ECB's overnight lending facility plunged to a one week low of €42 million after hitting a recent high of €2,822 million yesterday as noted. And with the WSJ noticing this development just a little late (as last week), the contraction, nevermind that another surge in borrowing is coming shortly, has been the big risk on sign for European markets, which in turn have pushed US futures higher, even as the market is getting increasingly nervous that Bernanke could very well disappoint significantly tomorrow. As usual, keep an eye on Libor, OIS spreads, and all other liquidity metrics, which indicate that despite the contraction in the overnight borrowing with the ECB, Europe's liquidity is far from normal.

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