Is Gold No Longer A Safe Haven? Not According To Capital Economics: "Gold Will Surge When Euro Crisis Escalates"

With gold dropping $200 in the past several weeks on ongoing much anticipated liquidations to cover margin calls, there are those who have wondered if the precious metals have lost their safe haven luster? Well, no. All they have lost is some value against the dollar even as all other global currencies have fallen faster than even gold as was pointed out yesterday by Mike Krieger. In other words all that is happening is a relative devaluation of the DM currencies relative to the one absolute, and to the dollar as well. However, as the Swiss National Bank so aptly demonstrated, all it takes for a central bank to intervene drastically is for its currency to appreciate beyond reasonable parameters. Which is what is happening to the dollar, not due to some intrinsic value in the currency, because it is just a matter of months if not weeks before Bernanke is forced to print all over again. The only reason the USD is soaring is due to to a multi-trillion dollar funding shortage around the world but mostly in Europe, which the Fed hopes to satisfy with a massive expansion in FX swap lines which become activated on October 12 but not before. Either way, some of the more timid elements may be explainably rushing for cover to paraphrase Norville Barnes. Which is why we present the following report from Capital Economics which explains why "Gold still deserves "safe haven" status."




Here's a quote from Harvey Organ...

"The two ETF's that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.

There is now evidence that the GLD and SLV are paper settling on the comex.

Thus a default at either of the LBMA, or Comex will trigger a catastrophic event."

Gold and Silver is on SALE...Buy it cheap and stack it deep...your going to need it sooner then you think...

Germany Spoils Party After FinMin Says Second Greek Bailout May Need To be Revised

Just hitting Dow Jones, another set of cold hard factual bricks for the bailout rumor brigade. From Germany's FinMin Wolfgang Schaeuble:

• GERMAN FINANCE MINISTER: MAY NEED TO REVISE 2ND GREEK BAILOUT - Dow Jones
• GERMAN FINANCE MINISTER: DOES NOT MAKE SENSE TO SPECULATE ABOUT NECESSITY FOR ADDITIONAL DECISIONS ON GREECE: RTRS
• GERMAN FINANCE MINISTER: THE RECAPITALIZATION OF EUROPEAN BANKS IS NOT A MATTER FOR THE ECB BUT FOR MEMBER STATES
  

It appears the euro is now soaring on expectations of a rumor to refute this latest fact.

At Least In 2008 The Governments Could Bail Us Out...

Admin at Jim Rogers Blog - 47 minutes ago

At least in 2008 there was the possibility that the governments could bail us out. Now, of course, the governments have gotten deep, deep, deep into debt themselves. Everybody is in much worse shape. - *in CNBC.com* *Jim Rogers is an author, financial commentator and successful international investor. He has been frequently featured in Time, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times and is a regular guest on Bloomberg and CNBC.* 

 

 

 

 

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Is China A Bubble?

Admin at Marc Faber Blog - 56 minutes ago

"If we define a bubble as excessive credit growth and artificially low interest rate, then China has had a gigantic bubble. Now, will it collapse or will it just slow down, that is a different issue but some sectors of the economy will collapse. - *in Economic Times* *Ticker, iShares FTSE/Xinhua China 25 Index ETF (FXI)* *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.* 

 

 

 

 

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Latest CNBC Video Interview

Admin at Jim Rogers Blog - 2 hours ago

Topics: commentary on the recent market turmoil, currencies and politics; *Jim Rogers is an author, financial commentator and successful international investor. He has been frequently featured in Time, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times and is a regular guest on Bloomberg and CNBC.* 

 

 

 

 

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I Am Planning To Buy Swiss Francs, Dollars & Agriculture

Admin at Jim Rogers Blog - 2 hours ago

Agriculture prices are getting banged right now. I am kind of planning on buying Swiss francs, more dollars and agriculture. - *in CNBC.com* *Tickers, ELEMENTS Rogers Intl Commodity Index - Agriculture Total Return ETN (RJA)* *Jim Rogers is an author, financial commentator and successful international investor. He has been frequently featured in Time, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times and is a regular guest on Bloomberg and CNBC.* 

Watch History Being Made As Solyndra Execs Plead The Fifth, Confirm Failure Of Government Stimulus Program

Is this the beginning of the end of Obama, with impeachments and much more to follow? Today's pleading of the 5th amendment by Solyndra execs may be the starting point. Watch the live hearing below.

Black Friday Arrives: Biggest Weekly Move In 30 Year Bond Since Black Monday

30Y rates move more than three standard deviations this week - the greatest move since Black Monday (1987) - as it drops 55bps - hhmm - stability.

Endspiel: Fidelity Says "It Is Clear Now That The Fed Cannot Bail Equity Markets Out Any More"

Uh... did a member of the status quo just tell the truth? "It is clear now that the Fed cannot bail equity markets out any more and any interest rate cuts by the ECB may not have much of an impact on markets" Cue panic?

CDS Rerack: What Comes After Bloodbath? Bloodbather?

As overnight hopes of global bailouts fade, the reality that the markets are on their own has started to sink in across every asset class but perhaps credit - the life-blood of everything we do economically - is hurting the most. Senior financials are 14bps wider at 317.5bps (record wides), Main is 11bps wider at 209bps, and XOver 36bps wider at 880bps. Yesterday saw sovereign selling focused in the majors but today it has spilled over into everyone else as commodity producers have maintained their relationship with oil and have snapped wider. While SovX is 'only' 11bps wider at 368bps, CEEMEA is 41bps wider at 390bps overtaking SovX for the first time since June back to its more 'normal' position cheap to Western Europe.

5 Handle For BAC As GM Now A Teenager, At 50% Of Post IPO High

We can only imagine the frantic calls being place between Omaha and Washington this morning...

TGI Failure Friday: Oslo Stock Exchange Closed For "Technical Difficulties"

The first of what is likely many. "Due to technical disturbances, Oslo Børs' Equity and  Bonds markets are temporary halted. Members may  delete their orders in this state.  Further information will follow. 

Orphaned Markets

Story yesterday of "helping" the weakest 16 banks in Europe to recapitalize was met with a strong rally, quickly followed by a sell-off to new lows.  The realization that the EU has gangrene and decided to deal with some warts brought back the fear the the governments are once again behind the curve and just don't get it. Then we rallied into the close because the G-20 would of course save us.  So far, not so much.  A wishy washy statement is just not enough for a market that has come to expect (if not depend) on more.   The BRIC's are supposed to ride to the rescue, but in Brazil, the currency has been getting crushed, Chinese CDS is hitting new wides.  Brazil is busy imposing tariffs on China.  Russia is complaining about Chinese dumping.  Hardly the signs of a co-ordinated effort to rescue the world.   So many people have been asking "What has changed?" in the past couple of days.  "How can we have gone from 1,220 to 1,120?"  The answer, to me is clear, a loss of faith in the ability and willingness of the governments to write checks to support the stock market.  I ask what happened to make stocks futures go from 1,120 on the 12th of September, to 1,210 by that Friday?  That to me is just as legitimate a question.  And the answer is clear - the market still believed that the governments were there to give the market whatever it whined for.  Every pop that week was directly a result of some government or quasi government action or rumor.  That rally occurred with Retail Sales disappointing, surprisingly bad Jobless Claims, weak Empire Manufacturing and Philly Fed.

Greece Denies Rumors Of An Orderly Default With 50% Debt Haircut

The onslaught of half fiction, half lies from Greece continues after the Greek government was forced to deny the latest set of truth leaks, in this case that Greece is preparing for an orderly default, which it obviously is: there is no way the country can hope to implement the terms of the July 21 bail out now, especially with a dead silence on the terms of the bond exchange offer which means it has failed miserably. What it is certainly right about is that there is no truth to a debt haircut being just 50%: it will be far more, and the reality is it the haircut severity probably won't have much of an impact - most French and German banks have long since wound down their Greek exposure. The key question is how long before the other PIIGS follow suit. Another important question is whether the orderly default will come before the next IMF capital injections is provided to the country or after, and if it will be too late for an orderly bankruptcy then, and instead we get a disorderly one. From Reuters: "Greece denied on Friday newspaper reports that one option in the debt crisis would be an orderly default with a 50 percent haircut for bondholders. "Greece denies the reports," a senior government official told Reuters on condition of anonymity." And we all know what official denials mean...

Flight To Safety, Liquidations Resume On Fresh European Stability Concerns

Yesterday's last minute short covering rally has been all but eliminated and then some, on fresh European concerns following a Deutsche Bank report that the agreed writedown of 21% from the July 21 second Greek bailout agreement could be executed, and that instead an orderly default with an up to 50% haircut is being considered. Generally, broad concerns that Greece can and will go bankrupt any minute once again dominate and have undone any favorable market sentiment from yesterday's G20, also known as the Full Tilt Ponzi Group, announcement, which was also followed up by an ECB statement that the central bank would do everything to prevent further contagion. Judging by the risk waterfall this morning, and the liquidations in gold (driven by a vague but ever stronger rumor of a winddown at a GLD-heavy hedge fund that is now down 50% YTD), virtually nobody believes anything coming out of any European institution. Alas, this is what two years of relentless accrued lying will do to your reputation. Adding fuel to the fire is a report from Credit Suisse that the chance of a "general European break up" is about 10% and that European banks would fall by about 40% on a disorderly Euro breakup and that peripheral European banks' net foreign liabilities would rise by €800 billion. In other words, European banks would blow up, which is nothing really new. Next, we hear from Dexia which yesterday got annihilated and today is down another 2.5% despite promises from the Belgian central bank governor Luc Coene that the bank is not in trouble and has not sought dollars from the ECB in a long time: obviously an attempt to prevent an all out attack on the insolvent bank, which as is well known bypasses the ECB and goes straight to the Fed for emergency funding. Overall, there is a very distinct sense that it's the end of the world as we know it, and the market does not feel all that fine anymore.

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