Saturday, December 31, 2011

Powerful Rebound In Gold and Silver Prices About To Begin?

by Jeb Handwerger, via

Rarely has such technical destruction been visited on stalwart sectors such as gold, silver and the mining stocks(GDX). The silver charts reveal technical damage not seen since the destruction of 1984. It can only be conjecture that can account for a once in a generation obliteration of a once hallowed sector. It must be remembered that both gold(GLD) and silver(SLV) had major moves earlier this year to the $1900 and $50, surpassing overhead resistance and reaching overbought territory. This may be the reason why the decline in precious metal is overextended and extremely oversold. We urged caution back in April for silver and in September for gold. Silver has characteristically corrected close to 50% from its highs, while gold has fallen less than 20%. Pullbacks are normal and restorative in a secular bull market in precious metals especially after explosive moves.
Unless such technical destruction is reflective of an upcoming geopolitical news development, we must look for more mundane causes. When the woods are ablaze, the fire obliterates the sequoias at the same time they incinerate the pines. The recent declines may be the result of a rush to the U.S. dollar (UUP) and treasuries (TLT).
Read More @




Ron Paul: Mitt Romney is a Serial Flip-Flopper & Part of the Status Quo

Making Sense Of 2011
12/31/2011 - 14:14
This is the time of year when you are supposed to look back and make sense of what happened during the year and make predictions about the new year. A futile task if there ever was one. How...

The Most Significant Developments of 2011 with Trends in 2012



Two Lectures On The History Of Austrian Economics

When it comes to the types of people in this world, there are those who say that the only way to fix the current economic catastrophe is to keep doing more of the same that got us in this condition in the first place (these are the people who say mean regression is irrelevant, and 10 men and women in an economic room can overturn the laws of math, nature, physics, and everything else and determine what is best for 7 billion people), and then there is everyone else. The former are called Keynesians. The latter are not. Only those in the former camp don't see the lunacy of their fundamental premise, a good example of which is the following. Luckily, the world is nearing the tipping point when the camp of the former, which for the simple reason that it allowed the few to steal from the many under the guise that it is for the benefit of all, is about to be overrun, hopefully peacefully and amicable but not necessarily, and the camp of the latter finally has its day in the sun. Naturally, when that happens the status quo loses, as the entire educational and employment paradigm is one which idolizes the former and ridicules the latter even though the former has now proven beyond a shadow of a doubt it is a miserable failure (ref: $20+ trillion excess debt overhang which will, without doubt, lead to a global debt repudiation or restructuring, with some components of "odious debt"). So for all those still confused what some of the core premises of the ascendent "latter" are, below we present two one-hour lectures by Israel Kirzner. We urge readers to set aside two hours, which otherwise would be devoted to watching rubbish on TV or waiting in line for In N Out burger, and watch the two lectures below. Because, contrary to what the voodoo shamans of failure will tell you, there is a way out. It is a very painful way, but it does exist. The alternative is an assured and complete systemic collapse once the can kicking finally fails.

A Future View Of Post-Bubbledemic America

Balancing the budget in 2032 is going to be a rather easy, mechanical task for future American politicians. A constitutional amendment requiring balanced budgets will be enacted by then, and Congress will only need to tackle projected deficits by adjusting variable pension and Medicare rates – for those retired – which will have replaced the current models for Social Security and Medicare. And if worst comes to worst, there will be room for additional cuts from the budget of an already octomated military which by then will lack any hegemonic designs as other major world powers claim their legitimate stakes and defend their grounds. That’s my prognostication as we close 2011, a year of much turmoil around the world, and one with a hopeful spark for change in the United States of America, as Wall Street’s macabre face slowly becomes unveiled.

I Now Have 2 Million Reasons to Be Bullish on Gold

by Peter Grandich:
“He who does not bellow the truth when he knows the truth makes himself the accomplice of liars and forgers.” — Charles Peguy
If there’s been one overriding theme I’ve stressed from when I turned bullish on gold at just over $300 in the spring of 2003, it’s that the financial industry and most of those who report about it and the markets hate gold. I said it’s foolhardy to expect there ever to be a universally bullish view for gold, and that we should appreciate that there will always be forces whose desire is for gold’s price to be suppressed, lower than where it would be in a free market. Ironically, those who support such price suppression are the ones who call people like me and the good people at GATA tin-foil hat wearers, fanatics, or worse.
While most of those who may be bearish on gold now or have been so recently are legitimate forecasters who just see the cup as half empty versus my view of half full, there is one human being (as a Christian, I’m desperately trying to remember that we’re all God’s children, even though this person makes me think that God must experiment at times or at least have a good sense of humor) whom I have called the Tokyo Rose of Gold Forecasters and who has not only had the worst track record since the mother of all gold bull markets began about a decade ago but who also twists facts and tries to change his own history to conceal that he has been anything but bullish and that he has missed the greatest run in gold’s history. I’m speaking of Kitco gold market analyst Jon Nadler.
A few weeks ago, I issued this challenge:
Read More @

Nations Ponder Their Escape From Debt

by Bob Chapman, The International Forecaster:
What does one write about between Christmas and New Years? Things are usually pretty quiet, especially in Europe. As a result we’ll give you a little about this and a little about that.
Public institutions worldwide are fighting ratings downgrades foremost of which is France, the US and, of course, sovereigns and banks worldwide. Miracles of miracles finally the rating agencies are doing their jobs. The caper they pulled in collusion with Wall Street in rating mortgage securities should have put them all in jail for life. We’ll call these efforts makeup time for their previous sins, which they never were prosecuted for. The complaint is their methodology is unreliable. We can assure you they know exactly what they are doing. The French want them to cease and desist. That is not going to work, because the French government and banks have very serious solvency problems. Central bankers and sovereigns always believe they are above the law. Eventually they all pay the price of greed and corruption.
Read More @

The History of Austrian Economics | Dr. Israel Kirzner



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Happy New Year...

Biderman On 2012: Long Gold, Short EUR And Stop Praying For A Miracle

Wearing a shirt that only a mother could love, Charles Biderman of TrimTabs offers his insightful perspective on the year ahead. Against the backdrop of a fog-bound Sausalito, Biderman sees only one path over the medium-term for Gold (up) as developed market central bankers print their respective fiat currencies and emerging market central bankers horde the one true sound money alternative. Just as we have been pointing out, he notes that the ECB has been QE-ing in all but name and the region faces at best a recession and at worst a depressionary breakup. Cost averaging into a Long Gold, Short EUR position is among his favorite ideas for 2012. Furthermore, he likes non-USD commodity producers in local currencies - implicitly long commodities and short the USD but it is his epiphany that a 'Miracle on Main Street' is hoped for by any and every market observer and media hack that rings truest. The hoped-for miracle that explosive growth (just as has always been the case post WWII) is just around the corner and will rescue us from the doldrums-like state we are meandering through is simply our heuristic biases run wild (together with an entire industry of asset managers and strategists who always see 10-15% appreciation ahead in broad equity markets over the next year). Until there is a total restructuring of developed market economies to the point where entrepreneurs are encouraged to act and where government spending is 'closer' to government income and not to 'wish fulfillment', there can be no jump-start to growth. Political will remains bereft of desire to do anything but kick the can down the road - and unfortunately, that can is getting bigger and heavier by the minute.

Jim’s Mailbox

Hi Jim,

Iran is heating up. They’re going to test fire long-range missiles tomorrow. Wonder if that’s why gold was up today?
The New Year should be quite eventful!
New Years Greetings,

CIGA Black Swan

Iran to fire long-range missiles in drill-agency Fri Dec 30, 2011 9:45am EST
By Parisa Hafezi

TEHRAN, Dec 30 (Reuters) – Iran will fire long-range missiles during a naval drill in the Gulf on Saturday, a semi-official news agency reported, a show of force at a time when Iran has threatened to close shipping lanes if the West imposes sanctions on its oil exports.
Iran threatened on Tuesday to stop the flow of oil through the Strait of Hormuz if it became the target of an oil export embargo over its nuclear ambitions, a move that could trigger military conflict with countries dependent on Gulf oil.
"The Iranian navy will test several kinds of its missiles, including its long-range missiles, in the Persian Gulf on Saturday," Admiral Mahmoud Mousavi, deputy commander of the Iranian navy, told Fars news agency.

Oil May Rise as Iran Threatens to Block Strait, Survey Shows By Mark Shenk – Dec 30, 2011 3:02 PM ET
Oil may rise next week after Iran’s threats to block the Strait of Hormuz, a critical waterway for shipping crude, a Bloomberg News survey showed.
Thirteen of 32 analysts, or 41 percent, forecast oil will increase through Jan. 6. Ten respondents, or 31 percent, predicted prices will decrease and nine estimated there will be little change. Last week, 38 percent of surveyed analysts expected a decline.
Futures surged to $101.77 a barrel on Dec. 27, the highest intraday price since Dec. 7, after Iran’s official Islamic Republic News Agency cited Vice President Mohammad Reza Rahimi as saying the country would bar shipments through the strait if sanctions are imposed on its oil exports.

Official and Unofficial Liquidity Injections Translate Into Gold & Silver Accumulation  

While money concentration tends to follow price, it can be associated with nearly every type of market action. Most often, particularly in gold and silver, money flows concentrate as price advances and declines. For example, commercial trader accumulation (long buying and short covering) and retail distribution (long selling and short selling) tends to occur as price declines. There are exceptions. Strong markets can display slow concentration during sideways chop or what Jim has described as accordion chop. Strong market, such as intensive silver buying in early 2011, can force commercial buying and short covering into strength; this condition is highly rare and illustrates extreme strain of control.
Fundamental trigger can be official or unofficial. Strong hands are accumulating gold and silver because large sums of unofficial liquidity (such as loan and currency swaps) entering the global financial system. Any official QE announcement, while perhaps surprising the public, would be little more than further public omission of an ongoing problem.
Hi Mr. De Groot,
In your latest article "Silver from investment darling to pariah" it says in the end "(6) Unfortunately, the cycle of panic, already predicted by long-term cycles, will return with even greater intensive." Does that suggest that the correction in Silver may not be complete yet?
Also, the chart Silver London P.M Fixed and the Silver Concentration Index (CI) was very interesting. Will you update that chart on your blog once there is a "earthquake before the price eruption"?
In order for Silver to take off do you think there has to be a fundamental trigger first? For example that the Fed or the ECB announces more QE at a meeting?
Kind regards,


In The News Today

Dear Friends,

This is pure global QE. The Fed provides the swaps which is a form of loan for the ECB to lend to their banks who in turn buy Euro Federal paper.
The veil is so thin and the result is exactly the same as QE in this global world with the Fed the world central bank of central banks. The slightly better than expected Italian bond issue is a hoax.

“Banks borrowed €17.307B from the ECB overnight, a very sharp jump from the €4.321B borrowed on Wednesday and the highest level since February. Banks deposited €445.683B, still near the €452.034B record set earlier this week.”

Delusions of the Euro Zone: The Lies that Europe's Politicians Tell Themselves

the link is here.





John Mauldin – The Matterhorn interview

This Lars Schall interview with John Maldin is posted over at the website...and is well worth reading and the link is here.

Peter Grandich doubles his gold price challenge to Kitco's Jon Nadler

and the link is here.





Ron Paul Wants to Check Fort Knox for Gold

The link is here.





Japan's new tax law prompts bullion sales spree

and the link is here.





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WATCH the FRAUD of the Mainstream Media AS THEY PANIC Over Dr. Ron Paul Winning Iowa



Gold and Silver rebound/Gold finishes up 11% on the year/

Good morning Ladies and Gentlemen: Gold finished the comex session at $1566.00 up $20.90 on the day.  Silver finished at $27.91 up 64 cents. In the access market, here are the final prices for the metals this year: gold: $1566.40 silver: $27.86 The markets were very quiet ahead of the New Years holiday weekend. However when everybody returns on Tuesday expect massive volatility on all bourses

On Cascading Counterparty Risk & Economic Treason

by Ann Barnhardt,

I’m out of pocket for a few days, but K.D. over at ran THIS PIECE on Wednesday, and I just wanted to chime in and expand the concept at bit. First, I absolutely, totally, completely and 105% confirm that the futures markets are withering and dying on the vine AS WE SPEAK. I’m hearing for every single one of my contacts, both floor guys (in both Chicago and NY) and introducing brokers (as I used to be) all over the country, that business is totally evaporating. And we’re not talking the normal Christmas season slowdown. No. We’re talking people explicitly stating that they are done trading and hedging with futures, both speculators and hedgers. It’s over. No mas. See you later, Alligator. Buh-bye.
This was going on to some extent before the MF Global rape/theft. The markets had grown thinner and thinner, ironically on more net volume, but the volume increases were due to the veritable fungal infection of the market that is the high frequency algorithm trading systems. Furthermore, any short hedger with a brain in their head over the last 18 months has known that short hedging in an inflationary environment is and would be needless suicide. Why IN THE WORLD would you SHORT an inflating market? If Mrs. Reggie Love is printing money a trillion at a pop, and I think Mrs. Love’s debasement will be at $8.5 TRILLION in a few weeks after the debt ceiling is raised yet again, isn’t it obvious that currency debasement is happening and that physical commodity prices are going to necessarily inflate? At this point, anyone who actually believes any statistics that come out of the federal government or the Federal Reserve (there’s no inflation!) has got to be mentally disabled. Literally. Mentally disabled.
Read More…

Mainstream “Republicans” Will Probably Fall For It Again: The Newt Gingrich Special

[Ed Note: For the folks out there who call themselves 'Republicans' and who are either not really paying attention, or who are just generally willing subjects to whatever drivel the establishment sells them, this will likely work like a charm. Please take special note of the first line in this story about "front runner" Gingrich.]
Ads and 30-Minute Special Will Promote Gingrich
by Jeremy W Peters,
His cash-short campaign unable to buy much advertising of its own, Newt Gingrich’s well-financed allies are coming to his rescue in Iowa, securing large chunks of airtime across the state.
Newsmax, the conservative magazine and Web site, will show a 30-minute special on Mr. Gingrich throughout the weekend in all of Iowa’s major television markets. The program is hosted by Michael Reagan, son of the former president, and makes the case that Mr. Gingrich is the strongest candidate to carry forward Ronald Reagan’s legacy.
“Millions of dollars in negative ads have been spent against him,” Mr. Reagan says. “But let’s discuss the real Newt Gingrich.” Soft music then starts to play and the camera cuts to a black and white photograph of Mr. Gingrich as a boy.
A second major player in conservative circles, Liberty University, the evangelical institution founded by Jerry Falwell, is also giving Mr. Gingrich some help in Iowa, running 30-second commercials in which Mr. Gingrich extols the virtues of a Liberty education.
Read More @

Architects of Euro Fail Lead Way to 2012 Danger Zone



Europe’s Future

by Alasdair Macleod,
Downward price chartNow the New Year reviving old desires,
The thoughtful soul to solitude retires.
The Rubaiyat of Omar Khayyam
We are at the threshold of a New Year and accordingly should accept Omar Khayyam’s recommendation, and as our thoughtful souls turn to Europe we might observe two entwined problems – economical and political. The economic problem is that spendthrift Europeans have run out of money, and their ability to print more is broadly restricted to saving the banking system. The political problem is that the whole future of the European Union has been thrown into doubt by the debt crisis.
Starting with economics, we see European budget deficits that are now likely to increase further as the mirage of economic recovery fades. Furthermore, there are large amounts of government debt maturing in the coming months, which need to be rolled over by persuading holders not to redeem existing bonds. According to UBS, in the next three months eurozone sovereign funding will total €234bn. The support from the banks is bound to be limited, since they face their own lethal debt trap of bank runs and maturing loan liabilities. This is the primary reason the European Central Bank made funds available to the banks through the long-term refinancing operation (LTRO), not as some thought to allow the banks to simply refinance sovereign debt.
Read More @

30 Statistics That Show That The Middle Class Is Dying Right In Front Of Our Eyes As We Enter 2012

from The Economic Collapse Blog:

Once upon a time, the United States had the largest and most vibrant middle class that the world has ever seen.  Unfortunately, that is rapidly changing.  The statistics that you are about to read prove beyond a reasonable doubt that the U.S. middle class is dying right in front of our eyes as we enter 2012.  The decline of the middle class is not something that has happened all of a sudden.  Rather, there has been a relentless grinding down of the middle class over the last several decades.  Millions of our jobs have been shipped overseas, the rate of inflation has far outpaced the rate that our wages have grown, and overwhelming debt has choked the financial life out of millions of American families.  Every single day, more Americans fall out of the middle class and into poverty.  In fact, more Americans fell into poverty last year than has ever been recorded before.  The number of middle class jobs and middle class neighborhoods continues to decline at a staggering pace.  As I have written about previously, America as a whole is getting poorer as a nation, and as this happens wealth is becoming increasingly concentrated at the very top of the income scale.  This is not how capitalism is supposed to work, and it is not good for America.
Read More @

You Are Washington’s Collateral

by Gary North,
Whenever any would-be borrower approaches a lender for a loan, he must be prepared to offer collateral, just in case he cannot repay the loan. If he defaults, the lender wants to be able to gain possession of the collateral, and obtain it quickly.
Every government that uses bond sales to maintain its level of expenditures must offer collateral. This collateral is its ability to extract sufficient revenue from those people under its jurisdiction so that it can make interest payments on the bonds.
In the South of 1850, a planter could buy slaves on credit. He pledged the future productivity of his slaves as collateral for the loan. He made sure that he extracted sufficient wealth from the slaves to pay off his loans. He lived well. They didn’t.
Why did he borrow? In order to buy more slaves. He used leverage. He built his plantation with borrowed money and the heirs of kidnapped victims. It was good business.
Read More @

2011 Year in Review: Signs of an American Spring and a Fourth Turning

by Adam,

[...] “Governments gambled on a return to growth solving all the problems. That bet has failed.” –Satyajit Das
Every December I write a Year in Review. Last year’s was posted at several sites including Chris Martenson’s [1]. What started as summaries posted for a couple dozen people accrued over 13,000 clicks in total last year. It elicited discussions with some interesting people and several podcasts, including a particularly enjoyable one with Chris [2]. Each begins with a highly personalized survey of my efforts to get through another year of investing. This is followed by a brief update of what is now a 32-year quest for a soft landing in retirement. These details may be instructive for some casual observers. I have been a devout follower of Austrian business cycle theory since the late 1990s and have ignored the siren call for diversification. I vigilantly monitor my progress relative to standard benchmarks. The bulk of the blog describes thoughts and ideas that are on my radar. The commentary is largely stream-of-consciousness with a few selected links that might be worth a peek. Some are flagged as “must see”. Everything else can be found here [3].
So why do people care what an organic chemist thinks about investing, economics, monetary policy, and societal moods? I can only offer a few thoughts. For starters, in 32 years of investing I had only one year in which my total wealth decreased in nominal dollars; whatever I am doing has worked. I also ride the blogs hard, am fairly good at distilling complexity down to simplicity, seem to be a congenital contrarian, and am pretty well connected (for a chemist). I am Joe Sixpack, a 99er of sorts with a growing unease.
Read More @

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Friday, December 30, 2011

Richard Russell: We are Watching Market History in Gold

from King World News:
With mounting fears over the recent plunge in gold and silver and continued volatility in markets globally, the Godfather of newsletter writers, Richard Russell, had this to say in his latest commentary: “This year’s close for gold marks the 11th year for higher year end gold closing. To my knowledge this is the longest bull market of any kind in history in which each year’s close was above the previous year. This fabulous bull market will not end with a whisper and a fizzle. I continue to believe that the upside gold crescendo of this bull market lies ahead. We are watching market history.”
Richard Russell continues: Read More @

Jim Sinclair: “This is Pure Global QE”

by Jim Sinclair,
Dear Friends,
This is pure global QE. The Fed provides the swaps which is a form of loan for the ECB to lend to their banks who in turn buy Euro Federal paper.
The veil is so thin and the result is exactly the same as QE in this global world with the Fed the world central bank of central banks. The slightly better than expected Italian bond issue is a hoax.
“Banks borrowed €17.307B from the ECB overnight, a very sharp jump from the €4.321B borrowed on Wednesday and the highest level since February. Banks deposited €445.683B, still near the €452.034B record set earlier this week.”
Original Source @

We’ve Been Impoverished and It’s Only Going to Get A Whole Lot Worse

by Mac Slavo,

The dollar is losing value, but this fact is not just some recent phenomenon. In case you missed the charts comparing the decline of the US dollar to the Roman silver denarius, what they show is that the US dollar has, over the course of the last one hundred years, experienced a steady decline amounting to about a 95% loss in purchasing power, closely mimicking the fall of the world’s reserve currency circa the 2nd and 3rd centuries.
Every single day our central bank and the US government utilize the stealth tax known as inflation to make you poorer by increasing your cost of living. It’s so subtle that most Americans don’t even notice – or care.
In just the last decade alone, Brits have lost about 43% of their purchasing power for the most essential of all goods – food and energy.
Read More @

As '11 Ends, 11 Charts Of 11 Disturbing 11 Year Trends

As we pop the corks of our proverbial champagne this weekend with an eye to a better year ahead, perhaps it is worth thinking about these 11 incredible trends that have evolved in a rather disturbing manner over the last 11 years. As John Lohman points out, the 21st century has not been pretty for ongoing centrally planned attempts to defer the 30 year overdue mean reversion.

Guest Post: 2011 - Catch-22 Year In Review

The Wall Street mantra of stocks for the long run is beginning to get a little stale. If Abbey Joseph Cohen had been right for the last twelve years, the S&P 500 would be 4,000. For this level of accuracy, she is paid millions. Her 2011 prediction of 1,500 only missed by16%. The S&P 500 began the year at 1,258 and hasn’t budged. The lowest prediction from the Wall Street shysters at the outset of the year was 1,333, with the majority between 1,400 and 1,500. The same Wall Street clowns are now being quoted in the mainstream media predicting a 10% to 15% increase in stock prices in 2012, despite the fact we are headed back into recession, China’s property bubble has burst, and Europe teeters on the brink of dissolution. They lie on behalf of their Too Big To Tell the Truth employers by declaring stocks undervalued, when honest analysts such as Jeremy Grantham, John Hussman and Robert Shiller truthfully report that stocks are overvalued and will provide pitiful returns over the next year and the next decade.

I Don't See Much Reason To Own Equities

Admin at Jim Rogers Blog - 38 minutes ago
I’m short emerging markets, short American technology, short European stocks – I don't see much reason to own equities. - *in CNBC* *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.* 

Silver ends DOWN on the Year

Trader Dan at Trader Dan's Market Views - 6 hours ago
First of all I would like to publicly thank one of my readers, "Silverwood", for noting that I erroneously reported in an earlier post that silver had ended the year 2010 at the $28.00 level. I mistakenly used the LOW for the month of December 2010 instead of the closing price which on the front month futures contract was $30.93. Based on that price, Silver is ending DOWN on the year 2011. Note on the following chart that it has retraced 50% or half of the entire rally made from the lows in 2008 which marked the bottom during the eruption of the credit crisis and the inception of t... more » 


Thankful for Gas Shale

Trader Dan at Trader Dan's Market Views - 7 hours ago
One of these days the politicians are going to wake up and realize that America is sitting on so much natural gas that we could kiss the Mid-East and its problems goodbye if we actually took steps to convert to a larger use of this valuable "home-grown" natural resource. Wouldn't it be nice to be able to ignore the mullahs in Iran as demand for the only thing they have to sell of any value evaporates up into smoke. Look at this price chart of natural gas and see what American ingenuity and technology can do when once it is unfettered and allowed to thrive. I for one am thankful th... more » 


Bubble/No Bubble - And Happy 2012

Dave in Denver at The Golden Truth - 7 hours ago
*I don't know that it happens right away, but I think the "snap-back" move we get in the sector will shock a lot of people, even long-time metals and mining stock participants.* I have never ever in close to 30 years of observing, studying and participating in all aspects of the financial markets seen an investment opportunity in which the fundamentals that support the undervaluation of an investment sector permeate every aspect of the system AND in which these fundamentals are right out in the open for everyone to examine - and yet, the same fundamentals and evidence are ignored ... more » 


US Dollar looks to squeak out a Winning Year

Trader Dan at Trader Dan's Market Views - 8 hours ago
The Dollar is being sold down today in the year's last trading session as bulls book profits and window dress their accounts after the nice run higher over the last two months in the greenback. This is allowing the commodity complex in general to rally and is benefitting both gold and silver. Reading too much into one day's trading action at this time of the year is generally not wise. Volume is simply too low to validate any moves and with liquidity quite low, it does not take much in the way of order size to move these markets around. Also, some of the pit locals particularly are ... more » 


Friday Humor: Unspinning The "€100 Bill" Or How The European Bailout REALLY 'Works'

By now everyone has heard the parable explaining how the entire European bailout, courtesy of near-infinite fractional reserve banking, can be taken care of using one €100 bill. Or so the yet again flawed economist thinking went. Unfortunately, this was just a parable, and a massively flawed one at that. As the below interaction between a ZH reader and his broker elucidates, here is what this idealized story would look like in the real world, that as we explained before, is drowning in about $21.2 trillion in excess debt.

Guest Post: New Asian Union Means The Fall Of The Dollar

The genius of globalization is not in how it “works”, but in how it DOESN’T work. Globalization chains mismatched cultures together through circumstance and throws us into the deep end of the pool. If one sinks, we all sink, enslaving us with interdependency. The question one must ask, then, is if all sovereign economies are currently tied together in the same way? The answer is no, not anymore. Certain countries have moved to insulate themselves from the domino effect of debt implosion, one of the primary examples being China. Since at least 2005, China has been taking the exact steps required to counter the brunt of a global debt collapse; not enough to make it untouchable, but enough that its infrastructure will survive. One could even surmise that China’s actions indicate a foreknowledge of the events that would eventually escalate in 2008. How they knew is hard to say, but if the available evidence causes you to lean towards collapse as a Hegelian creation (and it should if you are paying any attention), then China’s activity begins to make perfect sense. If a globalist insider told you that in a few short years the two most powerful financial empires in the world were going to topple like bowling pins under the weight of their own liabilities, what would you do? Probably separate yourself as much as possible from the diseased dynamic and construct your own replacement system. This is what China has done…

Rothschild, U.S. Fed, Admit Nothing. Explain Nothing

by Richard Mills,

Mayer Amschel Bauer Rothschild, founder of the International Banking House of Rothschild said:
“Let me issue and control a nation’s money and I care not who writes the laws.”
The Rothschild brothers, already laying the foundation for the Federal Reserve Act, wrote the following to New York associates in 1863:
“The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.”
In 1906, Senator Nelson Aldrich – known as the “General Manager of the Nation” because of his impact on national politics and position on the Senate Finance Committee – sold his interest in the Rhode Island street railway system to the New York, New Haven and Hartford Railroad, whose president was J. P. Morgan’s loyal ally, Charles Sanger Mellen.
Read More @

Stephen Leeb: Expect $5 Gas, $60 Silver & $3,000 Gold in 2012

from King World News:
With 2011 coming to a close and gold and silver stabilizing after the recent smash, today King World News interviewed acclaimed money manager Stephen Leeb, Chairman & Chief Investment Officer of Leeb Capital Management. KWN wanted to get his outlook for 2012 and thoughts on the recent takedown in the metals. When asked about the action in gold, Leeb responded, “The fact that gold has gone down, in the face of what should be good news, has really spooked people. But there are a lot of reasons you can have corrections, even the strongest markets have corrections. This could have started because Paulson sold a big chunk of his GLD.”
Stephen Leeb continues: Read More @

Official and Unofficial Liquidity Injections Translate Into Gold & Silver Accumulation

by Eric De Groot:
While money concentration tends to follow price, it can be associated with nearly every type of market action. Most often, particularly in gold and silver, money flows concentrate as price advances and declines. For example, commercial trader accumulation (long buying and short covering) and retail distribution (long selling and short selling) tends to occur as price declines. There are exceptions. Strong markets can display slow concentration during sideways chop or what Jim has described as accordion chop. Strong market, such as intensive silver buying in early 2011, can force commercial buying and short covering into strength; this condition is highly rare and illustrates extreme strain of control.
Fundamental trigger can be official or unofficial. Strong hands are accumulating gold and silver because large sums of unofficial liquidity (such as loan and currency swaps) entering the global financial system. Any official QE announcement, while perhaps surprising the public, would be little more than further public omission of an ongoing problem.
Read More @



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Foreigners Dump Record Amount Of US Treasurys In Past Month

With year end fund flows making absolutely no sense for the most part, thank you global central planning, as the euro plunges and the market refuses to follow, with risk assets rising on speculation the ECB (and/or Fed) are about to restart printing yet gold collapsing (on one or two hedge funds liquidating, yet econ PhDs already rewriting their theses on why the "gold bubble has popped"), and finally with Treasurys soaring to near all time highs (10 Year under 1.9% yesterday even as stocks surged on data from the National Advertisers of Realtors, aka NAR, of all fraudulent and corrupt entities), here is the latest observation to make the confusion complete. As the Fed's critical H.4.1 weekly update shows (which is leaps and bounds more accurate than the Treasury's TIC international fund flow data), in the week ended December 28, foreign investors sold the second highest amount of  US bonds in history, or $23 billion, bringing total UST custodial holdings to $2.67 trillion, a level first crossed to the upside back in April. This number peaked at $2.75 trillion in mid-August, and as the chart below shows the foreign holdings of US paper have been virtually flat in all of 2011, something which is in stark contrast with what the price of the 10 Year would indicate vis-a-vis investor demand. And going back further, the last week is merely the latest in a series of Custodial account outflows. In fact, in the last month (trailing 4 weeks), foreigners have sold a record $69 billion in US paper, a monthly outflow that was approached only once - in the aftermath of the US downgrade (when erroneously it is said that a surge in demand for US paper pushed rates lower - obviously as the chart shows nothing could be further from the truth).

Official and Unofficial Liquidity Injections Translate Into Gold & Silver Accumulation

Eric De Groot at Eric De Groot - 3 hours ago

While money concentration tends to follow price, it can be associated with nearly every type of market action. Most often, particularly in gold and silver, money flows concentrate as price advances and declines. For example, commercial trader accumulation (long buying and short covering) and retail distribution (long selling and short selling) tends to occur as price declines. There are... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

The Disconnect Continues

Presented with little comment - equities and bonds are diverging aggressively now as 10Y accelerates towards its all-time low yields (1.67 on 9/23). As we noted earlier, foreigners are dumping Treasuries at a record pace and yet it grinds tighter and stocks rally on USD weakness. Our 'thesis' from yesterday that a reactive Fed QE is being priced in seems the most 'sensible' but year-end flows for now are tough to call.

UBS' Art Cashin Waxes Poetic For The New Year

It may not be pentamic diameter or Shakespearean sonnet-worthy but the venerable Art Cashin delivers his now traditional year-end poetic summation of all things newsworthy - old and new.

Words and Phrases We Hope Not To See Or Hear In 2012

Rather than making some predictions, here is a list of words and phrases that were popular in 2011 that just annoy us.  It would be nice if they become less popular in 2012, but we predict they will remain in use.

European Stocks Surge As Sovereigns Slump

UPDATE: Spanish bonds are leaking wider after the defiict projection looks set to be significantly worse than previously expected.
Something strange is happening in European risk markets this week. While that sentence is entirely 'normal' for what has become a diverging/converging flip-flopping correlation microstructure but the clear trend this week has been European Sovereign derisking and European Stock rerisking. The Bloomberg 500 index (that tracks a broad swathe of European stocks) is up 0.75% from Christmas Eve (and 1.6% from yesterday's lows) while 10Y sovereign spreads are wider by 10 to 30bps in the same period. France stands out as one of the worst performers - more than 25bps wider this week alone. Only Spain is notably improved on the week (-17bps) but all 10Y sovereigns are well off their best levels as stocks make new highs. Whether this is a front-run on asset rotation into the new year or expectations of the same risk-on ramp-job we saw on the first trading of this year is unclear - we do remind those front-runners that mutual fund cash levels are significantly lower this year than last. It is clear that yet another 'sensible' correlation (such as BTPs to equities) has broken but when volumes return and the reality of the huge supply calendar we face in the next month alone sinks in, perhaps equity ebullience will pull to bond bereavement. If stocks are reacting to a quasi-QE from the ECB, why wouldn't sovereigns who are the direct beneficiaries in that surreal LTRO-driven-carry trade?

Refinery Crunch In Europe

A few weeks ago we discussed the pressure the Greeks were under to source their energy needs from Iran since no one else would extend them credit. The European credit strain contagion now appears to be spreading rapidly as Europe's largest independent refiner by capacity, Petroplus Holdings AG, is suspending operations at three plants as banks freeze a $1bn revolving loan facility. S&P cut its rating from B to CCC+ citing a sharp deterioration in the firm's liquidity position. As a pure play refiner, meaning it needs to buy all of its crude supplies (on credit obviously) to feed its plants, it seems evident that both vendor- and bank-financing mechansims are starting to clog up very seriously. Bloomberg notes that refining margins are down considerably and we suspect that the closure of the Petroplus plants will help margins implicitly but as headlines show:

French CEO About Ratings Agencies: ‘We Have To Shoot All These Guys’
12/29/2011 - 19:50
Until now, the crisis has touched mostly the financial world. But in 2012, it will hit the real economy.


by Silver Shield, Dont-Tread-On.Me:

I am working furiously right now buying silver and I hope you are too.   I have gone to extreme measures to free up capital everything from selling our second car, garage sales, and now dumping all the gold that I can to buy silver.   In the past week or so I have made that largest silver purchases since 2005, even more than I bought in the 2008 smackdown.  With the Commercial Short position at a decade low, the explosive upside potential is awesome.  After the 60% 2008 smackdown silver went up 400%, if we match that we would see $125 silver.  Let’s be honest here, if that happens this time with no exponential short position for the banks to worry about, in such a limited physical market, during a paper fiat financial crisis, silver will not be available at any fiat price.
Read More @ Dont-Tread-On.Me

Part 2

Bix Weir: We’ve Reached the End of This Round of Silver Manipulation

from Silver Doctors:
Bix Weir has stated today that he believes we have reached the end of this round of silver manipulation, with silver matching the low for 2011 this morning near $26. While it’s possible we have seen the lows for this correction (silver will need to close above $28 before we can even consider calling $26 THE bottom), think again if you believe we have reached the end of silver manipulation.  The bullion banks are merely positioned for a sharp rally to the upside, profiting from their HFT naked shorting induced illiquid holiday week smash.
From Bix:
Just a quick note. I’ve been getting emails from people around the world who are angry that they are not able to secure physical silver at these low manipulated prices. There are both problems with supply and exorbitant premiums in the retail sales market. We have been waiting for the separation between paper and physical silver and it seems we are there.
Read More @

The Depth Of Despair In The Gold Community

by Jim Sinclair,
My Dear Friends,
Today was the first day that we got some good action in the gold price. It will be very interesting to see if sellers appear as they have been during Asian hours. Just because the manipulators use the illiquid Asian hours to paint gold do not assume it reveals the nationality of the selling. The gold market as we all know on a day to day basis is totally rigged. In fact, find a market anywhere that is not bullied by some young buck who considers himself the Master of the Universe.
Gold is coming up on a tight group of four very major support areas that will hold the price from which the next advance is to take place. We have reached a point in terms of the depth of despair in the gold community that was never reached in the 1968 to 1980 reactions.
That is all this is. Just another reaction in a Gold price headed for Alf’s $4500.
Read More @

John Williams: The US Has $100 Trillion in Debts & Obligations

from King World News:
With so many questions surrounding the stability of the financial system, John Williams of Shadowstats issued this warning in his latest commentary: “Annual Deficits of $5 Trillion Are Not Sustainable. Significant space was taken up in the government’s latest financial statements to assess the sustainability of the current system. Most of the material covered was overly misleading nonsense.”
John Williams continues: Read More @

Egon Von Greyerz: Gold Will Trade $3,000 – $5,000 in 2012

from King World News:
With the gold price tumbling, along with silver, today King World News interviewed the man who told clients in 2002, when gold was $300, to put up to 50% of their assets into physical gold, held outside of the banking system. Egon von Greyerz is founder and managing partner at Matterhorn Asset Management out of Switzerland. When asked about the plunge in gold, von Greyerz said, “Well, Eric, I’m not really surprised because last time I talked to you I did say gold could go down to $1,550 support and maybe even $1,420. In my view that would be quite normal in a very thin market and I said that would probably happen by the year end.”
Egon von Greyerz continues: Read More @

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