Wednesday, October 17, 2012

U.S. to Get Downgraded Amid Fiscal ‘Theater,’ Pimco Says

by Tracy Withers, Bloomberg:

The sovereign credit rating of the U.S. will be cut as “fiscal theater” plays out in the world’s biggest economy, according to Pacific Investment Management Co., which runs the world’s largest bond fund.
“The U.S. will get downgraded, it’s a question of when,” Scott Mather, Pimco’s head of global portfolio management, said today in Wellington. “It depends on what the end of the year looks like, but it could be fairly soon after that.”
The Congressional Budget Office has warned the U.S. economy will fall into recession if $600 billion of government spending cuts and tax increases take place at the start of 2013. Financial markets are complacent about whether the White House and Congress will reach agreement on deferring the so-called fiscal drag on the economy until later next year, Mather said.
In a “base case” of President Barack Obama being re- elected and Congress becoming more Republican, there is a high likelihood an agreement “doesn’t happen in a nice way, and we have disruption in the marketplace,” he said.
Read More @ Bloomberg


by Peter Degraaf, Gold Seek:

Are Gold and Silver preparing for another upside breakout? The battle is between the bullion banks with large short positions; and investors and hedge funds, (along with Asian central banks), that are protecting all or part of their net worth by owning some gold. It has been eleven weeks since my last article. In that article titled: “Gold and Silver Update” I indicated that the summer doldrums appeared to be over. Gold was trading at $1620 and silver at $28.03. I wrote that article with the observation that both metals were ready to rise, and I write today’s article with a similar observation. The fundamentals have seldom been more favourable for the bull market in precious metals than they are today.
· The floodgates of monetary inflation are wide open.
· Central banks are buying – no longer selling.
Read More @

Ugly Truth ….. Nothing is as it seems

from crabbydogtrix:

Spanish bonds plummet in yield as bailout is imminent./Troika walk away from Greece/Gold and silver hold/silver OI remains at elevated levels raising a possibility of a commercial failure!

Good evening Ladies and Gentlemen: Gold closed up today at comex closing time by $4.00 at $1752.00.  Silver also responded rising by 4 cents to finish at $33.50.  It looks like the bankers have dug a line in the sand at $1750 gold and  33.25.  The OI for silver continues to remain at elevated levels causing much concern to our bankers.  We are also seeing massive amounts of silver inventory

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'Shadow Banking' In China

Xiao Gang, Chairman of the Bank of China, took on the issue of “shadow banking,” recently in an op-ed. Chinese finance is undergoing dramatic changes which are not yet widely understood. Historically (mainly before 2008), the vast majority of lending in China was done by the normal banking sector in the form of loans.  The process was a cornerstone of the government’s control over the economy.  The vast majority of banks in China are controlled by the government, so the “who and when” of lending was firmly in the hands of China’s leaders. But, the years 2008/9 will be remembered as watershed years for Chinese finance, as two trends appeared – an economy relying increasingly on debt creation for growth, and that debt creation becoming more and more complicated and obscure - making it is easy to see why so many officials and analysts are worried about the 'hazy and complicated area of finance' out of teh government's direct control.

Chinese Goldilocks GDP: Q3 Economy Goalseeked Just As Expected At 7.4%

Chinese economic data has in general been surprising to the downside in recent weeks - in opposition to the positive (seasonally adjusted awesomeness) of US data. However, for tonight's entertainment we have GDP at 7.4% YoY - perfectly in line with expectations (but the 7th consecutive quarter of slowing growth), Industrial Production beat modestly, Retail Sales beat handsomely (biggest beat in 18 months), and FAI beat...

So, no new stimulus coming anytime soon - leaving Bernanke and Draghi all alone (and the latter is stuck waiting for Rajoy to say 'Si'). AUD lurched violently up and down; US equity futures are unmoved; and Treasury yields rose perhaps 1bps.

The Fabulous Mogambo Rational Dullard Portfolio (TFMRDP)

Richard Daughty, a.k.a., 'The Mogambo Guru' at Mogambo Guru Report! - 5 hours ago
October 17, 2012 Mogambo Guru If I was a betting man, a hard-core gambling man, I mean a real long-shot kind of man greedily looking to make a ton of money in a hurry, using minimal investment, without doing any work, I would start accumulating out-of-the-money SP500 put options and/or short futures, starting right around in here someplace. However, I am definitely NOT a betting man, because I really, really, really hate to lose money. That's why I invest only in gold and silver: They are a sure-fire, can't miss, "a winner every time" kind of thing, as definit... more » 

Martial Arts For Survivalists

Physical strength, endurance, flexibility, adaptability, and mental discipline are all attributes of a true survivor.  Unfortunately, they are also attributes that are often neglected by the average survivalist.  The popular assumption is that if you have sizable food storage and can shoot straight, you are ready to rock-and-roll.  Reality has some harsh lessons for those with this mindset.  The first and most important weapon in any prepper’s arsenal is his own body; strong, healthy, and well taken care of.  If a person’s body is left to decay, no amount of gear is going to save them in the middle of a crisis situation...

Fort Knox, an Impregnable Monument to Security Theater

by Tony C. Dreibus and Elizabeth Campbell, Bloomberg:

During the panic of 1792, the Bank of North America tried to stave off a run by having employees “carry its specie busily to and from the cellar in order to give a magnified notion of what it had,” historian Bray Hammond wrote. Bank managers “ostentatiously brought in deposits of gold and silver that had
unostentatiously been carried out a little while before.”
The show of specie reassured jittery customers, saving the bank from failure. As a young clerk in Iowa during the panic of 1907, Hammond recalled employing exactly the same dodge: heaping impressively large sacks of low-value coin in plain view and ostentatiously counting it to give the impression of overflowing vaults.
President Franklin D. Roosevelt used a similar trick when he authorized the construction of the U.S. Bullion Depository at Fort Knox, Kentucky.
Read More @ Bloomberg

Aussie Stocks Suffer HFT Stop-Run Glitch At Open

We are now entirely used to the daily mini-flashes in US equities as algos lose their stabilizer and run one way or another. Recently we noted the same algos-gone-wild had hit the India stock exchange. Tonight, the HFT-bug has moved to Australia, where the open - which just happens to be option expiration - saws a number of major equities (including several of the banks - e.g. ANZ and CBA) get smashed instantaneously higher (by 5-7%) at the open - only to plummet back to normalcy soon after. The cuplrit - it would appear to us - is a market-clearing wipe-out of all resting stops above the multi-year highs that the stocks were at the edge of. Regulatoirs are 'investigating' though their first comment was "it is certainly nothing to do with the trading system." As the Sydney Morning Herald notes a market participant: "Either that or an algorithm has gone haywire, a mistake has been made, or these trades are deliberate.' Either way, do we have an orderly market?"

Chinese Electricity Consumption And Production Both Point To Sub 7% GDP Reality

Whereas yesterday we learned that Chinese September electricity consumption had dropped to a multi-year low of 2.9% Y/Y (ignoring the Chinese New year data aberration of -7.5% from January which should be a blended reading with the February surge of +22.9%), down from 3.6% in August, and the lowest since August 2010, today in turn we find that the flip side to the this number, electricity production, was an even bleaker +1.5%, and the lowest in three months. And while it has been rumored that China has an incentive to manipulate the former down, this has been offset by manipulating the latter - output - up. Which is why whereas the consumption data implies a modestly weaker GDP, which declined and missed the official target (if ended precisely as the goalseek-o-tron expected), it is the electricity production data that is the outlier, and which indicates that in reality the GDP is now trendlining well below the official 7%.

Iran Launches Submarine And Destroyer Into Gulf During US Naval Exercises

This week the US, UK, France, and a few Middle Eastern countries are conducting naval exercises in the Gulf of Persia to practice clearing mines that Iran, or other groups may place around the Straits of Hormuz in an attempt to disrupt the movement of oil tankers in the region. Mohammed Ali Jafari, the commander of the Islamic Revolutionary Guard Corps, said that the “exercise is a defensive exercise and we don't perceive any threats from it. We are not conducting exercises in response.” Yet this is not the impression that is given. Just yesterday, according to the official IRNA news agency, upon the direct orders of Supreme Leader Ayatollah Ali Khamenei Iran launched a refitted Tareq-901 submarine and a Sahand destroyer into the Gulf from the port of Bandar Abbas.

Cops: “We’re Not Anticipating Civil Unrest On Election Night”

Department Of Homeland Security has been gearing up for riots for some time
by Steve Watson, InfoWars:

In spite of a slew of racially charged threats circulating across the internet, police officials say they do not expect any rioting to occur on the night of the election, no matter what the result.
“We’re not anticipating civil unrest on Election Night,” a spokesman for the Detroit police department told The Hill.
“We’re going to collect the ballots like we usually do. If a situation arises and we need to respond, we’ll respond to the scene and assess.” he added.
Read More @

Citigroup CEO Vikram Pandit Steps Down, Is Well Paid For . . . What Exactly?

[Ed. Note: We have come to the conclusion that CEO's of the criminal banks are absurdly compensated so that they won't ever reveal where the (financial) bodies are buried.]
by Matt Taibbi, Rolling Stone:
A friend forwarded this to me and advised me to post the following paragraph without comment. This is Bloomberg on the compensation package for departing CEO Vikram Pandit, and we will indeed leave it, as the Russians say, без комментариев:
If no changes are made, Citigroup will have paid Pandit about $261 million in the five years since he became CEO, including his personal compensation and about $165 million for buying his Old Lane Partners LP hedge fund in 2007 in a deal that led to his becoming CEO. The bank shut Old Lane soon after Pandit took the post, causing a $202 million writedown.
Read More @

Overwhelming UPWARD charts of silver in off-hours trades

[Ed. Note: davincij15 sent us this video tonight which immediately caused us to recall Adrian Douglas' must-read 2010 research paper titled, 'Gold Market is not “Fixed”, it’s Rigged' which quantifies exactly what endlessmountain is trying to share in this video. And what's true of gold is true of silver.]
from endlessmountain

Explosive book reveals ‘toxic’ culture at Goldman Sachs

by Graham Smith and James Salmon, Mail Online:
Fresh allegations about the ‘toxic’ culture at Goldman Sachs emerged last night as the first chapter of a devastating book written by a former executive director was leaked online.
Greg Smith reveals how trainees were forced to attend pre-dawn ‘boot camp’ grillings and suffer humiliation if they got their boss’s lunch order wrong …
Publication of Mr Smith’s book, which threatens to lift the lid on a culture of bullying and greed at Goldman Sachs, is now less than a week away and the first chapter was this week released on Apple Bookstore.
Read More @

Doug Casey on Voting, Redux

by Doug Casey, Casey Research:

Editor’s note: Dear Readers, every two years – for about the last 30 years – Doug has run a variation of this article somewhere, including 2010, when Doug and Louis discussed voting… as a matter of principle, not the particulars of the candidates of the day. Well, it’s a different day, and once again the pundits are trying their best to persuade everyone of how crucial this election is, and how important it is to vote, if only for the lesser of two evils. So here it is. Although it will infuriate some, we consider it a Public Service Announcement.
P.S. If you want to discuss anything from matters of principle down to specific investment ideas with Doug, one of the best places to do so is at La Estancia de Cafayate, in Salta, Argentina, where Doug will be watching the elections on the super-wide plasma screen in the clubhouse. When the rioting starts, he figures that will be both safer and a lot more comfortable. You’re welcome to join him.
L: Doug, we’ve spoken about presidents. We have a presidential election coming up in the US – an election that could have significant consequences on our investments. But given the views you’ve already expressed on the Tea Party movement and anarchy, I’m sure you have different ideas. What do you make of the impending circus, and what should a rational man do?
Read More @

SOLA 3.10 The Powers That Be

from TruthNeverTold :

Open War Policy Revealed by Romney’s NeoCon Advisers

by Brandon Turbeville, Activist Post

On October 1, 2012, Presidential hopeful Mitt Romney outlined his own version of imperialist American foreign policy before the Virginia Military Institute. What Romney described was, in its goals, no different than that of any other President since JFK.
As was made clear in his speech, the presentation of the mutated Manifest Destiny to be ushered in by Romney would be significantly more open than the “leading from behind” destabilization and coalition-based Obama treachery, as the candidate has clearly stated this on more than one occasion.
Essentially, while Obama has continued and accelerated every disastrous policy of the Bush Administration, Romney has openly announced his intention to do the same. The only difference is that the Romney doctrine will supplant the deceitful, secretive, and treacherous nature of Obama’s foreign policy for a more ham-fisted and brazenly aggressive position.
Read More @ Activist Post

In The News Today

My Dear Friends,

Please accept my apology for a terse review today. I was in and out of the office for meetings.
The action of the gold market suggests to me a market made by edict, a new influence. It smells very political.
The body blocks of the gold price so far were at $1800 vs. the cash market, and more than 10 times at $1775. Now we have a new target price of $1750.
With all the markets that surround and influence gold not supportive to the decline in the gold price, I can only come to the conclusion that this is a political favor for the incumbent. When have we ever seen such prices picked in gold to make a stand?
The takedown this AM was so obvious, as was the recovery, as was the present price. Any person who takes the Presidency has extremely limited room to maneuver financially. There is no functional tool in any central toolbox other than QE to deal with national insolvencies.
Austerity is not one of them in the USA. Those with no margin have no problem.
This reaction is limited in a short time period.

Jim Sinclair’s Commentary

When you are losing economic power belligerency is the only resort to maintain political position.


Jim Sinclair’s Commentary

As Russia builds its military under Putin, it will take every opportunity to take the dollar out of its reserve currency even by now only due to default.
Russia is as determined to see the USA in economic trouble as Stalin was to rule the world. Russia is not beyond helping the dollar down at every opportunity.

Iraq wants Russians to replace Exxon at West Qurna: report MOSCOW | Thu Oct 11, 2012 8:42am EDT
(Reuters) – Iraq is considering replacing ExxonMobil with Russian companies at the supergiant West Qurna-1 oilfield, after the U.S. major angered Baghdad by venturing into Kurdistan, according to a media report citing industry sources.
The northern Kurdish region has riled Baghdad by signing deals with foreign oil majors, such as Exxon, Total and Chevron, contracts the central government rejects as illegal.
Nefte Compass, a weekly energy newsletter about the FSU and Eastern Europe, said on Thursday that Iraq is weighing whether to replace Exxon with Russia’s LUKOIL and Gazprom Neft – both already involved in the country.
It said that the proposal was due to be raised at a meeting this week between Iraqi Prime Minister Nouri al-Maliki and Russian President Vladimir Putin.
The meeting took place on Wednesday, but no such offers – if they were made – have been made public.
A spokesman for Russia’s second-largest crude producer LUKOIL, which operates West Qurna-2, said the company is not planning to increase its exposure in Iraq by acquiring a stake in West Qurna-1, reiterating the company’s official line that it is satisfied with its portfolio in Iraq.

Jim Sinclair’s Commentary

We must never forget that China has, and is increasing, its Golden Guns for the economic war forthcoming.
In economic warfare you strike when there is a crisis of confidence going on, on its own.
This is a plausible scenario of why the US dollar will in time break below .7200 with a magnet at .5600.



Jim’s Mailbox

Thank you Jim,

Clearly there is support for the dollar and intervention taking place in advance of the election. Certainly the incumbent would not want oil and gold surging into November. What I find amusing is how few people understand cost push inflation. There were relatively long moments of discussion during the debate last night related to the price of gas, oil, etc. They will increase domestic supply, more drilling, etc. Don’t they understand that costs in this case are a direct result of currency induced cost push inflation? If supply is up and cost is up there is no other explanation.  It’s clear that demand for the US Dollar is waning and certainly when national leaders watch a US debate like the performance yesterday they must reinforce their theories significantly that the path our nation is on is one of currency debasement.

Jim Sinclair’s Commentary

This dollar chart is a lousy chart no matter how you look at it. It looks like a run at .7200 to .7400.
The dollar argues against this manufactured gold reaction. If you took a look at the life of the index dollar chart you would yak.
The dollar chart is long term ugly-nasty. Gold is going to and through $3500. The next real battle of significance with the gold banks is directly at $2111, not here.
79.155 -0.066 (-0.08%)

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