Bernanke:Is gold money? No!/Massive Silver leaves Dealer

Harvey Organ, Wednesday, July 13, 2011

Bernanke:Is gold money? No!/Massive Silver leaves Dealer

 

 

Moody's Puts US AAA Rating On Downgrade Review 

BOOM: "The review of the US government's bond rating is prompted by the possibility that the debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes. As such, there is a small but rising risk of a short-lived default. Moody's considers the probability of a default on interest payments to be low but no longer to be de minimis. An actual default, regardless of duration, would fundamentally alter Moody's assessment of the timeliness of future payments, and a Aaa rating would likely no longer be appropriate. However, because this type of default is expected to be short-lived, and the expected loss to holders of Treasury bonds would be minimal or non-existent, the rating would most likely be downgraded to somewhere in the Aa range."

Guest Post: The Road To Perdition - Interview With Terry Coxon 

Terry Coxon worked side by side with best-selling author Harry Browne for years and is a rare expert in the arcane study of monetary systems. His remarks at this juncture in time, a time that might end up labeled in the history books as “Money Runs Wild,” are especially germane. 

David Galland: You were involved with Harry Browne during the last great inflation in the U.S. How does the increase in the money supply that kicked off in 2007-2008 compare in terms of scale to what went on leading up to the inflation in the ‘70s?

Terry Coxon: The comparison is pretty muddled. In terms of the M1 money supply – the total of checkable deposits and hand-to-hand currency – we haven’t yet gotten near the persistently high growth rate that occurred in the 1970s. But the growth in the monetary base has been far more rapid than what happened in the 1970s. There is some time delay between growth in the monetary base and growth in M1, but to make the picture really cloudy, I'm afraid the comparison turns out not to be very useful. Unlike in the 1970s, the Federal Reserve is now paying interest to banks on their reserves.

Alix Steel notes meaning of Paul-Bernanke exchange on gold

TheStreet.com's Alix Steel grasps the significance of U.S. Rep. Ron Paul's exchange with Federal Reserve Chairman Ben Bernanke about gold as money at today's hearing of the House Financial Services Committee. Steel's report is headlined "Ron Paul Attacks Bernanke on Gold"

 

 

Free Money: Three Days In A Row 

Risk ES closes. 30 ES points in 3 days. Thank you momos and robots.

Long Bond Futures Down 

Submitted by Tyler Durden on 07/13/2011 18:48 -0400

Wait, what is this? Selling in both ES and bonds? Surely you jest: after all money just goes from one to the other right? Bzzzz. Wrong.

Guest Post: The Show Must Go On 

The Debt Ceiling Reality Show is winding down to its dramatic conclusion on August 2. I think Fox should capitalize on the drama by gathering the American Idol judges to vote on the best performance by a political hack. We can have Ryan Seacrest announce on August 1 at 11:55 pm that the winner is – THE WALL STREET MONIED INTERESTS. The latest round of kabuki theatre performed by the corrupt lying thieves in Washington DC is being played out every night on the MSM. The volume of misinformation, lies, exaggerations, posturing, and propaganda is staggering. These vile excuses for leaders know that 80% of the American population wouldn’t know the difference between a debt ceiling and a drop ceiling. They use this ignorance to their advantage, as Obama warns that old people won’t get their social security checks and government drones won’t be paid.

Today's Exponential Chart Of The Day: IMF Edition 

This chart needs no introduction... or explanation.

Bawney Fwank On Whether There Is A Chance The US Will Be Put Into Default: "Yes" 

Barney Frank, fresh from being caught on live TV picking his nose during Bernanke's Humphrey Hawkins presentation, had a decidedly more sour outlook on the prospects for the debt ceiling. Spoiler alert: in tried and true fashion, the drama king blamed it all on the stupidity and inexperience of republicans. Asked when there is a chance the US will be put into default: "Yes. I take the freshmen republicans and people like Michelle Bachmann at their word. I don't think they're kidding. I think they fundamentally misread this situation as Bernanke, a Bush appointee after all, made clear today. I think there are people that frankly have an unreal view of the world. They believe that this is somehow a fake and that you can push a button and make a lot of these debts go away. I believe there are a substantial number of Republicans who are opposed to a huge debt and a further group of Republicans who understand why it's important to raise the debt limit, but are afraid of losing a primary to someone." Recapping Frank's view: why deal with a problem under my tenure, when very soon there will be a congressman who will replace me and he, or more likely she, can deal with the sordid mess I created. And this is not even counting the trillions in GSE off-the-books debt of which Frank was one of the key people responsible for letting it be the catalyst that blew up the credit bubble when Fannie and Freddie were nationalized just under 3 years ago.

In The News Today

July 13, 2011, at 2:40 pm
by Jim Sinclair 

James Turk: just “several more days of silver in the 30s” Posted by Dominique de Kevelioc de Bailleul on Jul 13, 2011
With silver and gold rallying strongly against the tide of the risk-off trade, bullion expert James Turk forecasts that silver is about to launch into the 40s, as more nervous investors come to terms with the inevitability of further devaluations and/or sovereign defaults, forced upon the world’s central banks by investors and weak politicians.
“One never knows exactly how the markets will unfold, but my sense is that we only have several more days of silver in the 30s,” Turk told King World News. “Once silver clears $38 on a closing basis, you are going to get back into the mid 40s in a heartbeat.”
Turk, the founder and president of overseas precious metals storage firm Goldmoney.com has warned long ago of the events playing out in Europe today, so his words carry significant weight among the bullion community.  The timing of his call back in January for silver to reach $50 by June 30 was considered reckless and daring at the time.  But history has proved him correct.  Silver reached an intraday high of $49.70 on May 2, just pennies shy of $50 and a month sooner than he expected.
Recently, Turk (along with another PM giant, Jim Sinclair) has differed with another hard-money advocate, Marc Faber, on the direction of precious metals prices during the months of July and August.  Faber expects the precious metals to meander in the hot summer months, which is a bet that the long-standing historical record of weakness during that time is most likely.  On the other hand, Turk anticipates a repeat of 1982, the year of the Mexican peso devaluations.
“The action in gold and silver so far this summer indicates to me that this is in fact poised to be explosive on the upside,” Turk explaind.  “Nobody is talking about this, but it could be a reality in short order.  Here it is nearly 30 years after the breathtaking summer of 1982, and history is about to repeat all over again.”
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Jim Sinclair’s Commentary

Just in case you had any question about liquidity’s direction.

Bernanke lays out easing options July 13, 2011, 10:00 a.m. EDT
By Greg Robb
WASHINGTON (MarketWatch) – While the Federal Reserve believes that the temporary shocks holding down economic activity will pass, the central bank is examining several untested means to stimulate growth if conditions deteriorate, including another round of asset purchases, dubbed QE3, Fed chairman Ben Bernanke said Wednesday in remarks prepared for the House Financial Services Committee. Bernanke discussed three approaches to further easing in his prepared remarks. One option, Bernanke said, would be for the Fed to provide more "explicit guidance" to the pledge that rates will stay low for "an extended period." Another approach would be another round of asset purchases, or quantitative easing, or for the Fed to "increase the average maturity of our holdings." Finally, the Fed could also reduce the quarter percentage point rate of interest that it pays to banks on their reserves, "thereby putting downward pressure on short-term rates more generally." Bernanke was clear to stress that easing was not the only option under consideration and that the next Fed move could well be to tighten. At the moment, Fed officials see a recovery that "will likely remain moderate," Bernanke said, with the unemployment rate falling "only gradually." Inflation is expected to subside in coming months, he said.
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Embry – Mining Shares Will Be Like Internet Stocks in the ’90’s KingWorldNews.com

With gold hitting new all-time highs and silver up over $2 at one point and mining shares taking off to the upside, today King World News interviewed John Embry, Chief Investment Strategist at $9 billion strong Sprott Asset Management.  When asked where he sees things right now Embry stated, “What’s been fascinating, and what was unappreciated by me in the early stages, was the enormous number of derivatives that have been created in the financial system.  Because of the derivatives they’ve been able to keep this thing going for infinitely longer than any rational mind would have thought possible.”
Embry continues:
“You’ve been able to create leverage to the extent that you’ve never seen before and this is why I think the bubbles were able to get stretched out and last as long as they did.  Because the balloon was blown up so much, I just think the aftermath in its finale is going to be extraordinarily unpleasant.”
When asked about the action in gold Embry responded, “I have been waiting for this move and it was interesting that it (gold) broke out a couple of days ago with real vengeance in the Euro.  I suspected that the next shoe to drop with be in North America and now we’ve got new highs today in US dollars, which should get even bigger headlines.  Gold is starting to make new highs against all currencies, and this is what we envisioned in an environment in which the fiat currency system is breaking down.”
When asked if London Whistleblower Maguire’s interview was contributing to this rally Embry said, “I believe it is.  He made very strong points.  One of his key points was regarding the whole pricing mechanism in the gold market, and that is when the physical market takes over from the paper market in establishing the price, it will represent the end of paper manipulation….
Click here to read the full interview on KingWorldNews.com…





Jim Sinclair’s Commentary

Our whole financial system is an illusion 

‘The Matterhorn Interview’ – July 2011 By Lars Schall
The book author, financial commentator and entrepreneur Mike Maloney talks in this exclusive interview with Lars Schall for Matterhorn Asset Management in Zurich, Switzerland about: inflation/deflation, the flaws of the current monetary system, the upcoming rollercoaster ride in crude oil, and the biggest bull market in gold and silver ever.
Mr. Maloney, is a massive financial/economic storm ahead for us that will express itself basically through these four phases: a short-term deflation – inflation – a huge deflation – a hyperinflation?
Mike Maloney: Yes, I absolutely believe so. I think related to the recovery of the stock markets, we got something going on in the United States that I refer to as a “Dead Cat Bounce“ – this is an old stock market term that goes back to the crash of 1987, where a stock market trader, when he was asked about the crash, answered: “Even a dead cat would bounce if you drop it from a high enough point.“ This means if a stock is so ridiculously overvalued, then when its bubble pops and it crashes, it goes down a certain amount and then investors come in to start buying what they think are good deals, because it’s now at half of what the stock was previously selling for, but they aren’t measuring the fundamentals: is this stock really a value measured in things like of P/E ratio (price-to-earnings ratio) and dividend yields?- the fundamental measurements of whether the stock is a bargain or whether it is overvalued. They aren’t looking at that. They just look at the price and they come in thinking they are scooping up deals only to find out later that the stock still needs to fall to go back to fair value. So those people that buy cause the stock to rise, then the stock runs out of steam or energy and it starts to roll over and decline again.Well, entire economies are doing the same thing. We were in a bubble that was a worldwide bubble. It’s a credit bubble that has caused all these other bubbles in other asset classes like stocks and real estate. Those bubbles have begun to pop, but by any measure of reasonable value the stock markets and the real estate are not done of falling yet. We’re still in a bubble. The crash of 2008 was just a speed bump on the way to a major accident. In the United States and many, many other countries around the world we are now in this “Dead Cat Bounce.“ The Federal Reserve for example created a whole bunch of currency. For the bailouts they’ve created more than a trillion of dollars of base money – base money is the currency in circulation, the paper dollars and the deposits that the banks have at the Federal Reserve, which are redeemable in paper dollars. These are not the dollars that the banks create with fractional reserve lending, which magnifies the money supply, but the Fed more than doubled the amount of base money, it went from 825 billion to 2.2 trillion paper dollars.
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Jim’s Mailbox

July 13, 2011, at 2:30 pm
by Jim Sinclair 

Chasing Fractions Or Points? CIGA Eric

Long-time bears and bulls were short pants will likely find the message from the markets a bitter pill to swallow this summer. This won’t be the first or last time this happens as we approach the major cycle dates in 2013 and 2014.
The long-term secular trends are NOT (emphasis here) extended.
Dow Jones Industrial Average (DJIA) and Z Scores of Secular Trends
Meanwhile, the headlines focus on short-term noise. Those that follow headline explanations find themselves, more often than not, trying to profit from fractions rather than points.
Headline: Wall Street rises on China growth, Bernanke eyed
Wall Street rose after three days of losses on Wednesday on stronger-than-expected growth in China, but investors closely watched developments in Europe’s debt crisis that has weighed stocks recently.
Testimony from Federal Reserve Chairman Ben Bernanke shortly after the market opens will also be scrutinized for hints of possible new stimulus measures after June’s dismal U.S. employment report. The testimony to the House Financial Services Committee will begin at 10 a.m. (1400 GMT).
Optimism about the global economy gathered pace after data showed China’s economy grew faster than expected in the second quarter, easing fears about a hard landing in the world’s second-largest economy.
John Canally, investment strategist at
http://finance.yahoo.com/news/Stock-index-futures-point-to-rb-634282506.html?x=0&sec=topStories&pos=2&asset=&ccode=&sec=topStories&pos=1&asset=&ccode=
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Change Is Coming 

CIGA Eric

Indeed scary stuff, Dennis, for all ages. This is why ignorance is bliss for many within United States.
Central governments have historically shown very little interest in doing anything that reduces their influence. Inflation, possibly defined as hyperinflation, is inevitable. The debt burden permits no other viable option than currency devaluation.
Individuals, cultures, and societies have survived hyperinflations across the globe for thousands of years. The individual spirit and the flexibility of cultures suggest we’ll all adapt to the coming change.
Adapt and prosper, however, are not necessarily interchangeable. Few prosper while most adapt.
There will be very few global safe havens when confidence breaks. Change is coming, and there’s nothing people can do other than learn/relearn to protect their interests against the transition that can no longer be stopped.
Eric
Looks like the rocket has really lifted off the pad today…soon to gather strength…probably next week. You do great work Eric and give me a sense of stability when things get edgy.
I had to laugh and cry at the same time when Congress wants to give Obama the right to raise the debt ceiling while Congress maybe thinks about reducing spending sometime in the future…if this actually happens I will join the hyper inflation people….Eric, can they be serious?
Which brings me to a question….is it possible to surive a hyper inflation and still remain in the US? I know some of my best friends just got back from Thailand and are going to move there in a year…they see what is coming to the US. How many really survived the hyperinflation in France or Germany? Did any of those that stayed there survive in tact? I don’t think so. Scary when you are 68.
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Bernankenstein Confirms Monster Experiments  

Posted by: ilene

Post date: 07/13/2011 - 15:40

The Fed will never be able to reduce the size of its balance sheet. In fact, it will need to begin expanding it soon.

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