Gold “Bargain of Lifetime” As Gold Standard Inevitable, Possibly Within Year - $10,000/oz Looms
My Dear Extended Family,
Major Vindication for Gold’s Greatest Guru By Christopher Barker
August 4, 2011
He has done it again! The man who earned the nickname "Mr. Gold" after precisely calling the top of gold’s previousbull market back in 1980, has just accomplished a feat that easily secures his legacy as the greatest precious-metals investor of our time.
Back in 2001, just as gold was recording a multidecade low beneath $300 per ounce, and the ancient monetary metal had been thoroughly outcast from the consciousness of financial markets, Jim Sinclair made an incredibly bold prediction. He forecast a powerful bull market for gold that would bring the price to at least $1,650 per ounce, implying about a six-fold increase from its price at the time.
In 2003, he launched Jim Sinclair’s MineSet, a website to host his daily commentary on gold and the key developments underpinning this ongoing secular bull market. Over time, the site developed a broad following among investors with exposure to gold. While his role as chairman of Tanzanian Royalty Exploration (AMEX: TRX ) remained his top priority, his persistent supply of insight into the gold market helped to steady the hands of gold investors as they confronted bouts of excruciating volatility and incessant calls for a collapse in gold prices.
I know that my own journey of investment in precious metals owes a portion of its success thus far to Sinclair’s unflappable vision of $1,650 gold as a foregone conclusion based upon a fully vindicated perspective of the macroeconomic landscape. Now, that’s not to say I adopted his perspectives on gold directly like an unquestioning disciple. To the contrary, I soon became frustrated by his insistence upon attaching specific timelines to certain forecasts; most notably when he became convinced gold would reach his $1,650 target on or before Jan. 14, 2011. I shared his confidence in the target price — even extending the mark to $2,000 for my own conservative long-term outlook — but I remained circumspect about the precise timing.
On the other hand, I believe his broader insights into financial markets have already proved remarkably astute. Those contributions are epitomized by golden nuggets like his 12-stage formula for higher gold prices issued in 2006, or this poignant radio appearance in 2009.
The making of a gold legend
Gold’s detractors like to point to the metal’s decline from the 1980 peak to suggest that gold investors are likely to be left holding the bag when the metal carves a supposedly unforeseeable about-face. But try telling that to Sinclair, who ran a brokerage service at the time called the Sinclair Group of Companies, and knew precisely the implications of then-Fed Chairman Paul Volcker’s aggressive campaign to raise interest rates to 20%. Sinclair sold 900,000 ounces of gold for an average price of $810 in early 1980, and walked away from the bull market with his winnings in hand.
From 1981 to 1984, Sinclair advised Hunt Oil and the Hunt family as they sought to liquidate their massive silver holdings that had played a role in silver’s incredible (first) spike to $50 per ounce. Later, he served as president of the commodity-focused Sinclair Global Clearing, and also president of a derivatives firm dealing in commodities and currencies. Perhaps the latter position contributed to his keen understanding of the dangers inherent in a heavily leveraged global market for derivatives, which forms a key foundation of his rather unsettling long-term macroeconomic forecast. But please, don’t shoot the messenger.
The golden perspective on the future of gold
Now that history will record Sinclair’s phenomenal call for $1,650 gold, issued a full decade in advance, his wildly successful participation in two consecutive bull markets for gold easily secures his legacy as gold’s greatest living guru. Whatever happens from here, no one can take away that record of achievement. But what has the guy whose target has now been met been saying about the outlook for gold beyond the $1,650 mark?
Earlier this year, Sinclair quipped: "I think that my price target of $1,650 per ounce gold is going to be so low it will be considered silly." Just a couple of months ago, with gold retreating to about $1,500 per ounce, Sinclair predicted: "The drop at this time will in retrospect be seen as the foundation for gold trading not at $1,650, but rather at $5,000 an ounce."
Just this week, on the eve of his price-target’s fulfillment, he offered: "Gold between $1,600 and $1,764 is deciding its new and elevated role in international finance." Indeed, after an entire decade of gains for the oft-maligned metal and the routinely ridiculed community of gold investors, the ancient currency is finally reasserting its rightful place on the world’s financial stage. So far in 2011, emerging-market central banks have already added $10 billion of gold collectively to their foreign exchange reserves .
Based in part upon the valuable insights into the gold market that I have gleaned over the years from Sinclair, I remain confident that $2,000 gold is likewise a foregone conclusion. Some of my colleagues may consider it the height of arrogance to project a forward price target for gold, adding to a veritable chorus of disparaging sentiments that I have encountered over the years as a consequence of my bullish stance on gold.
Undeterred, I continue to recommend that my readers allocate some portion of their investment portfolios to gold and silver through carefully selected equities. The Central Fund of Canada (AMEX: CEF ) remains the insiders’ choice for one-stop bullion exposure to both gold and silver. Speaking of silver, even though Silver Wheaton (NYSE: SLW ) has already advanced more than 1,400% since I pleaded with Fools to take notice at $2.51 per share in 2008, I still expect the stock to reach $100 before the precious-metals bull market loses steam. Even at these record-high prices, low-cost gold producers Goldcorp (NYSE:GG ) and Yamana Gold (NYSE: AUY ) continue to trade at substantial discounts to my assessments of fair value. I believe AuRico Gold (NYSE: AUQ ) has its golden ducks in a row, and Rubicon Minerals (AMEX: RBY ) recently scored a new lease on life with a transformational strategic partnership.
The process of selecting the best precious-metals vehicles is a crucial one, but not nearly as crucial as the decision to seek some exposure in the first place. I believe the greatest risk relating to gold that investors currently face, is the risk of missing out on the powerful upside moves still to come. With that final point, I trust Jim Sinclair would wholeheartedly agree.
More…
Jim,
Just came across this (below) re esp. "dilution" exposure.
Do you think you have this covered or should it be a big future concern for us as stockholders?
Thanks and take care,
CIGA Ted
Dear CIGA Ted,
Mining sector feels cold splash of reality FABRICE TAYLOR
From Wednesday’s Globe and Mail
Last updated Wednesday, Apr. 25, 2012 6:07PM EDT
Most of us underestimate how devastating this process can be until it’s too late. Simply put, dilution is when your economic interest is watered down. If a company you’ve invested in sells new stock and the share count goes up more than the value of the company, your investment is diluted. The more it can sell its new shares for, the less you’ll be diluted.
Waves of dilution usually herald the beginning of the end of the investing cycle in mining. I think we’re close.
By way of example consider the travails of Baja Mining Corp. It’s a junior miner with a promising copper-cobalt-zinc project in Mexico. The company has spent hundreds of millions bringing the project to the cusp of production. In late March it told shareholders that construction of the site infrastructure was on schedule for production next year. It also said that the cost to build the mine was creeping up and that it would try to find ways to cut costs to bring the project in on budget.
On Monday, Baja treated its owners to some unpleasant news: the cost to build the project would come in at $246-million more than originally expected, a 22 per cent increase over the original costs that were estimated only two years ago.
The stock, not surprisingly, collapsed from about $1 to as low as 30 cents, with the market cap plunging to $130-million. That’s bad, but it’s just one part of the company’s problems. It now needs to come up with a lot of money fast to bring its mine into production. It will most likely have to sell new shares to do so. Let’s assume it needs to raise $100-million through the sale of fresh shares. At $1 that would have increased the share count by a hefty 30 per cent. At 40 cents the dilution will be a brutal 73 per cent.
Existing shareholders who don’t partake in this financing, should it materialize, will lose more than half their current interest in the company. Dilution is painful and permanent. It never goes away.
More…
Jim Sinclair’s Commentary
Greece reported to be in talks about one-year deficit extension
Greece’s Finance Ministry is in talks with the country’s lenders to extend the period of fiscal adjustment by one year to 2015, according to reports.
Finance Minister Filippos Sachinidis discussed the issue with International Monetary Fund officials in Washington over the weekend, according to Ta New newspaper.
PASOK leader Evangelos Venizelos, who Sachinidis succeeded, has made the issue one of the central themes of his campaign. He says he will ask the troika to give Greece until 2015, rather than 2014, to reduce its public deficit.
"We believe that this will make the adjustment a little easier, PASOK spokeswoman Fofi Gennimata told Skai TV on Thursday.
Poul Thomsen, the head of the International Monetary Fund team for Greece, is expected to visit the country on his own after the May 6 election before a mission visit takes place the following month.
IMF sources in Washington said that Thomsen is likely to conduct a staff visit that will last a couple of days to assess the situation in Greece following the election.
More…
Jim Sinclair’s Commentary
Global food prices on the rise again, says World Bank
The cost of food rose 8 percent between December and March, after declining in the previous four months, and economists are worried that prices could go higher. Allison Jackson
April 25, 2012 16:35
China’s inflation rate edged up in March, driven by rising food costs
but analysts said there was still scope for Beijing to stimulate the
slowing economy. (STR/AFP/Getty Images)
Global food prices are on the rise again, threatening the food security of millions of people, the World Bank said today.
The cost of food around the world rose 8 percent between December and March, after declining in the previous four months, and economists are worried that prices could go higher unless food production increases, Reuters reported, citing the World Bank’s latest food price index.
Prices for major staple crops such as maize, soybean oil, wheat and sugar rose between 5-9 percent due to higher crude oil prices, adverse weather conditions and strong demand for food imports in Asia, the Washington-based lender said.
Only rice avoided a price bump thanks to plentiful supply and fierce competition among exporters, the Los Angeles Times noted.
More…
More Americans Than Projected Filed Jobless Claims Last Week By Timothy R. Homan – Apr 26, 2012 7:40 AM MT
More Americans than forecast filed applications for unemployment benefits last week, a sign that the labor market is taking time to improve.
Jobless claims fell by 1,000 to 388,000 in the week ended April 21 from a revised 389,000 the prior period that was the highest since early January, Labor Department figures showed today in Washington. The median forecast of 48 economists surveyed by Bloomberg News called for a drop to 375,000.
Fewer firings are needed to lay the groundwork for more hiring, which in turn should support consumer spending, the biggest part of the economy. Federal Reserve policy makers yesterday said that while labor-market conditions have improved, the unemployment rate “remains elevated,” helping explain why they stuck to a plan to hold borrowing costs close to zero through 2014.
“It’s just so hard for companies to be confident and start hiring,” said Yelena Shulyatyeva, a U.S. economist at BNP Paribas in New York, who correctly projected the level of jobless claims. “We believe that March is probably not the end of the modest readings on payrolls.”
A separate report today showed that signed contracts to buy U.S. homes rose more than forecast in March as low interest rates drew buyers back into the market.
More…
Just
as we predicted this morning, as soon as Europe closed, US equities
proceeded to meltup celebrating the claims data 'improvement
week-over-week' in this bizarro world we live in. ES (the S&P 500
e-mini future) has broken up and out of its 3-week range to run the
stops above the pre-Non-Farm-Payroll close levels from 4/5. Gold has
been relatively outperforming today and on a beta-adjusted basis, the
S&P has just melted up to meet Gold's enthusiasm. Ahead of
tomorrow's GDP data, it seems the worst-case scenario (from a market
meltup momentum perspective) is a small miss - not quite cool enough to
kick Bernanke into QE action and not quite warm enough to juice the
self-sustaining recovery bulls into action (especially as the earnings
picture is starting to fade a little here). 1400 next?
As we noted (here and here)
earlier this week, the world increasingly looks like 'Japan' with
little aggregate way out. The following chart perhaps confirms the
repressive wave of ongoing intervention across the developed world.
Extrapolating trends into the future implies that since the world's
central banks will need to have a short-term rate of negative 2% by
2020, there is a lot of QE-equivalent easing still to come.
As Simon Black noted, "The ironic triumph of the Keynesians means
that, in trying to save the economy, our central banks may end up
destroying it completely by means of the printing press; as a
consequence, we now get to experience some of the full-on horror of the
Japanese malaise."
The symbiosis between the Keynesian expansion of the economy and the growth of suburbs in US cities has been ably discussed by Beauregard (2006). Sprawl was driven by the flow of money, the "American dream" of owning a home in the suburbs, and facilitated by the widespread ownership of cars. The suburbs were designed with cars in mind. The growth of suburbs fulfilled two roles. Lots of houses were available for new buyers, which kept prices down; and city governments discovered that developer's fees and the new land taxes initially exceeded the maintenance cost of the new roads and infrastructure built to support them,. Unfortunately, as time passed and the infrastructure aged, soon maintenance costs exceeded tax revenues, necessitating another round of growth. Suburbs were able to maintain the required level of growth for a few decades, but we are reaching the point everywhere (it seems) where there cannot be enough new growth to maintain our crumbling infrastructure. The mindset of the "ownership society" really drove demand for housing, and the best places to expand were in the southwest, so that cities like Phoenix and Las Vegas really grew. Low interest rates plus easy money led to a bubble in house prices and an explosion of sprawl. The Austrian school of economics teaches us that easy money leads to malinvestment. Suburban growth certainly seems to qualify. Our urban sprawl malinvestment has left us with the interwoven problems of unlivable cities, financial crisis, and increased death and destruction from natural disasters.
Confirming the lack of decoupling in major developed economies (which we noted yesterday),
US macro data (as tracked by Citigroup's ECO Surprise Index) has
turned negative for the first time in six months. Having trended lower
(i.e. missed expectations to the downside) for much of the last few
months, this shift now puts aggregate US macro data in the
deteriorating case and infers considerable risks of downside to equity
prices in the next three months - or did The Bernank raise his put strike
yesterday?
by Christopher Johnson and Emma Farge, MineWeb.com
Gold, copper and other commodities could be paid for in yuan within a decade or two, bankers and traders said on Wednesday, provided China pursues its policy of gradually freeing up trade in the currency.
Already the world’s biggest consumer of commodities such as industrial metals and oil, China’s economy is growing more than three times faster than most developed countries.
Read More @ MineWeb.com
They should read a little American history first...
04/26/2012 - 12:03
My Dear Extended Family,
The degree of panic and hate mail I received in the last seven
trading days almost broke the record of the first fall of gold from
above $1000. A kind reader sent the following historical article to make
me feel better.
It worked.
I feel great having once again told our gold army with only one gear
in their fighting tanks, which is reverse, it would all be ok.
Yes, gold will go to overvaluation at a point in the future, but
there is no major top yet. I was wrong recently that the $1630 area had
been the low. The manipulators sure showed me the day after I posted
that. It now seems as if the $1620 area was the low of the recent major
effort to depress the price of gold.
Russia and Mexico as well as a host of other central banks bought
cash gold, declared "check mate" and stopped the Crimex and gold banks
dead in their tracks.
Central bank buyers are locomotives. The Crimex is a small lawn
tractor in comparison. Never stand in front of a locomotive is the
secret to Yra Harris’ long term, and I am sure forever, success. You can
tell I am proud of my former partner, Yra.
Thank you again Christopher. I do know you are only as good as your last call.
That $1650 has been the Mother of all magnets.
Jim
Major Vindication for Gold’s Greatest Guru By Christopher Barker
August 4, 2011
He has done it again! The man who earned the nickname "Mr. Gold" after precisely calling the top of gold’s previousbull market back in 1980, has just accomplished a feat that easily secures his legacy as the greatest precious-metals investor of our time.
Back in 2001, just as gold was recording a multidecade low beneath $300 per ounce, and the ancient monetary metal had been thoroughly outcast from the consciousness of financial markets, Jim Sinclair made an incredibly bold prediction. He forecast a powerful bull market for gold that would bring the price to at least $1,650 per ounce, implying about a six-fold increase from its price at the time.
In 2003, he launched Jim Sinclair’s MineSet, a website to host his daily commentary on gold and the key developments underpinning this ongoing secular bull market. Over time, the site developed a broad following among investors with exposure to gold. While his role as chairman of Tanzanian Royalty Exploration (AMEX: TRX ) remained his top priority, his persistent supply of insight into the gold market helped to steady the hands of gold investors as they confronted bouts of excruciating volatility and incessant calls for a collapse in gold prices.
I know that my own journey of investment in precious metals owes a portion of its success thus far to Sinclair’s unflappable vision of $1,650 gold as a foregone conclusion based upon a fully vindicated perspective of the macroeconomic landscape. Now, that’s not to say I adopted his perspectives on gold directly like an unquestioning disciple. To the contrary, I soon became frustrated by his insistence upon attaching specific timelines to certain forecasts; most notably when he became convinced gold would reach his $1,650 target on or before Jan. 14, 2011. I shared his confidence in the target price — even extending the mark to $2,000 for my own conservative long-term outlook — but I remained circumspect about the precise timing.
On the other hand, I believe his broader insights into financial markets have already proved remarkably astute. Those contributions are epitomized by golden nuggets like his 12-stage formula for higher gold prices issued in 2006, or this poignant radio appearance in 2009.
The making of a gold legend
Gold’s detractors like to point to the metal’s decline from the 1980 peak to suggest that gold investors are likely to be left holding the bag when the metal carves a supposedly unforeseeable about-face. But try telling that to Sinclair, who ran a brokerage service at the time called the Sinclair Group of Companies, and knew precisely the implications of then-Fed Chairman Paul Volcker’s aggressive campaign to raise interest rates to 20%. Sinclair sold 900,000 ounces of gold for an average price of $810 in early 1980, and walked away from the bull market with his winnings in hand.
From 1981 to 1984, Sinclair advised Hunt Oil and the Hunt family as they sought to liquidate their massive silver holdings that had played a role in silver’s incredible (first) spike to $50 per ounce. Later, he served as president of the commodity-focused Sinclair Global Clearing, and also president of a derivatives firm dealing in commodities and currencies. Perhaps the latter position contributed to his keen understanding of the dangers inherent in a heavily leveraged global market for derivatives, which forms a key foundation of his rather unsettling long-term macroeconomic forecast. But please, don’t shoot the messenger.
The golden perspective on the future of gold
Now that history will record Sinclair’s phenomenal call for $1,650 gold, issued a full decade in advance, his wildly successful participation in two consecutive bull markets for gold easily secures his legacy as gold’s greatest living guru. Whatever happens from here, no one can take away that record of achievement. But what has the guy whose target has now been met been saying about the outlook for gold beyond the $1,650 mark?
Earlier this year, Sinclair quipped: "I think that my price target of $1,650 per ounce gold is going to be so low it will be considered silly." Just a couple of months ago, with gold retreating to about $1,500 per ounce, Sinclair predicted: "The drop at this time will in retrospect be seen as the foundation for gold trading not at $1,650, but rather at $5,000 an ounce."
Just this week, on the eve of his price-target’s fulfillment, he offered: "Gold between $1,600 and $1,764 is deciding its new and elevated role in international finance." Indeed, after an entire decade of gains for the oft-maligned metal and the routinely ridiculed community of gold investors, the ancient currency is finally reasserting its rightful place on the world’s financial stage. So far in 2011, emerging-market central banks have already added $10 billion of gold collectively to their foreign exchange reserves .
Based in part upon the valuable insights into the gold market that I have gleaned over the years from Sinclair, I remain confident that $2,000 gold is likewise a foregone conclusion. Some of my colleagues may consider it the height of arrogance to project a forward price target for gold, adding to a veritable chorus of disparaging sentiments that I have encountered over the years as a consequence of my bullish stance on gold.
Undeterred, I continue to recommend that my readers allocate some portion of their investment portfolios to gold and silver through carefully selected equities. The Central Fund of Canada (AMEX: CEF ) remains the insiders’ choice for one-stop bullion exposure to both gold and silver. Speaking of silver, even though Silver Wheaton (NYSE: SLW ) has already advanced more than 1,400% since I pleaded with Fools to take notice at $2.51 per share in 2008, I still expect the stock to reach $100 before the precious-metals bull market loses steam. Even at these record-high prices, low-cost gold producers Goldcorp (NYSE:GG ) and Yamana Gold (NYSE: AUY ) continue to trade at substantial discounts to my assessments of fair value. I believe AuRico Gold (NYSE: AUQ ) has its golden ducks in a row, and Rubicon Minerals (AMEX: RBY ) recently scored a new lease on life with a transformational strategic partnership.
The process of selecting the best precious-metals vehicles is a crucial one, but not nearly as crucial as the decision to seek some exposure in the first place. I believe the greatest risk relating to gold that investors currently face, is the risk of missing out on the powerful upside moves still to come. With that final point, I trust Jim Sinclair would wholeheartedly agree.
More…
Jim,
Just came across this (below) re esp. "dilution" exposure.
Do you think you have this covered or should it be a big future concern for us as stockholders?
Thanks and take care,
CIGA Ted
Dear CIGA Ted,
Many people write crap that know nothing whatsoever about mining.
The payback can be so fast on development loans that there are
project lenders in the private markets. There are not at risk gold sale
deals where the bank selling get $25 dollar per ounce sold, limited in
time, as part of making the loan.
There are royalty companies that love to finance projects after
definitive feasibility. Also, there are quasi-government institutions
that are socially minded, eager to make development loans if the
transaction is sensitive to the needs of the host nation.
I did the first 45%/55% deal under my management with a country, a
transaction with many friends at quasi-government lending institution I
have visited with. This writer in question has never ran a company in
the extractive industry.
It is the nature of the deal and the quality of the project that
raises the required capital and not the capitalization of the company
doing the development. If this was not true there would never be a new
major and majors who stink historically at exploration would run out of
product in 5 years.
The quality of the professional’s and director’s mine building
experience is very important if only to guide the turn key mine builders
like Consulmet.
It is raving bullshit that it costs $1650 to mine today at an
attractive project. The maximum cost according to outside expert opinion
will be $750 per ounce published in my PEA.
Surface gold property mining is so low it is comical, and therefore modest resources can be cash cows.
Regards,
Jim
Jim
Mining sector feels cold splash of reality FABRICE TAYLOR
From Wednesday’s Globe and Mail
Last updated Wednesday, Apr. 25, 2012 6:07PM EDT
Most of us underestimate how devastating this process can be until it’s too late. Simply put, dilution is when your economic interest is watered down. If a company you’ve invested in sells new stock and the share count goes up more than the value of the company, your investment is diluted. The more it can sell its new shares for, the less you’ll be diluted.
Waves of dilution usually herald the beginning of the end of the investing cycle in mining. I think we’re close.
By way of example consider the travails of Baja Mining Corp. It’s a junior miner with a promising copper-cobalt-zinc project in Mexico. The company has spent hundreds of millions bringing the project to the cusp of production. In late March it told shareholders that construction of the site infrastructure was on schedule for production next year. It also said that the cost to build the mine was creeping up and that it would try to find ways to cut costs to bring the project in on budget.
On Monday, Baja treated its owners to some unpleasant news: the cost to build the project would come in at $246-million more than originally expected, a 22 per cent increase over the original costs that were estimated only two years ago.
The stock, not surprisingly, collapsed from about $1 to as low as 30 cents, with the market cap plunging to $130-million. That’s bad, but it’s just one part of the company’s problems. It now needs to come up with a lot of money fast to bring its mine into production. It will most likely have to sell new shares to do so. Let’s assume it needs to raise $100-million through the sale of fresh shares. At $1 that would have increased the share count by a hefty 30 per cent. At 40 cents the dilution will be a brutal 73 per cent.
Existing shareholders who don’t partake in this financing, should it materialize, will lose more than half their current interest in the company. Dilution is painful and permanent. It never goes away.
More…
Jim Sinclair’s Commentary
Whatever is required will be provided as long as the nation asking
opts to remain in the EU. The funds will be provided for by the European
Stability Mechanism Treaty due for passage in July of 2012.
Greece reported to be in talks about one-year deficit extension
Greece’s Finance Ministry is in talks with the country’s lenders to extend the period of fiscal adjustment by one year to 2015, according to reports.
Finance Minister Filippos Sachinidis discussed the issue with International Monetary Fund officials in Washington over the weekend, according to Ta New newspaper.
PASOK leader Evangelos Venizelos, who Sachinidis succeeded, has made the issue one of the central themes of his campaign. He says he will ask the troika to give Greece until 2015, rather than 2014, to reduce its public deficit.
"We believe that this will make the adjustment a little easier, PASOK spokeswoman Fofi Gennimata told Skai TV on Thursday.
Poul Thomsen, the head of the International Monetary Fund team for Greece, is expected to visit the country on his own after the May 6 election before a mission visit takes place the following month.
IMF sources in Washington said that Thomsen is likely to conduct a staff visit that will last a couple of days to assess the situation in Greece following the election.
More…
Jim Sinclair’s Commentary
There is no understand of currency induced cost push inflation almost anywhere, but here it comes.
Global food prices on the rise again, says World Bank
The cost of food rose 8 percent between December and March, after declining in the previous four months, and economists are worried that prices could go higher. Allison Jackson
April 25, 2012 16:35
China’s inflation rate edged up in March, driven by rising food costs
but analysts said there was still scope for Beijing to stimulate the
slowing economy. (STR/AFP/Getty Images)Global food prices are on the rise again, threatening the food security of millions of people, the World Bank said today.
The cost of food around the world rose 8 percent between December and March, after declining in the previous four months, and economists are worried that prices could go higher unless food production increases, Reuters reported, citing the World Bank’s latest food price index.
Prices for major staple crops such as maize, soybean oil, wheat and sugar rose between 5-9 percent due to higher crude oil prices, adverse weather conditions and strong demand for food imports in Asia, the Washington-based lender said.
Only rice avoided a price bump thanks to plentiful supply and fierce competition among exporters, the Los Angeles Times noted.
More…
More Americans Than Projected Filed Jobless Claims Last Week By Timothy R. Homan – Apr 26, 2012 7:40 AM MT
More Americans than forecast filed applications for unemployment benefits last week, a sign that the labor market is taking time to improve.
Jobless claims fell by 1,000 to 388,000 in the week ended April 21 from a revised 389,000 the prior period that was the highest since early January, Labor Department figures showed today in Washington. The median forecast of 48 economists surveyed by Bloomberg News called for a drop to 375,000.
Fewer firings are needed to lay the groundwork for more hiring, which in turn should support consumer spending, the biggest part of the economy. Federal Reserve policy makers yesterday said that while labor-market conditions have improved, the unemployment rate “remains elevated,” helping explain why they stuck to a plan to hold borrowing costs close to zero through 2014.
“It’s just so hard for companies to be confident and start hiring,” said Yelena Shulyatyeva, a U.S. economist at BNP Paribas in New York, who correctly projected the level of jobless claims. “We believe that March is probably not the end of the modest readings on payrolls.”
A separate report today showed that signed contracts to buy U.S. homes rose more than forecast in March as low interest rates drew buyers back into the market.
More…
Market Meltup Meets Non-Farm-Payroll Resistance
Just
as we predicted this morning, as soon as Europe closed, US equities
proceeded to meltup celebrating the claims data 'improvement
week-over-week' in this bizarro world we live in. ES (the S&P 500
e-mini future) has broken up and out of its 3-week range to run the
stops above the pre-Non-Farm-Payroll close levels from 4/5. Gold has
been relatively outperforming today and on a beta-adjusted basis, the
S&P has just melted up to meet Gold's enthusiasm. Ahead of
tomorrow's GDP data, it seems the worst-case scenario (from a market
meltup momentum perspective) is a small miss - not quite cool enough to
kick Bernanke into QE action and not quite warm enough to juice the
self-sustaining recovery bulls into action (especially as the earnings
picture is starting to fade a little here). 1400 next? Tension Rising at the Fed Accompanied By Deaf Ears
Eric De Groot at Eric De Groot - 9 minutes ago
While the Fed may be tilting towards the hawkish side, their position
really doesn't mean diddly squat if the following trend lines marked by
blue arrows in the chart below are breached to the upside. The window of
opportunity for a trend change is beginning to open but the message is
falling on deaf ears. A change will surprise not investors but also the
Fed. Chart: Average...
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content, and more! ]]
Gold seeing some strength
Trader Dan at Trader Dan's Market Views - 22 minutes ago
Gold appears to be catching some decent buying in today's session - buying
that has been strong enough to take it out of the range within it has been
trading for approximately the last ten days or so. Note the resistance
levels shown on the chart and you can see the progress.
It still has a big hurdle to clear if it is going to get any fireworks
going and that hurdle remains the same as it has been for some time now,
namely the region up near $1680.
It seems that Central Bank buying below the market has shored up support on
the chart.
One gets the impression that the gold market si... more »
When Did Austerity Become A 4 Letter Word?
Suddenly, everywhere you look, “austerity” has become a 4 letter word. Clearly it wasn’t excessive spending that caused too much debt. Surely we didn’t hit a financial crisis in spite of excessive spending, nope, it is all the fault of austerity. In the rush to avoid supporting anything that could be viewed as “austerity” we have lost sight of what austerity is, and how it can impact the economy. Let’s not let politicians get away with claiming everything that is “austerity” is bad. We too often confused “conjecture” with “fact”. Lately I have seen a lot written about how much better the job situation is today than it would have been without all the policies of Obama, Geithner, and Bernanke. It is treated as fact, yet it is merely conjecture.Project 'End-Up-Like-Japan' Continues
As we noted (here and here)
earlier this week, the world increasingly looks like 'Japan' with
little aggregate way out. The following chart perhaps confirms the
repressive wave of ongoing intervention across the developed world.
Extrapolating trends into the future implies that since the world's
central banks will need to have a short-term rate of negative 2% by
2020, there is a lot of QE-equivalent easing still to come.
As Simon Black noted, "The ironic triumph of the Keynesians means
that, in trying to save the economy, our central banks may end up
destroying it completely by means of the printing press; as a
consequence, we now get to experience some of the full-on horror of the
Japanese malaise."Of Disasters Natural And Keynesian
The symbiosis between the Keynesian expansion of the economy and the growth of suburbs in US cities has been ably discussed by Beauregard (2006). Sprawl was driven by the flow of money, the "American dream" of owning a home in the suburbs, and facilitated by the widespread ownership of cars. The suburbs were designed with cars in mind. The growth of suburbs fulfilled two roles. Lots of houses were available for new buyers, which kept prices down; and city governments discovered that developer's fees and the new land taxes initially exceeded the maintenance cost of the new roads and infrastructure built to support them,. Unfortunately, as time passed and the infrastructure aged, soon maintenance costs exceeded tax revenues, necessitating another round of growth. Suburbs were able to maintain the required level of growth for a few decades, but we are reaching the point everywhere (it seems) where there cannot be enough new growth to maintain our crumbling infrastructure. The mindset of the "ownership society" really drove demand for housing, and the best places to expand were in the southwest, so that cities like Phoenix and Las Vegas really grew. Low interest rates plus easy money led to a bubble in house prices and an explosion of sprawl. The Austrian school of economics teaches us that easy money leads to malinvestment. Suburban growth certainly seems to qualify. Our urban sprawl malinvestment has left us with the interwoven problems of unlivable cities, financial crisis, and increased death and destruction from natural disasters.
Dutch Deal Done
Holland entered the bond vigilantes' radar screens abruptly this weekend, following some vague rumbling that it may be downgraded if it doesn't get its deficit in order, and culminating with a cabinet collapse once the critical austerity deal was unable to be reached. Subsequently the cabinet resigned en masse. It seems it may have to be now reappointed en masse with headlines blasting that...- DUTCH PARLIAMENT MAJORITY BACKS BUDGET DEAL, ANP REPORTS
Houston, We Have A Coupling: US Macro Data Worst In Six Months
Confirming the lack of decoupling in major developed economies (which we noted yesterday),
US macro data (as tracked by Citigroup's ECO Surprise Index) has
turned negative for the first time in six months. Having trended lower
(i.e. missed expectations to the downside) for much of the last few
months, this shift now puts aggregate US macro data in the
deteriorating case and infers considerable risks of downside to equity
prices in the next three months - or did The Bernank raise his put strike
yesterday?
According to
bankers and traders China’s policy of gradually freeing up trade in its
currency could mean that commodities are paid for in yuan within a
decade
-
Gold, copper and other commodities could be paid for in yuan within a decade or two, bankers and traders said on Wednesday, provided China pursues its policy of gradually freeing up trade in the currency.
Already the world’s biggest consumer of commodities such as industrial metals and oil, China’s economy is growing more than three times faster than most developed countries.
Read More @ MineWeb.com
By the Editors , Bloomberg :
President Barack Obama and the presumptive Republican nominee, Mitt Romney, both act as if lecturing China about its undervalued currency is a good way to show they care about U.S. jobs.
Make no mistake: China’s exchange-rate policy represents a threat to the world’s financial and economic stability. By keeping its currency cheap to support export-driven growth, China is doing more than just putting the squeeze on other countries’ manufacturers. With dollars piling up from its trade
surplus, China is flooding the rest of the world with easy money.
Read More @ Bloomberg.com
President Barack Obama and the presumptive Republican nominee, Mitt Romney, both act as if lecturing China about its undervalued currency is a good way to show they care about U.S. jobs.
Make no mistake: China’s exchange-rate policy represents a threat to the world’s financial and economic stability. By keeping its currency cheap to support export-driven growth, China is doing more than just putting the squeeze on other countries’ manufacturers. With dollars piling up from its trade
surplus, China is flooding the rest of the world with easy money.
Read More @ Bloomberg.com
by Jan Harvey and Amanda Cooper, Reuters:
Gold rose for a third day on Thursday as weak employment figures and a pledge by the Federal Reserve the previous day to keep interest rates near zero weighed on the dollar and teased out some investor demand.
Data showed first-time claims for unemployment benefits in the United States were broadly unchanged last week, while a longer-term gauge rose to its highest level since January, undermining the dollar..
Read More @ Reuters.com
Gold rose for a third day on Thursday as weak employment figures and a pledge by the Federal Reserve the previous day to keep interest rates near zero weighed on the dollar and teased out some investor demand.
Data showed first-time claims for unemployment benefits in the United States were broadly unchanged last week, while a longer-term gauge rose to its highest level since January, undermining the dollar..
Read More @ Reuters.com
from KingWorldNews:
John Embry: Chief Investment Strategist for Sprott Gold & Precious Minerals Fund – John joined the now $10 billion strong firm SAM as Chief Investment Strategist in 2003, with a focus on the Sprott Gold and Precious Minerals Fund. He plays an instrumental role in the corporate and investment policy of the firm. Mr. Embry, an industry expert in precious metals, has researched the gold sector for over thirty years and has accumulated experience as a portfolio management specialist since 1963. John was named Vice-President, Equities and Portfolio Manager at RBC Global Investment Management, a $33 billion organization where he oversaw $5 billion in assets, including the flagship $2.9 billion Royal Canadian Equity Fund and the $250 million Royal Precious Metals Fund #1 ranked fund across the country for its 2002 net performance of 153%.
LISTEN NOW @ KingWorldNews.com
John Embry: Chief Investment Strategist for Sprott Gold & Precious Minerals Fund – John joined the now $10 billion strong firm SAM as Chief Investment Strategist in 2003, with a focus on the Sprott Gold and Precious Minerals Fund. He plays an instrumental role in the corporate and investment policy of the firm. Mr. Embry, an industry expert in precious metals, has researched the gold sector for over thirty years and has accumulated experience as a portfolio management specialist since 1963. John was named Vice-President, Equities and Portfolio Manager at RBC Global Investment Management, a $33 billion organization where he oversaw $5 billion in assets, including the flagship $2.9 billion Royal Canadian Equity Fund and the $250 million Royal Precious Metals Fund #1 ranked fund across the country for its 2002 net performance of 153%.
LISTEN NOW @ KingWorldNews.com
by George Ure, UrbanSurvival.com:
The
markets genuinely liked what Fed Chair Ben Bernanke had to say
yesterday in his press comments following the Fed rate meeting. A
glance at that shows the Fed still thinks it has more ammo to throw into
the fight against global economic collapse:
“Information received since the Federal Open Market Committee met in March suggests that the economy has been expanding moderately. Labor market conditions have improved in recent months; the unemployment rate has declined but remains elevated. Household spending and business fixed investment have continued to advance. Despite some signs of improvement, the housing sector remains depressed. Inflation has picked up somewhat, mainly reflecting higher prices of crude oil and gasoline. However, longer-term inflation expectations have remained stable.
Read More @ UrbanSurvival.com
The
markets genuinely liked what Fed Chair Ben Bernanke had to say
yesterday in his press comments following the Fed rate meeting. A
glance at that shows the Fed still thinks it has more ammo to throw into
the fight against global economic collapse:“Information received since the Federal Open Market Committee met in March suggests that the economy has been expanding moderately. Labor market conditions have improved in recent months; the unemployment rate has declined but remains elevated. Household spending and business fixed investment have continued to advance. Despite some signs of improvement, the housing sector remains depressed. Inflation has picked up somewhat, mainly reflecting higher prices of crude oil and gasoline. However, longer-term inflation expectations have remained stable.
Read More @ UrbanSurvival.com
by Paul Joseph Watson, Info Wars:
Russian
airborne troops are set to train how to target terrorists in America as
part of a joint anti-terror drill with the United States which will
take place in Fort Carson, Colorado at the end of next month.
“Airborne troops from Russia and the United States would hold joint anti-terror drills in the U.S. state of Colorado between May 24 and 31,” reports the Xinhua news agency, citing Russian Defense Ministry Col. Alexander Kucherenko. The story was also reported by Russian news outlet RIA Novosti.
Russian
airborne troops are set to train how to target terrorists in America as
part of a joint anti-terror drill with the United States which will
take place in Fort Carson, Colorado at the end of next month.
“Airborne troops from Russia and the United States would hold joint anti-terror drills in the U.S. state of Colorado between May 24 and 31,” reports the Xinhua news agency, citing Russian Defense Ministry Col. Alexander Kucherenko. The story was also reported by Russian news outlet RIA Novosti.
The exercises, which will mark the first time the
respective country’s two airborne forces have held joint drills on U.S.
territory, will revolve around the the “reconnaissance of imaginary
terrorists’ camp and a raid,” and will also involve evacuations of the
troops by helicopter.
The Russian soldiers will also be given access to U.S. special service weapons at Fort Carson.
Read More @ InfoWars.com
By Hope Yen for APNews, Yahoo.com:
The Senate offered a lifeline to the nearly bankrupt U.S. Postal Service
on Wednesday, voting to give the struggling agency an $11 billion cash
infusion while delaying controversial decisions on closing post offices and ending Saturday delivery.
The Senate offered a lifeline to the nearly bankrupt U.S. Postal Service
on Wednesday, voting to give the struggling agency an $11 billion cash
infusion while delaying controversial decisions on closing post offices and ending Saturday delivery.
By a 62-37 vote, senators
approved a measure which had divided mostly along rural-urban lines.
Over the past several weeks, the bill was modified more than a dozen
times, adding new restrictions on closings and cuts to service that
rural-state senators said would hurt their communities the most.
The issue now goes to the House, which has yet to consider a separate version of the bill.
Read More @ Yahoo.com
from KingWorldNews:
On the heels of the release of the Fed statement and the Bernanke press conference, today King World News interviewed Richard Yamarone, senior economist at Bloomberg Brief. He has consulted for monetary and fiscal policymakers and served as an adviser to major U.S. corporations. Yamarone also held senior positions for major international and domestic money center and investment banks. When asked what’s really happening with the US economy, Yamarone responded, “I think people are just running out of money. We have contracting, real disposable incomes. Most of the job creation that we have is from minimum wage type jobs.”
Richard Yamarone continues @ KingWorldNews
On the heels of the release of the Fed statement and the Bernanke press conference, today King World News interviewed Richard Yamarone, senior economist at Bloomberg Brief. He has consulted for monetary and fiscal policymakers and served as an adviser to major U.S. corporations. Yamarone also held senior positions for major international and domestic money center and investment banks. When asked what’s really happening with the US economy, Yamarone responded, “I think people are just running out of money. We have contracting, real disposable incomes. Most of the job creation that we have is from minimum wage type jobs.”
Richard Yamarone continues @ KingWorldNews
from Kerry Lutz.com:
Trace
Mayer and I sat down for lunch together in Manhattan today. We
discussed the impending collapse, how governments will sustain
themselves, and why it all means bad news for you. Trace, an author and
proprietor of www.RunToGold.com,
believes the current dollar/currency crisis could go on for many more
years. My personal opinion is we’re a lot closer to the end, than the
beginning; perhaps, we’re just one Black Swan away.
In any event, there are many strategies available for you to avoid suffering a disastrous fate, but you must act soon. The government, with its insatiable demand for cash to fund its overblown and inefficient operations, is going to be eliminating many of the techniques that you can now use. So, better to do it soon than to see all your options get cancelled out.
Click here to listen to Kerry Lutz and Trace Mayer
Read More @ FinancialSurvivalNetwork.com
Trace
Mayer and I sat down for lunch together in Manhattan today. We
discussed the impending collapse, how governments will sustain
themselves, and why it all means bad news for you. Trace, an author and
proprietor of www.RunToGold.com,
believes the current dollar/currency crisis could go on for many more
years. My personal opinion is we’re a lot closer to the end, than the
beginning; perhaps, we’re just one Black Swan away.In any event, there are many strategies available for you to avoid suffering a disastrous fate, but you must act soon. The government, with its insatiable demand for cash to fund its overblown and inefficient operations, is going to be eliminating many of the techniques that you can now use. So, better to do it soon than to see all your options get cancelled out.
Click here to listen to Kerry Lutz and Trace Mayer
Read More @ FinancialSurvivalNetwork.com
Bob Wenzel was invited to speak before the NY Fed, he advises them to do the moral thing and walk out, never to return.
by Robert Wenzel, Lew Rockwell.com:
At
the invitation of the New York Federal Reserve Bank, I spoke and had
lunch in the bank’s Liberty Room. Below are my prepared remarks.
Thank you very much for inviting me to speak here at the New York Federal Reserve Bank.
Intellectual discourse is, of course, extraordinarily valuable in reaching truth. In this sense, I welcome the opportunity to discuss my views on the economy and monetary policy and how they may differ with those of you here at the Fed.
That said, I suspect my views are so different from those of you here today that my comments will be a complete failure in convincing you to do what I believe should be done, which is to close down the entire Federal Reserve System.
Read More @ LewRockwell.com
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by Robert Wenzel, Lew Rockwell.com:
At
the invitation of the New York Federal Reserve Bank, I spoke and had
lunch in the bank’s Liberty Room. Below are my prepared remarks.Thank you very much for inviting me to speak here at the New York Federal Reserve Bank.
Intellectual discourse is, of course, extraordinarily valuable in reaching truth. In this sense, I welcome the opportunity to discuss my views on the economy and monetary policy and how they may differ with those of you here at the Fed.
That said, I suspect my views are so different from those of you here today that my comments will be a complete failure in convincing you to do what I believe should be done, which is to close down the entire Federal Reserve System.
Read More @ LewRockwell.com
Fascist Irony: Monsanto buys leading bee research firm after being implicated in bee colony collapse
by Jonathan Benson, Natural News:
Amid all the controversy over genetically-modified (GM) crops and
their pesticides and herbicides decimating bee populations all around
the world, biotechnology behemoth Monsanto has decided to buy out one of
the major international firms devoted to studying and protecting bees.
According to a company announcement, Beeologics handed over the reigns
to Monsanto back on September 28, 2011, which means the
gene-manipulating giant will now be able to control the flow of
information and products coming from Beeologics for colony collapse
disorder (CCD).
Since 2007, Beeologics has been studying CCD, as well as Israeli Acute Paralysis Virus (IAPV), for the purpose of coming up with intervention-based ways to mitigate these conditions. And based on the way the company describes both CCD and IAPV on its website, Beeologics has largely taken the approach that intervention, rather than prevention, is the key to solving the global bee crisis.
Read More @ NaturalNews.com
from RonPaul2008dotcom:
Amid all the controversy over genetically-modified (GM) crops and
their pesticides and herbicides decimating bee populations all around
the world, biotechnology behemoth Monsanto has decided to buy out one of
the major international firms devoted to studying and protecting bees.
According to a company announcement, Beeologics handed over the reigns
to Monsanto back on September 28, 2011, which means the
gene-manipulating giant will now be able to control the flow of
information and products coming from Beeologics for colony collapse
disorder (CCD).Since 2007, Beeologics has been studying CCD, as well as Israeli Acute Paralysis Virus (IAPV), for the purpose of coming up with intervention-based ways to mitigate these conditions. And based on the way the company describes both CCD and IAPV on its website, Beeologics has largely taken the approach that intervention, rather than prevention, is the key to solving the global bee crisis.
Read More @ NaturalNews.com
from RonPaul2008dotcom:
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