Alasdair Macleod: All Roads In Europe Lead To Gold

This week we bring back Alasdair Macleod, publisher of Finance and economics.org, because, as he puts it "every horror that we discussed last time we spoke is coming about". Especially scary since our previous conversation with him was less than three weeks ago... Today's interview continues building on his excellent synopsis from last month that detailed the origins of the Eurozone crisis. The fundamental shortcomings warned of at the Euro's creation in 1997, combined with the excessive sovereign debts run up since then, have finally expressed themselves at a scale too large to be contained any longer. Today, Alasdair details in-depth the huge and serious challenges facing Greece and the major Eurozone countries, and the likely impacts of the fast-dwindling options left remaining.  He sees no happy ending to this story, no outcome in which serious pain and permanent behavior change can be avoided. And for those looking for shelter from the unfolding economic storm, he sees few options besides the precious metals (which he believes are severely under priced at the moment):

"Dear Angela, Dear Francois, Dear Mario" - From Citi, With No Love At All

The big banks are getting restless. Nowhere is this more evident than in the latest just released letter from Citi's European Credit Strategy, literally a letter to Europe's trio of leading politicians, which follows hot on the heels of yet another recent Citigroup missive from Willem Buiter, which was largely ignored in the noise, yet which made it all too clear that when all else fails, it is the Chairman's sworn duty to paradrop money. Because if anyone, it is the banks that know that if things aren't fixed (they aren't), it is up to the central banks to do something to prevent the vigilantes from forcing the politicians hands, as they did in the summer and fall of 2011 (which will not provide a long-term fix, but at least allow bankers to hope that the next collapse won't take place before bonus season). As Citi says, "Until the gravity of the situation is made clear, until the self-reinforcing mechanisms that already seem to be in motion are understood, we don't see how the solutions, the answers, and the certainty that market craves can be brought to the table." Which simply means that things are about to get much, much worse as it will be up to the markets to bring the world to the edge of collapse once again, just so Europe, with the help of the Fed of course, once again is forced to get over the political bickering and prop up risk assets, in yet another iteration of "this time it's different", even though it isn't. Sure enough: "Our impression is that markets will need to act as the proverbial 'attack dog', forcing the issue on the political agenda. We can't escape the sense that it is probably politically easier to let the markets run loose for the time being to make it apparent that further intervention is needed. But 1000bp on Crossover is much closer than you imagine." In other words, Citi just gave the green light for the bottom to fall from the market just so Europe's increasingly impotent political elite does something, anything. Look for many more banks to sign off on the same letter.

If Greece Exits, The Market Rallies

Admin at Marc Faber Blog - 12 hours ago

In the case of Greece, I think we are closer to the end and I think if Greece exited the Eurozone, we would figure a shorter market rally. If the market is very concerned in the near term, then basically the Greece exiting would be a solution. It may not be the best solution, but it is a solution. -* in NDTV * *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.* 

  more »

Farming Has Been A Horrible Business For 30 Years

Admin at Jim Rogers Blog - 12 hours ago

More people in America study public relations than study farming. We have no farmers. You cannot eat press releases. It has been a horrible business for 30 years. Prices have to go up a lot, or we're not going to have any food at any price. - *in ET.com* * * Related: PowerShares DB Agriculture Fund (DBA) *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.*

Crumbling BRICs... And Why The Developed World Is Not "Taking Off" Either

The problem with self-reported economic data by various countries, especially those which are supposed to be at the forefront of economic growth, now that the "developed" world is groaning under consolidated debt/GDP ratios which will soon be the 4 digits, is just that - that they are self-reported: a main reason for the development of such governmental offshoot programs as the "Ministry of Truth." Which means that when the investing public hears of an updated Chinese GDP, or Brazilian inflation, or Russian industrial production, most roll their eyes but go with it, as this is the data that the greater fool down the street will also be using for investment decisions. Luckily, there are secondary indicators which present a much more realistic picture of what is truly happening in this fringe growth markets. A few days ago, we presented the "stock" view of the world's two biggest housing bubbles: China and Saudi Arabia, when demonstrating the epic outlier nature of these two countries in the context of cement consumption relative to GDP per capita: a snapshot which showed just how unsustainable the regional construction bubble in these two countries is. But since this is a snapshot in time, and hence "stock", how about the "flow", or the perspective of the economy from a continuous basis. For that we once again go to Goldman, which has conveniently compiled two alternative yet very critical data sets which go to the core of the BRIC economies: Chinese electricity consumption, as well as Brazilian toll road traffic. The picture(s) is (are) not pretty.

Failbook’s Epic Fail: Does Zuckerberg Want Users To Pay?

From the BBC: "Facebook has started testing a system that lets users pay to highlight or promote posts.  Facebook said the goal was to see if users were interested in paying to flag up their information." That’s their plan? That’s Zuckerberg’s big idea? Get users to pay to post premium content!? Did the well-circulated hoax that Facebook planned to get users to pay for use just turn out to be true? If they proceed with this (unlikely) it seems fairly obvious the world would say goodbye Facebook, hello free alternatives. The truth is that Facebook is a toy, a dreamworld, a figment of the imagination. Zuckerberg wanted to make the world a more connected place (and build a huge database of personal preferences), and he succeeded thanks to a huge slathering of venture capital. That’s an accomplishment, but it’s not a business. While the angel investors and college-dorm engineers will feel gratified at paper gains, it is becoming hard to ignore that there is no great profit engine under the venture. In fact, the big money coming into Facebook just seems to be money from new investors — they raised eighteen times as much in their flotation yesterday as they did in a whole year of advertising revenue. For an established company with such huge market penetration, they’re veering dangerously close to Bernie Madoff’s business model.

What Jamie Dimon Really Said: The CIA's Take

The last time the body language (and ex-intelligence) experts from Business Intelligence Advisors appeared on these pages, their target was Ben Bernanke, and specifically his first ever post-FOMC press conference. This time around, BIA has chosen the analyze what has been left unsaid by none other than the head of JP Morgan in the context of his $2 billion (and soon to be far larger) loss which is still sending shockwaves around the financial world. As a reminder, "Using techniques developed at the Central Intelligence Agency, BIA analysts pore over management communications for answers that are evasive, incomplete, overly specific or defensive, potentially signaling anything from discomfort with certain subjects,  purposeful obfuscation, or a lack of knowledge." So what would the CIA conclude if they were cross-examining Jamie Dimon?

FaceBook: The Complete Forensic Post-Mortem

While much has already been written on the topic of peak valuation, social bubbles popping, and the ethical social utility of yesterday's historically overhyped IPO, nobody has done an analysis of the actual stock trading dynamics as in-depth as the following complete forensic post-mortem by Nanex. Because more than anything, those tense 30 minutes between the scheduled open and the actual one (which just happened to coincide with the European close), showed just how reliant any form of public capital raising is on technology and electronic trading. And to think there was a time when an IPO simply allowed a company to raise cash: sadly it has devolved to the point where a public offering is a policy statement in support of a broken capital market, which however is fully in the hands of SkyNet, as yesterday's chain of events, so very humiliating for the Nasdaq, showed. From a delayed opening, to 2 hour trade confirmation delays, virtually everyone was in the dark about what was really happening behind the scenes! As the analysis below shows, what happened was at times sheer chaos, where everything was hanging by a thread, because if FB had gotten the BATS treatment, it was lights out for the stock market. Well, the D-Day was avoided for now, but at what cost? And how much over the greenshoe FaceBook stock overallotment did MS have to buy to prevent it from tumbling below $30 because as Reuters reminds us, "had Morgan Stanley bought all of the shares traded around $38 in the final 20 minutes of the day, it would have spent nearly $2 billion." What about the first defense of $38?  In other words: in order to make some $67 million for its Investment Banking unit, was MS forced to eat a several hundred million loss in its sales and trading division just to avoid looking like the world's worst underwriter ever? We won't know for a while, but in the meantime, here is a visual summary of the key events during yesterday's far less than historic IPO.

Jim’s Mailbox

May 19, 2012, at 4:50 pm
by Jim Sinclair 

Jim,

Wanted to make sure you saw this article from Spiegel regarding bank runs.
Regards, CIGA Bobby

Crisis of Confidence Fears of Bank Runs Mount in Southern Europe
Following the downgrade of 16 Spanish banks by Moody’s, the focus in the euro crisis is back on the banking sector. Greeks are withdrawing hundreds of millions from their accounts, with reports that the same is happening in Spain. Experts are calling on the European Central Bank to step in and prevent full-scale bank runs.
Link to full article…


Dear Bobby,

A resolution one way or another for the euro is coming fast now.

Jim

 

 

Jim’s Mailbox

May 18, 2012, at 5:25 pm
by Jim Sinclair The Pursuit of Balance Finds Few Masters  
CIGA Eric

How many investors motivated largely by fear and highly motivated misinformation campaign dumped their gold and silver positions last week?
Jim is absolutely right -  Please make an effort to stay balanced. Greed is a condition of lack of balance similar to fear.
Human behavior driven largely by evolution ensures that Jim’s pleas for balance of mind, body, and spiritwill go unheeded.  Emotion is the enemy of trading profits, but few traders ever achieve balance within a world that cajoles and encourages the instinctual responses such flight or fight (fear and greed).
Gold was first to record seismic activity that warned of an impending price eruption in 2008. This rumblings was followed by significant seismic activity in the silver market. While a similar pattern is unfolding in 2012, it will likely go unrecognized within a community currently unbalanced by fear.
Chart 1: Gold London P.M Fixed and Long/Short Concentration Index (CI): 1 = Bullish Setup, -1 = Bearish Setup 


Chart 2: Silver ETF (Silver) and the Silver Long/Short Concentration Index (CI): 1 = Bullish Setup, -1 = Bearish Setup

How many those gold and silver sellers reallocated to bonds?  The message from the market says bad idea.
Chart 3: US Treasury Bond 20YR+ (TLT) And US Treasury Bond Diffusion Index (DI)

The invisible hand is repositioning against the fear in plain sight.  Why not?  Everyone is too busy screaming and bitching to notice.  The top ten inflows for the future and options markets which includes gold, silver, precious metals, Australian dollar (commodity currency), and copper reveals its true intentions despite the inane headline chatter.
Table: COT Futures and Options Money Flows


More…



Jim,

$1525 was pretty close. $1510 didn’t happen.
Still, that was close enough for me.

CIGA Stefanmo




Jim Sinclair’s Commentary

What about more Morgans, or is Morgan’s OTC derivative position totally out of control and still wide open?

Courtesy of CIGA David

I have been watching junk debt relative to nominal Treasuries (IEF/TLT) intraday. I began seeing some very wild intraday moves, with junk debt prices collapsing (yields spiking) while safer Treasuries were aggressively being bid up (yields dropping).The speed and magnitude of this credit spread widening on Wednesday was indeed meaningful. Thursday, that spread widened even further, in a way that suggests that a credit event may be underway in the U.S. and that contagion is here.
Here we are, 48 hours after the major movement began on Wednesday, and a look at the daily chart of junk debt and sovereign debt EMB -0.09% shows that a "crash" may actually be here in credit markets. I say "crash" in quotes because while the price decline may not seem like much, a crash should be defined by how far back in time an investment sends you in its decline relative to a short time frame.
Meanwhile, Treasuries have spiked, with 30-year Treasuries below the panic 3% level. To say that "credit leads the stock market" is too simplistic. It is widening credit spreads which lead risk-aversion, and vice versa. Credit spreads lead equities, not credit.
In the past 48 hours, the magnitude of the decline of junk debt and sovereign debt relative to Treasuries increasing suggests meaningful credit stress is occurring. If junk/sovereign debt doesn’t stabilize and improve shortly, the odds of a follow-through sudden break in stocks in the U.S. increase substantially.
Credit spread movement and improvement/deterioration is pretty much THE thing to focus on.
The move in debt spreads over the last 48 hours has increased the odds of something major to come.
Notice that this isn’t a prediction, but a statement about how such a scenario could occur if indeed junk debt deteriorates further beyond the last 48 hours, and under the assumption that the magnitude of a decline could lead equities lower.
The most important question in the world may end up being answered soon after all. I remain defensively positioned in bonds and still short the US and European stock markets with an emphasis on short financials. All positions held since March 14.

THIS is Why I’m Invested in Physical SILVER

by H Mandeel, SGT report
Contrary to many other investors, I did not invest in physical silver out of fear of an economic collapse or inflation or hyperinflation. I invested in silver purely based on the anticipated future supply shortage. To demonstrate my point, here is a chart on the total remaining silver years of supply based on current production rates.
As seen in the green graph chart, in the next 10 years Canada, China and Mexico would be running out of silver. This will remove 9000 tons (289 MILLION ounces) of annual supply from the market. That’s a whopping 40% decrease from current mine supply! And the chart assumes NO INCREASE IN DEMAND over the next 10 years. Read More…

Robin Koerner on Why Ron Paul Remains the Hope for the US’s Future

Editorial by Anthony Wile, The Daily Bell:
Introduction: Robin Koerner is an influential political journalist who coined the term “Blue Republican.” He also runs WatchingAmerica.com, a volunteer force some 400 strong that finds and translates news and views about the USA from all over the world. This interview was conducted prior to the announcement that Congressman and Presidential Candidate Ron Paul (whom Koerner backs) would not further contest various states in the Republican primary. However, Ron Paul has not given any indication he is actually dropping out of the race and Koerner’s statements below thus stand as stated (unless Ron Paul issues further clarifications) without need of further clarification.

Daily Bell: Give us some background on yourself.

Robin Koerner: I am in my mid-30s and born in south of England. I studied physics and philosophy at Peterhouse, Cambridge University and have traveled quite extensively. I’m now a permanent resident of the USA (living in Seattle), with the intention of becoming a citizen. I am also the founder and publisher of Watching America.com and probably best known in the USA today for coining the expression “Blue Republican” to refer to those former non-Republicans of more liberal sensibility who are switching to the Republican party specifically to support Ron Paul.

Daily Bell: When did you decide to get involved as an alternative media political commentator?

Read More @ TheDailyBell.com

Wall Street Journal Asks: “Could We Trust Killer Robots?” (We Ask, Would They Be Silver Bugs?)

from Silver Vigilante:
In the weekend edition of the Wall Street Journal May 19-20, 2012, which I swear I stopped subscribing to but remains to be delivered, a piece entitled, “Could We Trust Killer Robots?” appeared. It details a near-future world in which the United States military has been made wholly robotic. The subtitle reads, “A drone may never have a sense of morality, but it might perform better than a human solder in sparing the innocent.”
In this apparently not-so-far-off world, Wall Street Journal uses 2015 (two-and-half-years) as an example, the robot will be able to determine through “infrared cameras, heat sensors, and other tools of surveillance determined whether the target is indeed a militant.” The robot will decipher when a person is “ready to attack” on a scale from -1 (a noncombatant) to +1 (a confirmed combatant.) Clearly, this is very complicated stuff.
After the delineation, the robot will then assess whether or not children or other civilians are in the nearby, “and that everything else is in order.” Once it chooses the proper weapon it will then proceed to “kill! Kill! Kill!” The robot then assesses the damage and either “kill! Kill! Kill’s!”again or, if the enemy is dead, proceeds on patrol.
Read More @ SilverVigilante.com

Fukushima Reactor 4 poses massive global risk

by Andy Johnson, CTV News:
More than a year after a devastating earthquake and tsunami triggered a massive nuclear disaster, experts are warning that Japan isn’t out of the woods yet and the worst nuclear storm the world has ever seen could be just one earthquake away from reality.
The troubled Reactor 4 at the Fukushima Daiichi nuclear plant is at the centre of this potential catastrophe. Reactor 4 — and to a lesser extent Reactor 3 — still hold large quantities of cooling waters surrounding spent nuclear fuel, all bound by a fragile concrete pool located 30 metres above the ground, and exposed to the elements.
A magnitude 7 or 7.5 earthquake would likely fracture that pool, and disaster would ensue, says Arnie Gundersen, a nuclear engineer with Fairewinds Energy Education who has visited the site.
The 1,535 spent fuel rods would become exposed to the air and would likely catch fire, with the most-recently added fuel rods igniting first.
Read More @ Infowars.com

Provocateurs Entrap Patsies as NATO War Council Plans Mass Murder

by Kurt Nimmo, Infowars:
On Saturday Chicago police arrested three patsies “accused of making Molotov cocktails” and who were “planning to attack President Barack Obama’s campaign headquarters, Mayor Rahm Emanuel’s home and other targets during this weekend’s NATO summit,” according to prosecutors.
The incident follows a familiar pattern. According to defense attorneys, police agents provocateurs are responsible for the Molotov cocktails and the arrests were timed to discredit protests against the NATO war council held this weekend in Chicago.
“This is just propaganda to create a climate of fear,” said defense attorney Michael Duetsch. “We believe this is all a setup and entrapment to the highest degree.”
Two government provocateurs going by the names “Mo” and “Gloves” were arrested on Wednesday along with the other men but have since mysteriously disappeared.
Brian Church, 20, Jared Chase, 24, and Brent Vincent Betterly, 24, are charged with providing material support for terrorism, conspiracy to commit terrorism and possession of explosives. They are being held on $1.5 million bond.
Read More @ Infowars.com

STRATEGICALLY PREPARING WITH GOOD FOOD – DoomsDay Prepping

from VictoryIndependence:

Paul power takes over GOP

by Rachel E. Stassen-Berger , Star Tribune:
After years of quiet, relentless organizing, followers of libertarian-leaning GOP presidential candidate Ron Paul have exploded inside the Minnesota Republican Party, becoming its most potent army.
“This is one of the greatest states that I have witnessed, where I have seen the transition, where the enthusiasm’s there,” the grinning Texas congressman told hundreds of exuberant activists Saturday at the state party’s convention in St. Cloud, where he won 12 of 13 open delegate spots to the GOP national convention in Tampa, Fla., in August. The 13th went to U.S. Rep. Michele Bachmann — and only after a Paul supporter dropped out to let her have that spot.
Read More @ Star Tribune

Police gear up in Chicago as thousands join anti-NATO rallies

from RussiaToday:
Around a dozen activists were arrested on the eve of the gathering – three were charged with conspiracy to cause terror. RT’s Anastasia Churkina is in Chicago.

This Billionaire Just Bought 400% More Gold

by Shaun Connell, Seeking Alpha:
A few weeks back, I wrote an article asking Is George Soros Wrong About Gold? He made waves a couple of years ago by claiming that gold is the “ultimate asset bubble,” only to then invest heavily in gold.
Last year, he made a lot of cuts to his position, easily missing the heavy correction that occurred mid-to-late 2011. But now? He’s getting back in the game.
According to Fox Business, George Soros’ hedge fund just quadrupled it’s holding in SPDR Gold Trust (GLD), and even opened a new position in call options for Newmont Mining (NEM).
Read More @ SeekingAlpha.com

NDAA Declared Unconstitutional; Indefinite Detention of Americans Blocked by Federal Court

[Ed. Note: Thankfully Judge Katherine Forrest has a soul, and a basic appreciation for the Constitution. Count this one under 'glimmer of hope'.]
from Ravenise00:

The National Defense Authorization Act signed by President Obama on the eve ofthe New Year has now come to a standstill. Since its genesis, the NDAA has been confronted with heavy criticism claiming the act is unlawful and on Wednesday DistrictJudge Katherine Forrest agreed. The section 1021 calls for the indefinite detentionof Americans and as of now is unconstitutional, but late Thursday an amendment tothe NDAA ruling was brought forward on the House floor.

Ron Paul going full force to Republican National Convention

from RTAmerica:

Geithner: ‘I Don’t Understand’ Why Debt Ceiling Debate Is Back

from PBS:

Priceless Viewer Comment:
Geithner: ‘I Don’t Understand’ Why Debt Ceiling Debate Is Back
Perhaps you have forgotten that the Administration is wasting Trillions of dollars THAT WE DON’T HAVE.
Does that ring a bell?
Read More at pbs.org

Spain bombshell Friday night as they adjust budgetary deficit to 8.9% from 8.5% – LCH raises European bank margin requirements – Ireland in need of another bailout

by Harvey Organ, HarveyOrgan.Blogspot.ca:
The total silver comex continues to baffle the bankers and CME officials. It seems that the big bad Wolf (JPMorgan) has huffed and puffed trying to blow down the silver longs from the silver tree to no avail. On Friday, the total OI rests at 113,766 a rise of 133 contracts from Thursday. These longs are resolute and ready to take on the bankers in July (after they do battle with the gold shorts in June). The front delivery month of May saw its OI surprisingly rise by one contract despite 3 delivery notices on Thursday. So again we slowly increased additional ounces standing by 4 contracts or 20,000 oz. It seems that the modus operandi of these stoic longs is a slow and sure approach and obtaining as much silver as there is available.
The next delivery month for silver is July and here the OI fell by a tiny 528 contracts as some of these boys decided to stay in the game but roll to September. The estimated volume at the silver comex on Friday was 44,860 which is still quite good. The confirmed volume on Thursday was astounding at 55,373. The high volume and constant OI means our bankers are not happy campers this weekend.
Read More @ HarveyOrgan.Blogspot.ca

NATO in Chicago This Weekend: Cell Phones May Be Shut Down

by Gary North, The Tea Party Economist:
Authorities are considering a shut-down of cell phone service in Chicago this weekend. The excuse: the NATO meeting.
The Daily Beast reports that the FBI and Secret Service have standing authority to jam signals and they can also push for the shutdown of cell towers, thanks to “Standard Operating Procedure (SOP) 303,” which lays out the nation’s official “Emergency Wireless Protocols.”
Without cell phones, people cannot access Facebook or Twitter unless they are at home or can get to a Starbucks, where there is free WiFi.
Read More @ teapartyeconomist.com

Rumors, Denials, and Visions of Chaos in the Eurozone

from Testosterone Pit.com:

While the G-8 leaders are schmoozing with President Obama during their slumber party at Camp David, and while the parallel NATO summit and its protests and rallies are wreaking havoc on the streets in Chicago, Europe is re-descending into rumor hell—where good rumors, as we found out last summer and fall, are head fakes that cause huge rallies in the markets, and where bad rumors, though passionately denied by all sides, turn out to be true.
The latest was that the European Central Bank and European Commission were preparing contingency plans for Greece’s exit from the Eurozone. Actually, it wasn’t even a rumor. EU Trade Commissioner Karel De Gucht declared it during an interview: “A year and a half ago, there may have been the danger of a domino effect,” he said, “but today there are, both within the European Central Bank and the European Commission, services that are working on emergency scenarios in case Greece doesn’t make it.”
Read More @ TestosteronePit.com

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