The Big Guns Are Buying a LOT of Paper Gold – We Know Better, Buy the Physical

by Myra P. Saefong, Market Watch:
Major investors have added to their stakes in physically-backed gold exchange-traded funds and central banks have bought the metal at a record pace — good signs that gold’s about to break out of its recent trading range, but not necessarily indicative of a major rally .
“Too many gold bulls are hanging their hat” on quantitative easing (QE) from either the U.S. Federal Reserve or European Central Bank, said Ed Bugos, director of mining finance at Precious Metals Equity Research.
That mentality is particularly worrisome given the uncertainty surrounding further QE, which helps stimulate the economy, devalue currencies and raise gold’s safe-haven appeal.
Even so, billionaire hedge-fund managers George Soros and John Paulson boosted their gold holdings in the second quarter, implying expectations for higher gold prices despite the metal’s less-than-stellar performance.
Gold futures GCZ2 closed Thursday at $1,619.20 an ounce, up just 0.3% for the month and up 2.6% for the year. They lost 4% in the second quarter.
Paulson & Co. upped its stake in the SPDR Gold Trust GLD by 26% for the quarter ended in June, while Soros Fund Management LLC more than doubled its stake in the ETF, according to quarterly Securities and Exchange Commission (SEC) filings released late Tuesday. Read more on Paulson and Soros.
Read More @ MarketWatch.com

Paulson Steps Up Gold Bet to 44% of Firm’s Equity Assets

by Miles Weiss and Kelly Bit, Bloomberg:
Billionaire John Paulson raised his stake in an exchange-traded fund tracking the price of gold while selling other stocks during the second quarter, leaving his $21 billion hedge fund with more than 44 percent of its U.S. traded equities tied to bullion.
Paulson & Co. purchased an additional 4.53 million shares of the SPDR Gold Trust, the firm’s largest position, and bought more shares of NovaGold Resources Inc. (NG), according to a Form 13F filed yesterday with the U.S. Securities and Exchange Commission. Gold prices posted their biggest declines since 2008 last quarter.
Read More @ Bloomberg

Will The Fall Of Europe's Discontent Follow The Glorious Summer Made By This Head Of The ECB

Measuring the 'contentedness' during this summer of total comfort is tricky. With equities at the year's highs in nominal prices in the US and breaking multi-month highs in Europe, how do we 'know' the relative richness or cheapness (or hope or despair) that is priced into stocks and what the 'fall' ahead looks like. We may have found a way. Europe's economic and implicitly market performance is very much based on the explicit belief that the EMU remains in tact and that Draghi's recent 'promise' will enable sovereigns to go about their economic business (austerity and growth) without the hindrance of those nasty speculating long-only fixed income managers repricing cost-of-funds and eating into the nation's growth. In the US, it's all about multiples - P/E expansion (in the face of lower 'E') has maintained the hope; and so it is in Europe. The following chart shows the extremely high correlation between European equity P/E (hope multiples) and European Sovereign risk. At the end of LTRO2, European stocks were exuberant only to fade away; currently, European stock multiples are once again back to those exuberant 'hope' heights. Trade accordingly.

When the Weakest Critical Part Fails, the Machine Breaks Down

When financialization fails, the consumerist economy dies. This is what is happening in Greece, and is starting to happen in Spain and Italy. The central banks and Central States are attempting resuscitation by issuing credit that is freed from the constraints of collateral. The basic idea here is that if credit based on collateral has failed, then let's replace it with credit backed by phantom assets, i.e. illusory collateral. In essence, the financialization system has shifted to the realm of fantasy, where we (taxpayers, people who took out student loans, homeowners continuing to make payments on underwater mortgages, etc.) are paying very real interest on illusory debt backed by nothing. Once this flimsy con unravels, the credibility of all institutions that participated in the con will be irrevocably destroyed. This includes the European Central Bank (ECB), the Federal Reserve, the E.U., "too big to fail" banks, and so on down the financialization line of dominoes. Once credit ceases to expand, asset bubbles pop and consumerism grinds to a halt

Why VIX Is So Low, And What Comes Next?

VIX is nothing more than the market's implied 'factor' that makes the supply-demand of options prices fit with model-based parameters. In simple terms it measures the market's expectations for volatility (up or down moves - not just down) going forward. Empirically it has a relationship with realized volatility - how much the market actually moved up or down relative to what VIX expected - and professionals will use various 'scalping' techniques to lock in day-to-day gains from the difference between the market's actual movement and what options prices expected. To wit: the current expectations of central bank action, just as it did in 11/2011 (global CB action) and 1/2012 (LTRO1), has caused a slow steady leak higher in stocks which crushes realized volatility - currently at record lows. This in turn drags implied vol lower as the 'scalpers' sell vol to capture the difference. With September 'events' around the corner, we suspect there are only a few more days before realized vol picks up and implicitly implied vol momentum scalpers are squeezed out again (and despite a low absolute VIX, the market IS pricing for a pick-up in risk).

Brooklyn Deli Clerk's Face Slashed Open For Refusing To Sell Beer For Food Stamps

The face of Yemeni deli clerk Mutahar Murshed Ali was slashed nearly in two for committing that most grievous of offenses: refusing to "sell" a Colt 45 to a drunk 20 year-old in exchange for foodstamps (whose usage Zero Hedge readers know, recently reverted back to all time highs). Of course, Ali was perfectly in his right to refuse to exchange booze for EBT: we reported recently that "New York would prohibit welfare recipients from spending their tax-funded benefits on cigarettes, alcohol, gambling, and strip clubs under a bill passed overwhelmingly by the state Senate." That however appears to not have bothered the assailant, who nearly cut off the deli vendor's face off in retaliation for not getting the "entitled" quid-pro-handout.

European Equities And VIX End Week In World Of Their Own

It's like Deja-Vu all over again. The last two days effluence exuberance in European stocks - most specifically Italian and Spanish broad indices - is extremely different from the lack-luster moves in corporate, financial, and sovereign credit markets. Yes, we know short-sale bans; we know fast-money; we know liquidity; but it is beginning to become a little farcical that equities are doing what they do with no follow-through from the actual underlying markets that 'should' benefit the most from whatever it is that the equity markets are rallying for. EURUSD ends the week perfectly unchanged from last Friday. Spain and Italy 10Y end the week down 60bps and 25bps respectively (but the gains were fading fast today - even as stocks accelerated). Europe's VIX collapsed 1.7 vols to around 21% today after being steady all week (as US VIX drops below 14%).

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Friday Chart Porn

Dave in Denver at The Golden Truth - 33 minutes ago

*General experience suggests that the economy has not recovered. As shown in Commentary No. 459, the official recovery simply is a statistical illusion created by the government’s use of understated inflation in deflating the GDP, which overstates deflated economic growth...The long-term fiscal solvency issues of the United States - where GAAP-based accounting shows annual deficits running in the $5 trillion range—are not being addressed, and the politicians currently running the government lack the political will to address those issues.* *- *John Williams, Shadow Statistics M... more » 

 

Ancient Rome had Nothing on Modern Day America

Trader Dan at Trader Dan's Market Views - 2 hours ago

Historians have chronicled the decline of the Roman Empire detailing in great extent the internal rot and moral decadence that helped speed its eventual fall. The lack of ethics and virtue was bemoaned even in those days by some of its leading philosophers/statemen. I find it therefore rather disconcerting to see the the eerie parallels between the symptoms of rot and decay prevalent in Rome before it fell and the current US financial system, which has become a cesspool/stinking outhouse in terms of any vestige of decency and integrity. Witness the case of one Jon Corzine, which if ... more » 

November’s Choices

by Andrew P. Napolitano, Lew Rockwell:

We are in terrible straits this presidential election. We have a choice between a president who has posed more of a danger to personal freedom than any in the past 150 years and a Republican team that wants to return to Bush-style big government.
President Barack Obama has begun to show his hand at private fundraisers and in unscripted comments during his campaign. And the essence of his revelations is dark. His vision of a shared prosperity should frighten everyone who believes in freedom, because it is obvious that the president doesn’t. He believes the federal government somehow possesses power from some source other than the Constitution that enables it to take from the rich and give to the poor. He calls this “a new vision of an America in which prosperity is shared,” and he declared, “If you’ve got a business, you didn’t build that. Somebody else made that happen.”
Today in America, nearly half of all households receive either a salary or some financial benefit from the government; the other half pay for it. In Obama’s vision for America, no one will be permitted to become too rich, no matter his skills and hard work. He somehow believes that government seizures and transfers of wealth generate prosperity. We know, of course, that the opposite occurs. Seizing wealth through taxation removes it from the private sector for investment. That produces job losses and government dependence on a massive scale.
Read More @ LewRockwell.com

Monopoly Money

by Andrew Hoffman, MilesFranklin.com:

Take a look at this photo – and caption – and think long and hard.
I know Monopoly is just a game; but then again, what’s so “SACROSANCT” about the U.S. dollar? Since Monopoly was invented in 1934, not a single “monopoly dollar” has been added to circulation. That is, each 2012 version has the same amount in its “bank” as in 1934. And thus – what do you know? PRICES HAVEN’T CHANGED AT ALL!
That’s right, Baltic Avenue has ALWAYS been $60, and Boardwalk ALWAYS $400. Not to mention – for real estate-focused readers – a “house” or “hotel” on Boardwalk has ALWAYS been $200. Actually, the only “monopoly price” that has increased in 78 years is the “Luxury Tax” – from $75 to $100 – to simplify making change!
Again, I know, Monopoly’s “just a game.” However, the concept is no different, as we have been conditioned to recognize the “value” of the “monopoly dollar”; just as we have with the U.S. dollar. Only the monopoly dollar is NEVER inflated, as we see in other games (when I was a child, 100 thousand in pinball was like 100 million today). And NOTHING is more inflated than the U.S. dollar – save the Zimbabwean dollar – with some of its dilution occurring overtly, but potential an EQUAL amount covertly.
Read more @ MilesFranklin.com

Portugal Runs Out of Gold as Citizens Forced to Sell in Order to Eat

by Michael Krieger, Liberty Blitzkreig

This story from Bloomberg is one of the most gold bullish items I have read in the last 12 months.  While many pundits like to get on their soapboxes and spout about how gold is in a “bubble” merely due to the fact that it has soared so much and they are bitter they didn’t see it coming, this article demonstrates quite clearly that gold is in the opposite of a bubble.  Let’s take a few quotes from the article:
Paulo Oliveira and his wife sold their wedding rings to pay the rent after he lost his job as a builder last month. They were the couple’s last pieces of jewelry.
“We have no more gold to save us from being kicked out this month,” the 46-year-old said as he stood in the area of downtown Lisbon popular with cash-for-gold stores. “Everyone I know is struggling, even the gold stores are empty because nobody has any more gold left to sell.”
“Business has gone from great to terrible in a matter of months,” Luis Almeida, whose family has owned a gold store near Lisbon’s Rossio Square for more than 40 years, said in an interview. “The sad truth is that most of my clients have already sold all of their gold rings.”
Portugal’s gold exports increased by more than five times to 519.4 million euros last year from 102.1 million euros in 2009, according to data published on the Lisbon-based National Statistics Institute’s website.
Read More @ LibertyBlitzkreig.com

Ecuador President Rafael “We Are Not A Colony” Correa Stands Up To The Jackbooted British Gestapo

by Dr. Paul Craig Roberts, PaulCraigRoberts.org:
A coward dies many deaths; a brave man dies but once.
The once proud British government, now reduced to Washington’s servile whore, put on its Gestapo Jackboots and declared that if the Ecuadorean Embassy in London did not hand over WikiLeaks’ Julian Assange, British storm troopers would invade the embassy with military force and drag Assange out. Ecuador stood its ground. “We want to be very clear, we are not a British colony,” declared Ecuador’s Foreign Minister. Far from being intimidated the President of Ecuador, Rafael Correa, replied to the threat by granting Assange political asylum. http://www.nytimes.com/2012/08/17/world/americas/ecuador-to-let-assange-stay-in-its-embassy.html?pagewanted=2&_r=1&emc=na
The once law-abiding British government had no shame in announcing that it would violate the Vienna Convention and assault the Ecuadorean Embassy, just as the Islamic students in the 1979 Khomeini Revolution in Iran took over the US Embassy and held the diplomatic staff captive. Pushed by their Washington overlords, the Brits have resorted to the tactics of a pariah state. Maybe we should be worried about British nuclear weapons.
Let’s be clear, Assange is not a fugitive from justice. He has not been charged with any crime in any country. He has not raped any women. There are no indictments pending in any court, and as no charges have been brought against him, there is no validity to the Swedish extradition request. It is not normal for people to be extradited for questioning, especially when, as in Assange’s case, he expressed his complete cooperation with being questioned a second time by Swedish officials in London.
Read More @ PaulCraigRoberts.org

Federal government hoarding meat stocks in response to drought – Food shortages for the rest of us?

by Ethan A. Huff, Natural News:
At least two-thirds of the U.S. is currently suffering through varying degrees of drought, with the U.S. Drought Monitor reporting as of August 14 that 63 percent of hay, 72 percent of cattle, 85 percent of soybean crops, and 87 percent of corn crops are not getting the water they need to survive. And in response, the federal government has announced that it plans to buy up $170 million worth of pork, lamb, chicken, and catfish to help out these farmers — but what does this mean for the rest of us?
Insufficient rains have already damaged a significant portion of the nation’s feed crops, much of which are used to raise conventional cattle for meat production. As a result, feed prices have steadily increased while stocks have dwindled, putting many farmers in a difficult situation economically. So to help them along, the White House has pledged to stock up on extra meat and poultry, which it says it will distribute through federal food “nutrition” programs.
According to the U.S. Department of Agriculture (USDA), the agency will snatch up an additional $100 million worth of pork products, $50 million worth of chicken products, $10 millions worth of lamb products, and $10 million worth of catfish products. And whatever cannot be distributed through these federal programs will be stocked and frozen for future use, according to the White House.
Read More @ NaturalNews.com

Finland prepares for break-up of eurozone

Finland is preparing for the break-up of the eurozone, the country’s foreign minister warned today.
by Ambrose Evans-Pritchard, The Telegraph:

The Nordic state is battening down the hatches for a full-blown currency crisis as tensions in the eurozone mount and has said it will not tolerate further bail-out creep or fiscal union by stealth.
“We have to face openly the possibility of a euro-break up,” said Erkki Tuomioja, the country’s veteran foreign minister and a member of the Social Democratic Party, one of six that make up the country’s coalition government.
“It is not something that anybody — even the True Finns [eurosceptic party] — are advocating in Finland, let alone the government. But we have to be prepared,” he told The Daily Telegraph.
“Our officials, like everybody else and like every general staff, have some sort of operational plan for any eventuality.”
Mr Tuomioja’s intervention is the bluntest warning to date by a senior eurozone minister. As he discussed the crisis, the minister had a copy of the Economist on his desk. It had a picture of Angela Merkel, the German Chancellor, reading a fictitious report entitled “How to break up the euro”, with a caption: “Tempted, Angela?”
Read More @ Telegraph.co.uk

Ask The Expert – David Morgan [Part 1/4] – Sprott Money News

from sprottmoneyltd :

The Greek Bailout Sham Is Getting Gummed Up

from, Testosterone Pit.com:
“Default is not necessarily destructive,” said Panayiotis Lafazanis, a Greek politician in the left-wing SYRIZA. “It is a weapon of the weak when they reach the point of not being able to pay their debts.” Closer to the truth than anything else emanating from Greek politics. “Not necessarily destructive” for the Greeks—given their current calamity—but highly destructive for the European Central Bank and national central banks that ended up with crappy Greek bonds on their books; and for banks with derivative exposure. Hence the bailouts. They’re an effort to keep the bondholders afloat, not the Greeks—no one wants to recapitalize the ECB.
But there is something the Greeks could do: they could, for example, do their patriotic duty and pay their taxes—rather than asking taxpayers in other countries to do that for them. According to a recent study, Greek tax evasion amounted to €11.2 billion in just one year. Do that year after year, and pretty soon, you’re talking about real money.
By looking at bank records, as a bank would do to grant a loan, researchers determined that the “true income” of the average Greek is a stunning 1.92 times larger than reported income. They’re not just cheating a little bit. They’re massively defrauding the system. The worst tax evaders:
Read More @ TestosteronePit.com

Startling Evidence That Central Banks And Wall Street Insiders Are Rapidly Preparing For Something BIG

from The Economic Collapse Blog:
If you want to figure out what is going to happen next in the financial markets, carefully watch what the insiders are doing. Those that are “connected” have access to far better sources of information than the rest of us have, and if they hear that something big is coming up they will often make very significant moves with their money in anticipation of what is about to happen. Right now, Wall Street insiders and central banks all around the globe are making some very unusual moves. In fact, they appear to be rapidly preparing for something really big. So exactly what are they up to? In a previous article entitled “Are The Government And The Big Banks Quietly Preparing For An Imminent Financial Collapse?“, I speculated that they may be preparing for a financial meltdown of some sort. As I noted in that article, more than 600 banking executives have resigned from their positions over the past 12 months, and I have been personally told that a substantial number of Wall Street bankers have been shopping for “prepper properties” this summer. But now even more evidence has emerged that quiet preparations are being made for an imminent financial collapse. That doesn’t guarantee that something will happen or won’t happen. Like any good detective, we are gathering clues and trying to figure out what the evidence is telling us.
Read More @ TheEconomicCollpaseBlog.com

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