Greg Hunter’s USAWatchdog.com
Dear CIGAs,
Economist John Williams says the latest round of “open-ended” QE has set the table for a global “dollar sell-off” and “hyperinflation” no later than 2014. Williams says, “There’s no way the consumer can fuel the economic recovery, and there is no way we’re going to see one in the near future.” Williams predicts, “The Treasury is going to have funding problems, and that means the deficit gets a lot worse.”
Now, there is talk the Fed might increase the money printing. Williams charges, “The Fed’s primary concern is to keep the banking system afloat, and they’re not doing so well with that.” Williams contends there is 12 trillion in liquid dollar assets held outside the U.S. Williams says it is only a matter of time before all the Fed money printing will “trigger a sell-off . . . and that will provide the early start of the hyperinflation.” You think the U.S. is better off today than it was in the last meltdown? Not according to Williams, he thinks, “. . . things have gotten a lot worse.” Join Greg Hunter as he goes One-on-One with John Williams of Shadowstats.com.
More…
Dear CIGAs,
Economist John Williams says the latest round of “open-ended” QE has set the table for a global “dollar sell-off” and “hyperinflation” no later than 2014. Williams says, “There’s no way the consumer can fuel the economic recovery, and there is no way we’re going to see one in the near future.” Williams predicts, “The Treasury is going to have funding problems, and that means the deficit gets a lot worse.”
Now, there is talk the Fed might increase the money printing. Williams charges, “The Fed’s primary concern is to keep the banking system afloat, and they’re not doing so well with that.” Williams contends there is 12 trillion in liquid dollar assets held outside the U.S. Williams says it is only a matter of time before all the Fed money printing will “trigger a sell-off . . . and that will provide the early start of the hyperinflation.” You think the U.S. is better off today than it was in the last meltdown? Not according to Williams, he thinks, “. . . things have gotten a lot worse.” Join Greg Hunter as he goes One-on-One with John Williams of Shadowstats.com.
Duck Tales Inflation Lesson
Why Did The Bundesbank Secretly Withdraw Two-Thirds Of Its London Gold?
Two days ago we reported that the German Court of Auditors demanded that the German Central Bank, the Bundesbank, verify and audit its official gold holdings consisting of 3,396 tons, held mostly offshore, namely New York, London and Paris, at least according to official documents. It also called for repatriation of 150 tons in the next three years to perform a quality inspection of the tungsten gold. Today, in a surprising development, via the Telegraph we learn that none other than the same Bundesbank which is causing endless nightmares for all the other broke European nations due to its insistence for sound money, decided to voluntarily pull two thirds of its gold holdings held by the Bank of England. According to a confidential report referenced by the Telegraph, Buba reclaimed 940 tons, reducing its BOE holdings from 1,440 in 2000 to 500 in 2001 allegedly "because storage costs were too high." This is about as idiotic an excuse as the Fed cancelling its reporting of M3 in 2006 because "the costs of collecting the underlying data outweigh the benefits." So why did Buba repatriate its gold? Ambrose Evans-Pritchard has an idea...
by Julian Phillips, MineWeb.com
The gold and silver price have and will move in tandem with each other, with silver moving higher still when gold prices rise and falling further when gold prices fall. Despite different fundamentals behind the two and a different pattern of mining [silver is a by-product of base metal production usually] the two metals are reflecting their value as a means of saving value and wealth, their monetary value. This won’t change as we see the economic currents behind the world’s financial system continue to falter. After all, for several millennia, man has not trusted man’s promises, but has referred to the precious metals to determine true value. So why should the last forty plus years change that, particularly when the 40-year + experiment with a paper financial system has shown so many structural faults.
Looking at the state of the world’s monetary system what do we see today that will dictate the prices of gold and silver tomorrow?
Read More @ MineWeb.com
by Mike Shedlock, Global Economic Analysis:
If you are going to tell a lie, make it as big and credible as you can by wrapping the lies with a platitude of half-truths. ECB president Mario Draghi did just that today with a spirited defense of bond purchases, coupled with a warning about deflation.
Paragraphs in italics below are from the above Bloomberg link. My comments follow immediately.
The ECB’s so-called Outright Monetary Transactions “will not lead to inflation,” Draghi told lawmakers in Berlin in a closed-door session, according to a text provided by the ECB. “In our assessment, the greater risk to price stability is currently falling prices in some euro-area countries,” he said. “In this sense, OMTs are not in contradiction to our mandate: in fact, they are essential for ensuring we can continue to achieve it.”
Read More @ GlobalEconomicAnalysis.blogspot.com
If you are going to tell a lie, make it as big and credible as you can by wrapping the lies with a platitude of half-truths. ECB president Mario Draghi did just that today with a spirited defense of bond purchases, coupled with a warning about deflation.
Paragraphs in italics below are from the above Bloomberg link. My comments follow immediately.
The ECB’s so-called Outright Monetary Transactions “will not lead to inflation,” Draghi told lawmakers in Berlin in a closed-door session, according to a text provided by the ECB. “In our assessment, the greater risk to price stability is currently falling prices in some euro-area countries,” he said. “In this sense, OMTs are not in contradiction to our mandate: in fact, they are essential for ensuring we can continue to achieve it.”
Read More @ GlobalEconomicAnalysis.blogspot.com
Secession Fever Sweeping Europe Meaningless Without Debt Repudiation
While regional independence is superior to both the failing European Union and the façade of special interest controlled democracy, one further action should taken by any jurisdictions that choose secession: Newly restored sovereign nations should repudiate their share of the illegitimate sovereign debt when they exit existing unions and nation-states.
Created by distant banking elites buying national politicians and
parliaments to load up on sovereign debts that can never be paid off,
this massive national debt load is illegitimate and destructive to
existing and new national economies. Governments have three ways to deal with debt loads of this magnitude:
The first is hyperinflation designed to destroy the payoff value of the
debt, second is the official repudiation of the debt or third, a
combination of both options. Attempting to hold the bankers accountable is not an option. The first nations to repudiate sovereign debt will have the advantage; and as
nations undertake this endeavor, they should keep this in mind: All
government bureaucracies grow until contained, taxes rise until
curtailed and politicians borrow and seek power until thrown out of
office.Your support is needed...
Thank You
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It's Been A Wild Ride
The last few years have been a wild ride in the world's equity markets. None wilder than the US equity markets. The only fly in the ointment is that we've seen this kind of 'wild ride' before, the kind of unbridled nothing-can-stop-us-now, its-all-priced-in, Central-Bank-sponsored rallies that have been the bread-and-butter of every BTFD'er since March 2009. Presented with little comment - this time it's different, we really hope...
Gold Chart and Comments
Trader Dan at Trader Dan's Market Views - 13 minutes ago
Gold's failure to hold the $1720 level has led to increased selling
pressure taking the metal down to strategic psychological support at the
round number of $1700. The market is bouncing off of that level in Asian
trade this evening as dip buyers/bargain hunters move in to take advantage
of the nearly $100 fall in price from its recent peak made a few weeks ago.
If the bulls can take the price back up through the blue line marked
"FAILED SUPPORT", gold should stabilize and range trade. If $1700 gives
way, then price is headed for a test of the line marked "SECONDARY SUPPORT".
Notice... more »
Another gold and silver raid/open interest remains high in silver/Germany engaged in gold swap probably with the USA/Chris Powell's speech in New Orleans/Anglo and Goldfields start firing 20,000 workers/
Harvey Organ at Harvey Organ's - The Daily Gold and Silver Report - 5 hours ago
Good
evening Ladies and Gentlemen:
Gold closed down today to the tune of $9.50 to $1698.80 while silver
fell 17 cents to $31.60. It seems that the bankers are relentless to
raid as their antics are well tolerated by the regulators.
Today the all important Purchasers Manufacturers Index was released
throughout the globe. This measure is perhaps one of the more important
index as it revealsTaxman Strips Exotic Dancers' Write-Down
In what will likely cause riots on the streets of New York City, the Court of Appeals has upheld that strip
clubs could not longer claim a tax exemption as its stage and couch
dances did not merit a 'musical arts performance' exemption. As Bloomberg BusinessWeek reports: "It
is not irrational for the tax tribunal to decline to extend a tax
exemption to every act that declares itself a ‘dance performance,’" the Court of Appeals said in a 4-3 decision. The sticking point, apparently, was the fact that the 'private dances' were the same as those supposedly 'choreographed' on stage
(which doesn't seem such a bad thing to us?) but like the Tax Tribunal
we haven't observed them or have personal knowledge of such VIP-room activity entertainment. The majority said qualifying the dances as artistic performances would “allow the exemption to swallow
the general tax" and one judge added "I find this particular form of
dance unedifying -- indeed, I am stuffy enough to find it distasteful; I would rather read the New Yorker," noting that Hustler was insufficiently 'cultural and artistic'."Three Chinese 'Surveillance' Vessels Enter Japanese Waters Around Senkaku Islands
It's been quiet, too quiet in the Pacific for the last few days, but now, as Yoimuri reports (and confirmed by Kyodo), the Japanese Maritime Safety Agency (Coastguard) issued a statement that "Chinese surveillance vessels on Thursday entered Japan's territorial waters around a group of islands claimed by China, for the first time in three weeks." Three Chinese maritime vessels moved into the waters near Minamikojima, one of the five main islands of the Japan-controlled Senkaku group in the East China Sea, around 6:30 a.m., the coast guard said. It is the first time since Oct. 3 that Chinese surveillance vessels have entered Japan's territorial waters around the Senkakus, which are known as Diaoyu in China.
The European Nash Dis-equilibrium Through The Eyes Of A Greek
In a somewhat mind-blowing 'gotcha' this evening (that we saw coming from the moment the words left his lips), the Greek finance minister has been forced to admit he's a lying cheat drop claims that he had secured a two-year extension for debt repayments and an agreement with creditors over EUR13.5bn in proposed austerity measures - because HE HADN'T! As The Guardian reports, Stournaras played to stereotype perfectly (the Greeks only got in the euro thanks to off-market currency swaps to reduce debt optics off-balance sheet) by lying once again (if you lie big enough it has to stock, right?). The U-turn - which he was forced to make after Germany denied the deal (yes Zee Germans again the only ones that anyone should be listening to) - caused chaotic scenes in parliament. As we have vociferously described, and Mr. Panos confirmed, the leverage is all with the Greeks (as much as the world does not want to admit it) as one Greek official said (frighteningly honestly!):"Even if the troika give us a negative report, what are they going to do? Are they really going to not give us the installment [to keep Greece's economy afloat] two weeks before the US elections, with everything that entails – default, bankruptcy, global market turmoil? These labour reforms will turn our country into Bangladesh. They have no fiscal benefit and will actually derail the adjustment program. The political system will collapse if we impose them. The troika is demanding that we commit suicide!"
Plutonocrits
The term 'Plutonomy' was originally coined by Citigroup analyst Ajay Kapur, who argued that in many countries, an ever larger part of economic activity was due to the the richest segments of society,
as wealth disparities have increased a great deal in recent decades.
Countries with especially large Gini coefficients (i.e., an especially
large gap between rich and poor) were deemed to represent such
'Plutonomies' by Kapur. We would briefly comment here that one of the
main reasons why the gap between rich and poor has widened so much is
the vast amount of monetary inflation that has taken place in recent
decades. It is not inequality as such that is the problem. The problem is that while the rich have gained from monetary inflation, the middle class and the poor have at the same time lost out.On That 'China Is At 52-Week Highs' Meme
It
appears once again that the behavior of a liquidity-constrained
high-beta market-price is encouraging excitement among some of the
world's 'smartest' media mavens. "But, but, but, 'China' at 52-week
highs must mean something?" we hear. Well three things on that meme: 1)
the 52-week high Hang-Seng is not reflective of 'China' fundamentals
per se - instead a far faster-money inflow/outflow liquidity indicator;
2) China's Shanghai Composite remains extremely weak; and 3) the
Hang-Seng has had three false (and dramatic) swings in the last three
years which have all reverted painfully fast (1 bearish and 2 bullish) -
do you believe this time is different? Fall 2010 and Spring 2012 both looked great - until they crashed and burned...Chart Of The Day: 55 And Under? No Job For You
Nearly two years ago, and progressing to this day, we first observed (and subsequently even the mainstream media caught on) that America's labor force is slowly but surely converting itself from a full-time to part-time worker society. The reasons for this are obvious: to corporations, the benefits associated with employing part-time workers are countless: avoiding substantial benefits-related costs, evading long-term job contracts, hourly basis wages, and many others. In fact, as long as there is slack in the economy, and there will be for a long, long time as the shift in labor demand is now secular, regardless of what the Fed wants to admit, employers will have ever more leverage, while workers have less and less (and are forced to agree to any employment terms, as long as they get some paycheck at all). This much has been known. What has gotten far less prominence is that of the much trumpeted 4+ million jobs added since the trough in late 2009, virtually all the job additions have gone to (part-time) workers 55 years and over. Indeed, as the chart below shows, starting since the official NBER end of the recession in June 2009, the US has cumulatively added 2.9 million jobs. However, when broken down by age cohort, 3.5 million of these jobs have gone to US workers aged between 55 and 69. Another 729K have gone to recent college grads aged 20-24. What about those workers in their prime years: between 25 and 54 years of age? They have lost a total of 729,000 jobs since June 30, 2009!
New Home Sales - Not As Strong As Headlines Suggest
While the media continues to push the idea that the housing market is on the mend
the data really doesn't yet support such optimism. The current
percentage of the total number of housing units available that are
currently occupied remains at very depressed levels. When it comes to the reality of the housing recovery the 4-panel chart (below) tells the whole story. There is another problem with the housing recovery story. It isn't real. The
nascent recovery in the housing market, such as it has been, has been
driven by the largest amount of fiscal subsidy in the history of world.
The problem, however, is that for all of the financial support and
programs that have been thrown at the housing market - only a very minor
recovery could be mustered. With household formation at very low
levels and the 25-35 cohort facing the highest levels of unemployment
since the "Great Depression" it is no wonder that being a "renter" is no longer a derogatory label.Hey Muppets, Only Another 100% Climb In Share Price To Go Before You Break Even With MS/GS/FB Investment Advice
10/24/2012 - 12:56
by JT Long, The Gold Report:
Sprott’s Charles Oliver says it’s a great time to be heading up a precious metals fund. Gold and silver companies are trading at spectacular valuations, quantitative easings by the governments of the world are poised to strengthen the metals’ prices even further, and more bargains could be had soon if investors dump stocks to avoid taxes. In this interview with The Gold Report, Oliver, manager of the Sprott Gold and Precious Minerals Fund, talks about the momentum building for gold and silver and shares the names of undervalued opportunities.
The Gold Report: Charles, at the beginning of the summer, you forecast that gold and silver prices would go up based on quantitative easing (QE) in the U.S. and Europe. Since then gold did take a leg up and has stayed above $1,700+/ounce (oz) and silver has stayed over $30/oz. QE3 was recently announced in the U.S., but some say pumping liquidity into the system is having diminishing returns. Have precious metals reached a ceiling or is there still room to go up?
Charles Oliver: I expect precious metals prices to rise significantly over the next decade. A large part of it as a result of QE and other money printing programs. The U.S. did announce QE3 recently. Having said that, it hasn’t started running up the printing press. A good rise in precious metals is yet to come.
Read More @ Theaureport.com
Dow:Gold ratio makes $12,400-an-ounce gold look a realistic target Posted on 23 October 2012
It was fascinating to read the comments of ‘Mr Gold’ Jim Sinclair this week about gold heading for $3,500 to $12,400-an-ounce as a result of a shift in spread management by the bullion banks (click here). He used to run one so knows exactly when and why these banks are likely to slash their short positions and go fully long in the precious metal.
However, a consideration of the famous Dow:Gold ratio is also relevant here as a confirmation of where this price swing will go. Historically the ratio of the Dow Jones Index to the price of gold has in extremis swung to parity with one ounce of gold equal in value to the dollar-value of this index (see graph below, it is an unmistakeable trend).
1980 Dow:Gold ratio
In 1980, for example, $850 an ounce gold approximately matched 850 on the Dow Jones Index. With the Dow around 13,000 today it would require a gold price of $13,000 to deliver the same Dow:Gold ratio of one.
Of course if the USA moved into a deep recession in 2013-14 then you might anticipate a Dow Jones Index some 30-50 per cent lower. In that case gold prices would only have to move to $6,200-$8,680 to achieve the magic parity in the Gold:Dow ratio.
Mr. Sinclair’s lowest estimate for the top gold price of $3,500 an ounce would have the Dow plunging by 75 per cent in a massive sell-off. Therefore, those who are optimistic about the ability of Fed to support high stock market prices by printing money also ought to be very confident about a massive hike in the gold price.
The next issue of the ArabianMoney investment newsletter will return to the theme of precious metals and how to extract the maximum investment upside from this historic price shift and the sort of additional risks that you have to take to achieve this (subscribe here).
Physical metal
Mr Gold himself always advises a core position of physical metals held in a secure location. Both gold shares and playing with derivatives have additional risk but arguably superior rewards for the expert or fleet of foot. The ArabianMoney investment newsletter has a simpler approach to achieving the same thing, though we concur with the idea of the junior gold companies as likely to deliver the highest total return in the long-run.
But as the Dow:Gold equation suggests it is far more likely that gold will outperform shares than vice-versa. Still if the Dow headed up to 17,000 then the Dow:Gold ratio would imply $17,000-an-ounce gold, although we note Mr. Sinclair does not even consider this possibility.
More…
Sprott’s Charles Oliver says it’s a great time to be heading up a precious metals fund. Gold and silver companies are trading at spectacular valuations, quantitative easings by the governments of the world are poised to strengthen the metals’ prices even further, and more bargains could be had soon if investors dump stocks to avoid taxes. In this interview with The Gold Report, Oliver, manager of the Sprott Gold and Precious Minerals Fund, talks about the momentum building for gold and silver and shares the names of undervalued opportunities.
The Gold Report: Charles, at the beginning of the summer, you forecast that gold and silver prices would go up based on quantitative easing (QE) in the U.S. and Europe. Since then gold did take a leg up and has stayed above $1,700+/ounce (oz) and silver has stayed over $30/oz. QE3 was recently announced in the U.S., but some say pumping liquidity into the system is having diminishing returns. Have precious metals reached a ceiling or is there still room to go up?
Charles Oliver: I expect precious metals prices to rise significantly over the next decade. A large part of it as a result of QE and other money printing programs. The U.S. did announce QE3 recently. Having said that, it hasn’t started running up the printing press. A good rise in precious metals is yet to come.
Read More @ Theaureport.com
Dow:Gold ratio makes $12,400-an-ounce gold look a realistic target Posted on 23 October 2012
It was fascinating to read the comments of ‘Mr Gold’ Jim Sinclair this week about gold heading for $3,500 to $12,400-an-ounce as a result of a shift in spread management by the bullion banks (click here). He used to run one so knows exactly when and why these banks are likely to slash their short positions and go fully long in the precious metal.
However, a consideration of the famous Dow:Gold ratio is also relevant here as a confirmation of where this price swing will go. Historically the ratio of the Dow Jones Index to the price of gold has in extremis swung to parity with one ounce of gold equal in value to the dollar-value of this index (see graph below, it is an unmistakeable trend).
1980 Dow:Gold ratio
In 1980, for example, $850 an ounce gold approximately matched 850 on the Dow Jones Index. With the Dow around 13,000 today it would require a gold price of $13,000 to deliver the same Dow:Gold ratio of one.
Of course if the USA moved into a deep recession in 2013-14 then you might anticipate a Dow Jones Index some 30-50 per cent lower. In that case gold prices would only have to move to $6,200-$8,680 to achieve the magic parity in the Gold:Dow ratio.
Mr. Sinclair’s lowest estimate for the top gold price of $3,500 an ounce would have the Dow plunging by 75 per cent in a massive sell-off. Therefore, those who are optimistic about the ability of Fed to support high stock market prices by printing money also ought to be very confident about a massive hike in the gold price.
The next issue of the ArabianMoney investment newsletter will return to the theme of precious metals and how to extract the maximum investment upside from this historic price shift and the sort of additional risks that you have to take to achieve this (subscribe here).
Physical metal
Mr Gold himself always advises a core position of physical metals held in a secure location. Both gold shares and playing with derivatives have additional risk but arguably superior rewards for the expert or fleet of foot. The ArabianMoney investment newsletter has a simpler approach to achieving the same thing, though we concur with the idea of the junior gold companies as likely to deliver the highest total return in the long-run.
But as the Dow:Gold equation suggests it is far more likely that gold will outperform shares than vice-versa. Still if the Dow headed up to 17,000 then the Dow:Gold ratio would imply $17,000-an-ounce gold, although we note Mr. Sinclair does not even consider this possibility.
More…
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