CTA Trading Desk Morning Report
[7:00am ET] Good morning.
I love it when a plan comes together. Those of you who have followed this blog closely know that I made rather strong predictions here that we’d all be on the Yellow Brick Road this summer. At the time there were few believers. With the break-outs yesterday and overnight, the enthusiasm will build.
In the past hour $GOLD hit a record high of 1579.30. $SILVER hit $37.02. Presently $GOLD is up +0.74% on the day and $SILVER, as to be expected in a precious metals rally, is up +3.00%.
To confirm my position on gold, here are my notes from last weekend’s Week In Review:
Five weeks ago in this space in the WIR, and in the blog, I opined that there were sound reasons for me to start buying the Goldminers. I did that, little by little, to a maximum holding of 92.8% long goldminers with just 7.2% cash in the gold accounts. This week, I temporarily dropped to 90.0% long (after taking partial profits in a stock where country risk was recently heightened) and then back to 91.0% long (increasing weightings in a couple stocks). But nothing much has changed in my outlook. Got gold?
A week ago I wrote here:
This week, $GOLD dropped -$18.26/oz (-1.22% W/W), closing at $1482.64, after the crushing loss of -1.34% on Friday… Why Friday? It’s psychological warfare by their side… As I recently published my reasons, all of which are quite valid, I believe the price of $GOLD will go to $5,000 within five years… Yes, I remain bullish. In that light; this chart shows me some technical support at about the $1475 level, and also at about the $1435 level. Also, the RSI-7 and Stochastic indexes are very low, so the odds are that the longer this sell-off goes, while staying above those support levels, the more likely the short-term downtrend will reverse and move back to the $1550 level, or higher, from its present $1482.64 price… There are many reasons to be bullish. For example, this week’s trading in the gold and silver was counter to what happened in platinum, palladium, copper and the US Dollar… For the same reasons that the summer rally in equities is a ‘risk on’ trade, and has started, I believe precious metals will lift sharply here, although they may be laggards in the rally.[From two weeks ago] I continue to believe and opine that “the G-20 finance ministers and central bankers learned a lot from Lehman 2008, and will adamantly refuse to allow a replay, one that would be even worse. Take this to the bank: buy gold. I expect lift-off in July.”
Prices never move in a straight line; it’s the understanding of trend and cycles that is important. Since the end of January, the recent trend has been up.
Through the seasonal slow-down, typically May-June, the trend has stayed intact. Now, into the summer, the prices are likely to rise again in a new cycle, as they have been from the start of the month.
Trading in the European banks to this point in the day are not indicating much directional movement, so, as for the overall equity market today I’ll start in neutral and see how the morning plays out. But I am encouraged that some of the junior miners are now finding bids. When that happens, you know how fast they can lift off.
Have a good day.
Obviously mine has not started out so well. The formatting of the blog and the WIR have differences, which drive me up the wall.
Here are the 7:00am ET snapshots of the latest equity market trading results for Europe, and futures prices plus 5-minute charts of the futures for S&P 500, 30-year US Treasury Bond, US Dollar index, Gold and Crude Oil.
| Symbol | Name | Last Trade | Change | Related Info |
|---|---|---|---|---|
| ^ATX | ATX | 2,670.00 |
 13.50 (0.51%) |
Components, Chart, More |
| ^BFX | BEL-20 | 2,454.65 |
18.17 (0.75%) |
Components, Chart, More |
| ^FCHI | CAC 40 | 3,778.32 |
4.20 (0.11%) |
Components, Chart, More |
| ^GDAXI | DAX | 7,219.59 |
45.45 (0.63%) |
Components, Chart, More |
| ^AEX | AEX General | 331.06 |
 1.06 (0.32%) |
Components, Chart, More |
| ^OSEAX | OSE All Share | 465.16 |
3.11 (0.67%) |
Components, Chart, More |
| ^SMSI | Madrid General | N/A | 0.00 (0.00%) | Chart, More |
| ^OMXSPI | Stockholm General | 350.08 |
1.50 (0.43%) |
Components, Chart, More |
| ^SSMI | Swiss Market | 6,030.68 |
15.84 (0.26%) |
Components, Chart, More |
| ^FTSE | FTSE 100 | 5,887.93 |
18.97 (0.32%) |
Components, Chart, More |
http://finviz.com/futures.ashx
http://finviz.com/fut_chart.ashx?p=m5&t=ES
http://finviz.com/fut_chart.ashx?p=m5&t=ZB
http://finviz.com/fut_chart.ashx?p=m5&t=DX
http://finviz.com/fut_chart.ashx?p=m5&t=GC
http://finviz.com/fut_chart.ashx?p=m5&t=SI
http://finviz.com/fut_chart.ashx?p=m5&t=CL
The team will check in during the day, reporting in the Discourse when there is a new entry.
Enjoy your day.
Cara on Trends & Cycles
Vad's Catch of the Day
Kaimu's Sound Money
By Stephen Wellman
CAPITAL MARKETS AND SOCIAL EQUITY REVISITED
Actually the phrase includes the words “Perspective and Discussion”.
I think we got a lesson on Democracy here at the Bill Cara blog last week when three of the regular posters here insisted that the SOUND MONEY reports are either too long or had “non-essential” info that one deemed “rant”. Of course when you deem something “non-essential” then you are on that slippery slope from the get go! Pretty soon large parts of the entire blog could be deemed “non-essential” by only a few participants.
It seems to me that if we extrapolate this “human action” out 100 million times then we would get what we now have in this so called “democratic political system” here in America. Think for a minute. These three blog readers most assuredly must know that they are not the owners of the blog and they must also realize that nobody appointed them as representatives of the masses (the silent majority who read the blog but do not post), so in essence they are similar to a special interest group or lobbyist in Washington DC. They were lobbying for their own self interest not the groups or the owner of the blog. Since there is no law against such behavior, just as there is no law against special interests groups and lobbyists, it is permissible to operate within the defined political system, aka blog system. You can imagine then from this one incident what it must be like in Washington DC every day with all these groups knocking on every politician’s door to lobby for their own “essential” favors. This leads to a similar vein in an article I read recently.
This is what I read in an article related to the return of the gold standard … It begins here:
“In politics, interest groups organize to gain influence over the government and implement policies for their own benefit, at the expense of the rest of society.”
Certainly those who have the time and capital to organize interest groups have an advantage over those of us who do not. I must say given some of the political campaign contribution amounts the banking sector donates that political favors are bought rather cheaply.
The article goes on:
“But why does political logic defeat common sense? The public choice school of economics has given us an explanation of the insidious process by which the few exploit the many. They point out that concentrated benefits and dispersed costs lead to rational ignorance. Translating, "concentrated benefits" are the large returns earned by the privileged groups through subsidies or bailouts.”
Hence the big bank bailouts and unfair tax policy applied to foreign operating US corporations and the favoritism politicians pay to certain powerful public and private unions.
“For each one of us tax payers, the cost of any individual bailout or welfare program is quite small, hence "dispersed costs". In looking at political action to fight the system, the individual taxpayer faces the following set of tradeoffs: the time and effort to understand even one piece of legislation or policy is substantial, and even if opposition to a particular program were effective, it would only save a few dollars per individual in taxes. This leads to "rational ignorance", the decision by most taxpayers that the return to working harder at your job or just enjoying life is much greater than the return to political organizing.”
I do think that “rational ignorance” prevails in America today. The idea that if you divorce yourself from the political and monetary issues that are so embedded and iconic and instead just work harder and enjoy life more then those seemingly tsunami sized issues will not effect you. This has led to the fierce competition for high paying jobs, the most illustrious education your money can buy and the backyard resort you see in so many suburban homes now. It’s the idea you cannot afford a luxury resort hotel every year any more so you may as well live in one. This thinking, this “rational ignorance” will not work though in the long run.
The article goes on to talk about the possibilities of returning to a gold standard:
“Given outcomes that are dominated by public choice logic, the monetary system will not be reformed when "it makes too much sense" to do so. It will not be reformed because it would put government finances on a sound footing, nor to restrain war-making. Stabilizing the dollar won’t do it either. The current monetary system (or as James Grant calls it, non-system) will be replaced, eventually, because it will fail, catastrophically.”
I fully agree that there will have to be some catastrophic failure before any true monetary reform can be made. As it stands way too many people earn their living from the government teat, either directly or indirectly. The expansion of debt to unlimited levels has accommodated this phenomenon. So what happens when the monetary system does collapse in a catastrophic way?
One thought outlined by Steve Forbes says this:
“He has been associated with supply side economics , who have their own so-called "gold standard". So-called because it is not much of a gold standard at all, only a rule that the central bank is supposed to manage the inflation of the fiat money system in line with the gold price. Under this system, gold is not money proper, it is a good whose price is considered the best indicator of the looseness or tightness of monetary policy. As Frank Shostak points out, this system offers none of the advantages of using real gold as money. And why should anyone expect that when push comes to shove, the Fed will follow any rule when the situation seems to demand improvements?”
Totally agree that under the Forbes plan gold is still not money … In fact that was the whole idea of floating currencies and the US FED in 1971 was that the US FED could control interest rates and thereby check the economic growth and emulate a gold standard. Of course that social experiment has failed for the masses, but has greatly benefited the few who reside closest to the power center in Washington and the US FED.
Then we have Murray Rothbard’s (Austrian economist) idea:
“For adherents to Murray Rothbard’s theory of banking, the gold standard means gold as money proper with banks holding 100% reserves against demand deposits. Under these conditions there is no necessity or even any purpose to having a central bank and devaluation is a form of default.”
This is the monetary system that the US FED and its member banks, along with 99% of the US Congress and Executive branch would be most opposed to. Hummmm … I wonder why? For starters without the mechanism to expand debt 99% of politicians would have to get honest for a change and stop promising voters the moon, because the moon would not exist. Perhaps this is something most voters would not prefer either since most voters want to believe they can attain the moon through very little effort on their part. This time though, “irrational ignorance” …
The very last two paragraphs of this article sum it all up:
“But the deeper obstacle is ideology. Most economists and central bankers actually believe that a) an economy cannot grow without an increasing quantity of money, b) the gold standard caused the Great Depression, c) The Fed determines monetary policy, a necessary and beneficial function and, d) the banking system needs a lender of last resort in the case of financial crises, you know, those crises that just sort of happen, that come out of no-where with no warning and hit us when we least expect.”
“None of the preceding propositions are true, but as long as they are accepted factoids, the next monetary system is likely to look a lot more like the current one with extra lipstick than anything that existed in the 19th century.”
From the article US To Return To Gold Standard. Really? By Robert Blumen …
http://www.dollarvigilante.com/blog/2011/7/7/us-to-return-to-gold-standa...
There you have it. This is the “ideology” which is taught from an early age in public schools and of course fortified in most universities, especially of the Ivy League persuasion. Even the investing public and the US banking institutions who hang on every word of the FOMC Meeting report consider this “ideology” as God. I am here to say those factoids are false and the US FED’s monetary track record as well as the US Treasury Statements should be all the evidence any “rational” voter needs to know in order to discern the truth of money and politics and the markets.
We have a monetary system based on politics and debt that is ruled by the human condition …
TWO-TERM DEBT
I always hear about how Clinton balanced the budget and had a surplus. Yes, he did for a short time with the help of a tech boom. George W Bush got the repercussions of the tech boom … he got the tech bust; just as Obama got the repercussions of the Bush War. Then I hear a lot about Reagan spending a lot, mainly on Defense, in an effort to break the back of the USSR. Was it all necessary? Why do Bush and Obama continue to outspend Reagan on military and defense? At least Reagan achieved his administrations goal of ending the USSR’s dominance in Europe and Asia. What have we achieved with Iraq and Afghanistan? From a fiscal standpoint we are worse off for the effort.
I did an analysis on the US PUBLIC DEBT on three two-term US Presidents. I did One for Ronald Reagan, one for Bill Clinton and one for George W Bush. All three were two-term Presidents.
RONALD REAGAN (1981-1988)
From 1981 to 1987 Reagan increased the debt ceiling a total of $1.86TRIL. He increased the debt ceiling two times per year, except for years 1984 and 1987, which were years when the debt ceiling was raised three times.
BILL CLINTON (1993-2000)
From 1993 to 2000 Clinton increased the debt ceiling a total of $1.8TRIL. Only one of those years was the debt ceiling raised twice and that year was 1993. Clinton had the WTC attack on his watch as well as Bosnia and Somalia military actions. He had no Cold War costs to contend with thanks to Reagan or Iraq War costs. His two term reign shows we have a much better chance to balance budgets when Congress does not go to war (a term I use for pre-emptive strikes since Congress never declared these wars legally).
GEORGE W BUSH (2001-2008)
From 2001 to 2008 Bush Two increased the debt ceiling a total of $5.365TRIL. Obviously Bush had no dotcom boom and in fact suffered a global banking crisis brought on by derivatives and very risky peer group one banks in the USA. He also suffered the WTC terrorism disaster and Congress decided to go to war. Two double whammies. Add in smaller disasters like Katrina.
As you can see above George W Bush has had a much more disastrous impact on US PUBLIC DEBT than both Ronald Reagan and Bill Clinton. It is curious to observe that even with a budget surplus and much less Defense spending that Clinton and Reagan raised the debt ceiling practically the exact same dollar amount. So in fact both Reagan and Clinton are very similar when it comes to debt issuance, which I consider a much more important political issue. When it comes to debt I have just shown that there is no difference between any of the politicians who assume the office of President, nor is there any difference between the two political parties in this respect. All politicians crave debt as much as they crave re-election.
THE USD SOFA
To me there is no doubt the USD now has a negative bias as if it is lying on a sofa watching TV like one of the millions of unemployed Americans who have been forced to accept the US FED and its “Not So Strong Dollar Policy”.
The dollar did rally back in early 2010 with the whole Greek debt crisis. This created doubt in the minds of investors as to the viability of the Euro and rightfully so investors ran to the USD and Treasuries. While the USD did rally to 88 in June 2010, but there was also some interest in gold as a safe haven during that same time period and throughout 2010.
Now it appears the Greek debt is getting worse not better, even with some austerity measures. The Greek crisis was one of the main drivers for the USD rally, as well as some of the debt issues the UK and Ireland were facing. Does the following chart really show Greece and the Euro are out of the woods?
Now we have Greek bonds at impossible yields, add to that the shifting debt sands that are undermining Portugal, Spain and Italy. Yet the USD is still range bound between 73 and 77, spending most of the past few months below 75. If the steady collapse of the EU is not enough to get the USD off the forex sofa then what is? What major catastrophe do we need to see globally that will drive the USD back up past 80, for that matter past 77? Or is the USD sofa bound headed for the carpet? Meanwhile gold has been rising most of 2011 as back in February 2011 the POG was at $1310 and now the POG is at $1550, around a 18%+ increase in USD terms throughout the deepening debt crisis in Europe. Since February 2011 the USD has fallen from 78 down to as low as 73 and is currently right around 76, a 2.5% loss to the POG 18% gain. Of course the Swiss Franc seems to be the only European money that has benefited from the EU crisis. Also the USD has lost ground against other more commodity based currencies like the AUD and the CAD. Still I ask again … What will it take to see the USD at 88 again? Does the entire EU have to collapse?
Add in these disturbing facts about the European economy and employment especially …
In May 2011, the youth unemployment rate (under-25s) was 20.0% in the euro area and 20.4% in the EU27. In May 2010 it was 21.2% in both zones. The lowest rates were observed in the Netherlands (6.9%), Germany (7.7%) and Austria (9.1%), and the highest in Spain (44.4%), Greece (38.5% in the first quarter of 2011), Slovakia (33.7%) and Lithuania (32.9% in the first quarter of 2011). From Eurostat
No wonder the youth are rioting! If the youth cannot get jobs then what future do they have to look forward to? Certainly Europe is not looking like the best place to get a job, but neither is the USA, but still this idea of the lesser evil prevails with floating currencies and global government bonds. Think of all the billions and trillions the government of the USA and Europe have thrown at these debt and employment issues, most of which only went to secure the futures of poorly managed large banks and certain insurance companies, socializing their risky derivative trades.
IN GOLD WE TRUST … NOW
The following data has been copied from the gold and mining analysis reported by Standard Chartered Bank from Singapore.
http://s3.amazonaws.com/iehi-img-mli/files/Standard-In_Gold_We_Trust-201...
Finally a major global bank admits what seems obvious to 80% of readers here at the Bill Cara blog for many years now …
FDR DID IT
NIXON DID IT
Look at all that currency devaluation … Once in May 1971 and another in Feb 1973. To this day the US Treasury values the USD holdings of gold at $42.22 per ounce.
FORD DID IT
Note the gold auctions in 1975 and the IMF begins targeting SubPrime countries …
The Land of the Free and the Home of the Brave made it illegal for citizens to own gold from 1933 to 1975, some 42 years, which got its start via the Emergency Banking Act enacted under the FDR era. That was a really long “emergency”! Although not completely accurate as under JFK the gold restrictions were lifted for permits and licensing. Still what sort of government forbids its own citizens to buy and sell gold when the monetary standard is based on gold, which was Constitutional money for over 150 years prior to FDR’s reign? Can we really be on a gold standard if citizens by law cannot own gold? The answer is no as we were on the US FED version of a gold standard, which was no redeemabilty because there was no possession. Our indebtedness progressed from there until we now accept “trillions” as ordinary debt.
I found this next section very interesting and right up my alley with relation to leveraging not only currency destruction using gold bullion, but even greater leverage on lost monetary purchasing power using the gold juniors. As I recently disclosed in the blog I sold two juniors for a combined 1660% gain using a two year “buy and hold” strategy dubbed "private placement non-expiring call options". I was asked via e-mail by jimymac to elaborate on this strategy. Simply put I buy private placements in prospective juniors at low valuations with warrants that are so cheap they are like buying call options in the money that never expire. This is the same strategy used by large banks like Standard Chartered Bank and Macquarie Bank Group who fund these brokered private placements around the World and especially in Ghana where I have a number of gold juniors.
JUNIORS
To see those 106 gold companies then go to the link I posted above.
REPATRIATION REDUX
Anyone remember the Bush 2004 Job Creation Act? We saw the USD rally because major US corporations were selling their foreign denominated profits to buy USD to repatriate. This is what killed Warren Buffet’s US Dollar short strategy.
"Providing American businesses with incentives to bring home their global earnings is a common sense solution that could help inject up to $1 trillion into our economy," according to the WIN America Campaign, a non-partisan group lobbying for the cause. "There are few other options available that will help ensure that our recovery endures and that it spreads to Main Street. The likelihood of another stimulus, additional tax cuts, or action by the Federal Reserve is low, and unemployment is still too high."
My how the propaganda is thick and heavy here …
I definitely think the WIN number of $1TRIL is overly optimistic, since the 2004 repatriation only netted $90BIL, but it rocked the USD. So if you want to make sure your agenda is sold then you always inflate the numbers to make your agenda look better than it really is. Of course US corporations always have agendas so there is your first red flag when you see major multi-nationals backing legislation. Of course a rising dollar and falling gas and gold looks great prior to elections as well. Bush did it so why not Obama? So USD shorts beware …
Finally …
ON PERSPECTIVE
This is part of the motto of the Bill Cara blog … “Perspective and discussion”. He also uses the word “discourse”.
I just finished making a lei. This is what happens when you own a flower business in Hawaii and your lei maker is not at work that day! After all I am an orchid farmer! If you want to calm your mind then I suggest you learn to make leis!
I do not want to burn up too much daylight hours debating how long these articles should be or about what and what style. We all write articles and post here from various “perspectives” and none of our lifetime experiences are the same and so neither is our life strategies or trading ... thank God!
For instance I started my life and my first memories living under a Venezuelan dictator by the name of Marcos Perez Jiminez (PJ) back in 1956, the 49th President of Venezuela. This was when my Father was working on bringing the Lake Maracaibo oil field into full production for Chevron Oil. I still to this day recall armed guards hired by Chevron all around our housing compound at Camp Richmond; with high fences and barbed wire, submachine guns, tanks and the whole nine yards of all the repression that a South American military junta can bestow on its People! I grew up having to learn to read, write and speak Espanol pronto or not have any friends! Even as a kid you could sense the instability and it is hard to feel safe if you do not speak the language, never mind your permanent “gringo” status. Obviously that is not how most people at this blog started life. Right off the bat there is a built in bias I have against military and authoritarian regimes.
I recall going out with my Father in his 18ft plywood speed boat to all these various rigs in the lake.
http://en.wikipedia.org/wiki/Marcos_P%C3%A9rez_Jim%C3%A9nez
Obviously Marcos Jiminez was a role model for Chavez!
So it goes as I started three companies since I was 17. There again I speak from an employer perspective and bias and the hurdles of unions and government regulation and intervention, since that is what I am most familiar with. As a small business owner I created jobs most of my life and I did not need the US Treasury or special favors from the US FED to do that. I did not need one single dollar of debt to start any business or create jobs. Debt is overrated in my book! Useful if applied correctly, but usually toxic. It is hard for me to remember being an employee any more. Although I am technically an employee of Uncle Sam since about one third of my working hours are spent working on his behalf. How much time does Uncle Sam help me here at the nursery? How many hours has he spent helping me research and execute trades? None is the answer.
I will not deny I have a bias towards assets and production of goods and services and jobs rather than liabilities like government intervention, US FED policies, unrealistic taxation, pre-emptive military campaigns, debt and money based on debt. To me there is no future in the pursuit of such policies of liability. I write about that because I think most people in America go through their day in such a propaganda fog they forget about simple things like true assets and liabilities and “value”. Distraction seems to be the order of the day in most people’s lives. Whole generations have totally forgotten that the quality of money is what is most important, not the quantity. We now hear money numbers every day like trillions and tens of trillions. If quantity of money truly solved all debt and economic issues, then why is it none of the debt issues either in America or Europe are ever resolved? Why is it that global economies are floundering under such debt burdens if in fact debt and the money supply expansion are good for the economy and jobs?
In the end money is highly political and if you subscribe to that basic fact then you can extrapolate if money is political then so are markets and everything else derived from money. Certainly with TARP and the 2008/2009 crash it is obvious who has the upper hand. I strive to find the more obscure pathways to monetary survival rather than the road most traveled. I also strive to distill confusion and complication down to more simplistic layman’s terms where we can all have some remote understanding of the true interventionary agendas at play in the markets, in government and our daily lives. This is the main reason I write here at Bill Cara. This is the reason SOUND MONEY is one of the most important aspects as to whether America survives as a Constitutional government based on Freedom of the People or goes down the tubes like every other debt ridden oligarch Empire of the past.
“The gold standard has one tremendous virtue: the quantity of the money supply, under the gold standard, is independent of the policies of governments and political parties. This is its advantage. It is a form of protection against spendthrift governments.” – Ludwig Von Mises, Economic Policy, 1949
“Every anarchist is a baffled dictator.” - Benito Mussolini
“Any dictator would admire the uniformity and obedience of the U.S. media.” - Noam Chomsky
"This [Federal Reserve Act] establishes the most gigantic trust on earth. When the President [Wilson] signs this bill, the invisible government of the monetary power will be legalized....the worst legislative crime of the ages is perpetrated by this banking and currency bill." - Charles A. Lindbergh, Sr., 1913
"I have never seen more Senators express discontent with their jobs....I think the major cause is that, deep down in our hearts, we have been accomplices in doing something terrible and unforgivable to our wonderful country. Deep down in our heart, we know that we have given our children a legacy of bankruptcy. We have defrauded our country to get ourselves elected." – Senator John Danforth (R-Mo), 1981
"We are completely dependant on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system.... It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon." - Robert H. Hamphill, Atlanta Federal Reserve Bank, 1934
CTA Trading Desk Mid-Day Report
CTA Trading Desk Post-Close Report
Good afternoon, Patrick here.
Much like the heroin addict who needs to mainline a few doses to avoid the throes of detox, the fearless phonies who run the US have cowardly decided the only way out of our debt mess is to inject more debt into our system, doing their best to ensure the dot.com and housing manias were only opening acts, a great credit bubble the closing act in this very sad saga.
This morning the Bearded One signaled the Fed was ready, willing, and able to continue monetary accommodation if the need arises down the road. Wasn’t it just yesterday morning the Euro was trading at 1.38? Ah, what a difference a day makes as the greenback has now surrendered over 3 cents in less than 24 hours.
Thank you Mr. Chairman; during the 89 years of the Fed’s existence, you and your wonderful institution have managed to almost completely destroy the entire purchasing power in the US Dollar.
Well some of us at least will continue to purchase precious metals (SLV+5.20%; GLD+0.78%) in an attempt to protect our wealth, a tricky proposition since our government seeks to tax gains on gold transactions, further complicating our task at hand.
How long can it be before confiscation of gold becomes a hotly debated topic on The Hill?
Taxation without representation is tyranny.
The S&P gapped back up above its 50-day moving average and will be in a stronger position closing above 1335. Gold soared to a new all-time high; while Royal Gold (RGLD+0.97%) and Gold Corp (GG+3.24%) have cleared bases, volatile stocks Agnico Eagle (AEM+1.72%) and Rangold (GOLD+3.17%) are still being held in captivity awaiting their get-out-of-jail-free card.
If AEM and GOLD can clear the top of their respective bases (66.5 and 88.5) these high beta stocks may be poised to close the performance gap versus their peers.
Have a great evening.
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Comments
Econoday Today
Cara 100 Ratings Changes For Wednesday
Good morning.
07:00 MBA Mortgage Index
08:30 Import/Export Prices
10:30 Crude Inventories
14:00 Treasury Budget
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AMZN - Amazon.com initiated with an Overweight at JP Morgan. Target $251
BRCM - PT Lowered from $47 to $41 @ Auriga. Buy
GOOG - Google initiated with an Overweight at JP Morgan. Target $660
NUE - Nucor initiated with a Neutral at Susquehanna. Target $44
SCHW - Charles Schwab initiated with an Outperform at BMO Capital. Target $21
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"The government is warning that terrorists may try to blow up airplanes by implanting bombs under their skin. The airlines responded by saying they'll charge any terrorists that do this a $50 carry-on fee." - Jay Leno
Surplus cont
adding to my comment (#89328) from last night...
Of the $142 billion surplus projected by the end of 2000, $137 billion was to come from excess Social Security taxes... the SS taxes were almost all due to the dotcom era, not new taxes... Clinton reduced the public debt but increased the intra-governmental debt which is money govt borrows from itself (largely from Social Security)...
Freeport Workers Return to Indonesia Mine (Grasberg)
http://on.wsj.com/nDyld5
SPY Channel
I believe we're in a down channel now.
FD:
Long BGZ and short SPY from SPY $132.2. 50% cash.
Follow the Yellow Brick Road
Good call on the summer rally Bill. If I remember correctly, one of your "just for fun, mugs game" predictions back at happy new year 2011 was for gold to reach $1600.
Here's a slogan that is just as good today as it was back in '49:
"The Gold Rush is on!"
Miners look weak (BHP, RIO)
Could it be there is more strength to come in the dollar?
China is slowing, but still growing at a phenomenal rate.
Re: Surplus cont
one last comment... the declared ~236 billion surplus in fiscal year 2000 was due to ~$248 billion borrowed from various trust funds, accounted for as "income", and applied towards creating a phantom "surplus."
I'll take my soapbox home now...
Re: Surplus cont
Hi Scott, so for the plain Jane folks like me the Clinton surplus was an untruth, thanks to you, Kaimu and Grym for clearing this up.
Regards
Earl
Cara 100 Update
CNQ - Upgraded to Buy @ Stifel Nicolaus based on Horizon oilsands restart in August, an expected pickup in polymer flood response at Pelican Lake, and additional FY12 heavy oil growth. Target $50
info
Bill
The community has value, thank you for that.
Also, your commentary on metals has been lights out, thank you for that as well.
Whole Foods Market
FYI - Just noticed the the symbol has changed from WFM from WFMI. It appears the RSI table has the old symbol and is not reporting the new share price.
Edit: Sorry, "to WFM from WFMI". More coffee please.
Cara 100 Update
INTC - Intel initiated with a Buy at MKM Partners. Target $25
SNDK - SanDisk initiated with a Neutral at MKM Partners. Target $37
Thanks again for running this blog
I watched the charts on gold and the miners after your comments, and picked a bottom, it worked. Thanks
Cara 100 Update
AAPL - estimates, target increased at Citigroup. Shares of AAPL now seen reaching $450. Estimates also raised on stronger than expected iPhone demand. Buy rating.
AAPL - estimates raised at UBS through 2012. Strong iPad2 sales and higher gross margins. Maintain $510 price target and Buy rating.
GILD - estimates lowered at UBS through 2012. Updated model reflects prescription trends and pricing changes. Maintain $47 price target and Buy rating.
Italy, as Credit Suisse sees it
• Italy is under attack. BTP-bund spreads have reached a post euro record of over 300bp - maybe more alarmingly, the repricing has been abrupt, with a move over 100bp in a matter of days. Contagion, long contained to Greece, Ireland and Portugal has now clearly reached not only Spain but also Italy, with other countries in the area also feeling the heat.
• Recent rating agency actions. Rating agencies have put Italy in the spotlight again and a downgrade is now a clear possibility. Standard and Poor's at the end of May and Moody's in June revised their outlook to negative. The two agencies pointed to three main factors behind their decisions. First, poor economic growth and growth prospects, in light of structural weaknesses of the economy and a likely rise in interest rates over time. Second, political uncertainty, on the back of a weak government "facing challenges in gaining public approval for its policies." Third, risks posed by the changing funding conditions for European sovereigns and private sector involvement in the second Greek package. A persistently higher interest rate can indeed lead to a downgrade through a vicious circle of higher spreads deteriorating debt sustainability measures, despite some relatively positive comments by Moody's on the recently presented fiscal measures.
• Overall, we believe that the fragility of the Italian situation stems mainly from the European political crisis - rather than from domestic developments. While Italy needs to vote and implement reforms and fiscal measures as already announced - and might need new, growth enhancing measures to make the adjustment somewhat more robust - the exit from the current crisis probably happens only when the wider euro area crisis gets resolved - starting with a satisfactory and definitive handling of the Greek case. And we probably need something happening on this front fairly soon. Some hope is coming from recent declarations after the Eurogroup meeting, but we are not expecting any imminent resolution.
• Italy's deficit reduction plans are on target... Italy managed to limit the increase in its borrowing requirements during the 2008-9 crisis and has respected the timetable for lowering its deficit up to now: in 2010, it stood at 4.6% of GDP, down from 5.4% in 2009 and better than the initial 5% official target. This year, data available up to June are consistent with a further reduction of the deficit to below 4% of GDP (official target is 3.9%), while measures to reduce the deficit further in 2012 to below 3% have already been voted by Parliament last year.
GS Been Lagging the Last 2 Days
Wonder if something is up here?
ILMN reversal over 9ema
back to recent highs looks underway.
Re: Surplus cont
Earl,
The odds are in our favor if we take at least 80% of MSM reporting as a miscalculation or distortion, if not just a flat out lie.
From Honest Abe we have a long line of worthwhile quotes, from more recent presidents we have, "Read my lips, no new taxes. " G.H.W. Bush; "Go shopping, or they will have won." — W (post 9-11); and...
From Slick Willie, one of my favorite, character revealing quotes, "It depends on what is, IS." Bill Clinton has never thought it a good idea to tell the truth if there is an opportunity for a really good lie.
Congrats on the gold moves ;-)
Grym
Re: Follow the Yellow Brick Road
Could be 1600 today the way it is moving. Let's see what happens after the London close.
Re: Surplus cont
" I'll see it when I believe it..."
Ciao, Z.
(GR) IMF issues comment on
(GR) IMF issues comment on Greece; expects public debt to exceed 170% by 2012 if plans are executed
- Expects Greece to return to the markets by 2014
- Sees debt as unsustainable through to 2020 due to program delays
- Sees 2011 GDP forecast to -3.8% vs -3% forecast
- Gap in financing expected at approx €105B through to 2014
- Notes that with private sector involvement it may not be possible to avoid a selective default
(US) Fed's Bernanke: Current
(US) Fed's Bernanke: Current tax rates will not support entitlements at current levels, feels current fiscal trajectory may lead to higher interest rates - Q&A
- Should take long term view on deficit, and take care not to hamper the recovery in the short term; reiterates tax code should be reformed and that the debt ceiling should be raised and must address fiscal situation
- Notes that the Fed has thought about possible preparations assuming that Congress fails to lift the debt ceiling
SURPLUS=DEBT
ALOHA!!
The point to take away from all this is that it matters not one bit whether the "budget" ever gets balanced as it seems even with a surplus, which it is recorded as a surplus, backdoor accounting or not; the US DEBT always goes up! You have to go all the way back to 1836 Andrew Jackson's era to see $0 debt, that's 175 years ago, when we really were on a redeemable gold standard. The track record of the irredeemable currency has never and will never have $0 DEBT. It is designed to work the opposite. It is designed to enslave all global governments and its peoples. You are witnessing the end game of Rothschild central banking right now on your televisions.
Here it is and this by a former US FED governor to boot ...
"We are completely dependant on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system.... It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon." - Robert H. Hamphill, Atlanta Federal Reserve Bank, 1934
This is why I say all the talk of "reform" is useless. Raising taxes are useless. This monetary fraud that has been perpetrated against every human on planet Earth is what needs to end. In this week's SOUND MONEY I have one major global bank to back me up on this ... Standard Chartered Bank. Naturally it is not a US bank, because the US banks are at the epicenter of this fraud and it is in their best interest to keep the fraud going!
Hence we have the focus on Bernanke this week; the Chairman of the FOMC(Federation Of Monetary Criminals)!!
Re: (US) Fed's Bernanke: Current
is it true that Ron Paul ask Bernanke if he thought Gold was money...and Bernanke's response, after a long pause, was No?
Re: Surplus cont
Ah, the spin and sales pitches grow thicker.....
As I recall there was a "budget surplus" but that never equated to no "NATIONAL DEBT" which is something else entirely. A "budget surplus" is like being in a lot of debt but getting a really big paycheck so you don't freak out about your payments for the term of the budget (1 year). You still have debt!
now, for why EVERYONE took the "budget surplus" bait, who do we look to? Only the Clinton Whitehouse? Oh NO boys and girls, not so!
"Clinton raised taxes (without a single Republican vote), cut spending and left office with budget surpluses.
In 2001, the conservative Heritage Foundation used the Clinton budget surpluses as the basis for their argument for tax cuts.
GW Bush said that the government was “storing up money.” That was a factor in his push for tax cuts.
In 2001, a Wall Street Journal article entitled “Where Should We Put the Surplus” stated that, “Current surplus estimates are so large that the government's passbook savings account, if nothing changes, will soon become the Mount Everest of cash hoards.”
Also, interestingly, in response to their own question about paying down the debt, the WSJ authors said, “Put simply, there's not that much debt to pay.”
Alan Greenspan supported the Bush tax cuts on the basis that running surpluses without a debt was a bad thing."
So, what was the common link between Reagan's debt, his tax raises, Clinton's national debt/budget surplus and tax raises?
Once again we see the Fed rearing it's ugly head in the form of "the Maestro".
Like the bank telling the customer they can increase the credit card limit because of one large paycheck, the Fed once again victimized the hapless citizenry by confusing everyone with budget surpluses as opposed to overall debt, which was undiminished. All of it, all of the supposed "surplus" was the result of Fed juicing liquidity. Greenspan juiced the economy for Reagan (remember the market crash?) and he juiced it for Clinton which drove the tech/dot.com bubble.
Re: Surplus cont
Craig,
Not bashing a specific administration... only stating the surplus didn't really exist because the govt borrowed from itself which eventually has to repay in benefits... I also agree the confiscation of wealth (via the central banks cartel) is the main issue
Bernanke admits QE3 is an option!!!!!
Really??????????
In the meantime US Gold is performing great, up almost 10% today. I am glad I switched to UXG from RBY. The choice between McEwen and Adamson is no contest! I'll go with Rob anytime!!!!!!!!!
Quick change of market fortunes
LOL this market is psychotic. Back from Cinema (taxi dad during summer holidays) and I still haven't managed to average in to SLW calls. Missed that amateur hour shakeout. T'is why I am so aggressive buying SLW. It doesn't offer many chances when it starts to run. Will add on any reasonable pullback today or later this week.
First time I'm not tempted to take profits at 120%. Let this sucker run. September expiration. POT coming along nicely.
What's up with Uncle Buck? Looks like a heart attack...
THE INTERNET
ALOHA!!
One thing the Rothschild central bankers never planned on was THE INTERNET!
On Monday our internet studio signed Rebecca Costa to lead our new MPOWER network. She wants to start broadcasting her new internet TV shows in August, so we have a very tight schedule. She currently has a radio show, The Costa Report, with over two million subscribers.
LINK: http://www.rebeccacosta.com/author
Retiring at the zenith of her career in Silicon Valley, Costa spent six years researching and writing The Watchman’s Rattle: Thinking Our Way Out of Extinction. In her book, Costa explains how the principles governing evolution cause and provide a solution for global gridlock. When asked why the book has special significance today, Costa claims, “Every person I know, rich or poor, educated or not, wants to know why our government gets more in debt, our air and water more polluted, our jails more crowded, our security more tenuous and our children more violent. We seem to have lost our ability to solve our problems. The Watchman’s Rattle offers a genetic explanation for our paralysis, and prescribes a way out.”
She will be interviewing Bill Clinton at our studio and if you look at her homepage you will see many elite businessmen as well, like Sir Richard Branson, for one. Others within her sphere are Michael Bloomberg, Arthur Lebenoff ... many, many. In fact here is a link to a list:
LINK: http://rebeccacosta.com/forewords
We plan a very elite line up of the most influential and innovative people on the planet to get involved in the MPOWER network. I am very fortunate to be involved in this internet TV studio. When I was working with Cisco Systems back in 1999 to build the prototype for the first VoIP at Menlo College in Silicone Valley even the techs who were doing the actual installations were ranting about how the internet would take over the world and they especially said internet TV. I was skeptical at first, but even the Merrill Lynch analysts who were on our project were expounding the same predictions. According to Cisco Systems who is now building out internet TV broadband there will be over 800 million broadband home connections by 2014. Over a decade later I am seeing it come to fruition and here is the main reason. Ready for it?
MONEY!
The major network studios and the major movie studios cannot compete with the production costs we have. What takes them $375,000 for eight minutes of programming we can do on the same quality level, even HD, for $20,000. That's how our studio was built and designed. We can go global, we can go global "live", we can link up at remote locations, we can have crawlers, essentially we can be CNBC for 1/200th of the cost. I am seeing the talent coming on board from all angles. Its all about the "content" and who owns it. Essentially its Sumner Redstone's(Viacom) motto! These are exciting times for the internet and especially for alternate programming with substantial content that will make the major networks look like Romper Room. Some 700 channels and maybe three or four are worth watching and one of them is 1970s reruns! This concept will break the backs of the corporate and bank owned sell side media. The only way they will be able to compete is to buy us out and shut us down. This is what I traded a couple of my juniors in on.
This is "resilient community" in action ... human action!
Re: Surplus cont
Isn't a surplus in the budget when there is a national debt something like a person having a few bucks left over after they paid the minimum on their credit card? Most of americans live with debt but only a few of us pay our entire credit card bill every month. How can we totally disagree with the government that represents us acting like most americans do.
*(GR) FITCH CUTS GREECE
*(GR) FITCH CUTS GREECE SOVEREIGN RATING TO CCC FROM B+; AS EARLIER SPECULATED; NOW OFF WATCH NEGATIVE
- The downgrade follows the assigning of a RWN on Greece's ratings on 20 May. At that time, Fitch stated that it would resolve the RWN in light of the conclusion of the fourth review of Greece's economic programme by the IMF and that in the absence of a fully-funded and credible EU-IMF programme, Greece's sovereign ratings would likely be lowered to 'CCC'. Moreover, Fitch's previous rating of 'B+' was premised on the judgement that provision of new money would not be conditional on private sector participation in any new and enhanced EU-IMF programme that would potentially result in a default event.
- Today's rating downgrade reflects the absence of a new, fully-funded and credible EU-IMF programme for Greece, coupled with heightened uncertainty surrounding the role of private creditors in any future funding, as well as Greece's weakening macroeconomic outlook
- Note: S&P lowered Greece ratings to CCC in mid June, and On June 1st Moody's cut Greece's sovereign rating by three notches to "CAA1."; one notch above the comparable S&P and Fitch ratings
Re: THE INTERNET
Kaimu,
I would venture to add "micro" markets are only viable with your business model or something similar which networks simply can't... are incapable of offering.
I see it coming to fruition with sports programming. ESPN has to engage the macro-market and as the internet continues to expand its influence, fans are better educated and desire competent, knowledgeable reporters but receive personalities spouting rumor as fact... hence the B10 Network, The Texas Longhorn Network, MLB, NFL, The Pac1) all have networks (PAC10 soon) solely due to the internet and its ability to educate and engage the micro-markets...
See Kaimu's Sound Money
Above.
(US) Fed's Bernanke:
(US) Fed's Bernanke: Reiterates that the Fed needs to keep all options on the table for easing policy, more quantitative easing (QE) is one option
- Reiterates that the US economy still requires a good deal of suppor.
- USD is decline for many reasons, decline in the USD had contributed somewhat to higher energy prices
Re: Surplus cont
It is exactly like you think it is.
There are credits and liabilities. Period.
If you have a big credit but it doesn't cover all of your liabilities, it is not a surplus.
"Surplus"
From Wikipedia, the free encyclopedia
Surplus means when there is more supply than demand, as in extra resources.
The difference then is the time frame.
In the short term it could be said that there is enough funds to cover short term liability demand, but in the longer term, there is no surplus, there is still long term liability.
When all debt is satisfied and there is true income over and above liabilities, and it is income and not borrowed, then there is a surplus.
Lawyers, Guns and Money
looking at swhc... http://www.youtube.com/watch?v=S5puAN1PGQw
No politician left behind
Okay, this is a joke from the Borowitz report, but it shouldn't be.
July 13, 2011
New Law, ‘No Politician Left Behind,’ Would Pay Congressmen Based on Performance
Controversial Law Draws Howls of Protest from Lawmakers
WASHINGTON (The Borowitz Report) – A government think-tank today proposed a controversial new law, “No Politician Left Behind,” which would pay congressmen solely on the basis of performance.
The law, which was proposed by the University of Minnesota’s Institute of Government, “would make a serious dent in the Federal deficit because few if any congressmen would ever have to be paid,” said the Institute’s director, Davis Logsdon.
“Right now, congressmen get paid even when they storm out of budget negotiations in a hissy fit,” Mr. Logsdon said. “Under this new law, the rule would be, no budget, no paycheck.”
The idea of being paid per accomplishment drew howls of protest from lawmakers, many claiming that if the law were enacted it would result in their financial ruin.
“If passed, this law would be tantamount to the establishment of ‘Work Panels,’ which would determine whether individual congressmen are accomplishing anything,” said Rep. Eric Cantor (R-VA). “I, for one, would be in deep, deep trouble.”
“I’m fairly sure that this law is unconstitutional,” said Sen. Mitch McConnell (R-KY). “Now, I have never actually read the Constitution, but if this law were passed I would probably be forced to read it or live in a cardboard box.”
House Speaker John Boehner (R-OH) said that creating performance standards for lawmakers was “an insult to the institution of Congress.”
“We have spent millions of dollars, some of it out of our own pockets, to get to Washington,” he said. “We did not come here to be treated like teachers.”
Bernanke and QE3
An interesting article - "Bernanke is Wrong, Gold is Money"
http://inflation.us/bernankegoldismoney.html
A quote from the article:
"Bernanke has made it very clear that he is prepared to print money until the U.S. dollar becomes worthless and the incomes and savings of all U.S. citizens are destroyed."
Balanced budget mandate
(US) White House: President Obama does not support a constitutional amendment mandating a balanced budget
- Reminder: US House Speaker Boehner (R-OH) had included the possibility of an amendment to be included in the negotiations as a condition for passing an agreement on the debt ceiling; pundits have anticipated that this condition will receive no democratic support, as Democrats claim it is an inflexible framework to handle Govt needs on crises, among other issues
Re: THE INTERNET
Kaimu,
For whatever it's worth - I've been leery of Netflix, Amazon, YouTube, and other internet tv services, for the sole reason that they can plug into so much of my and my family's life and scan all the data they want off our machines, only to be re-sold ad-infinitum to the world. I know the "cookies" data is a very sly and tempting revenue source to tap while starting up, but I'll always stick to the anonimity of my rabbit ears until I know I can trust the provider to stay at arms-length in these regards. Not to say Netflix/Amazon/YouTube haven't been wildly successful, but I think there will be an ever-growing market of people like me that are waking up to some of these concerns, and this could possibly provide you with some differentiation from other services if you approach your consumers differently.
Good luck in your new venture. I think yoy may regret selling those juniors though! :)
Re: (US) Fed's Bernanke: Current
Vad,
"- Should take long term view on deficit, and take care not to hamper the recovery in the short term; "
He is synch with the guy in charge of investing the Illinois pension fund. When asked by David Faber *CNBX) a couple of months ago what return they were expecting he answered, "Eight percent."
Faber let out an uncharacteristic, "THAT'S CRAZY!"
"Well, we have an infinite horizon," was the reply.
He went on to admit it would not make 8% this year because to cover the current pensioners they had to sell off some principal.
If you have an infinite life span I guess it will all work out for you ;-)
Grym
Re: Surplus cont
mayhem,
"How can we totally disagree with the government that represents us acting like most americans do."
As one who ALWAYS pays off the credit card and hasn't borrowed a penny in over 30 years, I wonder if it isn't the other way around.
My dad never borrowed money after paying off the house. He never had a new car in my lifetime. (I know he once bought a new Buick‚ in the 1920s, I think.) That was too extravagant for a middle class married guy — we were in the used Ford, Chevy or Plymouth class and the high end cars were for doctors and lawyers.
There was a time when people lived within their means and managed to save money.
I think later generations learned to "leverage" from the government.
Grym
Re: Surplus cont
We want everybody to cash in their bonds, we pay'em, and now we can sleep at night cause there is no "long term debt"?
Why do Republican politicians freak over debt everytime we have a Democrat president?
Debt they overwhelmingly created.
Could it be the master plan to kill all social programs?
Ask their owners.
Ciao, Z.
Re: Surplus cont
Zed II -
"Debt they overwhelmingly created."
What a misleading statement.
Re: Surplus cont
OK, two wars and a tax cut, plus a drugs benefit program at full list price.
True, the Dems didn't say no.
Ciao, Z.
Tax and Spend Democrats, Small Government Republicans and other
To be fair, it's a matter of overall party priorities, not spending itself.
"To be fair though, we have to examine total spending rather than just spending hikes on a percentage basis. If we exclude the World War II years (1943-1947), Obama and our Democratic congress will top the list of spenders at 21.8% of GDP. However, the next three top spenders were Republican presidents with Democratic congresses. Reagan (1981-1985) at 21.1%, GWH Bush (1991-1993) and then again Reagan (1985-1987) are next on the list, each at 20.9%. Clinton and a Democratic congress (1993-1995), round out the top-5 at 20.8%. Ford (1975-1977), Eisenhower (1953-1955), and GW Bush (2007-2009) were also members of the “20% Plus” club. Mean spending as a percent of GDP since Eisenhower (1953) has averaged 19%. Carter (1977-1979) and a Democratic congress would be the only new member of the “19% Plus” club."
http://thelongrunblog.wordpress.com/2009/04/25/tax...
New Pan-Asia Gold Exchange
Andrew Maguire’s assertion that China’s Pan-Asia Gold Exchange will wrest power away from the JP Morgan bullion market suppression scheme is already under attack.
Maguire, the so-called “whistleblower” who alerted U.S. authorities of JP Morgan’s bullion market price manipulation scheme and went public in March 2010 with his complaint, told King World News he expects the illegal naked shorts in the gold and silver market will be destroyed and that a true price discovery environment will result of China’s 1.3 billion population becoming empowered to buy the precious metals.
The primary argument against Maguire’s analysis is that markets don’t move price with the addition of the Pan-Asia gold Exchange.
It’s true, markets don’t move price – participants do. But the point Maguire makes has everything to do with the participants having access to the marketplace—hundreds of millions of anxious Chinese, who have so far driven up the price of everything that doesn’t have a dead president stamped it, such as copper, oil, lumber, food and every other commodity.
For 50+ years, starting with Mao Tse Tung, the Chinese were precluded from owning gold. In 2005, that all changed. Beijing understands the importance of the gold market in its efforts to establish the RMB as major reserve currency and the privileges that come with that status.
In the first quarter of 2011, Chinese investors bought 93.5 tons of gold coins and bars. After considering that China’s gold production reached only 340 tons of gold last year, with a consumption rate of 700 tons along with investor demand expected to top 20% per year, the expanded access through the Pan-Asia Gold Exchange to an expanded market will supercharge the public’s participation in the gold market.
Through the Pan-Asia gold Exchange distribution network and introduction of innovative gold products for the Chinese masses—a quite different model from the Shanghai Gold Exchange—the ease of access to market for the most populated country of the globe is Maguire’s point.
Consider the effect on the gold price of 320 million retail customers and 27 million corporate customers who conduct business through a network of 24,000 branches, and who now are able to buy gold through the Internet with a click of a mouse. That’s the network established between the Pan-Asian Exchange and The Agricultural Bank of China. Minimum contracts of only 10 ounces may be purchased, as opposed to the 100-ounce minimum required in Shanghai and Hong Kong.
And the Pan-Asian Gold Exchange goes live this month!
During the CFTC hearings earlier this year, Jeffrey Christian of the CPM Group said he estimates that the London Bullion Management Association (LBMA) has on deposit $153,000 worth of claims for each ounce of physical gold—which calculates to approximately 100 to 1 leverage to actual gold available for delivery.
What if there’s a sudden demand for physical gold, say, from China? Who will deliver it?
Maguire’s conclusion that the shorts operating under protection of the CME should be frightened is entirely appropriate.
New Pan-Asia Gold Exchange
FWIW....pretty interesting...
Andrew Maguire’s assertion that China’s Pan-Asia Gold Exchange will wrest power away from the JP Morgan bullion market suppression scheme is already under attack.
Maguire, the so-called “whistleblower” who alerted U.S. authorities of JP Morgan’s bullion market price manipulation scheme and went public in March 2010 with his complaint, told King World News he expects the illegal naked shorts in the gold and silver market will be destroyed and that a true price discovery environment will result of China’s 1.3 billion population becoming empowered to buy the precious metals.
The primary argument against Maguire’s analysis is that markets don’t move price with the addition of the Pan-Asia gold Exchange.
It’s true, markets don’t move price – participants do. But the point Maguire makes has everything to do with the participants having access to the marketplace—hundreds of millions of anxious Chinese, who have so far driven up the price of everything that doesn’t have a dead president stamped it, such as copper, oil, lumber, food and every other commodity.
For 50+ years, starting with Mao Tse Tung, the Chinese were precluded from owning gold. In 2005, that all changed. Beijing understands the importance of the gold market in its efforts to establish the RMB as major reserve currency and the privileges that come with that status.
In the first quarter of 2011, Chinese investors bought 93.5 tons of gold coins and bars. After considering that China’s gold production reached only 340 tons of gold last year, with a consumption rate of 700 tons along with investor demand expected to top 20% per year, the expanded access through the Pan-Asia Gold Exchange to an expanded market will supercharge the public’s participation in the gold market.
Through the Pan-Asia gold Exchange distribution network and introduction of innovative gold products for the Chinese masses—a quite different model from the Shanghai Gold Exchange—the ease of access to market for the most populated country of the globe is Maguire’s point.
Consider the effect on the gold price of 320 million retail customers and 27 million corporate customers who conduct business through a network of 24,000 branches, and who now are able to buy gold through the Internet with a click of a mouse. That’s the network established between the Pan-Asian Exchange and The Agricultural Bank of China. Minimum contracts of only 10 ounces may be purchased, as opposed to the 100-ounce minimum required in Shanghai and Hong Kong.
And the Pan-Asian Gold Exchange goes live this month!
During the CFTC hearings earlier this year, Jeffrey Christian of the CPM Group said he estimates that the London Bullion Management Association (LBMA) has on deposit $153,000 worth of claims for each ounce of physical gold—which calculates to approximately 100 to 1 leverage to actual gold available for delivery.
What if there’s a sudden demand for physical gold, say, from China? Who will deliver it?
Maguire’s conclusion that the shorts operating under protection of the CME should be frightened is entirely appropriate.
US Debt Clock vs BP Oil Spill
Remember the constant video of the BP oil spill from last summer:
http://www.youtube.com/watch?v=rlPPFcy-3Vo
Well it eventually went away.
Anyone know how to construct a similar one for the US DEBT??
http://www.usdebtclock.org/
Per Kaimu this morning:
"The track record of the irredeemable currency has never and will never have $0 DEBT."
So the beat or rather the leak goes on.
http://www.youtube.com/watch?v=umrp1tIBY8Q
GDX:GLD
Quite a day, bumping up against the 0.39 resistance areas on both
the daily:
http://stockcharts.com/h-sc/ui?s=GDX:GLD&p=D&b=5&g...
and weekly:
http://stockcharts.com/h-sc/ui?s=GDX:GLD&p=W&b=5&g...
Next couple days should be interesting to see if we can continue to hold the relative strength in PM miners and keep the momentum of this rally up. So far, so good............
See the Post-Close Report
Above.
Re: Surplus cont
Grym,
I too pay off my credit cards every month. I use them to get airline miles, points, etc but I don't like to keep a balance. I have paid cash for my cars for the last 40 years and own several properties and have only 1 mortgage, it is on the one I live in. A man needs to have some credit history in case of emergencies.
That makes me somewhat unusual in this society. Most of the people who live in the United States are leveraged to the hilt. Most people are "wage slaves." Unfortunately people tend to vote for people with similar values to their own so it should come as no surprise to anyone that the government is leveraged to the hilt.
Mayhem991
Re: Surplus cont
That old fairy tale, of Clinton creating a surplus, just refuses to die. Democratic supporters continue to repeat this false hood into 2011. It's part of the propaganda fog deployed by both parties.
Re: Surplus cont
mayhem991,
"Most people are "wage slaves." For sure.
I have a cousin who lives out of state and nearly every time they visited us over the last 35 to 40 years he's driving a new car. He always tells me how good a deal he got, "It only added X dollars to my existing monthly payment." I don't think he has ever been without a car payment. My guess is the credit card is always carrying a balance too.
In 1977 we decided to add a room to the house (which was paid for). After checking with two banks and savings and loan who required a life insurance policy on me and high interest (The Carter era) — I opened a margin account and simply borrowed against my portfolio. I paid it off in three months (at a far better rate) and I haven't cared about credit ratings since.
I used it in my business as well whenever cash flow slowed in recessionary periods.
The miracle of compounding interest, which Albert Einstein talked about as the most powerful force in the universe, is only a miracle when you are drawing it. This is something politicians don't seem to consider.
Grym
Gold Outlook
just up from Armstrong.
http://www.martinarmstrong.org/files/Outlook%20for...
kaimu's latest is like that Bon Jovi line:
I've seen a million faces and I've rocked them all.
As for all those arm chair editors on this blog, it's not about the style but the CONTENT. Only one has meaning to an investor and student.
Re: THE INTERNET
Kaimu:
"The only way they will be able to compete is to buy us out and shut us down."
Everyone must be vigilant that reasonable access to the internet is not lost to elite powers that currently control the media. Breaking the backs of the corporate and bank owned sell side media may not go over to well with this group
and they may seek total Internet control to eliminate competition to their oligopoly. There is already talk of using
a homeland security angle to seize control.
I am happy to see those who are attempting to contribute solutions to the mess we are in. After the present system
crashes, something will be created to replace it. Hopefully the truth will go towards creating a friendlier system that does not seek to destroy our wealth and ability to work and prosper as a society.
"This morning the Bearded One..
"This morning the Bearded One signaled the Fed was ready, willing, and able to continue monetary accommodation if the need arises down the road."
My deep concern is what we are NOT seeing here with this latest "chess move". They have a plan and they are not tellin'. What is it?
I, for one will proceed with caution in jumping onto any obvious trains.
However, admittedly it does feel good to be finally in the green with UXG and just about break-even with Ruby. ;-)
Moody's Warns It May Downgrade US Credit Rating
Reads the headline on cnbc.
that was timely. where were they when they rated everything AAA?
BTW: I have downgraded US credit rating a long time ago. Where is my bonus for being correct? Oh oh. i forgot, you only get bonus for being on the right side.
Re: "This morning the Bearded One..
MR.Ducks , My feeling yes they have a plan and it will favor some domestic banks and many foreign banks . Them First , Second and Third and us a distant fourth . Regarding stocks I am very pleased with SLW . PREPARED TO LEAVE AND JUMP TO GOLD MINERS . Good Luck to All. Bob .
Per Fleck today, regarding Ben's thoughts in DC,
he unfortunately doesn't understand the difference between an ' asset ', which often Is Not a store of value, and ' a store of value ' which Is an asset........
Re: Moody's Warns It May Downgrade US Credit Rating
"I have downgraded US credit rating a long time ago"
US credit should be at BBB- right now. If you can't pay your bills, then you shouldn't be at the investment grade level. Default should put you at junk status. Forget AAA and AA territory. Moody's and S&P are still way off.
That's why I never understood the 'flight to safety' concept. How safe can you feel lending to a bankrupt entity that refuses to cut its costs?
...........
http://imarketnews.com/?q=node/33641
Re: Surplus cont
Hi Grym, we pulled into Austin a bit ago, ran to the local HEB (grocery store). I walked into the store shouting 'don't shoot, tax payer here'. Just kidding but that's what I was thinking. I think they need a tax payer line, better yet have one line for the the lone star card. What a long line that would be...
UXG, thanks, it's about time all my miners are up today not that it really matters, I've put them on an 'add to' and not sell for 5 year plan but the calls are different. The last time UXG was above 9 my $1.45 calls were $4.50.
Take care
Earl
Au/Ag Ratios
Hi All - Note this is down to 41.39. Is anyone well versed on this relationship and what it may portend. A bit of joy today - even my laggard Evolving Gold caught a bid, with BEXP chugging along. Sounds like the left and right aren't playing well lately. U.S. stock index futures fell Wednesday evening after Moody's Investors Service warned that it may cut its triple-A rating on U.S. government debt. Happy Trading
Re: Gold Outlook
Dr S. - "As for all those arm chair editors on this blog, it's not about the style but the CONTENT"
Unfortunately you completely missed my point, which is: content with only modest presentation reaches an audience of N. That same content with GREAT presentation reaches an audience of 10 times N, maybe more. The iphone is an example of this. Apple engineers are wizards at combining functionality with presentation. It takes more effort to do well, but it is dramatically more impactful.
My opinion is, if we could have Kaimu's skill at substance mixed with an effort to improve presentation, it might really change the world. As it stands now, I feel the audience will remain limited. That's ok with me, its no skin off my nose, but one would think a wider audience would be something desirable rather than something to be beaten back for fear any change will end up killing the content.
Again, I want to reiterate, if nothing changes, I think that is fine too. It was just a suggestion, for heaven's sake.
bill said it first
But I didn't believe him. He claimed that Bernanke would set up QE3 not long after QE2 finished, and this would propel gold to ever greater heights. I thought it would take longer. But with today's announcement, that's exactly what is happening.
Aided by the slow, grinding, debt crisis that won't go away until the debt levels gets magically reduced (either through default, or through some sort of money transfer), gold is so clearly showing itself to be a store of value. This is totally different from what happened in 2008.
Mostly, we store value using someone else's promises. T-bills, Italian government bonds, corporates - these are all promises to pay. The really paranoid store cash under the mattress, but those paper bills are also promises too. Intrinsic to an unbacked currency is the promise not to print more of it. Bernanke is now quite clearly threatening to print more, breaking that promise.
He wants to print more because of the threat of deflation. Deflation happens when more promises to pay are broken than people take on new debt. Bernanke is trying to avert this by breaking that promise not to print more money.
Slowly, in fits and starts, the world is figuring out that a large number of organizations have over-promised. Really over-promised. In the fullness of time, many of those promises will be broken, because debt that cannot be repaid, won't be.
Gold is nobody else's promise. (Neither are Ross's cattle, of course). As the promises start being broken, one after another, people with value to store will search for a place to hide. They will figure out, in time, that there aren't many places that don't involve someone else's promise.
I think gold will do well. And Bill said it first. Even though I didn't agree with his macro story, I followed him in because my read of the action said this might be a moderately high probability entry point.
Thanks Bill.
Re: bill said it first
Gold becoming a Giffen Good?
http://en.wikipedia.org/wiki/Giffen_good
What else will be?
Re: Gold Outlook
davefairtex -
"Again, I want to reiterate, if nothing changes, I think that is fine too. It was just a suggestion, for heaven's sake."
That wasn't necessarily directed at you. But I'll just add that kaimu's been to HOLLYWOOD to set up a cable television network. I'm sure those execs will send him to the makeup room and script his show ;)
Re: Surplus cont
mayhem, Grym,
I too am debt free personally except for 'ye olde homestead' which at 5% fixed for 30 years and tax benefits means that my net debt cost is less than the return on a 30 year T-Trash Govi.//!!
I love debt as a weapon against a government which in my business lifetime (45 years) has never ever failed to disappoint me and allowed me to pay back fixed price debt in cheaper dollars while my incomes increase over time AND with no personal liability! Let me also say that I have NEVER not fulfilled an obligation, caused a bank to take a write down or threatened an institution in order to obtain more favorable terms unlike the Donaldo Trumpster who in my opinion is an all comb-over asshat covorting on his daddy's legacy...The guy is a hoot celib on the TV funny grins channel.
DEBT AS A WEAPON!
Just one brief example; A 12,000 sq ft building used for light manufacturing that we constructed in 1985 for a total cost of $285,000 and was leased back then for $2100 a month. Today it leases for $8,500 a month and the mortgage has long since been extinguished. Should I add that Cap rates on similar properties today are now down to 7.5% and that property now appraises for over $1.3 million?
Kaimu hates debt in the aggregate. I love pieces of debt bet against a corrupt system whose daily chant is "there ain't no inflation!"
You kids be nice to one another. I got's me a NetJet ride to Aspen day after tomorrow. Some of us farmers and my really really smart son forked over some serious green to avoid the cattle car call of our domestic airlines. Life's too short to be groped by a member of the U.S. TSA Gestapo...
Air travel today reminds me of the smelly and lewd Greyhound bus terminals of the 1960's/70's. In short, a very nasty experience that one puts up with for a cheap ride...
Re: Gold Outlook
"As for all those arm chair editors on this blog, it's not about the style but the CONTENT. Only one has meaning to an investor and student."
Well luckily we don't have to appreciate studying the same thing. That would make the world as impossible as a market place where we all bought and sold the same thing.
I'll happily address content and form when the family head off to Italy next week.
Musings
Did Obama really say "don't call my bluff" as he stalked angrily out of the cap meeting today??? freudian?? Also I believe it was just reported yesterday that 1100 civilians have been killed so far in Lybia, today the news was that 1300 have been killed so far in Syria.....some arab deaths require our action and others don't??? very confusing world when seen from my 70 year old eyes......loving the action in gold........3 small one that just seem to be starting moves are TLR, GBG, and BRD...DYOD for sure
Re: bill said it first
Hmm, a Giffen Good. I read the wiki on Giffen goods. 3 things are required:
* the good in question must be an inferior good,
* there must be a lack of close substitute goods, and
* the good must constitute a substantial percentage of the buyer's income, but not such a substantial percentage of the buyer's income that none of the associated normal goods are consumed.
Doesn't seem like the situation fits. Here is the example of Giffen goods from the wiki:
A poor family buys cheap bread and expensive meat to eat. The price of bread goes up - but not up to the price of meat. The price of meat stays the same. In this situation, overall consumption of bread will increase, because the poor family will not be able to afford as much meat, and must substitute even more bread for the meat they used to eat.
Normally a price increase will lower the amount of commodity consumed, but exactly the opposite thing occurs with Giffen goods.
I don't see gold as a Giffen good. I think of gold this way. Gold is like a lifeboat. Most of the time, nobody needs lifeboats. Every now and then, the ship (currency) you are on sinks, and lifeboats turn out to be really, really useful.
Re: Gold Outlook
Dr.,
As I recall at least one of the critics was referring to the length of Kaimu's articles, rather than disagreeing with content or style.
While I have at times read all, as someone who was in advertising for four decades, I can assure you that most people will not read 4300 words on most topics. (today's Sound Money)
If the goal is to "sell" a product or and idea the first step is to communicate — get readers to read.
Perhaps rather than cut copy (and the meat of the story) a bullet pointed outline and/or outline would get the word out to more people. Once they see points of interest to them personally, they are more apt to read the full-length commentary.
Ideas are all competing for limited time and not all have as much time as I.
My wife has done considerable editing. My letters to the local editor are restricted to 200 words and only once each 30 days — Many of my best shots fall to the cuts, but I have no alternative, so I cut with her help.
Grym
Re: bill said it first
Davefairtex,
QE3?
Here's what Jimmy Rogers had to say on the return of the QE on 6-9-11.
(Thanks to NYUGrad for the link.)
--------
Rogers on Bernanke: "Since the first day he went to Washington I told you he would be a disaster. He's never been right about anything in the seven or eight years he's been down there. I hope he doesn't come back with QE3, but that's all he knows. The only thing he knows to do is print money. He doesn't understand finance, he doesn't understand currency, he doesn't understand economics. He understands printing money and he's going to print more money."
"QE will go away, but it may come back — who knows what they'll call it? They may call it cupcake, but they're going to bring it back because he'll be terrified, Washington will be terrified. There's an election coming in Nov. 2012 and they're going to print more money."
http://bit.ly/kYWqRb
---------
He was also buying gold and commodities on pullbacks and short emerging marketsand US tech.
Grym