Tuesday, January 29, 2013

Student Loan Bubble Update: "This Situation Is Simply Unsustainable"


Santelli Exchange: How Messy with the Fed's Exit be?

Zimbabwe's Total Cash On Hand: $217.00


Silver Eagle Sales Surge To All-Time Record In January

The 3% of American gold bugs is growing in number.  Asians are already all in.  This can only mean higher prices, as the sleepy-eyed masses finally wake up.  It will take time, but markets follow thermodynamic laws.  Those who studied Physics understand entropy:

entropy - a process of degradation or running down or a trend to disorder

For those who remember chemistry, the boiling point of water is 100 degrees Celsius.  Things get really hot at 99.9 Celsius, even if they appear calm on the surface.  But once 100.0 Celsius is breached, all hell breaks loose.

Gold and silver will reach their tipping point, or critical mass, when the masses figure out they've been duped by a paper ponzi scheme.  At that tipping point, precious metals will reach their escape velocity, much like a rocket escapes earth's atmosphere and shoots to the moon (to borrow another Physics metaphor).


US debt headed toward 200 percent of GDP even after 'fiscal cliff' deal


Constitution a 'dead, dead, dead' document, Scalia tells SMU audience


Swiss banks lose old taste for gold

Read the last sentence in this article.


Ted Truman Talks Turkey


The Fiat Dow


(Hong Kong) Kaye - We Will See A Global Financial Meltdown


Trying To Reform Government Is Largely a Waste of Time


Coming Short Squeeze In Gold To Shock The World

This is a must-read interview of a money manager in Hong Kong.  He's an ex-Goldmanite, a former status quo guy who is obviously blowing the whistle on re-hypothecation in the physical gold markets.  Unlike London or New York, Hong Kong is mostly a physical gold market, not a paper exchange.  Hong Kong is the pathway for physical gold to enter mainland China, who is already the world's largest producer of gold.  Between their prodigious extraction and their voracious imports of gold, China has surpassed India as the world's largest consumer of physical gold.

It doesn't take much speculation to connect the dots and understand China is in a race to back the renminbi with gold as China seeks reserve currency status.


Monday, January 28, 2013

If ‘Assault Weapons’ Are Bad…Why Does DHS Want to Buy 7,000 of Them for ‘Personal Defense’?


Historic Move By The US Has Just Guaranteed Hyperinflation


IceCap Asset Management: "The Queen"


Hope Has Changed — It Died


A Louisiana Grocery Store is Forced to Raise Milk Prices by State Regulators


Greek Tax Tzar: "I Have Difficulty Paying Property Taxes"


Labor Minister Says France Is "Totally Bankrupt"



Bank customers withdrawing money at fastest rate since Sept. 11 terrorist attacks


America's Impending Master Class Dictatorship

This article was written 3 years ago in 2010, but is relevant today more than ever.


Russia, Kazakhstan Expand Gold Reserves as Central Banks Buy


What To Expect After This Week’s Gold & Silver Smash


3 Incredibly Key Charts For Battered Gold & Silver Bulls


Wednesday, January 23, 2013

Do I have to report my offshore gold…?


Final Pulse May Be A Stunning $8,000 For Gold & $500 Silver

Kevin Wides differentiates between the "Smart Money", "Institutional Investors", and "Public" for the different stages in a mania bubble, namely the Stealth Phase, the Awareness Phase, the Mania Phase, and the Blow Off Phase.

My labels are less polite for these group of investors:  the Smart Money, the Big Money, and the Dumb Money.


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Do You Want To Scare A Baby Boomer?

The concept of retirement will become obsolete for most baby boomers.


China May Now Have World’s 2nd Largest Gold Reserves


Central Banks Repatriate Gold: How Will This Affect Investors?

This is a must-watch video of Jim Rickards, author of Currency Wars.  It's also nice to see Lauren Lyster, formerly of RT, land at Yahoo Finance.


Analysis: Davos leaders uneasy over glut of easy money

This is rich: those benefiting the most from central banks' easy money policies, fear those same policies of inducing "systemic risk".  When the world's wealthiest and most powerful are worried, it's time for Joe Six-Pack to worry.


Art Cashin On The Only Sane Voice At The Fed

Any preconceptions of Fed omnipotence just circled the drain.  Instead of acting like prudent central bankers, they merely thought and acted like hedge fund managers gone wrong, while the commercial bankers they should have reigned in before the financial crisis were going hog wild.  Fisher appears to have been the only sane Fed governor.


Assistant Attorney General Admits On TV That In The US Justice Does Not Apply To The Banks


Tuesday, January 22, 2013

Massive Squeeze Coming As WGC Confirms Gold-Backed Yuan


The History of Gold (Part I)


The One Chart That Explains the Massive Risk of Investing in Gold & Gold Stocks

This article is long and redundant at times, but the message should be clear.  Buy physical gold and silver on the price dips.  Be a strong hand.  Do not be weak and panic sell on the dips.

And for those seeking higher reward / higher risk / high volatility, buy the right mining stocks and hold on.  Jim Sinclair says it best, "buy right, and sit tight."


Embry: Gold Super-Spike To Be Dwarfed By The Mania In Silver


Indian Jeweler Becomes Billionaire as Gold Price Surges


Monday, January 21, 2013

Pacific Group to Convert 1/3 of Hedge-Fund Assets to Gold


Gold import tax raised; move unlikely to deter buyers

This is further evidence the world's central banks will do everything in their power to curb demand for gold.


“Father of The Year” Bill Clinton Checks out Kelly Clarkson’s Backside

No commentary needed.

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Japan's Chain Of Events: Stagnation -> Monetization -> Devaluation -> Stabilization -> Retaliation -> Hyperinflation


Keynesians and Ponzians


China, Japan, And The US - Tying It All Together

The Israeli / Iranian conflict is temporarily taking a back seat to the Japanese / Chinese posturing over some islands.


Japan's Deputy Prime Minister Has A Modest Proposal For The Elderly: "Hurry Up And Die"

The answer is "yes", Japan's economy is on the brink of collapse.  The yen and Japanese government bonds will also circle the drain.


This Exploding Grenade Will Create A Gold & Silver Surge

Japan's bond market is on the brink of collapse.  Yes, that's been a popular prognostication for over a decade now, but the fiscal math is becoming increasingly unsustainable.  So we are early, but we will be proven right.


Uneasy in the Political Climate, Mickelson Talks Like Someone Ready to Step Away

Something tells me Phil Mickelson won't be getting a Christmas card from President Obama or Governor Jerry Brown.


A Brief Introduction, by Edelweiss Holdings

This is not an endorsement.  I have no ties to Edelweiss Holdings, nor am I a client.  I just found their message to be clear-eyed.


The Coming Debt Limit Drama: Government Wins, We Lose


Sunday, January 20, 2013

Western Banking: Money For Nothing -- Literally


Paper-Gold Fraud Now Out In The Open


Gold reserve mysteries

Why is it that every financial scandal, bubble bursting, allegations of fraud or manipulation, always have Lawrence Summers' name attached to it?  After all, he's supposed to be the genius PhD economist from Harvard.  Yet, here is curriculum vitae:

1) Summers was part of the triumvirate of Robert Robin and Alan Greenspan who convinced President Clinton to deregulate the financial services industry--against the advice of Brooksley Born who was concerned about the over-leveraging of global financial markets.  Clinton admitted it was one of the biggest mistakes of his Presidency--that, and the repeal of the Glass-Steagall Act under his Administration.  Lo and behold, global financial and credit markets did collapse in 2008 from banking over-leverage and plummeting collateral values.

2) Summers dismissed pleas from the Winklevoss twins in their case against Mark Zuckerberg's alleged theft of the Facebook  business model.  He arrogantly and admittedly viewed the matter as insignificant.

3) Harvard's endowment fund, the largest among universities, plummeted under his watch.

4) He has repeatedly confirmed the creditworthiness of the US Treasury, despite its credit ratings downgrades and unsustainable debts and deficits.

5) He has repeatedly defended the USDollar's store of value, despite its sinking value relative to other foreign exchange currencies, and especially relative to gold.

6) As US Treasury Secretary, and head of the Exchange Stabilization Fund, he oversaw the surreptitious sales, swaps, and leasing out of the Treasury's gold reserves at rock-bottom pricing.

In summary, he
1) missed the biggest financial bubble in 80 years,
2) missed the significance of Facebook in our every day lives,
3) had Harvard's endowment long on equities, when they should have been hedged,
4) he continues to deny the deterioration of US Treasury finances,
5) he continues to deny the USDollars' plummeting purchasing power,
6) he sold at clearance prices the US Treasury's gold reserves.

Aside from his arrogance, exactly how does Summers continue to hoodwink financial experts, the media, government bureaucrats, and academia into believing his genius?  He's about as wrong-headed as a dyslexic fortune-teller.


Oil Guru Destroys All Of The Hype About America's Energy Boom


The Silver Series: Silver as an Investment (Part 3)


Japan Warns It May Fire On Chinese Aircraft Over Disputed Islands; China Retorts: "There Will Be No Second Shot"

Stock market bulls and war-mongers will use this as "good news" and boost equities short-term, with the thought that it will be good for a "recovering global economy."  Which, of course, will only blow the bubble up even more before the inevitable burst.

It's reminiscent of the real estate bulls at the turn of the century declaring desert properties in America's sun belt would perpetually rise in prices...because well, they said so.


Keiser Report: Welcome Home German Gold


As Silver Shortage Intensifies, More Retail Products Disappear


Opinion: The Deadliest Global City

This is an interesting article on guns and violence.  It concludes that urban poverty causes violence.  And that guns should be completely banned.  Good luck with either proposal in America.


U.S. automakers urge Obama to punish Japan for weak yen

Anybody still denying the existence of a global currency war is in--well, denial.


Azerbaijan to increase gold reserves by 2 times in 2013

Another country is increasing its gold reserves, and repatriating their gold home.


Saturday, January 19, 2013

"Detonating The Japanese Debt Time Bomb" With Kyle Bass

This is another great video clip of Kyle Bass' thoughts, especially on Japan.  Golfers will appreciate his metaphor at the end of this 9-minute clip.

The World Is In Trouble


Gold, the renminbi and the multi-currency reserve system

It's 44 pages long, but you might want to at least skim it because it's coming from advisers to some of the biggest international lending institutions, central banks, policy-makers, and sovereign wealth funds.  This is what our global financial system will look like going forward.


Thursday, January 17, 2013

US Mint Out Of Silver Coins - Suspends Sales

Authorized Purchasers,

The United States Mint has temporarily sold out of 2013 American Eagle Silver Bullion coins.  As a result, sales are suspended until we can build up an inventory of these coins.  Sales will resume on or about the week of January 28, 2013, via the allocation process.

Please feel free to call us if you have any questions.


Jack A. Szczerban
Branch Chief, Precious Metals Group
Department of the Treasury
United States Mint

Fourteen Defining Characteristics Of Fascism


James Turk - Germany’s Gold Is Being Held Hostage


Chart Of The Day: The Fibonacci Fade And January 22


In case it wasn’t obvious…


All Aboard The Gold Repatriation Train: First Germany, Next: The Netherlands?


A Message To The 'Left' From A 'Right Wing Extremist'


It Will Take The Fed Seven Years To Deliver 300 Tons Of German Gold


Economics Professor Laurence Kotlikoff - Bernanke Playing With Fire


Wednesday, January 16, 2013

Geithner says gov’t will borrow from federal employee pension fund to avoid passing debt limit


Russia Says World Is Nearing Currency War as Europe Joins


Pimco’s Gross ponders if Bundesbank gold move means central banks don’t trust each other


Deutsche Bundesbank : Deutsche Bundesbank’s new storage plan for Germany’s gold reserves


Masses Close To Realizing Their Money Is Being Destroyed


Why It’s Taking 7 Years For Gold To Be Returned To Germany


Germany’s Entire Gold Hoard At The Fed May Already Be Gone


CURL: Obama supporters shocked, angry at new tax increases


Tuesday, January 15, 2013

Top UBS Analyst Predicts Carnage For The US Dollar & Equities


Bernanke: Get rid of the debt ceiling

Bernanke isn't even masking his intention to print currency into infinity.


China Focus: Office established to handle forex reserve loans

The Chinese are hedging their gargantuan dollar exposure.  By lending out their huge dollar reserves, they will effectively devalue the dollar, while using said dollars to accumulate assets to counterbalance dollar devaluation.

Why is this important to Americans?  Expect higher import prices--and higher prices on everything.


Long Term Unemployment at Highest Level Since WWII


Germany looks to repatriate gold; less trust in Fed?

And finally, Germany's plans to repatriate their gold hits the US press wires.  Remember folks:  I blogged about it last year.  Now that this action by the Bundesbank is reaching more mainstream media outlets, expect more volatility on the price of gold as cohorts from both sides of the issue continue this battleground issue:  do central bank and sovereign gold holdings really exist in the Treasury vaults in New York and London as claimed?  And even if they do exist, are their multiple legal claims against said gold bars?  Because if there are multiple claims:

1) the US Treasury and Bank of England has been running an illegal Ponzi scheme all those years,
2) claimants will find they should have repatriated their gold sooner than later,
3) with fractional reserve gold holdings, possession becomes 100% ownership.

In other words, those that didn't repatriate their rightful gold holdings home will be ASSED OUT.

The status quo will try to refute the legitimacy of the Bundesbank's concerns about the potential for re-hypothecated gold.  If so, the German public should demand a public, independent audit of their national gold reserves.


Germany plans to repatriate billions in gold from New York, Paris

German repatriation of their national gold reserves is getting more press.


Turk - German Repatriation Of Gold & What To Expect Next


As Germany Prepares To Repatriate Its Gold, We Hope They Have Learned From The "Monetary Sins Of The Past


Major Revenue Losses From Patent Expirations Forces Big Pharma Companies to Look to the Biotech Industry for Replacements

Recent analyst upgrades and articles like this have provided a boost for Arena Pharmaceutical shares.


See disclaimers in the side bar.  This is not an endorsement for any company, or investment in any company.

Disclosure:  the author and family members are long shares of ARNA.  The author has no position in VVUS.

Blavatnik Takes JPMorgan to Trial for Subprime Loss

The subprime mortgage-backed securities scandal (i.e. fraud) took down many unsuspecting investors, many of them sophisticated who are not your garden-variety Joe Six-Pack retail investor.  One was Leonard Blanatvik, who sued JPMorgan in 2009 for deceptively putting his fund at risk by stuffing it full of toxic assets.  Defendants at JPMorgan should be worried for two reasons:

1) Blanatvik is a billionaire, worth some $15 billion.  He is not your average day trader living in his mom's basement.  The man has clout and he will use it, irrespective of the outcome of the lawsuit.
2) Blavatnik is a Russian billionaire.  Russian billionaires didn't get where they got by allowing others to defraud them--with impunity.  Heads will roll--and let's hope I'm not being literal.  Maybe I've seen too many Hollywood movies, but these guys normally have bodyguards surrounding them, which means so should those who cross them.

All kidding aside, this case illustrates the depth of the rot on Wall Street.  It's one thing for a too-big-to-fail bank like JPMorgan to rip off its run of the mill clients on Main Street.  It's a another proposition when the wronged investor is a billionaire whale the size of Blanatvik.  He won't just go away after JPMorgan tries to wash its hands of any wrongdoing and receives a customary wrist slap of a fine from the government.  There will be blood.


Monday, January 14, 2013

"We Are Not A Deadbeat Nation" - Full Obama Transcript


Greeks Raid Forests in Search of Wood to Heat Homes

I'm glad the economic crisis in Europe has passed.  Right.


It Begins: Bundesbank To Commence Repatriating Gold From New York Fed


All The Gold In The World - The Definitive Infographic


John Embry - Silver Will Soar Hundreds Of Dollars Higher

“I don’t think the action in the gold and silver markets is reacting or based on reality.  For both gold and silver, what inventories are available are rapidly being consumed.  We are still seeing games being played in the paper market, but in the meantime those inventories are shrinking rapidly.

The day will come, an inflection point, when there isn’t enough physical metal left, and that is when prices are going to rise exponentially.  Right now the fundamentals are incredibly supportive and the sentiment is extremely negative.

The day will come, an inflection point, when there isn’t enough physical metal left, and that is when prices are going to rise exponentially.  Right now the fundamentals are incredibly supportive and the sentiment is extremely negative.

If we take a look at silver specifically, it’s an absolute layup for multiples of the current price.  I find it funny that people worry about the short-term downside.  We are talking about a buck or two, maybe, and we’re talking about hundreds of dollars on the upside.

To me it’s just astounding, looking at the risk/reward ratio, why anybody is the least bit concerned about what’s going on short-term.  Right now there is an obvious shortage of physical silver developing.  I’ve seen nothing to dispute the fact that physical silver inventories are extremely tight.

Look at what’s going on in Japan.  For years the Japanese have run up debt and they could get away with it because they had big savings, a trade surplus, and competitive industries.  But now everything is falling apart for them.

Prime Minister Abe and his new Finance Minister Aso have been blatantly outspoken in saying that the only remedy for the debt is monetary debasement of historic proportions in order to drive the currency lower.  Meanwhile, the rest of the world is doing the same thing.  To me this is just additional fuel to supercharge the precious metals higher, and in this case it’s overpoweringly strong because it will mean the Japanese will be moving into gold in a very big way.

Egon von Greyerz has stated there may be as much as $200 trillion worth of debt in the world.  Superimposed on that is a derivatives pile that if correctly accounted for would be well over $1 quadrillion of notional value.  When you think about that, it can’t possibly be repaid or even serviced as we go forward.  So the only option is to print more money in order to give the impression the financial system is holding together.

The reality is we will continue to see ‘QE to infinity’ as Sinclair said.  I mean we seemed to see a great relief after the fiscal cliff was postponed.  They kicked the can down the road a month and a half, and it just shows how desperate people are for supposedly good news.

That wasn’t good news at all.  It basically solved nothing, and yet it was greeted with an enormous amount of relief.  It’s ridiculous.

As a Westerner, it really depresses me to think that all of our gold is headed East, and our standard of living is headed South."

3 Analyst Upgrades for Arena Pharmaceuticals So Far in 2013

CompanyResearch FirmRatingPrevious Rating

Saturday, 12 Jan 2013

AS OF Jan 12, 2013

Friday, 11 Jan 2013

AS OF Jan 11, 2013
UnfavorableMost Unfavorable

Thursday, 03 Jan 2013

AS OF Jan 03, 2013

Perform an assayed public audit of all the Treasury's claimed 8,100 tons of gold and net of swaps, loans & sales


KWN Monday Silver Chart Special


KWN Sunday Gold Chart Special


Prosecutor as bully


Friday, January 11, 2013

Doug Casey: “There’s Going To Be A Bubble In Gold And Silver, And A Super-Bubble In The Miners; So Buy Them Now”

I think a substantial portion of everybody’s net worth should be in physical gold and silver at this point, because they’re the only financial assets that aren’t simultaneously somebody else’s liability. There’s no counter-party risk with them, and that’s critical.”

Because one thing the governments are going to be doing, is creating trillions more dollars, and that’s going to create other bubbles. So if you’re well positioned, you can capitalize on that, and make a fortune as the greater depression dawns upon most people.

There is almost certainly going to be a bubble in gold and silver, and a super-bubble in the companies that explore for and mine them. So buy them now.”

“Since 2007, we entered a gigantic hurricane, and from 2008 to early 2010 we were at the leading edge of the storm. For the last several years we’ve been in the eye of the storm, but we’re going to come out the trailing edge, and it’s going to be much worse, and much bigger, and much longer lasting that what we saw back in 2008. So I think there will be some bargains, but not now.”

“These governments have printed up trillions and trillions of currency units, not just the US government, but the Europeans, the Japanese, the Chinese. These trillions of currency units have really inflated the value of everything, as people look to hide capital in something that has value. We’re in the middle of a gigantic bond bubble, they’ve created a bubble in the bond market that’s bigger than the bubble that was in real estate, and bigger than the tech bubble in the stock market up until 2001. When the bond bubble that we’re in now deflates, it’s going to be a catastrophe for most people.

Bottom line according to Doug Casey: We’re at a quiet moment in the ongoing crisis, and as currencies and bond bubbles begin to implode, gold, silver, and mining shares may explode to historical proportions.


Jim Grant on the Debt-Ceiling Debate

White House Petition To Publicly Assay And Validate The US Treasury's 8,100 Tons Of Gold


Chinese To Increase Gold & Silver Storage A Staggering 180%


Chinese November Gold Imports Soar To 91 Tons; 2012 Total 720 Tons


The Santelli Exchange: The Precious Metal Purchasing Act

Is Gold and Silver Registration Coming to Illinois?

This bill won't pass, but expect more versions of it to come up in the future.  Research Executive Order 6102 in 1933, signed by FDR.  And then Google what he did in 1934.  Confiscation and theft are the only two words to describe that bait-and-switch.

So let me get this straight.  First they want gun registration and now precious metal registration?  I’m sure the government would only use such information in our best interests, because as we all know: Your Government Loves You.  Sounds reasonable, after all, only “terrorists” buy guns and gold anyway.

Meet the ” Precious Metal Purchasing Act” or SB3341, brought to you by the lovely folks at the Illinois 97th General Assembly:

The New (Old) Payroll Tax Is Starting to Hit Hard


Why Silver May Outperform Gold

I had an interesting email exchange with a client (let's call him Gary for now), so I thought I'd post my thoughts on silver, since gold already gets so much coverage.  I won't post my future strategies, but here are my current thoughts on the silver play.

The gold-to-silver price ratio is approximately 55 : 1 currently, although I expect it to return to 16 : 1 as that is the approximate ratio of resources in the ground.  In fact, it may overshoot to 10 : 1 in a raging precious metals bull market, for the following reasons:

1) pretty much all the gold ever mined is sitting in some vault, somewhere in the world
2) silver is consumed, and rarely recycled
3) there are very few pure silver mines in the world.  Most are by-products of other metals.  So if the world economy struggles, marginally profitable mines for other base metals would shut down, cutting off the supply of silver as well
4) even though the ratio of resources in the ground is 16:1, the ratio of extraction is lower.  In other words, because silver is an industrial metal, more silver is mined on a relative basis (and needed to keep production lines humming).  Faster depletion rates = bigger shortages down the line = higher appreciation in prices.
5) because it is an industrial metal with no comparable competitor, demand is inelastic--irrespective of price.  For example, if silver is a gating item in the production of Apple IPhones, the manufacturer will pay whatever it takes to keep their production line up.  An allocated component (i.e. a shortage) commands much higher price premiums, as the phrase "time is money" becomes intensely more relevant when a vendor (and customer) hears the words "production line down."  To the component supplier, it means the parts go to the highest bidder--assuming they can even find any inventory.  This refers back to Kyle Bass' comment about "Price will solve everything."  Despite gold's greater scarcity, silver's industrial demand dynamics will induce steeper price spikes and volatility during shortages.  Silver's monetary role and investment demand as a currency influences its price, also.

In the same scenario, if silver is indeed in the critical path, commodity buyers will pay whatever it takes to manufacture and ship out IPhones and IPads.  The end-user market demands it and Apple would demand it.  Corporate treasuries of high-tech companies would be well-positioned if they were to keep an inventory of potentially allocated parts, but most by-laws prevent them from parking their money in anything other than short-term US Treasury securities (T-bills, for instance).  The other headwind for stacking up inventory is high-tech's sophisticated Just In Time inventory system, which reduces inventory costs.  JIT works well--until JIT turns into "Just Short", which would pre-date disaster.  I understand the misguided mentality of "risk-less" returns and fiduciary implications, but these corporate treasury strategies will end in tears if a shortage in silver materializes.

Interestingly enough, I visited the UCSB Materials Science group (part of a cross-functional collaboration between multi-disciplinary Engineering departments) and one of the post-doctorate researchers said the Department of Defense gave them a grant to research platinum replacements (used in catalytic converters), as they obviously thought there would be a future shortage.  I asked him about silver, to which the scientist replied "oh, no, there is plenty of silver in the world."  In my mind, that triggered an immediate Pavlovian response to buy more silver.  Even the brightest minds will be wrong on this.

6) silver is used in so many applications, it's mind-boggling.  It's due mostly to superior thermal and electrical conductivity, so while cheaper metals could be used, performance would be compromised.  Silver is used in diverse applications such as electronics, solar panels, batteries, mirrors, optics, autos, antibiotics, disinfectants, and pretty much every high-tech gadget we use.

7) while gold has a better--if not longer history of being a monetary metal, silver's paper price is manipulated with more vigor, as it's a much smaller market.  Less capital is required by naked short sellers to suppress silver's price.  Hence, the snapback to the upside will be much greater.  It might take tens of billions of dollars on the long side to squeeze the shorts in gold.  But it'll only take a few billion dollars of physical silver buyers to bankrupt the shorts in silver.  See Bear Stearns in 2008.  Most believe their wrong-way bet on subprime mortgage-backed securities caused their collapse.  I can piece together a case which indicates their precious metals hedging positions on the short side also contributed to their demise.  When JP Morgan bought out Bear Stearns for a measly $10/share, assets included Bear Stearns' precious metals book.  Mergers and Acquisitions became synonymous with Murders and Executions.

Bottom line: if one is bullish on gold, it might be prudent to be even more bullish on silver.

Swiss Gold Refiners Overwhelmed, Major Delays In Deliveries


Gold To Dwarf 1970s Move By Smashing Through $6,000


Thursday, January 10, 2013

Buffett Says Banks Cleared of Excess Risk Pose No Threat to U.S.

Traders have been relying on the Bernanke Put for years since the financial crisis reared its ugly head. Now we have the Warren Buffett guarantee that banks won't implode global financial markets.  Both signal the Fed ginning up the printing press.  This isn't a bold statement on Buffett's part--he's a big investor in Wells Fargo, Bank of America, and Goldman Sachs.  They've been given cheap money (zero interest rate loans), free money (bailouts), and mortgage-related shenanigans have been prosecuted with slaps on the wrists (billion dollar fines).  Balance sheets have been recapitalized.

So yeah, their solvency has been restored--as long as one doesn't account for shadow assets mispriced to reflect un-reality.  Meanwhile, Buffett's vote of confidence has coincided with the USDollar tanking--while gold and silver rise in tandem.  That's the same gold which Buffett has denigrated as worthless, and the same silver that Buffett profited from in the 1990's.

The song "Money For Nothing" by Dire Straits comes to mind.

The old man is talking his book, and that's probably worth several billion in market capitalization right there.  The extend and pretend crowd can certainly delay the implosion of the bond market and currency crisis.  See Japan.

And I certainly wouldn't bet against the octogenarian.  At least not yet.


Wednesday, January 9, 2013

Bullion Delays Get Longer


Citigroup's Capture of Treasury Department Almost Complete


America Meet Your New Slumlord: Wall Street


Panic In California As Thousands Of Food Stamps Cards Suffer Brief Outage


John Hathaway - 2 Key Charts, Gold, Fed & The Big Picture


How The Swiss National Bank Went "All In", Three Times And Counting

Even the staid, stodgy, and conservative Swiss National Bank is joining the race to the bottom in the global currency war.


Professor Polleit explains why fiat currency systems produce 'collective corruption'


“If Just 1%Of Japanese Pension Assets Shift Into Gold, The Gold Market Would Explode”


Highest Ever One-Day Sales for American Silver Eagles?

I've always posited that when one buys gold or silver, one is competing against 3 billion peasants in Asia for said gold and silver.  Now it looks like some Americans are finally catching on.  More buyers entering the precious metals market means rising demand.  In a backdrop where supply isn't growing, "price will take care of itself" - as Kyle Bass correctly stated.

Do not try to time this market.  Gold has gone up for 12 consecutive years.  Those trying to buy, sell, buy, sell are missing the point--and in doing so, are probably generating tax revenue for Uncle Sam.



Tuesday, January 8, 2013

True Money Supply


The economics of gold and silver in 2013


Bill Gross: Fed Claims To Own Billions in Fort Knox Gold; “With Nothing In The Vault To Back It Up—Amazing!”


Ben BURNanke


Owning physical gold and silver vs. paper gold and silver

I get asked this question often, so this video is a short clip on why you want to take physical possession of your gold and silver.  Paper assets include the now-ubiquitous exchange-traded funds (ETF) which trade like stocks.  The most common ones are the GLD and SLV for gold and silver, respectively.  Without going into a long-winded discussion on why they are subject to market manipulation and pose counterparty risk, suffice it to say that they are not 100% backed by the physical metals (they openly admit this in their brochures).  Clients owning more than 10 million shares will be the only ones able to redeem said shares for physical delivery, so everyone else would own legal claim to paper and nothing more, in the event of a run on physical inventory.  In other words, unless you're a billionaire, good luck on getting your gold when the $hit hits the fun.

Other paper gold assets include COMEX futures, options, and other over the counter assets, which are highly speculative and volatile.  Physical gold and silver, on the other hand, are the soundest forms of money--even safer than currencies themselves.  Of course, the Fed, the US Treasury, and bankers would never admit this:  they want participants to have complete faith in the USDollar.  While the dollar remains a viable medium of exchange (for now), historically, it's been a poor store of value.  Hence, we see rising prices on everything we buy, year after year.  A college education used to cost under $1000 annually 30 years ago.  Today, that same education costs $20,000 annually.  Inflation has not been kind to tuition, healthcare, food, or energy prices.  Buy precious metals, and you mitigate rising costs.

As for Kyle Bass, here is some background on him.  He was one of the few money managers who bet on the subprime mortgage market collapsing--before it collapsed.  He and his firms' clients made billions when the real estate market imploded (while everyone else lost trillions in stocks and real estate).  He was featured in Michael Lewis' best-seller The Big Short, if you want to read about him and other investors prescient enough to identify the bubbles in real estate and financial assets, while everybody else was flipping Calfornia real estate and buying shares in banks and GM.

Bass also serves on the board of UTIMCO, the University of Texas and Texas A & M endowment fund, which happens to be the 2nd largest ($28 billion under management), next to Harvard .  In other words, they have a lot of capital to invest, both wisely and prudently.  He's not some lunatic fringe blogger bent on the decline of western civilization.  His opinion carries weight on Wall Street--and on Texas ranches.


A couple years ago, he initiated UTIMCO's push to convert their GLD shares into $1 billion worth of solid gold bars--precisely due to counterparty risk (as in they may have legal claim to gold via a certificate, but if they don't possess the gold bars, all they own is an empty paper claim).

While I agree with him in principle, I don't believe UTIMCO went far enough.  Their gold bars do exist, but they are stored in HSBC's vaults, the custodian for the GLD ETF.  There have been some grumblings of HSBC manipulating GLD shares and physical inventory, as well as accusations of JPMorgan manipulating the SLV ETF for silver.  It's the ol' fox guarding the hen house syndrome.  If I were UTIMCO, I would go even further, and send a team of Texas Rangers to HSBC's vaults in New York, repatriate and transport those gold bars back to Austin, Texas.  After all, if/when the $hit does hit the fan, possession is 100% ownership--irrespective of legal paper claims.

We have seen every major bank being fined for chicanery and manipulation of markets much bigger than gold and silver (see robosigning of mortgages, implosion of subprime bonds, and LIBOR market).  To suggest that banks aren't tempted to manipulate the precious metals sector is completely naive.

Given that background, watch this short 2-minute video clip.

Put simply, buying gold and silver mitigate risk--they are not speculative trades, unlike what my critics keep droning.  In fact, I would turn it around and insist that those who don't possess precious metals are the speculators, as they have 100% faith in the fiat dollar, which is by definition, not backed by anything tangible--except the US Treasury's ability to tax its citizens and private entities.  Even entrenched Keynesian economists admit this: 

How long can the world’s biggest borrower remain the world’s biggest power?”
  - Lawrence Summers, former US Treasury Secretary

And trust in a fiat paper currency is a speculation that has a 100% track record of failing over time.  The only question is when, not if.  This includes all dollar-denominated assets, whether they be stocks, bonds, or to a certain extent, even real estate.  In other words, gold and silver aren't just financial assets, or even merely commodities.  They are money.  Money that has been good money for 6000 years.

And I end with this oft-quoted quip from JPMorgan himself, the architect of the Federal Reserve Bank, which has an understandably antagonistic stance against gold.  But in a rare moment of truth, testified this before Congress:

"Gold is money.  Everything else is credit." - JP Morgan, 1912

Remember:  don't trade gold and silver.  Accumulate.  And BTFD.

Why You Should Own Physical PMs - Kyle Bass


Rescued by a Bailout, A.I.G. May Sue Its Savior


The Platinum Debt Ceiling Solution


This Will Cause Oceans Of Paper Money To Panic Into Gold


On The Dole And Watching The Pole: The New Normal EBT-Card User


Secrets and Lies of the Bailout


Chart of the Day: Inflation Since the American Revolution


Treasury Borrowing Advisory Committee Members

Do the Fed Chairman and US Treasury Secretary call the shots for the US--or even the global economy?  One could make that argument.  But given the Fed is a private corporation with European and US banks as shareholders, one could also make the argument that commercial banks run the Fed.

What about the US Treasury?  Here is a roster of the Treasury Borrowing Advisory Committee which meets every quarter.  The list of players is hardly surprising.


Monday, January 7, 2013

The Bearish Case for Gold and Silver

In the interest of keeping an open mind and avoiding blind spots, it's important to remain objective.  This author says the bull market in gold is over--after 12 years of rising every year.  You be the judge.


Looking at history and contrarian calls at inflection points (tops and bottoms), often the calls were correct directionally--before they turned and ended up being completely wrong down the road (hence, the contrarian label).  For instance, Businessweek's infamous cover in August of 1979 declaring "The Death of Equities" has been declared as the ultimate contrarian call.  Equities were falling out of favor, but lo and behold, the market bottomed in 1982 and the biggest bull market in stocks continued until 2000.

So Businessweek's call for "the death of equities" was correct for 3 years (and contrarians would have lost their shirts going long in 1979).  But when it bottomed out in 1982, being short was exactly the wrong place to be because the huge bull market began then.  So it was a good contrarian indicator--albeit, 3 years early.

So could gold peak at some point?  Probably, but given the stealthy bull market of 12 years and running, gold is still scorned and even hated in most circles.  Imagine the analysts and cocktail hour discussions if the stock of Google went up for 12 consecutive years.  They'd be jumping up and down like Tony Robbins on speed.

In other words, time-wise, this precious metals bull market is getting long in the tooth.  But if you study bull markets at all, the last mania phase is when most of the nominal gains are made, as prices enter the parabolic stage.  Most of the nominal gains from the 14-year bull market in gold from 1966 - 1980 were made in the final two years, when gold leaped from $400 to $850 in only a few months time span, from a base of $35 in 1971.

If gold and silver do enter the mania phase, I expect gold prices to peak around $6300 and silver $400, based on previous market bubble peaks, including the NASDAQ and gold.  Cycle theorists would then declare a smashing of prices, and the subsequent cleansing of the global financial systems to sort things out.  However, if the dollar collapses in the "Great Reset", then there will be no "peak" in gold or silver--or any other commodity for that matter, because if the dollar goes to zero, prices of everything else go to infinity.  There would be no peak as prices of everything would stay perpetually at infinity, as the old dollars expire worthless.

In that scenario, gold and silver won't be just optimal--they would be the ONLY money worth having.  Sounds improbable, right?  Think again.  Back in the early 1980's, Paul Volcker was able to finally reign in inflation by causing short term interest rates to soar to 23%.  It also logically coincided with the peak in gold prices.  The austerity was very painful to the economy--but also very necessary to clear out the bad debt.  Many went bankrupt.  But it was necessary--and achievable for only one reason:  America was the world's biggest creditor at the time.  Which meant a rise in interest rates benefited US Treasury coffers, as other countries had to pay higher coupon rates.

Today, the opposite is true:  the US is the world's biggest borrower in the history of mankind.  We are no longer a creditor--but a debtor on a massive scale.  A rise in interest rates converts our unofficial insolvent status into official bankruptcy.  It would be very similar to a homeowner holding an adjustable rate mortgage--and having the interest rate rise to 23%.  Bernanke likes to point out that he can withdraw liquidity anytime he wants should the economy improve, causing bond yields to rise.  No, he cannot.  He cannot stop the spigots of liquidity because the already fragile economic recovery would tank without injections of credit and liquidity, so what makes him so confident he can not only stem the liquidity injections, but actually reverse them?  The answer is he cannot--he is forced to continue QE'ing because if he stops the money printing, the music will stop playing and the economy would collapse.

Structurally, our economy is still built on quicksand.  Our economy is 70% consumer-based, and the consumer is still tapped out and over-indebted.  The debt problems are still there--in fact, they are even bigger.  Private sector debt (banks) have merely been transferred to official government debt (central banks) on a global scale with all the bailouts.  Who will bail out the Fed and other global central banks?  The Fed's balance sheet has exploded over 3 times since the 2008 financial crisis.  With additional QE, it will double once again to $6 trillion.  Let me repeat that:  in 2008, the Fed's balance sheet was $900 billion.  By the time the Fed is done with QE in 2015, its balance sheet will be north of $6 trillion.

So Bernanke won't be able to withdraw liquidity and raise interest rates should inflation accelerate.  In fact, the Fed has declared that they will pin interest rates to zero until at least 2015.  My interpretation is they will have to ATTEMPT to do that into perpetuity, because the debt problems will not go away--they will only grow due to compounding.  But market forces have a predilection of overwhelming manipulation by central planners eventually.  Market controls never work in the long run.  Something will break, whether it's runaway inflation, or rising interest rates--or both.  Although those forces are normally countervailing, inflation and rising interest rates have occurred simultaneously in the past.  See 1979 - 1980.

The question is then:  will rising bond yields and interest rates kill the bull market in gold?  The answer is yes--eventually, probably after a lag where both inflation and rates rise in tandem.  But can the Fed afford to have bond yields rise?  The answer is no.  In fact, the purpose of QE is to artificially increase demand for US Treasury bonds in a market where buyers have shunned Treasuries, so the purchasing of said assets by the Fed can artificially keep bond yields lower than what a free market would demand.

As long the Fed continues to have an explicit policy of suppressing interest rates, holding gold is still prudent, as the opportunity cost in a negative, real interest rate (inflation-adjusted) environment is de minimis.  However, even if bond yields at the longer end of the curve (30-year and 10-year maturities) get away from the Fed, the intractable outcome is default by the US government, which should make gold even more attractive for holders.  The problem with that scenario is that the world may not end, but the world as we know it will end.

Richard Russell - The 60-Year Shocker, Silver Shorts & Gold


Friday, January 4, 2013

William Casey, former Director of CIA, Quote

We’ll know our disinformation program is complete when everything the US public believes is false.
–William J. Casey, 1981 – Director of Central Intelligence from 1981 to 1987

Wednesday, January 2, 2013

Race to Debase - 2012 - Fiat Currencies vs Gold & Silver


Kyle Bass on Japan’s Debt Crisis: This Is How It Falls Apart

This is a re-print of an interview with Kyle Bass.  Anytime I re-post something, consider it a high-priority topic.


Truth and the Government, according to Kyle Bass

“They’re not going to tell you that a collapse is coming. You’re going to have to see it for yourself. The government’s never going to tell you that it’s going to happen. These guys are never going to tell you the truth, because they can’t tell you the truth. Their job is to promote confidence, not to tell you the truth.” - Kyle Bass

Game Theory And The Unfixable Fiscal Situation


Don't Show Bernanke This Chart Of Gold Loans In India


Moody's Warns On USAAA Rating; IMF Piles On

It appears the cozy relationships between the credit ratings agencies and the US Treasury are starting to thaw a bit...same with the status quo coordination between the Fed and the IMF, the central banks' central bank.  You know things are getting dicey when the powers-that-be interconnectedness is fraying at the edges.


Washington Agreement is another gold rig, former Fed and Treasury official admits


"The End Game: 2012 And 2013 Will Usher In The End" - The Scariest Presentation Ever?

This is a re-post.  I agree his scenario is not only possible, but probable.  No one knows for sure, but my predicted timeline is 2013 - 2015 for the big reset of our global monetary system to reset.   Raoul Pal's timeline is certainly more aggressive.


Paris Faces Darkness as City Set for Illumination Ban

Things are so bad in France they literally can't keep the lights on in Paris, "The City of Lights."  They'll have to call it the City of Darkness.  This should do wonders for crime prevention.