Monday, July 13, 2009

US Mint AGAIN Suspends Gold Coin Sales
Production of United States Mint American Eagle Gold Proof and Uncirculated Coins has been temporarily suspended because of unprecedented demand for American Eagle Gold Bullion Coins. Currently, all available 22-karat gold blanks are being allocated to the American Eagle Gold Bullion Coin Program, as the United States Mint is required by Public Law 99-185 to produce these coins “in quantities sufficient to meet public demand . . . .”

The United States Mint will resume the American Eagle Gold Proof and Uncirculated Coin Programs once sufficient inventories of gold bullion blanks can be acquired to meet market demand for all three American Eagle Gold Coin products. Additionally, as a result of the recent numismatic product portfolio analysis, fractional sizes of American Eagle Gold Uncirculated Coins will no longer be produced.

Commodity exchanges can dump gold debts on ETFs
Dear Friend of GATA and Gold:
GATA board member Adrian Douglas discloses in the report below, titled "The Alchemists," that the New York and Tokyo commodity exchanges have been permitting their gold futures contracts to be settled not in real metal but in shares of gold exchange-traded funds (ETFs). This essentially allows the gold shorts (and the exchanges themselves, which guarantee futures contracts) to transfer their obligations to third parties that may not have the metal they claim to have and that, in any case, are operated by the investment banks running major short positions in gold.

Thus it is likely that the paper claims to the world's supply of gold are greater than even GATA has suspected -- that the gold supply is even more oversubscribed and that "paper gold" is being created at an ever more frantic rate to suppress gold's price.

The ability to offload futures contract gold obligations to the ETFs could become the principal mechanism of the gold price suppression scheme. GATA asks its supporters to call Douglas' report to the attention of financial journalists, market regulators, and elected officials everywhere.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
The Alchemists
By Adrian DouglasSaturday, July 11, 2009

Fed Independence or Fed Secrecy?
By: Dr. Ron Paul, U.S. Congressman
Last week I was very pleased that hearings were held on the independence of the Federal Reserve system. My bill, HR 1207, known as the Federal Reserve Transparency Act, was discussed at length, as well as the general question of whether the Federal Reserve should continue to operate independently.

The public is demanding transparency in government like never before. A majority of the House has cosponsored HR 1207. Yet, Sen. Jim DeMint's heroic efforts to attach it to another piece of legislation elicited intense opposition by the Senate leadership.

The hearings on Capitol Hill provided us with a great deal of information about the types of arguments that will be levied against meaningful transparency and how the secretive central bankers will defend the status quo that is so beneficial to them.

Claims are made that auditing the Fed would compromise its independence. However, by independence, they really mean secrecy. The Fed clearly cherishes its vast power to create and spend trillions of dollars, diluting the value of every other dollar in circulation, making deals with other central banks, and bailing out cronies, all to the detriment of the taxpayer, and to the enrichment of themselves. I am happy to challenge this type of "independence."

They claim the Fed is endowed with special intellectual abilities with which to control the market and that central bankers magically know what the market needs. We should just trust them. This is patently ridiculous. The market is a complex and intricate thing. No one knows what the market needs other than the market itself. It sends signals, such as prices, that should be reacted to and respected, not thwarted and controlled. Bankers are not all-knowing and cannot ignore the rules of supply and demand. They might act as if they are, but their manipulation of the market just ends up throwing it wildly off balance, which gives us the boom and bust cycles.

They claim the Fed must remain apolitical. No organization is apolitical that relies on the president to appoint the chairman. In fact, it is subject to the worst sort of politics -- power to create trillions of dollars and affect the value of every dollar in the country without the accountability of direct elections or meaningful oversight. The Fed typically enacts monetary policy that is favorable to particular administrations close to elections, to the detriment of long term considerations. They do this partly because of the political appointee process for the chairmanship.

The only accountability the Federal Reserve has is ultimately to Congress, which granted its charter and can revoke it at any time. It is Congress' constitutional duty to protect the value of the money, and they have abdicated this responsibility for far too long. This was the issue that got me involved in politics 35 years ago. It is very encouraging to finally see the issue getting some needed exposure and traction. It is regrettable that it took a crisis of this magnitude to get a serious debate on this issue.

Audit would harm country, Fed vice chair warns
WASHINGTON -- Federal Reserve Vice Chairman Donald Kohn on Thursday launched a robust defense of the U.S. central bank's independence and warned that efforts to put monetary policy under political sway would hurt the economy.

Curbing the Fed's independence could both result in higher long-term interest rates and hurt the United States' credit rating, Kohn said.

"Any substantial erosion of the Federal Reserve's monetary independence likely would lead to higher long-term interest rates as investors begin to fear future inflation," Kohn said in remarks prepared for delivery before a congressional committee.

Kohn is due to testify later on Thursday. A copy of his remarks was released before the hearing.

Kohn's testimony comes as Congress debates President Barack Obama's plan for regulatory reform, which envisions the Fed taking on the role of systemic risk regulator, in a bid to fix a system that failed to prevent a financial crisis last year.

The proposal to expand the Fed's powers has increased calls for accountability at the central bank, and a bill put forward by Republican Congressman Ron Paul to expose it to a full audit by a government watchdog has won support from a majority in the House of Representatives.
Kohn said such a move could be highly detrimental.

"The bond rating agencies view operational independence of a country's central bank as an important factor in determining sovereign credit ratings, suggesting that a threat to the Federal Reserve's independence could lower the Treasury's debt rating and thus raise its cost of borrowing," he said.

Kohn said allowing that the Government Accountability Office to audit Fed monetary policy would be a bad mistake.

"The Federal Reserve strongly believes that removing the statutory limits on GAO audits of monetary policy matters would be contrary to the public interest by tending to undermine the independence and efficacy of monetary policy," he said.

U.S. banks still dominate COMEX gold, silver shorts
By: Gene Arensberg
ATLANTA -- Both gold and silver continued to get sold down this past week, probably a case of fearful investors raising cash ahead of a perceived storm brewing. However, both metals are nearing obvious areas of implied technical support and the news lately sure seems to be more supportive of gold and silver prices than not.

Trouble is that public support for the “governistas” in Washington has become the new bear market. Barack Obama and the current majority in Congress were elected by people who expected them to fix a broken economy. Instead there is a rapidly growing sentiment in the U.S. that the new majority representation decided to take advantage of the situation (and take advantage of every American) to force their radical, big spending, socialist agenda through on the basis of their “mandate.”

“Yes we can,” has become, “Yes we can because we are in power.”

“Hope” is quickly morphing into disillusionment, mistrust and despair as more and more Americans end up in the unemployment line and the official unemployment rate approaches double digits.

Americans don’t like it when their elected officials take obvious advantage of them.

For the national economy, confidence is a prerequisite to recovery, but when the government is more interested in pushing through controversial new, higher tax plans and shaky-science “green” save-the-planet-at-our-expense proposals during a crisis (when the economy is reeling and the taxpayers are just plain unable to pay for them) … well, confidence can be hard to come by.

The economy is just going to have to recover in spite of, not because of all the “help” being thrown at it.

It may not be too late for the in-your-face politicos to reverse course and salvage or repair some of the damage done, but that seems unlikely. Moderates and independents are already distancing themselves from the crew they voted for this past big election. Unless there is a real recovery showing soon, it won’t be long before even the president’s rank and file supporters turn on him, just like they did with another smiling democratic president ridden in to “correct the economy due to Republican abuses” in 1976.

The “good news?” It was under that 1977-1981 “leadership” by Jimmy Carter that we last saw a parabolic spike higher for gold and silver.,-silver-short

U.S. Budget Gap Exceeds $1 Trillion for Fiscal Year
July 13 (Bloomberg) -- The U.S. budget deficit topped $1 trillion for the first nine months of the fiscal year and broke a monthly record for June as the recession subtracted from revenue and the government spent to rejuvenate the economy.

The shortfall for the fiscal year that began Oct. 1 totaled $1.1 trillion, the first time that the gap for the period surpassed $1 trillion, Treasury figures showed today in Washington. The excess of spending over revenue for June was $94.3 billion, the first deficit for that month since 1991, according to data compiled by Bloomberg.

Individual and corporate tax receipts are sliding even as the worst recession in five decades shows signs of easing because the jobless rate continues to rise -- reaching a 26-year high in June -- and companies have yet to see a sustained increase in demand. The shortfall is also widening as the government ramps up spending from the $787 billion stimulus program President Barack Obama signed into law in February.

“This is a difficult pill to have to swallow,” said Richard Yamarone, director of economic research at Argus Research Corp. in New York. “The economy and banking system need these funds to recover, yet it will ultimately hit Americans’ wallets hard. It’s a necessary evil.”

The Treasury is increasing auctions of securities to finance the government’s spending. After more than doubling Treasury note and bond offerings to $963 billion in the first half, another $1.1 trillion may be sold by year-end, according to Barclays Plc. The second-half sales would be more than the total amount of debt sold in all of last year.

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