Monday, August 24, 2009

There Is No Gold To Be Bought Or Sold

Today's CRIMEX Gold AND Silver Market is one for the ages. Is this a new CRIMEX tactic to throw the dogs of the scent of their crime? The takedown of the Gold market in the FINAL 15 minutes of trading was abhorrent. Not to mention the rape in the Silver market. The London fix for Silver was 14.41. Obviously traders overseas saw fit to bid Silver up overnight. But no, they were mistaken. The Asian traders had it all wrong, the CRIMEX goons said so.

I find it laughable that this "sudden" free fall in the Precious Metals 15 minutes before the close of the CRIMEX market was precipitated by the Dollar catching a bid on the "successful" sale of $61 BILLION of three and six MONTH Treasury bills. $61 BILLION folks! $61 Billion of DEBT sold in one morning. The equivalent of 12% of the entire 2008 budget deficit...sold in one morning! LOL, the three month bills pay less than $5 profit to the holders? Who in the hell is buying this garbage? And why would its sale excite anyone enough in the FOREX markets to purchase the Dollar? Gold, even in a rigged market, would offer a far superior return on ones money.

Bah, just another day spent waiting for the inevitable... The Dollar notably closed below the 78.28 trigger line...

Interest rates drop at Treasury auction with six-month bills falling to lowest level this year
WASHINGTON (AP) -- Interest rates on short-term Treasury bills fell in Monday's auction with rates on six-month bills dropping to the lowest level this year.

The Treasury Department auctioned $31 billion in three-month bills at a discount rate of 0.16 percent, down from 0.18 percent last week. Another $30 billion in six-month bills was auctioned at a discount rate of 0.255 percent, down from 0.27 percent last week.

The three-month rate was the lowest since these bills averaged 0.15 percent on June 1. The six-month rate was the lowest since these bills averaged 0.25 percent on Dec. 29.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,995.51 while a six-month bill sold for $9,987.10. That would equal an annualized rate of 0.162 percent for the three-month bills and 0.259 percent for the six-month bills.

Separately, the Federal Reserve said Monday that the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, fell to 0.44 percent last week from 0.47 percent the previous week.

Danger for the Dollar
By Bill Bonner
Desperate borrowers should expect to pay high rates of interest. A borrower who doesn’t need the money can shop for the best rates and hold out for a good deal. But when a person needs to borrow, he takes what the market gives him.

Yet, one of the most curious things about the financial world circa 2009 is the yield on the 10-year Treasury note. It has fallen to under 3.5%. Despite record borrowing by the feds, lenders content themselves with the lowest yields in nearly half a century. Go figure.

The market seems to be anticipating a depression. Why else would bond yields be so low? If the economy sours…and the stock market sinks…the safe yields on Treasury bonds will seem like a good alternative. But Buffett believes the Treasury yields are not as safe as they appear. That other $900 billion has to come from somewhere. And the feds can’t allow interest rates to rise significantly; that would undermine all their stimulus efforts. High real interest rates depress economic activity. So, what can the feds do?

“Washington’s printing presses will need to work overtime,” says Buffett prophetically. Of the two ways of financing the deficit, one is a flimflam; the other is robbery. In the great credit expansion consumers borrowed so they could buy things such as automobiles. Now, the feds borrow and bribe the voters with money to buy automobiles.

No matter who does it, borrowing for consumption is merely taking from the future. Then, when the future comes…the account has to be settled. Result: no net gain. What was consumed in one year is not consumed in the next.

Of course, the feds don’t spend money the same way consumers did. Consumers wasted their money on frou-frou and watchamacallits of their own choosing. The government wastes money on different things – like turtle crossings and billion-dollar bailouts.

Not that we’re complaining about government spending. We’re just pointing out that it’s not the same as private spending. What makes goods good is that people choose them and buy them with their own money. They get what they’ve got coming. But the feds are spending other peoples’ money. If they get any goods at all it is practically an accident.

But what we’re talking about this morning is the dollar. According to Buffett, the dollar is in danger. He’s worried about the larceny, not the flim-flam. Printing up additional dollars robs savers. Each new dollar created to buy US debt makes each one already in existence – say, in a vault in the Bank of China – worth less than it was before. If that isn’t true, the whole body of economic thinking from Adam Smith to Irving Fisher is nothing but a fantasy. And the only way to protect the value of the dollars held by savers, theoretically, is to withdraw the stimulus money before inflation sends prices soaring.

Obama to raise 10-year deficit to $9 trillion
WASHINGTON (Reuters) - The Obama administration will raise its 10-year budget deficit projection to approximately $9 trillion from $7.108 trillion in a report next week, a senior administration official told Reuters on Friday.

The higher deficit figure, based on updated economic data, brings the White House budget office into line with outside estimates and gives further fuel to President Barack Obama's opponents, who say his spending plans are too expensive in light of budget shortfalls.

The White House took heat for sticking with its $7.108 trillion forecast earlier this year after the Congressional Budget Office forecast that deficits between 2010 and 2019 would total $9.1 trillion.

"The new forecasts are based on new data that reflect how severe the economic downturn was in the late fall of last year and the winter of this year," said the administration official, who is familiar with the budget mid-session review that is slated to be released next week.

"Our budget projections are now in line with the spring and summer projections that the Congressional Budget Office put out."

The White House budget office will also lower its deficit forecast for this fiscal year, which ends September 30, to $1.58 trillion from $1.84 trillion next week after removing $250 billion set aside for bank bailouts.

Record-breaking deficits have raised concerns about America's ability to finance its debt and whether the United States can maintain its top-tier AAA credit rating.

$107 trillion in liabilities
Are members of Congress out of touch with reality?

The nation can't pay for Social Security and the health entitlement programs it has now.

The Social Security and Medicare Trustees Reports for 2009, released in early May, laid out the situation plainly:

Social Security and Medicare have a combined unfunded liability of almost $107 trillion.

Members of Congress have, over the decades, promised Americans $107 trillion more in benefits under these two existing programs over the next 75 years than they have provided for in taxes.

Medicare alone has an unfunded liability of almost $38 trillion.

By some people's reckoning, when today's college students reach retirement in about 2054, the burden of paying Social Security and Medicare benefits would consume one in three dollars of taxable payroll.

And traders bought the Dollar today? And sold Gold? Not likely. No real Gold was sold today. Not a single ounce. Just little pieces of paper pretending to be Gold were sold today. There is no real Gold to be bought OR sold...and that is the TRUTH about the CRIMEX market. The CRIMEX is a game played by a very select few banks that gives the "illusion" of a Precious Metal market in New York. But there is no real bullion "exchange" in New York or in the USA for that matter. How can there be when futures contracts in New York are settled for shares of a Gold bullion ETF instead of Gold bullion? Ditto for the Silver Market. Both are a sham run with the blessings of the US Government.

Striving to be Free
By: David N. Vaughn, Gold Letter, Inc.
What is the next crisis bearing down on us? The next bust to come?

Almost 700,000 Americans are soon to use up all of their unemployment benefits. The national unemployment rate now hovers just under 10%. Sounds like a looming crisis to me. What happens when the last dollar disappears? I have relatives myself who have lost their jobs and their home has depreciated by 40%. This is happening all across the country. Around 4.5 million people will lose all their unemployment benefits. What comes next? Selling apples on the street? Increased soup kitchens across Middle America?

“Jim Rogers, retired chairman of Vancouver-based Rogers Group Financial, says advisors often suggest clients take a 5% or 10% position in precious metals as insurance…” “He says "a trillion dollar stimulus has to be inflationary…” “Since the future is unpredictable, I'd argue investors should be exposed to all of stocks, gold, real estate or REITs, cash and both nominal and inflation-linked bonds, as I am myself. How much of each can be decided after consulting with a trusted financial advisor.”

It is estimated that true year to year inflation is 7%. As the years move forward we may see inflation as we experienced in the 1970s. No, this world crisis is far from over but continues to build up steam if only under the surface. In this long term environment gold and gold related investments will always prove to be the better longer term investments. Today, do not consider the short term events, but continue to prepare yourself for the longer term events pending.

When investing always consider well where the longer term direction of the economy and current events are heading. You’ll hold on to your money longer if you think this way. Warren Buffet is the master in determining long term events. I'll give a plus here also for Wells Fargo Bank. During the real estate boom Wells Fargo refused to provide sub prime loans. And when the real estate bull crashed they were sitting on a lump of cash and calmly proceeded to purchase Wachovia Bank. A long term disciplined approach is always the key to where to place your money.

And traders sold their Gold and bought Dollars?

Yeah, right...

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