Sunday, November 29, 2009

Just A Bump Along The Way?

Is it just me, or is the media focusing too much attention on "Black Friday"? Never in my lifetime has the media droned on endlessly about the volume of sales the "day after" Thanksgiving. This story drowns the local evening news broadcast. They even use it to promote the evenings upcoming broadcast. IT's SICK!

UAE to back banks amid Dubai meltdown
DUBAI, United Arab Emirates (AP) -- The United Arab Emirates has pledged to stand behind foreign and domestic banks in the country, offering additional money while extolling the strength of the Gulf nation's financial sector as world markets brace for a potential day of reckoning Monday over Dubai's crushing debt.

The UAE's immediate priority was arguably to avert any run, however unlikely, on banks by panicked depositors. But the promise of cheap funds also signaled to global investors that the country's federal government -- backed by oil money -- will do what it can to limit the fallout from its indebted emirate's woes.

In a statement Sunday, the UAE's central bank said it had sent notice to Emirati banks and foreign banks with branches in the country making clear they would have access to "a special additional liquidity facility."

Sounds like money printing to me...

A Defiant Iran Details Plan for 10 Enrichment Plants
Iran warned Sunday that it would reduce its cooperation with United Nation’s nuclear agency and in a gesture of defiance it ordered the construction of 10 new uranium enrichment plants.

Iran’s warning and its announcement for building new plants appeared to be its first reaction to the demand by the United Nations nuclear watchdog demand on Friday to immediately suspend enrichment activities at a newly disclosed site called Fordow, near the city of Qum. Iran had told the agency that it planned to complete the half-built plant, which is tunneled into the side of mountain, by 2011.

Iran’s defiance to comply with the demand could further damage the already strained ties with the West and lead the United Nations Security Council to impose tougher sanctions on Iran over its controversial nuclear program, and threatens to heighten tensions with Israel, which has hinted at the possibility of attacking Iranian nuclear operations if diplomacy fails.

How and Why China Will Flood the Gold Market
By Jeff Clark, Editor, Casey’s Gold & Resource Report
What would happen to the gold price if China increased its gold reserves to just 5%? What about 10%? To overtake the U.S. as king of the gold hill, it would have to buy all the gold held by the governments of France, Italy, and Germany combined. Can China really do any of that?

At $1,000 gold, to push China's gold holdings to 5% of reserves would take $55.3 billion; to 10% would cost $144.4 billion; to be the world's top gold dog would run $227.6 billion.

Chinese reserves are approaching $2.3 trillion, of which almost 70%, or $1.6 trillion, are denominated in U.S. dollars. The cost to become the world's biggest holder of gold would be a pittance compared to the amount of money China has available. In other words, money is not a problem.

Combining the country's massive holdings of dollars and the very real likelihood those dollars are going to lose much of their value, the motivation to buy tangible assets is urgent.

Further, keep this in mind: China's reserves continue to grow. Therefore, the country must continue buying gold (or consuming its own production) just to maintain the small gold-to-reserves ratio it has, let alone increase it.

In addition to the government buying precious metals, Chinese citizens will continue gobbling them up, too. Demographics alone tell us why.

Government statistics show the average urban household in China has about US$1,300 in disposable income. Multiply that by the number of urban households in China and you come up with roughly $36 billion in available capital.

According to precious metals consultancy CPM Group, about 9.5 million ounces of gold will be turned into coins this year (including "rounds" and medallions). At $1,000 gold, that's $9.5 billion, or only about one-third of the capital available in China.

The number is more striking for silver: Total coin production this year is expected to hit 35 million ounces, equaling $615 million or just 1.7% of the available capital in China. Of course, a lot of Chinese people want cars and refrigerators, etc., but it won't take much of a shift of this capital into gold and silver to have a major impact on the global retail precious metals market. It may already be under way.

And long-term projections show the demographic trend won't slow down: The middle class in China is expected to increase by 70% by 2020. So over these next 10 years, more Chinese and more money will be coming into the precious-metals markets, all at a time when inflation is almost certain to be high, adding to gold and silver's appeal. Couple this with China's long-standing cultural affinity for gold and you have the makings for a potentially life-changing gold rush.

If I were a crime detective, I'd say China has the motive, means, and opportunity to push gold and gold stocks much higher.

China, gold, and the civilization shift
By Ambrose Evans-Pritchard
Stephen Jen from the hedge fund Blue Gold Capital has a warning for those who think that gold has risen far too high, is necessarily in a speculative bubble, and must soon come clattering back down.

Mr Jen is an expert on sovereign wealth funds from his days at Morgan Stanley. The gold story — essentially — is that the rising economic powers of Asia, the Middle East, and the commodity bloc are rejecting Western fiat currencies. China, India, and Russia have all been buying gold on a large scale over recent months.

Why should that stop when the AAA club of sovereign debtors is pushing towards the danger threshold of 100pc of GDP?

These new players account for almost all the accumulation of foreign currency reserves worldwide over the last five years, so what they do matters enormously.

After crunching the numbers, Mr Jen found that the share of gold in their reserves is just 2.2pc compared to 38pc for the Old World (perhaps we should just call them the deadbeats from now on). They would have to buy $115bn of gold at current prices to raise their bullion to just 5pc of total reserves, and $700bn to reach just half western levels.

The killer-term here is at current prices since any such move in the tiny global market for gold would send prices into the stratosphere.

India-IMF Deal: Tipping Point for Gold
By Frank Holmes
India's deal to buy 200 metric tons (6.4 million troy ounces) of gold from the International Monetary Fund (IMF) is a huge deal - not just the fact that the New Delhi government is handing over $6.7 billion for the metal, but what it may mean for gold going forward.

India, the world's largest gold jewelry market, is making a rational and bullish call on gold. The supply of gold continues to decline - the biggest supply is from governments with socialist policies that are selling their gold to pay for social welfare and bailout programs. The IMF is a classic case of this.

What's particularly interesting in this case is that the buyer is a developing economy that's the largest democracy in the world. I see this as another sign of the wealth shift away from the developed markets of North America and Western Europe toward the emerging world.

A decade ago, many of the major emerging markets were in shambles, with contracting economies and huge current account deficits - now many of them have large surpluses to deploy, and they're thinking beyond Treasuries.

What Has Government Done to the Dollar?
By Mike Hewitt
The U.S. dollar has changed from being a paper certificate for a tangible asset to a fiat currency - a paper note declared legal tender. By looking at the history of American paper money one can clearly see the distinction.

For years now, (at least since the U.S. Congress authorized establishment of the Working Group on Financial Markets in 1987) the evidence has become increasingly convincing that a Fed-led Cartel* has been intervening in most Major Markets, and not just in the Gold and Silver Markets.

But The Cartel’s Special Focus has been Intervention in the Precious Metals Markets, regularly successfully taking down the prices of Gold and Silver. The Motivation for this is clear. To the degree that Gold and Silver become increasingly Widely recognized as the Ultimate Measures and Stores of value, they delegitimize the Cartel’s* Fiat (Colored Paper – Intrinsic Value Zero) Currencies and Treasury Securities.

To Date, The Cartel has not lost a round in their repeated attacks to take down Gold and Silver prices, or in their Interventions in other Major Markets either, for that matter.

BUT, The Cartel’s Interventional Regime is now under unprecedented pressure.

Does the recent all-time-nominal high in Gold indicate the Cartel is finally losing Control?

Bernanke Says Curbing Fed Powers Would Impair Economy
Nov. 28 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said curbing the central bank’s authority to supervise the banking system and tampering with its independence would “seriously impair” economic stability in the U.S.

“A number of the legislative proposals being circulated would significantly reduce the capacity of the Federal Reserve to perform its core functions,” the Fed chairman said in a commentary released yesterday on the Web site of the Washington Post. The measures “would seriously impair the prospects for economic and financial stability in the U.S..”

“There is a strong case for a continued role for the Federal Reserve in bank supervision,” Bernanke said. “Because of our role in making monetary policy, the Fed brings unparalleled economic and financial expertise to its oversight of banks.”

“Now more than ever, America needs a strong, nonpolitical and independent central bank with the tools to promote financial stability and to help steer our economy to recovery without inflation,” Bernanke said.

Not only is Bumbling Ben desperate, HE IS ABSOLUTELY FULL OF SHIT. Promote financial stability? Yeah right Ben. The US Dollar has ONLY lost 95% of its purchasing power since the Fed showed up. The Fed is at the center of financial INSTABILITY. The Fed must ultimately be destroyed.

Isn't it ironic that it was public outcry over the poor condition of the banks in 1907 that led to Congress adopting the Fed as the "great banking overseer" in 1913 ...only to hear public outcry once again over the poor condition of the banks, and demanding an end to the Fed. The Fed is a near 100 year experiment that has clearly failed. NOW is the time to shut down the experiment and move on.

"Ben Bernanke Has Never Gotten Anything Right," Peter Schiff Says: Fed Officials Respond
Putting Peter Schiff on a panel with St. Louis Fed President James Bullard and former Fed Vice Chair Alan Blinder is asking for trouble or, at the very least, a heated debate.

That's just what occurred last Sunday night in New York at an event sponsored by Princeton's Business Today.

Predictably, Euro Pacific Capital's Schiff disagreed with Bullard and Blinder on just about everything, including the government's role in causing the crisis, and the outlook for the economy and the dollar.,%5EGSPC,SPY,TBT,TIP,GLD,FXI

Alan Blinder vs. Peter Schiff: When Will the Dollar Lose Its Reserve Status?
The almighty dollar ain't what it used to be.

The decline of the dollar was one of the topics of debate Sunday night when St. Louis Fed President Jim Bullard and former Federal Reserve Vice Chairman Alan Blinder faced off against longtime gold bug and dollar bear Peter Schiff at a panel hosted by Princeton's Business Today.

Bullard, who doesn't often discuss the dollar, does have hope for the greenback. When the world was in full panic mode last year, Bullard notes the dollar actually gained value in a "flight to safety" trade, even though the Fed was flooding the market with supply.

While that may be true for now, Blinder "can imagine the Chinese currency being the dominant reserve currency in the world in 30, 40, 50 years from now."

Peter Schiff, in predictable fashion, says the dollar's day of reckoning is coming much sooner than they think, citing artificially low interest rates and America's rising debt obligations.,udn,spy,dia,gld,gdx