Wednesday, December 30, 2009

Is It Really Just A Coincidence?

I'm doing my best to ignore the markets this week. The noise that seems to persist is but a cacophony of impudent thieves boasting of triumph. Hardly...

In the never ending effort to obfuscate the Precious Metals Markets, the CRIMEX goons this week have toed the company line and engaged in some of their most nefarious and blatantly obvious criminal activity to date. Pause for a moment and peruse the graphic above...and consider this:

On Monday, Tuesday, and Wednesday of this week the United States Treasury Department has been engaged in yet another desperate series of auctions of US Treasury Bonds to further fund the irresponsible excesses of our floundering government. The total raised for the week a staggering $118 BILLION. This weeks auctions will be the final installment of 2009 Treasury issuance, which will bring this years gross coupon issuance to $2.183 trillion -- a daunting figure surely to be matched in 2010.

In an effort to make these "tokens of debt" attractive to investors, it was deemed imperative by the Grand Masters of National Debt to make the US Dollar look strong, and it's arch enemy Gold look weak. Marching orders were sent to the cartel's bullion banks to "press Gold" to throw investors off the scent of safety in the hope of luring them into the Treasury's little Den of Debt instead.

Is it really just a coincidence that the price of Gold rolled over each of these three past days precisely at the open of trading on the CRIMEX as shown clearly on the graphic above? Not bloody likely! Let the graphic above sear into your mind. It is the clearest picture of a "crime in broad daylight" you may ever witness. There is absolutely no sound fundamental reason for Gold to have sold off at PRECISELY 8:20AM est every morning the past three days. NONE! If Gold is such a poor investment, why then does it not get clobbered in trading around the rest of the planet each night?

Gold holds the TRUTH about the destruction of your country by a small group of thieves determined to put each and every one of you in the poor house and destroy your inalienable right to life, liberty, and the pursuit of happiness guaranteed by the Constitution Of The United States Of America. The US Government will stop at nothing to keep this TRUTH from you.

The US Treasury can not sell US Dollar denominated debt on it's own merit. Therefore, the Treasury must use it's minions at the bullion banks to make Treasury Bonds "look better" than any alternative, in particular Gold.

US Treasury Bonds are a bad bet, and the World grows wiser by the day to this TRUTH. We are told again and again by the financial media that these weekly debt auctions are "successful". Why? Does one more successful bond auction buy the government another week or two of kicking the can down the road before the TRUTH overwhelms the Bond Market? Why are "successful" bond auctions always reported as if it were a "relief" that the Treasury succeeded in selling some more of the nations future?

Are investors really buying all this debt? Or are we being led to believe investors are buying ALL this debt when in fact the Fed is buying it "indirectly"? Who is buying all the bad debt instead of buying Gold? Eric Sprott & David Franklin may know the answer to this question, and I doubt the Treasury Department will be happy to know that their little Ponzi Scheme has been exposed.

In their essay: Is it all just a Ponzi scheme? Eric Sprott & David Franklin go to extraordinary lengths to reveal just who is buying all this US Teasury debt, and it ain't you and me folks.

In the latest Treasury Bulletin published in December 2009, ownership data reveals that the United States increased the public debt by $1.885 trillion dollars in fi scal 2009.1 So who bought all the new Treasury securities to fi nance the massive increase in expenditures? According to the same report, there were three distinct groups that bought more than they did in 2008. The first was “Foreign and International Buyers”, who purchased $697.5 billion worth of Treasury securities in fi scal 2009 – representing about 23% more than their respective purchases in fi scal 2008. The second group was the Federal Reserve itself. According to its published balance sheet, it increased its treasury holdings by $286 billion in 2009, representing a 60% increase year-over-year.2 This increase appears to be a direct result of the Federal Reserve’s Quantitative Easing program announced this past March. Most of the other identifi ed buyers in the Treasury Bulletin were either net sellers or small buyers in 2009. While the Q4 data is not yet available, the Q1, Q2 and Q3 data suggests that the State and Local governments and US Savings Bonds groups will be net sellers of US Treasury securities in 2009, while pension funds, insurance companies and depository institutions only increased their purchases by a negligible amount.

So who was the third large buyer? Drum roll please,... it was “Other Investors”. After purchasing $90 billion in 2008, this group has purchased $510.1 billion of freshly minted treasury securities so far in the fi rst three quarters of fi scal 2009. If you annualize this rate of purchase, they are on pace to buy $680 billion of US treasuries this year - or more than seven times what they purchased in 2008. This is undoubtedly the group that made the US defi cit possible this year. But who are they? The Treasury Bulletin identifi es “Other Investors” as consisting of Individuals, Government-Sponsored Enterprises (GSE), Brokers and Dealers, Bank Personal Trusts and Estates, Corporate and Non- Corporate Businesses, Individuals and Other Investors. Hmmm. Do you think anyone in that group had almost $700 billion to invest in the US Treasury market in fi scal 2009? We didn’t either. To dig further, we turned to the Federal Reserve Board of Governors Flow of Funds Data which provides a detailed breakdown of the owners of Treasury Securities to Q3 2009.3 Within this grouping, the GSE’s were small buyers of a mere $5 billion this year;4 Broker and Dealers were sellers of almost $80 billion;5 Commercial Banking were buyers of approximately $80 billion;6 Corporate and Non-corporate
Businesses, grouped together, were buyers of $11.6 billion, for a grand net purchase of $16.6 billion. So who really picked up the tab? To our surprise, the only group to actually substantially increase their purchases in 2009 is defi ned in the Federal Reserve Flow of Funds Report as the “Household Sector”. This category of buyers bought $15 billion worth of treasuries in 2008, but by Q3 2009 had purchased a whopping $528.7 billion worth. At the end of Q3 this Household Sector category now owns more treasuries than the Federal Reserve itself.8

So to summarize, the majority buyers of Treasury securities in 2009 were:

1. Foreign and International buyers who purchased $697.5 billion.
2. The Federal Reserve who bought $286 billion.
3. The Household Sector who bought $528 billion to Q3 – which puts them on track
purchase $704 billion for fi scal 2009.

These three buying groups represent the lion’s share of the $1.885 trillion of debt that was issued by the US in fi scal 2009.

We must admit that we were surprised to discover that “Households” had bought so many Treasuries in 2009. They bought 35 times more government debt than they did in 2008. Given the financial condition of the average household in 2009, this makes little sense to us.

This is a MUST READ essay. Please take the time to read it in its entirety, and share it with a fellow investor. The TRUTH must be heard.

Trader Dan Comments On The Talking Up Of The Dollar
By Dan Norcini,
In technical analysis there is what we term the “reverse polarity” principle. What this means in English is that former levels of support, such as what we see back in December 2008 and June 2009, become resistance levels when once broken to the downside. In other words, just as they formed regions where buyers were quite active previously, they then “reverse polarity”, or attract sellers when price moves back up to test them from the downside. In this case, this level has currently stopped the Dollar’s rally in its tracks.

Before I would become too excited about the Dollar’s prospects, I would need to see a weekly close above this level but even more importantly, I would want to see all of the major moving averages turning up and moving higher with the 10 week and the 20 week moving above the 40 and 50 week. Another way of saying this is that Dollar bulls have not yet proved that they are capable of beating back the selling that is originating at last week’s high. Until they do, the longer term trend is still bearish even though I am the first to admit that the bears were unable to break the double bottom support near the 74 level.

Price then rebounded away from that level with analysts looking for a reason to explain the move higher. The concerted opinion has now emerged that the US economy is on the mend and the next move by the Fed will be to raise interest rates, thus supporting the Dollar. Again, market action makes commentary.

Personally I believe that any such expectation of an increase in interest rates is unjustifiable nonsense. Much of the improvement in the numbers coming out for the US economy is the result of government expenditures. That is unsustainable. Everyone knows that except perhaps the current Administration and the political leadership of the Congress which believes that the more debt that is created the more prosperity follows.

I have posted a number of quotes and stories this month that clearly address the "debt bomb" that the US Treasury has on their doorstep in the coming year. The illusion being sold to the American Public by government "officials" and economists, the financial news media, and Wall Street is that "the recession is over" and America is "on the road to recovery". Folks, it's a load of crap! ...the greatest lie ever told. I just have to post one more:

Brace For Impact: In 2010, Demand For US Fixed Income Has To Increase Elevenfold... Or Else
by Tyler Durden
And while you are lamenting the death of private debt markets, here is precisely what the Fed, the Treasury, and all bank CEOs are doing all their best to keep hidden until they are safely on their private jets heading toward warmer climes: in 2010, the total estimated net issuance across all US$ denominated fixed income classes is expected to increase by 27%, from $1.75 trillion to $2.22 trillion. The culprit: Treasury issuance to keep funding an impossible budget. And, yes, we use the term impossible in its most technical sense. As everyone who has taken First Grade math knows, there is no way that the ludicrous deficit spending the US has embarked on makes any sense at all... none. But the administration can sure pretend it does, until everything falls apart and blaming everyone else for its fiscal imprudence is no longer an option.

Out of the $2.22 trillion in expected 2010 issuance, $200 billion will be absorbed by the Fed while QE continues through March. Then the US is on its own: $2.06 trillion will have to find non-Fed originating demand. To sum up: $200 billion in 2009; $2.1 trillion in 2010. Good luck.

As we pointed, the number one reason why 2010 is set to be a truly "interesting" year is a result of the upcoming explosion in US Treasury issuance. Fiscal 2010 gross coupon issuance is expected to hit $2.55 trillion, a $700 billion increase from 2009, which in turn was $1.1 trillion increase from 2008. For those of you needing a primer on the exponential function, click here. But wait, there is a light in the tunnel: in 2011, gross issuance is expected to decline... to $1.9 trillion.

A brazen essay by one of the Internets best. Please take the time to read Tyler Durden's essay in its entirety.

The Great Year-end Gold Sale is sure to end without notice. Make your purchases soon, and hold on tight. These goons will stop at nothing to steal your Gold from you. Let's face the facts folks, the goons at the CRIMEX are on the hook for potential Gold deliveries that are far in excess of what the CRIMEX has in its coffers. This is going to get ugly, and they NEED YOUR GOLD.

And then there is Silver. The CRIMEX are about to be sunk by their Silver commitments:

The Silver market is waiting to explode The BIS just reported derivative totals and the category "other metals" which is mostly Silver, more than doubled in size to $203 Billion over the last six months alone. To put this number in perspective, the annual global production of Silver is about $10 Billion and a rough estimate of global above ground inventory is $17 Billion. So the "paper Silver" market is about 20 times the size of annual global production and 12 times the above ground inventory. Can you say default?!!! -Bill Holder, LeMetropoleCafe


With the markets in OBVIOUS rigged mode, I will again refrain from commenting further on the Precious Metals charts as they are clearly being painted by the CRIMEX goons. As the New Year passes, the opening few trading days of 2010 should prove most intriguing...

Monday, December 28, 2009

Up The Creek Without A Paddle

Volume in all the markets is extremely thin this holiday season. I would not read too much into the markets moves up OR down here. It was exciting to see Gold rise $18 on Christmas Eve, but I wouldn't stake a long position on that move, we need to see some credible follow through. This being the case, I will refrain from commenting on the Precious Metals.

Something to consider regarding the Dollar. How much of this "rally" in the Dollar is because of US companies repatriating Dollars in year-end moves to "bring home overseas profits"? Companies operating overseas must sell the local currency and buy Dollars to "cash in". There is not a single fundamental reason for the Dollar to be rising. It is interesting to note regarding the Dollar that the rally has begun to fade right at it's 200 DAY moving average.

Did you see the sneaky move by the Treasury on Christmas Eve to give Fannie Mae and Freddie Mac a blank check towards their bailout? The Treasury announced that it would provide unlimited support to Fannie Mae and Freddie Mac for the next three years. All losses they incur will be funded by the taxpayer.

U.S. Treasury Department Office of Public Affairs
FOR IMMEDIATE RELEASE: December 24, 2009
At the time the Federal Housing Finance Agency (FHFA) placed Fannie Mae and Freddie Mac into conservatorship in September 2008, Treasury established Preferred Stock Purchase Agreements (PSPAs) to ensure that each firm maintained a positive net worth. Treasury is now amending the PSPAs to allow the cap on Treasury's funding commitment under these agreements to increase as necessary to accommodate any cumulative reduction in net worth over the next three years. At the conclusion of the three year period, the remaining commitment will then be fully available to be drawn per the terms of the agreements.

Neither firm is near the $200 billion per institution limit established under the PSPAs. Total funding provided under these agreements through the third quarter has been $51 billion to Freddie Mac and $60 billion to Fannie Mae. The amendments to these agreements announced today should leave no uncertainty about the Treasury's commitment to support these firms as they continue to play a vital role in the housing market during this current crisis.

Let there be no more doubts...control of residential mortgage finance now rests firmly with the federal government. How long will it be before the government tells us what "kind of " of house we can live in?

Oh, what's this? Fannie and Freddie will receive $42 MILLION in salaries and bonuses?

Fannie and Freddie to Get Unlimited Aid…and Huge Executive Bonuses
The Obama administration made like Santa Claus just before the Christmas holiday, enlarging the potential bailout of mortgage giants Fannie Mae and Freddie Mac—and approving Wall Street-like compensation packages for their leaders. On Thursday, President Barack Obama unilaterally raised the $400 billion cap on emergency aid to the companies, which were heavily criticized for helping bring about the housing crisis.

Prior to the announcement by the White House, the
Federal Housing Finance Agency approved $42 million in salaries and bonuses to the top 12 executives at Fannie Mae and Freddie Mac. Fannie Mae chief executive Michael J. Williams and Freddie Mac chief executive Charles Haldeman each will receive a base salary of $900,000 and bonuses and incentive payments of up to $5 million for running companies that might have collapsed had it not been for the federal government’s rescue in 2008.

Oh, to be such a successful failure....

I try to stick to the Precious Metals and currency markets, but I can not pass on the opportunity to pass along a little "truth" about the lie the US Senate touts as "health care reform". Sen Dodd said after passing the Senate version of "health care reform", "This will be a day all Americans will remember." Yes it will, just like the attack on Pearl Harbor was. Christmas Eve will be remembered as the day the American taxpayer went to war with their government. The 2010 mid-term elections should prove to be a bloodbath for the Democratic Party.

Change Nobody Believes In
The rushed, secretive way that a bill this destructive and unpopular is being forced on the country shows that "reform" has devolved into the raw exercise of political power for the single purpose of permanently expanding the American entitlement state. An increasing roll of leaders in health care and business are looking on aghast at a bill that is so large and convoluted that no one can truly understand it, as Finance Chairman Max Baucus admitted on the floor last week. The only goal is to ram it into law while the political window is still open, and clean up the mess later.

Dropping the Bomb on Health Care
By Peter Schiff
While ramming their new legislation through Congress, the Democrats have taken great pains to point out that they do not intend to "socialize medicine." But make no mistake, that's where we're headed. Even if some naïve centrists believe that their efforts have denied the Left a total victory, the practical implications of the current legislation sow the seeds for complete capitulation.

This first round of reform could be labeled as the 'neutron bomb' of the insurance industry: it leaves some of the private apparatus standing, but it irradiates whatever remains of the industry's market viability.

The bill's centerpiece is a clause prohibiting insurers from denying coverage based on a pre-existing medical condition. However noble and marketable an idea, this proscription removes the very basis upon which any insurance model operates profitably.

A system of insurance requires that premiums be collected from a pool of low-risk people so that funds are available in case a high-risk event befalls a particular person. In that way, premiums can be low and coverage can be widely available, even if the benefits offered are hypothetically unlimited.

For example, homeowners buy fire insurance even though their houses are very unlikely to burn down. Recognizing that a fire could wipe them out financially, most homeowners endure the cost of coverage even if they never expect to collect. The same model applies to health insurance in a free market.

However, the health care bill removes the need for healthy individuals to carry insurance. Knowing that they could always find coverage if it were eventually needed, people would simply forgo paying expensive premiums while they are healthy, and then sign on when they need it. But insurance companies cannot survive if all of their policyholders are filing claims!

Correctly anticipating this incentive, the Senate bill imposes an annual fine which gradually escalates to $750 for those who fail to buy coverage. So what? I would gladly pay $750 in order to avoid the $8,000 per year I pay now for personal health insurance. Currently, I'm relatively healthy for a 46 year old and I don't anticipate making a big claim. But if I do, under the new rules I can always get 'insurance' after the fact. Heck, if I can stay healthy for the next couple of decades, I'll save a fortune. Think about how much easier the decision would be if I were 20 years younger! Since most people are capable of figuring this out, the entire insurance industry would collapse under such a system.

Compulsory Private Health Insurance: Just Another Bailout for the Financial Sector?
By Ellen Brown
Dr. Benjamin Rush, a signer of the Declaration of Independence, is quoted as warning two centuries ago:

"Unless we put medical freedom into the Constitution, the time will come when medicine will organize into an underground dictatorship. . . . The Constitution of this republic should make special privilege for medical freedom as well as religious freedom."

That time seems to have come, but the dictatorship we are facing is not the sort that Dr. Rush was apparently envisioning. It is not a dictatorship by medical doctors, many of whom are as distressed by the proposed legislation as the squeezed middle class is. The new dictatorship is not by doctors but by Wall Street - the FIRE (finance, insurance and real estate) sector that now claims 40 percent of corporate profits.

Healthcare Reform is a Lump of Coal
by Dr. Ron Paul
Such is the arrogance of politicians. There seems to be no end to the problems they feel capable and duty-bound to solve through legislative proclamation and plenty of your money. To hear them talk, one might think that a few words spoken on Capitol Hill would make problems just disappear. All it takes it good intentions.

But no good can come from 2400 pages of Washington's good intentions.

I have observed quite the opposite throughout my political career in the House of Representatives, and fear that with this immense legislation, our healthcare problems are only just beginning. Over the last few decades, I have seen healthcare subjected to more and more creeping red tape that only creates bottlenecks and increases costs as new bureaucratic hurdles are put in place.

Politicians cannot solve the problems created by ever-increasing intervention by exponentially increasing their intervention. Similarly, they cannot improve the quality of healthcare and expand access to it for all Americans simply by legislative decree. If only it were that simple! The reality is the free market, when allowed to function, naturally increases access and drives prices down through competition. The free market keeps service providers accountable by allowing people to take their business elsewhere.

The historian William Lecky said, "Truth is scattered far and wide in small portions among mankind, mingled in every system with the dross of error, grasped perfectly by no one, and only in some degree discovered by the careful comparison and collation of opposing systems."

The Truth About The Comex
Aside from the extreme manipulation that is going unenforced here, if enough silver longs were to stand for delivery, theoretically JPM would blow up - or be forced to cover - driving the price of silver significantly higher.

My fund partner and I were just discussing the idea that ultimately, just like in 1980 when the Hunts tried to corner the silver market from the long side, the Comex will change its rules in order to avoid a default. This time around the rule change I anticipate will allow JPM to settle those contracts in cash OR, as they've already done in terms of changing the rules, allow JPM to settle those contracts using the SLV ETF. The Comex may even go as far as allowing JPM to "force settle" its silver shorts using SLV. Remember, there is precedence for the Comex's changing the rules in order to protect itself.

IF/When this occurs, it will send a big signal to the global market about the true condition of the growing scarcity of physical gold/silver. But in the meantime, as JPM has shown with its ever-increasing weekly silver short position, JPM can just keep selling as many contracts as it wants to try and keep a lid on the price of silver knowing that it ultimately will never have to deliver the underlying amount of silver.

We have already seen the Comex bailed out of a gold squeeze last May when Deutsche Bank, a large gold futures short seller, suddenly transferred 800,000 ounces of gold from London to the Comex, alleviating a potential blow up delivery short squeeze.

So, the short answer to the issue is that I don't believe the Comex will "blow up" any time soon because the CFTC refuses to enforce market manipulation standards on the gold/silver market. And I don't believe it ever will enforce those standards, contrary to Ted Butler's dreams, and I think the Comex will continue being an illegal short-selling operation of gold and silver until there's a "de facto" default, which will occur when JPM has to force-settle its silver shorts with either a huge cash premium offer or several 10's of millions of shares of SLV.
Eventually Comex will be rendered useless. I don't know if this will occur from a physical squeeze, or if the cause will be the Comex changing the rules - as they've done in past - to allow for cash settlements, or if global players will just ignore the Comex altogether.

Tuesday, December 22, 2009

Every Picture tells A Story

Baltasar Gracian wrote that "Truth is for the minority." He also noted that truth always lags behind, and is as hard to tell as to hide.

I don't know about ya'll, but I am absolutely fed up with this BS they call a "market" in New York. It's fascinating that the ONLY time in a 24 hour period that the price of Gold "plummets" is "New York Time". Is it just a coincidence that the price of Gold ONLY comes under severe pressure when the "market" in the time zone dominated by the US Dollar is open? I think not.

If you ever needed proof that the US Dollar is on the ropes, look no further than the NY CRIMEX futures exchange. A visual peek at this market is posted above care of the swindlers at Amazing the calm in the Gold Market outside of the New York Market... The desperation to which the criminals on the CRIMEX, aided by unlimited government funding and exemptions to commodity trading laws, go to persuade us that Gold is weak, and the Dollar is strong. The Asians must laugh every morning at the good fortune these fools that run our country offer them as they give away the wealth of the Western World to the East.

I maintain the vast majority of liquidation in New York the past week is a direct result of "forced" liquidation brought about by the recent increase in margin rates on the CRIMEX. The CFTC, unable or unwilling to enforce position limits on the CRIMEX, has instead encouraged the CRIMEX to increase margin rates in hopes that "forced" liquidations will cough up the necessary positions for the overextended shorts to find "metal" to cover their ill advised short positions. In effect, the CFTC is attempting to kill the patient to save the disease. This of course will fail as this "direction" does not address the real problem on the CRIMEX: There is not enough physical metal in their warehouses to meet the needs of all the contracts illegally written on this exchange.

Take a moment, and send the CRIMEX goons a Christmas card thanking them for the opportunity to purchase "physical" Precious Metals one more time at such a steep discount. How many times now have they raided these markets to "suppress" prices, AND FAILED? Even at today's discounted prices, Gold is FOUR TIMES more expensive today than it was in 2001 when this Bull Market began. Do not be fooled! Gold is going MUCH higher, MUCH SOONER, than anybody can imagine.

Please find 30 minutes to listen to this exceptional interview with Gold sage Jim Sinclair. In this interview Jim touches on a number of issues pertaining to the Gold market and the US Dollar that will explain FULLY the event we are witnessing. This interview is well worth your time, and just what the Gold Doctor ordered:

Dear CIGAs,
Please click the following link to hear Jim Sinclair’s latest interview on With the gold market under pressure, it is an important listen.
Click here to listen to the interview…

"China is trying to operate the gold market because they want the rest of the IMF's gold."
-Jim Sinclair

With Christmas fast approaching, I will now sign off until Monday, December 28. Give the finger to this nonsense and join me in celebrating the Christmas Spirit. Be happy and be safe.

Monday, December 21, 2009

CRIMEX Goons Facing Destruction?


A great deal of discussion the past several days regarding open interest on the COT has left traders 'Wondering what the hell is going on". The big air pockets in price have not resulted in the "normal" reduction of open interest in the futures as price declines, as the goons cover their large short positions and rake in their criminal profits.

Perhaps we should consider that the weaker hands that are being shaken out of the market here from all-time highs are being replaced by a greater number "stronger" hands determined to take on the corrupt cartel bankers and destroy them. in other words, the stronger speculators are taking on more gold and silver contracts and our wonderful and fraudulent bankers are shorting more and more gold and silver.

The CRIMEX goons have accomplished little over the past two weeks. They have lowered the price by $120 and increased their short positions, and that's about it. Did they not consider that by lowering the price they have only increased demand for PHYSICAL GOLD though out the world?

Have the goons shot them selves in both feet this time? Will they be able to stop the bleeding? This week ahead should prove to be most interesting. Expect to see an increase in the commercial shorts as the CRIMEX goons dig in and supply massive gold and silver contracts in which the underlying asset does not exist under their ownership. The second half of the run to $1300+ Gold may be birthing as we type this.

Near-term resistance in Gold lies at: 1116 / 1118 / 1124. Support at recent lows near 1095 and the 50 Day moving average remains key.

Near-term resistance in Silver lies at: 17.44 / 17.72 [50 day moving average] / 17.82 . Support at 17.05 remains key.

COMEX Raises Gold and Silver Margin Requirements, Validates Bull Market Strength
The COMEX has raised the margin requirements for gold and silver futures contracts. Additionally, gold is trading in minor backwardation but this is probably not serious. The margin requirement rise validates the strength of the bull market. There will likely be additional margin requirement increases during this upleg.

The result of these increases in the margin requirements will likely be somewhat bearish for the metals in three to six months. This is because it will require more capital to control the same amount of the commodity and will serve to dampen some of the speculative hot money which has been flowing into the metals lately.

Margin requirements and other exchange rules are what put a damper on the Hunt brother’s plans. Overnight the rules were changed without notice and it resulted in tremendous losses and margin calls to the Hunts. The effect of margin requirements on the instruments of the gold price suppression scheme does cause some questioning. For example, are they even subject to the requirements?

The Gold 'Bubble' that Goes On and On
The funny thing is, according to this data at Google news, the media has been calling gold a bubble for, not only years now, but decades.

Why precious metals aren’t in a bubble
Critics of precious metals investing have called gold and silver a bubble, further claiming that today’s higher prices will fade as economic conditions improve. Although gold and silver prices are much more expensive than they were even a few years ago, gold and silver are hardly near bubble status.

Scarce Ownership of Precious Metals
One of the most prominent reasons that gold and silver aren’t yet a bubble is that very few casual or institutional investors own physical gold and silver.

Gold Isn’t Speculative
Unlike oil, dot com stocks and even real estate, gold isn’t bought and sold to make people rich. It isn’t sold as a get-rich-quick product. In fact, gold and silver are sold as get-rich-slowly products that help investors retain their purchasing power.

Metals Prices Haven’t Truly Grown
While the money supply has expanded tremendously since the early 1990s, gold prices didn’t begin their most recent rally until 2002, mostly due to a relatively strong economy.

Rarity is Always Valuable
There is less gold and silver on the earth’s crust with each passing day. As precious metals are used in manufacturing, the amount in existence decreases, which subsequently increases the value of each gold and silver coin owned by investors.

Now or Never
While precious metals aren’t currently in a bubble, it’s impossible to deny that they might soon be. With so many investors realizing the only way to safeguard their assets from inflation, deflation, and economic calamity is physical metals, it is certain that the price of silver will continue to rally. From the everyday collector to the institutional investor, precious metals are now on the radar as a safe and reliable investment. Rather than wait as precious metal prices trend higher, protect your assets by purchasing gold and silver coins today.

Gold Is "Nowhere Near the Top"
The U.S. dollar has reigned as the world's reserve currency for more than 30 years. That's a real anomaly in the history of paper money, according to Stansberry & Associates Investment Research founder Porter Stansberry, but the dollar's days on the throne are numbered. With a sea-change in the monetary system on the horizon—and drawing ever-nearer as more and more U.S. creditors turn toward hard assets and away from paper dollars—he tells The Gold Report in this exclusive interview that the world is approaching a return to "at least a de facto gold standard." Porter does not recommend bullion as "insurance" (because that suggests hope for the dollar when there is nothing to pin hope on) but rather as "the perfect natural money."

TGR: Granted, the U.S. dollar is the reserve currency, but could a single currency drive the whole world to return to a gold standard?

PS: If you want to understand how one currency could replace the U.S. dollar as the global reserve currency, look into Gresham's Law. Historically, bad money always drives out good. Accordingly, if a central bank anywhere in the world sets up its currency to be backed by any kind of hard currency, it would cause people all around the world to desire that currency for their savings, rather than dollars.

The Swiss don't do it anymore, but suppose, for example, that China decided to back all of its currency in silver. That would make a big difference in the market for dollars in particular because there are so many excess dollars around the world that have to be purchased every year that it would displace the dollar very quickly. All you would need is a country with a large role in global trade deciding to establish a currency based on a hard commodity standard, whether gold or silver or a bi-metal standard. Those standards historically have always been very respected.

Then as soon as you have a hard currency standard, people will begin to hoard that currency and dump the dollar. For example, the U.S. bi-metal standard in the 1800s undervalued silver relative to gold. Within about 10 years—from 1810 to about 1820—no silver coinage was left in the country. That happened in the 1960s as well, by the way. At that time, the face value of silver coins in circulation, the pre-1964 quarters, for example, was lower than the value of the metal. So they disappeared from circulation almost overnight.

The same thing would happen were another currency to be made more secure—with backing from gold or silver, for example—than the dollar. People would begin to hoard that currency and dump the dollar.

I believe that's what we're beginning to see with the central bank purchases of gold. It may be hard to believe, but it's true, that central banks have been net sellers of gold since the end of Bretton Woods. It's really an anomaly that for 35-plus years, there has been no challenge to the dollar standard. There's never been a time before in human history that the world reserve currency wasn't backed by gold or by a combination of gold and silver.

This came from economist David Rosenberg:
"We are not sure if this is a well known "fact", but the U.S. government has a record $2.5 trillion of its debt, including bills, bonds and notes, rolling over in 2010. That, my friends, is 35% of the outstanding level of Uncle Sam's marketable obligations having to be refinanced in one single year. "

by Puru Saxena
BIG PICTURE- “It’s a question of how do you achieve the deleveraging. Do you go through a long period of slow growth, high savings and many legal problems or do you accept higher inflation? It would ameliorate the debt bomb and help us work through the deleveraging process” – Kenneth Rogoff, Professor of Economics at Harvard, Former Chief Economist at the International Monetary Fund

Make no mistake; the developed world is drowning in debt and as outlined above, there are only two viable options – a global economic depression or very high inflation. It is our contention that the policymakers have chosen the latter option and over the following years, we will experience the trauma of severe inflation.

Look. The American government is staring at total obligations of US$115 trillion, America’s debt to GDP ratio is off the charts and the American public is also up to its eyeballs in debt. Under this scenario, you can bet your bottom dollar that the American establishment will try to reduce this debt overhang through a process known as monetary inflation.

"It is error alone that needs the support of government," wrote Thomas Jefferson. "Truth can stand by itself."

Thursday, December 17, 2009

You're a mean one, Mr Grinch...

Excuse me for laughing, but this "rally" in the US Dollar is a joke. As a matter of fact, it is a stretch to even call it a rally. It is a short squeeze pure and simple. Nothing has changed fundamentally for the Dollar that would warrant it being bought outright.

"There is nothing that I see on the horizon with our current Administration, political leadership or Federal Reserve officials that inspires the least bit of confidence in their ability to do the right thing for the long term prosperity of the nation. That makes me quite comfortable with gold for if I had to choose between trusting the current crop of bozos and the yellow metal, right now there is no competition whatsoever."
-Dan Norcini,

So Greece has received another debt downgrade from a "ratings agency". Aren't these the same guys that rated sub prime mortgage derivatives AAA+? Sure Greece is a mess, the whole world knows that. A sovereign debt default by the Greeks could spell a lot of trouble for the Euro folks. But buy the Dollar for safety? The currency of the largest debtor nation in the history of the world? I'd have to think a debt default by the USA would be a bit more threatening to the "World" than seeing Greece go down the drain.

So the Euro goes in the toilet and the Dollar rises. Did anybody notice that the Yen went nowhere today?

Then there are these clowns, fringe speculators, that keep insisting the Fed is going to raise interest rates "sooner than later" because the USA is "on the road to recovery". How in the hell can ANYBODY suggest the US economy is recovering with a 10% unemployment rate. An unemployment rate that is vastly understated via government accounting gimmickry. Listen to the Fed, listen to the President, listen to the Treasury Secretary. None of them really believes the country is in, or even near, a "sustainable" recovery. THE FED IS NOT GOING TO RAISE INTEREST RATES ANYTIME SOON. It is unlikely they will even raise them at ANY point next year.

Do you think The President renominates Bumbling Ben as Fed Chairman if Ben does not agree to NOT raise interest rates until AFTER the 2010 mid-term elections at the earliest? THERE IS NO WAY INTEREST RATES WILL RISE BEFORE THAT ELECTION.

Has anybody considered that this whole sequence of events since Thanksgiving has been a covert effort to bring the price of Gold down so the Chinese can buy "at a price"? These guys were running around calling the Gold market a bubble a week before the Thanksgiving Top. Reports were rampant that there had been a sea change in the Dollar futures from short to long. in the week prior to Thanksgiving. This is a con job by the BIG BOYS to get your Gold. DO NOT GIVE IT TO THEM.

Reports that the "Dollar carry trade" is unwinding are grossly exaggerated. If anything, the pros are doubling down as the Dollar gets a little bid up here. The Fed has even encouraged the carry trade by AGAIN by keeping its overnight target at 0-0.25% and pledged to keep rates low for "an extended period".

Yeah Gold took it on the chin today. A small price to pay for telling the Truth. Don't be surprised to learn a week from now that China, or India again, scooped up the remainder of the IMF Gold at these Christmas Sale prices. Wasn't Russia making a large Gold bullion purchase this week inside their country? Perhaps Russia was behind this big "markdown" in price ahead of settling their purchase. The supply of physical Gold is dwindling fast. We have all read the stories. If Gold is so hard to get your hands on, should the price be falling? Absolutely not!

The fall in Gold price here is all over now but for the cover up. Take advantage of this extension of the Gold Christmas Sale. Buy some Gold.

An Unbelievable Opportunity in Gold
Yes, there is no typo in the headline of this article. Today there is still an unbelievable opportunity to invest in gold that will disappear over the next several years as this monetary crisis deepens. Despite the general widespread sentiment of Western financial advisers that they have missed the run-up in gold and now it is too late to buy, this is not true at all. In fact, to illustrate how little people understand about the reasons to buy gold, of all my friends that I urged to buy physical gold more than six years ago when gold was less than half of its current price, I only know of one that has bought any gold, and it still took five years of my prodding, four times a year, for this single person to purchase gold. This is how incredibly misunderstood an asset gold remains today despite its enormous run higher in the past 8 years. This brief anecdote aptly illustrates the bias against gold and the foolish belief that gold is a bubble that persists today due to the massive propaganda and disinformation campaigns waged by bankers against gold. It is ironic today that public mistrust of bankers can be at such a high level at the same time that the public is still enormously willing to follow all of the bankers’ propaganda about gold. This great twist of irony illustrates just how powerful the bankers’ century long misinformation campaign about money and gold has been. Few people even understand how money is created let alone why gold is a protector of people’s rights.

Ninety-five percent of what I’ve heard financial advisers state about gold is wrong.
Ninety-five percent of what I’ve read in the public domain about gold is wrong.
Ninety-five percent of what I’ve read from the Western media about the US dollar is wrong. And ninety-five percent of the arguments I’ve read against owning gold, even when filled with supposed “facts”, are wrong. Many of the arguments against gold sound convincing, even though they are deeply flawed because erroneous data are used to produce flawed conclusions. But this is the very definition of propaganda – arguments that use erroneous data presented as “facts” to draw convincing conclusions that are highly flawed, though to the undiscerning eye, they seem quite logical. The reason that bankers have always spread so much propaganda about gold is because gold is the kryptonite of bankers. Gold allows people to preserve their wealth against their fiat currency debasement schemes.

Just as was the case with subprime mortgages when almost all of Wall Street got it wrong, the only reason anyone believes that gold is a bubble today is because people have forgotten how to think for themselves, foolishly believe that there are not hidden ulterior motives behind the beliefs spouted by Wall Street, and for some inexplicable reason, still internalize and accept all banker propaganda against gold while at they same time, they claim to distrust them. That’s why no matter how much further gold drops before this correction ends, if you don’t make the move to buy physical gold if you don’t own any, you will look back with regret five years from now and realize that you missed an unbelievable opportunity.

Wednesday, December 16, 2009

The Debt Stockade

Two weeks ago our fiscally ill-equipped, and politically over-rated President suggested that our way out of and through this economic morass was to "spend our way out of this recession".

WASHINGTON (AP) - President Barack Obama outlined new multi billion-dollar stimulus and jobs proposals Tuesday, saying the nation must continue to "spend our way out of this recession" until more Americans are back at work.

Without giving a price tag, Obama proposed a package of new spending for highway, bridge and other infrastructure projects, deeper tax breaks for small businesses and tax incentives to encourage people to make their homes more energy efficient.

Last week our Presidential Prince of Perpetuating the Government's Ponzi Scheme invited banking leaders to the White House and begged them to loan more money to Americans.

WASHINGTON -- President Barack Obama challenged top bankers Monday to explore "every responsible way" to increase lending, saying they were obliged to help after being rescued by taxpayers. He asked them to "take a third and fourth look" at their small-business lending.

Would you lend money to somebody that you thought couldn't pay it back just because the President asked you too?

If it were possible to spend our way out of debt, America would be the richest nation in the universe. But, alas, it is impossible to spend ones way out of debt by accumulating more debt. Seriously, what a stupid concept.

Prepare For The Hyperinflationary Great Depression

If the $1.2 trillion in excess reserves were to actually hit circulating currency overnight, or even in a much more gradual fashion, then hyperinflation would surely be unavoidable, not so much as function of the consumer becoming a dominant force once again, which is the deflationists' key point, but as a result of the excess liquidity of the capital markets, which is the only reason why the S&P is where it is, into Main Street. As it stands, banks' unwillingness to recreate the cheap credit bubble by lending to anyone who has a pulse and can walk is the only thing that is so far preventing America's name change to the United States of Zimbabwe.

A must read essay.

Fed Keeps ‘Extended Period’ Pledge, Sees Improvement
Dec. 16 (Bloomberg) -- The Federal Reserve repeated its pledge to keep interest rates “exceptionally low” for “an extended period” and said the economy is strengthening.

“Deterioration in the labor market is abating,” the Federal Open Market Committee said in a statement today after meeting in Washington. “Household spending appears to be expanding at a moderate rate, though it remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit.”

Policy makers led by Chairman Ben S. Bernanke, who faces a confirmation vote for a second term by the Senate Banking Committee tomorrow, met after a week of reports suggesting growth is picking up. With inflation forecast to be “subdued for some time,” investors maintained bets the Fed won’t tighten policy until August to bring down a jobless rate near a 26-year high.

“The economy has stabilized, the recession is over,” said Mickey Levy, chief economist at Bank of America in New York. “The Fed is not at the point where it is willing to say the recovery is sustainable.”

Bernanke Foes Seek to Curtail Fed
Ben Bernanke is widely expected to win Senate approval for a second term as Federal Reserve chairman, but opponents are hoping to use the debate on his nomination to curtail his autonomy at the central bank.

The Senate Banking Committee is poised to clear Mr. Bernanke's nomination on Thursday, sending it to the full Senate for a vote. Several lawmakers plan to use the proceedings to gain momentum for a bill that aims to subject the Fed's monetary-policy making to congressional audits.

The measure, crafted by Sen. Bernie Sanders (I., Vt.), mirrors one written by Rep. Ron Paul (R., Texas) that was included in the House's overhaul of financial-industry regulations passed last week.

Republican Sens. Jim DeMint of South Carolina and David Vitter of Louisiana have vowed to block Mr. Bernanke's confirmation until the full Senate considers the audit legislation, which has been co-sponsored by about a third of the Senate.

Mr. DeMint said Tuesday that he thinks the measure, which has steadily gained support among lawmakers, would pass if it came to a full Senate vote.

"It would surprise me if very many people would be willing, in public, to vote against the audit," Mr. DeMint said. "Americans don't trust the Federal Reserve," he said. It has expanded its "mission well beyond anything that was ever discussed."

Where's Our Money?

Chairman of the Federal Reserve Ben Bernanke is up for confirmation to his second term, but he has still refused to disclose where he sent $2 trillion in taxpayers' money. Send a message to your senators and ask them to make Bernanke come clean before his confirmation moves forward!

Person of the Year, My Foot! Bernanke "Failed Miserably," Chris Whalen Says
Ben Bernanke has been named Time's "Person of the Year," for his aggressive actions to stem the global financial crisis.

But does Bernanke deserve to be "Person of the Year"?

"Absolutely not," says Christopher Whalen, managing director of Institutional Risk Analytics. "On a personal level I have great sympathy for Chairman Bernanke but he's made such a pig's breakfast of this whole situation."

Unlike those who praise Bernanke for bringing the economy back from the brink of the abyss, Whalen says all he's done is "saved the dealer community" from themselves by overseeing a massive taxpayer-funded bailout of the financial community.

Bernanke "hasn't done anything for the real economy," the analyst says. "The only thing I see is inflation. For the average American the message they should take away from this year is this: Bernanke's policy has insured we'll see the purchasing power of Americans' savings dwindle."!-bernanke-%22failed-miserably%22-chris-whalen-says-391846.html?tickers=%5EDJI,%5EGSPC,SPY,DIA,TLT,TWX,GLD

The Audacity of Debt
At least someone in America isn't feeling a credit squeeze: Uncle Sam. This week Congress will vote to raise the national debt ceiling by nearly $2 trillion, to a total of $14 trillion. In this economy, everyone de-leverages except government.

It's a sign of how deep the fiscal pathologies run in this Congress that $2 trillion will buy the federal government only one year before it has to seek another debt hike—conveniently timed to come after the midterm elections. Since Democrats began running Congress again in 2007, the federal debt limit has climbed by 39%. The new hike will lift the borrowing cap by another 15%.

There is surely bipartisan blame for this government debt boom. George W. Bush approved gigantic spending increases for Medicare and bailouts. He also sponsored the first ineffective "stimulus" in February 2008—consisting of $168 billion in tax rebates and spending that depleted federal revenues in return for no economic lift.

Democrats ridiculed Mr. Bush as "the most fiscally irresponsible President in history," but then they saw him and raised. They took an $800 billion deficit and made it $1.4 trillion in 2009 and perhaps that high again in 2010. In 10 months they have approved more than $1 trillion in spending that has saved union public jobs but has done little to assist private job creation. Still to come is the multitrillion-dollar health bill and another $100 billion to $200 billion "jobs" bill.

House Narrowly Passes $290 Billion Increase in Debt Limit
The House on Wednesday approved a short-term $290 billion extension in the nation's debt ceiling, delaying a decision until February about a larger increase in the borrowing cap.

The vote comes less than a week after House Majority Leader Steny Hoyer (D., Md.) said he intended to seek a $1.8 trillion increase in the ceiling to support federal government borrowing through 2010.

A decision was made to seek the more modest increase after it became clear the larger increase may have failed to win support in the Senate.

The Senate must still take up the two-month increase, which it is expected to do next week.

House lawmakers voted by a razor-thin margin of 218-214 to pass the borrowing increase. On most major pieces of legislation, 218 votes are required for approval in the House.

Not a single Republican lawmaker voted to support the increase. They argued that increasing the debt ceiling was giving the Democratic majority and the Obama administration a license to spend more money.

The increase in the debt limit raises the total debt the federal government can hold to $12.394 billion from $12.104 billion.

Treasury officials have warned the current cap will shortly be hit, requiring the ceiling to be increased.

Increasing the debt ceiling is largely symbolic as the public debt is the accumulation of past deficits, or money already spent.

But were the U.S. to breach its debt limit, it would default on its obligations, potentially lose its prized top-shelf credit rating and have to pay significantly higher interest to its creditors

Such a scenario, albeit an extremely unlikely one, would have tremendous ramifications for the wider financial markets.

The federal budget deficit reached historic levels of $1.4 trillion in fiscal 2009. Through the first two months of fiscal 2010, the government is on pace to surpass that level.

Regulators Resist Volcker Wandering Warning of Too-Big-to-Fail
Dec. 15 (Bloomberg) -- Paul A. Volcker visited nine cities in five countries in the past eight weeks to warn that bankers and regulators “have not come anywhere close to responding with necessary vigor” to the worst economic crisis in 70 years.

“There is a lot of evidence that financial weaknesses brought us to the brink of a great depression,” Volcker, 82, said Dec. 8. at a conference in West Sussex, England. He told executives there that the changes they’ve proposed are “like a dimple.”

Two years after the start of the deepest recession since the 1930s, no U.S. or European authority has put in force a single measure that would transform the financial system, based on data compiled by Bloomberg. No rule- or law-making body is actively considering the automatic dismantling of banks that Volcker told Congress are sheltered by access to an implicit safety net.

There’s little evidence that policy makers are heeding Volcker, the former chairman of the U.S. Federal Reserve. More than 50 regulatory overhaul proposals have been submitted in the U.S. and Europe, the data compiled by Bloomberg show. Lawmakers and regulators have debated new rules for capitalization and leverage, central clearing for derivatives trading, oversight of hedge funds and ways to monitor systemic risk.

While the U.S. House of Representatives has approved a financial regulation bill, authorities in the U.S. and Europe have sidelined measures that would automatically force changes in the structure of financial companies that Bank of England Governor Mervyn King called “too important to fail.” Volcker is leading a chorus arguing for restricting the size or primary functions of financial institutions.

Gold again today thumbed it's nose at the US Dollar, and got angry. The U.S. dollar index reversed notable early losses and ended only slightly lower while treasuries reversed early gains and ended with minor losses after the fed’s semi-positive remarks about the job market increased speculation that they may indeed be starting to move towards raising interest rates around the middle of next year.

Has the Fed been right about anything yet since this global financial crisis began? So the Fed said pressure on the jobs market was abating. Yeah, and the subprime mortgage blow up would not affect the "whole" of the economy. And the Fed claims that consumer spending is "picking up". Hardly, the cost of consumer spending is the only thing picking up. Consumers are NOT buying more, they're spending more and getting less. That's the TRUTH that Gold exposes for anyone that cares to see it.

Gold is pissed, and it's intentions are clear. Gold is going to break the back of the US Federal Reserve. Gold, ultimately, is going to destroy the US Federal Reserve.

Tuesday, December 15, 2009

Christmas 2009 Gold Sale Continues. While Supplies Last.

Despite the Dollars unexpected strength today, Gold, and in particular Silver, proved most resilient. Rising Inflation is not the friend of any fiat currency. Today's Dollar strength was quite simply chicken little Dollar shorts exiting their trades.

Market psychology regarding the US Dollar has been turned on it's head lately because of the the sudden "strength" in the US jobs market reported two weeks ago. There is this rediculous notion that the Fed is going to suddenly raise interest rates. NOTHING could be further from the truth. The very last thing the Fed wants is for interest rates to rise. If they wanted interest rates to rise, why do they continue to buy Fannie Mae and Freddie Mac garbage from the banks? After all, they are buying this crap in an effort to keep interst rates on home mortgages low.

As we noted here a few days ago, the U.S. Treasury has $2 trillion in short term Treasury debt which has to be refinanced in the next 12 months. This does not include the net Treasury borrowing that will be required to fund the 2010 spending deficit. The U.S. has to borrow at least an additional $3 trillion next year to fund everything. Raising interest rates will increase the costs of borrowing money. I doubt the Fed, or the Treasury, wants to see interest rates rise anytime soon, or next year for that matter.

November's jobs numbers were hardly encouraging, no net new jobs were added to the economy. Retail sales for November were "overstated" by 50% as they were greatly influenced by the increase in the cost of gasoline. This rise in gasoline costs was confirmed by today's Producer Price Index numbers. Today's PPI numbers were a sharp increase month to month and year to year. THEY ARE INFLATIONARY any way you slice them. But they will NOT encourage the Fed to raise interest rates. This string of data has got Dollar Bears skittish, and fearing an increase in interest rates. Ain't gonna happen. The Fed will once again reiterate their 0 - 0.25 interest rate policy "for and extended time" mantra as they exit their Fed meeting tomorrow. Recall that Bumbling Ben Bernanke was quick to shoot down the thought of raising interest rates following the speculation sparked by the "unexpected" November Jobs number.

People! If the economy was so rosy, would Little Timmy Geithner have extended the TARP program until October 2010? If the economy was so rosy would the government have extended the home buyer credit, and expanded it, until April 2010?

And honestly, who gives a damn if they did raise interest rates? Are we gonna get our shorts in a bunch because the Fed raises interest rates to "gasp" 1%? Were not interest rates of one percent the cause of our financial crisis? Please, give this Fed raising rates nonsense a rest. Pure and simple, they can NOT raise them today, or next year. Higher interest rates would raise borrowing costs and squeeze corporate profits. They could send stock prices falling. And they risk derailing the economic recovery. The Great Christmas 2009 Gold Sale Continues. While Supplies Last.

"Rising prices of precious metals and other commodities are an indication of a very early stage of an endeavor to move away from paper currencies...What is fascinating is the extent to which gold still holds reign over the financial system as the ultimate source of payment."
-Alan Greenspan, 9 Sep 2009

U.S. producer prices soar 1.8% in November
Core PPI increases 0.5%; both rates come in higher than expected

Rise in wholesale inflation unlikely to last
WASHINGTON (AP) -- Evidence that the economic rebound could eventually raise inflationary pressures emerged in a report Tuesday that wholesale prices surged last month.

Most economists aren't worried, though. They think the economy remains too weak for the price increases to last.

Much of the overall increase reflected a jump in energy prices. Yet that increase will likely reverse itself. Analysts noted that oil prices have fallen about 10 percent since the start of the month.

Core Inflation may be held at bay going forward because of the floundering economy. But the jump in energy prices, particularly year over year, are unlikely to "reverse itself". Even with a recent 10% drop in the price of Oil, prices are 70% higher today than they were in December 2008. Oil prices bottomed in December 2008 at $35 a barrel. They then rose steadily over the course of this past year, peaking recently at $82 a barrel. It will be dificult for the next several months to "explain away" the year over year rise in the cost of energy because of this fact. Unless, of course Oil prices suddenly collapse over the next several weeks. That would seem unlikely, but in these rigged commodity markets, nothing can be ruled out.

Foreign demand for long-term US assets slows
WASHINGTON (AP) -- Foreign demand for long-term U.S. financial assets slowed in October and China's holdings of U.S. Treasury securities were unchanged.

Continued strong demand for U.S. debt is critical to financing America's soaring budget deficits and keeping domestic interest rates low enough to support a broad economic recovery.

Foreigners purchased $20.7 billion more in assets than they sold in October, down from a $40.7 billion increase in September, the Treasury Department said Tuesday.

Japan, the second largest holder of Treasury securities, had a total of $746.5 billion in October, down slightly from September's $751.5 billion.

The Treasury securities held by the United Kingdom dropped to $230.7 billion, from $249.3 billion, while the holdings of Hong Kong rose to $142 billion, from $132.2 billion.

Treasury securities held by oil exporting countries totaled $188.4 billion, up slightly from $185.3 billion in September. Russia's holdings totaled $122.5 billion, little changed from September's $121.8 billion.

Homebuilder sentiment index dips in December
LOS ANGELES (AP) -- Even a holiday gift from Uncle Sam couldn't brighten the homebuilders' outlook in December.

The National Association of Home Builders said Tuesday its housing market index fell by one point to 16 this month, reflecting concern that job losses and a slow economic recovery will continue to stifle demand for new homes despite the extension of a federal tax credit for buyers.

The latest reading is the lowest since June, when it fell to 15. This was also the first monthly decline since October.

The worsening outlook was something of a surprise because it came one month after the industry received a major boost from Congress and the Obama administration.

New home sales got a lift this year from low mortgage interest rates and an $8,000 federal tax credit for first-time homebuyers. The incentive was set to expire on Nov. 30, but Congress extended it through April and expanded it to include $6,500 for existing homeowners.

In the latest survey of builder confidence, the reading for current sales conditions slipped one point to 16. Traffic by prospective buyers stood at 13. And builders' outlook for sales over the next six months fell by two points to 26.

The index reflects a survey of 514 residential developers nationwide. Index readings below 50 indicate negative sentiment about the market. The last time it was above 50 was in April 2006.

Purchases of US debt slow, and homebuilder confidence revisits the bottom. This sure raises my confidence in the US Economy. The Fed better get a hoppin on raising those interest rates!

Mission Not Accomplished
By: Peter Schiff, Euro Pacific Capital, Inc.
Although Barack Obama has refrained, at least for now, from delivering triumphant speeches in a naval flight suit, there is nevertheless a strong tone of accomplishment emanating from the President and his deputies. Over the weekend, top White House economic adviser Lawrence Summers even pronounced that the recession is now over. Without hedging his bets, Summers declared that thanks to the Obama Administration's wise stewardship, economic stimuli, and emergency bailouts, another Great Depression, set up by the prior Administration, had been narrowly averted. Summers saw no impediments to the return of sustainable growth. He may as well have delivered these remarks from the deck of an aircraft carrier.

I hate to shoot down these high-flying expectations, but the economy is not improving. All that has changed is that we are now more indebted to foreign creditors, with even less to show for it. Washington's current policies have once again deferred the fundamental, market-driven reforms needed to redirect us onto a sustainable path. Instead, through aggressive monetary and fiscal stimuli, we are trying to re-inflate a balloon that is full of holes. This was the Bush Administration's exact response to the 2002 recession. It's shocking how few observers note the repeating pattern, especially the fact that each crash is worse than the last.

Obama's claim of success largely derives from the slowing tally of job losses, the seemingly renewed strength in the financial system, the pickup in home sales and home prices, and the positive GDP figures. But these 'achievements' fall apart under close examination.

Some Key Numbers To Watch in Gold
By: Rick Ackerman, Rick's Picks
This has been a great year for gold, but investors can’t seem to shake the jitters they acquired in 2008, when prices plunged 35% between March and October after poking briefly above $1000 for the first time. Is last week’s 10% selloff the beginning of another murderous correction? We don’t think so, although it could take a few more weeks for prices to consolidate for the next strong push. But more immediately, we expect the Comex February contract to ease to a minimum $1090 in the days ahead. That would represent a $38 decline from yesterday’s settlement price and bring the total correction to slightly more than 11 percent.

Technical considerations aside, there is nothing in the news to suggest that any of the factors driving gold’s spectacular rise have changed. Mostly, it’s a case of large dollar reserves weighing on foreign holders who would rather be holding something else. They will continue to exchange those dollars for gold in particular, notwithstanding occasional news stories that would have us believe that the dollar and U.S. Treasury debt represent a safe haven in a crisis. What they represent is a carry-trade speculation that sometimes unwinds precipitously to the detriment of those who have borrowed dollars. The resulting short-squeeze effect has the ability to keep an otherwise leaden dollar buoyant, at least for short stretches, but the resulting surges in the dollar should not be confused with signs of strength.

This dynamic seems to be what is troubling gold bulls the most. Although they can rattle off a dozen good reasons why the price of gold is absolutely likely to continue higher, the dollar side of the equation can seem relatively mysterious. There are some pretty good technicians out there who are bullish on the dollar, and we ourselves have made the case that short-squeeze forces could cause the dollar to turn unnaturally strong. For what it’s worth, however, we see more bluster than strength in the Dollar Index’s rally from early December’s lows. Actually, Friday’s sharp thrust showed a trace of chicken-heartedness in failing to take out early November’s peak at 76.82 (see chart above). Serious rallies do not shy from such challenges, and that’s why we think this rally, even though it left the launching pad a week ago in a shower of sparks, is not destined for greatness.

Gold retested Friday's lows this morning and vaulted off them on news of the unexpectedly high PPI numbers. This, again, in the face of a rising Dollar. I continue to believe that the 38% retracement level in Gold at 1104 is key support in this current reaction. The Fed is most likely to ignore yesterdays PPI report [and Wed. mornings CPI report] and once again reaffirm their intent to hold interest rates near zero for "an extended period". This reaffirmation should put a little pep back in Gold's step heading into the close of 2009.

Monday, December 14, 2009

Somebody Call The Cops!

-Ludwig von Mises, Austrian Economist (1881- 1973)

Gold and Silver have both endured a constructive consolidating reaction over the past week. Both have retraced almost 38% of their most recent up legs. They now appear poised to resume their respective marches higher. Silver took the lead today, and I suspect that in the very near-term Silver may be the leader as these two Precious Metals resume their up trends. Watch the Gold to Silver Ratio [GSR] closely. Should the GSR fall below its 50Day moving average, expect a quick acceleration in the price of Silver.

With respect to seasonality, Gold and Silver have historically been strong in the second half of December. Also, Triple Witching options expiration this week should open the door to new advances in the Precious Metals. Dip buyers, now is the time to act. Traders with short positions should tighten their stops here, and be thankful for the bone they were tossed.

Senate passes $1.1-trillion spending bill
Washington - The Senate on Sunday passed a $1.1-trillion spending bill with increased budgets for major sections of the federal government, including health, education, law enforcement and veterans programs.

The spending bill passed Sunday consists of $447 billion for departments' operating budgets and about $650 billion in mandatory payments for federal benefit programs such as Medicare and Medicaid. Those programs under immediate control of Congress would see increases of about 10%.

The FBI gets $7.9 billion, a $680-million increase over 2009; the Veterans Health Administration budget becomes $45.1 billion, from $41 billion; and the National Institutes of Health receives $31 billion, a $692-million increase.

All but three Democrats voted for the bill. All but three Republicans opposed it.

The bill also approves a 2% pay increase for federal workers.,0,3675856.story

A $1.1 TRILLION spending bill is passed by The Senate of a bankrupt nation. Wonderful! And with a 2% pay raise for federal workers, but NO cost of living raise for the nations senior citizens. What an insult. Where is the outrage?

Harry Reid demands that China fix its economic policies
The U.S.-China relationship is a carefully calibrated dance, especially in this the first year of the Obama administration. That’s why one has to wonder what prompted Senate Majority Leader Harry Reid to write a scathing letter to Chinese President Hu Jintao calling on China to move faster to reform its economic policies.

In the letter, sent to Chinese and U.S. officials Wednesday, Reid lashes out at China on two issues, its still-inflexible currency and its failure to do more to protect intellectual property rights.

"There is widespread agreement that China’s currency policy is a major source of imbalance in our relationship– indeed, in the global economy. The de facto peg is set at a level that for many years has not reflected economic reality," Reid wrote. "Your currency policy is not in the long-term interest of China: it creates inflationary pressure, promotes over-investment, and feeds asset bubbles within China. In short, it is one of the most serious economic problems in the world today."
Harry, the US Dollar is "one of the most serious economic problems in the world today." I don't believe Harry understands that IF China allows it's currency to will force our Dollar to fall further, faster. The only thing holding the Dollar above water right now is the Chinese
unwillingness to let it fall by allowing their currency, the Juan, to rise.

Goldman Fueled AIG Gambles
Goldman originated or bought protection from AIG on about $33 billion of the $80 billion of U.S. mortgage assets that AIG insured during the housing boom. That is roughly twice as much as Société Générale and Merrill Lynch, the banks with the biggest exposure to AIG after Goldman, according an analysis of ratings-firm reports and an internal AIG document that details several financial firms' roles in the transactions.

In Goldman's biggest deal, it acted as a middleman between AIG and banks, taking on the risk of as much as $14 billion of mortgage-related investments. Then Goldman insured that risk with one trading partner—AIG, according to the Journal's analysis and people familiar with the trades.

The trades yielded Goldman less than $50 million in profits, which were mostly booked from 2004 to 2006, according to a person familiar with the matter. But they piled risks onto AIG's books, which later came to haunt the insurer and Goldman. The trades also gave Goldman a unique window into AIG's exposure to losses on securities linked to mortgages.

When the federal government bailed out the insurer, Goldman avoided losses on its trades with AIG covering a total of $22 billion in assets.

A Goldman spokesman says that up until AIG was rescued by the government, the insurer "was viewed as one of the most sophisticated financial counterparties in the world. It wasn't until the government intervened in September 2008 that the full extent of AIG's problems became apparent."

"What is lost in the discussion is that AIG assumed billions of dollars in risk it was unable to manage," the Goldman spokesman added.

In light of this "revelation", it is hard to believe Goldman Sachs was not aware of the potential risks AIG had taken on, and the threat these risks posed to the financial system. Somebody, please, where are the prosecutors? This is a crime scene that needs to be revisited.

Paul Introduces Legislation Requiring Congressional Approval of Treasury Gold Dealings
Washington, DC: Congressman Ron Paul of Texas this week introduced legislation designed to curb the ability of the President or the Treasury Secretary to manipulate worldwide gold prices. The "Monetary Freedom and Accountability Act" restores proper congressional authority over gold policy by requiring that body to vote its approval before the President or Secretary buys or sells gold.

"The Constitution grants authority over monetary policy specifically to Congress alone, not to the executive or the administration," Paul stated. "Yet Congress has neglected its duty for decades, and now our foolish fiat money system is run without challenge exclusively by unelected Treasury and Fed bureaucrats. As a result, the Treasury has been able to engage in the buying and selling of gold to manipulate the worldwide market price. Gold is very important to markets and investors in America and across the globe, and Congress should not allow the administration to interfere in the gold market behind closed doors."

"The Fed wants all of us to think the stock market is not overvalued, and that credit and monetary expansion can create lasting prosperity," Paul concluded. "My bill will make it harder for the Fed and the Treasury to manipulate gold prices, which should always serve as an unbiased indicator of the true health of world markets."

It's high time Congress started doing its job again, why is legislation necessary to put Congress back to work if the job is given to them, and ONLY them, by the US Constitution. Don't all these knuckleheads up on Capitol Hill swear to uphold The Constitution when they take their oath of office? I wonder when last any of them has read The Constitution? Thank you Congressman Paul.

Obama's Big Sellout [MUST READ!]
By MATT TAIBBI, Rolling Stone
The president has packed his economic team with Wall Street insiders intent on turning the bailout into an all-out giveaway.

Barack Obama ran for president as a man of the people, standing up to Wall Street as the global economy melted down in that fateful fall of 2008. He pushed a tax plan to soak the rich, ripped NAFTA for hurting the middle class and tore into John McCain for supporting a bankruptcy bill that sided with wealthy bankers "at the expense of hardworking Americans." Obama may not have run to the left of Samuel Gompers or Cesar Chavez, but it's not like you saw him on the campaign trail flanked by bankers from Citigroup and Goldman Sachs. What inspired supporters who pushed him to his historic win was the sense that a genuine outsider was finally breaking into an exclusive club, that walls were being torn down, that things were, for lack of a better or more specific term, changing.

Then he got elected.

What's taken place in the year since Obama won the presidency has turned out to be one of the most dramatic political about-faces in our history. Elected in the midst of a crushing economic crisis brought on by a decade of orgiastic deregulation and unchecked greed, Obama had a clear mandate to rein in Wall Street and remake the entire structure of the American economy. What he did instead was ship even his most marginally progressive campaign advisers off to various bureaucratic Siberias, while packing the key economic positions in his White House with the very people who caused the crisis in the first place. This new team of bubble-fattened ex-bankers and laissez-faire intellectuals then proceeded to sell us all out, instituting a massive, trickle-up bailout and systematically gutting regulatory reform from the inside.

If after reading this expose you are not shaking with rage, then YOU are a Zombie. Matt Taibbi has out done himself with this revelatory essay. PLEASE take the time to read it in its entirety, and then pass it along to friends and family. Barack Obama, ...the man who sold his country down the river.

Friday, December 11, 2009

Rising Gas Prices Ignite Euphoria

ONLY IN AMERICA could a 9.7% increase in the cost of a gallon of gasoline create euphoria in the financial news media. Absent gasoline sales, November's retail sales figure would be CUT IN HALF.

From the U.S. Department of Commerce:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for November, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $352.1 billion, an increase of 1.3 percent (±0.5%) from the previous month and 1.9 percent (±0.5%) above November 2008. Total sales for the September through November 2009 period were down 2.1 percent (±0.3%) from the same period a year ago. The September to October 2009 percent change was revised from +1.4 percent (±0.5%) to +1.1 percent (±0.2%).

Retail trade sales were up 1.4 percent (±0.5%) from October 2009 and 2.2 percent (±0.5%) above last year. Building material and garden equipment and supplies dealers were down 9.3 percent (±1.8%) from November 2008, but gasoline stations sales were up 8.9% (±1.3%) from last year.

Using data from the U.S. Census Bureau news release linked above, and data from I have deciphered that ONE HALF of the "unexpected rise" in November Retail Sales is directly attributable to a 9.7% increase in the cost of gasoline from October 1, 2009 to November 1, 2009.

If you subtract the increase in gasoline station sales from October '09 to November '09 from the total retail sales number for the month of November '09, retail sales for the month of November '09 ONLY grew 0.7% month to month as opposed to the headline number of +1.3% reported widely today by the financial news media.


Economic reports raise hopes for global recovery
WASHINGTON (AP) -- Just in time for Christmas, the fragile economic recovery is showing signs of strengthening: Consumers are spending, companies are rebuilding stockpiles and Chinese exports are mounting a comeback.

Data released Friday eased some worries about Americans' willingness to spend this holiday season. But stores remain worried that they may have to offer deeper discounts than planned, perhaps as early as this weekend, because of mediocre sales so far.

That's because the only thing consumers spent a great deal more on last month was gasoline. I fail to see how spending more on gasoline shows Americans are eager to spend this holiday season.

Shoppers crowded malls for deep discounts over Thanksgiving weekend, but many consumers have been slow to return. Some analysts say the industry could suffer its second straight year of holiday-season sales declines.

The two weeks since Thanksgiving have been especially tepid. According to ShopperTrak, a research firm that tracks sales and traffic, sales slipped 0.3 percent for the week that ended Dec. 5 compared with the year-ago period. And they plummeted 18 percent compared with the previous week.

Officials at ShopperTrak estimated Friday that business did not improve much this week.

Oh..., I guess that Americans are not so eager to spend after all. Unless of course you count spending on gasoline. They spent 6% more on that in November than they did in October.

Also sparking optimism was a report Friday that U.S. businesses unexpectedly increased their inventories in October, halting a slide of 13 consecutive declines. The small gain raised hopes that businesses will restock their depleted shelves, boost factory production and help bolster the recovery.

Correct me if I'm wrong, but don't U.S. businesses increase their inventories ANNUALLY in October in expectation of "increased sales activity" in advance of Christmas? 50% of American retail's annual profits come from sales between Thanksgiving and Christmas...or so it is hoped.

China's trade figures for November were the best in a year, with exports falling just 1.2 percent from the same month of 2008. Retail sales, factory output and investment also saw robust growth last month.

Asian markets rallied as investors were heartened by the signs of rising global demand that could lift other economies in the region as consumers in the U.S. and elsewhere begin spending more after months of holding back.

"...the best in a year, with exports falling just 1.2 percent from the same month of 2008." Since when is falling exports good news? I guess when they fell less than the month before, LOL! I bet somewhere in the financial media this statistic is being reported as "growth" in Chinese exports.

World markets climb as China's exports improve
The Associated Press - Louise Watt - ‎13 hours ago‎
LONDON — European markets followed Asian stocks higher Friday as a big improvement in China's exports pointed to rising global demand that could lift other ...

That didn't take google long to find. Are financial news headlines meant to deceive? China's exports dropped 13.8% in October, yet we are led to believe they improved. "...a big improvement..." They DROPPED 13.8%!!!


Retail sales, at best, are bouncing along the bottom, and going nowhere fast. Government statistics are reported by the financial news media as purposely misleading in an effort to stoke confidence and encourage the hopes of a floundering nation.

Nowhere in the AP story above from Yahoo Finance was there mention that Total sales for the September through November 2009 period were down 2.1 percent (±0.3%) from the same period a year ago. Nor was there any mention that Octobers retail sales numbers were revised down 0.3% fro +1.4% down to +1.1%. Of course not, why rain on a retail sales parade?

And lost in today's financial news media frenzy over these magnificent retail sales figures for the month of November is the fact that the price of gasoline rose 9.7% just in the month of October alone. Who said there is no inflation?

I bet you never knew rising gas prices could be so exciting...

Gold - 10% off - While Supplies Last