Tuesday, December 1, 2009

The Ultimate Safe-Haven Is Gold

“The real problem with government is not the deficit. The real problem with government is the amount of our money that it spends.”
-Milton Friedman

Gold broke higher overnight from a tall consolidative ascending triangle at 1180. This breakout projects to 1222, and would appear likely as this short consolidation worked a bit of the froth out of the market up at this level. Silver appears to be still held in check under 19...a break above 19 in Silver may well launch all the Precious Metals to points unknown.

[As I was finishing up this post, Silver PLOWED through 19 at 11:18AM est. Hang on!"

I fully expect all the Precious Metals to grind higher into Christmas as fund managers clamour for the metals to show exposure to the best performing sector of the year on their year end statements. The safe-haven status of the Dollar may have been proven benign last Friday, as traders quickly dumped it on strength for the safety of Gold as events unfolded in Dubai. 75 on the US Dollar Index would now appear as formidable resistance.

Dubai Panic Provides Stress Test for Gold
By: Rick Ackerman, Rick's Picks
Gold’s spectacular swoon on Friday provided fresh evidence that a red-hot bull market is in no imminent danger of cooling off. The initial plunge was orchestrated by bullion bankers and other promiscuous borrowers of gold when some unsettling financial news out of Dubai triggered a misbegotten panic into, of all things, dollars. Smelling blood, gold shorts pulled their bids when it looked as though the dollar was about to soar. Alas, the buck barely got off the launching pad before gravity re-asserted itself with a vengeance. The rally was so short-lived and feeble that it will have significantly diminished the dollar’s bizarre status as a “safe haven.” That in turn will make it harder in the future for the central banks of Europe, Japan and the U.S. to kick off an inevitable dollar-support operation with some “news” annnouncement designed to promote a short squeeze. Conversely, gold’s powerful, market-driven surge will now be even more difficult for officialdom to suppress, since Friday’s rebound was so swift and steep as to purge all doubts that bulls are overwhelmingly in charge.

The day is surely coming when financial panic seeks a safe haven, not in U.S. dollars or Treasury paper, but in bullion.

Dubai Woes Give China Chance to Buy Oil, Gold: Report
BEIJING (Reuters) - Dubai's debt crisis could be China's opportunity to snap up gold and oil assets, a senior Chinese official said in remarks published on Monday.

No Chinese banks have yet reported exposure to debt from Dubai World, a flagship firm that last week said it was seeking to delay debt payments by six months. Some Chinese real estate and construction firms have limited exposure to projects in the emirate, state television reported this weekend.

China's $2.27 trillion in foreign exchange reserves are mostly parked in U.S. treasuries, despite calls from some in China to invest the reserves in oil and other natural resources that the fast-growing Chinese economy will need in future.

While the impact of the Dubai crisis on the global economy and on China was not known yet, it would last a while at the very least, Ji Xiaonan, who chairs the supervisory board for big state-owned companies under the State Council's state assets commission, told the Economic Information Daily.

"That could give China a buying opportunity to put some forex reserves into gold or oil reserves," Ji was quoted as saying by the paper, which is widely read by Chinese officials.


Exit Equities for Cash, Bonds or Gold?
By: Peter Cooper, Arabian Money
A strong correction in financial markets would therefore seem unavoidable as the liquidity shock of the stimulus shots wears off. Last Friday the global markets showed a microcosm of what to expect in a big sell-off.

The dollar rallied, bonds rose sharply and oil and gold sold off. But it took only a matter of a couple of hours for a sharp fall in the gold price to attract new buyers and almost restore the price. It seems equity sellers took their dollars and immediately bought gold.

In that case investors cashing out of equities might be well advised to follow this new trend. For in a world where the ability of governments to repay debt starts to be called into question, or actually stalls in the case of Dubai World, then holding wealth in any currency is an issue, and the ultimate safe haven is gold.


Madmen, Gamblers, Alcoholics, the US Dollar and Gold
by Ron Hera
The notion that a central authority, even one equipped with sophisticated computer models, can successfully substitute a mathematically-based view from on high for the individual judgments of millions of businesses, entrepreneurs, and consumers across countless regions and industries is not merely the height of hubris but quite simply mad. Fundamentally, it is entrepreneurs deploying private capital, not bankers or economists that create the products, services, business, and jobs that make up the economy. Whether for the sake of social welfare or for the purposes of monetary policy, intervention in the free market invariably distorts the distribution of wealth, causes a net reduction of wealth for society as a whole, and misdirects entrepreneurs into activities eventually revealed as uneconomic. Perhaps the best argument for the futility of central bank monetary policy is that of Federal Reserve Chairman Ben Shalom Bernanke, Ph.D., who said to graduates of the Boston College School of Law on May 22, 2009:

“As an economist and policymaker, I have plenty of experience in trying to foretell the future, because policy decisions inevitably involve projections of how alternative policy choices will influence the future course of the economy. The Federal Reserve, therefore, devotes substantial resources to economic forecasting. Likewise, individual investors and businesses have strong financial incentives to try to anticipate how the economy will evolve. With so much at stake, you will not be surprised to know that, over the years, many very smart people have applied the most sophisticated statistical and modeling tools available to try to better divine the economic future. But the results, unfortunately, have more often than not been underwhelming. Like weather forecasters, economic forecasters must deal with a system that is extraordinarily complex, that is subject to random shocks, and about which our data and understanding will always be imperfect. In some ways, predicting the economy is even more difficult than forecasting the weather, because an economy is not made up of molecules whose behavior is subject to the laws of physics, but rather of human beings who are themselves thinking about the future and whose behavior may be influenced by the forecasts that they or others make.”

Mr. Bernanke’s comments are not remarkable only for their clarity and candor, or because they are a stark admission of the failure of central bank monetary policy, but because they echo the founding principles of the Austrian school of economics. In fact, Mr. Bernanke provides excellent reasons for the repeal of the US Federal Reserve Act. Despite common misconceptions of economics as a branch of mathematics or as a hard science, economics is in fact a social science, similar to psychology. For example, when we speak of economic incentives we are referring to the manipulation of human behavior through artificial means to achieve policy objectives such as increasing consumer spending, just as pairing the sound of a bell with the introduction of dog food will produce dogs that salivate at the sound of a bell when no food is present (of course the salivation response can eventually be extinguished if no food is provided for an extended period of time).


The Catastrophic End of Market Manipulation
By Bix Weir
Market manipulation is very easy to implement with computer trading programs that execute millions of transactions back and forth in a matter of seconds steering markets wherever the programmer points his mouse. With no market oversight from the SEC or CFTC and an unlimited checkbook at the Federal Reserve the power to rig markets with computers is awesome.

To understand the full scope of manipulation funds available to Obama’s economic team it helps to understand how much money the government/FED has pledged in its various programs...many people believe it was only the $700B TARP funds but according to the FDIC the number is closer to $14 TRILLION as of 1st quarter 2009:

A Year in Bank Supervision: 2008 and a few of it’s Lessons

The real fraud here lies within the insider trading and "front running" of all this money at the point of execution for the huge market orders. The New York Federal Reserve executes these trades through their banking cabal conspirators called "Primary Dealers". By knowing the FED moves ahead of time and actually making the trades for the FED these insider banks have massively goosed their profits.

This year we have witnessed first hand the problem with planned economies and free market manipulation. Tim Geithner, Lawrence Summers and Austan Goolsbee have tried to inflate a contracting economy by using massive manipulation and deception across all markets and have failed miserably. What they have done is further transferred the wealth of our nation from the poor and middle class to the rich bankers that caused the mess in the first place. What they will see very soon is the “blowback” from their market manipulation project with the total destruction of our global economic system.

The Obama Administration Economic Team should be tried in court by a “jury of their peers” for the high crimes of Free Market Manipulation and may god have mercy on their souls.

What is left of the value of a one-dollar bill?
Chinese-American named Won Park has found the answer.

How much do you know about the “Greeks”?
No matter what the investment, an investor needs to know and fully understand the potential risks of the investment prior to committing capital to that investment. In the options market, the Greeks define and quantify the risks of your position before you commit to the investment. Understanding the Greeks is a must for proper risk management. Further, the Greeks can also help you identify and select not only the proper strategy to fit the opportunity you selected, but also which specific options to use to create that specific strategy.

Today you need to watch this complimentary seminar covering the Greeks…

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