Wednesday, December 14, 2011

The message is always the same: gold is a terrible idea whenever paper assets are in crisis.

I think it’s a bunch of bullshit myself
But I tell you this man, I tell you this
I don’t know what’s gonna happen man
But I wanna have my kicks before the whole shit house goes up in flames

 -Jim Morrison, The Doors, "Roadhouse Blues" Live

"Nor can private counter parties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise."

Alan Greenspan, Congressional Testimony on Regulation of OTC Derivatives, 24 July 1998

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
Thomas Jefferson, (Attributed)
3rd president of US (1743 - 1826)
"Technicals" don't matter.  They only matter, and even then only slightly, in a functioning market environment.  This market environment is not functioning; it's not even really a market, is it?  All of you who are watching the Fed paint a chart are fools.  You see a chart with a bunch of lines drawn on it to try to make it mean something; I see a sign at the PM store that says "SALE!"
 -SWRichmond, ZeroHedge comments

"Here we go again is an old phrase, but so appropriate to appreciate at this point in time. How many times have gold and silver been taken to the cleaners only to come back and make new highs? How many times has the death of the bull market been called by various pundits? This correction will end up like all the others." -Bill Murphy, GATA

Money is Fleeing the US Financial System
Eric KingKingWorldNews.com
With growing concerns about the safety of the US financial system, today King World News interviewed internationally followed Martin Armstrong, founder and former head of Princeton Economics International Ltd..  At one point Armstrong’s firm rose to be perhaps the largest multinational corporate advisor in the world.  Armstrong had this to say about corruption in the system: “Given the corruption in the legal system, the regulators...The SEC, the CFTC, they’ve never prevented a single thing, nothing.  Madoff, MF Global, you name it they haven’t done it.  So I don’t know what we are paying these people for.  Corzine, I know from (an) inside source at the SEC, there were going to be rules to prevent them from doing exactly what they are doing.”

“Corzine went down (to the SEC), met with Mary Schapiro, she personally revoked it.  That’s information I have from inside the SEC.  So the whole thing is a joke.  When I speak to people on the (Capitol) Hill, they even say the SEC is bought and paid for.  If they (Congress) ask them (the SEC) for documentation, they resist.  Just like the Fed resisted opening the books to Ron Paul.

These are unelected government agencies.  They do not play ball with the elected side of government.  It’s a contentious relationship.  This is not one government and we should understand what the structure really is.”

When asked about a communication he received regarding the MF Global situation, Armstrong stated, “Largely because of my comments on this subject, I received an email (from the CME) saying that the CME is now considering ponying up $550 million to help the investors to bring them back up to at least an 88% level instead of the 72% level from the court.

Legally the CME should bring it up to 100% and then they become the creditor against the banks.  They probably don’t have the money.  But the banks should be giving back all of the money they took from MF Global.  They know what the deal is, they know it was client’s assets....

“So I think the CME is between a rock and a hard place, but if they don’t do something you are talking about the entire US financial system is something equivalent to some third world entity.”

When asked why the CME was communicating with him, Armstrong replied, “Apparently our influence is still very huge and there were some members (of the CME) that came to the conference.  Our conferences tend to be well attended and like mini UN’s.

The question (at the conference) was, ‘Is money safe in the United States?’  The response was, ‘Unless you get some sort of written authority from whoever you are dealing with that they are not going to engage in this kind of activity, you are going to have to go to some other place where it’s not allowed.’  At least in London they have to have a signed agreement.  They don’t in New York.

They (investors) have been moving money dramatically from New York.  You don’t want your money at a place that’s trading right now...It’s just crazy.  What’s going on around the world, everybody is really concerned at practically every level and now we have MF Global, which is bringing into question the validity of the US financial system.” 
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Noted at the Lemetropole Cafe today:
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December gold open interest

Hi Bill,
Not sure if this is on you radar.
Dec OI had been falling into Dec 7th down to 860 contracts as we would expect. But then something interesting has been happening, the OI has been rising daily since Dec 8th. Today the CMEGROUP report shows 2034 open interest as of yesterday. If I had to guess, most of these new contracts are going to be for delivery. According to Kitco, lease rates bottomed on the 7th. Is it possible the gold is getting leased and dumped onto the market during thin trading and then bought back at lower prices for Dec delivery. If that was the case that gold could be delivered back to the CB with little risk the CB losing their leased gold (COMEX default for example). Since Dec 7th gold has dropped nearly $100. Interesting to see if the rising Dec OI continues.
Rob M.

James Mc is on top of it…

"Corzine's Bottom" the new "Brown's Bottom" "?

Bill,
As always the corrupt CME never lowers margins whenever gold and silver prices are collapsing. At today's $28.53 low for silver the futures leverage is now a paltry

5.83-1. The gold leverage has shrunk to 13.66-1. The high margin/ low leverage not only serves the interest of cabal shorts unable to deliver physical, but probably exacerbates selling by former MF Global clients already in crisis. The silver leverage is as low now as low as any time that I can find in available data. The wicked and corrupt nature of derivative markets has reached Machiavellian proportions. Judging by their terror of gold rising there must be something BIG right around the corner.

It is no coincidence that whenever ANY major financial institution or brokerage collapses the result is ALWAYS a subsequent collapse in precious metals, along with commodities in general. Gold has plummeted 10% since the MF crisis began the weekend of October 28th, much of it the past 3 days. When failed trading firms are taken over by cabal players paper derivatives are always sold to create an illusion of PM weakness. EVERY single collapse, including the Asian crisis, LTCM, Enron, Refco, Lehman, AIG, EU nations, and MF Global has resulted in gold and silver getting hammered. The message is always the same: gold is a terrible idea whenever paper assets are in crisis.

Savvy investors worldwide are now scooping up the incredible physical PM bargains being afforded by a corrupt derivatives scheme. The majority of U.S. citizens will remain clueless to the end. That's the power of the MSM inflation expectation message. If the viciousness of this attack is any indication 2012 should be a really big year for physical PM owners. Sub-$1,600 gold will one day look as ridiculous as the 1999 "Brown's Bottom" at $250. Maybe this one will be known as Corzine's Bottom. It fits, Corzine is a proven ass.
James Mc
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This is the reason for the ferocity of this sell off in my judgement, coupled of course with a general liquidation in stocks and other 'risk assets.'

Central Banks were leasing gold for record low rates to the bullion banks like JP Morgan and HSBC. Silver lease rates also fell in sympathy.

As you may recall,
LIBOR - GOFO (Gold Forward Offered Rates) = Lease Rate.

As can be seen from the last two charts showing the LIBOR GOFO spread, the lease rates reported in the press are a derived rate and actually represent the amount that can be earned from the gold carry trade.

I do not like to look at just the Lease Rate which is really just a calculated derivate, but at the two major components. Which one is driving the change in the spread, and why? As an aside, I do not think that the major bullion banks finance their gold leases through LIBOR anymore in these days of excess reserves and quantitative easing, but it is a useful reference for most others. This tends to put a little more emphasis on the nominal level of the Gold Forwards Offered Rate. But this is just my opinion and I could be wrong.
There is an obvious 'chicken and egg' argument embedded in this phenomenon. For example, some might say that the high spread between GOFO and LIBOR makes it difficult for those who wish to short gold to obtain it since the price one pays to finance the deal is quite high. I think this is Tom McClellan's hypothesis as well as some others.

This is an interesting theory, because it seems to suggest that without the ability to borrow gold from central bank holdings and perhaps those others who can lease in large numbers like ETFs and not the spot market, shorting gold is not possible at these prices and the natural tendency of the clearing price is to stay the same or to increase. This suggests more manipulation than market demand and supply.

I tend to think that the spreads widen as the bullion banks must borrow more heavily to support their short positions with some sort of physical backing. When the pain of the spread becomes too great, they have the incentive to throw contracts at the paper price in a desperate effort to break the price and relieve the short term pressures. The 'informational campaigns' that surround these bear raids by the demimonde seems to support this hypothesis I think. The central banks are notorious for rescuing Primary Dealers who are in trouble.

I would tend to categorize this latter theory of mine as the LIBOR-Gold Forwards Pain Index.

But unfortunately I can see both sides of these theories. I would just like to know who is motivated by leasing their gold in order to knock the price for some reason. I know of only two groups like that: the fiat central banks in order to help the bullion banks, and perhaps unallocated ETFs that do not particularly care what the price of gold may be as long as they can collect their fees.

"Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise."

Alan Greenspan, Congressional Testimony on Regulation of OTC Derivatives, 24 July 1998
The bullion banks use this leased gold as collateral for more fractional paper short sales, breaking the price trend and forcing liquidation. Their sales are done in the so-called Dr. Evil manner, of dumping large numbers of contracts on light markets.

There is also the liquidation factor from the collapse of MF Global, and the reluctance of small specs to engage in the futures markets at all because of capital risk and lack of confidence.

This allows the bullion banks to arrange for a big price swing that allows them to cover their short positions and also obtain other assets on the cheap such as mining companies.

Since the leased gold must be returned after a short term period, this is almost always a trading gambit, as opposed to outright net gold sales by the central banks which have virtually stopped in the past couple of years.

This at least is my take on what is happening. If this is correct we could see a repeat of the big market bottom and deep lows with a spring back as we have seen several times before. And the magnitude of these swings may continue to increase as the sorcerer's apprentices continue to meddle with the real economy.

If the CFTC were to do their jobs, as the Europeans had done with banks like Citigroup who employed their 'Dr. Evil' trading strategy there, we would not have this type of harmful volatility in key commodity markets.

On these dips one would imagine that long term buyers are taking advantage of the low prices to acquire bullion and store it as a future hedge. As the bullion banks seek to return the borrowed gold, their demand attracts the momentum trading hedge funds that are now selling, so we see a big rally in the metals. The big rally in the metals causes the LIBOR - Gold Forwards pain to increase, and so the banks cry to be rescued. And so on it goes.

The obvious artificiality of these price swings obscures the efficient allocation of capital, and the orderly operation of markets, not only in metals but in key commodities significant to the real economy. The CFTC and SEC apparently have the tools to correct this, but they choose not to do anything constructive for whatever reasons. Cronyism and Congressional opposition are two possible motives.

This is not dissimilar from the gaming of the energy markets that Enron made infamous before its collapse. Financial structures based on this sort of artificial con game always collapse, given time and the latitude for their greed made possible by regulatory capture.

That is why the public should have no patience with the commodity market makers like MF Global, a TBTF bank, and even an exchange when they fail because of reckless gambling and market manipulation.

As for any complicit central bankers, regulators, and politicians, justice must be restored and prosecutions made in order to halt the growth of the moral hazard of complicity in fraud and insider trading that is now endemic, if not epidemic...

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Posted by Dominique de Kevelioc de Bailleul on Dec 13, 2011

UK-based International Business Times reports China’s gold imports spiking 50 percent in October from September, and soaring 4,000 percent from October of a year ago, to an all-time single-month record high of 85.7 tons. Sign-up for my 100% FREE Alerts

Though India’s anticipated record gold imports of a 1,000 tons this year could slow due to signs of slowing jewelry demand from a recent 20.3 percent crash in the rupee, since August, investors can no doubt count on China to, not only take over the gold market slack, but soon-to-dominate the New York-London gold cartel

As a reminder to evolving drama in the gold market, WikiLeaks exposed China’s plan to break from its sadistic recycling of trade surpluses into U.S. Treasuries, a shift in strategy by Beijing that’s prompted other Asian nations to follow suit. See BER article, WikiLeaks Drops Bombshell on gold Market, GATA right again!

Source: U.S. embassy cable – 09BEIJING1134

According to China’s National Foreign Exchanges Administration, China’s gold reserves have recently increased. Currently, the majority of its gold reserves have been located in the United States and European countries. The U.S. and Europe have always suppressed the rising price of gold. They intend to weaken gold’s function as an international reserve currency. They don’t want to see other countries turning to gold reserves instead of the U.S. dollar or euro. Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar’s role as the international reserve currency. China’s increased gold reserves will thus act as a model and lead other countries toward reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the renminbi.

And the promotion of the "internationalization" of the renminbi has noticeably accelerated this year. On a year-over-year basis, the amount and rate of increase of gold purchases by the People’s Republic of China is no less impressive than the $3.2 trillion of foreign reserves slated to be deployed by Beijing.

IB Times quotes Credit Suisse analysts Thomas Kendall, who sees "Chinese imports of the yellow metal hitting 470-490 tonnes for the full year, up from last year’s 245 tonnes," a near-double spike in volume anticipated at the close of 2011.

And it appears that the Chinese are patient when accumulating gold, outside of its steady purchases from its own China-based mining industry, buying on opportunistic dips created by periodic hedge funds selling. In fact, the notorious sell offs in the gold market plays into the hands of the masters of Sun Tzu (1), as September’s swoon from one large hedge fund manager provided attractive prices for Beijing’s rapid gold accumulation program.

"Analysts said the [gold] buying, led by emerging market central banks intent on diversifying their growing foreign exchange reserves, helped explain gold’s rebound from a low of $1,534 a troy in September as large hedge funds such as Paulson & Co were forced to sell some gold to cover losses elsewhere," stated the Financial Times of London on Nov. 17.

After dominating the world economy in production and exports of the past two decades, Beijing’s next Mao-like ‘Great Leap Forward’ enlists 100s of million of China’s middle class in a joint venture with its central bank to now wrest control of the gold market away from New York and London.

As the world witnessed the powerful rise of China, post Tiananmen Square, the power of 1.3 billion Chinese, encouraged and mobilized by a centrally-commanded political structure to achieve an objective vital to its national security can produce awesome results. As the WikiLeaks cable exposes, today, Beijing is out to break the gold cartel with its awesome population might.

Since 2002, after lifting the 53-year ban on gold ownership under Mao Zedong, the Chinese have eagerly scooped up gold coins and jewelry at rapid rates, to numbers which now rival India’s colossal demand for the yellow metal.


Forbes Magazine reported in March, "Believe it or not Ripley! The People’s Bank of China (PBOC) recommended yesterday that 1 billion Chinese consider buying gold as a hedge against inflation and to preserve values in a world where currencies can fall. . . . Wow! Be like the Fed telling you to buy oil stocks or crude oil futures due to expectation higher gasoline prices this summer."

According to the World Gold Council, total gold demand in the PRoC will reach 750 tons in 2011. In the third quarter, consumer demand for the precious metal continued to soar, led by a 24 percent increase in demand of 60.2 tons of gold bars and coins, from last year’s third quarter total of 48.5 tons, while demand for jewelry rose 13 percent.

Front-running China’s demand

Frank Holmes, contributing editor for Forbes Magazine penned an article, today, titled, Central Bank Appetite And The Monetary Case For $10,000 Gold. Holmes sees what the Chinese see: a tsunami of money creation coming out of the U.S. and the ECB, whose combined currencies comprise approximately 88 percent of all central bank reserves.

In the Forbes article, he quotes long-time friend and founder of Goldcorp’s Silver Wheaton, Frank Giustra:

The bottom line is that the money needed to bail out Europe and to fund America’s spiraling debt and future unfunded obligations is in the tens of trillions. IT DOES NOT EXIST.

It has to be created by printing money in massive quantities, and despite all the rhetoric you will hear against such policies, in the end it’s the path of least resistance. Printing money is an invisible tax on savings, much easier to initiate, than, say, raising taxes or cutting back on services and entitlements.


Under the Holmes scenario, which, incidentally, has become an ever-increasingly common conclusion, drawn by many well-respected analysts, the gold price could move as high as $10,000 per ounce in coming years. That means: the dollar and euro are expected to erode significantly in purchasing power during that time period.

As far as the question: when is a good time to buy gold? Stephen Leeb, author of Red Alert: How China’s Growing Prosperity Threatens the American Way of Life, has researched China and its strategic initiatives for the coming 20 years. According to him, just jump in and wait, because a few hundred dollars here, or there, won’t amount to much in the long run.

"So how low gold will go here is literally meaningless," Leeb told King World News on Monday. "My advice to investors is don’t try to catch a bottom and be a hero. It could happen any time. It could be happening as we speak, it could be happening today. But it’s really irrelevant. Let’s say gold is at $3000, $4,000 or $5,000 in three or four years, which I think is very, very likely–are you really even going to remember that it went to $1,650 or $1,550? No."


(1) From Wiki: The book was first translated into the French language in 1772 by French Jesuit Jean Joseph Marie Amiot, and into English by British officer Everard Ferguson Calthrop in 1905. Leaders as diverse as Mao Zedong, General Vo Nguyen Giap, Baron Antoine-Henri Jomini, GeneralDouglas MacArthur, Napoleon, and leaders of Imperial Japan have drawn inspiration from the work. The Art of War has also been applied to business and managerial strategies.
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By Dave in Denver, The Golden Truth
As I see it, if you don’t own some physical gold and silver, you are going to be in a bad way as the impact of the MF Global collapse continues to ripple through the markets. All of us are facing some difficult times in the weeks and months ahead as this global financial bust plays itself out, but trying to contend with this fallout without owning physical gold and silver is like going into a war without any bullets.   - James Turk
This current market "correction" in gold and silver is an absolute gift.  I say "correction" because there is no doubt that the Fed/Wall Street is piling on in order to make the metals look undesirable to the unsuspecting.  Time and again they've done this over the last 10 years.  But to be able to go out and move more of your increasingly devalued U.S. dollars to acquire physical gold and silver at prices that are 15% cheaper for gold and 40% cheaper for silver cheaper than 8 months ago is an absolute gift.

I had an interesting conversation with a good friend earlier this week. He was thinking about liquidating all of his investment accounts and moving everything to cash, fearing that all "investments" were going to get annihilated. My response was, why would you move into a pile of cash that you keep in a bank? Do you really trust the banking system? Just like customer cash accounts at MF Global vaporized overnight, your bank account is nothing more than an electronic entry in a bank computer that is not really any more secure than an a cash account at a brokerage firm. Seriously.

But even more troubling would be the idea that someone would want to move into cash - into U.S. dollars. By law - a law which is in direct violation of the U.S. Constitution, mind you - all money issued by the Government is backed by the "full faith and credit of United states Government." Think about that statement for a moment. Let's break it down to its basic meaning.

"Full credit" of the Government. The credit rating of the U.S. Government was recently downgraded from triple-AAA by S&P. This means that the credit rating of the U.S. Government is deteriorating. It is actually deteriorating quite rapidly. In fact, if it weren't for the fact that the U.S. Government - unlike the individual countries of the EU - has the ability to print money in unlimited quantities, the actual credit rating of the U.S. Government would be "CCC-," which means that it is on the cusp of default. So when you keep your wealth in the form of U.S. dollar "cash," on a de facto basis you are storing your "wealth" in an "investment" that is on the verge of bankruptcy.

Now, let's examine the idea of "full faith" in the U.S. Government. This implies the notion that we collectively have complete "faith" in our Government and the leaders that implement our Government. Is that true for you? Do you have "faith" in the Obama administration? Would you have "faith" in a Gingrich or Romney administration? How about Congress? We know from recent polls that the approval rating for Obama is at an all-time record low for any President with one year remaining in his first term. Record low. We also know that the approval rating for Congress is now well below 10%. Do those ratings convey the idea that Americans have "faith" in their Government?

Now, I'm dead serious about this. IF the implicit credit rating of the U.S. Government is, realistically, near the level of default and IF the overwhelming majority of the people in this country have little or no faith in our Government, the HOW THE HELL CAN THE U.S. DOLLAR HAVE ANY REAL LONG TERM VALUE AND HOW CAN IT BE CONSIDERED A STORE OF WEALTH? Seriously? Why the hell would you want to move your wealth into U.S. dollar-based "cash?"


So what are the alternatives? Other than gold and silver, I really don't know of any alternatives. Actually, again I'm being serious, guns, ammunition, canned food and other "hard usables" would also maintain their value if things get really bad. But gold and silver have been "transaction/barter currencies" for the better part of 5000 years. This is not going to change. Despite what looks like a lot of volatility, or risk, with gold and silver, over the last 10 years the U.S. dollar has gone down in value 80% against gold and silver. 80%. It has another 20% to go before it goes where every other paper fiat currency in history has gone - extinct. On that obvious basis, why would you put your wealth in the U.S. dollar?
 
We have seen much worse market corrections/manipulated hits in the precious metals over the last 10 years.  And yet, over that time period, gold and silver have outperformed every other possible investment.  Every single one, without exception.   But we're getting to the point at which you need to start looking at gold and silver as being the best shot you can have at financially surviving what is coming our way.  2008 was bad but what is about to happen globally will be even worse.  Don't take it from me, consider what James Turk has to say.  James Turk is one of the smartest, most forward-looking market commentators that I have ever come across.  It just so happens that his views have paralleled mine over the last 10 years.  Although I don't know what his "off the record" true assessment would be, his vision publicly is not as gloomy as mine.  I think I'm going to be right.  But here's Turk's latest comments from Eric King's daily blog interviews:  LINK
 
Consider that, if you had a billion marks in the bank in Germany on November 13, 1923, when you woke up the next day you had one mark.  That is the power of a Government that issues fiat currency by enforcement of law and that is trying to survive.  But also consider that if you had all of your wealth in gold and silver, on November 14th your wealth position was the same as it was the day before.  Our Government is trying to survive right now and yet it keeps increasing its deficits and debt load.  Soon enough the Fed will be firing up its printing press yet again and your dollar in hand will become worth even less.  Gold will soon be probing new highs even though it may not seem like it at this exact moment.
 
I have laid out the truth and the facts today as they are.  My statements are backed by the events of history for 5000 years.  If you think that it's going to be different this time, then go ahead and keep your wealth in U.S. dollars and Government bonds.  But if you think and know, like I do, that eventually the ability of the U.S. Government to maintain any value in the dollar is going to disappear, then you need to use opportunities like the current one to move even more of your paper wealth into physical gold and silver.  Not GLD, not SLV, not any other ETF.
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The gold bugs are throwing in the towel
By Mark Hulbert

CHAPEL HILL, N.C. (MarketWatch) — Gold bugs over the last two weeks have become even more discouraged than they were at the end of November.

And that’s saying something, since they were already quite dejected.

As a result, contrarians detect a very strong wall of worry forming in the gold market, one which could very well be the springboard for bullion rallying into new all-time high territory.

Consider the average recommended gold market exposure among a subset of the shortest-term gold market timers tracked by the Hulbert Financial Digest (as measured by the Hulbert Gold Newsletter Sentiment Index, or HGNSI).

Two weeks ago, when I last wrote in this space about a contrarian analysis of gold sentiment, this average stood at 13.7%.

Today it stands at 0.3%, which means that the average gold timer is essentially keeping all of his gold-oriented portfolio out of the market.

To be sure, I reported two weeks ago that, on the basis of the HGNSI being as low as 13.7%, contrarian analysis was already bullish on gold’s prospects. And yet, far from rallying, the yellow metal since then has fallen by more than $100 per ounce. Read Nov. 30 column.

What assurances do we have that contrarian analysis will be any more successful this time around? We don’t, of course.

But it’s worth stressing that contrarian analysis is right more often than it is wrong. For example, I have been measuring gold market sentiment for three decades, and have subjected the HGNSI to rigorous econometric tests.

At the 95% confidence level that statisticians often use to determine if a pattern is genuine, gold bullion tends to do better following low HGNSI levels than high ones.

There’s another reason to expect bullion to soon begin rallying: The end-of-year period historically has been a strong one for gold. Indeed, Ned Davis senior equity analyst John LaForge told me that the bulk of gold’s return over the last decade has been produced in the last several weeks of the calendar year.

We haven’t seen any such seasonal strength this year, needless to say. But gold’s seasonal tendencies are yet more evidence pointing in the same direction as contrarian analysis: Gold is due for a strong rally.
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THE FUTURE OF THE US DOLLAR


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St Louis Adjusted Monetary Base
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From The Grandich Letter



In almost three decades in and around Wall Street, I’ve never seen such widespread distaste and outright hatred of an investment that for almost a decade has greatly outperformed just about every other investment vehicle: gold. I will discuss why I believe this is the case in a moment, but I want to first respond to what I can only describe as one of the “Three Stooges of Gold Forecasting’s” latest forecasts that has once again caused near hysteria among gold players and the media that follows it.
Dennis Gartman, a true master of self-promotion but who’s actual track record (if anyone in the media actually delved into it I believe they would see for themselves) better suits him for the lead role in “The Boy Who Cried Wolf,” has once again grabbed headlines with yet another the-gold-bull-market-is-over assertion.
Mr. Gartman is one of three people who many in the media continue to quote despite a nearly decade-long poor overall track record on gold. He, Jeff Christian and Jon Nadler have demonstrated to me (and I suspect many others) that a broken clock’s percentage of telling the correct time in any given day is about the same as their actual accurate forecasts for gold in the last decade.
Yours truly has called this the “mother” of all gold bull markets and, by making the following offer to the Three Stooges of gold forecasting, I would like to offer up a million reasons why:
I will wager any one of them (or a combination of all three) one million dollars U.S. that gold will hit $2000 before it hits $1,000 on the COMEX. I have arranged for the law firm of Lomurro, Davison, Eastman & Munoz of Freehold, New Jersey to hold the funds in trust. For once, let one or all of the most arrogant and often wrong gold forecasters truly put their money where their mouth is when it comes to gold forecasting. This offer shall be good until midnight, December 31, 2011 (I will donate my winnings to charities).
With regard to gold and the fact that I was supposed to be on vacation until January 3rd, I will be short and sweet: the great “Bull Run” won’t end until the price of gold has at least a “2” in the front ($2,000+).
In a nutshell, gold basically traded between $300 and $500 from the time it began free trading in the early 70s. It did briefly overall hit the mid $800s in early 80s. Up until the new millennium began, gold was greatly hindered by three factors, all of which are no longer negatives:
·         Large-scale Central Bank selling;
·         Gold producers cutting their noses to spite their faces by selling large quantities of production forward (hedging);
·         No vehicle that could provide institutional type investors the ability to acquire/control large quantities of gold easily and provide liquidity. (The choices were purchasing physical bullion with costs and storage concerns and/or mining shares that proved more than once not to be exactly like owning gold).
These three former great negatives became major positives when:
·         The Washington Accord was reached and Central Bank sales first became managed and then eventually turned into net buying;
·         Producers like the old American Barrick (now Barrick Gold), who were more commodity traders than miners and used sophisticated hedging strategies to net much higher prices for gold than simply selling their production, were scorned for selling forward and it became evil to do so among investors;
·         The creation of Exchange-Traded Funds (ETFs) allowed institutions to make gold part of their portfolios in an easy and liquidity-driven way and ended up tipping the scales heavily in favor of demand over supply.
The Three Stooges and the overwhelming negative gold pundits who think like them (Are all over the airwaves today) could only not ever grasp this changed landscape, but they could never also accept that despite widespread proof that all types of markets worldwide have been manipulated, that somehow manipulation didn’t occur in the gold market. Their favorite response was/is, “if gold is/was manipulated, how then did the market rise so much?” trying to suggest it should be much lower if people truly were trying to hold it down. These “pied pipers” of the hate gold crowd would want you to believe that the widespread corruption that has become evident in financial markets worldwide somehow doesn’t take place in gold and silver.
And that brings me to the final piece of the puzzle that has made up the gold game since it first started trading freely in the 1970s: gold is, and shall always be, hated by the overwhelming majority of people who work in the financial services industry and the media that follows it. You’re never ever, ever, ever, ever, ever, ever, ever going to find universal overall support for gold because to do so would equate to undermining what drives the financial services industry worldwide – the buying and selling of financial assets. Just like you will never hear a Ford dealer tell you to buy a Chevy or an Atheist tell you to love Jesus, an industry that makes its living selling stocks and bonds isn’t going to tell you to load up on something that usually benefits from their misfortunes. And neither shall the media in general who lives off those selling stocks and bonds.
So stop looking for the “crowd” to be gold lovers. In fact, when they come remotely close to that (like they did in September), it’s always a sign that a top of some type is near.
Instead, recognize the fundamental changes I spoke of that make up the gold market, throw in the fact that the world has gone mad with the printing of paper money and an epic crisis in the Middle East is coming in 2012, and use this correction in gold to add to or finally take ownership in the last great buying opportunity before the Three Stooges and their legion once again get bloodied and gored by the mother of all gold bull markets.
Because it’s that time of year when market moves can be exaggerated due to lack of liquidity, and the fact that the haters are having one of their “rare” opportunities to pound their chests (look at all the negative gold comments in the last 48 hours. Even Hulbert noted bullish sentiment near zero), it would come as no surprise to see the September lows of $1531 gold and $26 silver tested and/or broken briefly. One of the true best timers and good friend Mark Leibovit pointed out to me that cycle lows are not due for another month or so. Knowing this and the technical damage that has been done, there’s no need to rush and mortgage the house to buy gold. An accumulation program with time and price targets over the next several weeks should IMHO lead to a very nice capital gains Christmas present this time next year.
Finally, when the bears are once again proven wrong and we go over $2,000, the media shall finally ask them why they got it wrong yet again versus asking those of us who had it right for a decade why is it temporarily down….. NOT!”- Peter Grandich, Grandich Letter
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...and from Miles Franklin's "Ranting Andy" Hoffman
LONG-TERM charts are extremely valuable in PM market analysis, as constant Cartel capping creates MONSTROUS resistance formations that, when inevitably broken, become MONSTROUS, essentially UNBREAKABLE support. 

The ONLY time in the entire 12-year bull market that gold fell significantly below its 200 DMA was at the bottom of GLOBAL MELTDOWN I, another Cartel-induced attack that took gold 15% below, a phenomenon that lasted a total of two months and NEVER yielded an RSI reading as low as today's.  Aside from late 2008, the ONLY time gold's discount to its 200 DMA exceeded 5% was mid-1999, amidst the "Brown Bottom" when the U.K. OVERTLY sold 400 tonnes at the historic low - and EVEN THEN, the discount to the 200 DMA never exceeded 9%! 

Heck, the last time gold traded at a discount to its 200 DMA of more than 9% was in 1990, amidst a vicious bear market, to the week Miles Franklin commenced operations; and EVEN THEN, the largest discount to NAV was just 12%, lasting for just ONE WEEK!

Adding an explanation point to the analysis, the last time gold traded at a 15% discount to its 200 DMA was 1982, at the beginning of a 17-year bear market, 29 years ago!

GLD Dec 14

This is NOT 2008, as the market is NOT cratering due to a "liquidity crisis" (despite what the media writes).  It is collapsing because sovereign nations the world round, starting with Europe, are on the verge of economic incineration, the EXACT same issues that drove gold to record highs in February 2009 (when the Dow hit its GLOBAL MELTDOWN I low) and August 2011, when GLOBAL MELTDOWN II commenced. 


Cartel efforts to "shoot the messenger" have reached epic levels that in today's market are painful, but tomorrow won't even be remembered if you own PHYSICAL metal, NOT PAPER products such as ETFs and mining shares.  Led by surging PHYSICAL demand WORLDWIDE, Gold will shortly steady itself and SURGE higher, taking silver with it, as it has for the past 5,000 years.


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