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Thursday, December 24, 2009

There Is No Gold Bubble

John Embry of Spott Asset Management writes as to why there is no bubble in gold:

"Today, the western central banks are discovering . . . that the
manipulation of the free market process ultimately fails"

Gold bull has many years, thousands of dollars to go


"...
For at least the past 15 years,
Western central banks have
been flooding the market with
massive quantities of gold, pri-
marily by leasing it surrepti-
tiously to their bullion-bank
cronies. Ostensibly that portion
of their activities, which was
transparent (i.e., direct sales),
was for reserve diversification.
However, the real motive for
their behavior was to depress the
price of the yellow metal, there-
by reducing critical scrutiny of
their increasingly reckless mon-
etary policy, ensuring that inter-
est rates remained at low levels
and allowing the U.S. dollar to
retain its supremacy.
...
Accordingly, I find it almost
nauseating that various pundits
are currently referring to gold as
overpriced and in a bubble phase.
In reality, gold remains in a
stealth bull market that will have
seen nine consecutively higher
year-end closes at the end of 2009.
Despite this, it has attracted
very little attention from the in-
vesting public in general. The
dedicated goldphile has partici-
pated throughout and a number
of sophisticated financial players
have come on board recently, the
latest being the legendary trader
Paul Tudor Jones, but the average
investor remains blithely un-
aware at this juncture.
It is instructive to remember
that at the end of the last bull
market in 1980, people were lined
up around the block outside the
Bank of Nova Scotia in down-
town Toronto to purchase physi-
cal gold. Today, the only lines
that have formed are outside em-
poriums set up so the unsuspect-
ing public can unload their gold
jewelry for cash. To have a bubble
of any significance, there has to
be wide public belief and it cer-
tainly isn’t on display in the gold
market at present.
More importantly, ...

[More at the above link]

Wednesday, December 23, 2009

The US Dollar Generally Acts Inversely To Gold

The US dollar generally acts inversely To gold and silver, and it sure as heck is not going up other than the occasional bear market rally like right now. There is a lot more to go on the down side.

This generally holds true for any other governments that are devaluing their fiat tokens; thus the price of gold and silver is going up on most other government fiat tokens also, since the ten year old bull markets in gold and silver started.

Jim Rogers and Marc Faber See Disaster Looming, Blame The Fed

Legendary investors Jim Rogers and Marc Faber have similar outlooks on the financial crisis and the efforts of the Federal Reserve to revive the U.S. economy. What do they think of the Fed's quantitative easing policy? In a word, it is a recipe for disaster.

According to Rogers, governments have not addressed the underlying problems which triggered the crisis, but instead have "flooded the world with money." He argues that trying to solve the problem of too much consumption and too much debt with more consumption "defies belief," and will result in epic failure.

Faber's outlook echoes the sentiments of Mr. Rogers. He says, "If we agree that excessive credit and excessive leverage led to the crisis, then what the Federal Reserve is doing is giving a wrong medicine to the patient—they are giving the drug addicts more drug instead of sending them to rehabilitation, which is not good for the economy. So I think that the whole policy will eventually end in another disaster but we don’t know when and many things can happen in between."
...


* * *


John Williams' Shadow Government Statistics
"Analysis Behind and Beyond Government Economic Reporting"
has released to non-subscribers the "Depression Special Report - August, 1st, 2009"

DEPRESSION SPECIAL REPORT

Number 52

August 1, 2009

__________

Current Economic Downturn Is Worst Since Great Depression

Recession Started a Year Earlier Than Official Reckoning

Business Contraction Triggered Systemic Solvency Crisis
Not the Other Way Around

Still Heavily Gimmicked, Post-Revision GDP Shows More Realistic Numbers

Economic Crisis Is Far from Over

__________



OVERVIEW

U.S. Economy Is in a Multiple-Dip Depression. The grand benchmark revision of the national income accounts on July 31, 2009 confirmed that the U.S. economy is in its worst economic contraction since the first downleg of the Great Depression, which was a double-dip depression. The current economic downturn increasingly will be referred to as a depression, and it is far from over. There will be intermittent blips of new activity, such as the current cash-for-clunkers automobile giveaway program that appears to be generating a one-time spike in auto sales. Yet, this downturn will continue to deteriorate, proving to be extremely protracted, extremely deep and particularly nonresponsive to traditional stimuli. ...

The rest is at this link.

* * *

International finance is sooooooo complicated. Nope. It's not. A five year old can understand it:






* * *

Over at Mover Mike:

...
Rickards remarked: “When you own gold you’re fighting every central bank in the world.”

That’s because gold is a currency that competes with government currencies and has a powerful influence on interest rates and the price of government bonds. And that’s why central banks long have tried to suppress the price of gold. Gold is the ticket out of the central banking system, the escape from coercive central bank and government power.

As an independent currency, a currency to which investors can resort when they are dissatisfied with government currencies, gold carries the enormous power to discipline governments, to call them to account for their inflation of the money supply and to warn the world against it. Because gold is the vehicle of escape from the central bank system, the manipulation of the gold market is the manipulation that makes possible all other market manipulation by government.
...


* * *

This current rally in the US dollar and correction in gold and silver is just temporary. Nothing to worry about. There are no bubbles in gold or silver. Governments still have a lot more damage ("quantitative easing"/"stimulation"= further damage) to do to their fiat tokens.

Thursday, December 17, 2009

The US Dollar Goes Up AND Gold Goes Up, Too

Governments are going bankrupt. Bets and debt are being called, probably US dollar denominated. Thus a demand for dollars. The US dollar is going up BUT gold goes up, too. Gold, silver, atoms, stuff are being more highly valued than paper or digital financial instruments, particularly more than government fiat (order) tokens. More and more people are realizing that real safety, insurance lie in gold and silver; that governments can not be trusted with fiat paper/digital tokens. When a government's back is against the wall, it will screw anybody and everybody in an attempt to hang on to its power by creating more tokens out of thin air. The scene right now has been repeated over and over in the past. It's nothing new. There is a lot more of this to come.

Think about this. Many people that vote in the US expect a president to "manage" the economy. They don't understand that that is not possible (read Hayek's _Fatal Conceit_ in addition to _The Road to Serfdom_). Some people elected a president that said before he was elected that he did not know anything about economics (and expect him to manage the economy). More recently he said that we cannot expect to spend our way out of this economic situation. And, just the other day, he reversed himself and said that we are going to have to spend our way out of this economic situation. Insanity, theft and con jobs are ruling in the US. Who in their right mind would want shares of USA incorporated, shares being the US dollar, particularly since the US government expects to spend an additional 1.5 trillion dollars this fiscal year that they don't have. Where are they going to get those dollars from?





This is rare, panicky dollar/gold action.

After an 8-9 year bull market in gold and silver a few people are just starting to wake up, just starting to get what is happening; that a financial/economic system can only take so much debt. That there is a price to be paid when governments add even more debt to an amount that is too much to begin with. A government fiat token can not be created without that amount of debt being created first either by the treasury or the central bank. When all kinds of financial instruments and government "money", "currencies", and other financial instruments start failing; that the last resort is atoms of gold, silver, farm land, oil, etc.

* * *

The US government has to roll over, refinance (because the US Treasury is broke) over 2 trillion dollars of debt. Plus, it has to finance an about 1.5 trillion dollar deficit in this coming fiscal year. Who is going to buy over 3.5 trillion dollars worth of debt from the biggest, baddest, record breaking, incredibly irresponsible debtor in the world?

The rest of the world's economies are having a tough time, therefore there simply are not enough savings in the world to buy US debt like there used to be. It looks like it is time for the Fed to play "make believe" "let's pretend", accepting I.O.U.s from the US Treasury, putting them on the Fed's books as an asset beefing up their "reserves", allowing them to create more US dollars out of thin air and sending them over to the US Treasury in return for their debt. It's fantasy time, in a big way, for the Fed and the US Treasury. The more dollars they create, the more **value** they steal that is stored in existing dollars. What a huge scam/heist, which is the whole point to having a central bank to begin with.

* * *

"The U.S. is third worlding."
Going South

* * *


Time Magazine gives Ben Bernanke the Person Of The Year Award. No kidding. A man with no banking experience, no financial market experience and no business experience. The text on Time's web site about this award is completely mindless. That should reflect who reads Time. That is as dumb as giving Obama the peace prize as he increases war spending. Insanity rules out there. Ya can't make this stuff up. Truth is stranger than fiction.

* * *

U.S. already $292 bln in the red this year - CBO

* * *

Wait till most people wake up to this fact. "There is no rush like a gold rush.". Amongst a few, panic is setting in. When "money junkies" control a government, watch out!

Wednesday, December 16, 2009

Gold Is Looking Bullish

Nothing says that gold can not go lower here but it sure is looking bullish. The shares (equities) are suggesting the same thing.



Jim Rogers in a December 10 interview:

He says he likes silver better than gold, that central banks have turned from sellers to buyers, and, that there is no bubble here in gold.



Gold is trading nothing like it has in all the years since the bull market in gold began. Things have really changed. The big boys are paying attention, taking action and taking on the anti-gold cartel. The NY futures' prices show that.

Thursday, December 10, 2009

The HUI and Gold

The AMEX's HUI (gold bug index) is suggesting that gold is near its low for this pull back.

First, here's the big picture:



About 2 years ago, people were buying gold/silver shares as the HUI approached 500-525. Then the HUI took a big plunge down to around 150. What percent of people involved in this huge plunge were not vowing to get the heck out when the HUI made it back to break even? Not many. Most/many want out after regaining a break even position. It took almost 2 years for them to recover. That's a lot of emotional pain for a long time. No wonder the HUI is correcting/reacting after making it back to its old highs, and then backing off.


Now for a 12 month chart:



The September and October highs around 450 offer some support for the HUI now.


The HUI's channel:




The Dollar Bubble - if you are new to the scene and want to get up to speed on the big picture real quick like (about 30 minutes):



...
"Clowns to the left of me. Jokers to the right...."
...
"Trying to make some sense of it all. But I can see that it makes no sense at all."
...
"Got the feeling that something ain't right."
...
- Steelers Wheels

What ever you do, don't chicken out here at this level because many of the developed economies are still crashing, are still being ruined despite what the controlled financial Muppets on TV and the controlled heads of state say in the press. Both those groups are from moron land, gangster bankster land and gangster government land. A number of years from now, people will be in awe at the level of the HUI. The gold and silver bulls have years to go. Heck, they will be in awe of the gold and silver prices, too.

Wednesday, December 09, 2009

Gold, US Dollar, Celente

Gold is correcting/reacting to the small rise in the US dollar. Also, gold got up near the top of the two parallel lines that form a channel. Big deal. To be expected. Bull markets in gold and silver do not go straight up. Bull markets make higher highs and higher lows.



The head and shoulders formation of gold's over one year long deep correction say that gold is going to $1,300 at least, probably more for 2010. Do not be surprised if it is a lot more.




A recent interview of Gerald Celente; about one week old:



There is a competitive devaluation of most government fiat tokens going on out there around most of the world.

Both *fear* and *greed* are developing out there. These can do wonders to the price of gold and silver. And, do not worry about silver. It used to be about 16 times more plentiful than gold. Now it is about 5-6 times more rare than gold because of all the industrial uses over the decades that have been found for it, unlike gold. That and the fact that it is still real actual money is virtually unknown in the English speaking world for starters. Wait till the world wakes up to the reality of how 1.) rare silver is and that silver is 2.) actual real money. Unlike gold, silver is classified by some governments and industries as a "strategic metal".

Friday, December 04, 2009

What Is Reality? Two Gold Prices.

There are inflation adjusted gold prices and nominal gold prices.

If nothing changes in a residential neighborhood in the US over 10 years and the price of a house doubles in 10 years, it is not because the value of the house increased. The value of the house stayed the same. The doubling of the price (in the US) is due to the US dollar decreasing by 50%. So, the inflation adjusted price of the house stayed the same while the nominal price doubled. This principal holds true anywhere in the world.

The same holds true for other things like gold and silver, except sometimes they can go up in real terms a lot in addition to their nominal price increasing just to keep pace with the devaluation of the US dollar.

Nominal price:



True inflation adjusted prices via Shadow Government Statistics:





* * *

Banana Ben being taken to the wood shed by Bunning. He lays reality on banana republic Ben with no holds barred:

Senator Bunning Statement On The Re-Nomination Of Ben Bernanke To Be Chairman Of The Federal Reserve
Senate Banking Committee
Thursday, December 3, 2009

As Prepared For Delivery:

Four years ago when you came before the Senate for confirmation to be Chairman of the Federal Reserve, I was the only Senator to vote against you. In fact, I was the only Senator to even raise serious concerns about you. I opposed you because I knew you would continue the legacy of Alan Greenspan, and I was right. But I did not know how right I would be and could not begin to imagine how wrong you would be in the following four years.

The Greenspan legacy on monetary policy was breaking from the Taylor Rule to provide easy money, and thus inflate bubbles. Not only did you continue that policy when you took control of the Fed, but you supported every Greenspan rate decision when you were on the Fed earlier this decade. Sometimes you even wanted to go further and provide even more easy money than Chairman Greenspan. As recently as a letter you sent me two weeks ago, you still refuse to admit Fed actions played any role in inflating the housing bubble despite overwhelming evidence and the consensus of economists to the contrary. And in your efforts to keep filling the punch bowl, you cranked up the printing press to buy mortgage securities, Treasury securities, commercial paper, and other assets from Wall Street. Those purchases, by the way, led to some nice profits for the Wall Street banks and dealers who sold them to you, and the G.S.E. purchases seem to be illegal since the Federal Reserve Act only allows the purchase of securities backed by the government.

On consumer protection, the Greenspan policy was don’t do it. You went along with his policy before you were Chairman, and continued it after you were promoted. The most glaring example is it took you two years to finally regulate subprime mortgages after Chairman Greenspan did nothing for 12 years. Even then, you only acted after pressure from Congress and after it was clear subprime mortgages were at the heart of the economic meltdown. On other consumer protection issues you only acted as the time approached for your re-nomination to be Fed Chairman.

Alan Greenspan refused to look for bubbles or try to do anything other than create them. Likewise, it is clear from your statements over the last four years that you failed to spot the housing bubble despite many warnings.

Chairman Greenspan’s attitude toward regulating banks was much like his attitude toward consumer protection. Instead of close supervision of the biggest and most dangerous banks, he ignored the growing balance sheets and increasing risk. You did no better. In fact, under your watch every one of the major banks failed or would have failed if you did not bail them out.

On derivatives, Chairman Greenspan and other Clinton Administration officials attacked Brooksley Born when she dared to raise concerns about the growing risks. They succeeded in changing the law to prevent her or anyone else from effectively regulating derivatives. After taking over the Fed, you did not see any need for more substantial regulation of derivatives until it was clear that we were headed to a financial meltdown thanks in part to those products.

The Greenspan policy on transparency was talk a lot, use plenty of numbers, but say nothing. Things were so bad one TV network even tried to guess his thoughts by looking at the briefcase he carried to work. You promised Congress more transparency when you came to the job, and you promised us more transparency when you came begging for TARP. To be fair, you have published some more information than before, but those efforts are inadequate and you still refuse to provide details on the Fed’s bailouts last year and on all the toxic waste you have bought.

And Chairman Greenspan sold the Fed’s independence to Wall Street through the so-called “Greenspan Put”. Whenever Wall Street needed a boost, Alan was there. But you went far beyond that when you bowed to the political pressures of the Bush and Obama administrations and turned the Fed into an arm of the Treasury. Under your watch, the Bernanke Put became a bailout for all large financial institutions, including many foreign banks. And you put the printing presses into overdrive to fund the government’s spending and hand out cheap money to your masters on Wall Street, which they use to rake in record profits while ordinary Americans and small businesses can’t even get loans for their everyday needs.

Now, I want to read you a quote: “I believe that the tools available to the banking agencies, including the ability to require adequate capital and an effective bank receivership process are sufficient to allow the agencies to minimize the systemic risks associated with large banks. Moreover, the agencies have made clear that no bank is too-big-too-fail, so that bank management, shareholders, and un-insured debt holders understand that they will not escape the consequences of excessive risk-taking. In short, although vigilance is necessary, I believe the systemic risk inherent in the banking system is well-managed and well-controlled.”

That should sound familiar, since it was part of your response to a question I asked about the systemic risk of large financial institutions at your last confirmation hearing. I’m going to ask that the full question and answer be included in today’s hearing record.

Now, if that statement was true and you had acted according to it, I might be supporting your nomination today. But since then, you have decided that just about every large bank, investment bank, insurance company, and even some industrial companies are too big to fail. Rather than making management, shareholders, and debt holders feel the consequences of their risk-taking, you bailed them out. In short, you are the definition of moral hazard.

Instead of taking that money and lending to consumers and cleaning up their balance sheets, the banks started to pocket record profits and pay out billions of dollars in bonuses. Because you bowed to pressure from the banks and refused to resolve them or force them to clean up their balance sheets and clean out the management, you have created zombie banks that are only enriching their traders and executives. You are repeating the mistakes of Japan in the 1990s on a much larger scale, while sowing the seeds for the next bubble. In the same letter where you refused to admit any responsibility for inflating the housing bubble, you also admitted that you do not have an exit strategy for all the money you have printed and securities you have bought. That sounds to me like you intend to keep propping up the banks for as long as they want.

Even if all that were not true, the A.I.G. bailout alone is reason enough to send you back to Princeton. First you told us A.I.G. and its creditors had to be bailed out because they posed a systemic risk, largely because of the credit default swaps portfolio. Those credit default swaps, by the way, are over the counter derivatives that the Fed did not want regulated. Well, according to the TARP Inspector General, it turns out the Fed was not concerned about the financial condition of the credit default swaps partners when you decided to pay them off at par. In fact, the Inspector General makes it clear that no serious efforts were made to get the partners to take haircuts, and one bank’s offer to take a haircut was declined. I can only think of two possible reasons you would not make then-New York Fed President Geithner try to save the taxpayers some money by seriously negotiating or at least take up U.B.S. on their offer of a haircut. Sadly, those two reasons are incompetence or a desire to secretly funnel more money to a few select firms, most notably Goldman Sachs, Merrill Lynch, and a handful of large European banks. I also cannot understand why you did not seek European government contributions to this bailout of their banking system.

From monetary policy to regulation, consumer protection, transparency, and independence, your time as Fed Chairman has been a failure. You stated time and again during the housing bubble that there was no bubble. After the bubble burst, you repeatedly claimed the fallout would be small. And you clearly did not spot the systemic risks that you claim the Fed was supposed to be looking out for. Where I come from we punish failure, not reward it. That is certainly the way it was when I played baseball, and the way it is all across America. Judging by the current Treasury Secretary, some may think Washington does reward failure, but that should not be the case. I will do everything I can to stop your nomination and drag out the process as long as possible. We must put an end to your and the Fed’s failures, and there is no better time than now.

The rest is here. Access to this piece on the federal government's server seems not to have been available for a couple of days now, thus the long quote. Keep trying. Access to:
http://bunning.senate.gov/ is not available right now either. His speech/testimony is quite factual and damning. You can see from it why the biggest heist/robbery in the history of the US of value stored in US dollars and US dollar denominated financial instruments is happening. NONE of this would have been possible without the existence of a central bank, with people free to choose whatever 1.) money and 2.) currencies they chose to use. The combination of government and bankers can be litterally deadly to many, many people; particularly those who can not understand/see what is happening.

Or, now, it's on youtube:




* * *


Since around 2000-2001 despite US Treasury debt being considered a "safe haven", bonds have been doing lousy relative to gold. Still, most people have not been paying attention. Amazing. Wait till the masses get clued in.



There are still plenty more private sector and government sector defaults to come. Wait till both greed and fear by the masses seriously enter the gold and silver markets where true safety lies. There is no bubble in gold/silver. An awful long way to go on the up side has to happen first

Wednesday, December 02, 2009

Gold, Silver and The Fed

The only point for any government to have a central bank is for looting the ignorant, the clueless. Now a days in the US at least, that includes the middle class, which will virtually disappear as well as a significant percent of the wealthy. President Andrew Jackson knew this and accomplished the closing of the second central bank that the US had. It had a much shorter life than the current [The Fed] central bank has had. Of course, Americans were much better educated in those days with virtually all schools being private. And, of course they were much better off with no central bank. After the end of the second central bank, American's standard of living increased faster than ever in the history of the world.



"I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world, no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government run by the opinion and duress of a small group of dominant men" … President Woodrow Wilson, in reference to the Federal Reserve Act of 1913





John Williams over at Shadow Government Statistics has a new "Hyperinflaton Special Report (Update 2010)": (for subcribers)
• Economy and Financial System Face Eventual Great Collapse
• Government and Fed Actions Have Narrowed Hyperinflationary Great Depression Timing to Next Five Years
• High Risk of Ultimate Dollar Crisis Unfolding in Year Ahead
...
UPDATE — COMMENTARY

"How has the hyperinflation outlook changed since the Hyperinflation Special Report was published in April 2008?" Such is the most frequently asked question I receive these days.

The answer is that the outlook is little changed, since the following report outlines the basic issues and limited options for the U.S. government that were in play well before the current crises broke. The actions taken since by the federal government, U.S. Treasury and the Federal Reserve, in response to the still-deepening recession and ongoing systemic solvency woes, just exacerbated the long-range problems described in the report. The official actions likely have advanced the timing of the hyperinflation to the much nearer future, perhaps within the next year or two. Since September 2008, the Federal Reserve has been attempting to debase the U.S. dollar at an extraordinary pace, and such now is recognized widely among the major U.S. trading partners.
...

HYPERINFLATION SPECIAL REPORT
Issue Number 41
April 8, 2008

is available to the public here

* * *

There is so much fraud in the government and financial systems now a days, who / what do you trust?

Gold and silver for starters. The speed at which gold and silver are moving on up is a bit unnerving. They haven't traded like this since the bull market started, although the 2% cap on a day's move is still able to be put on by the Powers That Be. We'll see how long that lasts.

By the way, last week:

"The other item this week is that the US Mint ran out of one ounce "Eagle" bullion Gold coins this week, the second time this has happened in a bit more than a year. The supply simply could not keep up with the demand." - Bill Buckler, The Privateer