Patience will pay off for gold and silver investors says author Jim Rickards

Gold bugs need to be patient as history is on their side. That’s the message from ‘Currency Wars’ author and investment manager Jim Rickards writing this week for The Daily Reckoning website.
He still sees gold going to ten times its current price and silver prices rising by a multiple of that. However, this may take time and the waiting game is part of the key to getting this investment right.
Time lags
‘Inflationary forces often appear only with significant lags relative to the expansion of the money supply,’ he says. ‘This was the case in the late 1960s and early 1970s. The Fed began to expand the money supply to pay for Lyndon Johnson’s ‘guns and butter’ policy in 1965. The first sign of trouble was when inflation increased from 3.1 per cent in 1967 to 5.5 per cent in 1969.

This post was published at Arabian Money on 10 September 2014.

German Gold Repatriation Accelerating

Headlines are easy to write, a bit of sensation in it and they will surely persuade people to read the accompanying article. Though I’m often disappointed to read articles that contain remarkably little of what the headline promises. On the other hand, I personally have written many articles that were read by few because my headline wasn’t catchy enough in a stream of apocalyptic headers readers a daily thronged upon. I call this the headline problem; no catchy headline, no readers. This might create an incentive for writers to exaggerate a headline just to get their message across. The next step is to sensationalize a headline and the content to go with it to attract even more readers – though this approach has little to do with journalism. Surprisingly, Bloomberg used this approach on June 23, 2014, when they published this article:
German Gold Stays in New York in Rebuff to Euro Doubters Germany has decided its gold is safe in American hands.
The headline and story suggest that the German gold repatriation schedule – to ship home 300 tonnes of gold from the US and 374 tonnes from France by 2020, in order to have half (1695.3 tonnes) of Germans official gold reserves stored in Frankfurt – will be halted as German politicians decided their gold “is safe in American hands”. The headline and content that comes with it are misleading in every sense of how you look at it. The first Paragraph states:
Surging mistrust of the euro during Europe’s debt crisis fed a campaign to bring Germany’s entire $141 billion gold reserve home from New York and London. Now, after politics shifted in Chancellor Angela Merkel’s coalition, the government has concluded that stashing half its bullion abroad is prudent after all.
At the time the article was written 32.1 % of German sovereign gold reserves were stored in Frankfurt. So, if the government “has concluded that stashing half its bullion abroad is prudent after all“, it would still require 607.214 tonnes to be shipped to Germany in order to have 50 % on German soil. Though the article suggests there will be no more shipments of German gold from the US, which is incorrect as we will see later on.

This post was published at Bullion Star on 07-09-2014.

Swiss Franc Tumbles On Threats NIRP Coming To Bern Next

We have recently noted the increasing pressure on the Swiss National Bank (SNB) over its peg to the EUR in the midst of a capital flood from Europe. The slow bleed strengthening of CHF against EUR had many concerned the SNB would be forced (by exogenous factors) to adjust the peg. But, this morning, it appears they tried to draw a red line… CHF has plunged after SNB’s Mosler said negative interest rates remain an option should its minimum exchange rate (peg) come under threat. So, first NIRP in Europe, then in Japan (as per our overnight discussion), and now the Swiss warning NIRP is coming there next…
As Bloomberg reports,
Negative interest rates remain option for SNB should minimum exchange rate be threatened, says Thomas Moser, an alternate member of SNB policy-setting Governing Board, Wall Street Journal reports. Says ‘we’re never shy about it. We always said we would use it if needed’
SNB President Thomas Jordan also said on June 19 that ‘introduction of negative rates is a possible option:’
It seems the reaction was 3-step ‘intervention’ – because of course – the SNB needed the market’s move to confirm their threat… Sell Gold, Sell JPY, then Sell Swissy…

This post was published at Zero Hedge on 09/10/2014.

There Goes GDP: Wholesale Inventories Miss, Weakest Since May 2013

With GDP now basically an exercise in inventory expansion and contraction (Q2 inventory estimate amounted to 40% of GDP), this ‘miss’ in July Wholesale Inventories provides a worrying glimpse into Q3 GDP. Against expectations on a 0.5% rise MoM, inventories rose only 0.1% (and June was revised lower) to the weakest inventory build since May 2013. This is the 3rd miss in a row.
SOURCE

This post was published at Zero Hedge on 09/10/2014.

Lawrence Williams: Goldcorp CEO expounds on Peak gold and $900 gold price

Goldcorp CEO, Chuck Jeannes, has been on the interview trail recently and has come up with some interesting, although not altogether surprising, views on gold and the gold price. Indeed if one analyses them from the Goldcorp perspective they are wholly logical given what is one of the most successful of the world’s mega gold miners’ current financial and operating situations.
Followers of the gold sector will be aware that not only has the pace of gold exploration dipped dramatically, as majors have cut back and juniors are cash strapped, but the discovery of new major gold deposits has diminished to close on zero, while big new projects under development are pretty well coming to an end, as the majors cut back on capital programmes, and finance for multi billion dollar mega projects is tough, if not impossible, to raise in the current financial climate. ‘Peak gold’ has been discussed in the gold-oriented media from time to time, but it probably has needed the comment from a heavy hitter like Jeannes to get it the prominence it perhaps deserves.
Yes, Peak Gold is indeed close. In fact the only thing preventing it having happened already is, ironically, the lower gold price, which has forced big miners to mine higher ore grades and thus raise production (thereby lowering unit costs) but at the expense of mine lives. But their scope for doing this diminishes the whole time. We may yet thus see a small increase in global gold production this year as a result and as the remaining projects, already in the pipeline, come on stream. But the industry’s scope for maintaining this is diminishing by the minute and Jeannes is almost certainly correct in his prediction that global gold output is about to turn downwards, and may well remain on a downwards path for many years to come.

This post was published at Mineweb

Get your money out of Britain: Global banks warn investors ‘Yes’ vote would be ‘cataclysmic’ for U.K. economy

International investors have been warned to pull their cash out of Britain to protect themselves against the 'cataclysmic' impact of Scottish independence.
Japan's biggest bank, Nomura, warned sterling could plunge by 15 per cent in the event of a ‘Yes’ vote – amid warnings over a ‘run on UK assets’ threatening savings and pensions of ordinary families.
It came as it emerged David Cameron has pleaded with business chiefs to publicly warn against Scottish independence.
The Prime Minister asked company bosses at a Downing Street drinks event last night to 'highlight the dangers of a Scottish exit in any way we can'. 

This post was published at Daily Mail

Doug Casey: ‘There Is a Rogue Elephant in Your House’

One time when I was in Burma (now Myanmar), I spent a couple of days riding around the forest by elephant back. Elephants are a fine thing to have in the forest but, believe it or not, you have one living in your house with you. And you should do something about it now, before your house is wrecked and you and your family get stomped in the process.
Any amount of financial success won’t mean much if you get stepped on by the elephant in the room. The damage you routinely suffer from the elephant—not to mention the lingering threat that he’ll go completely berserk someday—dwarfs the importance of the best investment decision you’ll ever make. So, I’m going to invite your attention to a problem of overriding importance: How can you protect yourself and your wealth from the elephant?
The elephant in the room is, of course, the government.

This post was published at Casey Research

James Rickards: Fed Tapering Signals Trouble for Economy, Stock Market

The Federal Reserve is in the midst of winding down its third round of quantitative easing (QE3), and economist and financial author James Rickards says that doesn't bode well for the economy and financial markets.
After the Fed's prior two quantitative easing operations, both the economy and the stock market suffered, he notes. Rickards is the author of "The Death of Money: The Coming Collapse of the International Monetary System."
"It's happening again, but in slow motion, because the QE3 taper was gradual and from a higher level," he tells CNBC. "When this third taper is done in November, the weakness will become apparent."

This post was published at Money News

Harvey Organ- By December Whole Thing Going to Collapse

The following video was published by Greg Hunter on Sep 9, 2014
Harvey Organ at Harveyorgan.blogspot.com says the world is running out of physical gold and silver needed to suppress prices. Organ says when China and Russia disclose the true amount of gold they hold, there will be a price spike never before seen in the history of the world. Organ says, ‘You will see that you will go to sleep at night, and you will wake up the next morning and see gold bidding at $3,000 per ounce, and there will be no offer, and it will rise by $500 a day. It will come in 2014. They are running out, they don’t have it.’
The supplies for silver are even more strained and suppressed according to Organ. He says, ‘Silver is similar to what is going on in gold, but even better. In China, on September 22, they are going to have a futures market similar to Comex, but it will be in physical metal. You settle in physical metal. So, for the first time, you are going to see the pure price discovery mechanism work, and it’s going to be in total conflict to the crimes that are being committed on the Comex. Organ thinks silver will trade at ‘$200 per ounce’ and says, ‘By December, this whole thing is going to collapse.’

Why gold is still the best buy after the US dollar for currency protection (video)

Gold prices may be falling but they are falling less than many other currencies against the US dollar. That still makes gold the second choice of investors hedging against currency decline. So why is it not rising in dollar terms?
On ‘Futures In Focus,’ Adam Mesh Trading Group’s Todd Horwitz and Bloomberg Industries’ Ken Hoffman discuss the price of gold on ‘In The Loop’ with Olivia Sterns…
WATCH VIDEO

This post was published at Arabian Money on 09 September 2014.

Can silver defend $19 again?

The price of silver has declined continuously since peaking at just over $21.50 per troy ounce at the start of July. At $19.00, silver is now just 40 cents shy of hitting April’s low of $18.60 and only 80 cents away from 2013′s trough at $18.20. The grey metal has been pressured above all by the recent weakness in gold prices (see figure 3) and the dollar’s strength. Unfortunately, there are no signs yet to suggest the two metals will decouple soon. Thus if the current trend continues, silver may go on to break below this key $18.20-$19.00 support range, a result which could encourage fresh selling from financial speculators. However, sentiment is not as bearish as had been the case in the previous times when the metal reached these extremes. So, a potential bounce back here may also be on the cards, especially as a long-term bearish trend has already been eroded (see weekly chart, in figure 1). In other words, there is the possibility we will see a protracted move in the price of silver soon. But which direction this may be is difficult to predict at this stage.

This post was published at TruthinGold on September 10, 2014.

Draghi’s Non-Starter: A Policy to Impoverish People to Make Governments Efficient

How Europe’s low inflation impedes fiscal and structural reform … Europe does not yet have its equivalent of Japan’s Abenomics, but Mario Draghi, president of the European Central Bank, pretty much advocated it in his press conference last week. Europe, he said, needs fiscal, monetary and structural policy working together, the three arrows of Abenomics. He acknowledged the ECB’s duty of getting inflation, now 0.3%, back up to its target of near 2%. But the ECB, he said, can’t rescue Europe alone: it needs help from fiscal and structural reforms. – Economist
Dominant Social Theme: Inflation is key. Debasing the currency is necessary for progress and prosperity.
Free-Market Analysis: This Economist article is all about why price inflation is necessary to help Europe’s bleeding economies achieve “fiscal consolidation.”
Fiscal consolidation is a polite descriptive term for raising taxes and cutting government spending. Inflation helps this process because while it’s taking place, prices rise, disguising the cuts and additional taxes. Price inflation “softens the blow,” in other words.
And that is what The Economist deems important. Governments need to be efficient. Voters need to be lulled. Here’s more:
Of course, … monetary policy can’t initiate fiscal consolidation or liberalize product and labour markets, and … both those things are essential to Europe’s long term health. But the ECB can help determine whether either of those things succeeds.
For Europe’s fiscal and regulatory policy makers to do their jobs, it will help immensely if the ECB does its own. Let’s start with fiscal consolidation. Mr Draghi’s predecessor, Jean-Claude Trichet, used to extoll the stimulative benefits of fiscal consolidation; the confidence of investors and business would soar when they saw government finances put on a stable path.
– See more at:

This post was published at The Daily Bell on September 10, 2014.

New Homebuilder Short-Sell Report Is Up

This is my best work yet. This particular homebuilder had $262,000 of debt on the balance sheet for every home it delivered at the peak of the market. Today is has a stunning $630,000 of debt for each home it has delivered over the last 12 months. It’s contract signings are in decline per its latest 10-Q disclosure.
In my view, shorting this stock now offers the investor the potential for a 70% gain over the next two years. In addition to its high level of debt, I have uncovered a high degree of questionable and misleading accounting maneuvers this company uses to make its p/e ratio look lower and to make all of its other financial analysis ratios appear more favorable. I can honestly say that I have never come across worse financial disclosure at a large-cap public company.

This post was published at Investment Research Dynamics on September 9, 2014.

Gold In The USA

The United States has always had a love affair with the yellow metal. It all started in Stafford, Virginia in 1782, when Thomas Jefferson documented the first gold discovery himself. Since then, Americans have been searching for gold far and wide. The California Gold Rush brought hundreds of thousands of people to the West in search of new found wealth. Years later, many more ventured into Alaska’s wilderness to hit it rich. Even today, there is a modern gold rush in Nevada, where the five biggest gold mines (by contained oz) are located.
The US produced 8.2% of the world’s gold in 2013, which puts it in third place for annual production. It’s also no secret that the US also holds the largest reserves of gold today, primarily located in the Fort Knox and Federal Reserve Bank of New York depositories. Between the two locations, a hefty 8,133.5 tonnes of gold are vaulted.
The future is still bright for gold in America: in fact, just three undeveloped deposits in Alaska (Pebble, Donlin, and Livengood) hold a potentially game-changing 180,000,000 oz of gold combined. While it is true that there have been some hiccups along the way, such as Roosevelt’s confiscation of gold in 1933, it is unlikely that America’s fixation on gold will end any time soon.

This post was published at Zero Hedge on 09/09/2014.

Decades of federal government ‘cost-plus’ contracts increase taxpayer costs 2, 3, 4 times

The biggest issue with federal government purchasing is the use of cost-plus contracts. This should be an issue that most people agree with regardless of their political leanings.
Cost-plus contracts are a way for government acquisition professionals to pass on research and development risks to the taxpayers. The acquisition professionals cause this risk to taxpayers through two different actions: 1. Writing poor system requirements and 2. Not contracting for the proper lab work, experimentation, and prototyping for new technologies. Essentially, programs are going forward for full funding without the proper engineering and scientific effort being conducted to refine new designs and catch unforeseen problems with new technologies. There are programs funded that contain requirements for technologies that don’t even exist in a proven prototype.
For some programs that are funded by Congress, there are several high risk technology requirements that are rolled into the same project, compounding risk to taxpayers. While the contractors experiment, fail, and experiment again to try and meet those requirements, the bills keep piling up.

This post was published at Washingtons Blog on September 9, 2014.

IceCap Asset Management On Europe: “If You Exclude All The Debt, There’s No Debt Problem”

Virtually every country in the world spends more money than they collect in taxes, and no group of countries has done a better job at this than those that formed the Euro-zone.
This collective group has so much debt, that a recent study by the Bank of International Settlements concluded it would take 20 consecutive years of surpluses to simply bring debt loads back to levels previously reached prior to the current crisis.
Considering that this has never happened before, we have little confidence that this type of spending constraint can be accepted and implemented by any of the respective governments.
There is only one way possible for any person, company or government to spend more money than they earn – they must borrow to make up the difference. And as long as the Euro-zone countries are able to borrow, they’ll be able to extend the charade a while longer.
This is the point when many investors and pro-Euro supporters will argue that all of the Euro-zone countries are able to borrow, and in fact each country is able to borrow at the lowest interest rate in history for each individual country.
This is indeed true. However, this is the point when IceCap reminds investors that there are two types of debt markets.
The first is the one where the price or interest rate you pay is determined by the open market, with no interference or influence by other forces.
In 2012, the Euro crisis reached it’s latest crescendo and each country’s ability to borrow was at the mercy of the open market…

This post was published at Zero Hedge on 09/09/2014.

Obama Outperformed Reagan? Hardly.

“There are three types of lies; Lies, Damn Lies and Statistics.” – Mark Twain
Last week, Adam Hartung qualified for the “Mark Twain Award” if there was such a thing. In his article, “Obama Outperforms Reagan On Jobs, Growth & Investing,” Adam goes to some length to try and show that unemployment rate, the S&P 500 and economic growth are currently better under the current administration than they were during the Reagan administration.
Adam’s first mistake was in the use of the Bureau Of Labor Statistics measure of unemployment (U3) as a comparative benchmark of success as President. To wit:
“’President Obama has achieved a 6.1% unemployment rate in his 6th year, fully one year faster than President Reagan did. At this point in his presidency, President Reagan was still struggling with 7.1% unemployment, and he did not reach into the mid-low 6% range for another full year. So, despite today’s number, the Obama administration has still done considerably better at job creating and reducing unemployment than did the Reagan administration.”
While this is “technically true,” it falls within Twain’s category of a “statistical lie.”
The BLS’s measure of unemployment has become obfuscated by the rise in the number of individuals that are no longer counted as part of the labor force. As I discussed in “Why The Unemployment Rate Is Irrelevant,” the measure of labor force participation is markedly different between Reagan and Obama.

This post was published at StreetTalkLive on 08 September 2014.

Scottish Chaos? Should I Stay or Should I go?

It is very interesting to see the numerous emails pouring in from Scotland and England. Even in Scotland there is a strong left-wing socialist factor that has their hand out to whom Cameron is trying to persuade to stay in the UK and they will be rewarded. For the benefit of both England and Scotland, a separation would be fantastic if Scotland took the high road here. If Scotland lowered its taxes including VAT, this will put pressure on England.
Moreover, it has been argued that Scotland costs the British more than they get back. The Government Expenditure and Review Scotland (GERS) calculates how much money is raised through taxes in Scotland and the level of public spending north of the border. The Scottish nationalists argue the number are erroneous. However, the numbers appear to be fairly trustworthy. The GERS figures, for the financial year 2008/09, show that the Treasury spent about 54 billion on Scotland and only received 43.5 billion in revenue.
The Brits believe that the Scots do not pull their own weight. However, there is the question of a very important asset – the North Sea oil. Most of the United Kingdom’s fossil fuel lies off the coast of Scotland – not England. Therefore, the wealth the North Sea Oil generates should arguably be added to figures for total revenue from Scotland that England does not count. This introduces a whole string of important questions if there is a separation. Will this natural resource be returned to an independent Scotland?

This post was published at Armstrong Economics on September 9, 2014.

Preparing To Asset-strip Local Government? The Fed’s Bizarre New Rules

In an inscrutable move that has alarmed state treasurers, the Federal Reserve, along with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, just changed the liquidity requirements for the nation’s largest banks. Municipal bonds, long considered safe liquid investments, have been eliminated from the list of high-quality liquid collateral. assets (HQLA). That means banks that are the largest holders of munis are liable to start dumping them in favor of the Treasuries and corporate bonds that do satisfy the requirement.
Muni bonds fund the nation’s critical infrastructure, and they are subject to the whims of the market: as demand goes down, interest rates must be raised to attract buyers. State and local governments could find themselves in the position of cash-strapped Eurozone states, subject to crippling interest rates. The starkest example is Greece, where rates went as high as 30% when investors feared the government’s insolvency. Sky-high interest rates, in turn, are the fast track to insolvency. Greece wound up stripped of its assets, which were privatized at fire sale prices in a futile attempt to keep up with the bills.
The first major hit to US municipal bonds occurred with the downgrade of two major monoline insurers in January 2008. The fault was with the insurers, but the taxpayers footed the bill. The downgrade signaled a simultaneous downgrade of bonds from over 100,000 municipalities and institutions, totaling more than $500 billion. The Fed’s latest rule change could be the final nail in the municipal bond coffin, another misguided move by regulators that not only does not hit its mark but results in serious collateral damage to local governments – maybe serious enough to finally propel them into bankruptcy.
Why this unprecedented move by US regulators? It is not because municipal bonds are too risky, since corporate bonds with lower credit ratings are accepted under the new rules. Nor is it that the stricter standard is required by the Basel Committee on Banking Supervision (BCBS), the BIS-based global regulator agreed to by the G20 leaders in 2009. The Basel III Accords set by the BCBS are actually more lenient than the US rules and do not include these HQLA requirements. So what’s going on?

This post was published at Washingtons Blog on September 9, 2014.

The Era Of Widespread Biometric Indentification And Microchip Implants Is Here

Are you ready to have your veins scanned every time you use your bank account? Are you ready to use a “digital tattoo” or a microchip implant to unlock your telephone? Once upon a time we read about such technologies in science fiction novels, but now they are here. The era of widespread biometric identification and microchip implants is upon us, and it is going to change the way that we live. Proponents of these new technologies say that they will make our private information and our bank accounts much more secure. But there are others that warn that these kinds of “Big Brother technologies” will set the stage for even more government intrusion into our lives. In the wrong hands, such technologies could prove to be an absolute nightmare.
Barclays has just announced that it is going to become the first major bank in the western world to use vein scanning technology to control access to bank accounts. There will even be a biometric reader that customers plug into their computers at home…
Barclays is launching a vein scanner for customers as it steps up use of biometric recognition technology to combat banking fraud.
The bank has teamed up with Japanese technology firm Hitachi to develop a biometric reader that scans a customer’s finger to access accounts, instead of using a password or PIN.
The biometric reader, which plugs into a customer’s computer at home, uses infrared lights to scan blood flow in a person’s finger. The user must then scan the same finger a second time to confirm a transaction. Each ‘vein profile’ will be stored on a SIM card inside the device.

This post was published at The Economic Collapse Blog on September 9th, 2014.