Gold & Silver Trading Alert: Miners Break Down as U.S. Dollar Soars

Briefly: In our opinion no speculative positions in gold, silver and mining stocks are now justified from the risk/reward perspective. However, day-traders might consider a small speculative long position in silver.
Even though gold didn’t react strongly to Mario Draghi’s comments, a lot happened in the precious metals market yesterday. We finally saw a breakdown in mining stocks and we saw an extreme daily rally in the USD Index. As you know, the USD Index very often triggers significant moves in gold. Even though the last 2 days didn’t bring any changes, the situation has just become very tense for the precious metals investors and traders. What are the implications for your precious metals investments and trades?
Let’s examine the charts and find out (charts courtesy of As you know, the USD Index is right at the cyclical turning point (or slightly behind it, which doesn’t change anything), so it’s likely to change its direction. Since it moved above the Sep. 2013 high in a very sharp manner, you might be wondering if there was something important that stopped the rally yesterday and that could prevent further gains for at least a while.

This post was published at GoldSeek on 7 September 2014.

Gold And Silver Ready To Go BOOM

The wait for the next leg up in both gold and silver has been excruciating. Many bulls are losing hope and the number of bears appears to be increasing. As for me, I remain rock solid. I hold long silver positions and I must say I am not worried one iota. Of course I could be wrong. I seriously doubt it though. Let’s see why.
There are really only a couple of things I wanted to show in this analysis. We will use the weekly chart for gold and the daily chart for silver. Let’s begin with gold.
We can see the triangle formation as made by the two black trend lines I have drawn. This structure is on the charts of most, if not all, technical analysts. And so it should be. But it is very obvious. And when something becomes too obvious, I put on my contrarian hat.
From previous analysis, readers will be well aware that I am looking for a rally that busts the upper trend line in a fake out move. I expect the break to only be temporary before it reverses back down to continue the down trend.
Also, in previous analysis, I stated I thought the lower trend line would hold this current pullback. Last week it broke through and in doing so provided further clarity. That is, I believe this is the start of a double fake out. This current break of the lower trend line is the minor fake out while the bust of the upper trend line will be the major fake out.

This post was published at Gold-Eagle on September 8, 2014.

No Economy For Americans

The Dow Jones stock average closed Friday at 17,137, despite the fact that the payroll jobs report was a measly 125,000 new jobs for August, an insufficient amount to keep up with the growth in the working age population.
The low 125,000 jobs figure is also inconsistent with the Bureau of Economic Analysis’ second estimate of second quarter 2014 US GDP growth of 4.2 percent – a figure beyond the capability of the present-day US economy.
Clearly, the economic numbers are out of sync with one another. They are also out of sync with reality.
One of the reasons the stock market average is high is the massive liquidity the Federal Reserve has pumped into the banking system since 2008. Instead of going into consumer inflation, the money went into stock and bond price inflation.
Another reason for the artificial high stock market is the multi-trillion dollar buy-back of their own stock by US corporations. Many of these corporations have even borrowed from the banks in order to drive up their share prices with heavy purchases, thus maximizing executive bonuses and the values of stock options for board members. In effect, they are looting their own firms by loading the companies with debt in order to drive up executive and board incomes.
The stock market’s rise is not because consumer incomes and real retail sales are growing. Real family median incomes have been falling, and real retail sales, at best, are flat.
Let’s look at the composition of the pathetic 125,000 new jobs, and then we will examine whether these jobs are real or make-believe. (Keep in mind that payroll jobs include part-time jobs and that the number of payroll jobs is not the number of people employed, because many Americans make ends meet by working two and even three jobs.)

This post was published at Paul Craig Roberts on September 8, 2014.

German Opinion Poll: 22% Can Imagine Voting for AfD

EU Skepticism Still Growing in Germany The recent state election in the Free State of Saxony already indicated as much: EU-skepticism is alive and well in Germany, even with the imminent threat from the EU’s sovereign debt and banking crisis on the back-burner.
This has now been further confirmed by the release of an Emnid survey (Emnid is a large polling company in Germany, comparable to Gallup), according to which 22% of German voters can imagine voting for the AdF (‘Alternative fr Deutschland’), an EU-skeptic party formed in February of 2013).
Note here that ‘could imagine to vote for’ is not the same as ‘would vote for if the election were held tomorrow’ – based on that, the party would receive only 6% of the nation-wide vote, which is however a clear improvement over the actual result in the last parliamentary election. Note that the party received 7% in the European election, which was a quite respectable, though not sensational result.

European election 2014: the AfD received a respectable 7% of the vote

This post was published at Acting-Man on September 8, 2014.

If The Economy Is Recovering, Why Is The Labor Force Participation Rate At A 36 Year Low?

Should we be concerned that the percentage of Americans that are either working or looking for work is the lowest that it has been in 36 years? In August, an all-time record high 92,269,000 Americans 16 years of age and older did not “participate in the labor force”. And when you throw in the people that are considered to be “in the labor force” but are not currently employed, that pushes the total of working age Americans that do not have jobs to well over 100 million. Yes, it may be hard to believe, but there are more than 100 million working age Americans that are not employed right now. Needless to say, this is not a sign of a healthy economy, and it is a huge reason why dependence on the government has soared to absolutely unprecedented levels. When people can’t take care of themselves, they need someone else to take care of them. If the percentage of people in the labor force continues to decline like it has been, what is that going to mean for the future of our society?
The chart below shows the changes in the civilian labor force participation rate since 1980. As you can see, the rate steadily rose between 1980 and 2000, but since then it has generally been declining. In particular, this decline has greatly accelerated since the beginning of the last recession…

This post was published at The Economic Collapse Blog on September 7th, 2014.

Ten Reasons to Condemn Inflation

Inflation, defined as an expansion of the supply of unbacked money, is an elementary evil, always and everywhere that it occurs.[1] It is the ignored and core cause of numerous problems in the economy and in society, including:
1. Inflation Causes Booms and Busts
Increasing the money supply that involves the granting of more credit means that new money is created by credit that is not covered by savings. This causes interest rates to fall more than would be the case without an expansion of the money supply. The result is an artificial economic boom, which politicians and the general public initially welcome. Investments are triggered that would not have been carried out if the invested capital had to be saved up first, prior to such investments. Therefore, there are insufficient resources available to bring all the projects thus begun to completion. In addition, resources – which are by their very nature scarce – are not brought to bear where they are most needed – in the most urgent projects. When interest rates climb again, the malinvestment comes to light, and a crisis – a bust – results. To overcome the bust, the central bank then reduces the interest rate again. A crisis that would clean things up is thus not allowed to happen, because it is politically undesirable.
2. Inflation Redistributes Wealth and Purchasing Power
An un-backed expansion of the money supply causes the prices of goods and services to rise. The parties who first receive the newly created money profit. They are able to make purchases at goods prices that still have not risen, whereas the later recipients of the money will only enjoy the benefits of the new money when the goods prices have already risen. They are put at a disadvantage and lose relative to the initial recipients of the cash. In addition, some market participants don’t gain anything from the newly created money. The initial recipients are the banks, the state, and large enterprises. This effect also occurs when the price of goods remains stable due to money expansion and would otherwise have fallen without an expansion of the money supply. In this instance, inflation is particularly nefarious.

This post was published at Ludwig von Mises Institute on Monday, September 08, 2014.

Scottish Independence Referendum: The Complete Summary

For those just catching up on the main news event of the weekend, namely the sudden surge in Scotland “Yes” vote polling surpassing 50% for the first time, here is a complete round up of the background, updates and expert reactions from RanSquawk, Bloomberg and AFP.
ANALYSIS: THE CASE OF SCOTTISH INDEPENDENCE
Recent polling shows the ‘Yes’ campaign overtaking the unionists for the first time, just 10 days ahead of the final vote on September 18th Independent Scotland runs the risk of limited currency options and fiscal uncertainty UK debt ratings hang in the balance as worst-case scenario sees Westminster shouldering an estimated extra GBP 140bln in former Scottish debt BACKGROUND
The ‘No’ party – the unionists – are led by Alistair Darling, former Chancellor of the Exchequer, previously held a lead over the nationalists but this has reversed in the most recent polling, with the ‘No’ vote holding 49%.
The ‘Yes’ party – the nationalists – are led by Alex Salmond, Scotland’s First Minister, and harbour hopes of swinging the referendum in their favour as latest polls suggest they have been overtaken the ‘No’ camp by 2ppts.
Serious doubts remain over the future of Scotland’s currency if the nationalists win. Salmond has repeatedly stated his intention of keeping the GBP, but all 3 main UK parties have made clear they would not be willing to share their currency and central bank with a foreign state. Also, a potential use of the GBP without a currency union would not be compatible with EU membership, as the EC requires member states to have a monetary authority of their own.
HOW WILL THE MARKET REACT?
‘No’ Victory – Given the somewhat complacent attitude market participants have had towards the vote indicates that the upside in riskier assets is limited in case the unionists win the referendum with a large majority. Nevertheless, expect to see some tightening in spreads of the shorter-dated implied volatilities which have widened heading into the risk event.
However, a close vote could lead to a second referendum in 5-10 years and as such, changes to UK regional governance would take place as a result of more devolution, with additional powers going to Scotland such as more autonomy over taxation. In turn, business leaders, including the head of Standard Life and RBS, will have to decide as to whether to relocate their headquarters to the UK or stay in Scotland depending on what type of policies Scotland decides to pursue with its additional powers.
‘Yes’ Victory – Great uncertainty revolves around an independent Scotland, specifically due to the lack of clarity over the potential new fiscal arrangements such as interest rates, taxation, investor protection, financial stability and monetary policy.

This post was published at Zero Hedge on 09/08/2014.

Should Banks Lend Money At All?

Banks are in the business of making loans. Is that the right model?Before answering, please consider the model of Lending Club. Lending Club is an online financial community that brings together creditworthy borrowers and savvy investors so that both can benefit financially. We replace the high cost and complexity of traditional lending with a faster, smarter way to borrow and invest. Here is the initial process straight from the Lending Club Website.

This post was published at Global Economic Analysis on Monday, September 08, 2014.

A Quick Reminder Of The Only Thing That Matters, In One Chart

Over the weekend, one of JPM’s best strategists, Nikolaos Panigirtzoglou, looked at global liquidity and concluded that “the current episode of excess liquidity, which began in May 2012, appears to have been the most extreme ever in terms of its magnitude and the ECB actions have the potential to make it even more extreme.” Curious why? Read the key note excerpts here. But more to the point, for anyone lamenting stingy central banks, here is one chart that should put everything in perspective, and explain why the world has reached a plateau of permanent addiction to monetary liquidity injections, and whynothing else matters.
Oh, and good luck with that “Fed is about to raise rates” stuff…

Source: “JPM

This post was published at Zero Hedge on 09/08/2014.

As ISDAFIX Becomes Next LIBOR, Can GOFO Manage To Avoid The Spotlight?

As ISDAFIX Becomes Next LIBOR, Can GOFO Manage To Avoid The Spotlight? In the wake of the recent LIBOR benchmark interest rate rigging scandal and successful prosecution of a number of global investment banks for participating in LIBOR manipulation, a new interest rate rigging scandal is gathering steam.
Allegations surfaced last year that ISDAFIX, a similar global interest rate benchmark, had been rigged by a group of global banks, and these allegations are under investigation by a number of regulators including the US CFTC and the UK FCA. While the regulators have not provided any feedback as of yet, the class action suits by impacted investors are now beginning.
ISDAFIX is a set of global benchmarks for interest rate swaps that are used by the worldwide financial community to price and settle contracts based on these interest rate derivative swap contracts. The interest rate swap market is worth over $450 trillion, and these products and contracts are used by a wide spectrum of participants from large corporates to national pension funds and investment houses. The International Swaps and Derivatives Association (ISDA) owns the ISDAFIX benchmark.
The first class action suit in the US has just been filed by the Alaska Electrical Pension Fund, and is seeking compensation for alleged manipulation of the ISDAFIX benchmark rates. The class action suit accuses 13 investment banks and one brokerage of manipulating the benchmark rates to artificial levels over a multi-year period so as to avoid paying out to clients on the interest rate contracts.
The defendants comprise the largest investment banks in the world including Barclays, JP Morgan, Deutsche Bank, Goldman Sachs, HSBC, UBS, and Credit Suisse, (which are all market making members of the London Bullion Market Association) and also Citigroup, and Bank of America. Brokerage house ICAP is also named in the class action suit. ICAP was in charge of calculating the US dollar version of ISDAFIX by averaging rates which were submitted by the contributing banks.
The Alaskan pension fund suit contains analysis by legal and investment consultancy Fideres. Fideres was also the consultancy that provided analytical evidence of price manipulation for a number of recent class action suits that allege price manipulation of the London Gold Fixing benchmark.
According to the suit, analysis over 2009-2012 by Fideres finds that on nearly every day the banks in question were all submitting virtually identical rates to each other, and that when it became known in December 2012 that UBS had begun cooperating with regulators over the LIBOR investigations, only then did the submitted rates start to diverge.
Following the manipulation allegations, the owner of the benchmark, ISDA, took the administration of the benchmark away from ICAP, and more recently, a new administrator ICE Benchmark Administration has been appointed by ISDA. ICE is the owner of numerous financial exchanges and clearing houses, such as the NYSE Euronext exchange.
After the LIBOR scandal, the LIBOR benchmark became the world’s first regulated benchmark. LIBOR is now regulated by the UK FCA, and coincidentally, LIBOR it is also administered by ICE Benchmark Administration. There is an expectation in the market that the ISDAFIX benchmark will probably also become a regulated benchmark.

This post was published at Gold Core on 8 September 2014.

Here Is Why Europe Just Launched The “Nuclear Option” Against Russia

Europe’s leaders, we assume under pressure from Washington, appear to be making a big weather-related bet with their taxpayers’ lives this winter. As they unleash funding sanctions on Russia’s big energy producers, Europe has pumped a record volume of natural gas into underground inventories in an effort to ‘outlast’ Russia and mitigate any Napoleonic “Winter War” scenario. The plan appears to be to starve Russian energy firms of cashflow – as flows to Europe are already plunging – and remove their funding ability, potentially forcing severe hardship on Russia’s key economic drivers. There appears to be 3 potential problems with this plan…

This post was published at Zero Hedge on 09/08/2014.

What I Learned in China About the Fate of the US Dollar

Surreal Art and Car Lotteries A huge plastic bull with a mushroom cloud coming out of his fundament … and a guy with horns on his head, crushed against the wall.
It is art. Titled: Things Are Not What They Seem. It is also a puzzle. Because we can’t tell what it seems to be. In fact, it doesn’t seem to be anything at all… just an odd piece of surreal art. It is exactly what it seems to be, in other words. Maybe that is the joke. Another statue … in a kind of rough bronze … has a woman (at least, it appears to be a woman) with her legs splayed, and her arms over her head, lying on the floor.
The Parkview Green mall in downtown Beijing is easily the biggest, most modern and most stylish mall your editor has ever seen. It looks like something imagined from the future – made of steel, glass and concrete… with soaring interior spaces crisscrossed by elevated walkways and escalators… and a collection of oversize pieces of art that rivals the Tate Modern in London.

Tianjin Goldin Finance 117
(Photo credit: unknown)

This post was published at Acting-Man on September 8, 2014.

India prepares for return of gold demand

Festival season is kicking off in India – a period in which gold sales traditionally spike in the world’s largest consumer market for the precious metal.
This year investors are watching the key market particularly closely, following a period of muted demand when bourses have rallied and supply has been choked.
The recently elected government of Prime Minister Narendra Modi surprised industry analysts by keeping import controls unchanged in its July maiden budget, in spite of an improvement in India’s trade balance.
At the same time, gold demand has become subdued in India, as domestic investors favour equity markets, which have risen 25 per cent in the past six months on hopes of renewed economic growth following Mr Modi’s victory in May.
‘We have been saying for about a year now that gold is not what it used to be,’ says Swapnil Pawar, business head at Karvy Capital, the asset management and investment advisory group.

This post was published at TruthinGold on September 8, 2014.

EU – Nothing Works, Not Even Stimulation

Mario Draghi cannot launch QE without German political assent … It is surely wishful thinking to suppose that the ECB is ready to launch full-fledged QE, given its political make-up … Mario Draghi’s comments on the eurozone economy at Jackson Hole have put him in direct conflict with Berlin – UK Telegraph
Dominant Social Theme: These last five years have been a problem, but now you can smell the hope and change.
Free-Market Analysis: We’ve written regularly about the difficulties with the EU for years and what’s astonishing is that almost all of our predictions about its dysfunctional nature – and predictable results – have been realized, and yet the EU staggers on.
There were even, as we anticipated, street demos and open rebellion in parts of the EU at the height of the current crisis. Athens was bloodied and Spain, Italy and Portugal among other countries saw serious unrest, especially among youth. And yet, surprisingly, the EU withstood the blows primarily through the use of uncompromising political, civilian and military force. The elites were not afraid to “crack heads.”
It is Southern Europe that has borne the brunt: Taxes have risen, services have been cut and formal employment has never returned. Young people have little work; older workers cannot trust the vaunted EU safety net. Retirements have been put off. Poverty has risen.
Enter Mario Draghi and the Eurocrats once again to salvage a continually unsalvageable mess. Draghi intends to print lots of money in order to buy securities in the open market, presumably including national and EU debt.

This post was published at The Daily Bell on September 08, 2014.

Europe Takes the QE Baton

If the wide, wide world of investing doesn’t seem a little strange to you these days, it can only be because you’re not paying attention. If you’re paying attention, strange really isn’t the word you’re probably using in your day-to-day investing conversations; it may be more like weird or bizarre. It increasingly feels like we’re living in the world dreamed up by the creators of DC Comics back in the 1960s, called Bizarro World. In popular culture “Bizarro World” has come to mean a situation or setting that is weirdly inverted or opposite from expectations.

This post was published at Mauldin Economics on SEPTEMBER 7, 2014.

Key Events In The Coming Week: iPhone 6 Release And Other Less Relevant Happenings

One of the more amusing comments overnight came from Bank of America, which now predicts that China’s export growth will be boosted by iPhone 6 by 1% per month through year-end. Whether or not this is accurate is irrelevant, but we are happy that unlike before, BofA has finally figured out that iPhone sales are positive for Chinese GDP, not US, which was the case with the release of the iPhone 4 and 5, when clueless strategists all came out boosting their US (!) GDP forecasts on the iPhone release. We note this because the long-awaited release of Apple’s new iPhone will certainly grab some attention tomorrow. According to a BofA poll last week and of the 124 respondents surveyed, 66% of those have noted that they are going to buy the new iPhone and of those planning to buy 75% of those will be replacing their iPhone 5/5s.
In terms of economic data, after a quiet Money when the only release is the consumer credit data, on Tuesday we get the JOLTS report and UK Industrial Production are the main releases of the day. On Wednesday, we will get China’s credit growth stats for August which will be interesting after a sharp decline in July. US wholesale inventories and French IP are also due on Wednesday. This then brings us to Thursday where Draghi is expected to give a keynote speech at a eurofi forum in Milan. We will also get inflation readings from China, France and Germany on Thursday. On Friday, the latest US retail sales data as well as U of Michigan consumer sentiment for September are due. We will also get IP data from the euro area and Italy but given deepening.

This post was published at Zero Hedge on 09/08/2014.

Feverish Bulls Snub a Day of Rest

Even rigged markets are entitled to a little rest now and then, wouldn’t you say? If so, they passed up the opportunity to do so on Friday ahead of a three-day holiday weekend. Instead, while nearly everyone in America was fixing to usher out summer in whatever way might retain its savor best , stocks were ratcheting higher with a cheerless determination that was about as laid back as a buzz saw. You can see this in the chart below. The Dow Industrials bottomed a little more than an hour into the session; then they forged ceaselessly higher until the closing bell imposed a mandatory, three-day time-out. If buyers are acting this aggressively in the lazy, hazy, waning days of summer, just imagine what they are capable of between now and Thanksgiving, when the country traditionally gets back to work with a vengeance.

Whatever happens, and no matter how convinced we are that the stock market is forming a broad top, we’ve grown weary of trying to short it. Some would say we’re crazy to even try to get in the way of a bull that has been rampaging for 65 months. The Dow is on its way to 20,000, permabulls insist, so why try to swim against the tide? Maybe they’re right. Although we can think of a dozen great reasons why the Dow can’t possibly keep rising in the months ahead, the arguments would be the same ones we’ve made all along. The simplest and most compelling of them is that the stock market’s stellar performance has gotten way, way ahead of an economy that can’t seem to get off the launching pad. But that’s been true for years, and it’s difficult to imagine what might change this dynamic no matter how perverse it seems. As for the spurt in GDP growth alleged by the spinmeisters, we’re not buying it. What we see is stagnant wages, a housing recovery that is completely spent, budget tightening at all levels of government save federal, a manufacturing sector so out-of-practice that it’s unable to reap the full benefit of lower energy costs, and job creation that is egregiously sub-par in both quantity and quality. What’s left? As far as we can tell, only a car-leasing boom that has probably reached the saturation point.

This post was published at Rick Ackerman BY RICK ACKERMAN ON SEPTEMBER 8, 2014.

British Pound Collapses To 10-Month Lows

We warned here that the “Yes” vote for Scottish Independence was a “high risk” event, and as we noted earlier, with polls indicating its a high probability and ‘English’ leadership in full panic mode, it is perhaps not surprising that the British Pound opened down 160pips at 10-month lows… (a 500 pip drop in 3 days)… But, didn’t the clever people on TV tell us ‘it was priced in’?

Chart: Bloomberg
* * *
As we concluded previously,
Some Possible Implications Of a ‘Yes’ Vote
In our view, a ‘yes’ vote would have several key implications:
Bad for UK growth. Uncertainties over the economic prospects, policies and currency arrangements of an independent Scotland probably would hit growth in both Scotland and the rest of the UK (rUK), raising the incentive for firms to ‘wait and see’ or to expand elsewhere. Exports to Scotland account for roughly 4% of GDP for the rUK and Scotland would immediately be the rUK’s second biggest trading partner, slightly behind the US and slightly above Germany. Moreover, many banks and businesses have sizeable cross-border exposures between Scotland and rUK, and some firms may seek to limit such exposure as a hedge against the possible breakup of sterlingisation (if that is the policy adopted).

This post was published at Zero Hedge on 09/07/2014.

Scotland Has Had Enough?

Hmmm…. this is a curious thing, you know. Secession, specifically.
Scotland’s nationalists overtook opponents of independence in an opinion poll for the first time this year, sparking a government promise of more powers for the Scottish parliament less than two weeks before the country votes on whether to break up the 307-year-old U. K.
Yes, the government promised. Uh huh. And why promise now? How do you guarantee compliance? You can’t, and you won’t get it. If Scotland’s citizens believe these promises they’re fools. If the UK government intended to do any of this it would have done so without the threat of Scotland leaving.
It didn’t, and therefore Cameron and the rest are ****ing liars.
Period.

This post was published at Market-Ticker on 2014-09-07.