Gold Investors Weekly Review – October 10th

Jon

n his weekly market review, Frank Holmes of the USFunds.com summarizes this week’s strengths, weaknesses, opportunities and threats in the gold market for gold investors. Gold closed the week at $1,223.09, up $31.74 per ounce ( 2.66%). Gold stocks, as measured by the NYSE Arca Gold Miners Index, rose 0.24%. The U. S. Trade-Weighted Dollar Index fell 0.90% for the week.
Gold Market Strengths Gold futures rose this week as many anticipate the Chinese will take advantage of lower gold prices. Indeed, gold seemed to withstand recent decreases in oil prices as well as increases in the dollar, implying that many investors are taking advantage of the bargain prices. On Friday, the Bank Credit Analyst highlighted that gold prices are unlikely to break down after successfully bouncing off support at $1,200 and are poised to stage a relief rally into the end of the year.
Gold Market Weaknesses Deutsche Bank recommended shorting gold due to the strong dollar environment.
A continuation of the prevailing socialist model in South America, Chile’s Supreme Court granted a petition by the Diaguita communities to overturn a resolution to develop the El Morro gold-copper project joint venture (JV) in Chile. This is the third time Goldcorp’s El Morro project has been suspended in three years.

This post was published at GoldSilverWorlds on October 11, 2014.

Deflation Fears Gaining Ground in Europe

Jon

The following article in the London Telegraph is definitely worth a read. It confirms what I have been thinking for a while now that the primary fear facing the markets and thus the Central Banks as far as the Western economies go, is NOT inflation, but rather deflation. Try as they can, the ECB and the BOJ in particular, cannot seem to get the kind of growth they are hoping for, and more particularly, an inflation rate of 2% annually.
Dam breaks in Europe as deflation fears wash over ECB rhetoric ‘We are reaching the end game in Europe. If they don’t launch real QE soon, the consequences are too awful to contemplate,’ warns RBS We have been following the Euro here in detail ever since ECB head Draghi first began attempts to talk the currency down when it reached the 1.400 level in May of this year. Quite frankly, with the problems that the Eurozone was having economically, the last thing desired in those quarters was a strong currency.
This was accomplished primarily by first raising the specter of additional monetary easing by lowering rates. Secondly it was then further reinforced by successive steps taken by the ECB which were seen as stimulative in nature by investors. I will not go into detail here as those have been covered previously here on this site.

This post was published at Trader Dan Norcini on Saturday, October 11, 2014.

Goldcorp CEO visits Australia and predicts ‘peak gold’ next year

Jon

Canada's Goldcorp, the world's biggest gold producer by market value, has renewed its prediction that "peak" gold will arrive next year, setting the scene for the bullion price to rise significantly over the next five to 10 years.
And it expects competition for gold resources will eventually force it out of its "comfort zone" of operating only in North and South America, with Australia's status as a major mining destination making it part of the new location considerations.
Goldcorp president and chief executive Chuck Jeannes told the Melbourne Mining Club yesterday that from next year there would be a steady reduction in global mine supply, due in part to the rate of new discoveries falling dramatically since peaking at 175 million ounces in 1995.
He said while investment demand for gold had been hit with the flight to equities in the past two years, China's cultural affinity for the precious metal, the rising wealth of its population, and the need for asset diversification away from the U.S. dollar meant the supply/demand fundamentals were "very strong" with the coming of peak gold.

This post was published at GATA

Lawrence Williams: Silver in supply deficit but price unmoved so far

Jon

Silver has been dubbed the ‘devil’s metal’ and likened to ‘gold on steroids’ because of its vastly more volatile price pattern vis-à-vis gold, with which it is inextricably linked. Indeed the prices of all the so-called precious metals tend to be linked to gold’s price performance although their fundamentals suggest that this should not be the case and, like silver, industrial supply/demand factors should be the main price drivers..
Over the past two years with gold in decline, silver has thus fared even worse, it tending to underperform gold on the downside and outperform on the up. A much followed measure of this is the gold:silver ratio which over the past few years has varied from around 35 to 70 and, at the time of writing is sitting at just over 70 – the worst level (for the silver investor that is) for  4 years.
What is perhaps surprising regarding the current silver price though, is that the latest analysis figures from specialist London-based precious metals consultancy, Metals Focus, suggest that this year silver will again be in supply/demand deficit, as it was last year, yet the price has still continued to fall. The silver bulls – and there are plenty of them – will point to murky goings on in the COMEX silver market as the root cause behind the decline, with huge short silver positions held by big banks with the apparent financial clout to manipulate the market whichever way they wish.

This post was published at Mineweb

ECB to publish results of bank audit on Oct 26

Jon

The European Central Bank said on Friday it will publish the results of new stress tests of eurozone banks on October 26, before it takes over as the region's banking supervisor.
These tests have been carried out under new powers given to the ECB as a result of the financial and debt crises, and are expected to be far more rigorous than previous tests which turned out to have missed weaknesses in some banks.
The ECB audits have focused attention in banks' boardrooms on whether they need to boost their capital base, since the purpose is to ensure that banks are strong enough to withstand sudden shocks and loss of confidence.
The ECB "will publish the results of its comprehensive assessment of 130 banks on October 26", the bank said.

This post was published at France24

Doug Noland: Derivatives Story 2014

Jon

At this point, I’ve seen sufficient market evidence to posit that the global financial Bubble has serious fissures. Emerging market currencies, bonds and equities are in trouble. Commodities are in trouble. The global leveraged speculating community appears close to, if not already in, trouble. Geopolitics is full of trouble. Global “risk off” liquidity issues are becoming a bigger issue – and are now being transmitted to U.S. securities markets through liquidity-challenged sectors such as small cap equities, corporate Credit and surging prices for risk protection. Corporate credit default swap (CDS) prices this week surged to multi-month highs. The VIX stock market volatility index jumped to an eight-month high. Moreover, this week’s bludgeoning in the over-loved and over-owned technology sector could have pushed some to the edge. Examining it all, the unfolding backdrop has me pondering previous vulnerable Bubbles along with the soundness of global derivatives markets.

This post was published at Prudent Bear

Casey Research: The Broken State and How to Fix It

Jon

The United States of America is not what it used to be. Unsustainable mountains of debt, continuous meddling by the government and Fed to “stimulate the economy,” and the US dollar’s dwindling status as the world’s reserve currency are very real threats to Americans’ standard of living. Here are some opinions from the recently concluded Casey Research Fall Summit on the state of the state and how to fix it.

This post was published at Casey Research

Monetary Policy And Impact On Assets

Jon

Monetary Policy and Impact on Assets
The last note briefly addressed the benefits associated with the reverse repurchase facility (RRF). Indeed liabilities have increasingly moved from bank balance sheets to the Fed, freeing lending capacity. One must recall reserves are not fungible outside of the banking system (but can act as collateral for margin). With flow decreasing, the opportunity for small relative volume bids spread over a large quantity of transactions (most instances per unit time) decreased with market prices in many asset markets. Is more downside coming?
A cost of QE is high quality debt remains siloed. As previously described, the RRF allows for assets previously purchased by the Fed to serve the market only in a limited capacity. While they are not able to the reused as collateral, they do replace a portion of the demand for high quality assets in the market, leaving relatively more available for reuse. At present, the 5bps paid by the Fed essentially attempts to put a floor under the short-term price for money. The Fed established an overall cap in September, supposedly because MMFs would view the Fed as a more secure counterparty than banks. I take a different view: They Fed is balancing net income from securities lent with the monetary policy goal of keeping rates up. As Stone & McCarthy recently pointed out, demand exceeded the $300 billion cap, limiting the amount paid-out by the Fed at the 5bps rate, with excess bid via Dutch auction. In the recent auction coinciding with quarter-end the low bid hit a price of -20bps (the counterparty receives less than deposited in order to rent the high quality assets from the Fed). While one may count the result as a limited success in controlling the lower bound of short-term interest rates, the Fed controls the cap for the 5bps rate. Interest on reserves (IOR), at 25bps, holds the entire system afloat, where otherwise extreme supply (especially relative to demand) would dictate a lower price; In economic depression even more so. To improve the optics of control, causality is reversed when speaking of the price of money. The interbank interest rate for reserves is set by market forces, and daily, the central bank adjusts reserves to match. Mechanically the Fed’s ‘target’ is just that, and nothing more. Alternatively, with IOR and the RRF, the prices at the each extremis of the corridor are fiat, and impact the Fed balance sheet.

This post was published at Zero Hedge on 10/11/2014.

Look at the Economy, Fight the Illusion of Normality, Feel the Weirdness.

Jon

That the economy needs such large stimulus in the sixth year of an expansion is unprecedented. Usually by now the economy has overheated from too-fast growth (inflation!), and economists are worried about the next recession.
By Editor, Fabius Maximus, a multi-author website with a focus on geopolitics. This article originally appeared here.
I don’t believe I’ve successfully communicated to our readers the extraordinary nature of our times. We too often focus on the details, but ignore this essential aspect of our situation. Since the crash (perhaps starting even before) we’ve sailed beyond the edges of the known economic ‘space’. We can no longer even see the edges of the map.
Normal science, the activity in which most scientists inevitably spend almost all their time, is predicated on the assumption that the scientific community knows what the world is like. Much of the success of the enterprise derives from the community’s willingness to defend that assumption, if necessary at considerable cost. Normal science, for example, often suppresses fundamental novelties because they are necessarily subversive of its basic commitments.
– Thomas Kuhn’s Structure of Scientific Revolutions (1962)
Look at the US economy. Marvel at the oddness.
Near-zero interest rates since December 2008 – almost 6 years – scheduled to end in Q2 or Q3 of 2015. Three rounds of quantitative easing (ending this month) taking the Fed’s balance sheet from $800 billion to $4,500 billion. – a trillion dollars added in the past year. A mind-bending expansion of the Federal public debt, taking it from $5.1 trillion to $12.9 T (x2.5) – with $809 billion added during the fiscal year just ended (a 6.8% increase, equal to 4.7% of GDP).

This post was published at Wolf Street on October 10, 2014.

Keiser Report: Meeting of Megaminds (E665, ft.Russell Brand & Alec Baldwin)

Jon

The following video was published by RT on Oct 11, 2014
In this episode of the Keiser Report, Max Keiser and Stacy Herbert host a two part interview with award-winning film and television actor, Alec Baldwin, and comedian, actor, author and host of the Trews, Russell Brand, about revolution, the media, ultra low interest rates, cobblers and their little helpers. They also discuss whether or not Sean Hannity has the talent to be a ‘terrorist’ and Russell Brand gives his opinion on the role of Fox News.

Chinese Gold Demand Expert Koos Jansen

Jon

Koos Jansen is one of the world’s most renowned experts on Chinese gold demand. He’s honest and straightforward, which is certainly not something we are able to say about other global gold supply/demand experts, and this hour-long podcast is simply terrific. Please make the time to listen.
Here’s just one example of what makes Koos great and why this interview is so worthwhile:
Do you know why silver prices in Shanghai seem to always be trading at a premium to London? Because the price quoted out of Shanghai includes a 17% VAT. Without the VAT, silver in Shanghai would be ay a discount to London! Where on earth have you ever heard that before? You see, that’s what makes Koos so invaluable. He does his own independent research and he is beholden to no one so you’re always going to get the straight skinny.
If you want the best information possible, be sure to follow Koos’ work posted at In the meantime, do yourself a favor and listen to this entire podcast. It’s wll worth your time.
TF
CLICK HERE TO LISTEN

This post was published at TF Metals Report on October 11, 2014.

New Zero Bound Only Game In Town

Jon

The Federal Reserve tried to fix the U. S. economy by Quantifornication – stimulus measures.
Investors reacted to the Fed’s unconventional efforts. Since the U. S. dollar is the world’s reserve currency and precious metals are priced in dollars they bought gold and silver to protect their wealth against currency devaluation and inflation.
Gold catapulted to a record in 2011 as investors wagered on higher inflation and a weakening dollar.
Gold and silver soar in price
How things have changed, the dollar has recently gained a lot of new friends while gold has very few left. The Fed is going to end its bond-purchasing program this month and start raising interest rates sometime in 2015, experts are talking June/July.
Investors believe:
A substantial upward trend in real interest rates will soon begin. In a strengthening economy. In a future where there is no inflation. Expectations regarding the Fed’s present, and it’s next moves, are pushing the dollar ever higher, gold and silver lower.
The chart above compares the movement in the dollar index with gold’s price.
Have investors got it wrong? Should we be more happy about rising interest rates or more worried about Russia/Ukraine, religious genocide, China and its deteriorating relations with other China Sea stakeholders, Ebola, very weak macroeconomic data coming out of Europe/Japan/Brazil, a slowdown in China and more than a few other hot buttons?
And do rising long rates really threaten gold? Has gold’s price ever gone up in conjunction with rising interest rates?
The following information and snippet is from Adam Hamilton and Scott Wright over at Zeal Intelligence.
Between August 1976 and January 1980 gold went up 731.7 percent, at the same time 10y Treasury yields climbed from 7.7 percent to 11.0 percent, a 42.2 percent climb.
From April 2001 to May 2006 gold nearly tripled with a 180.6 percent gain. During that time the average yield in benchmark 10y Treasuries was over 4.4 percent.

This post was published at Gold-Eagle on October 11, 2014.

PUTIN PLAYING CHESS, OBAMA PLAYING TIDDLY WINKS

Jon

I thought our economic sanctions were destroying Russia. We know they have pushed Germany into recession. Does a country on the verge of economic collapse, as our captured MSM blathers about on a daily basis, pay down $53 billion of debt in one quarter? Our empire adds $200 billion of debt per quarter.
Russian debt as a percentage of GDP is 13%. U. S. debt as a percentage of GDP is 101%. Who are we fooling. We live in the out of control empire in decline. Russia already experienced their fall. They learned their lesson. Debt leads to decline. Putin will win this economic battle. Obama’s master plan is to try and bankrupt Russia by driving the price of oil down and making Europe stop trade with Russia. In the short term Russia will be negatively impacted. The Russians are a stoic people. They aren’t spoiled, debt addicted, iGadget distracted morons. They’ll withstand the pain without making a peep. Putin’s popularity is near 80%.

This post was published at The Burning Platform on 11th October 2014.

Weekly Gold Trend Analysis: Stocks Sink as Gold Demand Rises

Jon

The dollar went down and down and so did stocks. And thus – the story goes – gold is valued more against the dollar than it was last week. Or, as Reuters puts it, “Gold retained gains from a four-day rally on Friday and was headed for its best week in nearly four months.” Safe-haven buying anyone?
This Week’s Monetary and Industrial Trends
October is the cruelest month for stocks, which slumped again on Friday, victims of bad sales forecasts in the technology sector and perceived economic problems abroad. There was positive news on Wednesday with the release of Fed notes that indicated policy makers were reluctant to raise interest rates. Stocks jumped, but then promptly fell again on Thursday.
Friday was choppier, with the Dow trending sideways before finding a significant downward direction. AP summarized the damage: “The Dow Jones industrial average lost 115 points, or 0.7 percent, to 16,544 Friday. The Standard and Poor’s 500 fell 22 points, or 1.2 percent, to 1,906. The technology-heavy Nasdaq fell 102 points, or 2.3 percent, to 4,276.
” It was a wild week for markets with sharp swings – down, up and down. In fact, Wednesday marked the Dow’s biggest rise while Thursday generated its biggest decline. Bond prices rose, always a sign of equity nervousness.
Impact on Gold
Gold benefited stock troubles this past week, as Reuters tells us:
Spot gold was steady at $1,223.20 an ounce by 0641 GMT, after hitting a 2-1/2 week high of $1,233.20 in the previous session. The metal has risen more than 2.7 percent for the week, its best since the week ended June 20, after recovering from a 15-month-low under $1,200 hit on Monday.

This post was published at The Daily Bell on October 11, 2014.

Targets Hit…And Bounce Trade Is Over Already

Jon

A wild week as markets began to act very sloppy. Wide and loose action with large daily swings is rarely a good thing and we are now beginning to break lower.
I’m still not sure just how deep this correction will go…but 200-day moving averages are coming into sight now, and should provide support or the ultimate low.
As for stocks, we were lucky enough to have nailed one who rose some 60% in a couple days but that was a rare sight last week.
I’m short a couple names right now and only using small position sizes if I take a trade at all.
The metals finally began to stabilize…but I’m still not so sure a low is in. After such a large and constant fall, metals need a rest. It is that simple. They can rest a couple months and rise and fall all the while. A major low could be in but I’m not yet convinced of that yet.
If a low is in place, we will have lots of time and tons of chances to get in. There is no rush to try to catch the exact low.
Gold gained 2.70% for the week. Thursday saw a nice move right up to $1,230 resistance before it backed off. Unfortunately the move happened in overseas trading before our North American markets opened as so often happens, leaving us out. I’m in no rush or panic to buy gold here yet although the emails are starting to come back in from the regulars telling me gold has bottomed and is going higher and what not. Time will tell.

This post was published at Gold-Eagle on October 11, 2014.

What’s RIGHT With the Euro

Jon

You read that right. Right.
I think like an economist. The economist always thinks in terms of alternatives. The economist’s mindset was expressed clearly by the late comedian, Henny Youngman. “How’s your wife?” “Compared to what?”
One of the most common complaints against the eurozone is this one: “The eurozone is a central currency, but decentralized national fiscal policies.” I have never seen one of the critics who invoke this argument propose the abolition of the euro and the European Central Bank. This argument is always offered to defend the idea of fiscal union. In other words, there is no push to decentralize the currencies of the eurozone. There is a strong, but so far ineffective, push to unify the fiscal policies of the eurozone.
Think through the implications of this. Can you see what is wrong with this argument?
A KEYNESIAN ARGUMENT
This argument is inherently Keynesian. It relies on the fallacious idea that national government deficits overcome recessions. A related idea is that government deficits promote economic growth. But all good Keynesians know that national government deficits require monetary inflation in order to sustain them, because without monetary inflation, interest rates will rise in response to the increased deficits. So, the Keynesian argues, because it is necessary that various countries have different degrees of deficit, depending on the business cycle in a particular country, the imposition of a single currency on top of multiple national economic cycles cannot be sustained.
This is all part of the worldview which began no later than the Versailles conference after World War I, in 1919. We have seen one sustained attempt to create a single European state. This single European state is supposed to have a single currency, a single central bank, and a single fiscal policy.
Let us go back to 1914. From the end of the Napoleonic wars in 1815 until the outbreak of World War I in mid-1914, the Western world enjoyed the benefits of an international gold coin standard. There was no centralized monetary policy. There was a single currency that was used in international trade, and in most of the countries involved, there was a domestic gold coin standard. Citizens could go to a bank and demand payment in gold coins in exchange for a domestic currency. This acted as a brake on the expansion of domestic currencies.

This post was published at Gary North on October 11, 2014.

The Four Questions Goldman’s “Confused, Understandably Frustrated” Clients Are Asking

Jon

One would think that after last week’s market rout, the worst in years, that Goldman clients would have just one question: why just a month after you, chief Goldman strategist David Kostin said to “Buy Stocks Because Hedge Funds Suck; Also Chase Momentum And Beta“, are stocks crashing? No really: this is literally what Kostin said in the first days of September: “investors should buy stocks which should benefit from a combination of beta, momentum, and popularity as funds attempt to remedy their weak YTD performance heading into late 2014.” Turns out frontrunning the world’s most overpaid money losers wasn’t such a great strategy after all. In any event, that is not what Goldman’s clients are asking. Instead as David Kostin informs us in his weekly letter to Jim Hanson’s beloved creations, “every client inquiry focused on the same four topics: global growth, FX, oil, and small-caps.”
So while said clients figure out just what the right question is, here are the wrong ones, aka Goldman’s damage control:
Policymakers focus on anemic growth in Europe and Japan while US economic and company fundamentals remain strong. Investors should focus on ‘American exceptionalism’ and own stocks with high domestic sales. We forecast S&P 500 will rebound by 7% to reach our year-end target of 2050. Buybacks have been the major source of demand for US equities during the past four years with S&P 500 firms repurchasing more than $1.5 trillion of shares. Peak 3Q reporting season is the next three weeks. Halloween will be the end of the blackout period for most firms. In recent years, 25% of annual buybacks have occurred in November and December. Conversations we are having with clients: Confusion over growth, FX, oil, and small-caps
“Whiplash’ is how one veteran investor described this week’s market. S&P 500 fell 1.5% on Tuesday as the IMF’s newest World Economic Outlook discussed the weak prospects for global growth. Wednesday registered 2014’s best daily return ( 1.8%) supported by the release of Fed minutes that noted US growth ‘might be slower than they expected if foreign economic growth came in weaker than anticipated’. The clear implication: Interest rates might be held lower for longer than market participants expected. This comfort was short-lived – S&P 500 sank 2% on Thursday and 1% on Friday.
Four topics dominated client discussions this week: (1) The uneven global economic outlook with the US expanding above-trend, China slowing, and Europe barely growing; (2) US dollar strength and a euro rapidly moving towards parity by 2017; (3) the bear market in crude oil with Brent plunging by more than 20% since June; and (4) the dismal returns for US small-cap stocks with the Russell 2000 index lagging by 13% YTD for the largest underperformance vs. the S&P 500 since the Tech bubble in 2000.

This post was published at Zero Hedge on 10/11/2014.

Weekday Wrap-Up: Bitcoins and Goldbugs, Q3 Earnings Signals, $40 Oil, and Geopolitical Feedback Loops

Jon

Dominic Frisby says Satoshi Nakamoto is a goldbug and explains how bitcoin was designed to replicate gold mining. Sheraz Mian of Zacks Investment Research says third quarter earnings season will be very important this year and explains why. Jeff Rubin, who used to think we’d see $200 oil prices, is now calling for oil to hit $40-50 a barrel; and, the last guest to our show this week, Don Coxe, explains the difficulty of anticipating geopolitical feedback loops on the financial markets.
Here are a few excerpts from this week’s set of interviews, which recently aired to our subscribers in full (click here for more info).
Here’s Dominic Frisby on how Satoshi was a goldbug and created bitcoin to replicate gold mining:
“The guy who invented Bitcoin, Satoshi Nakamoto…if I’m right in who he is, he was a great great student of money. He wrote loads of papers about money and he was a goldbug. He hated inflation; he hated what governments were doing to money – the manipulation of interest rates – and in some of his other work he described inflation as pernicious; and his aim was to as closely as possible replicate the effects of gold digitally. So he wanted a sound money. He wanted a deflationary system of money. He wanted a money where there’s limited supply. The whole process of creating bitcoins on your computer known as mining was designed totally to replicate the gold mining process…” (Click here for audio)

This post was published at FinancialSense on 10/10/2014.

Oath Keepers CPT Journal – Eureka, Montana, October 8th, 2014

Jon

This article was written by Brandon Smith and originally published at Oath Keepers
The Oath Keepers CPT (Community Preparedness Teams) program is the BEST existing solution offered to the Liberty Movement today in the wake of numerous national and international crises. I have not yet seen a single other program or effort that comes close in value to the general American public. It combines all of the necessary knowledge, skills, and organization required for a community of people, no matter where they happen to live, to be able to survive and thrive a large scale disaster scenario, and to provide the ability to rebuild and help others once the smoke has cleared.
It should be obvious to most people by now, especially Constitutional activists, that America is already in the path of a great landslide of economic, social, and political instability. This landslide cannot be stopped. It cannot be turned back. There are no silver bullet solutions, and there never will be. Given this fact, we can continue to plead in futility for the corrupt establishment to police itself, curl up in a ball and be buried by the chaos, or, we can rise above it through dedicated preparation and organization.
The goal of CPT is to make every neighborhood, county, and state in the country as independent, secure, and self sufficient as possible, erasing the fear of the common citizen, which ultimately thwarts the rise of tyranny within our society. A people without fear cannot be ruled.

This post was published at Alt-Market on 11 October 2014.