UNLOCKING GOLD’S TRUE VALUE: The Economic Code – Finally Revealed

The true value of gold is much higher than the spot price quoted in the market. This is due to several factors, but the most important reason is misunderstood by just about every economist and monetary scientist in the world today. Those who are able to understand the information in this article, will finally be able see the value of gold (money) in a totally different way.
It has taken me years of research and reflection to understand GOLD’s TRUE VALUE. Unfortunately, the majority of economists and precious metal analysts look at gold in a very specialized way. While precious metals analysts see gold as real money versus the Keynesian view of a Fiat Dollar System, both fail to grasp gold’s true value.
Gold is more than a precious metal based on supply and demand. Furthermore, the Austrian School of Economics looks at gold as a foundation of money in the procurement of goods and services. However, gold’s real value comes from energy in all forms and in all stages in its production
I am going to repeat it one more time…. gold’s real values comes from ENERGY in ALL FORMS and IN ALL STAGES in its production.
I have been saying this in interviews and writing about it for years, but I still believe a lot of people just don’t get it. So, now I am going to break it down in a simple chronological way.
The Foundation Of Gold Money: ENERGY = GOLD = MONEY
To understand this principle, I have decided to use one of the largest gold producers in the world as an example, Newmont Mining.
According to Newmont’s 2013 All-In-Sustaining-Cost for producing gold, they provided the following chart:

This post was published at SRSrocco Report on August 23, 2016.

The Chimera Of ‘Stable’ Money

Since the early 19th century, economists have consistently preached that the value of money or its purchasing power should be stable or relatively stable. David Ricardo, in 1817, said: ‘A currency, to be perfect, should be absolutely invariable in value.’
According to this view, money as a unit of account should be equivalent to a yardstick measuring an immutable distance. Over the last century, this view of money has led economists to suggest that prices, reflecting the purchasing power of money, as measured by a price index, should also be stable and that central banks should actively interfere with the market economy to bring stability to such an index. The U. S. Central bank has essentially been following such a policy since its inception in 1913. Price stability is inscribed in the Maastricht Treaty, and the goal of hitting a 2% CPI inflation target is a variant of this widely-held view.
Yet, this policy has been mostly responsible for the great depression that started in 1929 and the great recession that began in 2008. It is responsible for the widening growth in income inequalities (here) and the mass economic distortions of the last century. When you do not recognize your errors of the past, you are condemned to repeat them!
The purchasing power of money is determined, like most things in a capitalist system, by supply and demand. Changes in the demand for money (think of shifts in the curve) are caused essentially by two forces:

This post was published at Zero Hedge on Aug 23, 2016.

Suddenly Scared of Vancouver’s Commercial Property Bubble?

The hunt is on for Chinese buyers.
For investors, Vancouver real estate has been a heavenly gift. But now, suddenly, some of the biggest institutional investors, including Canada’s third largest pension fund, are getting cold feet and want out.
Just over the past 12 months, the ‘benchmark price’ soared 27% for apartments and 38% for detached houses! The term ‘housing bubble’ doesn’t even do it justice.
But in July, British Columbia implemented a 15% transfer tax on home purchases involving foreign investors, an effort to put a lid on the price spiral that’s threatening to price an entire generation out of the housing market. By the end of July, the first squiggles appeared, as prices still soared but year over year sales volume plunged nearly 20% [read… Vancouver Housing Bubble, Meet Pin].
Preliminary reports for August are now trickling in as anecdotal and incomplete data in a slow summer month, and therefore not necessarily indicative. For example, the Canadian publication, Global News, summarized the August move with plenty of caveats: ‘Vancouver real estate market is in the midst of a major slowdown, with prices dropping and sales plummeting.’
We will know more when the monthly data emerges.

This post was published at Wolf Street by Wolf Richter ‘ August 23, 2016.

July New Home Sales Soar to 12.4% Month-over-Month, Surprises Forecast

This morning’s release of the July New Home Sales from the Census Bureau came in at 654K, up 12.4% month-over-month from a revised 582K in June. Seasonally adjusted estimates for April and May were revised. The Investing.com forecast was for 580K.
Here is the opening from the report:
Sales of new single-family houses in July 2016 were at a seasonally adjusted annual rate of 654,000, according to estimates released jointly today by the US Census Bureau and the Department of Housing and Urban Development. This is 12.4 percent (12.7%)* above the revised June rate of 582,000 and is 31.3 percent (19.9%) above the July 2015 estimate of 498,000.
The median sales price of new houses sold in July 2016 was $294,600; the average sales price was $355,800. The seasonally adjusted estimate of new houses for sale at the end of July was 233,000. This represents a supply of 4.3 months at the current sales rate. [Full Report]

This post was published at FinancialSense on 08/23/2016.


Gold:1340.60 up $2.90
Silver 18.91 up 7 cents
In the access market 5:15 pm
Gold: 1338.40
Silver: 18.82
For the August gold contract month, we had a good sized 261 notices served upon for 26,100 ounces. The total number of notices filed so far for delivery: 13,387 for 1,338,700 oz or tonnes or 41.639 tonnes. The total amount of gold standing for August is 42.777 tonnes.
In silver we had 9 notices served upon for 45000 oz. The total number of notices filed so far this month: 480 for 2,400,000 oz.
We now enter in earnest the options expiry for gold and silver. The comex options expiry is: Friday, August 26.
Options expiry for the OTC /London’s LBMA contracts expire at noon August 31.
Today we witnessed gold and silver rise yet gold/silver equity shares falter. Generally this is a good sign that the crooks are orchestrating another raid in the next 24 hours. The silver situation is no doubt bothering them immensely.
Let us have a look at the data for today.
In silver, the total open interest FELL BY 71 contracts DOWN to 205,045 AND MOVING AWAY FROM ITS AN ALL TIME RECORD. THE OPEN INTEREST ON FRONT MONTH OF SILVER CONTRACTED BY A TINY AMOUNT DESPITE THE FACT THAT THE SILVER PRICE WAS WHACKED PRETTY HARD TO THE TUNE OF 46 CENTS IN YESTERDAY’S TRADING . In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.025 BILLION TO BE EXACT or 146% of annual global silver production (ex Russia &ex China).
In silver we had 9 notices served upon for 45,000 oz
In gold, the total comex gold FELL 1,657 contracts as the price of gold FELL BY $3.70 yesterday . The total gold OI stands at 572,845 contracts.
With respect to our two criminal funds, the GLD and the SLV:
we had no changse today at the GLD/
Total gold inventory rest tonight at: 958.37 tonnes of gold
we had no changes in the SLV, / THE SLV Inventory rests at: 358.793 million oz.
First, here is an outline of what will be discussed tonight:

This post was published at Harvey Organ Blog on August 23, 2016.

45 Years Without Gold

When World War I began, many analysts believed that the international gold standard would keep the war short. A war of attrition was not thought to be possible because the disciplining effects of the gold standard – capital flight and gold outflow – were supposed to restrain the ability of states to mobilize resources in times of war. As many believed at the time, states under the gold standard would quickly run out of money to pay for soldiers and resources. No one ever imagined that the war would last four long years and that most countries would stop using the gold standard, turning instead to debt and inflation to pay for the war.
The gold standard was never the same after World War I. It survived in a modified form until August 15, 1971 – 45 years ago this month – when President Nixon cut the last link between the world monetary system and gold. The initial idea was to temporarily suspend the limited convertibility that existed; only governments could request reimbursements of gold against dollars. Unfortunately, there is nothing more permanent than temporary emergency measures. We are still living with a 45-year-old monetary experiment in which central banks have no direct link to gold.
Why was the Gold Standard Suspended?
Convertibility acts as a mechanism that constrains the arbitrariness of the monetary authorities. The United States dollar was little more than a promise made by the US government – or its central bank – to deliver a specific amount of gold: one ounce of gold for every $35.
If governments plan to spend more than they earn, they are forced to issue debt. If a government’s debt level is already too high, the market might refuse to keep lending or might only lend with very high interest rates. If this happens, governments can then turn to their central banks to monetize the debt; for example, a new currency may be issued against the debt that the market would not buy.
If monetizing debt reaches high levels, inflation quickly follows. However, the inflationary mechanism will differ depending on whether or not there is convertibility:

This post was published at Ludwig von Mises Institute on Aug 22, 2016.

The Myth of Leverage

Mining Stocks, Gold Prices and Commodity Price Trends
Gold has gone up >400% over the last 16 years. Ironically, it is hard to find a gold mining equity exhibiting similar performance. In retrospect, if one invested in gold, one not only made much better returns, one also took a relatively insignificant risk in comparison to owning equities – equities can go to zero while it is hard for a commodity to fall much below its cost of production. Moreover, depending on the jurisdiction, owning gold might have resulted in lower (or no) tax liabilities.
I am often amused when investors talk about leverage that mining equities offer – a large proportion of investors in the mining sector are driven by this, a sort of casino mentality. As experience over the last 16 years shows, leverage has been a myth and has actually been negative. In their chase for leverage, investors missed out on value-investing and profiting from wealth-creation. Let’s dissect this.
As you can see in the following three graphs, there is often a very close correlation between the prices of commodities. When a particular commodity goes up in price, other commodities go up as well. When the price of a certain metal increases, the cost of its production increases as well, as a consequence of the prices of commodities (iron, oil, etc.) that go as ingredients into production rising as well, leaving at best an uncertain, unpredictable degree of leverage in the equation.

This post was published at Acting-Man on August 23, 2016.

The Permian Pitfall: A Race To The Bottom For Tight Oil

Remember the shale gale and Saudi America? The scale of those outlandish delusions has now dwindled to plays in a few counties in West Texas and southeastern New Mexico. Saudi Permian.
It’s a race to the bottom as investors double down on the tight oil companies that can still tell a growth story. Permian-weighted E&P companies are the temporary darlings of Wall Street as other tight oil plays have lost their luster.
A Silly Price Rally: Catch-22
We are in the middle of a truly silly price rally. Other rallies of 2015 and 2016 took place despite substantial production surpluses and too much inventory. Then, there was some hope that higher prices might result if over-production could be brought under control. Now, the world’s production and consumption are near balance but oil prices remain mired in the $40 to $50 per barrel range.
This current rally will end badly because there is something more fundamental keeping prices low. Despite repeated assurances from IEA and EIA that demand growth is strong, it is not strong enough to draw down outsized global inventories.

This post was published at Zero Hedge on Aug 23, 2016.

Gold: All Eyes On Jackson Hole

Graceland Updates
In the gold market, all analytical eyes should be on the Jackson Hole central banking conference. On Friday, Janet Yellen makes her speech. Please click here now. Double-click to enlarge this eight hour bars gold chart. Janet’s speech could be the catalyst that takes gold down to my $1310 target, and catapults it from there to $1392. Gold is trading in a triangle pattern that many technicians are watching, but fundamentals make charts; statements from key central bankers could easily take gold slightly lower before the ‘real move’ higher begins. Please click here now. Double-click to enlarge. Technically, silver looks very healthy. Yesterday’s price decline may have been uncomfortable for price enthusiasts, but it did create a nice drifting rectangle pattern. That strengthened the overall technical situation. With these types of price patterns, there’s roughly a 67% chance of an upside breakout. Please click here now. US dollar bulls don’t have many powerful friends right now, and with good reason. Next, please click here now. Double-click to enlarge. The US dollar is the risk-on world’s flagship entity, and against the safe haven yen it looks like an ongoing train wreck. Please click here now. Influential Morgan Stanley strategist Hans Redeker highlights the truly horrifying growth in dollar-denominated debt held by European corporations. Rate hikes are not good news for those corporations, to put it mildly.

This post was published at GoldSeek on 23 August 2016.

Foreign Demand For US Treasuries Has Just Dried Up – Episode 1056a

The following video was published by X22Report on Aug 23, 2016
Construction of single family homes in Alberta Canada has fallen back to 2009 levels. US is reporting new home sales have spiked, this is due to speculators in the south and manipulation. Richmond Fed declines and there are now major warning signs that a major collapse is approaching. BOJ is now nationalizing the stock market, the open free market is gone. Corporations are now issuing debt and the ECB is buying it up. Foreign demand for Treasuries has now dried up. The FUTA tax records show that job market has not gotten any better, the economy is headed towards a major collapse.

Gold And Silver Trading Alert: Suspicious Reversal in Gold

Gold moved lower early during yesterday’s session, but came back up later on and finally gold ended the session only less than $3 lower. Can we view such a reversal as a bullish sign? Not necessarily – a reversal should be confirmed by high volume and yesterday’s session wasn’t. Consequently, one needs to look at other parts of the precious metals sector for confirmations.
The above action, however, provides bearish signals, not bullish ones. Let’s start with the USD Index chart (charts courtesy of

This post was published at GoldSeek on 23 August 2016.

Media Worried Too Many Americans Will Question Legitimacy Of 2016 Election, Blame Trump

2016 is the year many, many Americans began to question whether or not our elections, and to a lesser extent, our democracy (insert ‘it’s a constitutional republic, big difference!’ here) are rigged. As I’ve argued many times in the past year, there is plenty of evidence suggesting these skeptical Americans are, indeed, onto something with their suspicions.
But the corporate media has come out in defense of America’s ‘democracy’ – and political elites are defending the system, too. In the wake of Trump’s recent rhetoric regarding the ‘rigged’ system, the ruling class of the United States is peddling the fiction that somehow Trump’s irresponsible sensationalism is solely to blame for the newfound feelings of illegitimacy plaguing our elections.
Take, for example, Monday’s POLITICO piece entitled ‘What if Trump won’t accept defeat?’:

This post was published at Zero Hedge on Aug 23, 2016.

News from TINA Land

Distortions and Crazy Ideas
We have come across a few articles recently that discuss some of the strategies investors are using or contemplating to use as a result of the market distortions caused by current central bank policies. Readers have no doubt noticed that numerous inter-market correlations seem to have been suspended lately, and that many things are happening that superficially seem to make little sense (e.g. falling junk bond yields while defaults are surging; the yen rising since the BoJ adopted negative rates; stocks rising amid a persistent decline in earnings growth; bonds, gold and stocks moving in unison, etc., etc.).
The investors engaging in said strategies all appear eager to court disaster in exchange for what seem rather paltry gains. To this it should also be pointed out that all sorts of trades are nowadays becoming ‘crowded’ very quickly, often to a never before seen extent.
It’s like a bus full of children heading toward a cliff, with everybody 100% sure that the brakes are in working order, because supposedly skilled mechanics are in charge of overseeing the bus – the same mechanics who needlessly tuned up the engine (which has begun to make strange sounds).
The fact that said mechanics are known for groping in the dark most of the time is widely ignored, or let us rather say, it is actually widely acknowledged, but doesn’t keep people from making as if it didn’t matter. Why? Because of… TINA – the currently fashionable bubble rationalization.
Yield Engineering
One of these articles discusses a strategy currently employed by yield hunters. This may actually partly explain why the yen has been so strong – apparently foreign investors are piling into negative yielding Japanese government debt, which can be made to deliver a positive yield by means of financial engineering. According to a free lunch alert by Bloomberg:

This post was published at Acting-Man on August 23, 2016.

Gold Daily and Silver Weekly Markets – Winding Roads

“These lies meet the truth,
This waiting I’ll do;
Desire so true
This waiting I’ll do.”
rstir, You Just Have To Know of Me
The big story this week for the precious metals is the Comex option expiration on the 25th for the September silver contract.
As Bill Murphy has observed recently, ‘silver is the kryptonite of the precious metals cartel.’
The financiers are playing a long, but deadly game.

This post was published at Jesses Crossroads Cafe on 23 AUGUST 2016.

The First Victims Of The Libor Surge Have Emerged… In Japan

When we last looked at the blowout in US short-term funding rates, most notably Libor, which has been broadly attributed to regulatory reasons ahead of the October 14 money fund reform deadline, we pointed out that with trillions in debt tracking Libor, it was only a matter of time before something snapped.
Since then Libor has slowed down its dramatic ascent, so far plateauing in the low 0.8% range, however, the materially “tighter financial conditions” have remained.

This post was published at Zero Hedge on Aug 23, 2016.

Why is This Hated Stock market so resilient?

Do not let yourself be tainted with a barren skepticism.
Louis Pasteur
The market has resisted all attempts to correct. We know why it is not crashing; this has to do with mass psychology, but what’s preventing it from letting out a significant dose of steam. The table below might hold the answer. We looked at all 30 components of the Dow monthly timelinesutilising our indicators, and the results were quite surprising, to say the least. On the monthly charts, each bar represents one month’s worth of data so these are long-term charts, and they usually provide a much clearer picture of what the futures holds as opposed to the shorter term charts.

This post was published at GoldSeek on 23 August 2016.

Barack Obama may have finally destroyed America’s #1 advantage

In July 1944, just weeks after the successful Allied invasion of Normandy, hundreds of delegates from around the world gathered in Bretton Woods, New Hampshire to determine the future of the global financial system.
The vision was simple: America would be the center of the universe, and every other nation would revolve around the US.
This arrangement ultimately led to the US dollar being the world’s dominant reserve currency which still remains today.
Whenever a Brazilian merchant pays a Korean supplier, that deal is negotiated and settled in US dollars.
Oil. Coffee. Steel. Aircraft. Countless commodities and products across the planet change hands in US dollars, so nearly every major commercial bank, central bank, multi-national corporation, and sovereign government must hold and be able to transact in US dollars.
This system provides a huge incentive for the rest of the world to hold trillions of dollars worth of US assets – typically deposits in the US banking system, or US government bonds.
It’s what makes US government debt the most popular ‘investment’ in the world, why US government bonds are considered extremely liquid ‘cash equivalents’.

This post was published at Sovereign Man on August 23, 2016.

Bond Market Gives Its Verdict On Yellen’s Jackson Hole Speech With Stellar 2 Year Auction

If today’s 2 Year auction was supposed to telegraph what the bond market thinks of Janet Yellen’s Jackson Hole statement, then the message is clear: there won’t even be a sliver of hawkishness, because while the When Issued market was expecting the note to price at 0.771%, it stopped through the When Issued by 1.1bps, printing at 0.76%, which incidentally is where the July 2 Year auction priced as well, only that particular auction tailed by 1.2 bps.

This post was published at Zero Hedge on Aug 23, 2016.