Too Much Debt!

Update: January 11, 2013

Congress lived up to their reputation and kicked the can once more.  Essentially, tax rates were raised (such as on those making $450,000 or more and estate taxes went up from 45% to 40%) but spending cuts were deferred for a couple months, entailing yet another round of political saga to come.  So, as the following chart from Casey Research shows, the deficit situation has not gotten any better.  In fact, according to the CBO, it’s worse – earlier estimates had not even considered the interest payments, so the annual deficit will be $60 billion more than originally anticipated.

Fiscal Cliff - Budget Deficit Details

September 22, 2012

On January 1, 2013 the US will face the real possibility of falling off a fiscal cliff and may take down much of the global economy with it. Specifically, the cliff is represented by three factors, which policy makers must overcome in order to avoid another severe recession – or worse, depression.

  1. The Bush Tax Cuts are set to expire at the end of 2012.  At a time such as this, when the economy is stagnant, any tax increases will only serve to further sour any potential business activity. On the other hand, the government annual deficit spending is already at $1.2 trillion and if revenues aren’t increased, budget deficits will only get worse.
  2. Mandatory budget cuts are set to take affect. Last year, when congress was unable to agree on a long-term plan to tackle the never-ending growth of the national debt – now over $16 trillion – the temporary measures they initiated allowed for a small ceiling increase, while putting in place a special super-committee to study the situation and recommend policy. The super-committee came and went without any agreement, which automatically instituted a $1.2 trillion cut in government spending – half from domestic spending and half from defense spending. These cuts are set to go into affect starting in January, 2013 at about $100 billion per month and last for nine years.
  3. The debt ceiling is again being breached. Last year, when the ceiling debate was the centerpiece of discussion, lawmakers were unable to reach agreement on a debt reduction policy. They were only able to conclude a temporary measure, allowing for a small increase in the ceiling while the super-committee furthered the discussion. The current debt ceiling limit of $16.394 trillion is coming up fast.

It should be obvious that the real problem is that there is simply too much debt!  But then again, what should one expect when the whole monetary system has become based on debt? In today’s world, money only comes into existence when someone is willing to borrow it from the banking system. This is why the Fed and all the other central banks try so hard to keep interest rates low – as  more money is borrowed, the banks are able to use fractional reserve banking methods to increase money availability even more. The economy keeps chugging along as long as people and companies are willing to borrow more.

But this debt-based system obviously has its limits, as the current economy has been showing. People and companies are unwilling to burden themselves with more debt.  The Fed’s policies have been trying to overcome that by keeping interest rates low so that the government can keep spending borrowed money in order to sustain the perception that the economy is okay.

It is impossible for the governments to ever repay these debts, which is why the central banks will continue to employ “QE” measures, just as they did in early September, when the ECB in Europe, followed by the US Fed, and finally the Bank of Japan all embarked on major money-printing policies to keep the debt-game going a bit longer.

In relative terms, it wasn’t that long ago when money was based on real, tangible assets, such as gold and silver – assets that couldn’t simply be conjured up out of thin air.  These are the real assets that people should be seeking now, especially since saving cash in a savings account yields next to nothing in interest. Plus, as the governments of the world continue to print money to cover unpayable debts, the value of all fiat paper money will only continue to decline.

However, investors in precious metals will want to get their priorities straight.  Many gold bugs, for example wish to keep their precious metals close – where they can actually touch them. Possession is nine-tenths of the law, after all.  Having physical possession of one’s precious metals has benefits, especially in the case of a complete financial collapse, which some say is inevitable, given the shape of the current over saturated debt system.  Having real money to barter with under those circumstances may be priceless.

On the other hand, not everyone is comfortable holding physical precious metals in substantial quantities. Private storage can be a risk, which should be weighed carefully.  For those concerned about the safety of private storage, or even those seeking diversification can look into alternative ways to hold precious metals. One convenient method is to use Exchange Traded Funds (ETF) traded on stock exchanges. Whether open-ended funds like GLD and SLV or closed-ended funds like PHYS and PSLV, the investor should be aware that there are still risks to overcome, such as the stock market itself.

Yet there are other ways people can invest in precious metals.  Companies such as BullionVault allow their clients to buy and sell precious metals online, via an internet browser.  Once purchased, the metal is physically stored in various geographically separated regions of the world. This immediately accomplishes two things – diversifies assets across national boundaries, which reduces some sovereign risks and also relieves the investor of personal storage responsibilities.

Perhaps some combination of all of the above methods, or others not covered can be sought after for the potential precious metals investor.  When the debt-system finally collapses, people will wake up and remember what real money really is and wonder why they never thought about it before.  It’s funny, isn’t it?  Something so vital to every day activities, yet so little thought is given to what money really is. It’s good that some people are waking up early.

OunceOfSilver Launches Tools for Precious Metals Investing & Historical Analysis

OunceOfSilver has added some tools for precious metals investors.  These tools allow for the analysis of historical data in order to help determine opportune times to buy gold, silver, platinum and palladium.

Historical ETF Data

Historical ETF Data

Analyze specific trends in precious metal ETFs using Historical ETF Data.  This tool allows inspection of historical share price, share value, net asset values, daily trading volumes, outstanding shares and even total ounces of metal held in trust.  Compare both open and closed ended funds – GLD, SLV, SGOL, SIVR, PHYS, PSLV and CEF against each other.

Historical Metals Spot Data

Get historical data on precious metal spot prices in the Futures markets. View the open, high, low & closing prices individually or view with candlestick chart. Also get current and historical performance perspectives of technical trading indicators based on daily Moving Averages and other Technical Analysis techniques.

 Historical Metals Spot Data
Historical US Mint Bullion Activity

Historical US Mint Bullion Activity

The US Mint reports its monthly sales to authorized dealers of Silver Eagle, Gold Eagle & Gold Buffalo bullion coins. This utility allows one to get a visual perspective on the daily, monthly or annual trends in physical bullion consumption. View by overall ounces or coins dispensed.

Historical Retail Bullion Availability

See the changes in the inventories of some of the most popular retail bullion dealers and gain perspective on the public’s buying & selling activity in the precious metals arena. Analyze data by precious metal (Gold, Silver, Platinum or Palladium), coin type (Eagle, Buffalo, Philharmonic, Maple Leaf, Panda, Libertad, etc.) or analyze availability of bullion in bar form.  View results by total ounces, total coins or total bars.

Historical Retail Bullion Availability

Conspiracy Theory? Or Conspiracy Fact?

Some people are beginning to wake up and see that the things that are happening in this world are not just random, but centrally planned, coordinated events. To really understand the world, YOU MUST FIRST UNDERSTAND YOURSELF.

On the ruling elite’s current and historical control – mind-control – of the general public:

 

On what really happened on September 11, 2011:

 

 

On the Jesuits and their goal of world domination

On the Colorado “Batman” theater shooting:

Historical US Mint Bullion Activity

Using the graphical interface below, customize the date range and select the type of bullion coin available from the US Mint. Hit the Show Graph button to see historical mint activity.

Historical Spot Data

Using the graphical interface below, customize the date range and select the metal. Then from the drop-down menu, select the data detail desired and hit the Show Graph button.

Interactive Charts

The utilities below provide the precious metals investor with present and historical data on various gold and silver investment vehicles such as ETFs. Aside from the “paper” vehicles, the physical market is also tracked in regard to bullion dealer inventories and sovereign mint output.

Data & Statistical Utilities
Historical ETF Data
Historical ETF Data

Get historical data on precious metal ETF funds/trusts, such as GLD, SLV, SIVR, SGOL, PSLV, PHYS & CEF. Find out their respective or combined physical metal holdings (in troy ounces), share price, share value, net asset value, shares outstanding, shares short, and daily trading volume.
Historical Metals Spot Data
Metals Spot Data

Get historical data on precious metal spot prices in the Futures markets. View the open, high, low & closing prices individually or view with candlestick chart. Also get current and historical performance perspectives of technical trading indicators based on daily Moving Averages and other Technical Analysis techniques.
Historical US Mint Bullion Activity
US Mint Bullion Activity

The US Mint reports its monthly sales to authorized dealers of Silver Eagle, Gold Eagle & Gold Buffalo bullion coins. This utility allows one to get a visual perspective on the daily, monthly or annual trends in physical bullion consumption. View by overall ounces or coins dispensed.
Historical Retail Bullion Availability
Retail Bullion Availability

See the changes in the inventories of some of the most popular retail bullion dealers and gain perspective on the public’s buying & selling activity in the precious metals arena. Analyze data by precious metal (Gold, Silver, Platinum or Palladium), coin type (Eagle, Buffalo, Philharmonic, Maple Leaf, Panda, Libertad, etc.) or analyze availability of bullion in bar form.  View results by total ounces, total coins or total bars.
CME Daily Delivery Activity
CME Daily Delivery (Issues & Stops)

In the commodities Futures market, buyers and sellers exchange contracts, which can be traded during market hours. However, the buyer always has the option to take delivery of the underlying commodity. The CME puts out a report each trading day identifying the number of contracts from which delivery has been requested. This utility enables the user to track these activities in Gold, Silver, Platinum & Palladium.
Historical COMEX Warehouse Inventory & activity
COMEX-Approved Warehouse
Inventory & Activity

Precious metals (Gold, Silver, Platinum or Palladium), are moved into and out of COMEX-approved warehouses on a daily basis. Some investors speculate that the reasoning behind the increase in activity recently points to physical scarcity. With this tool, investors can keep an eye on warehouse inventories and daily receiving and withdrawal activities.
Historical COT Futures Positions
Commitment of Traders (COT) Positions

Every Friday, the Commodity Futures Trading Commission (CFTC) publishes what is known as the COT report.  This report summarizes the commodity futures positions held by market participants as of the previous Tuesday’s market close.   This tool allows precious metals investors and traders to identify key trading points and speculate on future trends.
Charts and Tables from the World Wide Web
Charts & Tables
from the World Wide Web

Here is a handy reference for charts and tables with statistics and information gathered from various sources on the web. All references are categorized and appropriately titled to make searching easier.
SilverSaver(R) - Save Physical Silver and Gold

 

Historical ETF Data

Using the graphical interface below, customize the date range and select the ETF(s). Then from the drop-down menu, select the data detail desired and hit the Show Graph button.

Central Banks Manipulate the Gold Markets: Chris Powell

Here’s Chris Powell of GATA explaining the motivation for central banks to keep the gold price under control. Powell also notes that potential gold investors should only buy physical gold, which they can actually hold in their hands. He estimates that 70-80% of all the gold people think they own doesn’t really exist!  The paper forms of ‘investment gold’ such as ETFs or unallocated accounts likely do not have the physical gold supporting all the paper claims.  Through rehypothecation schemes, gold leasing and swaps arrangements, there is simply not enough physical metal to back all the paper claims.


US Government Allows JP Morgan to Manipulate Silver Market: Ted Butler

Finally, after years of analyzing the silver market and studying Commitment of Traders (COT) data, Ted Butler has concluded that the CFTC won’t prosecute JP Morgan for their silver market manipulation because the U.S. government is intentionally allowing the suppression of precious metals prices. (It’s about time! Glad to finally have you aboard, Mr. Butler!)

The Plunge Protection Team
Ben Bernanke - Chairman of the Federal Reserve Mary L. Schapiro - Chairman of the SEC Gary Gensler - Chairman of the CFTC Tim Geithner - Treasury Secretary
Ben Bernanke Mary Schapiro Gary Gensler Tim Geithner
Chairman of the Federal Reserve Chairman of the SEC Chairman of the CFTC Treasury Secretary

Specifically, the President’s Working Group on Financial Markets was created in 1988 by the Reagan administration in order to prevent another market crash like that seen in October of 1987.  This Working Group, sometimes referred to as the “Plunge Protection Team” consists of four members (today’s members pictured above): The Chairman of the Federal Reserve; The Chairman of the Securities Exchange Commission (SEC); The Chairman of the Commodities Futures Trading Commission (CFTC); The Treasury Secretary.

Their mission is to intervene in the markets whenever they feel it is in the best interests of the banking powers.  Strong precious metals prices mean a weakened U.S. dollar. The paper futures markets are used to suppress the prices of gold and silver in order to maintain the illusion of a stronger dollar. As Chris Powell of GATA always says, “There are no markets anymore…only interventions.

Butler noted that even though Chairman Gensler of the CFTC likely understands that citizens are “being screwed” by the manipulation, he’s unable to do his duties and enforce existing commodity laws against JP Morgan because this powerful Working Group has alternate goals.

Find more information about precious metals price suppression here.

Major Support At These Levels

Sprott Asset Management has issued a Gold Alert, showing six “key developments in the physical gold market” in the past couple weeks which indicate that there is strong demand for precious metals at these levels.  One of those developments is the huge increases of Hong Kong gold exports to China.

HONG KONG GOLD EXPORTS TO CHINA (KG)

An Opinion on Clive Maund

June 8, 2012

After the precious metals were hit hard after reaching a high of $1920/ounce on September 6, 2011, the market has been in a mini-bear mode ever since.  The fundamentals for high precious metals prices were still in place and indeed they are even stronger today.  So, what caused the rout?

Through other reading on the net, I got word that Clive Maund had successfully called the price decline in advance for his subscribers.  I had also heard that he had previously correctly predicted the May 1, 2011 silver smack down.  I thought perhaps my negative judgements on technical analysis were premature and that maybe I could learn something from this prospective sage.

So I decided to try his service.

After signing up, he did correctly call the bottom and advised his subscribers to get out of their short positions at pretty much the perfect time.  However, since then, Clive’s success rate reveals that he’s no sage – indeed, he and his unwitting subscribers are more likely the poor stooges on which the commercial players are feeding.

Admittedly, the markets since September, 2011 have been difficult, especially for buy-and-hold investors.  Volatility has been extreme and it’s been a trader’s market, if anything.  The problem for Clive’s subscribers is that he changes his mind frequently and it’s not always clear whether new positions are in addition to or instead of older positions.  When the trade goes bad, he’s rather silent, even leaving his subscribers in the dark.  But when a call ends up to be correct, he’s quick to advertise.  In fact, sometimes he advertises his calls in reports available to the general public, usually when subscribers already have their positions in place, but not always. Specifically, more than one time he has reversed a decision and went public immediately, before subscribers were able to get out of their positions, leaving them potentially exposed to opposing actions by public readers of his report.

A good example of silence after a bad call was Clive’s alert on the natural gas sector in the beginning of February 2012. His charts showed a major reversal coming in the sector and advised subscribers “buy aggressively.”  To be fair, the report advised that stop-losses be set “directly below support” shown on the chart.  Still, after recommending buying natural gas along with specific investments in GaStar Exploration (GST), United States Natural Gas Fund (USNG), and ProShares Ultra DJ-UBS Natural Gas ETF (BOIL), when the market went the opposite direction almost immediately, not one word from Clive to subscribers went out.  He assumes his subscribers’ stop-losses were set and gives no further report on what happened or why his original analysis was incorrect.

If Clive has a gift, I would guess that it lies in reading charts and converting that analysis into some technical perspective.  But he doesn’t stick to that technical analysis alone – he utilizes the emotional economic backdrop of the European/American crisis to justify his chart analysis.  In fact, his alerts to subscribers frequently portray the same scary themes one would expect from free services such as Bloomberg or ZeroHedge.

With all the problems in Europe at present, Clive’s calls have been echoing all the terror evident in the blogosphere. The emotion has run high in his reports on the precious metals markets.  Twice in less than a month starting at the end of May 2012, in his effort to show an imminent price explosion to the upside for precious metals, he’s used the term “This is it!”  His advice was to go long on GLD and SLV call options and even the 2X and 3X silver vehicles like AGQ and USLV.  Unfortunately, both times the prices went the other direction, causing him to send out a warning on possible price declines even further. And worse for his paid subscribers, his last warning was open to the general public – again making it even more difficult for subscribers to get out of their positions with minimal losses.  Just what are subscribers paying for, anyway?

Now, stepping back and looking at Clive’s technical analysis over the past 8 months, I have to wonder if chartists like Clive and their subscriber-sheep are really the patsies that the commercial traders have been fleecing in their market manipulations. When the simple folk invest in 2X and 3X gold and silver ETF vehicles, or take options positions in GLD or SLV, just who is taking the opposite side of those investments? Could it be the same small and large speculators in the commodities futures/options markets that always seem to get fleeced by the commercial institutions?

According to Ted Butler, who’s been studying the commodity futures/options Commitment of Traders (COT) reports for more than 30 years, commercial traders manipulate the market against the small and large technical traders whenever they smell blood – that is, when the commercials have a net short position and the the technical funds have a net long position. They ‘manage’ the market lower and trigger the technical funds’ stop-losses forcing even lower prices as the technical funds sell their positions.  The commercial traders easily soak up all these contracts at a profit on their short positions.

Could it be that those small and large speculators are selling equities and options in the stock markets to the sheep, then taking the proceeds and buying commodity futures contracts with leverage?  Under this scenario, it’s the sheep, not the small and large commodity futures speculators that end up being fleeced – they’re only ‘betting’ the money they got from the sheep. But if the sheep end up making money, the small and large commodity speculators make even more money because they have leverage on their futures positions. So that’s the motivation for the small and large speculators to keep coming back for more in the rigged futures markets – they’ve got nothing to lose and much to gain.  It’s the sheep that always end up losing.

The prices of precious metals are currently set in these commodities futures markets. It is a paper contract that is traded, NOT the physical metal. This ‘mechanism’ cannot last forever.  At some point, the physical metal will become too scarce.

Conclusion: It would be much better if the sheep stopped following the advice of clowns like Clive, using paper vehicles to trade in the precious metals markets.  Instead of buying ETFs like GLD, SLV, USLV, AGQ, or worse buying commodity futures/options contracts with leverage, investors should go out and buy the physical metals.  When the physical metals are no longer available in the marketplace, the prices will have nowhere to go but up!  Until this happens, the commercials and trading institutions will continue to reap most of the paper profits.

Contact the author, JonK or comment below.

Protect Your Assets

 

It’s been said that the American dream is turning into the U.S. nightmare. The grand idea used to be that people can emigrate away from lands controlled by tyrants to a place where freedom rings true – to a place where people are guaranteed natural rights to pursue happiness and success without the worry of too much government stepping in the way of personal progress. Such a dream has steadily decayed over the last century.

  • The welfare state that has evolved in the United States is draining private wealth and personal freedoms at an alarming rate.
  • The entire western banking and financial system has begun to resemble the mob, where insiders not only reap all the profits, but are bailed out by citizens when they lose at their own game.

It’s time for those who have worked hard their whole lives and managed to save more than they’ve consumed to start thinking about ways they can protect their wealth from fraudulent financial institutional behavior or government theft, confiscation and redistribution. If history is any guide, things will only get worse – much worse – before they get better.

The time to act is NOW! National debt is hitting daily record highs, never to be paid off. The U.S. Government is getting desperate for more funds. New and proposed legislation and regulation are increasingly restricting freedoms which enable people to preserve their wealth.

This is why we are offering the Protect Your Assets series, where we have researched different ways which people can legally protect their personal wealth from being stolen by corrupt financial institutions engaging in fraudulent activity, confiscated by over-zealous government legislation, or gradual erosion by ever increasing localized taxes.

Protect Your Assets

– Stock Portfolios –

In today’s investing climate, we’ve seen trading institutions such as MF Global fraudulently dip into client funds to pay for their own proprietary trading. And when that trading went sour, it left its clients with losses estimated in the billions of dollars. How can an investor protect him/herself from such blatantly fraudulent activity?

The stock exchange system itself has evolved into a questionable state as stock certificates no longer list the individual investor as the actual owner – all in the name of trading efficiency, of course. How can an investor be sure he/she really owns the shares in his/her portfolio?

And as if that weren’t enough, recent legislation has been proposed to either mandate specific investments by retirement accounts in U.S. debt instruments, or expose all assets to the threat of being confiscated under the guise of “national security.” How can an investor protect his/her assets from his/her own government?

Read more…..

In the first part of this Protect Your Assets series we offer a step by step guide that any investor can follow in order to protect their stock portfolios from these threats. Purchase via PayPal with the Buy Now button below.

Protect Your Assets – Stocks …………………..Special Promotional Offer - $20

 

Several payment options, including crypto-currencies, are available after checkout.

 

Is More QE Coming, Or Not?

With the Fed purchasing 61% of all the US debt, it’s somewhat confusing why potential precious metals investors want to see more QE before making their move. And as the following chart from the St. Louis Fed shows, the money supply is still at uncharted, nose-bleed levels and showing no signs of decreasing.

US Dollar Money Supply

Nevertheless, analyzing a derivative of the TIPS Spread to identify when the Fed might reintroduce even more easing is what the economists over at Agora Financial have been doing.  As the chart below shows, the Fed may be waiting for the “Breakeven Inflation Rate” to drop below 2.2% prior to accelerating those printing presses.

Five-Year Forward Break-Even Inflation Rate

JP Morgan’s $2 Billion Loss Possibly Indicative of Bigger Problems Behind the Scenes

Update May 16, 2012: In contrast with Jim Willie’s speculation below, a much more renowned Jim Rickards has a much more probable thesis on the JP Morgan loss. The trade was actually a bet on the spread between the bond index and the bonds themselves. Time ran out, resulting in the loss. Read about it at USNews.

Here’s an interview with Jim Willie (TheGoldenJackass) discussing his speculation on what’s really going on regarding JP Morgan’s $2 billion dollar ‘whale trader’ loss.  Jim speculates that JPM’s declaration that it involved European bond investments that have gone bad doesn’t make sense because in the last 6 weeks those bonds haven’t changed so much to warrant such huge losses. More likely, according to Jim, is that these losses are much larger and they reflect losses in the credit derivatives markets. Furthermore, eastern nations like China are likely causing the rout in precious metals because they’re forcing the western commercial banks to sell to cover these losses in the derivatives markets.