There’s just too many loud voices – plus self-promoting self-aggrandizers like Harry Dent – screaming for $800 gold. Last time Goldman came out with an $800 gold target, gold ran from $1100 up to $1400. Will these carnival barkers be right this time around? I don’t know. As Bernanke famously said, the Fed (banks) have new technology that enables them to create electronic dollars (Comex paper contracts) in unlimited quantities in order to direct the market in the direction of their command.
Of course, we all are left wondering why Bernanke ended his Fed chairmanship a few terms earlier than he needed to and decided to not stick around to face the consequences of his actions while he was pressing the print button on his keypad.
Yes, what we are about to show you is simply a collection of anecdotal data points. Taken separately, perhaps they can all be written off and marginalized. Taken collectively, however...well, maybe there's something to consider here.
This site has been around for over five years now and, for most of that time, we've preached about how fractional reserve bullion banking is a scheme that is destined to fail. By pricing a physical commodity upon the oversupply of paper derivatives, shortages become inevitable. The market recognizes the value of the mispricing and drives up demand. At the same time, the lower price affects supply as producers of the commodity limit or shut down production due to the economics and declining/negative margins.
What eventually happens is a physical supply shortage that manifests itself in smaller global stockpiles. This is evident in the increasing abundance of stories about the tight global gold market, particularly in London. This has also become apparent in silver as, just this week, Thomson Reuters GFMS released their latest Silver Interim Report, which projected the third consecutive year of a global shortfall in the supply of physical silver. Check these links for details:
The $500 Trillion Ticking Time Bomb But Yellen knows that things are far from well. She knows that unemployment is not 5 percent, since 94 million people capable of work are not working. She also knows that the risks in the U.S. and in the world economy are greater than ever.
The U.S. federal debt is $18.5 trillion and total debt is close to $70 trillion. On top of that there are unfunded liabilities in excess of $200 trillion, plus there is around $500 trillion of interest-rate-sensitive derivatives in U.S. banks.
With a debt and risk position of around 3/4 of a quadrillion dollars, it’s not the most comfortable position for the Fed to increase interest rates. On top of that, the overvalued U.S. stock market could hardly cope with an interest rate increase. The market is in the final stages of a secular bull market and any bad news will be the catalyst for a bear market of massive proportions.
Turns out that Overstock.com has loaded up on some $10 million of gold and silver — metal that would be used to pay employee wages in the event of a crisis. As chairman Jonathan Johnson explains it: “We thought there’s a decent chance that there could be a banking holiday at some point caused by a crisis and it could last for two days or two weeks or who knows how long, and we wanted to be in a position where we could continue to operate during any such crisis.”
By Ronald-Peter Stoeferle, Incrementum AG Liechtenstein
November 19 (King World News) – Guinea Pigs in Monetary Experiments
It seems strange to us that after seven years of unconventional central bank policy, there is no debate as to whether these measures have any effect at all, respectively whether the situation wouldn’t actually be better without QE. The narrative of rising asset prices and a relatively painless way to supposedly sustainable growth is barely questioned.
Unconventional monetary policy is justified by an emergency situation and is only temporary. Or is it not? How simple is the often-promised return to “monetary normality” really? In this context, Japan is an example that proponents of monetary policy experiments would rather not look at too closely. The country is a “model student” of highly aggressive monetary policy ...
In the following article, Frank Holmes looks specifically at the performances of five major global currencies which are very closely tied to (mostly) specific commodities which have been falling dramatically in US dollar terms. There are obviously a number of others which have been similarly affected in the global commodities crash and, although not specifically mentioned in most cases, gold is also a significant contributor to the economies of all five and while the currencies noted may not track gold as closely as they do iron ore, oil and gas and copper, gold prices in all of these have performed hugely better than they have in the US dollar.
By California Lawyer | Tuesday, November 17, 2015 at 10:58 am At some point, certainly, the concept cannot be lost on law enforcement officials that the banking cartel selling massive paper futures, naked or not, are perhaps violating the law. I say this somewhat in jest, because also at this point, there is clear evidence of the banking cartel taking massive, concentrated, short positions on the Comex, something the CFTC could, but won’t, do anything about.
Is the banking cartel engaged in fraud by selling naked shorts? The simple answer is not likely.
One way to look at the shenanigans on the Comex are through the prism of lawyers’ eyes, using state common law, such as fraud, deceit and misrepresentation. On the surface, it seems that the cartel banks engage in fraud on a daily basis, as they naked short the metals, causing massive price declines, which they then close out for huge profits at the bottom, only to do it again and again at opportune times like when the FOMC minutes are front run and the cartel banks make guaranteed profits. This is unfair, particularly to the longs that unwittingly buy the cartel’s paper, only to watch waterfall declines and stop runs, wiping out the pitiful longs, time and time again.
In the law there are several types of fraud.
In California, “fraud” and “deceit” are defined in California Civil Code sections 1572, 1709, and 1710. Civil Code section 1709 defines “deceit” generally as, “One who willfully deceives another with intent to induce him to alter his position to his injury or risk, is liable for any damage which he thereby suffers.” Civil Code section 1710 specifies four kinds of deceit:
“A deceit, within the meaning of [section 1709], is either:
The suggestion, as a fact, of that which is not true, by one who does not believe it to be true [intentional misrepresentation of fact];
Recent omments from Frank Holmes of US Global Investors, in turn based on the latest data from the World Gold Council paint a positive picture in terms of continuing gold purchasing by central banks during the third quarter of the year. Like all statistics though the true inference could be gleaned from how one looks at them.
We assume the WGC figures are, in essence, correct although they relate to what is actually reported by Central Banks to the IMF and this is sometimes open to question. As we pointed out in a recent article here, most of the world’s biggest gold holding countries have reported absolutely zero change in the holdings over the past 10 years with the only truly significant increases in reported gold holdings coming from Russia and China. And the latter supposedly came clean on its increases in gold reserves with its big 600 tonne rise in the reported figure back in June – apparently accumulated over the previous six years but not reported to the IMF at the time. But whether the Chinese figure, or indeed some of the other reported figures, are a true statement of the respective countries' actual holdings remains open to doubt in some quarters. ...
When people are scared about the economy and financial markets, they rush to gold. Boy, were they worried in recent months.
U.S. demand for gold bars and coins surged 207% during the third quarter, the World Gold Council said on Thursday. The skyrocketing demand signaled a level of interest in gold investment "not seen since the global financial crisis," the group said. The U.S. Mint backs up that assessment. It said gold Eagle coin sales surged to nearly 400,000 ounces last quarter, the highest level in more than five years.
My e-mail box has been filled up this week with panicked owners of gold and “trolls”, it is sometimes hard to decipher which is which. I say this because the logic being employed is in some cases panic driven and in others just plain flawed, but similar nonetheless. Some who own gold assets have come to the mindset that even though they know precious metals are manipulated, they fear it will “go on forever”. The same goes even for some of the leaders in the gold community, weak knees abound. The bottom line is this, once the last once of deliverable gold is received, the game will end.
Let’s ask a few questions to put this in perspective. If your local forecaster showed you the radar of a cat5 hurricane out in the gulf moving very slowly toward you, is there anyone or anything that could get you to cancel your homeowners or flood insurance? This is the case in today’s financial and geopolitical world. You see daily where leverage has risen to previously unseen ratios. You have watched as interest rates around the world have been zeroed out and in many cases have gone negative. You see reported economic numbers that make no sense and are regularly contradicted by real world experience.
Debt overwhelms most people in debt based fiat currency economies (US, UK, Europe, and others). Credit cards, auto loans, student loans, mortgages, and more …
Debt overwhelms most governments in debt based fiat currency economies. They are in debt because governments spend more than their revenues, which is a truly simple concept. However, don’t expect fiscal sanity to return anytime soon.
HOW BAD IS IT?
In round numbers global debt is about $200 Trillion and increasing about $10 Trillion per year or $27 Billion per day, each and every day. Dishonest money is easy to create – just borrow it into existence.
o the degree that serfdom is political powerlessness and near-zero access to the processes of accumulating productive capital, super-welfare guaranteed income for all is simply serfdom institutionalized into a Hell devoid of purpose, pride, meaning, community and positive social roles.
Jean-Paul Sartre famously wrote that Hell is other people. While this is undoubtedly true in cocktail party and workplace settings, in socioeconomic terms,Hell is a scarcity of positive social roles--the sources of positive identity, pride, purpose, community and meaning.
Since meaningful work is the source of positive social roles, Hell is a lack of meaningful work. ...
Let's try to untangle the web of Fed-speak going on here. "Reality" for our purposes is defined as my opinion, obviously. Yellen Defends Seven Years of Low Interest Rates in Letter to Nader
Fed-Speak: Warning that "an overly aggressive increase in rates would at most benefit savers only temporarily," she argued in the letter released Monday in Washington that the Fed's seven-year era of zero rates had sheltered American savers from dramatic declines in the value of their homes and retirement accounts.
Reality: It was a thing called deflation, which is a natural corrective to man-made, currency-compromising monetary policy that leverages the 'value' inherent in official 'money' in service to asset appreciation. Periodically, this 'money' becomes valued as liquidity as the monetized economy deleverages from the official Fed-sponsored inflation (in this case, Alan Greenspan's commercial credit bubble). In other words, the "value of their homes" was a false economic signal to begin with. So what she is saying is that the Fed's seven-year era of zero rates have been a tool employed to forestall, you guessed it... reality.
The 7th largest economy on the entire planet, Brazil, has been gripped by a horrifying recession, as has much of the rest of South America. But it isn’t just South America that is experiencing a very serious economic downturn. We have just learned that Japan (the third largest economy in the world) has lapsed into recession. So has Canada. So has Russia. The dominoes are starting to fall, and it looks like the global economic crisis that has already started is going to accelerate as we head into the end of the year. At this point, global trade is already down about 8.4 percent for the year, and last week the Baltic Dry Shipping Index plummeted to a brand new all-time record low. Unfortunately for all of us, the Federal Reserve is about to do something that will make this global economic slowdown even worse.
Throughout 2015, the U.S. dollar has been getting stronger. That sounds like good news, but the truth is that it is not. When the last financial crisis ended, emerging markets went on a debt binge unlike anything we have ever seen before. But much of that debt was denominated in U.S. dollars, and now this is creating a massive problem. As the U.S. dollar has risen, the prices that many of these emerging markets are getting for the commodities that they export have been declining. Meanwhile, it is taking much more of their own local currencies to pay back and service all of the debts that they have accumulated. Similar conditions contributed to the Latin American debt crisis of the 1980s, the Asian currency crisis of the 1990s and the global financial crisis of 2008 and 2009.
Perhaps a retail coals-in-the-stockings Christmas will awaken the mainstream media to the reality that recession is now a global phenomenon. If container shipping is any reflection of the upcoming Christmas season, Santa is poised to fill the nation's Christmas stockings with coal. Let's start by noting that Baltic Dry Index Falls Below 500 for First Time Ever (gcaptain.com) andContainer Freight Rates Plummet 70% In 3 Weeks (Zero Hedge).
David Stockman: “It’s part of the larger context of a central bank dominated financial system. These central banks are run by Keynesian academics who believe that 12 people sitting on the Open Market Committee here (at the Fed) or an equivalent number at the ECB and the Bank of Japan can somehow figure out the right price for money and the right price for every maturity of debt…
In effect, a currency crisis is simply the abrupt revaluation of the currency to reflect new realities. I have long maintained that the structural imbalances of debt and risk that triggered the Global Financial Meltdown of 2008-2009 have effectively been transferred to the foreign exchange (FX) markets.
This creates a problem for the central banks that have orchestrated the "recovery" by goosing asset bubbles in stocks, real estate and bonds: unlike these markets, the currency-FX market is too big for even the Federal Reserve to manipulate for long. The FX market trades roughly the entire Fed balance sheet of $4.5 trillion every day or two. Currencies are in the midst of multi-year revaluations that will destabilize the tottering towers of debt, leverage and risk that have propped up global growth since 2009.
There is no way Fed policy can be win-win-win for all participants. One result of the global dependence on central bank interventions is a unhealthy fixation on the slightest changes in those interventions, oops I meant policies.
Since the slightest pull-back in central bank inflation of asset bubbles could spell doom for the global economy and everyone holding those assets, the world now hangs on every pronouncement of the Federal Reserve in a state of extreme anxiety. Why the extreme anxiety? Because any change in Fed intervention creates both winners and losers. There is no way Fed policy can be win-win-win for all participants, and to understand why we turn to Triffin's Paradox, a.k.a. Triffin's Dilemma.
It’s all good. Just ask Janet Yellen or any hawkish Federal Reserve board member. Indeed, there have been some better readings on the US economy lately but things are far from outstanding.
Plenty of equity traders suddenly expect new highs on the major markets any day now. The bond market is pricing in 70%+ probability of a December rate hike. This time around markets are not jittery because the Fed has assured us offshore problems won’t touch the US. Let’s hope they are more right about that than they were four short months ago.
As noted in the editorial if this new narrative holds we’re back to the situation we were in early in the year in the metals markets. Hoping the Fed just gets it over with so traders can stop obsessing over and shorting because of a potential rate hike. As strong as the Dollar has been I remain a skeptic about the 120 USD Index predictions that are now common. If that comes to pass it will obliterate the US manufacturing sector. The equity rally is already a pretty narrow one. More sectors generating negative earnings growth might be too much to bear.
One thing to look ahead to is tax loss selling season. After that we may actually see inflation start to turn up as lower energy and material prices are fully reflected in year over year comparisons. That could make real rates more negative again which would support metals prices.
The contraction is accelerating and crosses economic lines and industry lines. In fact, one can say 95% of the economy is driven by the consumer. For instance, Cummins engine is not a consumer stock but if consumer cannot spend the trucking industry dies. – my colleague, Hal
The Government/Fed can print money to keep the banks from collapsing and to keep the financial system “solvent,” but it can’t print economic activity. To be sure, opening up the easy credit spigot to car buyers caused a temporary bounce in auto sales. But this is not sustainable. At a certain point, the availability of car buyers who can support a monthly car loan payment gets exhausted. Over 30% of all new cars sold to the private sector are now financed with sub-prime and deep sub-prime loans. Car repo rates are going through the roof according to my sources in the industry. Recently a high percentage of car sales were “fleet” sales to the Government.
I recently finished a biography about George Walton Williams of Charleston, SC. He lived from 1820 to 1903, and was a grocer and hardware store owner in Charleston. During the Civil War, he was paid by the Confederate Government to be a “blockade runner” with his ships in and out of Charleston Harbor to and from England. He demanded to be paid in Gold, not Confederate Dollars. At the end of the war, all of his wealthy Charleston friends were penniless, while he retained his wealth and ability to restock his hardware and grocery. His comment was:” It is not that I became richer, it is that everyone else around me became poor”.
The book is: George Walton Williams: The Life of a Southern Merchant.
Centrally issued money optimizes inequality, monopoly, cronyism, stagnation, low social mobility and systemic instability. If we don't change the way money is created and distributed, wealth inequality will widen to the point of social disorder. Everyone who wants to reduce wealth inequality with more regulations and taxes is missing the key dynamic: the monopoly on creating and issuing money necessarily widens wealth inequality, as those with access to newly issued money can always outbid the rest of us to buy the engines of wealth creation.
Control of money issuance and access to low-cost credit create financial and political power. Those with access to low-cost credit have a monopoly as valuable as the one to create money.
Once again, you’re being fed a giant lie. The Federal Reserve will NOT raise interest rates in December.
I know there’s a lot of jabbering in the media right now with the vast bulk of commentators, pundits and economists all saying in near unison that we’ve finally reached the tipping point and that December is absolutely the month that the Fed pulls the trigger and, for the first time in a decade, lifts U.S. interest rates.
Their only rationale is that the U.S. printed a surprisingly strong jobs reports in October.
If you thought Black Friday and Cyber Monday were the peak of overhyped sales frenzy – you ain’t seen nothing yet! China’s Singles Day – an even more hyped up event from China’s online giant, Alibaba, sees even more conspicuous demand than Black Friday and Cyber Monday rolled together – and all in one day. The event falls on the 11th day of the 11th month and this year saw sales hit an almost unbelievable US$14.3 billion – up from just over $9 billion a year earlier. For a country the media tells us is in recession and struggling with its domestic economy – a factor blamed for many of theWest’s current ills, and for the resource sector’s poor performance in particular – this has to be a truly remarkable figure and suggests that whatever may be afflicting the country’s manufacturing and exports sector, domestic demand is running higher than it has ever been – and substantially so.
Renowned money manager Eric Sprott is still very bullish on physical gold and silver. Why? Sprott proclaims, “The U.S. is broke. We know they’re broke. . . . About a thousand professors have signed up and told Congress you’ve got to deal with this issue, and it is immediately ignored, but it is by far the biggest issue. It’s not just government. It’s corporate pension plans, and state pension plans and all these unfunded obligations where everyone thinks they are going to receive something only to find out that they are not going to receive something. . . . The math is pretty simple. The U.S. is broke, and I don’t want to single out the U.S. Lots of countries are broke. I am sure Japan is broke, and I am sure there are European countries that are broke. We can’t keep extending and pretending and suggesting everything is great. Unfortunately, someone is going to pay the price, and I am not sure when the price is going to be paid. The analogy I use is we all knew ten years ago that Detroit was broke. . . . It was so mathematically certain that you knew what was going to happen. The same thing will happen to the United States.”
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