Kelly Smith writes: The U.S. Comex gold futures outperformed all the major asset classes this week, jumping 1.60% to end at $1,241.20 on Thursday. Gold prices have surged while the S&P 500 Index has dropped 2.26%, the Euro Stoxx 50 Index has plunged 3.87%, and the crude oil futures have dived 3.64% week-to-Thursday. The Dollar Index has lost 1.11% to finish at 84.955 on Thursday. The benchmark U.S. ten-year Treasury bond yield plunged to a low of 1.862% from 2.281% last Friday. The Merrill Lynch Treasury Bond options implied volatility index (MOVE Index) surged from 74.64% on Tuesday to 101.28% on Wednesday while the VIX Index jumped from 21.24% at the end of last week to 26.25% on Wednesday and 25.20% on Thursday. The Greek ten-year bond yield has surged almost 220bp this week to 8.641%.
Structural over-indebtedness argues for further upward revaluation of gold
Economists and politicians continue to attempt to lower high debt relative to economic output (debt/GDP), resp. stop its further growth. We think the ratio between the size of the public debt and gross domestic product is not very meaningful. The uselessness of this data can be seen from the fact that the calculation of GDP has recently been changed. An increase in GDP must – ceteris paribus – lower indebtedness relative to GDP. This happened in the US, where overnight GDP was reported to be 3% higher than previously believed, by suddenly including intangible values such as licensing fees and R&D spending in the calculation. As a result, $470 billion. were pulled out of the statistics hat. This is roughly equivalent to the economic output of Belgium. ...
By Michael Pento of Pento Portfolio Strategies October 17 (King World News) - Despite Rally & Propaganda, Fed To Launch Historic QE-Infinity
It wasn’t too long ago that the stock market was busy celebrating a “great” September jobs report. There were 248k net new jobs created and the unemployment rate dropped to 5.9 percent. Janet Yellen, Ben Bernanke and the rest of Washington D.C.’s central planners deemed it a great time to take a Keynesian victory lap, basking in the delusion that they have now proved you actually can print and borrow your way to prosperity.
And because of their success, the Fed would be able to raise interest rates without any damage to the economy....
Author: Lawrence Williams Posted: Friday , 17 Oct 2014 LONDON (MINEWEB) -
One of the junior gold exploration sector’s big West African success stories is facing delays, probably fairly minor, due to logistical complications arising from Liberia’s Ebola epidemic. Speaking at a Canaccord Genuity resource event on Thursday, Aureus Mining’s CEO, David Reading, noted that although there had been no Ebola cases reported at the mine site, nor at the local village at the company’s New Liberty gold project, the disease epidemic, along with the rainy season, has affected equipment deliveries which may delay the guided start-up projection of initial gold production in Q1 2015 and steady state output by the end of the first half of the year.
Reading noted that Aureus has, similar to many West African companies, implemented strict Ebola protection protocols with enhanced security and more restricted access to operations...
Most of the world’s greatest mines started as a surface outcrop before turning into a big hole in the ground. Australia’s Deep Exploration Technologies Cooperative Research Centre, backed by miners like BHP Billiton , Barrick and Newcrest, is developing new techniques to find deposits visible only deep underground.
The premise is that mineral deposits are evenly scattered across the globe and miners have only found the ones with veins at or near the surface, says Neil Williams, retired chief of government research agency Geoscience Australia. Even the world’s deepest mines, like the 2-mile-deep Mponeng gold mine in South Africa, exploit structures that prospectors originally found with conventional methods. Those methods include everything from sophisticated gravity and radiation sensors to old-fashioned panning for gold, where prospectors work upstream until the flakes disappear, then look uphill for the source of the gold. ...
The real problem is that there has been no economic recovery -- it was just an illusion. The real economy is weak and we have now started a downturn in the economy that will last for a very long time. All we have seen since 2007 is a false improvement based on money printing and a massive increase in world debt.
The U.S. debt has doubled from $9 trillion - $18 trillion since 2007 when the crisis started. Of course the Fed has also printed an additional $3 trillion. It was just announced that the budget deficit for the previous year that just ended in September was only $480 billion. Well, the U.S. debt has grown by over $1 trillion in the last 12 months. So the difference between the budget deficit of $480 billion and the $1.1 trillion increase in debt is just creative accounting. ...
For those who doubt that America is ruled by a narrow elite: three charts.
The book Why Nations Fail: The Origins of Power, Prosperity, and Poverty neatly summarizes why nations fail in a few lines:
(A nation) is poor precisely because it has been ruled by a narrow elite that has organized society for their own benefit at the expense of the vast mass of people. Political power has been narrowly concentrated, and has been used to create great wealth for those who possess it.
Sound like any countries you know?Perhaps we should flip this question around and ask: how many nations don'tfit this profile? ...
But the main problem is there is just too much debt. The developed world is choking on debt. When Western central planners intervened and took absolutely unprecedented steps in 2008 - 2009 in order to save the day, it did not allow for a cleansing of the financial system. In other words, there are zombie companies that exist today because interest rates are almost nothing. ...
Another day, another HFT firm busted for manipulating the market. Today's participant: Athena Capital, which did what every other algorithmic, HFT firm does - rig the market of course, but at least it had a sense of humor about it: Athena called the market-rigging algorithm that "manipulated the closing prices of tens of thousands of stocks during the final seconds of almost every trading day during the Relevant Period" by the very amusing name "Gravy." But remember: HFTs are really your friend - they just provide liquidity and stuff.
Author: Nicholas Larkin (Bloomberg) Posted: Thursday , 16 Oct 2014
Platinum dropped to the lowest in more than a week in London, falling below the price of gold for the first time since April 2013, on concern slowing economic growth will curb demand. Palladium declined.
The MSCI All-Country World Index of equities slumped to an eight-month low yesterday as U.S. retail sales dropped more than forecast in September, while the Bloomberg Commodity Index has retreated to the lowest level since July 2009. An ounce of platinum bought as little as 0.9974 ounce of gold in London today, data compiled by Bloomberg showed. The ratio was as high as 1.18 in January.
Platinum is mostly used in catalytic converters and jewelry and has slipped 8.8 percent since the start of January, even as a South African ...
Since peaking above $107 per barrel at the end of June, the price of West Texas Intermediate (WTI) crude oil recently collapsed to less than $82. That’s a 23% decline in less than three months. Oil is now trading at its lowest price in two years. And a lot of folks think it’s going to fall even further.
I disagree. It’s likely the bottom is almost in for oil prices. And the sector looks like it’s setting up for a short-term rally.
Let me explain…
I've a different thought on the decline of oil. While it has helped that the USA's production is up, to me one key benefits to a crashing oil is that it staves off a huge gold rally. Lower fuel costs will help with the mining groups because it was getting too expensive to mine the stuff out of the ground. So you either let the price rise on the commodity or you make it cheaper to get the commodity out of the ground at current price levels.
As a game plan this will help central banks accumulate, like China, while continuing get it at fiat lows.
Just a thought that has been bouncing around my noggin.
Expecting the state to truly reform the nation's engines of financialization is like asking the cocaine addict married to the wealthy dealer to divorce the dealer.
Most observers think they know why the government (i.e. the state) has failed to truly reform the financial system: corrupt politicos on the receiving end of the Too Big to Fail (TBTF) banks and financiers' millions of dollars in lobbying and campaign contributions do the banks' bidding.
While the reduction of democracy to an auction in which the highest bidder controls the state is certainly one systemic reason for this abject failure,there is an even greater, more deeply systemic reason why the state cannot reform the rotten core of financialization.
The state has become dependent on the wages and profits of finance for its own revenues. ...