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The Sequester ‘Crisis’ And What Should Be Done - Ron Paul's Texas Straight Talk

Despite what the media and politicians would have us believe, the United States did not collapse last Friday when the package of spending reductions known as “sequestration” went into effect. The financial markets hardly blinked, as they have come to be more skeptical about these periodic government-hyped “crises.”

 

What had been portrayed as a drastic reduction in government spending was merely a decrease in the projected rate of increase in government spending over the next decade. Under sequestration, government spending increases by $2.4 trillion over the next 10 years rather than $2.5 trillion without it.

 

So we are speeding toward collapse at only 100 miles per hour instead of 110 miles per hour.

 

Some in Congress are using the panic over sequestration to justify another surrender of legislative authority to the executive branch. These members want to “pass the buck” on prioritizing federal programs by giving the president, cabinet officials, and high-level bureaucrats authority to set spending priorities. However, it is Congress’s job to set priorities in federal spending.

 

The drafters of the Constitution give the legislature the authority over spending because they recognized it was a threat to liberty to allow this power to be concentrated in the executive branch. Congress’s willingness to cede more authority to the executive should be opposed by everyone who values liberty and limited government.

Some of the loudest objections to sequestration have come from the champions of the military-industrial complex. Yet under sequestration defense spending will still increase by 18 percent over 10 years as opposed to 20 percent without sequestration.

 

There are claims that the military will face a one-time real reduction back to 2007 levels of spending, before beginning to climb again next year. That remains to be seen. However, few claimed at the time that 2007 levels of military spending, occurring as they did during the huge post 9/11 build-up, were inadequate.

 

But despite the fact that the US spends more on military than the rest of the world combined, we are told that even this modest, short-term reduction would be, in the words of outgoing Defense Secretary Leon Panetta, “shameful” and “irresponsible.” A return to 1980’s levels of military spending in real dollars – a time of significant military build-up – is considered outrageous even though the US faces no Soviet Union or equivalent threat.

 

In fact, the entire $1.2 trillion dollars that the sequester is supposed to save could be realized by cutting one unneeded, wasteful boondoggle: the $1.5 trillion F-35 fighter program. The F-35, billed as the next generation all-purpose military fighter and bomber, has been an unmitigated disaster. Its performances in recent tests have been so bad that the Pentagon has been forced to dumb-down the criteria. It is overweight, overpriced, and unwieldy. It is also an anachronism: we no longer face the real prospect of air-to-air combat in this era of 4th generation warfare. The World War II mid-air dogfight era is long over.

 

As defense analyst Winslow Wheeler wrote last year:

 

“It's time for Defense Secretary Leon Panetta, the U.S. military services, and Congress to face the facts: The F-35 is an unaffordable mediocrity, and the program will not be fixed by any combination of hardware tweaks or cost-control projects. There is only one thing to do with the F-35: Junk it.”

 

We should not look for cancellation of the F-35 program any time soon, however. The military industrial complex understands the political necessity of spreading its military Keynesianism as widely across Congressional districts as possible.

 

That is why F-35 manufacturer Lockheed-Martin can boast on its website that “the F-35 provides 127,000 direct and indirect jobs in 47 states and Puerto Rico.” What is unfortunately not understood is that these 127,000 workers would be far better utilized producing needed goods and services rather than treated as a jobs program disguised as national defense.

 

Despite the alarm over cuts that are not real cuts, it is clear that the US government is not serious at all about changing its ways. In a recent tour of the Middle East, newly-confirmed Secretary of State John Kerry announced that the US would be sending another $60 million to the rebels seeking to overthrow the Syrian government – in the midst of the sequester “crisis”!

 

Despite the rhetoric, there appears no intention on the part of the government to take our fiscal crisis seriously or abandon the idea that we should run the rest of the world.

Hal's insight:

hat tip to Ed Steer: http://www.caseyresearch.com/gsd/edition/eric-sprott-central-bankers-are-gaming-gold/ ;

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Anthony Kemmer's curator insight, August 17, 3:52 PM

This article discusses the “Sequester ‘Crisis’” and what should be done about it. It claims that the United States did not collapse when “sequestration” went into effect. The article says, “ Under sequestration, government spending increases by $2.4 trillion over the next 10 years rather than $2.5 trillion without it.” This is a big deal. We are only speeding toward collapse at a 100mph instead of 110mph. 

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LearCapital | Download Lear Gold & Silver Daily Today!

LearCapital | Download Lear Gold & Silver Daily Today! | Gold and What Moves it. | Scoop.it

Download the Free Lear Gold & Silver Daily Today!

 

Stay on top of the latest breaking commodities market news, coin prices, real time charts and special promotions from Lear Capital's “Lear Gold and Silver Daily” app for both iOS  and Android devices .

 

The Lear Gold and Silver Daily app is a special new benefit brought to you by Lear Capital at no additional cost.

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Market Volatility and Growth Uncertainty Brought Back Interest into Gold - @SharpsPixley.com

Market Volatility and Growth Uncertainty Brought Back Interest into Gold - @SharpsPixley.com | Gold and What Moves it. | Scoop.it

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%. 

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Gold set to post weekly gain on economic fears, US Federal Reserve view - The Economic Times

Gold set to post weekly gain on economic fears, US Federal Reserve view - The Economic Times | Gold and What Moves it. | Scoop.it
Despite Friday's drop, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.2 per cent to 760.94 tonnes.
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Structural over-indebtedness argues for further upward revaluation of gold

Structural over-indebtedness argues for further upward revaluation of gold | Gold and What Moves it. | Scoop.it

Ronald-Peter Stoferle tells King World News:

 

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. ...

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China gold output growth to slow to less than 1% by 2018: Analysts - The Economic Times

China gold output growth to slow to less than 1% by 2018: Analysts - The Economic Times | Gold and What Moves it. | Scoop.it
Growth in gold mine output from number one producer China is set to slow significantly in coming years in the face of declining ore grades and waning profitability, analysts said.
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3 Reasons the Silver Price is Bound to Rise - Shanghai Metals Market

3 Reasons the Silver Price is Bound to Rise - Shanghai Metals Market | Gold and What Moves it. | Scoop.it
Silver managed to close Thursday at $17.37 per ounce after taking a steep fall to $17.04 the previous day. 3 Reasons the Silver Price is Bound to Rise
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68.369 tonnes withdrawn from Shanghai Gold Exchange for week ending 10/10

Ed Steer writes concering chart sent by Nick Laird:

 

[Weekly] gold withdrawals from the Shanghai Gold Exchange for the week ending Friday, October 10.  They reported that 68.369 tonnes were withdrawn...

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That's a pretty nice withdrawal. Click through for the chart.

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Gold rebound thwarted by positive US data, equity gains

Gold rebound thwarted by positive US data, equity gains | Gold and What Moves it. | Scoop.it
Despite hitting a resistance at $1250 levels, gold is still on track for second weekly gains. Changing rate expectations are driving gold and US dollar, analysts said.
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World economy so damaged it may need permanent QE - Telegraph

World economy so damaged it may need permanent QE - Telegraph | Gold and What Moves it. | Scoop.it
Markets are realising that the five-and-a-half year recovery since the financial crisis may already be over, says Ambrose Evans-Pritchard
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Washington Accounting Magic: US Deficit $483 Billion, New Borrowing $1.1 Trillion

Washington Accounting Magic:  US Deficit $483 Billion, New Borrowing $1.1 Trillion | Gold and What Moves it. | Scoop.it
We’re shocked and appalled: they're lying to us, here in the land of open and transparent governance?
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Government hikes import tariff value on gold - The Economic Times

Government hikes import tariff value on gold - The Economic Times | Gold and What Moves it. | Scoop.it
The government today hiked import tariff value on gold to $401 per 10 grams but kept the tariff unchanged for silver at $575 per kg, following global price trends.
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Peter Grandich and Michael Pento discussion

Peter Grandich and Michael Pento discussion | Gold and What Moves it. | Scoop.it

Peter and Michael discuss the latest on the stock, bond and gold markets. Click on the playbar below to listen to the entire interview.

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Despite Rally & Propaganda, Fed To Launch Historic QE-Infinity - Pento

Despite Rally & Propaganda, Fed To Launch Historic QE-Infinity - Pento | Gold and What Moves it. | Scoop.it

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....

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Ebola delaying Liberia’s first modern gold mine - @Mineweb.com

Ebola delaying Liberia’s first modern gold mine - @Mineweb.com | Gold and What Moves it. | Scoop.it

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...

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Is The Next Giant Gold Field Hiding Under The Great Plains? - American Hard Assets

Is The Next Giant Gold Field Hiding Under The Great Plains? - American Hard Assets | Gold and What Moves it. | Scoop.it

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. ...

 
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The real problem is that there has been no economic recovery -- it was just an illusion

The real problem is that there has been no economic recovery -- it was just an illusion | Gold and What Moves it. | Scoop.it

Egon von Greyerz tells King World News:

 

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. ...

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For those who doubt that America is ruled by a narrow elite: three charts. Charles Hugh Smith

For those who doubt that America is ruled by a narrow elite: three charts. Charles Hugh Smith | Gold and What Moves it. | Scoop.it

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? ...

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The developed world is choking on debt

The developed world is choking on debt | Gold and What Moves it. | Scoop.it

 Jean-Marie Eveillard tells King World News:

 

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. ...

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HFT Firm Athena Engaged In Massive Closing Price Manipulation, Called It "Gravy" | Zero Hedge

HFT Firm Athena Engaged In Massive Closing Price Manipulation, Called It "Gravy" | Zero Hedge | Gold and What Moves it. | Scoop.it
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.
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Bullard to BTV: Fed Should Consider Delaying The End of QE | Bloomberg | Safehaven.com

Bullard to BTV: Fed Should Consider Delaying The End of QE | Bloomberg | Safehaven.com | Gold and What Moves it. | Scoop.it
James Bullard, President of the St. Louis Federal Reserve Bank, told Bloomberg Television's economics editor Michael McKee today that the Fed should consider delaying the end of QE.
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100-YEAR CHART: Gold price vs Dow Jones shows metal still cheap

100-YEAR CHART: Gold price vs Dow Jones shows metal still cheap | Gold and What Moves it. | Scoop.it
Gold price hits 5-week high Wednesday as stocks drop but gold's gains could've been greater if not for strong dollar.
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Platinum drops below gold for first time since April 2013 - @Mineweb.com

Platinum drops below gold for first time since April 2013 - @Mineweb.com | Gold and What Moves it. | Scoop.it

Author: Nicholas Larkin (Bloomberg)
Posted: Thursday , 16 Oct 2014 

(BLOOMBERG)  - 

 

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  ...

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The Current Cap

The Current Cap | Gold and What Moves it. | Scoop.it
Less than two weeks ago, gold again bounced from the same $1180 level which had supported it in the past. The "safe haven" bid has pushed gold higher since but now it seems stuck and capped
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Oil is crashing. Here's what traders need to know.

Oil is crashing. Here's what traders need to know. | Gold and What Moves it. | Scoop.it

Oil has suffered an epic decline.

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…

Hal's insight:

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. 

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Why the State Has Failed to Reform Our Broken Financial System | Charles Hugh Smith

Why the State Has Failed to Reform Our Broken Financial System | Charles Hugh Smith | Gold and What Moves it. | Scoop.it

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. ...

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