A Yahoo headline: Pentagon Readying For Long War in Iraq, Syria. More war means more debt and higher inflation. Increasing national debt is as certain as death and taxes. Increasing consumer prices follow.
Oct 22 (BBC) — For the last two days Neeta Malhotra has been busy shuttling from one jewellery store to another in Mumbai. Her elder daughter is getting married next year but she’s trying to buy as much jewellery as possible for the wedding now. ‘I was waiting for this period to start buying gold jewellery for my daughter’s wedding’ says Mrs Malhotra, as she checks out a necklace in the store. But why is she in such a hurry to buy so much jewellery right now? After all, her daughter’s wedding is still a year away. “This is the best time to purchase gold and the prices are also low right now. I am not sure whether I will get the same rate next year,” she says. Neeta is one among millions of Indians who have been thronging stores over the last two weeks to purchase jewellery, as the festive and wedding season kicks in.
The city known as America’s story factory is making up Census data.
In the latest allegation of The Post’s exclusive probe into fishy goings-on at the Census Bureau, a new whistleblower says workers in the Los Angeles region have been manipulating economic data.
Contact information for the veteran Census worker — who reached out to me by e-mail recently and whom I interviewed by phone — has been turned over to congressional investigators who are looking into data falsification in other parts of the country.
“Everybody knows falsification is going on,” the whistleblower told me, adding the malfeasance in the LA region is so obvious that it’s hard to miss. ...
Could an infectious disease kill the monster that has been choking gold and silver prices for more than a year? On the heels of a lively Sprott Precious Metals Roundtable discussion, The Gold Report caught up with investor Eric Sprott to ask how a tragedy in Africa could impact the price of precious metals and mining stocks. We also spoke to his Executive Vice President of Corporate Development John Ciampaglia about a new way to gain exposure to gold.
The Gold Report: Deutsche Bank warned in a recent note that the Ebola virus could impact commodity markets, including gold and cocoa, as it spreads to producing countries in West Africa, particularly Ghana and Mali. In a recent article titled "Ebola, The Tipping Point," you mourned the unnecessary loss of life and predicted 5% less global production next year than this year. Could a lack of supply due to Ebola-related closures really cause the price of gold to rise?
Eric Sprott: There is already a shortage of gold and silver in the markets without a corresponding increase in the price. I wrote an open letter to the World Gold Council questioning its data on China. If you believe the Shanghai Gold Exchange data, China consumes more than 2,000 tons (2 Kt). In 2011, it consumed only about 1 Kt. In the last two years, China has bought an extra 1 Kt gold—25% of a 4 Kt market. If any country came in and bought 25% of the oil market, the wheat market or the orange juice market, the commodity price would not go down. Obviously, the physical gold market is not manifesting itself in the price changes.
I think Friday saw a power-shift from the central banks to the global private banks. I think the global banks served notice that the Central bank plan of 1) reining in the risk-taking of the TBTF banks and 2) stimulating growth in the real economy is now dead in the water. There is a new plan.
Frank O. Trotter, Executive Vice President - EverBank Total abject failure. Mad Max. Breakdown of society. Chaos. How’s that for an upbeat start?
Failure is a tough thing to talk about, particularly here in the US where it’s all about optimism. What’s the best? Who's the fastest? Where should I put my money for the highest return?
But examining failures can help us avoid mistakes. So let’s take a tour of a few currencies and money systems that fell apart. We’ll learn some principles of sound money and hopefully, have a little fun.
What Is Money? Even though we don’t think about it every day, we all know that money is a fiction. It is a medium of exchange – a token we pass back and forth instead of bartering, and a store of value that keeps score of our assets and debts. It is based on belief and faith—nothing more.
At times, money has been metals or tobacco or wampum. There are the famous Yap Island stones. At other times, like today, paper tokens with no intrinsic value stand in as money.
As we’ll see, people and societies have always experimented with money.
Policy makers deny its existence, yet investors still reckon that whenever stocks and other risk assets take a tumble, the authorities will be there with calming words or economic stimulus to ensure the losses are limited.
A put option gives investors the right to sell their asset at a set price so the theory goes that central banks will ultimately provide a floor for falling asset markets to ensure they don’t take economies down with them.
Last week as markets swooned again, it was St. Louis Federal Reserve President James Bullard and Bank of England Chief Economist Andrew Haldane who did the trick. Bullard said the Fed should consider delaying the end of its bond-purchase program to halt a decline in inflation expectations, while Haldane said he’s less likely to vote for a U.K. rate increase than three months ago.
Michael Snyder is a self-proclaimed “truth-seeker” and financial writer who says there is no recovery on Main Street, and we are not going to get one—ever. Snyder contends, “We’ve had permanent damage to the U.S. economy. It’s kind of like going to the beach, and you build a sandcastle. The waves start coming in, and the sandcastle is not going to be destroyed by the first wave. Then, more waves will come in, and eventually the whole sandcastle will be wiped out. That’s kind of what’s happening to the U.S. economy. We’ve had waves of economic problems, and we have had permanent damage as a result. Our economy is not totally destroyed yet, but we have permanent damage. Now, new waves are on the way, which will cause more damage because of the long term trends.” Snyder goes on to explain, “None of the long term problems that have been plaguing our economy have been fixed. Instead, the Fed printed a bunch of money and pumped up the stock market. It made people feel good, but the underlying fundamentals are not getting any better.”
Russell: “In the early days of the US, the dollar was trusted. The reason it was trusted was that the dollar was backed by physical gold. Those were the days when the dollar was considered “good as gold.” The obvious reason was that a person could take his dollars into any bank, and exchange his dollars for gold.
This changed in 1933 when Americans were forbidden by law to own gold. As far as Americans were concerned, they were now dealing with paper and could no longer exchange their paper for gold.
So in 1933, Americans were no longer on the gold standard. But foreigners who were creditors of the US would settle their accounts in gold. If the US had a debt with a creditor, the creditor could settle his debt by calling in a quantity of gold.
This changed in 1971 when, in the face of an outpouring of US gold, President Nixon slammed the gold window shut. This took the US, both domestically and internationally, off the gold standard. The dollar was simply a piece of paper, comparable to Monopoly money. Following the US’ example, the rest of the world abandoned the gold standard.
But the interesting thing is how gold keeps trading with the action in the Chinese Shanghai Composite Index. If you look at the action in the Shanghai Index and the action in gold, they are very similar in terms of building a bottom. The Shanghai Index made its low in November of last year. Now the Chinese stock market is trading well even though the economy is growing less than expected.
But gold is doing exactly what Shanghai’s Index is doing in that...
Gold prices gave back some ground today as stocks fell and the dollar index rose. Many are still wondering if the recent volatility seen in stocks is over. Judging by the V bottom made on the daily chart, stocks may have put in a near-term bottom. This could be potentially bearish for gold prices as investors look to continue to ride the stock market higher. Perhaps the even bigger story right now when it comes to gold, however, is the dollar and the euro. The dollar index appears to be heading back to its recent highs as the euro continues to drop. This drop in the euro is likely based on the notion that the ECB will be forced to act with additional stimulus measures in order to combat its slowing economy.
The US government’s debt is getting close to reaching another round number—$18 trillion. It currently stands at more than $17.9 trillion.
But what does that really mean? It’s such an abstract number that it’s hard to imagine it. Can you genuinely understand it beyond just being a ridiculously large number?
Just like humans find it really hard to comprehend the vastness of the universe. We know it’s huge, but what does that mean? It’s so many times greater than anything we know or have experienced.
German astronomer and mathematician Friedrich Bessel managed to successfully measure the distance from Earth to a star other than our sun in the 19th century. But he realized that his measurements meant nothing to people as they were. They were too abstract.
So he came up with the idea of a “light-year” to help people get a better understanding of just how far it really is. And rather than using a measurement of distance, he chose to use one of time.
By Charlotte McLeod+ - Exclusive to Gold Investing News
Many investors aren’t pleased with the current price of gold , which closed Wednesday at $1,241.10 per ounce, but for buyers in India, the metal’s ill fortune has turned into an opportunity.
CNBC reported that a better Indian economy has prompted those in the country to buy the yellow metal during this year’s five-day Diwali festival, which will peak on Thursday. “[T]here is more money around to spend,” Matthew Turner, a precious metals analyst at Macquarie, told the news outlet.
Also helping sales is a slight relaxation in the 80:20 rule. Put in place by the Indian government back in 2012, it mandates that 20 percent of imported gold be set aside for re-export. Along with a concurrent jump in the country’s gold tax from 2 to 10 percent, it put quite a damper on gold sales last year. ”Many jewelers in Delhi and Mumbai witnessed up to a 40% drop in sales last Diwali,” The Wall Street Journal points out.
The equipment maker is scheduled to report third-quarter earnings Thursday.
Caterpillar (NYSE:CAT), the world's largest maker of mining and construction equipment, said Wednesday that its worldwide dealer machinery sales dropped 10% for the three months ended in September.
The worst affected of its division was the resources segment, made up mainly by mining equipment, which sank by 28% compared to the same period last year. Construction sales for the period also fell, but only by 3%.
Since the financial crisis, the government of the UK and the Bank of England have jumped through hoops and twirled around in extraordinary gyrations to bail out one of the largest financial centers in the world, the uniquely powerful and at once unaccountable speck of land, the City of London, an incorporated area within London known as the Square Mile; or rather bail out its financial institutions, its way of doing business, and its bonuses; and along the way, bail out banks further afield.
Done in the now classic way. Key ingredient: the Bank of England printed enormous amounts of money, repressed interest rates, and stirred up inflation, which hit 5% in 2011. But somebody had to pay for it: savers and workers. It demolished real wages and purchasing power of the people who make up the rest of the country.
Those who actually create value as opposed to chasing yield with nearly-free money will actually have some traction once the swamp of excess liquidity drains.
When those closest to the money spigots of the Federal Reserve can borrow billions for next to nothing, cash--laboriously saved from years of paychecks--is reduced to trash. What chance does a saver have in a bidding war for a house or other asset against a financier who can borrow essentially unlimited cash?
Answer: none. The saver can leverage his cash at best 4-to-1: a 20% down payment leverages a mortgage of 80% borrowed money. The financier can borrow as much he wants for next to nothing.
After cutting bullish Comex gold futures and options holdings for eight straight weeks, large speculators added to their net-long holdings. Large Speculators Add To Gold Bullish Positions For First Time Since Mid-August