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oftwominds-Charles Hugh Smith: Artificial Abundance, Moral Hazard and the Federal Reserve's Doomsday Machine

oftwominds-Charles Hugh Smith: Artificial Abundance, Moral Hazard and the Federal Reserve's Doomsday Machine | Gold and What Moves it. | Scoop.it

A loss of faith in key institutions cannot be fixed with more cheap credit or subsidized mortgages.


Today's topic is important but a bit tricky; you may want to refill your beverage container before buckling in.
Moral hazard is the separation of risk from consequence. A person who knows they won't suffer the consequences of a risky bet gone bad will behave quite differently from a person who knows the full consequences of a risky bet gone bad will fall on them.

A person who is insulated from risk will have an insatiable appetite for risky bets because any gains will be theirs to keep but any losses will be covered by someone else--for example, the Federal Reserve or taxpayers.

Correspondent Jeff N. recently alerted me to the equivalence of the perception of abundance and moral hazard. Jeff was responding to An Abundance of Bad Decisions(June 13, 2013), which noted that decisions made in the euphoria of abundance were generally bad because they were based on 1) projecting the good times would last for the indefinite future and 2) the Status Quo, having delivered abundance, was working fine and should not be challenged or changed.

As a result, both critical thinking and innovation atrophy, as neither are needed in times of abundance. Indeed, they pose an active threat to the Status Quo and are thus marginalized or suppressed. ...
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thepoliceprofessional.com's curator insight, June 21, 2013 5:23 PM

I wonder what Ayn Rand would say?

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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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You could be watching the wrong gold price. Click here to see why.

You could be watching the wrong gold price. Click here to see why. | Gold and What Moves it. | Scoop.it

Gold is still in a downtrend, if you examine a chart of gold prices measured in dollars. But gold in euros looks much stronger, and that’s actually a bullish condition, eventually.

 

People often ask at what dollar price is gold likely to find support or resistance. But it can be argued that the dollar price of gold is not very relevant for a lot of the old-school technical tools. The static price levels of prior highs and lows do not generally show much significance as support or resistance agents once they are reached again.

 

The big reason for this is ...

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HappyGoldLucky's curator insight, September 13, 3:04 PM

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Six Reasons to Invest in Silver - American Hard Assets

Six Reasons to Invest in Silver - American Hard Assets | Gold and What Moves it. | Scoop.it
Invest in Silver: Silver has fallen massively from its highs and arguably offers investors an attractive route to hedge against future market turbulence.
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Swiss Gold Initiative & The PPT Losing Control Of Gold Market

Swiss Gold Initiative & The PPT Losing Control Of Gold Market | Gold and What Moves it. | Scoop.it

Today one of the legends in the business spoke with King World News about the Swiss Gold Initiative and the fact that the U.S. Plunge Protection Team is very close to losing control of the price of gold.  Keith Barron, who consults with major companies around the world and is responsible for one of the largest gold discoveries in the last quarter century, also spoke about the disastrous policies of the Swiss National Bank.


Barron:  “One of the most interesting things happening right now is a move by the Swiss National Bank to begin instituting negative interest rates.  The reason they want to do this is because the capital inflows over the last couple of weeks from European countries into Switzerland has increased dramatically.  This is destabilizing the peg between the Swiss franc and the euro....

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Asian Gold Demand Remains In Focus; CME Group Plans Futures Contract In Hong Kong - Shanghai Metals Market

Asian Gold Demand Remains In Focus; CME Group Plans Futures Contract In Hong Kong - Shanghai Metals Market | Gold and What Moves it. | Scoop.it
The significance of the Asian region to the gold market has been reinforced once again by the announcement from CME Group that it plans to launch a gold futures contract in Hong Kong by year-end.
Asian Gold Demand Remains In Focus; CME Group Plans Futures Contract In Hong Kong
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Peter Grandich on Gold

Peter Grandich on Gold | Gold and What Moves it. | Scoop.it

Peter Grandich on Gold:

 

Gold – A major cycle low is due now so a move back to the low end of a trading range that has been in force for over a year comes as no surprise. I do think the fact that so many bears are now pounding their chests that both gold and silver are a Contrarian’s delight at this point. Risk appears to be down to $1,180 while reward is $1,400+

Hal's insight:

Click through for his thoughts on other markets. Pay close attention to the opening as he writes of another tragedy to arise after 9/11.

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Does Another Iraq War Spell Another Run on Gold?

Does Another Iraq War Spell Another Run on Gold? | Gold and What Moves it. | Scoop.it

by Scott Carter:

 

Here we are in 2014 and another US President is crafting yet another plan for another conflict in the Middle East. Defeating violent ideologies is never easy and the fight on terror continues to be very costly. What is now unfolding in Iraq and Syria will have wide-reaching implications for global security as well as international money markets, world economies, multi-national currencies, and universal indebtedness.

 

We have all seen reports about the gruesome beheadings of US journalists in Iraq, and we’ve been introduced to a new, violent threat called ISIS (Islamic State of Iraq and Syria) and ISIL (Islamic State of Iraq and the Levant), a radical Islamist group that has declared a caliphate. Their jihadist-fueled killings have shocked the sensibilities of the world. While they share some of the basic ideologies of Hamas, Hezbollah, and al Qaeda … they are better financed, better organized, better equipped, and far more brutal than anything the world has previously seen. ...

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Census Bureau changes its story about e-mails

Census Bureau changes its story about e-mails | Gold and What Moves it. | Scoop.it

by John Crudele:

 

More government e-mails have gone missing.

 

Early this year, the Commerce Department told me there were an estimated 2,000 e-mails exchanged between the head of the Philadelphia region of the Census Bureau and his counterpart in the Chicago region from 2010 to early 2014.

 

In fact, Commerce even quoted me an exact price for copying services — $304.

 

Soon afterward, Commerce reassigned my request — which was made under the Freedom of Information Act (FOIA) — to another processor (one with a PhD!) and then told me that it wouldn’t provide the bulk of the e-mails because of … one excuse or another. ...

Hal's insight:

This is a must read report. Bottom line, you can't trust the people and numbers coming out of institutionalized government offices.  What a sham.

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Preparing To Asset-strip Local Government? The Fed’s Bizarre New Rules

Preparing To Asset-strip Local Government?  The Fed’s Bizarre New Rules | Gold and What Moves it. | Scoop.it

In an inscrutable move that has alarmed state treasurers, the Federal Reserve, along with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, just changed the liquidity requirements for the nation’s largest banks. Municipal bonds, long considered safe liquid investments, have been eliminated from the list of high-quality liquid collateral. assets (HQLA). That means banks that are the largest holders of munis are liable to start dumping them in favor of the Treasuries and corporate bonds that do satisfy the requirement.

 

Muni bonds fund the nation’s critical infrastructure, and they are subject to the whims of the market: as demand goes down, interest rates must be raised to attract buyers. State and local governments could find themselves in the position of cash-strapped Eurozone states, subject to crippling interest rates. The starkest example is Greece, where rates went as high as 30% when investors feared the government’s insolvency. Sky-high interest rates, in turn, are the fast track to insolvency. Greece wound up stripped of its assets, which were privatized at fire sale prices in a futile attempt to keep up with the bills. ...

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Platinum Fixing Under The Microscope | Is it honest or is there fraudulent manipulation? Zero Hedge

Platinum Fixing Under The Microscope | Is it honest or is there fraudulent manipulation? Zero Hedge | Gold and What Moves it. | Scoop.it
First fines have been imposed for manipulation of the gold fixing, the silver fixing is even discontinued entirely. But is everything in order with the platinum fixing? Have there been manipulations – and are they part of a larger manipulation campaign?
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oftwominds-Charles Hugh Smith: Stocks Have Reached a Permanently High Plateau

oftwominds-Charles Hugh Smith: Stocks Have Reached a Permanently High Plateau | Gold and What Moves it. | Scoop.it

A permanently high plateau of stock prices is a marvelous innovation.


Somebody said this before, of course, but one glance at a chart of the S&P 500 tells us that stock prices have reached what looks like a permanently high plateau. How can we identify a permanently high plateau? One sign is price never touches the 50-week moving average (MA), much less the 200-week MA: prices just keep marching higher in a volatility-free permanently rising plateau ...
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Paul Craig Roberts: Everything Is Totally Manipulated - YouTube

Jason Burack of Wall St for Main St interviewed former assistant US Treasury Secretary under President Reagan, former Associate Editor of the Wall Street Jou...
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An interesting listen.

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The Ups and Downs Of Gold Cycles :: Jim Sinclair's Mineset

Jim Sinclair writes:


My Dear Extended Family,


Cycles are best understood as probabilities for directional movement. Those gold cycles that turned down at $1900 have now turned up with the price of gold now plumbing previous lows which are by definition major support.

 

The price objective once this experience is over is $2100, and is where it will trade in time.

 

I can only imagine what a deluge of emails this will bring from the Gold Internet Trolls.

 

Respectfully yours, 
Jim

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A Win-Win Scenario for Gold Investors

A Win-Win Scenario for Gold Investors | Gold and What Moves it. | Scoop.it
The US economy is set upon by two opposing forces - inflation and deflation. Right now they're more or less in check - each one working against the other to produce a fairly benign influence on the overall economy. But eventually one will emerge victorious. And when that happens, as Jim Rickards explains, gold investors will come out on top. Read on...
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Germanene: Graphene 'cousin' synthesized, using gold substrate

Germanene: Graphene 'cousin' synthesized, using gold substrate | Gold and What Moves it. | Scoop.it
A new research study shows that scientists are able to produce germanene, a material with the potential to be far more efficient than graphene.
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Bruce Fellowes's curator insight, September 12, 4:12 PM

I'm always talking about Graphene to my students as the new super material. Here's another material on the radar

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China Daily: "Western Sanctions Will Make Moscow Back The Chinese Yuan Against The Dollar" | Zero Hedge

China Daily: "Western Sanctions Will Make Moscow Back The Chinese Yuan Against The Dollar" | Zero Hedge | Gold and What Moves it. | Scoop.it
"The apparently long-term rupture of Russia's relations with the West offers an opportunity to the Chinese leadership to enhance its already close relationship with the Kremlin and thus turn the global geopolitical balance in its favor - not unlike former US president Richard Nixon and former secretary of state Henry Kissinger who reached out to Chairman Mao Zedong in 1972. The Russians, angry with Washington, are now more amenable to giving China wider access to their energy riches and their advanced military technology. The Western sanctions pushing Russia out of the international financial system are also making Moscow more ready and willing to back the Chinese yuan against the US dollar." - China Daily
Hal's insight:

This is why we're going to eventually see, I think, gold take off.

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oftwominds-Charles Hugh Smith: What If the Easy Money Is Now on the Bear Side?

oftwominds-Charles Hugh Smith: What If the Easy Money Is Now on the Bear Side? | Gold and What Moves it. | Scoop.it

Complacent melt-ups aren't just boring--they're not very profitable.


File this under Devil's Advocate: what if the easy money in the stock market is no longer the "guaranteed" Bull melt-up but the Bearish bet on a sudden air pocket?Just as a thought experiment, put yourself in the shoes of the money managers who have the leverage to move the markets.

You probably know the drill: program your trading bots to recognize every technical trading scheme's key support and resistance levels, and then unleash huge futures/options buys after hours or pre-open so the market jumps in the direction that makes you the most money. ...
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Gold continues to founder on demand slump - The Economic Times

Gold continues to founder on demand slump - The Economic Times | Gold and What Moves it. | Scoop.it
Gold prices tumbled to its lowest level in more than three months at the domestic bullion market here today on bouts of heavy speculative unwinding against the backdrop of fading demand.
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CME to launch gold futures contract in Hong Kong by year end - Shanghai Metals Market

CME to launch gold futures contract in Hong Kong by year end - Shanghai Metals Market | Gold and What Moves it. | Scoop.it
CME Group Inc will launch a physically deliverable gold futures contract in Hong Kong later this year to capture growing hedging and investment buying in the Asian region. CME to launch gold futures contract in Hong Kong by year-end
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Russia, China agree to settle more trade in yuan and rouble

Russia, China agree to settle more trade in yuan and rouble | Gold and What Moves it. | Scoop.it
BEIJING (Reuters) - Russia and China pledged on Tuesday to settle more bilateral trade in rouble and yuan and to enhance cooperation between banks, Russia's First Deputy Prime Minister Igor Shuvalov said,
Hal's insight:

Good bye King Dollar.

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Gold may be a ‘buy’ as investors turn ever more bearish

Gold may be a ‘buy’ as investors turn ever more bearish | Gold and What Moves it. | Scoop.it
The last time such gloom set in, the yellow metal staged a rally, writes Mark Hulbert.
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Despite Recent Weakness In Gold, Revaluation Spike Is Coming

James Turk told King World News:

 

So what investors can expect to see is that gold will be revalued dramatically higher, either by market forces or through the announcement of a new currency bloc in the East that is backed by physical gold.  We are seeing the last legs of the desperate gold price suppression scheme at work in the West.  As this suppression scheme collapses, just as it did in the 1960s, this is when you will begin to see immediate and violent moves higher in the gold market.” ...

Hal's insight:

Click through for the full article and chart. We shall definitely see one way or the other. As has continues to be my thought debt is what will ultimately move gold. When it becomes clear that the massive debts can't be met then gold will take the lead. Right now the Fed has done a good job of playing the shell game.

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Manipulation of Gold and Silver Definitely Ends This Year-Harvey Organ | Greg Hunter’s USAWatchdog

Manipulation of Gold and Silver Definitely Ends This Year-Harvey Organ | Greg Hunter’s USAWatchdog | Gold and What Moves it. | Scoop.it

by Greg Hunter:

 

Harvey Organ has been on a personal mission to expose the “fraudulent manipulation” of the gold and silver markets since the late 1990’s.  Organ, who studies these markets daily, contends, “It’s definitely going to happen this year.”  Why does Organ think this?  Let’s start with the gold market.  Organ says, “You are seeing a huge amount of obligations per one ounce of gold that’s available, and as the gold moves from West to East, and the bubble of paper obligations that’s left are going to blow up.  So, that is what we are basically seeing in gold.  There is a massive movement basically towards three countries . . . Russia . . . China . . . and India.  So, if you figure the world produces no more than 2,200 tons of gold per year, excluding China and Russia, more than 100% of that gold is going to those countries.”  Organ goes on to say, “I doubt very much if the United States has one ounce of gold left.”

 

The price suppression game has been going on for a long time.  Why does Organ think it will finally end this year?  Organ says, “There is a deficit of gold of 1,800 to 2,000 tons per year.  The leasing game started in 1988, and it starts going much higher in 1993.  So, over the last 20 or 30 years, all that gold has been leased out.  Gold that’s been leased never comes back.  Now, this is why there are huge derivatives outstanding. . . . Gold at the central banks is gone.”  Organ explains, “You can always paper over a paper problem, but you cannot paper over a physical default.  I don’t think there is any left, and this is the year they run out of gold to deliver at GLD, Comex and the LBMA (London Bullion Market Association).  How do we know it is officially over?  Organ says, “Probably, China announces to the world how much gold it has.” ...

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Richard Russell - US Treasury Should Buy Gold In Open Market

Russell tells King World News:  “As subscribers know, at this point I am only interested in preserving wealth rather than trying to increase it in this risky market.  My choice for preserving wealth has been physical silver and gold.  Since I don’t know what the US government will do in a time of emergency, I prefer having my silver and gold in a nearby foreign country.  Mexico has a tradition of confiscation and revolution, so the obvious other choice is our stalwart neighbor to the north —Canada.

 

One little known stock that fills the bill (one that I’ve recommended over the years) is Central Fund of Canada —CEF.  CEF actually owns physical silver and gold in a proportion of roughly 1/3 silver and 2/3 gold.  You can read all about it on its website, Central Fund

 

Interestingly, CEF now sells at a discount from the actual value of its silver and gold holdings.  ...

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Government securities will mature and just disappear. Poof! Like an old girlfriend that never happened.

Government securities will mature and just disappear. Poof! Like an old girlfriend that never happened. | Gold and What Moves it. | Scoop.it

John Crudele writes:

 

Fed chairman Ben Bernanke has said in the past that we’ll just let all those government securities mature and they will — in essence — disappear.

 

Once they mature, I guess we can pile the bonds in a heap — digital, of course — and set fire to them.

 

But, of course, when a bond matures someone gets the principal. So who gets it in this case? The Fed, I suppose, will just let that money disappear. Poof! Like an old girlfriend that never happened.

 

But we don’t have to worry about it now. Those bonds are years from maturity. We’ll let the next generation worry about them — and everything else. ...

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Exclusive: Peru's gold output will likely fall 20 percent this year - official

Exclusive: Peru's gold output will likely fall 20 percent this year - official | Gold and What Moves it. | Scoop.it
LIMA (Reuters) - Peru's gold output will likely drop by 20 percent this year and keep falling through 2016 as aging mines churn out less of the precious metal and a government crackdown curbs informal
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Hat tip to @EdSteerGSD

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