The lessons of Jeremy Grantham's recent interview with Charlie Rose seem to be becoming increasingly prescient as the stock market surges to new highs amid a crumbling macro (and micro) economy. "Bernanke is whipping the economic donkey that can only grow at 1-2% as if it was a race horse growing above 3%," and unfortunately he will keep doing it "until the donkey is dead." As Grantham says, it is a "very dangerous situation to have the most powerful man in the world," doing this as simply put, the Fed, "does not have the tools to generate employment." But while Grantham's clarity on Bernanke's actions are unquestionable in their endgame, his views (below) on Keynes, debt, and wealth transfer are even more concerning. "We had this amazing experiment... but we have been conned into believing by the financial world that debt is everything."
Bernanke is whipping a donkey that can't run. LOL pretty funny.
Author: Lawrence Williams Posted: Wednesday , 08 May 2013
LONDON (MINEWEB) -
Star Trek’s fictional Mr Spock would have had huge difficulty understanding the recent movements in the gold price. For those unfamiliar with the long running TV series and a number of subsequent films, Spock was from the planet Vulcan whose inhabitants eschewed emotion in favour of logic – and there certainly is little logical about the recent path of the gold price.
The world is very much aware of the enormous demand which sprung up for the precious metal following its mega dip in price of mid-April, which has seen demand for physical gold surge enormously virtually throughout the world, although China appears to be the epicentre of this unparalleled take-up of the metal. What was not immediately apparent was that China’s imports through Hong Kong – believed to be the principal route by which gold bullion reaches the Middle Kingdom – had already been increasing dramatically in the first three months of the year, culminating in imports of 223.5 tonnes in March alone.
While the above is a gross figure and does not take into account metal which may have come back into Hong Kong from the Chinese mainland – reckoned to be perhaps 90 tonnes – even the net amount suggests an annual uptake of around half of all global gold production extrapolating that amount over a full year. But by all anecdotal accounts the volumes flowing into China in April will have been many times higher than the March figure. There was some talk of 300 tonnes of gold being purchased over a 2 or 3 day period immediately after the big price fall for example!
Add to that anecdotal reports that there were similar huge surges in demand for physical gold in India, Dubai and many other countries – indeed also in Europe and the U.S. if not worldwide, and of the difficulties major mints producing gold coins, wafers, bars etc. had in meeting demand, and we ...
TrimTabs' Charles Biderman disputes the notion that prices of stocks are reasonable, despite Warren Buffet's comments.
By Charles Biderman
Warren Buffet says bonds are a horrible investment because prices are artificially high due to the Fed creating phony money. And at some point, says Buffet the Fed will stop. To my way of thinking, that also makes stocks a horrible investment.
So, if stocks are just as vulnerable as bonds to the Fed withdrawing the narcotic known as free money, why does Mr. Buffet say stock prices are reasonable? To me, logic says stocks are just as overpriced as bonds.
Let us look at what really is happening in the money creation world. The US government is running a current deficit of around $900 billion year, down from $1.1 trillion last year, still enormous. At the same time, the Federal Reserve Bank buys bonds and pays for them by creating a credit in the seller bank’s checking account.
In other words, the Fed is buying up the entire US Government deficit and then some. That means there is lots of extra cash floating around the financial markets bidding up the prices of not just bonds but stocks as well. So while I agree with Mr. Buffet that at some point bond prices have to drop significantly, so do stocks. ...
A group of bankers that advises the Federal Reserve’s Board of Governors has warned that farmland prices are inflating “a bubble” and growth in student-loan debt has “parallels to the housing crisis.”
The concerns of the Federal Advisory Council, made up of 12 bankers who meet quarterly to advise the Fed, are outlined in meeting minutes obtained by Bloomberg through a Freedom of Information Act request.
Their alarm adds to a debate on the Federal Open Market Committee about whether the benefits from their monthly purchases of $85 billion in bonds outweigh the risk of financial instability. While Chairman Ben S. Bernanke has argued the program is worth pursuing, Fed Governor Jeremy Stein and Kansas City Fed President Esther George are among those who have voiced concerns that an extended period of low interest rates is heightening the risk of asset bubbles.
“Agricultural land prices are veering further from what makes sense,” according to minutes of the council’s Feb. 8 gathering. “Members believe the run-up in agriculture land prices is a bubble resulting from ...
Today acclaimed commodity trader Dan Norcini sent King World News one of the most extraordinary and powerful pieces that we have ever shared with our global readers. Norcini is warning KWN readers around the globe that “... some in the halls of economic power have looked over the cliff and seen the abyss below,” and their “only concern (at this point) is avoiding entering that chasm.” Norcini also discussed gold, silver, stocks, shorts and central planners in this magnificent piece.
“With US equity markets surging into new record highs on a daily basis, one of the few sectors not participating are the gold and silver mining shares. The divorce from the broader stock market is quite evident with the miners sinking lower as the rest of the market moves higher. Clearly there is little if any speculative interest in owning shares in this beaten down sector outside of the value based buyers.
"As I have mentioned many times before, its takes the momentum based buying crowd to chase prices higher, and clearly they are not interested. As far as the broader investment community is concerned, the central bank reflationary activities via bond buying programs, mortgage-backed securities, agency debt, along with the low interest rate environment, are having no impact whatsoever on inflation. Thus, the West continues to cast off gold, jettisoning the metal in favor of equities, while the East accumulates as much physical gold as possible." ...
Demand for physical gold has soared, Scott Carter says.
While the price of gold has declined in recent weeks, demand for the physical metal has soared, Lear Capital CEO Scott Carter said Tuesday.
"I think what you see is investors that thought they might have missed the price before saw the price drop in April, and this was a great opportunity for them to get into the market," he said. "So, we've actually seen on the physical side a big bump in investors wanting to add to their position or jump in for the first time."
Lear Capital is the largest seller of physical gold and silver in the United States.
On CNBC's "Fast Money, Carter also noted that the U.S. Mint had recently announced it was running out of its supply.
"So, demand at the mint level for coins, demand at the retail level in our business, is at an all-time high right now," he said.
(Read More: Gold at $4,000 an Ounce?)
Carter added that the disconnect between the commodity price of gold and the demand for the physical product could be a function of timing among investors.
"They're in and out of contracts and not taking physical possession," he said.
I’ve said for years now that the very small minority of us gold bulls are locked in a war with the over-whelming number of professionals and the financial media who live off them, all of whomHATE GOLD!
It was foolish to think that after the gold “take down” a few weeks ago that they would simply go away (despite one of the four-star generals Goldman Sachs, ordering a retreat by covering shorts).
Author: Lawrence Williams Posted: Friday , 03 May 2013
LONDON (MINEWEB) -
On the face of things the answer to the question posed by the title should be obvious – but.... What prompted the question is a whole rash of Internet headlines regarding a mad rush to purchase gold by the Chinese over the May Day holiday. By all accounts gold bullion and jewellery dealers were overwhelmed by the numbers of people flooding in to buy gold – particularly in Hong Kong where premiums were believed to be not as high as on the mainland.
Some of the headlines seen were as follows: China Gold Mania - Coins, Bars and Jewelry Sales Surge 108% on Goldseek; Chinese housewives buy 300 tons of gold on Marketwatch; HONG KONG gold retailers overwhelmed by mainland shoppers on China Daily; CHINA - Gold Helps China May Day Sales Rise 20% on Forbes; CHINA - Housewives' gold rush keeps price from fallingon People’s Daily online etc. ...
Last week at its regular policy-setting meeting, the Federal Reserve announced it would double down on the policies that have failed to produce anything but a stagnant economy. It was a disappointing, but not surprising, move.
The Fed affirmed that it is prepared to increase its monthly purchases of Treasuries and mortgage-backed securities if things don’t start looking up. But actually the Fed has already been buying more than the announced $85 billion per month. Between February and March, the Fed’s securities holdings increased $95 billion. From March to April, they increased $100 billion. In all, the Fed has pumped more than a half trillion dollars into the economy since announcing its latest round of “quantitative easing” (QE3) in September 2012.
Although many were up in arms when the Fed said it would buy $600 billion in government debt outright for the previous round, QE2, all seems quiet about the magnitude of QE3 because it doesn’t come with huge up-front total price tag. But by year’s end the Fed’s balance sheet could hit $4 trillion.
With no recovery in sight, where’s all this money going? It is creating bubbles. Bubbles in the housing sector, the stock market, and government debt. The national debt is fast approaching $17 trillion, with the Fed monetizing most of the newly issued debt. The stock market has been hitting record highs for the past two months as investors seek to capitalize on the Fed’s easy money. After all, as long as the Fed keeps the spigot open, nominal profits are there for the taking. But this is a house of cards. Eventually, just like in 2008-2009, the market will discipline the bad actions of the Fed and seek to find the real normal.
In the meantime, real families are suffering. While Wall Street and the government take advantage of access to the Fed’s new “free” money, the Fed claims there is no inflation. But who hasn’t paid higher prices at the grocery store, the gas pump, for tuition, for insurance? It’s bad enough that household incomes have stagnated, but real purchasing power has declined so much that one in seven Americans, 47.3 million people, are on food stamps. Five million are collecting unemployment insurance with 21.5 million afflicted by unemployment according to the government’s own figures. That’s 13.9 percent -- close to double the 7.5 percent unemployment number reported last week.
We are certainly not in a recovery. We don’t see the long unemployment and soup kitchen lines like in the Great Depression, but that’s just because the lines are electronic now.
It is not surprising the Fed has decided to hand the American people more of the same failed policies. But it is disappointing. We know what the real solution is: allow the marketplace to work. Allow entrepreneurs the chance to create instead of stifling innovation with arbitrary regulations. Allow interest rates to rise to equal the risks in the economy. Allow bad debts to be liquidated so we can build on a firm foundation. Stop printing money to benefit the government and big banks. Restore sound money to the economy and the American people. Sound money is the bedrock for prosperity and the best check on big government and crony capitalism.
“I was absolutely outraged to be quite honest with the jobs report on Friday in the United States. If you applied logic and actually looked at where these jobs were created, I don’t think there is any possible chance that those numbers are correct...."
Click through for the rest of his thoughts on the jobs report.
Author: Lewa Pardomuan & Fayen Wong Posted: Wednesday , 08 May 2013
SINGAPORE/BEIJING (REUTERS) -
Chinese gold imports are likely to swell further after more than doubling to an all time high in March as retail consumers pounced when prices plunged to a two-year low last month.
China is the world's second largest buyer after India, and in both countries the steep fall in international gold prices in April unleashed years of pent up demand for coins, bars and jewellery.
That will help bolster prices for the metal, which has been abandoned by funds in other parts of the world in the wake of its historic fall.
"Physical demand picked up significantly over the last couple of weeks. Consumers and industrial users tend to see price drops as buying opportunities," Zhang Bingnan, secretary-general of the China Gold Association, told Reuters. ...
NEW DELHI -- Gold imports by India, the world's largest consumer, are set to exceed 100 metric tons for a second month in May as jewelers rush to beat central bank curbs on overseas bullion purchases by banks, a refiner said.
The biggest slump in gold prices in more than three decades on April 15 spurred banks, traders, and jewelers to import more than 100 tons last month, said Rajesh Khosla, managing director of MMTC-PAMP India Pvt. Purchases this month will match April's imports, he said. MMTC-PAMP's refinery in northern Indian state of Haryana can process 100 tons of gold, 600 tons of silver, and make 2.5 million pieces of coins a year, he said.
The Reserve Bank of India, or RBI, will issue guidelines by the end of this month to restrict banks from importing gold on a consignment basis as it seeks to reduce domestic demand and curb a record current-account deficit, the central bank said on May 3. Banks will be allowed to buy on a consignment basis to meet only genuine needs of exporters of jewelry. ...
In what must be an inexplicable move to momentum-chasers everywhere, as gold continued to decline in price in March, and long before its targeted smash in April, China was not backing off its gold purchases of the yellow product. Quite the contrary: as export data released by the Hong Kong Census and Statistics Department overnight showed, Chinese gold imports in March exploded to an all time record high of 223.5 tons. This follows 97.1 tons in February, and brings the total imports for the first quarter of 2013, or 372 tons, on par with what China imported in the entire first half. It also means that since January 2012, China has imported an absolutely stunning 1,206 tons of gold. Putting this number in context, this is 20% more than the entire reporter official gold holdings of 1054 tons, and represents roughly half of the total 2500 tons of gold mined every year (a number which is set to decline as gold miners find current prices unsustainable and are forced to shut down production). ...
Click through for the full post and all the charts.
An independent, critical account of the American economy would soon raise questions about the structural causes of inequality.
That some sectors of the economy will be doing better than others is natural. If you're a landlord or mobile-apps coding genius in San Francisco, the economy is excellent. Those working in the vast North American oil-patch are experiencing a boom economy. Realtors in resurgent markets such as Miami are having their best year since the top of the bubble in 2007. This can be viewed through any number of lens, one of which is the inherent inequality of capitalism: capital and labor flow to what is most profitable at this point in time, and capital and labor left stranded in low-yield, declining sectors suffer poor returns and lower wages. This inequality can be seen as the systemic cost of a dynamic economy in which capital and labor are free to move to better opportunities. It can even be argued that the more dynamic and fast-changing the system, the greater the inequality, as those who move fast enough to take advantage of new opportunities reap most of the gain (The Pareto Distribution of 80/20 is often visible in these sorts of distributions). Economic systems that can be gamed by bribery or purchased political influence are also inherently unequal, as those with power are more equal than those without power. This is the classic feudal society or crony-capitalist kleptocracy. Those benefitting within the crony-capitalist kleptocracy will of course claim that ...
According to reports, Sudan has granted an Iranian firm called "Mine an Metals" a license to explore for gold in River Nile state north of Khartoum, where much of Sudan's gold comes from,.
KHARTOUM(BullionStreet): Three months after the visit of Iran's president Mahmoud Ahmedinejad to Khartoum, Sudan finally granted permission for an Iranian firm to explore for gold in the country.
According to reports, Sudan has granted an Iranian firm called "Mine an Metals" a license to explore for gold in River Nile state north of Khartoum, where much of Sudan's gold comes from,.
The move is likely to attract US led sanctions against the African country, which has been trying to attract more investment to explore for gold as it become the country's main source for dollars needed to fund imports after the loss of most oil production with South Sudan's secession. ...
Fascinating news to me. Iran may have a bigger hunger for gold than we know. Now that they have been selling oil for gold, maybe they are catching the fever ;-)
China consumed a total of 320.54 tons of gold in the first quarter, surging 25.6 percent year-on-year.
BEIJING(BullionStreet): A day after China Gold Association announced sharp increase in gold consumption, the trade body sees record imports of the yellow metal this year.
A top official of the CGA said country's gold imports are likely to swell further after more than doubling to an all time high in March as retail consumers pounced when prices plunged to a two-year low last month.
Zhang Bingnan, secretary-general of the China Gold Association said physical demand picked up significantly over the last couple of weeks. Consumers and industrial users tend to see price drops as buying opportunities.
"Investment demand should continue to stay strong through the rest of the year because of limited investment alternatives," said Zhang, adding that gold sales and processing volumes both spiked in April. ...
Last week's widely circulated story of Chinese housewives buying 300 tonnes in two weeks, don't sound so crazy anymore.
A widely circulated story in official Chinese news outlets about the country's housewives propping up the gold market was met with a fair bit of skepticism.
People's Daily Online quoted the "Voice of China" radio program which said "one of this year's most popular phrases may be 'Chinese housewives' – as a major force which reportedly spent 100 billion yuan (US$16 billion) over the past two weeks purchasing 300 tons of gold and thus helping to sustain gold prices."
New data provided by Bloomberg suggests these figures may be not completely out of the ballpark.
In March mainland buyers splashed out more than $10 billion on 223,519 kilograms (223.52 tonnes) of gold compared with 97,106 kilograms in February, a 130% jump. According to data from the Hong Kong government, net imports by mainland China investors also more than doubled to over 130 tonnes. ...
Nothing has changed in the precious metals market since the big sell-off of three weeks ago. The Commitment of Traders Report is still sitting in a wildly bullish configuration...and all that awaits is a trigger of some sort. That, coupled with the reaction of JPMorgan et al when the rallies begin, will determine how high the rally goes...and how fast we get there. Supply and demand means squat in a managed market. So we wait. ...
I had the opportunity yesterday to speak with one of the western world’s most courageous and astute women, Karen Hudes, Former Senior Counsel to the World Bank—now turned whistle-blower.
It was a powerful conversation, as Karen spent 20 years with the World Bank as an attorney and economist, before being “let-go” after reporting internal fraud and corruption.
During the interview Karen indicated that the world is rapidly changing, with western power structures breaking down, economic & political influence gravitating to BRICs nations, all amid a pending currency transition which will highly favor precious metals.
Starting out by discussing the shocking centralized power she witnessed while working at the World Bank, Karen explained that, “A study done by three [Swiss] systems analysts who used mathematical modeling [shows] how the [world's] 43,000 transnational corporations were being controlled through interlocking corporate directorates. There’s a group of 147 companies, most of them are financial institutions, and what they’ve done, is through the interlocking directorates, they control 40% of the net worth of these [43k] companies, and 60% of their earnings…so that group has been using the presidency of the World Bank as kind of a puppet to dominate the world—that’s [now] finished.”
A major shock to that centralized power base, according to Karen, was the recent move by BRICs nations leaders to bypass the World Bank for their financing needs, by establishing their own development bank. ...
... The silver coin in most of human history has allowed the owner to purchase goods and services. It has also been one of the primary mechanisms for the storage of wealth. The amazing thing about the coin is that it also has tremendous utility. Silver is the best conductor of electricity, so it is essential to our technology driven world. Computers and solar panels all rely on the electrical properties of silver. Silver also is one of the best natural anti-microbial elements in Nature.
There is an ever expanding list of potential uses for the metal. At the same time, the surplus of silver that we had not too long ago has been consumed. The ore grades that we are mining continue to decline. At a time when supplies are tight and getting tighter, the demand for industrial, jewelry and monetary uses continues to grow. ...
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