South African Strikes Halt 39% of Nation’s Gold Output tinyurl.com/bm5v5xr— Silver Watchdog (@Silver_Watchdog) September 26, 2012
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by Michael Pento:
"The worldwide currency debasement war has now entered a new and more deadly phase. Central banks have escalated the combat plan to bring about the world's weakest currency for their individual countries. On the heels of the Federal Reserve and European Central Bank's promises of unlimited counterfeiting forever, the Bank of Japan announced last week that it would expand its purchase of Japanese Government Bonds (and other assets including equities) by 10 trillion Yen. This brings the latest round of BOJ intervention to a total of 80 trillion Yen!
"The sad fact is that the developed world's central banks are in a desperate battle of one-upmanship. The ill-founded goal is to wreck their currency's value in relationship to other fiat currencies in order to boost manufacturing and stimulate economic growth. But once again these central bankers have their economics backwards.
"A weak currency that is caused by printing money cannot create a more competitive market for a country's exports because it increases the cost of goods sold in terms of the domestic currency. Central banks reduce the value of their currency by lowering interest rates and boosting the money supply. This causes aggregate prices to rise, especially on manufactured goods that are a key component of exports. While it is true that foreign currencies will have a more favorable exchange rate, the price of domestic goods and services will have increased in commensurate fashion-thus, offsetting the change in currency valuations. Therefore, there is no improvement in the balance of trade and no improvement in economic growth from competitive currency devaluation. ..."
"It would be too much to say that the government of Free Germany, as we are still wont to call it, is taking steps toward the gold standard. After all, no committee beckons in the Bundestag. The government is entangled with Spain and Greece and the scrip known as the Euro. The newspapers are mum. It would not be too much, though, to say that the latest report from the Deutsche Bank, the country’s leading private bank, is a newsworthy document, even if it will slide past up the bien pensant salons of Europe.
"Deutsche Bank’s report is “Gold: Adjusting for Zero.” It reckons we’re in a situation that is “Zero for growth, yield, velocity and confidence.” It says: “We believe there are nearly zero real options available to global policy-makers. The world needs growth and is willing to go to extraordinary lengths to get it.” It forecasts bluntly that the value of the dollar will plummet in the first half of 2013 to less than a 2,000th of an ounce of gold. It reckons “the growth in supply of fiat currencies such as the USD will remain an important driver.”
"That’s just for openers. The report then goes on to assert that gold is misunderstood and doesn’t really belong in the basket of “commodities” used by so many economists. Gold is money, according to the Deutsche Bank. Says it: “We would go further however, and argue that gold could be characterised as ‘good’ money as opposed to ‘bad’ money which would be represented by many of today’s fiat currencies.” It refers to Gresham’s Law and suggests “the undervalued money (good) will leave the country or disappear from circulation into hoards, while the overvalued money (bad) will flood into circulation. ...”
Julian Philips argues that the concept of a currency as a measure of value has now departed completely.
by Julian Philips:
"... During the 42 years of the currency experiment with no gold or silver standing behind currencies we have seen the gold price multiply from $35 to $1,770. That's over 50 times in 42 years. And there's still much more to come it seems, with the assistance of governments.
HARARE (REUTERS) -
"ZIMRA has decided not to allow the company to take tax credits for capital expenditure as previously promised, Zimplats.
"The platinum miner said it would not contest the tax demand, but had lodged an objection to the payment of penalties and interest. ..."
by Brian Milner:
"When the world’s leading central bankers reached into their medical bags this month to treat chronically underperforming economies, they really had only one possible elixir – more quantitative easing designed to pump additional fuel into troubled financial systems and keep interest rates at historic lows.
"But the massive injection of capital by the Federal Reserve and the Bank of Japan, as well as the European Central Bank’s pledge to buy up sovereign bonds of troubled euro-zone members, has precious little to do with growth. If monetary stimulus were the answer, the Japanese economy would surely not still be stuck in neutral after years of unprecedented pump-priming. What the central banks are about, some economists and financial historians have concluded, is financial repression – a concerted effort to keep real interest rates below the level of inflation for long periods in order to reduce mountains of public debt and keep the costs of funding it under control.
“Faced with a private and public domestic debt overhang of historic proportions, policy makers will be preoccupied with debt reduction, debt management and, in general, efforts to keep debt-servicing costs manageable,” acclaimed U.S. economist Carmen Reinhart wrote in a Bloomberg commentary in March. “In this setting, financial repression in its many guises (with its dual aims of keeping interest rates low and creating or maintaining captive domestic audiences) will probably find renewed favour and will likely be with us for a long time. ...”
hat tip to www.grandich.com
Richard Russell writes on King World News:
"... the banks will be rendered more liquid, and the Dow and mortgage-backed securities will probably be lifted. But what happens when the banks are cleared of all their mortgage-backed securities? Maybe the Fed will buy straight mortgages, I don't know, and I'm not sure that the Fed knows. Maybe the Fed just wants to sneak by the election, and later they'll address the problems.
"Meanwhile, the Fed will continue to talk up the economy. But I believe it's the Transports that are telling us the real story regarding the US economy -- and to put it politely, the Transport have been crashing. Question -- could the real story about the US economy be that the US economy has been crashing too?
"We depend to a large extent on the government and the Fed to tell us what is happening, and government statistics can lie (as, for instance, the government's phony statistics on inflation). With the banks ‘relieved’ of their mortgage-backed securities and loaded with fiat currency, the banks will be in a stronger position, and the Fed will own tons of mortgage-backed securities. ..."
Dave in Denver writes:
"I think most people are aware that Ron Paul's legislation requiring a thorough, independent audit of the Fed has passed in the House. I also think most people are unaware that Senate Majority Leader, Harry Reid, is trying to kill this legislation in the Senate. Does anyone see the irony here? The Democrats stormed DC in 2008 on a campaign platform of "Change." Obama promised to clean up the corruption on Capitol Hill and make Government more transparent. After all, isn't it supposed to be a "Government of the People, by the People, for People?" It seems Obama and Harry Reid skipped over that part of the history lesson in grade school. In fact, Obama is supposedly a Constitutional Law expert. But from the legislation and Executive Orders signed by Obama during his 1st term, I have every reason to believe he's never even read the Bill of Rights (the first 10 Amendments). As an example: Sayonara habeas corpus
"At any rate, there seems to be significant resistance from the Democrats for legislation requiring an audit of the Fed. This makes no sense because aren't the Democrats supposed to be the party of the 99%'ers? What gives? It took getting the swishy Democrat, Barney Frank, out of the way of the House Finance Committee in order to get Ron Paul's legislation out of committee and to the House floor, where it passed overwhelmingly. But now Harry Reid stands in the way. ..."
by Michal Gray:
"Federal agents are investigating the peddling of bogus gold bars in Midtown.
"The Post has learned as many as 10 fake gold bars -- made up mostly of relatively worthless tungsten -- were sold recently to unsuspecting dealers in Manhattan's Midtown Diamond District.
"The price of gold has risen more than 600 percent since January 2000, while the S&P 500 index is down 0.6 percent over the same period.
"The 10-ounce gold bars are hugely popular with Main Street investors, and it is not known how many of the fake gold bars were sold to dealers -- or if any fake bars were purchased by the public. ..."
Today MEP (Member European Parliament) Nigel Farage warned King World News that “We are now entering the end game.” Farage also cautioned “We are storing up these huge problems for our children and grandchildren.” Farage also discussed gold, but first, here is what he had to say about the ongoing crisis: “What is really happening here is the eurozone crisis is so serious, and so dire, public opinion across Europe is turning so quickly in every country against the project, that what they are trying to do is seal and complete the project before everybody really wakes up to what’s being done in their name.
“That’s what they are about. We are now entering the end game in what has been a 50 year political project. This is all going to come to a very dramatic head over the course of the next two years.
“The end game for them is to effectively abolish the nation states of Europe, to completely abolish any concept of national democracy, and to vest all power, all the attributes we associate with normal countries, that is all to be vested in this new European political class. ..."
Tyler Durden writes on www.ZeroHedge.com:
"As we noted on several occasions in the past ten days, as a result of QE3 and its imminent transformation to QE4, which will merely be the current monetization configuration but without the sterilization of new long-term bond purchases, the Fed's balance sheet is expected to grow by over $2 trillion in the next two years. This also means that the matched liability on the Fed's balance sheet, reserves and deposits, will grow by a like amount. So far so good. However, as Bank of America points out today, there may be a small glitch: as a reminder on December 31, 2012 expires the FDIC's unlimited insurance on noninterest-bearing transaction accounts at which point it will revert back to $250,000. Currently there is about $1.6 trillion in deposits that fall under this umbrella, or essentially the entire amount in new deposit liabilities that will have to be created as a result of QEternity. The question is what those account holders will do, and how will the exit of deposits, once those holding them realize they no longer are government credit risk and instead are unsecured bank credit risk, impact the need to ramp up deposit building. One very possible consequence: negative bill rates as far as the eye can see. ..."
NEW YORK (TheGoldAndOilGuy.com) -- A leading precious metals consultancy, Thomson Reuters GFMS, has forecast that investors will buy record amounts of gold in the remainder of 2012.
"GFMS produces the benchmark supply and demand statistics for the gold market. It forecasts that investors will purchase 973 tons of gold in the second half of 2012, more than during the wild gold market of the summer of 2011.
"This surge in demand for the yellow metal, GFMS says, will move gold above the $1,850-an-ounce level, not far from the record high of $1,920 hit in September 2011. ..."
Charles Hugh Smith:
"Central banks could be helping communities instead of enriching predatory, parasitic "too big to fail" banks and financial feudalism.
"In a system that depends on lies and the credulity of the citizenry, the greatest lie is that the Federal Reserve's "quantitative easing" bailouts of the banks somehow help our citizens and communities.
To clarify this, ask yourself this question: what else could we have bought with the $29 trillion the Fed loaned or backstopped to the banks?
"If you enjoy quibbling about the total sum of Fed support, be my guest; the Levy Institute came up with $29 trillion after poring over all the data, while the Government Accountability Office’s (GAO) tally topped $16 trillion. That's 100% of the nation's GDP and roughly 100% of the $16 trillion national debt.
"While we're asking about opportunity costs, let's ask what else we could have bought with the $10 trillion that the Federal government has borrowed and blown in the past 11.7 years. The national debt was $5.727 trillion when G.W. Bush was sworn into office on January 20, 2001. It had risen to $10.626 trillion when President Obama was sworn into office in January, 2009. It is now $16.016 trillion, an increase of $5 trillion in less than four years in "debt held by the public" (i.e. the Chinese central bank, the Japanese central bank, the Federal Reserve, etc.)
"You can check the totals for any recent date on treasurydirect.gov.
From time to time I have suggested alternatives to "wars of choice" and bailing out the financial Plutocracy, for example Cost of Iraq War: $3 Trillion; Cost of Solar Plants to Power all 105 million U.S Households: $500 Billion (April 10, 2008) and We’re Dropping the Ball on Renewable Energy (June 25, 2011).
"$500 billion is roughly 3% of $16 trillion. That is rather astounding, isn't it? We could have switched to a (largely) solar-powered electrical grid for a mere 3% of what the Fed squandered to save the "too big to fail" banks. Yes, yes, I know we need a massive energy storage system for any solar-powered grid; shall we ..."
By Jeff Thomas, International Man
"There is much discussion these days as to whether the price of gold is being manipulated. The answer is simply "yes."
"It is likely that most potential gold investors would agree that the major financial institutions have the ability to influence the gold price. They would also agree that to do so would be ofbenefit to those institutions. Yet, many investors still have difficulty making the final leap to agree that, if the institutions can manipulate the gold price and, by doing so, will profit from it, they will actually manipulate the price. Odd, as this would seem to me to be the easiest of the three premises to accept.
"However, there are also many investors who do believe that manipulation exists. From time to time, investors have commented to me, "I don't know how they're going about it, but I'm sure it's being done."
"This view suggests that the method of manipulation is difficult to understand.
Much of the manipulations that financial institutions perform are complex and confusing to those who are not involved in the industry, and this is intentional. The muddier the waters, the less transparent the activities are.
"So, let's take away the detail and express one common method of gold price manipulation in simple terms:
"Bullion banks generally hold only a small percentage of what they sell. Banks claim to hold 10%, but a real number may be as low as 1%. This is possible because most buyers keep the gold stored in the bank where they bought it. All the buyer really has is a piece of paper stating that the gold exists in the bank and is being held for him. ..."
Rick Rule tells King World News:
“What’s interesting, Eric, with the world increasingly globalized, is the shocks that affect Japan don’t just affect Japan. They affect Europe and the rest of the world. We’ve seen, as an example, the follow-on impacts in 2008 when the US housing crisis tightened up inter-bank lending around the world, and that led to a psychotic break in the markets.
“The banking system is globalized, the trade system is globalized, so things that impact us in one part of the world impact us on a global basis. There are any number of calamitous events (which could take place), and I would suspect the world is full of potential black swans.
"The point that Nassim Taleb makes, in his work, is it’s always the black swan that you don’t anticipate that knocks you for a loop. ..."
The yellow metal steadied on Tuesday following data that showed central banks added to their bullion holdings in July and August, led by South Korea and Paraguay.
By Amanda Cooper
"Data from the International Monetary Fund on Tuesday showed South Korea raised its holdings of gold by nearly 16 tonnes in July, along with Paraguay, which raised its reserves in July from a few thousand ounces to more than 8 tonnes, continuing the trend among central banks to hold more bullion.
"According to the IMF's international finance statistics report, South Korea added 15.988 tonnes of gold to bring its holdings to 70.44 in July, meaning it has doubled its bullion reserves in the space of a year after being one of the largest purchasers of gold in 2011.
"Paraguay raised its holdings by 7.527 tonnes to 8.194 tonnes two months ago, while Venezuela cut its holdings by 3.733 tonnes to 362.053 tonnes in that month.
"Turkey has added the most to its holdings, having raised its reserves by 100.2 tonnes in the first eight months of the year, followed by Russia, which has added 53.75 tonnes.
"Private investors have also added to their holdings of gold through exchange-traded funds backed by physical metal, which now hold a record 74.06 million ounces.
"We still prefer to be buying gold on dips and believe the break higher will eventually come. But the futures market needs to lose some speculative length and the physical market needs to adjust to a higher price-range first," Walter de Wet, an analyst at Standard Bank, said in a research note. ..."
Ed Steer writes:
"... Ted pointed out in his weekly commentary on Saturday that JPMorgan is now short over 31 percent of the Comex futures market in silver all by themselves...and he wondered out loud whether "they...and the regulators...have lost their collective minds?"
"This is beyond criminal, as everyone at the CFTC, the CME Group...and Jamie Dimon himself...should be doing the perp walk this morning in international orange jump suits. ..."
James Turk tells King World News:
"It's a real battleground out there, Eric. It started at the beginning of last week when gold was looking like it would break through $1780 while silver was already climbing through $35. But then the shorts started throwing everything they could at that price advance and stopped both precious metals. ...
"... Economic activity in most of the world continues to slide. None of these factors offer a pretty picture, which explains why the precious metals are in an uptrend and in my view are going to climb much higher as we head toward the end of the year.
"Throughout this uptrend in precious metals that began over a decade ago, we’ve seen a lot of battles like this, Eric. The important point though is that the uptrend shows the physical buyers of gold and silver gaining the upper hand, while the shorts and central planners are losing this war. ..."
Trader Dan writes:
"... while it is up today I am concerned that it looks to be stalling out up here. With the general public (small specs) holding the largest net long position on record there is a risk of downside stop hunting occuring if the short term oriented longs decide to start cashing in their chips. So far gold is merely flatlining along the next "STEP" on the chart. As you can see, it has worked sideways along these steps gathering energy before it then takes a sharp leg higher where it repeats the process. As long as support down at the most recent step holds, it will be okay as attempts to reach the sell stops will be thwarted by solid dip buying. However, if the dip buyers ease off for any reason, these stops will be vulnerable as a large number of small speculators are holding long positions entered into above the $1780 level. Those are underwater already so they remain liable to getting forced out if the market were to break below the $1755 - $7150 level.
"I would expect any stop related selloff to generate some buying interest however especially down towards $1735 - $1725, the region labelled as "Secondary Support" on the chart. ..."
click over for the full analysis and chart.
Despite a pullback from a 6-1/2-month high hit last Friday, gold's outlook remains promising as investors expect the stimulus plans by central banks to maintain a bullion-friendly low interest rate environment.
By Rujun Shen
"... Despite a pullback from a 6-1/2-month high hit last Friday, gold's outlook remains rosy as investors expect the stimulus plans by central banks to maintain a bullion-friendly low interest rate environment.
"The investment interest in gold continues to rise, as we see COMEX net length increasing and gold ETF (exchange-traded fund) holdings up," said Li Ning, an analyst at Shanghai CIFCO Futures. "There is a strong likelihood that gold will rise further. ..."
The upwards path of the gold price looks to be an almost certainty, inasmuch as anything is certain in this world, driven by open ended QE commitments around the world.
by Ross Norman:
LONDON (SHARPS PIXLEY) -
"The thing that links 2012 with 2004 and 2008 is of course that these are US election years and not untypically the incumbent is wont to remind us how well the US is doing - by extension the dollar is firmer and gold weaker than it might have been.
BY Moran Zhang
"Royal Bank of Scotland Group Plc (NYSE: RBS), the government-owned British banking giant, on Monday raised its planned job cuts in the investment bank to 3,800 from 3,500, adding to the latest round of industry-wide layoffs.
"American depositary receipts of Royal Bank of Scotland fell 1.23 percent, or 14 cents, to $8.77 in Monday midday trading.
"The bank, 81 percent owned by the British government after being rescued during the 2008 credit crisis, said in January it would cut 3,500 jobs in its investment banking division. ..."
"... With regard to gold being a currency he said that:
"And if you get into a situation where there's an alternative in this world, where we're looking at 'What are the alternatives?' and the best alternative becomes clearly one thing, something like gold.
"There becomes a risk in that. Now it doesn't have the capacity. The capacity of moving money into gold in a large number is extremely limited. So the players in this world that I have contact with that move that money really don't view gold as an effective alternative, but it could be a barometer and it is an alternative for smaller amounts of money. ..."
Terry Coxon tells CaseyDailyDispatch:
"... Now the budget situation – or the debt-financing situation for the US Treasury – has been made exceptionally easy by the exceptionally low interest rates that have been engineered by the exceptionally rapid growth in the money supply. When the economy starts to revive, interest rates will go up, and then the cost to the US Treasury of rolling over its now $16 trillion in debt will become a noticeable element in the overall budget. That pushes the government closer to a debt spiral, where the rise in interest rates makes it more expensive to service debt, which means the debt accumulates even faster. At that point, doubts about the ability of the government to service the debt over the long run forces another kick up in the government's borrowing costs. It becomes a nasty and vicious feedback cycle that is similar to what is going on now in Greece and Spain. This is a predicament the US government is just whistling about. They've closed their eyes to the risk.
"So between the built up inflationary pressure that will come roaring out when the economy revives and the constantly growing US government debt, there is no solution to the economy's problems that is politically acceptable. ..."