You and I probably read many of the same newsletters and websites. In the context of the general public but also the financial community, I believe you could be considered a gold expert. I salute your foresight in seeing the financial crisis ...
Based on the December 21st, 2012 Premium Update. Visit our archives for more gold & silver analysis.
This was a week of declines for precious metals, very strong ones, indeed. It seems that the main culprit was not the U.S. dollar, that should have actually helped the whole sector, as it declined heavily too, but the fears concerning the “fiscal cliff”, that we discussed some time ago, and the lack of any solutions from the government so far. We believe that as soon as the problem is solved, the whole sector will rally strongly. That is even more likely, as gold and silver are currently extremely oversold, as we’ll see in the technical part of this essay. To see the true magnitude of the plunge, and try to guess where we can go from this point, we’ll have a look at the yellow metal from the perspective of different currencies. But first things first – we’ll start with the usual long-term chart of gold priced in USD ...
Even though this summer was a sentiment wasteland for the precious metals markets, right now feels like a close second. After rallying strongly in August and September the metals have declined for almost 3 months now culminating in a recent smash down. And it feels especially worse since the reaction of gold and silver to the open-ended $85 billion per month quantitative easing announcement from Ben Bernanke has been the opposite of what most would expect.
Seeing through the negativity though the situation is better off for the metals than it was 6 months ago. During the summer, gold built a multi-month base in the $1500s which further validated that zone as being a massive support zone. Then the surge higher off of that base has created a big positive divergence in momentum that often precedes a major move higher in price. Even if gold were to drop back into the $1500s, the divergence in momentum should still be in place, and technicians will undoubtedly pick up on that fact if a bunch of demand comes rushing back into the gold market. ...
Why am I hopeful? the Status Quo is devolving, and a better way of living lies just beyond the corrupt, wasteful, ruinous consumerist debt/financial tyranny we now inhabit.
First, let's start with a Christmas song by longtime reader/contributor Dan T. who is a professional songwriter/musician: The Happy Christmas Song - thank you, Dan, for the joy of this music.
Readers often ask me to post something hopeful, and I understand why: doom-and-gloom gets tiresome. Human beings need hope just as they need oxygen, and the destruction of the Status Quo via over-reach and internal contradictions doesn't leave much to be happy about.
The most hopeful thing in my mind is that the Status Quo is devolving from its internal contradictions and excesses. It is a perverse, intensely destructive system with horrific incentives for predation, exploitation, fraud and complicity and few disincentives.
A more human world lies just beyond the edge of the Status Quo.
I know many smart, well-informed people expect the worst once the Status Quo (the Savior State and its corporatocracy partners) devolves, and there is abundant evidence of the ugliness of human nature under duress. ...
Today John Embry told King World News that a coming catastrophic loss of confidence will push gold and silver to price levels that most investors can’t even fathom. He also spoke about what to expect in 2013. Here is what Embry, who is chief investment strategist at Sprott Asset Management, had to say: “I have been following the manipulation of the gold and silver markets for over 14 years now, and I can honestly say that I’m not sure I’ve seen a more blatant attempt to drive prices lower for no reason whatsoever.”
“There is no reason out there which could be used to explain why gold and silver prices would be under pressure. So I would love to know what the central planners are thinking here. I believe, and this might have been referred to in the interview you did with Gerald Celente, that this is all about confidence.
When you are running a pure fiat currency system, confidence is the only thing you have to keep things together....
While long neglected compared to gold some analysts believe silver could be the single best investment option of the decade
by Marc Howe:
Although often derided as a "poor man's gold" due to its lower relative price there nonetheless remain an abundance of reasons to invest in silver for the long term.
Mark Thomas of www.silverpriceadvisor.com has just published twenty reasons to invest in silver, which underlie his conviction that the precious metal remains the single best investment option of the decade.
These reasons include the following:
- The amount of silver consumed annually and purchased for investment purposes has long exceeded total annual mining output;
- Industrial and investment demand for silver outpacing gains in mining production growth; ...
Today King World News is pleased to share with its global readers some extremely important charts that were sent to us from Nick Laird of ShareLynx out of Australia. This is the first in a series of charts that KWN will be releasing from Laird that give a visual snapshot of what is really taking place in the gold and silver markets. We thank Laird for sharing these fascinating charts with our global readers.
Deal is the biggest transaction of its type for a mid-tier gold miner in recent years
Shandong Gold has obtained a 51% equity stake in Aussie gold producer Focus Minerals (ASX:FML) following the completion of an AUD$225mn placement to the northern Chinese miner.
The Australian reports that Focus shareholders gave the go-ahead to the deal earlier this month, and that the company hopes to use the cash injection to push forward development of existing gold projects in the Goldfields-Esperance region of Western Australia.
The company plans to spend $18m on drilling to expand ore reserves and $22m on the exploration of tenements situated in Laverton, Coolgardie and Treasure Island. ...
I've said it before. And I'll say it again, China is making moves to corner the mining industry. And with good reason.
Witness the Japanese Yen as it continues to plummet following the path desired by the new political leadership. The point is not being lost on gold as it continues to hover near record highs when priced in terms of that currency.
Click over for the full piece. It is instructive to look at gold priced in out currencies.
Perhaps one of the most startling and telling charts of the New Normal, one which few talk about, is the soaring difference between bank loans - traditionally the source of growth for banks, at least in their Old Normal business model which did not...
Gold investing has become one of the most popular facets of the commodity world in the past few years. After watching the precious metal soar to its historic high in 2011, many have hopped on the gold train and added exposure to their portfolio. One of the biggest limiting factors in gold investment is the sheer price of the metal; at roughly $1,700/oz. it can be quite expensive to own a substantial of the commodity.
It can be easy to overlook the price tag on this commodity, but when you step back and take a macro look at gold, you get a better idea for why it is classified as a precious metal. Below, we show you all of the things that an ounce of gold could buy should you ever decide to cash in you holdings. ...
It was the best of times; it might be the worst of times. Dollar bills glide effortlessly to the ground, dropped from the giant QE machine in the sky. All is quiet, all is calm. There is peace on earth, well, at least in Washington D.C.
While Treasuries are said to have no default risk as the Federal Reserve (Fed) can always print money to pay off the debt, hidden risks might be lurking. As oxymoronic as it may sound, the biggest risk to the economy and the U.S. dollar might be, well, economic growth! Let us explain.
The U.S. government paid an average interest rate of 2.046% on the $11.0 trillion of Treasuries outstanding as of the end of November. Treasuries include Bills, Notes, Bonds and Treasury Inflation-Protected Securities (TIPS). At 2.046%, the cost of carrying the Treasury portfolio currently costs the government $225 billion per annum; about 6% of the federal budget was spent on servicing the national debt.
While total government debt has ballooned in recent years, the interest rate paid by the government on its debt has continued on its downward trend: ...
In reading your last email i’m perplexed at what the final outcome will be. Will it be that everything will go against the norm from this point out due to manipulation? Are investments using Wall Street products as an outsider over? Will the PM markets be controlled and held down to the advantage of the devils in the sandbox? For us outside the theatre investors, is it time to buy a farm outside the USA so we don’t have to use GMO seeds?
Cordially yours, CIGA Jeffrey
Let’s start with the economics of your question. In your business as a defense attorney you have had to deal from time to time with people in downward spirals. You know the downward spiral never stops unless perfect intervention is exercised and the person in the spiral actually wants change.
That is very rare.
Economics are the same. Economics is made up of people and their decisions. Having committed significant economic crimes of debt there comes a time when their total acts work as a heavy weight on their being and really bad habits take the individual down further into a negative spiral, which if not intervened properly will go to zero. They by definition in most cases must fall to hit bottom.
Hitting bottom is the last human condition before death in such a set of circumstances.
Think of the drug addict that ends up dead from overdose. The drug in economics is credit. The downward spiral we have been in is the simple result of too much and too many pushers of the drug debt. It has grown to such an unbelievable level that there is no tool in any central bank’s tool box to fix the size of the overmuch debt problems.
The manipulation of markets in the hope of manipulating people’s perspectives simply will not work to prevent further drops into the negative spiral going to hit the bottom.
Hitting the bottom is now defined in currency values, particularly the present, by default, dollar reserve currency. Since nature always requires destruction before construction, in a downward spiral manipulation borders on a sick wasteful joke. We are stuck in the concept of time versus conclusion so many are temporarily confused by manipulation.
Manipulation is the sign of madness amongst governments suffering from egomania during a downward spiral. Manipulation may cull the weak in an industry from the strong, but the strong will succeed regardless. Manipulation will not prevent the outcome of an economic downward spiral in Western finance presently entrenched and long term.
We have now defined the long term downward spiral as the value of the US dollar versus other currencies.
Now on to your question of a hobby farm. Now is the time to acquire the property. The real estate market is bottom bouncing which means that utility properties such as a farm should be acquired for our purposes It should be within a day’s comfortable ride to reach. It can function as a gathering place for the family to grow protein and other eatables. It can be purchased utilizing a reasonable mortgage as long as the rate is fixed. You can use Agricultural services such as Farmer’s Credit Bank and Agricultural Extension service to get the right thing. Look at it as a fine family hobby and part of your investment portfolio.
Very few people can be happy amongst cultures not common to them so the thought of other areas for the hobby farm will apply only to a limited few.
Great info from Jim Sinclair in response to a reader.
From silver-lined prophylactics to iron Buddhas from space, 2012 has seen some strange and fascinating stories on the topics of both base and precious metals
by Marc Howe:
In addition to news items concerning landmark mergers and acquisitions, dramatic movements in spot prices and paradigm-shifting market developments, the past year has also seen more than its fair share of strange and quirky stories concerning both the base metals we employ regularly in everyday life, or the precious metals we covet and esteem as prudent investment purchases.
We've compiled what we think are some the most memorable, fascinating and amusing stories on both base and precious metals from the past twelve months, listed below in no particular order:
1. Silver nano-particles used to make HIV-resistant super prophylactic
2. Ancient Buddhist statue found in Tibet carved from meteorite
3. Aluminum has potential as eco-friendly auto fuel
4. On why copper is the immune system's deadliest weapon
Click through for the rest. There's some interesting ones here.
So the world didn't end on the shortest day of 2012, as forecast by no-one beyond lazy journalists and internet frauds.
But the long bull market gold has choked its last. Or so some soothsayers claim.
Bloomberg: "Gold, [enjoying] its longest winning streak in at least nine decades, is poised to enter a bear market..."
Interactive Investor: "Is gold's bull market over? Market commentators [are] citing a tumultuous economic environment. Others say it has simply been over-bought, and as with each bull market, inevitably reach[ed] a point of resistance..."
MarketWatch: "Gold bugs are finally throwing in the towel. Over the last two weeks [they] have become even more discouraged than they were at the end of November. And that’s saying something..."
Okay, we were kidding. These 3 stories in fact came at the end of 2011. But with the big top of summer last year now a distant memory, and with prices this week unwinding all of 2012's gains for Euro and Sterling investors, you could book your path to the US Treasury, running Italy, or getting a $400,000 annual housing allowance from the Bank of England by saying gold is spent today. ...
You play to win the game...You don't play to just play it - Herm Edwards, when he was head coach of the NY Jets LINK
In order to win the gold/silver game, spotting critical information and knowing how to use can give us an edge over the rest of the market. Using the COT report as source of information has proved useful over the last 10 years.
Last week I suggested that the COT report might show that hedge funds have started to chase the momentum of the gold market lower by shorting gold contracts, while the bullion bank cartel used the extra selling from hedge fund short-selling to cover their shorts. I suggested this dynamic would likely mark a bottoming of this latest bullion bank paper market take-down of the price of gold/silver.
The CME/Comex Commitment of Traders report released Friday, which shows long/short open interest positions by trader category through the previous Tuesday, shows that indeed the hedge funds began to short Comex gold futures in decent size and the bullion banks continued to aggressively cover their short positions.
We've watched the banks cover their shorts quite aggressively for the past few ...
A little holiday treat from the nice folks at Sprott Asset Management.
By: Eric Sprott
As long-time students of precious metals investing, there are certain things we understand. One is that, historically, the availability ratio of silver to gold has had a direct influence on the price of the metals. The current availability ratio of physical silver to gold for investment purposes is approximately 3:1. So, why is it that investors are allocating their dollars to silver at a much higher ratio? What is it that these “smart” investors understand? Let’s have a look at the numbers and see if it’s time for investors to do as a wise man once said and “follow the money.”
Average annual gold mine production is approximately 80 million ounces, which together with an estimated average 50 million ounces of annual recycled gold, totals around 130 million ounces available per year. In comparison, annual mined silver production has averaged around 750 million ounces, while recycled silver is estimated at 250 million ounces per year, which adds up to approximately 1 billion ounces. Using this data, there is roughly 8 times more silver available to buy than there is gold. However, not all gold and silver is available for investment purposes, due to their use in industrial applications. It is estimated that for investment purposes (jewelry, bars and coins), the annual availability of gold is roughly 120 million ounces, and of silver it is 350 million ounces. Therefore, the ratio of physical silver availability to gold availability is 350/120, or ~3:1.1 ...
Tremendous macroeconomic dangers lie in wait over the next year
by Marc Howe:
Michael Pento says gold remains an essential purchase for prudent investors in the upcoming year, with the governments of OECD nations "rac[ing] towards both bankruptcy and inflation" while their central banks aggressively push for higher inflation.
Writing for King World News Pento, President of Pento Portfolio strategies, highlights the debt problems of the US in particular, noting that it "should now be clear to all Americans that our government is completely incapable of voluntarily reducing our fundamental problem of excess debt."
Pento says the monetization of surging Treasury debt means that inflation and interest rates will both surge beyond historical averages, which in turn means that deficits and debt will be significantly higher than anticipated by policy-makers. The US government will be forced to avail itself of measures from the Federal Reserve to "maintain the illusion of solvency in the future." ...
The fiscal cliff is not the only cliff we're racing toward; there are others.
The fiscal cliff dominates the mainstream news, but it is more like a bump on the pathway to the real cliff. In essence, the path has turned down and we're picking up momentum, gaining speed as we head for the cliff. The real cliff is the gap between what has been promised and what can plausibly be collected in tax revenues: $86 trillion but one recent estimate, over $120 trillion by other guestimates. The difference is caused by the relative rosiness of the projections to control Medicare and Medicaid spending. Lower estimates assume we can stop the growth of these programs in the long-term, something that has not yet happened for the reason that the system lacks any controls to do so. This gap widens by $7 trillion a year. That is, the promises to present and future retirees and beneficiaries goes up if we count the promises made not just for 2013 but for the future. This $7 trillion is twice the entire Federal budget and roughly 50% of the nation's GDP. Understood in this way, we can see that raising taxes by $200 billion or cutting expenditures by $200 billion is not going to keep us from hurtling off the real fiscal cliff in a few years.
... As much as we decry the lack of enforcement and the diminution of the rule of law, it was “wild and wooly” in the late 1800s in the United States. One form of stock watering worked as follows. A company could be formed with the contribution of assets. However, the stock value was tied to “par”. Par could be declared by the board to be a multiple of the value of the underlying assets held by the company. The issuance of the stock would allow the early holders to sell their stock at a large premium to reality.
It sounds familiar. As the central bankers continue to print grotesque amounts of fiat currency, the analogy to money printing and watered stock rings true. The differences between the scheme in the 1800s and the present are twofold. The first is the scale. The amounts involved are light years beyond the imagination of the operators in the 19th century.
The second is that the assets underpinning our experiment with watered currency are declining in value and economies are being hollowed out. The watering of the currency is bad enough, but the wealth of the countries upon which the currencies are based is being simultaneously destroyed.
Powerful people also read history books. They have learned that hyperinflation, runaway metals prices and runaway interest rates frighten the majority of people. ...
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