The Printing Presses Are ON

Bernankenstein has finally caved to the vested interests and is going to start printing money again. This is going to be an end game move. Collapse of the US dollar?

Marc Faber on Bloomberg:

Gold and Oil

This is a must read:
BofA Sees Fed Assets Surpassing $5 Trillion By End Of 2014... Leading To $3350 Gold And $190 Crude

My commentary on Gold is bullish on this and you can confirm that here: Gold Tags.

Back on the 12th May 2012 I posted Eric Sprott Discusses Gold Manipulation On CNBC

Hows that flag going?

Is it going to be a repeat of the 2008 flag?

How did we go? BINGO! Now, will we see a consolidation pull back to say the high $1600s before continuing climb?

Weekly Gold 19th September 2012

QBAMCO argues for $15,000+ as an eventual price target (that makes me dizzy thinking about it) as posted in Perspectives On Gold's "Parabolic" Catch-Up Phase.

Were a USD devaluation and re-pegging to occur as of the end of 2014, following 2 ¼ years of $40 billion monthly MBS debt monetization, we estimate our Shadow Gold Price would approximate $15,000/ounce. (The SGP divides the quantity of USD base money by the quantity of US official gold holdings, as per the Bretton Woods monetary regime.) Over the weekend, Bank of America analysts implied USD base money inflation would increase much more than the Fed announced, to about $5 trillion by the end of 2014. This figure would imply an SGP a bit over $19,000/oz.

The Ridiculous Argument On $AUD Intervention

Meanwhile, bozos like Warwick McKibbin, ensconced in their ivory towers of academia complete with walls papered with failed economic theory and many associated sycophants, propose intervening in the Australian dollar. Here is a gem: How the RBA should clip the dollar

So what happens if we clip the dollar to to say 80c and Oil has jumped from around $100 a barrel to $200 a barrel? Australian consumers and the road transport industry paying over $3/Litre at the pump is what happens.

Sure the high $AUD hurts manufacturers but think about $200 oil and a FALLING $AUD. Sure as daybreak, if the US Fed collapses the $USD, oil will go polaric.

Force the $AUD down whilst Oil doubles and the next boom will be the noise accompanying the immolation of the Australian economy.

Leave it alone fools.

Eric Sprott Discusses Gold Manipulation On CNBC

Hows that flag going?

Is it going to be a repeat of the 2008 flag?

Gold Walks A Familiar Path

Gold Repeats A Prior Pattern

We are now entering the initial upward phase of the next iteration of this cycle, which is a period when big gains for gold prices are typically seen.  A few months from now, we'll get to worry about just how this cycle's important mid-cycle low might have an effect on gold prices, but that is not the issue to be concerned with at this time.  Instead, we want to locate the true major cycle bottom in gold prices, which can arrive a month early or late and still be considered "on time" in the history of this cycle.  We also want to catch the initial upward phase of the new cycle, which is when the biggest gains are usually seen.

Having the 2005-06 pattern as a guide can help us see where all the dance steps are from a complete prior instance, and let us see how the current market is following that rhythm.  If the current gold market follows those same dance steps, then we should see a nice rise up into a top due in early June, followed by another rise leading to a slightly higher top in late July.

The link is well worth a visit.

Gold Attacks And Manipulation

Last night I was looking at the Gold chart and SLAM! It recovered in the end but its getting silly.
Today's $1.24 Billion Targeted Gold Slam Down Makes The Mainstream Press

For the first time in what may be ages, a phenomenon that has become near and dear to anyone who trades gold, and which at best elicits a casual smirk from those who observe it several times daily, we find that the WSJ has finally picked up on the topic of the endless daily gold slam down, where the seller in complete disregard for market disruption (because in a normal world one wants to sell any given lot without notifying the market that one is selling so as to get a good price on the next lot... but not in the gold market where the seller slams the bid with reckless abandon) ignores market depth and in a demonstration of nothing but brute price manipulation force, slams every bid down just to demoralize further buying. Naturally, that this simply provides buyers with a more depressed price than is "fair" is lost on the seller, but not on the buyers who promptly bid up the metal as attempt to demoralize buying end in failure after failure. Yet it is peculiar that today, for the first time, the intraday gold slam down has finally made the MSM. To wit: "The CME Group Inc.’s Comex division recorded an unusually large transaction of 7,500 gold futures during one minute of trading at 8:31 a.m. EDT. The sale took out blocks of bids as large as 84 contracts in one fell swoop and cut prices down to $1,648.80 a troy ounce. The overall transaction was worth more than $1.24 billion... Gold traders buzzed with speculation that the transaction was an input error — a so-called “fat finger” trade. “Or a Gold Finger as it might be known in the bullion market,” traders at Citi joked in a note to clients." Well, no. It wasn't.

Because if it was, by that logic the gold market falls prey to a fat finger every single day, often times 2 or 3 times a day. But because gold market participants have learned that complaining to the CFTC about this kind of manipulation has no impact, and because at the end of the day it merely provides a cheap reentry price, most have grown to love and anticipate these kinds of moves. In fact, we can only hope that the CFTC and SEC ignores this WSJ update, and lets the market keep on keeping on without changing anything. Because otherwise who will provide the depressed price levels that permit conversion of worthless paper into Fed-detested, undilutable barbarous tradition?

Whistleblower Exposes JP Morgan's Silver Manipulation Scheme

On March 23, 2010, GATA Director Adrian Douglas was contacted by a
whistleblower by the name of Andrew Maguire. Maguire is a metals trader
in London. He has been told first-hand by traders working for
JPMorganChase that JPMorganChase manipulates the precious metals
markets, and they have bragged to how they making money doing so. 

CFTC Pulls Public Comments from JP Morgan Whistle-blower: “We Are Fearful of a Cascading Credit Event; Wide-Scale Market Collapse”

In the letter, the JP Morgan insider reveals that high level executives and traders at the bank are putting the investments and savings of thousands, if not millions, of hard working Americans at risk of complete wide-scale market collapse through their machinations and fraudulent practices. Moreover, he suggests that executives at his bank are fully aware of commodity manipulations in which the bank engages, as well as the risks posed by a European collapse, an event that, according to the whistle-blower, will lead to annihilation of investments within a matter of days. (letter in link above)

Metal$ are in the pits

There is no silver lining to the activities of JPMorgan Chase and HSBC in the precious-metals market here and in London, says a 40-year veteran of the metal pits.

The banks, which do the Federal Reserve's bidding in the metals markets, have long been the government's lead actors in keeping down the prices of gold and silver, according to a former Goldman Sachs trader working at the London Bullion Market Association.

Embry - Gold Manipulation More Blatant

Embry had this to say about the gold market:  “I would dare say that the manipulation (of gold) today is perhaps more blatant and there is more of it than I’ve ever seen.  They (the manipulators) don’t care anymore.  You see these 3 o’clock in the morning precipitous drops. 

You see drops when the COMEX opens and when the London PM fix is in.  There are always these times they attack, and no market that wasn’t being manipulated would trade with that regularity.

I am of the mind that the paper guys have overplayed their hand and they have pushed the price too low.  The people in the East, in particular, the Russians, the Chinese, etc., know perfectly well the situation.  They are using this as a wonderful opportunity to take on more and more physical at what I would consider to be bargain prices.

Gold Flags

I haven't blogged for a while as most of the stuff I've written is coming to fruition so its pointless writing "see, I told you".

• US debt spiralling out of control and the debt fuelled recovery stalling as the election looms.
• European debt is spiralling out of control and the Monetary Union is simply imploding and civil unrest spreading as austerity triggers a poverty and economic spiral. 
• UK debt spiralling and this week, officially in recession.
• Australian property continues its slide (1.15% fall a month for 5 years is 50% off!) as the mining myth remains a mirage for the simpletons in suburbia as Australian debt approaches 270% of GDP (Australian Debt).
• The Chinese bubble deflating rapidly.
• Japan is just a train wreck.

So what next? If you think that Europe or the USA are going to pay their debts, you are delusional. Next step is an attempt at hyperinflation. They'll just print money like confetti in an attempt to make that $15Trillion debt today look like a $15 fifty years ago. It will cause chaos and spiralling unemployment but f*ck the little people, as long as the banking kleptocracy stays high and dry.


The strategy involves central bank simply printing money and buying government securities...

...and the government then drops its new money on the financial sector (M1, broad money supply) like confetti...

In 1980 the Zimbabwean dollar was worth more than the U.S. dollar, with ZWD 1 = USD 1.47. Throw in some money printing and on 18 July 2008, a report on Zimbabwe's inflation, said that an egg costs ZW$50 billion (GBP 0.17, USD 0.32), and it showed adverts for prizes of Z$100 trillion in a Zimbabwean derby and ZW$1.2 Quadrillion ($1,200,000,000,000,000.00: approx. GBP 2,100; USD 4,200) in a lottery. It also showed a monthly war pension currently is ZW$109 billion (GBP 0.37, USD 0.74), shops can only cash cheques if the customer writes double the amount, because the cost will go up by the time the cheque has cleared, and people can only withdraw a maximum of ZW$100 billion froman ATM.
http://en.wikipedia.org/wiki/Zimbabwean_dollar#Exchange_rate_history

In 2008,  thirteen US cents (yes 0.13c) got you...

Has the USA had hyperinflation before? It certainly has, Hyperiflation in History (with 32 cases).

If the USA tries to hyper-inflate, gold is going polaric. Even this week the  Bank of Japan announces fresh stimulus to boost growth.

Some signals.

1. Fed Signals No Need for More Easing Unless Growth Falters (and growth WILL falter eg The Second Foreclosure Tsunami Is Coming, And Is About To Kill Any Hopes Of A "Housing Bottom")
2. Risk off? Having Sold Most of its Own, IMF Now Lauds Gold as 'Safe Asset'
3. Peter Schiff - QE3 is coming

Gold in a Bull Flag?

Firstly, some Technical Analysis 101. What is a Bull Flag?
Bull Flag Pattern 1
Bull Flag Pattern 2

Is Gold in a bull flag like in the links above? I think so.

How high could gold go? I came across this interesting piece of analysis. Ambitious? Maybe (or maybe not).

The European Shell Game

 

European links

Four from Spiegel: 

'Even a 1-Trillion Euro Firewall Wouldn't Be Enough'(whoops)

Amid Debt Crisis, Athens Falls Apart (Who would have guessed? *rolleyes*)

Despite Progress, Euro Crisis Is Far From Over (bleeding obvious but worth a read never-the-less)

'The Problem Has Only Been Deferred' (I'd say transferred to the public from the banks and deferred)

Three from ZeroHedge:

Greek Deposit Run Update: Hopeless And Getting Worse  (I've said on this blog before - watch the money flows!)

 

Europe's Scariest Chart Just Got Scarier (I've written here before - remember the 1920s in Germany and what eventuated)

The Greek €107 Billion Contingent Liability Gorilla Exposed (It just gets better!) 

A Dose of Reality:

1. If Greece borrows money from the IMF/EU which means that they have more debt now than they did before they defaulted then they are worse off and not better off as they have a larger debt.
2. If Greece has an additional $107 billion in debt that has not been accounted for because it is not in the name of the Hellenic Republic but is guaranteed by the Hellenic Republic then how are they going to pay off this debt?
3. If the goal of this entire exercise was to reduce Greece’s debt to GDP ratio to 120% then how will a larger debt accomplish this as it is fiscally impossible.
4. If the “real REAL goal” was to pay off the European banks so they wouldn’t default then Europe has accomplished this goal but at a terrible cost to Greece and to the Greek people.

New York Times:

Ranks of Working Poor Grow in Europe (Betcha none are bankers)

Finally, from Bloomberg, what actually occurred (must read!):

Greek Restructuring Delay Helps Banks as Risks Shift (Kleptocracy at its best)

Delaying Greece’s debt restructuring by more than a year reduced banks’ potential losses as firms trimmed their holdings and most of the risk shifted to European taxpayers. 

Just a redesigned Shell Game.

“This is a horrible deal for the EU taxpayer,” said Raoul Ruparel, chief economist at Open Europe, a London-based research group. “The longer we wait for these restructurings, the worse the deal gets for the public. There’s an ongoing risk transfer from the banks to the taxpayers.” 

 The new borrowing -- in effect, replacing private with public debt -- will amount to 78 billion euros, according to the EU, leaving the actual relief from the swap at 59 billion euros. Greece also will need to draw money from a second, 130 billion- euro EU and IMF rescue fund to repay other private debt and finance the government’s budget deficit. 

And, Greece's total debt?

That will leave Greece’s debt at 161 percent of gross domestic product at the end of the year, 4 percentage points less than the current level, according to a March 11 report by the European Commission. The ratio probably will return to 165 percent in 2013, the commission said.  

Got that? Greece's debt is a mere 4 percentage points less and debt will be back to 'normal' in 2013 whilst most risk is now on the EU taxpayer.

When all IMF and EU loans promised to Greece are disbursed, 66 percent to 75 percent of the country’s debt will be held by the public. In 2010, before the first bailout and before the European Central Bank started buying its bonds, Greece had about 310 billion euros of debt, all held by the private sector.  

If Greece has to restructure again, or defaults, taxpayers will be on the hook.

“The swap doesn’t achieve debt sustainability for Greece,” said Nicola Mai, an economist at JPMorgan Chase & Co. in London. “Debt relief going forward will have to come from the public sector.”

Anyone that can't see the European Monetary Union is a Kleptocracy and in full self destruct mode [whilst its citizens get royally screwed], deserves what's coming to his/her investment holdings.

Real Money vs Printed Money

Printed Money
The world's central banks printing and dumping paper to create the illusion of economic growth:

In the end printing money failed in the Weimar Republic, Zimbabwe and Japan. It will eventually fail in the Eurojoke and USA. The equity markets are like junkies and now addicted to their cheap money fix, printing has to resume or markets will tank. As the Dow passes 11,000 down, QE3 will be discussed and 'Real Money' will prepare for liftoff.


Real Money
The barbarous relic.

 

Who is buying if the plebs aren't?

Supply vs Demand.

Jobs On the DebtStar, Be Quick!

So in last night's news the USA added 200,000 jobs last month and the spruikers cheered that the USA was in recovery but the market said "f*ck you". And, the spruikers scratched their heads and wondered why (Euro meltdown countdown nothwithstanding) as they bullshitted on about 'value' and a forward looking 'market'.

Here is the problem in a few lines.


US Jobs added in 2 years 2,283,000 (Great!!)
US National Debt added in 2 years $3,066,000,000,000 (Whoa!!) 
Borrowings per job $1,083,392 (See a problem?)
 
Average US wage is $47,000 so by borrowing $1,083,392, the US Govt has borrowed 23years wages per job.
 
US National Debt increase in 2 years 25%
US National Debt increase in 4 years 64%
 
US National Debt in January 2000 $5.774 Trillion

US National Debt in January 2008 $9.257 Trillion

US National Debt in January 2012 $15.201 Trillion (tripled in 12 years!!)
US National Debt in January 2015 $23.920 Trillion (estimate based on current growth!!)
 
12 years as a percentage of the USA's 235.5 year history is 5.1 % of the said nation's illustrious existence and in that short period the debt increased 163%. (Congratulations Dubya and Barack!).

Recovery my arse.

Unsustainable!

(but its OK, its an election year)

http://www.usdebtclock.org/

What Will 2012 Bring?

So, now the hangovers have abated, what will 2012 bring?

Marcus Padley
I'll start with a broker I thoroughly respect, Marcus Padley (writes for Fairfax etc), who appears who made some predictions whilst having a few beers pre-Christmas.

Headlines you may see in 2012 

• ANZ raises interest rates 100bp at monthly monetary policy meeting. Declares interest rate settings “appropriate for our shareholders” and “profit margins within target band”
• RBA closed. Glenn Stevens joins Macquarie
• Westfield charges Retailers $10,000 per square megabyte on New Westfield Virtualand website
• Gerry Harvey declares the internet a ‘fad’
• Mercedes Benz prices jump 218% on euro break up. German exports fall 98% Greek Drachma jumps 14% to 0.0002374 Deutschmarks as faceless EU plant retires from post as Greek Prime Minister aged 45 on seven eighths of his final two years salary plus benefits
• German taxi driver earns 10 times as much as new Greek PM
• Rogue Trader at Goldman Sachs makes $US100bn profit shorting euro. Joins Cramer’s White House Administration as US Treasury Secretary
• Berlusconi releases second Love Song CD “Don’t cry for me Angela Merkel, you know the truth is, I never loved you. All through my wild days, my mad existence, I knew the euro, wouldn’t go the distance”

...etc. Read the rest in the link, its quite amusing.


His 2011 predictive history sans beer (I assume) is worth a read, he is rather good... Let's share the financial obvious with hindsight. If you like what you read you can sign up for a free weeky newsletter at the bottom of this page: Marcus Today. Also a free end of day report here.

Art Cashin
Art is a 40 year trading veteran on the floor of the NYSE working for UBS.

Art Cashin of UBS

Europe Rumbles Continue Beneath More Upbeat Headlines - Ever since last week’s liquidity operation, most headlines out of Europe have leaned toward the reassuring side. Beneath those headlines, however, there are signs the strains remain and may, in fact, be growing.

European banks are making great use of the ECB’s overnight deposit facility. Last night they parked $590 billion at the ECB breaking the record they had set the night before. They are clearly unwilling to lend to other European banks, highlighting the distrust and fear in the interbank marketplace. While the ECB’s lending initiative calmed the markets somewhat, it apparently has done nothing to free up the logjam blocking interbank lending.

The distrust on the streets is said to be growing also. Barroom gossip says that safe-deposit boxes are in a demand that borders on frenzy. They allow you to take your Euros and covert them into something of value (gold, Swiss Francs, etc.) and sock it away in a safe place. Others are said to be buying property in London and elsewhere lest you awake one day and discover that your Euros have reverted to drachmas or lira.

Savvy bankers are said to be setting up personal and communal trusts domiciled in places like the Bahamas, the Caymans or the Isle of Jersey. Some banks are offering depository accounts denominated (and repayable) in alternate currencies like the dollar or the yen.

We think a Lehman-like event would most likely be triggered by a run on a bank or a series of banks. The scramble for currency (value) protection among the public could turn into that bank run in the same way that a crowd can instantly turn into a mob. Watch the money flows out of Greece and Italy very carefully. The pot continues to bubble.

Outflows From Italy and Greece

Max Keiser (the irrepressible!)




My Predictions

• At least one Eurobank will fail as capital flight from the PIIGS increases in intensity. (Capital flight occurring now, banks insolvent and on ECB life support)
• Credit contagion and freeze. (TED Spread, Euribor etc rising now)
• Crash of various debt fuelled asset classes. (Stocks, property easing as credit freezes, economies stall and UE climbs are occurring now)
• China's manufacturing sector continues to contract (now 2 months running), their housing and debt sector collapses. (happening now at a rapid rate)
• Japanese economy on the verge of collapse as Yen reaches all time high.(happening now, this year they borrowed more than tax revenue for the first time)
• ASX will see 2xxx (Eurobank failure - replay of 2008)
• Unemployment in Oz 9% and rising (rising now as property prices fall)
• Australian bank profits turn to losses ala USA, Ireland, Britain etc with abysmal outlook for 2013 as another 8-10% wiped off house prices.(outcome of Property Prices falling another 8-10% plus credit freeze)
• 40% of Americans and 8% of Australians have 'underwater mortgages' or negative equity.(outcome of Property Prices falling another 8-10%)
• US Debt over $17 trilion (thats a gimme)(based on last 3 years debt growth and Obama's debt addiction and election year)
• Gold over $2500 USD as QE3 is triggered following a late 2008 NYSE -30% replay, which puts a boost under stockmarkets, but little else as US unemployment U3 nudges 12% . (based on late 2008, early 2009)
• Australia's Deficit increases as tax revenues dwindle (outcome of Property Prices falling another 8-10% and UE rising, CGT and PAYG revenues falling)
• Australian states get credit downgrades as the stamp duty money flow slows to trickle and their in massive deficits leading to massive cuts in state public servants. (outcome of Property Prices falling another 8-10%, Stamp Duty revenues dwindle)
• If Ron Paul doesn't get GOP nomination, No Hope Obama hits the front. (coin flip)
• AUD breaches 75c.(based on late 2008, early 2009 carry unwind, Risk OFF)
• Coin toss on Iran invasion as China declares alliance. (historical friendship established a long time ago, google it)
• Russia continues to take a more aggressive and militaristic stance towards the west with a possible China alliance (enemy of my enemy is my friend). (occurring now)
• Civil unrest climbs in the PIIGS and UK - soldiers used to keep it under control as civil war draws closer as unemplyment climbs, credit is frozen and austerity creates a depression.(starting to occur now as austerity bites)
• Le Pen and the far right take more dominant positions in France if not president Le Pen (starting to occur now)

On China/Iran and Russia/West (videos in links):
China to Protect Iran Even if Result Starts World War III

Russia Retaliates Against US: Puts Radar Station On Combat Alert, Prepares To Take Out European Missile Defense Systems




HAPPY NEW YEAR!!

Gold Since Late 2008 When The GFC/Depression Kicked Off

September and October 2008.

15th September 2008, Lehmann Bros fails - Gold Closes @ $785
10th October 2008, +$146 or 18.5% in  25 days - Gold Peaks @ $931
24th October 2008, -$250 or 27% in  14 days - Gold Closes @ $681 (as Institutional Funds liquidate everything to meet investor redemptions as panic sets in).

(click on chart to expand) 

And, since 24th October 2008 (note the dotted line of support)? Up $950 or 140% in 3years and 2 months.

(click on chart to expand)

Where to when the Eurozone slides into the abyss in 2012 and the ECB is forced to 'print' Euros? Closely followed by the US Fed with its printing aka QE3 as the global credit freezes and the depression is in full swing.

Global Central Banks Ring Gold Buyers' Bell

Peter Schiff is one of my most respected financial commentators, he called the sub-prime collapse and the equity crash of 2007-2009.

Today’s unprecedented announcement by the world’s most powerful central banks was a loud and clear bell ringing to buy precious metals. The move, disguised as an attempt to help the fragile state of the global economy, is in reality a move to prop up failing banks in Europe and the US. By reducing interest rates paid for dollar swaps, central bankers are in effect increasing the quantity of global dollars in circulation.

Gold Techs

On 24th September I wrote Golden Gravity ....

Why the $1580 (US) level in Gold is important (to me).


Weekly Gold Chart (my platform and my analysis).

I’m thinking the April high of $1580 as support which coincides with:


1. Line of trend support drawn from January low of $1308 .
2. Red 30 week Simple Moving Average line which has been defining support since January 2009.
3. Yellow Weekly RSI (7) in its historical turn zone (45).

Every time parameters 1 to 3 have lined up above she has bottomed PLUS, as a bonus $1580 was the level of April resistance

This could well overshoot in these crazy times, where the majority of world banks are insolvent (not just Lehmann) and the governments are in debt up to their eyeballs but its already corrected a healthy 15%. With the banking sector insolvent methinks there is real need for a 'real' safe haven

(click on charts to expand to see the nitty gritty)

Zoom in:

Well, it appears that $1580 is holding. Chart Update:

I've added a 40week (approx 200day) Moving Average to the chart (yellow line), where gold bounced off following my last post on the subject.

I think that Gold could have some downside before its run as a 'safe haven' ala 2008. For no reason other that I feel that when the global financial shit really hits the fan, fund managers will liquidate everything as they have to meet investor redemptions.

Technical Targets (prices in US Dollars per Ounce)

Fibbonacci numbers in blue are from Major Bull Run October 2008 to early Sep 2011 ($682 to $1921)

Fibbonacci numbers in purple are from Minor Bear Fall early Sep 2011 to late Sep 2011 ($1921 to $1532)

$1837USD Fib 78.6%

$1772USD Fib 61.8%

$1726USD Fib 50% (This is a biggie to be breached)

$1680USD Fib 38.2% (This was tested and held as Resistance on 4th October)

Current price as I write $1650

$1628USD Fib 23.6%

$1624USD Fib 23.6% (Pivotal area in the bull/bear tussle)

$1600USD 30 wk Moving Avge (On Chart, this was tested and held as Support on 4th/5th Oct)

$1548USD 40 wk Moving Avge (On Chart, this gets breached and next level down will get tested)

$1447USD Fib 38.2%
$1301USD Fib 50% Extreme bottom Support IMO, I can't see this breached unless the impending depression gets 'fixed' by some miracle or war (like WW2 'fixed' the 1930s depression) etc.

Another Gold blogger I discovered last week is also fan of $1580. Gold Trading Desk.


PS Want to know who is the main suppressor of Gold? JP Morgan mainly and HSBC to a smaller scale. These figures below are in millions.  JPM has $1.79Trillion in assets and $78Trillion in derivatives exposure, 43x its assets and over 1.3x the GDP of the whole world.

(click on pic to expand)

Golden Gravity

Gold got hammered last night. Many reasons put forward (the Comex Margin hike a few days before Option expiration has been used well before):

Gold Daily and Silver Weekly Charts - Liquidation Panic - Martian Gold - Comex Hikes Margins

When Hope Fades

Case Closed: CME Hikes Gold, Silver, Copper Margins

Did Schaeuble Break The Precious Metals And Force Everyone To Raise Cash?

Europe Closes On 'Bailouty' Hope As Rumor Of Major Fund Liquidating PMs Grows Louder

The Bullish Argument

Is Gold No Longer A Safe Haven? Not According To Capital Economics: "Gold Will Surge When Euro Crisis Escalates"

Marc Faber: On Operation Twist, The Dollar, Gold, And The Greeks(Marc is calling for a repeat of late 2008 and 2009 ie the US Fed eventually hits 'print' when the stockmarket is thru the floor)

Some key facts (for calm and perspective):
When Lehmann Bros filed for bankruptcy in Sep 2008, the US stock market fell about 30% and along with everything else (except Swiss Franc, Yen and USD) that was being dumped, Gold fell just over 20% in a month.

Once all the margin calls were rung out and a calm sense of doom descended after the panic, approximately a month after Lehmann, Mr AU Gold cut his traditional relationships and ran [as a safe haven].

• Between October 2008 and March 2009 (March is when the Fed hit 'print' the first time) Gold added 25% (in USD) whilst the Stockmarket fell another 30%.
• Because the Australian dollar was falling Australian gold holders picked up 40%.

Why the $1580 (US) level in Gold is important (to me).

Weekly Gold Chart (my platform and my analysis).

I’m thinking the April high of $1580 as support which coincides with:


1. Line of trend support drawn from January low of $1308 .
2. Red 30 week Simple Moving Average line which has been defining support since January 2009.
3. Yellow Weekly RSI (7) in its historical turn zone (45).

Every time parameters 1 to 3 have lined up above she has bottomed PLUS, as a bonus $1580 was the level of April resistance

This could well overshoot in these crazy times, where the majority of world banks are insolvent (not just Lehmann) and the governments are in debt up to their eyeballs but its already corrected a healthy 15%. With the banking sector insolvent methinks there is real need for a 'real' safe haven

(click on charts to expand to see the nitty gritty)

Zoom in:

If your Super is NOT in equities (ie not in Growth or High Growth) and you aren't exposed to banks and/or companies that benefit from house construction, discretionary spending (eg Retail and Shopping Centres) etc, DON'T PANIC!* and have a look at opportunities in these times.

*if your Super is in equities (ie growth or high growth) and you are exposed to banks and/or companies that benefit from housing construction, discretionary spending (eg Retail and Shopping Centres) etc and/or you have geared (mortgaged) Investment Properties, FEEL FREE TO PANIC!

Which reminds me (things bogans like)...

#242 – Playing the Market
#227 – Banks
#85 – Residential Property Investment (my favourite of them all)

Weekend Of The Zombies

Links from the weekend's global Zombie jamboree:

Europe

Is September 20 Greek Default Day?

Euro Declines as European Finance Chiefs Fail to Reassure on Greek Debt

DSK Says Greece Is Done

Euro Bulls Capitulate After Trichet Comments

Germany Rejects Geithner's Leveraged Rescue Fund Proposal; First Time Ever, Majority of Germans No Longer See Benefits to Eurozone Membership

European Leaders Remain Divided, Geithner Brushed Off; German Banks Need $175 Billion Capital

Interactive Infographic Of The Doomed European Financial System

USA

Obama Proposes $4 Trillion in Spending Cuts "Over 120 Years"
(that'll make a dent in the $15T deficit and $115T in unfunded liabilities)

More on the Coming Wave of Foreclosures

China

China Home Prices Rise, Challenge Curbs

Home Prices Rise in All 70 Monitored China Cities;Local Governments Rely on Ponzi Land Sales to Pay Mounting Debt;Tightening Concerns Hit China Stocks


China is in quite a pickle, a gargantuan bubblicious picle as outlined months ago, while everyone is staring at Greece...  and Double, Double Toil and Trouble .


Back in June it took 57 years income to buy an average apartment in the capital (Chinese Bears)

Calculations based on Soufun data show that in the opening months of 2006 an average-price new apartment in China's capital would cost around $US100,000 — the equivalent of 32 years' disposable income for the average resident.

By 2011, the average price had more than doubled to $US250,000, but relatively modest increases in income mean it would now take 57 years of saving for the average resident to cover the cost.

So does China cool the bubble or risk doing a Japan (?) while they are waiting for Europe and the USA to get back to buying junk with money they haven't got. I hope they can wait a decade or three.


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But the Winner Is...

This guy is amazing. I watched him a few days ago describe a 20% (or such like) property loss over a number of years as a sideways market. A wildebeeste in a suit...

Great Depression coming…Not!

For long-term investors worried about the unbelievable volatility on stock markets at the moment and wondering what their next money move is, there could only be one reason why you would want to change your general strategy - a Great Depression!

Do I expect it? No. Does anyone? Yes, Harry S. Dent, Jr. Is he right? Could be, but I doubt it.
If Harry, the author of The Great Depression Ahead, is right, then we all should go to cash and wait on the sidelines until we can guess the right time to get back into stocks. That would mean that we're choosing to take 5-6% on a term deposit until we're pretty sure that we're out of the woods, but is this the wisest strategy?

Hmmm. We've been sinking deeper into a swamp of foetid decay for 4 years and that swamp is so deep in the forest there is no fucking sunlight.

Anyone with half a brain should have been in cash 3.5 years ago. Lets look at Australian stocks over 5 years....

How is a loss over 5 years of -19.4% compared to that 5% in cash?

$100,000 invested in 2006:

• Cash @ 5% is now worth $127,000; 
• ASX200 is now worth $80,600.

50% needed straight up to catch up. Whats that story about the hare and the tortoise?

Indeed why would you change such a winning strategy when Capt Crack-Pipe says stay on course?

The 2007 highs were false highs and were created by the silliness of sub-prime loans and cheap money right around the world [but not Australia, no Housing Bubble from cheap money here], and what's happening now is that governments like in Greece, companies such as Centro and many financial institutions around the world are being given a reality check.

This is what the ‘muddle-through thesis' looks like on a day-to-day basis and it can be really scary and sometimes quite exciting but the long-term investor shouldn't be distracted by the daily noise.

Stay on course says the Captain!! No storm ahead.

This could take over a year but when the consensus says the worst is over, there will be a big bounce in stocks. Until then, I have faith that the collective wills of governments and the best economic minds in the world can avoid the policy mistakes that created the Great Depression of the 1930s.

Sure will be a bounce, expecially when the ASX has lost another 50-70%. And, a lot of bounces in between especially when one is Running Up The Down Escalator

(today the Nikkei is another 12% lower than above. Overall - 77.4% over 21 years)

Inhale deeply Captain and hold it, this shit is expensive.

I think a Goldilocks downturn is more likely where stock prices don't rise by much, unemployment doesn't go too high and house prices don't fall by too much. This view rests on my belief that the likes of Brazil, Russia, India and China or the BRICs, will give the global economy the grunt that was missing in the 1930s.

This is a tongue in cheek comment, but thank God for formerly underdeveloped and Communist countries that are now playing catch up in the materialism/capitalism game!

Great Depression? Not!

Ahhh The China Myth coupled with another DEEEP pull on the pipe. Stay on course.

Peter Switzer is the founder of the Switzer Super Report, a newsletter and website for self-managed super funds.

Is this a cunning anti-alzheimers plan to keep older minds active via keeping pending retirees in the workforce until they are 85?

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Gold Insights

The Dutch Ask Their Central Bank: "Where Is Our Gold?"

Central banks return as gold buyers  (video in link)

Analysis

Analytical 1
A Closer Look at the Gold Continuation Triangle, and the Coming Breakout to 2100

Analytical 2 (charts expand when clicked on)
Gold Daily and Silver Weekly Charts - Antics Abounding

Speculation

Ambitious?
Gold-Backed Dollar Puts ‘Fair Value’ at $10,000 an Ounce: Chart of the Day

Really Ambitious?

Stephen Leeb - Gold, Minimal Downside, $12,000 Upside

"Standby....Green Light! Go! Go! Go!" 

Wahnhaft

(Wahnhaft is German for delusional)

How delusional? The flapping gums in the Euro crack-den deem that Greece WILL NOT default.

Really? Lets look at loaning money to Greece over one year. Their one year GOVERNMENT bond.

A 141% return over one year? As an investor I would say there is no fucking way any institution can pay 141% over one year, particularly one run by corrupt muppets.

Oh no, its all good says the pump-and-dump talking heads. If YOU think Greece can meet THOSE obligations you are a fool. A default on debt is a matter of time.

But Greece has to stay on an Austerity path whilst growing its economy. Austerity AND growing? Austerity is working to great effect. Greek economy shrinks by 7.3%

Slashing spending, laying off workers and increasing taxes whilst trying to expand the economy. Thats a bit like trying to run up the down escalator.

Everything is ticketyboo.

Excerpts From EU Report Stating Euro Crisis Contagion Has Spread And Is Now Systemic

Deposit Flight at European Banks Means Risk Piling Up at ECB

Sarkozy, Merkel "Convinced" Greece will Remain in Eurozone; Market Convinced of Default; Gold Declines US Dollar Drops; Band-Aids and Rubber-Bands

Either Merkel and Sarkozy are attempting to buy time, hoping beyond hope to preserve their failing legacies, or are delusional.

I suggest a combination of the three.

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Its a Blip/Buying Opportunity blah blah blah

A Canuckistanian, Dave Rosenberg is very good is generally and on the money. I can't post his blurb direct for copyright but read the guts here:

David Rosenberg: "It's Time To Start Calling This For What It Is: A Modern Day Depression"

Please note: The French banks ARE NOT bankrupt, they just need to 'raise capital'.

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Gold at 10K? NO WAY!!

That can't be right. I know paper money was initially introduced to save folks lugging sacks of gold to business transactions as well as a sword, it (was) a promissary note underpinned by some tangible precious metal. Flicked by Nixon so he could print to pay for Losing War No1 (Vietnam) (have the Americans EVER won since Pax Americana?). But, what if we went back to backing paper money by gold(?)... The market for honesty: Gold at $10,000

When The Dow was 850ish in 1980 and someone told me it was going to go 1,450% in 20 years  to 11,000 in year 2000, I would have laughed.

Or 1,750% in 2007 AFTER the crash, all money printed and backed by nothing other than spin.

Hmmm, $10K Gold is ONLY 1,300% over 31 years.

Interesting times.

What is going on here?

So Greek is bankrupt. Ok thats a given.

Euro getting smashed as a result thats a given particularly that Portugal, Ireland, Italy, Spain and the UK are not far behind. PIIGSUK indeed.

Germany is getting nervy and some officials believe that Greek should default and started taking defensive positions. Germany May be Ready to Surrender Over Greece.

France are not putting up the barricades and their stockmarket got smashed (-4.03%), particularly the banks on exposure to Greek debt. French Banks Slide as Greek Holdings Might Prompt Moody’s to Cut Ratings

Germany fell 2.27% and Britain 1.63% so they weren't totally spared either. 

And, then the Euro starts to rally on Chinese buying Italian bonds (they must rollover 60B this month) and the US Stocks rally on that rumour. Are the Chinese going to buy Portugese, Irish, Greek and Spanish as well? Short term saving of one "I" still leaves PIGS wallowing.

But why is Gold getting hammered? The penultimate safe haven? 

Goldman Head Gold Trader Speculates About "Authority" Intervention In Gold

Instead of spurring a further gold price rally on the basis that it was one of the few remaining safe haven “currencies” we saw a 50 usd collapse in minutes. The source of this flow seems hard to pin down with some speculating over whether  “authorities” were concerned about the signals of an accelerating gold price and its impact on other fragile markets.

  
And, Central banks and the gold price

Attempts to keep the price of gold down are unlikely to succeed for long. Westerners who buy gold may be unhelpful to the central banks, but you cannot stop a few hundred million Chinese and Indians from protecting their hard-earned savings. And the Chinese are busy developing their bullion markets, taking control away from the Western central banking cartel.

To Infinity And Beyond

Wikileaks has dropped a couple of Holy Hand Grenades of Antioch onto the Gold supressors (the banks such as JP Morgan acting as Fed puppets). It reveals the reason behind China's gold buying spree.

Cables from the US Embassy in Beijing.

The U.S. and Europe have always suppressed the rising price of gold. They intend to weaken gold's function as an international reserve currency. They don't  want to see other countries turning to gold reserves instead of the U.S. dollar or Euro. Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar's role as the international reserve currency. China's increased gold reserves will thus act as a model and lead other countries towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the RMB.

The full cables for above:
Link1
Link 2 (in case Link1 mysteriously 'disappears')

This time the quick change of the U.S. policy (toward China) has surprised quite a few people. The U.S. has almost used all deterring means, besides military means, against China. China must be clear on discovering what the U.S. goals are behind its tough stances against China. In fact, a fierce competition between the currencies of big countries has just started. A crucial move for the U.S. is to shift its crisis to other countries -- by coercing China to buy U.S. treasury bonds with foreign exchange reserves and doing everything possible to prevent China's foreign reserve from buying gold. The nature of such behavior is a rogue lawyer's behavior of 'ripping off both sides': taking advantage of cross-strait divergences, blackmailing the Taiwan people's wealth by selling arms to Taiwan, and meanwhile coercing China to buy U.S. treasury bonds with foreign exchange reserves and extorting wealth from the mainland's people. If we [China] use all of our foreign exchange reserves to buy U.S. Treasury bonds, then when someday the U.S. Federal Reserve suddenly announces that the original 10 old U.S. dollars are now worth only one new U.S. dollar and the new U.S. dollar is pegged to the gold, we will be dumbfounded. Today when the United States is determined to beggar thy neighbor, shifting its crisis to China, the Chinese must be very clear what the key to victory is. It is by no means to use new foreign exchange reserves to buy U.S. Treasury bonds. The issues of Taiwan, Tibet, Xinjiang, trade, and so on are all false tricks, while forcing China to buy U.S. bonds is the U.S.'s real intention

The full cables for above:
Link1
Link 2 (in case Link1 mysteriously 'disappears')


ZeroHedge's analysis on the cables are a must read. Wikileaks Discloses The Reason(s) Behind China's Shadow Gold Buying Spree

Wondering why gold at $1850 is cheap, or why gold at double that price will also be cheap, or frankly at any price? Because, as the following leaked cable explains, gold is, to China at least, nothing but the opportunity cost of destroying the dollar's reserve status. Putting that into dollar terms is, therefore, impractical at best, and illogical at worst. We have a suspicion that the following cable from the US embassy in China is about to go not viral but very much global, and prompt all those mutual fund managers who are on the golden sidelines to dip a toe in the 24 karat pool.

I thought of titling this piece, “Why $5,000 Gold May Be Too Low.” Because once fund managers enter the gold market in mass, this tiny sector will light on fire with blazing speed. 

Finally, a take on the recent clockwinder's central bank to join the beggar-thy-neigbour game. Thank You Swiss National Bank For $2000+ Gold


What happens when you take a rubber ball to the swimming pool and hold it (suppress it) a few feetr under water and finally you let it go because you can't hold it any longer as it seeks 'correct' environmental pressure?

"when someday the U.S. Federal Reserve suddenly announces that the original 10 old U.S. dollars are now worth only one new U.S. dollar and the new U.S. dollar is pegged to the gold, we will be dumbfounded."

That a classic line or what?