Market Recap forFriday September 21, 2012
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Quote of the Day
Thirteen years ago, it took a bit more than 42 ounces of gold to buy the DOW. In the year 2007, when the DOW made a brand new all time high in nominal terms, it took half the amount of gold to buy that same Dow, namely a bit more than 20 ounces. Today, as the DOW is once again flirting with moving back towards the all time high in 2007, it takes an astonishing LESS THAN 8 OUNCES of GOLD to buy that same DOW!
Are you getting the point of all this? All that the elitist monetary masters are creating in their alchemy laboratories is a RAMPANT case of paper asset inflation of the stock market. Stocks are losing value against gold and have been so doing since 1999. The more QE the Fed wants to spit out, the further this ratio is going to collapse until at some point it will probably end up with 3-4 ounces of gold being able to purchase the DOW.
Another way of stating this is: Do not be hoodwinked by the claptrap coming from the mouth of the monetary elites at the FOMC that inflation is tame and that expectations are subdued. We are witnessing one of the single greatest instances of inflation in the stock market in our domestic history!"
- Dan Norcini, traderdannorcini.blogspot.com
This is as strong of a warning as I can issue to the Gold and Silver investor community.
Be EMOTIONALLY prepared for hyper-volatility in Gold and Silver prices as we approach the end of the Month!
- Bix Weir, RoadtoRoota.com
(Yes, Bix, the markets will get volatile. Sinclair warned that gold will see swings of $100/day. - David Schectman)
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From David's Desk
The Cartel And Hedgies Are Short Paper, But Long Physical Gold
The following bulletin from Jim Sinclair explains where gold is headed and who will benefit. In typical fashion, Sinclair's information is superb but his writing style isn't exactly clear. In fact, after reading it, my wife asked me what he meant by "7 touches"? (See following bulletin) Half a dozen years ago it was fashionable within the gold community to point out that a few bullion banks (Goldman Sachs, JP Morgan and a few friends) were always "short" gold. Sinclair stated then, that the bankers weren't stupid and as the bull market advanced, the same bankers that were "short" would be the ones who were "long" and they would make a fortune on their gold holdings. That's right, they would be "long," not "short!" At the time, not many people believed him - but here he is, in the bulletin below, once again pointing out who is accumulating gold. Low and behold, it's the very same bankers that are being blamed for being "short." Of course, they are "short," short paper gold and "long" the physicals. That is exactly what Sinclair is alluding to. But it's not just the bankers that are accumulating physical gold; it's also "big money." They are starting to protect their wealth against the coordinated central bank (QE) money debasement from the Fed, the ECB and Japan.
If this isn't reason enough to shun the paper gold vehicles like GLD and go through the minor aggravation of accumulating physical gold, I don't know what is. This has been my plan for more than a decade.
In The News Today - jsminset.com
September 23, 2012, at 9:16 am
by Jim Sinclair
My Dear Friends,
You can be absolutely sure the 7 touches capping sells at $1775 were for the purpose of accumulation.
Our newly created trillionaire banksters will be long of cash gold in their own depositories.
Gold is going to $3500 and beyond much, much, much faster than it took to get to go above $1900.
If you think the major banksters are either short or flat on this gold move, you are seriously bonkers.
Regards, Jim
Gold Seen Luring Wealthy as Central Bankers Expand Stimulus By Glenys Sim - Sep 21, 2012 4:00 PM GMT
More high-net-worth individuals are seeking to buy gold to protect their wealth from the risk of rising inflation after central banks boosted stimulus, according to Deutsche Bank AG's asset and wealth-management unit.
"Gold has historically been considered to be a store of value and an inflation hedge and increasingly it is being utilized as a monetary instrument," said Mark Smallwood, head of Asia-Pacific wealth-management solutions. "There is a growing interest among our clients to gain exposure," he said, with an increased preference for physical holdings.
Gold is in the 12th year of a bull run, 13.5 percent higher this year, as investors seek to hedge against weaker currencies and the threat of rising consumer prices. Holdings in gold-backed exchange-traded products expanded to an all-time high yesterday, and Bank of America Corp. and Deutsche Bank are among banks forecasting that the price will rally to a record.
"With the movements by the central banks globally in the last few weeks, there is considerable investor concern as to the long-term effects of the liquidity infusions," Smallwood said by phone from Guilin, China yesterday. "As a result of that, private clients are concerned about the possible future effects of inflation and the means of hedging that risk."
Immediate-delivery gold reached $1,779.50 an ounce on Sept. 19, the highest price since February, after central banks took further steps to bolster their economies hurt by Europe's debt crisis. The metal, which reached a record $1,921.15 on Sept. 6, 2011, gained 0.4 percent to $1,774.85 at 5:30 p.m. in Singapore.
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Whereas Ted Butler focuses on JP Morgan and "the Big Four Commercial Banks," and their perpetual "short" position in silver (and gold), I don't recall him ever suggesting that they actually own the physical silver to offset their short positions.
My friend Trader David R flatly states that this IS the case; he has seen the silver with his own eyes in London. In fact, he asked me to come with him last year and told me he would bring me to the vaults and personally show me the silver. Last winter he emailed me and said, "I will be going to London in May; if want to come along, I am sure I can get you a tour of a few of the major banks vaults (JPM included) and you can see all of the gold and silver for yourself ?"
Who is Trader David R and why should you believe him? Judge for yourself. He told me:
I worked at some of the largest bullion banks in the world over my career and I ran all types of books and did a lot of business with Central Banks around the globe. I was involved in the largest gold hedge ever done in the history of the world back in 1996. This has been my life for the past 18 years. From 2000 to 2006 I was the gold trader at Barclays London. I have worked for AIG, Barclays, and UBS, some of the biggest bullion desks in the world.
David R left Barclays and moved to Manhattan to work for one of the largest and most successful privately held hedge funds in NYC. He was in charge of the precious metals trading department, and supervised dozens of the most talented precious metal's traders in NYC. I was told by a reliable source that every metals trader worth his salt would kill to work for that firm. The traders were not salaried, they worked on commission and they all made BIG money. That is where I met David. He gave me a personal tour of their trading department. His understanding of the gold and silver industry and his resume is as good as it gets.
In concert with Sinclair, David R maintains that the banks (and large hedge funds) are long "physicals" and short "paper" gold and silver. He told me:
They buy the physical silver at the same time they sell the future (on Comex) futures trade in contango (higher price than spot physical) they get zero interest rate cash from FED so borrow the money for free, they own the vaults to store the silver.... so as the future comes to maturity they can either settle against their physical long or roll the future to collect more free contango.... This is pure arbitrage paid for by the FED. This has been going on for over 30 years and why shouldn't they be allowed to have 25% of the Open Interest? There is no manipulation because they are short the futures and long the physical and have "ZERO" price risk, but nice profits! It's brilliant trading and completely 100% legal and that's why they will never be charged with manipulation because there is none going on. Sometimes it's just that easy!
As for all the talk about a shortage of silver, he says:
Let's go and visit their vaults and you can see all the physical silver there... Lease rates are at full carry +. There is no shortage what so ever and the banks are charging 40 bp for storage because they cannot find any more space to put it all, you can take all the physical you want! The JPM manipulation is not a manipulation, but a way of trading that has been going on for years. JPM is short futures (due to contango) and long physical. People need to understand that metals are just a derivative of the interest rate market and once people do, they will get a better understanding why the market moves the way it does.
How can you be sure that he really knows what goes on with the bullion banks gold trades? He said, "Because I worked for three of the major bullion banks for 11 years and was in charge of Barkleys gold book and the hired 42 Brinks trucks to move our 27 million ounces of gold out of HSBC 's vault and into JPMs vault when HSBC raised storage costs on us, I am 100% positive that it's there. I know we had 27 million ounces of gold on our daily balance sheet and the other big banks all had around the same amounts." These facts tend to validate Jim Sinclair's contention that the big banks do, in fact, have the physical gold to offset their short paper positions on the Comex.
For those of you who still doubt that the big banks actually own the physical silver, David R says you can find it listed on their audited annual financial statements:
They are clear as day on the "Notes to consolidated financial statements" under "physical commodities." You can see the assets. If someone actually believes that their statement is being forged, then there is nothing that I am going to say that will convince someone like that. These guys made a fortune in silver last year and it wasn't because they were short. I know the guy who did these trades and saw the house in the Hamptons he just bought. He also had a huge flag made which has gold and silver bars on it. If you ever go to the Hamptons and you see the flag, you know who lives there!
He added:
I explained to you what HSBC and JPM do on the silver. They get $ from the FED for free. They own all the storage vaults, so they do not have to pay the fees for storage. They then own the physical silver in their vaults and sell the futures contracts (which are in contango) at a much higher price than OTC price so then hold the both till delivery. Since there is no cost for $ and no cost for storage, they made a fortune on earning the contango of the silver and gold market. It's a brilliant strategy, which has made them a fortune.
If you sat with me for a day I could show you how this market really works.
Last year, David R left the NYC hedge fund and opened his own closed fund and trades gold and silver with his own capital and funds provided by silent partners.I suspect he does it better than anyone else.
This is not information you will read anywhere else. You can believe it or not. I have known David R for nearly four years, and I do believe it. David R is very much in agreement with Sinclair. He is absolutely convinced that gold and silver are going MUCH, MUCH higher. He told me last week that with the Fed's latest "open-ended" QE edict the dollar and bond market are done, finished and the bull market in gold is guaranteed! As far as he is concerned, Bernanke has sold out our kids and grandchildren and it no longer makes any difference who occupies the White House!
To wrap this up, I want to make it very clear that the "shorting of gold and silver" is NOT a negative for us; it is a positive. It provides us with discount prices on the physicals. If you don't take advantage of this situation, before prices explode, you are foolish! You have another chance on Monday morning to buy gold for a $15 discount (as of early this morning from the close on Friday). There is no logical reason that gold should be cheaper on Monday morning - this is a "paper" event designed, as Sinclair pointed out, to allow the smart money to enter the physical market and pick up more gold at a lower price. You can join in with them or sit on the sidelines - it's your call.
Sincerely,
David Schectman
Miles Franklin
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Gold Highlights
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September 21, 2012
Gold timing -- and I might as well say this -- I believe there is only one safe, eternal repository of wealth -- and that is gold. Therefore, I believe that there is only one item worth buying at this time, and that is physical gold in the form of bullion coins. If you buy gold bullion coins, you can forget about timing. I don't care what the price of gold is now, in a month, six months, or five years from now. Gold is eternal wealth that you can physically own. So forget what you paid for the gold coins, and forget their price a year from now. Accumulate them and put them away in a safe place. They represent the safest form of pure intrinsic wealth, and they are the only items whose price you do not have to worry about. The reason is that gold has no true competition. Nothing on earth compares in eternal safety with physical gold.
***
The Fed is buying up the lousy mortgage-backed securities from the banks, thereby refueling the shaky banks. The banks will then buy government bonds and maybe buy the best of the Dow Industrials and gold. Thus the Fed is kicking the can down the road -- for maybe a year longer.
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QE3 To Infinity-The Final End Game
September 21, 2012, at 2:30 pm
by Jim Sinclair
My Dear Extended Family,
The final end game of QE3 to infinity, with a month or two off from time to time, will be a product of the long-term viability of the Federal Reserve Balance sheet and the impact on the dollar there from.
Let's review what has transpired and begin to look at what will happen:
1. OTC derivative manufacturers and distributors sold fraudulent paper to almost every entity as clients of the Western world financial system. Inherently the OTC derivatives manufacturers and distributors had part of the transaction on their books. No problem as long as the entire scam was a "Daisy Chain," a connected set of transactions that has the appearance of risk but when all netted out equals almost zero.
2. Until Lehman was flushed, and flushed it was, most all OTC derivatives could have been netted to zero in a derivative resurrection bank. Losers would have rejoiced and winners would have declared war. However when Lehman was forced into bankruptcy it broke the "Daisy Chain" (a chain of near risk-less transactions when netted) of the OTC derivatives scam. At this point winners had won huge and loser had lost huge and there was no longer a means of repair to the quadrillion-dollar scam. The problem has no practical solution other than transferring all losing paper to the balance sheet of the Federal Reserve where then it was anticipated no non-government "mark to market" audit would ever occur. It was the perfect hole to stick the junk into.
3. The size of the OTC derivative market stood at one quadrillion one hundred and forty four trillion as reported by the Bank of International Settlement, the counter internationally.
4. The Bank of international Settlements, seeing this outrageous number, changed their computer method of valuation to maturity assuming no failures and reduced the size of OTC derivatives of all kinds to a more acceptable but still huge number of $700 trillion notional value.
5. In the first and second round of QE the Federal reserve purchased OTC derivatives including the variety called securitized mortgage debt to remove them from the balance sheets of the Western world financial system, thereby improving the Western world's financial institutions balance sheet and preventing an international industry wide bankruptcy. That means the Federal Reserve has impaired its balance sheet in order to repair some of the balance sheet integrity of the Western world financial system. The amount they have purchased is significant, but not compared to total outstanding above more than one quadrillion dollars.
6. The reason for QE to infinity, QE3, is the failure of business activity in the Western world to pick up with early huge monetary stimulation so as to repair the balance sheet of the Western financial world financial system. The unseen crisis is the hidden weakness of the Western world financial system thanks to FASB (The gatekeepers of world accounting) which allows financial institutions internationally to hide their losses by valuing their paper at whatever the bank wants it to be with no reference to seek a market value, primarily because there is none to seek.
7. The crisis not seen by Fed observers is the true balance sheet condition of the loses on the trillions of dollar of worth-less paper fraudulent paper because numbers are given but no independent mark to market audit has been or is likely performed.
8. As QE3 to infinity moves ahead, the balance sheet of the Federal Reserve continues to acquire worthless paper in exchange for dollars. Junk moved onto the balance sheet of the US Federal Reserve as the common share of the USA, the US dollar continues to expand exponentially.
9. The end game problem is an extended recessionary business conditions going into 2015 to 2017 wherein the supply of dollars continually expands, the US Federal Deficit grows, US state deficit spending continues to grow and the quality of the Federal Reserve balance sheet proceeds to deteriorate further.
Therefore the end game is the perception of the weakness of the lender of last resort, the Federal Reserve's Balance sheet, as it impacts confidence the US dollar and US interest rates.
Now you know what brings about the end game.
In the future I will do small simple articles dealing with the impact on markets of a to be Bankrupt Central Bank, the US Federal Reserve. The end game could come sooner, but only if there was an independent "mark to market" audit of the Federal Reserve inventory of worthless paper, which remains unlikely no matter, who wins the election in November.
Those of you invested in gold and silver vehicles of all kinds (with the exception of ETFs and futures) rest well this weekend. $3500 will easily be a place gold trades. The Canadian dollar and blasphemy to the euro snobs, the Swiss franc, remain go to vehicles for cash positions. Yes cash because you to not have to pay to own them as you do with a sovereign paper with negative interest.
Your watchman, Jim
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Jim Sinclair's Commentary
It is my opinion that the 7 hits at a meaningless number $1775 by the manipulators was done for the purpose of accumulating gold as the accepted standard the golden cross occurred.
Gold is going to $3500 and nothing is going to stop it. To assume the big boys will ignore what to the establishment is gospel and will be short gold to $3500 is nuts.
Patience my dear friends.
'Golden cross' indicates gold momentum turning more bullish Fri Sep 21, 2012 1:19am IST By Frank Tang
NEW YORK, Sept 20 (Reuters) - A "golden cross" formed on spot gold's price chart gives bullion investors another reason to increase their bullish bets.
On Thursday, gold's 50-day moving average (DMA) traded above its 200 DMA, which marked a golden cross in technical analysis, indicating bullion's intermediate and longer-term momentum is getting increasingly bullish.
"Given shorter-term moving averages have all turned higher in recent weeks and the bullish price action recently, this golden cross today is an additional indicator of strength in an already strong market," said Adam Sarhan, chief executive of Sarhan Capital.
The previous long-lasting golden cross on bullion charts was formed on Feb. 6, 2009, and gold prices surged 11 percent in the following 11 sessions.
Technical traders and momentum-driven investors could buy more gold as the bullish formation will remain in place as long as the current gold price stays sharply above its 50-day and 200-day moving averages.
More...
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In The News Today
September 21, 2012, at 9:36 am
by Jim Sinclair
Jim Sinclair's Commentary
Of course. What else do you expect when it is clear that Wall Street owns Washington?
This lack of ethical procedures guarantees nothing changes and gold goes to and beyond $3500
Wall Street Rolling Back Another Key Piece of Financial Reform POSTED: September 20, 9:33 AM ET
Wall Street lobbyists are awesome. I'm beginning to develop a begrudging respect not just for their body of work as a whole, but also for their sense of humor. They always go right to the edge of outrageous, and then wittily take one baby-step beyond it. And they did so again last night, with the passage of a new House bill (HR 2827), which rolls back a portion of Dodd-Frank designed to protect cities and towns from the next Jefferson County disaster.
Jefferson County, Alabama was the most famous case - the city of Birmingham went bankrupt after being bribed and goaded into taking on billions of dollars of toxic swap deals - but in fact it was just one of hundreds of similar examples of localities being duped into suicidal financial deals by rapacious banks and financial companies. The Denver school system, for instance, got clobbered when it opted for an exotic swap deal pushed by J.P. Morgan Chase (the same villain in Jefferson County, incidentally) and then-school superintendent/future U.S. Senator Michael Bennet, that ended up costing the school system tens of millions of dollars. As was the case in Jefferson County, the only way out of the deal involved a massive termination fee that might have been even more destructive than the deal itself.
To deal with this problem, the Dodd-Frank Act among other things included a simple reform. It required the financial advisors of municipalities to do two things: register with the SEC, and accept a fiduciary duty to respect the best interests of the taxpayers they are advising.
Sounds simple, right? But Wall Street couldn't have that. After all, if companies are required to have a fiduciary responsibility to cities and towns, how in the world can they screw cities and towns? The idea was a veritable axe-blow to the banks' municipal advisory businesses.
So what did Wall Street lobbyists and trade groups like SIFMA (the Securities Industry and Financial Markets Association) do? Well, they did what they've been doing to Dodd-Frank generally: they Swiss-cheesed the law with a string of exemptions. The industry proposal that ended up being HR 2827 created several new loopholes for purveyors of swaps and other such financial products to cities and towns. Here's how the pro-reform group Americans for Financial Reform described the loopholes (emphasis mine):
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Jim Sinclair's Commentary
Our Banksters have a team of attorneys and accountants for the singular purpose of hiding risk.
This is a dilly. Nothing changes therefore gold is on its way to $3500.
How to Lose Weight Fast the Deutsche Bank Way By Jonathan Weil Sep 20, 2012 6:30 PM ET
Imagine if I told you I could reduce my own body weight by 80 percent or more, on paper, through a series of calculations utilizing my own proprietary mathematical models, the details of which are so complex and highly prized that I couldn't divulge them.
You would be right not to believe me, and might think I'm nuts. Yet this, in essence, is what regulators let banks do all the time with their balance sheets. Huge swaths of assets are allowed to vanish, making too-big-to-fail financial institutions seem leaner and safer than they are.
Under the system known as risk weighting, banks get away with this because they are allowed to stipulate that some assets carry little, if any, risk. Many government bonds, for instance, fall into the riskless category for purposes of determining regulatory-capital ratios. So a bank can assume it won't incur losses on them, which allows it to keep a lower capital cushion. The flaw here is that rule makers aren't good at predicting what kinds of assets might blow up. Some governments, especially in Europe, are in awful shape and pose a real risk of defaulting.
In other words, the notion of risk weighting is a farce, at least the way it is practiced now. Yet it carries the imprimatur of the Basel Committee on Banking Supervision, the Swiss body that writes capital standards for most of the developed world. Thankfully, a U.S. regulator has stepped up to say the world should scrap the Basel committee's standards.
More...
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9/21 Gold Closes $8 Higher/NO FREE MARKETS TRADE LIKE THIS ... EVER!
"All over the world people are chanting, 'Death to America.' Except in China, where they're chanting, 'Not until we get our money back'." ... Jay Leno
Silver - Smashed out of absolute nowhere for no reason whatsoever,..
Sent to Chilton -
Bart,
How much longer are we going to have to put up with this absolute robbery?
 Silver was just nailed for almost $1 whilst almost the entire rest of the market was unchanged? What is going on and how long is the CFTC going to ignore such blatant thievery?
When are you going to say enough is enough? What's happened to the conclusions of the Investigation? Al Capone will be laughing in his grave,
It's disgusting,
Yours faithfully,
Richard
Weekly News Wrap-Up 9.21.12
21 September 2012 2
By Greg Hunter's USAWatchdog.com
The Middle East and North Africa are on fire. The latest blow-up happened in Pakistan where the U.S. Embassy was attacked by protestors. There have been attacks and protests on U.S. interests in Middle East countries such as Libya, Egypt, Yemen, Sudan and many others. The Obama Administration says it is all because of some anti-Muslim movie, but many think it is way more about our foreign policy. The Obama Administration finally admitted the U.S. Libyan Embassy attack was the pre-planned assault by al-Qaeda. The U.S. backed al-Qaeda terrorists in Libya and continues to do so in Syria. Meanwhile, the U.S. conducts drone strikes against al-Qaeda in Yemen and Pakistan. These people are not stupid. They know when they are getting played. A new Pew Poll out shows America is less trusted in many Middle Eastern countries now than in 2008. For example, in Pakistan in 2012, only 12% view America favorably. In 2008, 19% viewed the U.S. favorably. Mitt Romney made his now famous "47% of people don't pay taxes" statement that has put his campaign on the defensive. What I find ironic is that neither party is talking about the "unlimited" $40 billion a month the Fed is printing to buy sour mortgage debt from the big banks. This is another banker bailout!! This mortgage debt was supposed to be equal to Treasuries in quality-AAA. Now, it is toxic? Isn't that a gigantic fraud on the taxpayers of America? Finally, a story you need to watch is the fight China and Japan are having over a group of islands in the South China Sea. These islands are apparently so important one Chinese general is threatening to go to war over who owns them. Coming up, Gerald Celente of Trends Research is the guest for Monday. He says we are not headed for war in the Middle East-it has already started. Join Greg Hunter as he gives his analysis to these stories and more in the Weekly News Wrap-Up.
http://usawatchdog.com/weekly-news-wrap-up-9-21-12/
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Gold Seen Luring Wealthy as Central Bankers Expand Stimulus
By Glenys Sim - Sep 21, 2012 11:00 AM ET
More high-net-worth individuals are seeking to buy gold to protect their wealth from the risk of rising inflation after central banks boosted stimulus, according to Deutsche Bank AG's asset and wealth-management unit.
Gold is in the 12th year of a bull run, 13 percent higher this year, as investors seek to hedge against weaker currencies and the threat of rising consumer prices. Photographer: Sergio Dionisio/Bloomberg
"Gold has historically been considered to be a store of value and an inflation hedge and increasingly it is being utilized as a monetary instrument," said Mark Smallwood, head of Asia-Pacific wealth-management solutions. "There is a growing interest among our clients to gain exposure," he said, with an increased preference for physical holdings.
Gold is in the 12th year of a bull run, 13.5 percent higher this year, as investors seek to hedge against weaker currencies and the threat of rising consumer prices. Holdings in gold- backed exchange-traded products expanded to an all-time high yesterday, and Bank of America Corp. and Deutsche Bank are among banks forecasting that the price will rally to a record.
"With the movements by the central banks globally in the last few weeks, there is considerable investor concern as to the long-term effects of the liquidity infusions," Smallwood said by phone from Guilin, China yesterday. "As a result of that, private clients are concerned about the possible future effects of inflation and the means of hedging that risk."
Immediate-delivery gold reached $1,779.50 an ounce on Sept. 19, the highest price since February, after central banks took further steps to bolster their economies hurt by Europe's debt crisis. The metal, which reached a record $1,921.15 on Sept. 6, 2011, gained 0.4 percent to $1,774.85 at 5:30 p.m. in Singapore.
Central Banks
The Bank of Japan said Sept. 19 it will expand a fund that buys assets following the U.S. Federal Reserve's announcement last week of a third round of so-called quantitative easing, or QE, by buying $40 billion of mortgage-backed securities a month. China's government has approved infrastructure plans to support the second-largest economy and the European Central Bank gave details this month of a program to buy debt of member states.
"For our ultra-high-net-worth clients, and a growing number of our high-net-worth clients who have significant liquidity, they are becoming increasingly concerned to have at least some of their exposure to this asset class in the form of allocated physical bullion itself, rather than the indirect exposure that an over-the-counter product offers," he said.
Deutsche Bank clients can store gold in Malca-Amit Global Ltd.'s vault at the Singapore FreePort, Smallwood said. Malca Amit, which holds assets for banks and individuals, is doubling its space in Singapore, the company said in February.
Record Forecasts
Gold will climb to $2,400 by the end of 2014 if the Fed's latest easing lasts until then, Bank of America said Sept. 18. Prices will exceed $2,000 in the first half of next year, Deutsche Bank wrote that day. The Fed said its purchases would last until it sees a "sustained improvement" in the economy.
The difference in yield between 10-year notes and same- maturity Treasury Inflation Protected Securities, a gauge of expectations for U.S. consumer prices, reached 2.73 percentage points on Sept. 17, the most since May 2006. Prices rose 0.6 percent in August, the Labor Department reported Sept. 14.
Billionaire investors George Soros and John Paulson increased their stakes in the SPDR Gold Trust, the biggest gold- backed exchange-traded product, in the second quarter, filings showed, while central banks from Russia to South Korea are also adding bullion to reserves. Central banks may purchase close to 500 tons this year after becoming net buyers in 2009, according to the World Gold Council.
Hurt Demand
Slowing global economies may hurt gold demand, which fell 7.1 percent in the second quarter, the London-based council said Aug. 16. Imports by India, last year's biggest buyer, slid 56 percent to 131 tons in the second quarter, the council said. Indian purchases are down 31 percent year-to-date, UBS AG estimated yesterday.
Gold imports by mainland China from Hong Kong rose in July for the first time in three months, reaching 75.8 metric tons, according to data from the Census & Statistics Department of the Hong Kong government. Shipments to the second-largest user reached a record 103,644.5 kilograms in April.
"A clear, upward trend of gold prices will reignite investment demand in China and India," Janet Kong, an analyst at China International Capital Corp., the nation's largest investment bank, wrote in a report.
-END-
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Dave from Denver...
"Gold Seen Luring Wealthy As Central Bankers Expand Stimulus"
Right now, the best expression of our macro view is still to own gold and silver because we believe this is ultimately going to be the survivor of this Debt Super cycle. We believe it's going to be the surviving collateral...You have to countenance into the largest Debt Super cycle that's known to man, that what happened in the late 1970s could pale in significance relative to what could happen in the next five years here. I think September 12th might well have marked the day the world embarked on serial debasement of the reserve currency, and set the train in motion for a really gigantic move in gold over the next five years. There is no limit to the price. - Ben Davies, King World News LINK
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 our of committee and to the House floor, where it passed overwhelmingly. But now Harry Reid stands in the way. If you want to voice your opinion on this matter, please fill out this form and hit "send my fax:" LINK I don't know about anyone else, but at the very least I would like to see what the Fed is doing with the gold swap transactions alluded to by former Fed Chief Counsel, Kevin Warsh, and I would like to see how the dollars are being directed in Europe from the Fed's massive currency swap facility.
A news item in the Financial Times - and likely one that will not be repeated by U.S. media sources - that caught my eye this morning was the Brazilian Finance Minister lashing out at the Fed over QE3:
Guido Mantega, Brazil's finance minister, has warned that the US Federal Reserve's "protectionist" move to roll out more quantitative easing will reignite the currency wars with potentially drastic consequences for the rest of the world. LINK
Brazil? A lot of people might dismiss commentary like that from Brazil's Government. But Brazil is one of the faster growing economies of the world right now, it's a large trading partner with the U.S. and it has begun to economically and financially ally itself with China/Russia. This China alliance includes the implementation of a currency swap facility, which enables China and Brazil to conduct trade in their respective currencies, thereby bypassing the U.S. dollar as the trading medium and rendering the dollar irrelevant for such purposes. The point here is that the U.S. dollar is losing its status as the world's reserve currency. And more quickly than most realize, I might add.
The only way to protect your wealth against the incipient currency wars (see the quote above), is to move as much of your paper wealth as possible into gold and silver. It seems this is becoming a trend among the so-called 1%'ers - of the world:
Gold has historically been considered to be a store of value and an inflation hedge and increasingly it is being utilized as a monetary instrument," said Mark Smallwood, head of Asia-Pacific wealth-management solutions. "There is a growing interest among our clients to gain exposure," he said, with an increased preference for physical holdings
Here's the source of that quote from Bloomberg News: LINK Please note the direct and explicit reference to "physical holdings." That is the most important aspect of holding gold as a currency and wealth hedge. This is a point that is completely dismissed and ignored by 99% of all financial advisers and 99% of all people who think they own gold by owning GLD, SLV, CEF, and GTU. With those vehicles you only own a security certificate and when you sell it you are left with - fiat dollars. This is a tragic misunderstanding of the gold dynamic and it will end badly for those who remain blind to it.
It's a football Friday and the Broncos have another tough match-up this week, hosting a big game this Sunday vs. the Houston Texans. Manning had a rough outing last week against the Falcons, but despite four 1st half turnovers, the Broncos had a shot at winning that game late in the 4th quarter. The Texans won't be as lucky as the Falcons were against Manning and I expect that Denver will easily cover the 2 points Vegas is giving them. Have a great weekend:
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The dust has finally cleared again. What a day! Here is how the scoreboard looked at the Comex close on Kitco...
Gold - $1775.80 up $7.30Silver - $34.61 down 3 centsPlatinum - $1628 up $10Palladium - $668 up $7
My disgust level at silver being the only precious metal ending the day lower is as high as it gets.
Zerohedge notes in this comment how ludicrous it is for what happened to the price of silver today following a dopey Bloomberg report (that same Bloomberg who will not allow GATA to be mentioned.)...
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CFTC'S Chilton: Silver Investigation Continues, Expects Something Public 'In Near Future'
21 September 2012, 2:45 p.m.
By Debbie Carlson
Of Kitco News
http://www.kitco.com
Kitco News) - The Commodity Futures Trading Commission is wrapping up its investigation of the silver market and while some sort of public announcement may come "in the near future," nothing is "imminent," said CFTC Commissioner Bart Chilton Friday.
"We're still wrapping it up. There's nothing imminent, but I envision saying something publicly in the near future," Chilton told reporters at the Hard Assets conference in Chicago.
It's been four years since the CFTC announced in September 2008 that it was investigating the silver market for possible manipulation. It's unusual for the government agency to announce publicly that there is an ongoing investigation.
Chilton reiterated at the conference that he believes that there was illegal activity, but did not say what that might be. He told reporters that he was frustrated the investigation has not ended yet.
Chilton said speculative position limits go into effect Oct. 12 which caps the number of trades a single speculative trader can have in place to 10% of a contract's first 25,000 in open interest.
-END-
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Silver Is Up 25% Since August - What to Do Now
By Brett Eversole, analyst, True Wealth Systems
Thursday, September 20, 2012
In early August, silver investors hit their "puke point."
The metal had fallen nearly 30% over the previous five months. It was nearly as hated as it had ever been...
That's what got me interested. Based on history, buying silver when investors give up, like they did in early August, is a great idea. The last four times investors gave up, silver rose an average 20% in three months.
The trade worked even better this time. If you stepped in and bought in August, you're up 25% in less than seven weeks. And investors are excited about silver again. So what should you do now?
Back in August, futures traders speculating on silver were near all-time "short" levels. As a rule, when futures traders all think the same thing, the market tends to do the opposite.
And that's exactly what happened. Silver soared.
But today, silver isn't the contrarian trade. Silver futures traders are nearing an extreme in bullishness. Take a look...
The blue line in the chart above indicates bets made by futures traders. When the line is low, like it was in August, traders expect silver to fall... When the line is high, silver traders expect the metal to go higher.
As you can see, silver traders have completely reversed their bets in the last two months. Now, traders are nearing a bullish extreme. But that doesn't mean it's time to sell silver...
You see, when sentiment bottoms, it usually signals a move higher in prices. But when sentiment peaks, it doesn't always mean prices crash.
Take another look at the chart...
On October 20, 2009, silver sentiment peaked. Prices then drifted sideways for the next month before making new highs. A similar situation happened in late September 2010. Silver sentiment peaked. But silver prices didn't slow down, they kept on rising.
I believe that's exactly what will happen today. Here's why...
In 2010, the market was expecting "money printing" from the Federal Reserve. Silver hit a bullish sentiment extreme and continued rising.
We're in a similar situation today. Last week, the Federal Reserve announced the next round of so-called "quantitative easing." Silver sentiment soared. But I believe there's much more room for silver to move higher.
We've already seen the 20% gains we expected in three months. But the negative sentiment extremes tend to kick off new bull markets in silver. Based on history, these new silver bull markets return 91% in just nine months. So even after a quick 25% move, silver still has 50%-plus upside from here.
If you're already in this silver trade, I suggest sitting tight. But if you haven't bought yet, you haven't missed it.
Sure, silver could fall slightly from here. Or it could move sideways for a while.
But the long-term trend is up. And based on history, we want to own silver today.
Good investing,
Brett Eversole
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The Wrap
September 21, 2012
Jim Grant: We are all living in a land of speculation and manipulation
You put Jim Grant on TV and someone mentions the Fed and the result every single time is the equivalent of waving a red curtain in front of a rabid bull.
The above headline is Grant's summary of the current predicament of anyone who wishes to trade these "markets"...and it may as well be the best synopsis of the New (ab)normal.
And aside from an odd detour into Government Motors, Grant once again hones in on the only true antidote to central planner idiocy, gold: "the best thing about gold is that it's got no P/E multiple. Gold is a speculation on an anticipated macroeconomic outcome, the systematic debasement of currencies by central banks. Why wouldn't they do QE4? What intellectual argument do they have against doing it again, and again, and again."
This must read Zero Hedge posting has a must watch CNBC video interview between Grant and Bartiromo embedded in it. And if you scroll down a bit more, you'll find a 32-minute video interview with ex-Federal Reserve Chairman Paul Volcker. I thank reader U.D. for bringing this excellent story to our attention. It's entitled "Jim Grant: We Are Now All Lab Rats of Bernanke...and the Fourth Branch of Government"...and the link is here.
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Deutsche Bank: Western Economies Are Screwed, And Investors Face A 'Disturbing Paradox'
In a new report entitled Gold: Adjusting For Zero, Deutsche Bank analysts Daniel Brebner and Xiao Fu paint an incredibly dark picture of the bind the global economy is in right now.
Brebner and Xiao are pretty frank about how levered up the financial system is at the moment, and they warn that the next shock will be totally involuntary and unexpected.
This short businessinsider.com story was posted on their website during the New York lunch hour yesterday...and I thank Roy Stephens for his second contribution in today's column. The link is here.
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David's Mail Box
God bless you and your entire family, David.
I know M.F. was one of the best connections that came along to me a few years back. I tell everyone slightly interested to get on your mailings and buy PMs.
Hopefully, some will, and the others will find out soon enough how difficult it will be to afford them, if they are available by then.
If PMs become too expensive for most, as I quite believe they will, local coin dealers will run out even in small amounts or they will not be able to pay the price to acquire them.
I can just see little old ladies trying to turn in the family silver to obtain cash to either survive or buy PMs at that point and the shops will not be able to assist.
Anyway, I consider you all very special, indeed.
Melanie
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Stocks
Stocks will finally start its much awaited correction, as our "weight our evidence" tilts heavily to the bearish side, despite Ben Bernanke's open-ended policy of money printing to support equities. However this does not appear to be the final high. After the correction runs its course, we expect another stab at new highs -- which should do it.
Bearish evidence is as follows: Bearish Weekly Squat on smallest range in 23 months; Highest Call/Put readings in 23 months; Dramatic falloff in NYSE 52 week highs; Triple Bearish momentum divergences; Accumulation/Distribution readings remain Bearish - though improved - and the reason why it's likely there is another attempt at new highs; Failure in market leadership as New Economy sector records 6 week low vs Old Economy. Maximum downside at this juncture is SPY 137.34, with likely termination points 141.17 - 139.29, before the the bounce-back rally begins.
Gold
Last week, we forecast a potential upside on the GDX to 55.20, before a correction to begin. On Friday, our target was hit. Actual high 55.25! This brings the stunning advance to 36.8% over 9 weeks -- and time for a pause. The next important target is 58.93, but the market will not get there on this run. Volume has simply not kept pace with price, and a modest pullback is in order. Other reasons for a pullback at this time: Bearish Weekly Squat on the smallest weekly range in 9 weeks and bullion recording a 7 month high above its 55 week moving average -- an overbought reading. Originally we believed the magnitude of the correction in the 10% - 13% range. This has now been shortened to 7% - 9% because of recent new bullish fundamantals that have emerged - namely the unprecedented financing arrangement by Cluff Gold and Samsung, (courtesy of Jim Sinclair) which will put the lid on excessive short selling by the hedgies and HFT's. When the GOOGLE's, MICROSOFT's, APPL's and CSCO's of the world realize that investing in real money in the ground is far better than depreciating Dollar balances (or any other fiat currency) in the bank, the gold sector will become the favored sector for the next decade. Look for GDX support 51.47 - 50.12 over the next 5 - 8 weeks.
Dollar (UUP)
The Dollar (UUP) found support around 21.70, and a dead cat-back bounce is likely over the next few weeks, with 22.15 - 22.35 targets. The Dollar remains solidly entrenched in a bear market and eventually new lows will be seen.
Massive support in the UUP 21.35. which is destined to be broken.
Interest Rates (TBT)
Long rates declined slightly last week after the huge run-up the week before. The low in rates have been seen. Next higher levels in TBT 17.41, 17.97, 18.57 and eventually 21.10. The bull market is over in Treasuries and because inflationary expectations will soar in 2013, and beyond, we expect to see a 28 handle in TBT.
Bernie Mitchell
www.feargreed.com
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About Miles Franklin
Miles Franklin was founded in January, 1990 by David MILES Schectman. David's son, Andy Schectman, our CEO, joined Miles Franklin in 1991. Miles Franklin's primary focus from 1990 through 1998 was the Swiss Annuity and we were one of the two top firms in the industry. In November, 2000, we decided to de-emphasize our focus on off-shore investing and moved primarily into gold and silver, which we felt were about to enter into a long-term bull market cycle. Our timing and our new direction proved to be the right thing to do.
We sell over $100 million a year in gold, silver, platinum and palladium. We are rated A+ by the BBB. We are recommended by many prominent newsletter writers including Doug Casey, David Morgan, Jean Paul Louvet, LeMetropole Caf�. Our reputation for service, education, quality product and pricing is outstanding. 
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