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What Gold Is Saying ...

Larry Edelson | September 24, 2012

New, unlimited money printing from the Federal Reserve. Unlimited euro printing from the European Central Bank. And that's not all.

Japan's central bank is printing more yen. The Bank of England is on the fray as well, announcing even more pound printing.

And yet, as you can see from this chart, the price of gold has not even bettered this year's March high at roughly $1,802, nor last year's November high at the $1,823 level.

Despite all the money printing, gold has not even made new highs above those levels.

All that money printing, and gold is nearly $150 below its all-time record high.

So where's the beef? Where's the evidence that gold is now headed to $5,000?

Where's the evidence that all that money printing is overpowering the credit contraction that's occurring nearly worldwide?

Where's the evidence that inflation is about to break out to the upside and send the U.S. economy into hyperinflation?

There isn't any.

In fact, gold is telling you exactly the opposite: That more debts are about to be liquidated than the central banks can offset with money printing.

That inflation has not yet broken out to the upside.

That there isn't even record demand for gold right now; instead, demand is actually slumping.

Look, I would love nothing more than to tell you that gold has finally embarked on its next leg up to $5,000-plus.

But the fact of the matter is that there is no evidence that it has. Period.

That evidence may yet come, but until it does, I'm not willing to stick my head out and load up on more gold. Nor should you.

So let me state for the record: I will NOT change my interim forecast for gold to go bullish until spot gold has closed above $1,823 an ounce on a weekly and monthly basis. That will be the signal that gold's next leg up is beginning.

Until then, gold remains highly vulnerable to a move back down to the $1,400 level, perhaps even a tad lower.

Until then, gold remains highly vulnerable to the kind of action we saw this week in crude oil. Crude oil, with all the geopolitical tension with Iran and in the Middle East - coupled with all the money printing - should be soaring, right?

Well, dead wrong. The price of oil collapsed this week, plunging more than $9 a barrel - a full 9.4%, in a matter of days.

Or gold may end up looking like the rout that occurred in the grain markets this week, where soybean prices plunged 8.4% - despite nearly everyone remaining wildly bullish on food prices.

Don't get me wrong. I am extremely bullish on gold prices over the long term.

And I will issue the signal to buy more gold as soon as the coast is clear and we see, as mentioned above, gold close above $1,823 on a weekly and monthly basis.

So then, the question of the day must be: With all the money-printing going on, why hasn't gold broken out yet?

Why is gold below its March 2012 and November 2011 highs?

To me, the reasons are simple:

First, money printing means absolutely nothing when most of the money being printed is merely ending up sitting in banks. The banks are not lending and, instead, that money is parked back with the Federal Reserve in the form of excess reserve deposits, for which the Federal Reserve is paying 0.25% interest to the banks!

Second, all that money-printing means nothing when consumers aren't interested in adding to debt by increasing their borrowings and credit lines ... and the velocity of money, or its turnover, is virtually non-existent.

Ditto for corporations that are conserving cash and largely paying down or refinancing debt rather than taking on new debt.

Third, all the money-printing means practically nothing when Europeans are still scared to death the euro will fail, and are pulling their money out of European banks like there's no tomorrow; some $465 billion in capital has fled the euro region in the past three months alone.

In short, money printing by itself means nothing. If it did, gold would already be at new record highs. And it's not.

The dollar would already be at record lows. And it's not.

Crude oil would be soaring. And it's not. Most other commodities would also be soaring. They're not, either.

All the conditions necessary for the next leg up in gold and commodities are not here yet.

So if you think it's a no-brainer now that gold is taking off to the upside like so many investors and analysts do think, I urge you to be skeptical and very, very careful.

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The Simple Case for Gold

by Martin D. Weiss, Ph.D.

If you haven't met my good friend Charles Goyette, now's the time to do so.

He's the author of the New York Times bestselling book, The Dollar Meltdown and the recent blockbuster release, Red and Blue and Broke All Over.

He's frequently been on Fox News, CNN, MSNBC, PBS, CNBC and the Fox Business Channel - on shows with Bill O'Reilly, John Stossel, Judge Napolitano, Bill Moyers, Lou Dobbs and others.

Lew Rockwell, the chairman of the prestigious Ludwig von Mises Institute, says, "Charles Goyette has been a rare beacon of freedom and common sense."

And Congressman Ron Paul writes: "My friend Charles Goyette does a great job explaining why America faces a looming financial crisis and outlines common sense strategies for individuals to protect themselves and their families."

These endorsements are impressive. But what's even more impressive are his credentials in helping investors make money.

Before the great gold and silver bull market of the late 1970s, Charles Goyette helped thousands of investors get in on the ground floor.

In the 1990s, as U.S. stocks enjoyed one of their biggest rises in history; he helped investors take advantage of that boom as well.

And since the 2000s, the team he has assembled recommended 646 winning trades in gold, bonds, stocks and a variety of other markets.

Today, however, we have a totally different environment for two reasons:

First, the looming Fiscal Cliff - the largest-ever combination of federal tax hikes and spending cuts - could hit the economy like a ton of bricks starting January first.

And second, in a desperate attempt to soften the blow, the Federal Reserve has announced UNLIMITED money printing.

I know of few people more knowledgeable about BOTH the Fiscal Cliff AND the Fed than Charles Goyette.

So to get his latest insights about how these two dramatic events will impact markets during this heated political season, I just talked to him at length.

Here's a condensed transcript of our interview ...

Martin Weiss: Good morning, Charles!

By announcing unlimited money printing, it seems Fed Chairman Bernanke is trying to fight the Fiscal Cliff single-handedly. Do you think that that can work?

Charles Goyette: Not a chance! Bernanke himself admits he can't go it alone - that the Administration and Congress must reach a grand bargain on the Fiscal Cliff.

But they were unable to do so last year during the great budget ceiling battle. With just 54 days after the election, it's highly unlikely they'll be able to do so this year either.

Let's face it: Unlimited money printing doesn't stop the Fiscal Cliff, balance the budget or even do much for the economy.

Unlimited money printing means only one thing: Unlimited gold prices!

Martin: Some analysts seem to think that's an oversimplification.

Charles: Quite to the contrary! Any second-guessing of this simple case for gold can only lead you to obfuscating the obvious and missing major profit opportunities.

Just connect the dots:

As the U.S. Fed prints dollars in unlimited amounts, it devalues the dollar.

As the European Central Bank prints unlimited amounts of euros, it devalues the euro.

As the Bank of Japan jumps in to print unlimited quantities of yen, it also devalues the yen.

And as these three major currencies go down, so do virtually all other paper currencies in the world.

Martin: There's no way any paper currency can hold up with the word's three most important currencies sinking in value.

Charles: Exactly! There's only ONE kind of money they cannot devalue: Gold. As paper currencies fall, gold surges. No two ways about it.

Just look what Mr. Bernanke has ALREADY done:

* He has defied thousands of years of history - Rome before its collapse ... Germany before World War II ... Brazil in the 1960s and '70s ... plus dozens of other rampant inflations.

* He has ignored evidence of rapidly diminishing returns for the economy - more effort, less impact.

* He has apparently overlooked new evidence of inflation - consumer and wholesale prices accelerating to the upside.

* And it looks like Mr. Bernanke has even rebuked his own experts, deciding to put the pedal to the metal with QE3.

At this rate, the Fed's balance sheet will be about 24% of U.S. GDP by Christmas 2013!

So the scope of Bernanke's money printing is breathtaking, and it's being duplicated around the world. The European Central Bank is printing money, China is printing money, and now Japan as well.

It's a global phenomenon moving at breakneck speed. And it's lighting a fire under gold like none other in modern history.

Martin: When?

Charles: It has already started. Some wise investors saw that the Fed was going to embark on QE3. So they've been bidding up gold prices in the summer - in advance of the news itself.

But this is a lot more than QE3 - for several reasons:

First, like I said, it's unlimited. QE1 and QE2 were capped. This one isn't.

Second, for the first time, the Fed is targeting unemployment - not inflation. And we all know how tough it is to get unemployment down. After all - if the $1.8 trillion the Fed has already printed failed to solve America's jobless problem, what makes anybody think another $40 billion a month can do the trick?

Third, it's GLOBAL.

Plus, there's one more joker in the deck - flight capital! The prospect that global investors will rush to gold in panic!

Martin: Hold on for a sec. If there's a major calamity in Europe, wouldn't some Europeans be forced to dump some of their gold to raise cash?

Charles: Of course. I'm not saying gold will go straight up. There's always some vulnerability on the downside. But those are just interim moves.

For example, at some point, as things slow down in China, around the world, and particularly in Europe, we could again see some money rushing into the dollar, temporarily depressing gold. But if it happens, it will just be the prelude to the next gold price explosion.

The dollar is like the wooden shack at the beach. You've got a company picnic going on and it starts to rain. So everybody runs for cover under the shack. That's the dollar.

But when the downpour turns into a massive hurricane, the shack is worthless, you want to be holed up in a house made of brick and mortar, something durable for the duration - gold.

Martin: For years, we've heard that only a small fraction of the world's wealth is in gold. So if only a very small additional percentage of the world's wealth shifts to gold, that alone would drive it through the roof.

For example, the U.S. mortgage market is four times larger than the gold market. The market for foreign currencies, most of which are being devalued, is 44 times larger. And the global market for derivatives is 500 times larger!

Charles: Agreed. Plus, here's another stat for you: If a currency crisis drives each American to own just one ounce of gold, that's 311 million ounces - enough to take down ALL of the world's new gold mine production for almost 3� years.

But that's just U.S. citizens! The rest of the world's gold demand will also surge in response to falling paper money.

And many people will want to own much more than a single ounce of gold as global money printing goes into overdrive.

Martin: Is that also why gold has been moving up?

Charles: Hard to say. But for the most part, the American people are not yet gold buyers. Sure, they see a lot of gold ads on TV, but most have no experience with gold and don't own any.

So just the prospect of more Americans moving into the gold market, each buying gold in very small amounts, leads to the conclusion that gold prices could balloon.

Martin: Typically it seems that there are big capital movements swinging back and forth between the euro and the dollar.

Charles: Yes, and when both currencies are devalued, then capital turns to the Japanese yen. But if Japan is also a locus of major money printing, the only currency left is gold. All the others are strictly irredeemable pieces of paper. This is obvious to us. Still, though, most average investors haven't caught on yet.

Martin: So who is bidding up the price of gold?

Charles: Primarily some sophisticated and institutional investors. You have central banks moving into gold. They get it. You also have hedge funds beginning to understand it.

Consider Kyle Bass, currently on the board of the University of Texas as a financial advisor. He moved them into a billion dollars of physical gold. They actually took possession of the bullion - moved it to their own warehouse.

Martin: Earlier, you said that unlimited monetary expansion means unlimited gold prices. Can you expand on that?

Charles: With QE1 and QE2, the Fed knew that it was playing with fire - inflationary fire. It knew it was using a monetary weapon of mass destruction.

So by capping each QE program, the Fed was trying to assuage its critics. It was sending the message:

We know we're committing a monetary sin, but at least we are exercising some semblance of restraint.

Martin: And now?

Charles: Now the Fed has abandoned its last vestige of restraint, effectively saying:

We have no clue what the consequences of unlimited money printing will be, but we're going to do it anyhow!

Martin: This is ugly.

Charles: And it gets even uglier when you consider the ability of the U.S. to repay its debt.

We all know about the $16 trillion national debt. But as Professor Kotlikoff at Boston University says, it's not just $16 trillion. We have to also look at unfunded liabilities - things like Social Security and retirement plans that people in this country are counting on.

These unfunded liabilities aren't just a number on a piece of paper. They're real core debts and obligations that the U.S. has to retirees, veterans, Medicare recipients, and many other people.

So people ARE counting on them. Virtually every financial plan for individuals incorporates them. That's one reason why they are very real and have a real impact.

Every business in America depends on its customer base, which, in turn, depends on its income. And that income relies on the government commitments to average Americans.

Professor Kotlikoff says the visible debt of $16 trillion is just the tip of the iceberg. The big part of the iceberg is below the waterline, and the total unfunded liabilities - what he calls the "fiscal gap" - is now $222 trillion!

Martin: More than ten times larger than funded debt!

Charles: Yes, and simply impossible to repay.

The ultimate arbiter - the final judge - of all this must be the price of gold.

Gold will respond to a double-barreled shotgun: BOTH the country's massive debt load AND the Fed's money printing.

The combination of these two is frightening. In fact, it's precisely the same combination that doomed other countries to rampant inflation and ultimate decline.

It's the same problem we've seen over and over again: Chronic insolvency covered up with massive injections of liquid cash.

Martin: Please sum it all up in just a few words.

Charles: Sure. The Fed's unlimited money printing and the nation's fundamental insolvency is creating a double calamity.

They're pushing up the quantity - and pushing down the quality - of the U.S. dollar! Off the charts!

And this means gold should go off the chart to the upside.

It's that simple.

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September 24, 2012

The US faces a one trillion dollar debt. How will the US get the money to pay off this frightening deficit? The Fed will buy mortgage-backed securities from the banks at the rate of $40 billion a month, thus re-liquefying the banks. The banks will then spend the money on Treasury bonds.

Thus, the Fed will accomplish a few things -- the banks will be rendered more liquid, and the Dow and mortgage-backed securities will probably be lifted. But what happens when the banks are cleared of all their mortgage-backed securities? Maybe the Fed will buy straight mortgages, I don't know, and I'm not sure that the Fed knows. Maybe the Fed just wants to sneak by the election, and later they'll address the problems.

Meanwhile, the Fed will continue to talk up the economy. But I believe it's the Transports that are telling us the real story regarding the US economy -- and to put it politely, the Transport have been crashing. Question -- could the real story about the US economy be that the US economy has been crashing too? We depend to a large extent on the government and the Fed to tell us what is happening, and government statistics can lie (as, for instance, the government's phony statistics on inflation).

With the banks "relieved" of their mortgage-backed securities and loaded with fiat currency, the banks will be in a stronger position, and the Fed will own tons of mortgage-backed securities. What will the Fed do with billions of dollars worth of mortgage-backed securities? Maybe hold them until maturity and then hide the losses in their books.

So the net result will be that the banks will be in better shape, and the Fed's balance sheet will be in worse shape.

What happens in 2013 when we face the next trillion-dollar deficit? Damned if I know -- maybe they'll come up with a new monetary system. Or maybe they'll boost the price of gold and pay off the deficit with devalued dollars. Or maybe, we've come to the end of the line with Fed-created, fiat junk currency.

Subscribe to the Dow Theory Letters to read the full article.

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Is gold heading to $4,500?   Commentary: Are gold fundamentals, technicals most bullish ever?   By Peter Brimelow, MarketWatch Aug. 23, 2012, 2:04 a.m. EDT

NEW YORK (MarketWatch) - Gold makes its move. The bugs are rampant.

The yellow metal made life very difficult for commentators trying to keep a regular schedule on Wednesday.

MarketWatch's Claudia Assis can hardly have hit the send button on her story headed "Gold ends lower as other metals gain", which dealt with the close of floor trading - the December gold contract was down $2.40 - when the Fed minutes set the market roaring.

By the stock market close, gold had risen over $17 to stand 1% above Tuesday's stock market closing level and at the highest since early May.

Gold shares, too, came surging out of negative territory to finish with strong gains. The NYSE Arca Gold Bigs Index XX:HUI -3.08% closed up 2.21%, the highest since June 19 and up 17.2% since the recent low on July 24.

This late development followed a strong day on Tuesday, which saw a floor close in the CME December contract of up $19.90 (1.23%) and a 1.69% gain in the HUI.

This was enough to stimulate exuberant commentary by the Aden Forecast's GCRU service, published early Wednesday morning: "AND..... THEY'RE OFF! The markets have taken off. The train has left the station, and another leg up in the bull market is getting started."

Continue reading at MarketWatch.com

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GOLD - one year ago today

 

Last Friday gold closed down $7.50 to its price from one year earlier.  Gold started the year UP around $200 from its price from one year earlier.  It rose to nearly $300 ahead in the early spring, then it started to fall rapidly.  As of 11:00 a.m. today, gold is finally back UP.  It is UP $106.10!  The negative trend has now been reversed.  I have asked Laura, our editor, to compile a chart that will show the running trend for the past 12 months.  So far she has compiled the data from May 1st onward.  We now have it posted in the Gold Highlights section at the top of this newsletter.  My guess is that by December 31, gold will be around $300 higher than its number from one year ago.  This chart is will be very helpful to allow you to see how gold is performing this year compared to last year.  Gold is now well on its way to finishing the year way ahead of the previous year's close for the 12^th year in a row.  Good times are here again!

  

 

 

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Storage fees ARE tax deductible.

 

Our CPAs have confirmed that storage costs are in fact deductible as a legitimate expense and can be added to one's basis for calculating capital gains taxes.  This is another great reason for people to store with us.  The whole cost is tax deductible.  Depending on your federal and state tax rate, more than half of the cost of your storage can be written off on your tax return.  Now that's what I call a good deal!

 

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Fake Gold Bars

 

Most of you have by now read about the counterfeit gold bars that were discovered by a NYC merchant.  Bix Weir wrote the following on the subject on Monday.

 

Roota Warned You of Physical Gold/Silver Counterfeits in 2010 - Road to Roota

 

The FAITH BUBBLE is bursting. This crosses the entire spectrum of the investing world as people are finally discovering that the world they live in is a false paradigm filled with con men and corruption.

 

The latest con is something that had been rumored for years and yet never really hit the mainstream media and that is tungsten filled gold bars. Last week it hit the mainstream with a MINIMUM of 10 bars found to be tungsten filled. Here's ZeroHedge.com's take:

 

Gold Counterfeiting Goes Viral: 10 Tungsten-Filled Gold Bars Are Discovered In Manhattan

http://www.zerohedge.com/news/2012-09-23/gold-counterfeiting-goes-viral-10-tungsten-filled-gold-bars-are-discovered-manhattan

 

What has not been talked about is what the ratio of fakes-to-real is. Yes, they found 10 problem bars but what they didn't say is how many bars were tested. Were 100 bars drilled and 10 fakes found? That would be 10% fake-to-real ratio in this batch of gold bars. Or maybe only 20 bars were tested and 10 were found to be fake making it a 50% fraud ratio! Maybe only 10 bars were tested and all 10 were fake!

 

We just don't know and THAT IS THE PROBLEM!

 

Now ask yourself this...HAVE YOU DRILLED YOUR GOLD/SILVER BARS?

 

I guarantee you that 99.9% of you have not. Frightening reality.

 

But this is NOT new to subscribers to the Road to Roota. As a matter of fact, I was jumping up and down about this in March 2010! That gets me back to the importance of being EARLY in my future predictions rather than being LATE. Those who give time frames for the collapse in 2-5 years have been saying 2-5 years for over 10 years! They think it helps their credibility because they never right but never wrong. Ultimately they will be WRONG because they'll be saying 2-5 years until the day before the CRASH...then they will say I TOLD YOU SO!

 

Preparing yourself as if the crash is imminent will serve you much better than those taking your time thinking you have 2-5 years in perpetuity!

 

Now, here's the important part.  Here is an email I just received from our major supplier.  Counterfeit gold is really not a problem for you at all if you buy one ounce gold coins.  If you want bars, our supplier is on it and you can buy these too with confidence.  Rule Number One -Know who you are dealing with!  Miles Franklin has an A+ Better Business Bureau rating with no complaints on our record.

 

We are presently engaged with GE to acquire on of their Phasor XS ultrasound devices for detecting inserts within the larger bars. 

 

One-ounce coins would be very, very difficult to pull this off on, and it has never been found to have occurred anywhere. We have not seen this in 1-ounce bars, either. 

 

Between X-Ray and Ultrasound, we should be able to detect problems on any size products. However, this is a good reason to stay away from some of the older and larger gold bars, and stick with product such as Gold Eagles or the new Sunshine 1 Ounce Gold Bars with validator holograms. Counterfeiting gold eagles would bring the full weight of the US Secret Service down on someone, so it is unlikely to happen. They are going to go for easy marks like a Credit Suisse 10 Ounce Bar.

 

What needs to happen is that mints need to create impossible to counterfeit product, and all the old product can then be melted down and re minted in the new, improved form. 

 

Sunshine Minting, a company that supplies gold and silver coin blanks to the US Mint, has recently released a new bar with a validation "hologram" on the back of every bar. In order to view the code, you need a special lens. We are now carrying and distributing these bars as of last week.  

 

  

 

If a customer complains and it has been removed from the chain of custody, it would be a hard thing to prove just where it came from. Say a customer has a fake 10-ounce bar and decides the way he is made whole is by purchasing a 10-ounce bar from Miles Franklin and then switching the bars and calling to complain when it is received. 

 

The only way we could produce any binding guarantee would be to sell coins/bars that are sealed under tamper evident packaging of some sort. 

 

This is precisely why it is difficult to post delivery of futures contracts to COMEX members with silver or gold that is outside of the warehouse chain-of-custody. In order to get the metal into the vaults, it must go through an authorized weigh-master/assayer. 

 

 

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We still love Jesse Ventura here in Minnesota. He was quite the character while he was governor of the State of Minnesota. He was, if nothing else, refreshing and interesting. Here is the latest from old Jesse:

 

Jesse Ventura on CNN Piers Morgan - BrassCheckTV.com

 

Piers Morgan - former UK celebrity gossip columnist - does his best to keep

him in line and subtly ridicule him.

 

Excellent material on:

 

* Who's behind the latest wave of attacks

in Libya and elsewhere?

 

* The absurdity of the government's 9/11 theory

 

* The inherent scam of US politics

 

Video:

 

Jesse Ventura on CNN Piers Morgan Sept. 17th, 2012 Full Interview

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Gerald Celente-The First Great War of the 21st Century has Begun

By Greg Hunter's USAWatchdog.com

24 September 2012

 

Top trends forecaster Gerald Celente says, "The first great war of the 21^st century has begun, and people are afraid to call it what it is."  Celente says the extreme violence in in the Middle East and North Africa is Not because of a movie that pokes fun at Islam.  It's because of decades of bad U.S. foreign policy.  Celente calls people like Rudolph Giuliani a "s***head" and a "scumbag" for lying to the American people about the real reasons why the Muslim world is enraged.  Celente goes on to say, "If anybody says I went over the edge, this is a matter of life and death."  Celente also believes the world is being taken to war because the world economy ". . . is collapsing.  It's collapsing in front of our eyes.  The numbers are there."  Celente tells people to "buy gold and silver" to preserve wealth and says, "All around the world they are dumping dough into their economies to keep them going."  Join Greg Hunter as he goes One-on-One with Gerald Celente of the Trends Research Institute.

 

 

Big War of 21st Century Has Begun Gerald Celente

 

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