|Market Recap for
Thursday September 27, 2012
|Table of Contents
Click on the Links Below to Scroll to the Articles
- Quotes of the Day
- From David's Desk: Ranting Andy, Bill Holter and I don't always agree on everything but we all speak our mind. Check out the new chart we are putting up for you each day (gold one year ago today)
- Gold Highlights
- Bill Holter: 7 billion people is an enormous amount, divide this amount by the roughly 5 billion ounces that have been mined since the beginning of time and there is not even 1 ounce available per person on the planet!
- Zero Hedge: The topic of Bill Holter's essay - Presenting Warren Buffett's "Gold Cube"
- Jim Sinclair: QE to infinity is going to work, but not in the way that talking heads and MSM assume by their negative economic commentary. The impact of this political expedient will be colossal.
- Silver Coin Investor: How Gold and Silver Provide a Safe Haven in Today's Troubled World
- Darryl Robert Schoon: The Fed Is Trapped - Gold Is The Exit
- The International Man: Traveling With Precious Metals
- Odds & Ends
- About Miles Franklin
Private Meetings and Events
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|Quote of the Day
It is estimated that the Fed is pumping roughly $80 billion a month into the US economy. This will amount to around one trillion dollars a year. The Fed's balance sheet is off the charts, and I conclude that "QE to infinity" will be considered both insane and unsustainable.
- Richard Russell, Dow Theory Letters September 27, 2012
My advice remains -- hold few, if any, common stocks. And if you must spend your money, spend it on bullion gold coins. Store the coins in your vault and forget about the price of gold. What you'll really be tracking is the number of dollars that it takes to buy just one of your gold coins.
- Richard Russell, Dow Theory Letters September 26, 2012
December gold was down 12 dollars to 1753, but still bullishly above 1700. December Silver was down 8 to 33.94 but still drastically underpriced compared to gold. One ounce of gold buys a bit over 52 ounces of silver. Many silver bulls believe the ratio can drop from its current 52 to 30.
- Richard Russell, Dow Theory Letters September 26, 2012
We will know when full valuation occurs. It is not anywhere near here.
-Jim Sinclair, In The News Today September 26, 2012
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|From David's Desk
Check Out the New Chart We Are Putting Up For You Each Day
Overall, a pretty darn good day. Gold was up 1.39%, or $24.30 to $1,777.60. Silver was up $0.67 to $34.66. Gold has now breached resistance at $1,775. Let's see if it can hold it through Friday's close. Silver is still hovering just below its resistance at $35.
Jim Sinclair published the following article on Thursday. There are two topics that stand out. First, he will inform his followers to know when gold has peaked. Of course, so shall I. Second, he not only expects to be right in the first instance, he also expect expects his corporate success will equal his success in calling the top in gold. He is referring to his gold company, Tanzanian Royalty Exploration (TRX). My faith in Jim Sinclair runs deep and Susan and I have all of our mining share dollars (other than a tidy sum in a private placement with Doug Casey and Olivier Garret) in Jim's firm TRX. I believe that the most important factor to consider before buying sock in a mining company is management. My view is simply if Jim Sinclair can't pull it off, who can? TRX has done very well for us this year!
In The News Today
September 27, 2012, at 8:02 am
by Jim Sinclair
Jim Sinclair's Commentary
Major accomplishments, without self-realization, is a total life waste. Accolades, in truth, mean nothing. Don't you think knowing publicly that QE to Infinity was unavoidable years ago, and suggesting preparation for its colossal impact on economies for more than 10 years ought to get you say, a gold star? Nay, only the good old boys from Skull and Bones get such recognition. So far I have been privileged to have the best two market expectations possible in the history of markets, and the net result is if I charged for JSMineset, I might have five readers.
When we call full valuation of gold correctly, we will be forgotten forever. It could be that what you give away has only the value people pay for it. A conservative group in New York that I spoke for last year discussing all that has occurred did not invite me back to speak this year. On a March 2009 Bloomberg radio interview I called the bottom of the bear equity market within two weeks and gold's trip to $1650. That guarantees you will never hear from them again.
I owe you two more accomplishments. First a corporate success of the same caliber and then full valuation on gold. Assuming that I pull these last two major efforts off, and I know I will, then I will say goodbye to markets and company building forever. I am sure Bert and Jesse are proud of me.
Continue reading on jsmineset.com
Regarding the topic of mining shares - there are three of us who write for Miles Franklin. I am the owner, and I do. Ranting Andy Hoffman does and so does our recent affiliate Bill Holter. One thing that I insist on here at Miles Franklin is that every one of us has an obligation to write what we believe and our opinion does not have to fall in line with what the other writers are saying.
Ranting Andy is death on mining shares and with good reason. His personal experience in the industry and as an investor has left him with nothing but disdain and frustration with the sector. Bill Holter also worked in the industry and he is quite upbeat on the future of mining shares. He also says you should first have a very substantial core position of physical gold and silver and then you can use the shares as a high risk-reward investment that is leveraged to the price of the physicals.
My views are similar to Bill's. But I lean even heavier toward the physicals. Currently, my mix of physical to mining shares is 90-10. Eight years ago my mix was 50-50 and I made a great deal of money on the shares, which I then used to buy more physicals, for free. Interestingly, when I mentioned this to Bill, he said that was exactly what he did too.
We all think we are right but thinking it and being right are two different things. So read what each of us has to say and as always, think it through and make your own decision. The one thing we all agree on is that you must have a large core position in physical gold and silver. Beyond that, whether you own no mining shares, some or a lot is up to you. For me, I expect to increase the percentage of mining shares in my portfolio over the next six months, but remember, I already have all the physicals I will ever need, and they are safely stored offshore our Miles Franklin International Precious Metals Storage Program in Canada.
Just got a note from Ranting Andy.
It finally happened! Gold, priced in euro has just hit a new all-time high. So too will the dollar, but we might have to wait a few more months.
From ALL-TIME HIGH
Laura, our editor slipped this in yesterday, with little fanfare, but I want to call it to your attention.
This is a new chart I asked her to compose for our readers. It compares, in easy-to-follow format, where the price of gold is at the close of each day, compared to one-year ago. As you can see, up until recently, gold was falling way behind its previous year's performance. But now the tide has turned. It is rapidly moving ahead of last year and rest assured; gold will finish the year WAY ahead of last year's close in the mid $1,550s.
This is what the chart looked like yesterday. Note: gold was UP $125.30. That number should be rising almost every day from now on and could easily top $300 by year's end. (As I am putting the finishing touches on the Friday daily at 2:30 a.m. this number is now up to $170 and rising. That puts gold up 10.6% in the last year! Silver, which was looking pretty ugly earlier this year, is up 13.07% from last year on this day too.)
Just got some very important information from Deepcaster.
You may recall that last summer I posted comments from James Dale Davidson that warned of the impending loss of the Dollar's Petro-Dollar status. This is war on an economic level and threatens our very cushy lifestyle here in America. Do not take this trend lightly!
China announced on Sept. 6, 2012 that any country that wishes to sell Crude Oil using its currency, the Renminbi, can do so. The next day Russia announced it will sell China all the Crude it wants and will not expect to be paid in $US.
These actions struck a Mortal Blow, whose consequences are not yet fully evident, to the US Dollar as the World's Reserve Currency, and thus to the future Economic Health of the U.S., a blow which will eventually impel it toward Third World status.
Formerly a main source of strength of the $US was the arrangement with Saudi Arabia whereby Crude would be sold only in US Dollars. Since the World had to have Saudi Crude, it had to have $US. Not so anymore.
China and Resource-rich Russia are ascending economically while the US and Western Europe are in a decline.
Couple that New Power Reality with another New Reality, the accelerating decline in Purchasing Power of the Main Fiat Currencies, the $US and the Euro.
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BFI Wealth, Zurich - Swiss Annuities and Managed Accounts
Miles Franklin and BFI Consulting of Zurich, Switzerland, have partnered for the past two decades in offering access to offshore annuities and managed accounts. Born at roughly the same time in the early 1990s, both firms have successfully PROTECTED clients via quality, secure, private accounts holding PHYSICAL Precious Metals, annuities, and other managed products. BFI is a global leader in the sale and maintenance of Swiss annuities and privately managed accounts - particularly to U.S.-based clients; and through its Global Gold subsidiary - utilizing worldwide storage leader Via Mat - offers international Precious Metal storage services in Switzerland, Hong Kong, and Singapore. As with Miles Franklin's Canadian offshore storage program, Global Gold offers allocated storage OUTSIDE the banking system.
|Bill Holter, Associate Writer for Miles Franklin
How precious is it really?
Published: September 27th, 2012
Zerohedge did a very short piece yesterday on the required "size," (Presenting Warren Buffett's "Gold Cube") or lack of which would be needed to house ALL of the Gold mined in history. The graphic is excellent and I urge you to look and stare at it for a minute or more. While looking at this, envision one of the recent "McMansions" that have sprung up all over the place, envision a floor plan with 4,000 sq. ft.. Then picture that square floor plan as high as it is deep, roughly 65 feet high (not very high considering that I am afraid of heights and jumped into well from this height). That's it, ALL of the Gold in the world, all of the jewelry, all that is hoarded and all that the central banks purport to own, ALL of it.
Next, think about the few ounces that you've accumulated and picture it sitting in the corner of this McMansion of storage. It seems insignificant you say? Have you ever been to downtown NY or Chicago or any other metropolitan area? Or even a sporting event with 50,000 people? Think about each one of those people, what if they also had the few ounces saved that you do and theirs were part of of the storage block... but wait, they don't! In the US, less than 1% of the population owns any Gold other than maybe a wedding ring or a "Mr. T starter kit." Worldwide it is probably not much higher.
The picture that I'm trying to paint in your mind is just how RARE Gold really is and just how under owned it is. Think about it, less than 1 out of 100 own any Gold for investment at all and many of these are merely paper receipts. Mathematically, ALL THE "MONEY" in the world will accrue back into Gold when the cascade of fiat collapse happens. This McMansion storage unit will become the base, the backing, the CORNERSTONE of ALL monies for 7 billion people! ...And the best part? You actually have a slice of this pie! In fact, even with just 10 ounces, a MUCH bigger slice than you currently even realize!
The point is this, 7 billion people is an enormous amount, divide this amount by the roughly 5 billion ounces that have been mined since the beginning of time and there is not even 1 ounce available per person on the planet! So, if you agree with the idea that "Gold IS money" (and I highly advise that you do because it IS), every time that you purchase just 1 single ounce you are taking MORE than one other inhabitants available portion.
This is by no means "breaking news" of any sort. I just wanted to help you take a step back and look at the entire "forest" and just how small it really is. I wanted to try to make it as simple as possible when viewed from the standpoint of just how insignificant each and every one of us are coupled with the fact that there is less than 1 ounce available per person. If you can wrap your mind around the concept that literally $ trillions upon $ trillions of paper value will accrue into the 5 billion ounces of Gold, you will have the knowledge necessary to survive financially. This is not rocket science, it is not even math that requires a calculator. It is pure and simple common sense which has apparently not dawned on better than 6.9 billion people on the planet!
Read more Bill Holter articles on the Miles Franklin Blog
Reliable Financial Advisors
In a world of heightened speculative and counterparty risks, finding someone you can trust may be the most important research you do. Miles Franklin does not sell stocks, but is frequently asked if we know of reputable, full-service brokers. WE DO NOT CONDEMN OR CONDONE EQUITY INVESTMENTS, but want investors with such interest to be honestly and competently handled.
In resource stocks, the folks at Sprott Global Resource Investments - managed by Eric Sprott and Rick Rule - are the best in the business. In various capacities, we have worked with Eric Angeli, Jeff Howard, Kenton Toews, Mishka vom Dorp, Jason Stevens, Anthony Marsh, and Andrew Jackson - all of whom are diligent, ethical, and knowledgeable. That style of business is indicative of the reputation Global has built over the past 25 years. You can feel comfortable with any of their brokers, reachable at 800-477-7853.
For all other stocks - including large cap gold, silver and other resource equities - Nick Shermeta, from Northland Securities here in Minneapolis, is as trustworthy and knowledgeable as they come. Nick is a Senior Vice President with more than 20 years experience, but will treat you as if you were his only client. You can reach Nick at 612-851-5908, or by email at email@example.com.
The common denominator is decades of Wall Street experience, which should give you comfort that well-seasoned and weathered hands are helping manage your portfolio. Notably, we do not receive compensation for these recommendations. We just want you to know that if they are good enough for us, they should be good enough for you too.
Presenting Warren Buffett's "Gold Cube"
Submitted by Tyler Durden on 09/26/2012 13:35 -0400
Recall from Warren Buffett's 2011 letter to investors:
Today the world's gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce - gold's price as I write this - its value would be $9.6 trillion.... You can fondle the cube, but it will not respond.
Below is what said gold cube containing all the world's gold would look like, with distinctions for the various types of gold currently in existence:
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In The News Today
September 26, 2012, at 4:48 pm
by Jim Sinclair
My Dear Friends,
QE to infinity is going to work, but not in the way that talking heads and MSM assume by their negative economic commentary.
The impact of this political expedient will be colossal.
There is no other tool in anybody's toolbox so this is it.
Quantitative Easing Did Not Work For The Weimar Republic Either
Did printing vast quantities of money work for the Weimar Republic? Nope. And it won't work for us either. If printing money was the secret to economic success, we could just print up a trillion dollars for every American and be done with it. The truth is that making everyone in America a trillionaire would not mean that we would all suddenly be wealthy. There would be the same amount of "real wealth" in our economy as before. But what it would do is render our currency meaningless and totally destroy faith in our financial system. Sadly, we have not learned the lessons that history has tried to teach us. Back in April 1919, it took 12 German marks to get 1 U.S. dollar. By December 1923, it took approximately 4 trillion German marks to get 1 U.S. dollar. So was the Weimar Republic better off after all of the "quantitative easing" that they did or worse off? Of course they were worse off. They destroyed their currency and wrecked all confidence in their financial system. There was an old joke that if you left a wheelbarrow full of money sitting around in the Weimar Republic that thieves would take the wheelbarrow and they would leave the money behind. Will things eventually get that bad in the United States someday?
Of course we are not going to see hyperinflation in the U.S. this week or this month.
But don't think that it will never happen.
The people of Germany never thought that it would happen to them, but it did.
The following is an excerpt from a Wikipedia article about the Weimar Republic. Take note of the similarities between what the Weimar Republic experienced and what we are going through today....
The cause of the immense acceleration of prices that occurred during the German hyperinflation of 1922-23 seemed unclear and unpredictable to those who lived through it, but in retrospect was relatively simple. The Treaty of Versailles imposed a huge debt on Germany that could be paid only in gold or foreign currency. With its gold depleted, the German government attempted to buy foreign currency with German currency, but this caused the German Mark to fall rapidly in value, which greatly increased the number of Marks needed to buy more foreign currency. This caused German prices of goods to rise rapidly, which increase the cost of operating the German government, which could not be financed by raising taxes. The resulting budget deficit increased rapidly and was financed by the central bank creating more money. When the German people realized that their money was rapidly losing value, they tried to spend it quickly. This increase in monetary velocity caused still more rapid increase in prices, which created a vicious cycle. This placed the government and banks between two unacceptable alternatives: if they stopped the inflation this would cause immediate bankruptcies, unemployment, strikes, hunger, violence, collapse of civil order, insurrection, and revolution. If they continued the inflation they would default on their foreign debt. The attempts to avoid both unemployment and insolvency ultimately failed when Germany had both.
When the Weimar Republic first started rapidly printing money everything seemed fine at first. Economic activity was buzzing and unemployment was very low.
But as the following chart shows, when hyperinflation kicks in, it can happen very quickly. By late 1922, the effects of all of the money printing were really starting to hit the German economy....
Once you start printing money it is really, really hard to stop.
By late 1922, inflation was officially out of control. An article in The Economist described what happened next....
Prices roared up. So did unemployment, modest as 1923 began. As October ended, 19% of metalworkers were officially out of work, and half of those left were on short time. Feeble attempts had been made to stabilize prices. Some German states had issued their own would-be stable currency: Baden's was secured on the revenue of state forests, Hanover's convertible into a given quantity of rye. The central authorities issued what became known as "gold loan" notes, payable in 1935. Then, on November 15th, came the Rentenmark, worth 1,000 billion paper marks, or just under 24 American cents, like the gold mark of 1914.
Hyperinflation hurts the poor, the elderly and those on fixed incomes the worst. The following is an excerpt from a work by Adam Fergusson....
The rentier classes who depended on savings or pensions, and anyone on a fixed income, were soon in penury, their possessions sold. Barter often took over from purchase. By law rents could not be raised, which allowed employers to pay low wages and impoverished landlords in a country where renting was the norm. The professional classes - lawyers, doctors, scientists, professors - found little demand for their services. In due course, the trade unions, no longer able to strike for higher wages (often uncertain what to ask for, so fast became the mark's fall from day to day), went to the wall, too.
Workers regularly got wage increases during this time, but they never seemed to keep up with the horrible inflation that was raging all around them. So they steadily became poorer even though the amount of money they were bringing home was steadily increasing.
People started to lose all faith in the currency and in the financial system. This had an absolutely devastating effect on the German population. American author Pearl Buck was living in Germany at the time and the following is what she wrote about what she saw....
"The cities were still there, the houses not yet bombed and in ruins, but the victims were millions of people. They had lost their fortunes, their savings; they were dazed and inflation-shocked and did not understand how it had happened to them and who the foe was who had defeated them. Yet they had lost their self-assurance, their feeling that they themselves could be the masters of their own lives if only they worked hard enough; and lost, too, were the old values of morals, of ethics, of decency."
Of course not everyone in Germany was opposed to the rampant inflation that was happening. There were some business people that became very wealthy during this time. The hyperinflation rendered their past debts meaningless, and by investing paper money (that would soon be worthless) into assets that would greatly appreciate thanks to inflation, many of them made out like bandits.
The key was to take your paper money and spend it on something that would hold value (or even increase in value) as rapidly as possible.
The introduction of the Rentenmark brought an end to hyperinflation, but the damage to the stability of the German economy had been done. The German economy went through several wild swings, which ultimately resulted in the rise of the Nazis. The following description of this time period is from an article by Alex Kurtagic....
The post-hyperinflationary credit crunch was, not surprisingly followed by a credit boom: starved of money and basic necessities for so long (do not forget the hyperinflation had come directly after defeat in The Great War), many funded lavish lifestyles through borrowing during the second half of the 1920s. We know how that ended, of course: in The Great Depression, which eventually saw the end of the Weimar Republic and the beginning of the National Socialist era.
By the end of the decade unemployment really started to take hold in Germany as the following statistics reveal....
Jim Sinclair's Commentary
Neither of our candidates are stupid enough to allow the country and world to drop into a black hole they can prevent by simply kicking the can down the road. You do not need "Carnac the Magnificent" to know whomever is president this black hole will meet, be it a Democrat or Republican boot. This will be a 100 yard field goal but not with a football, rather a can. Nothing else is possible
The fact that nothing is yet done about this pending disaster proves how political the legislative is. The fact that it has not yet been approached is proof it will be kicked a year or more forward.
Obama vs. Romney: How they'd handle the $7 trillion fiscal cliff By Jeanne Sahadi @CNNMoney September 26, 2012: 8:41 AM ET
NEW YORK (CNNMoney) - It's one of the biggest decisions facing Congress: what to do about the fiscal cliff - the $7 trillion worth of tax increases and spending cuts that start taking effect next year.
Two major sticking points: whether to extend some or all of the Bush tax cuts and how to replace the nearly $1 trillion in spending cuts.
Handled poorly, things will be a mess.
Handled smartly ... well, there likely will be just varying degrees of mess. That's because Congress has now left virtually no time to arrive at a thoughtful bipartisan resolution before the changes go into effect.
Lawmakers are too busy waiting for the results of the November election before they'll address the issue seriously.
So how would the two men vying for the White House in 2013 handle things?
Barack Obama: Tax on rich is key
Jim Sinclair's Commentary
Here is a key element of QE3 to consider.
"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."
I might add with less than 2 weeks of "QE to infinity" being openly practiced and every numb-nut yelling QE 3 will do nothing inside and outside our gang, you have to know it is an operation to make the most in gold over the shortest time by the Muktars of Wall Street. That would just be a redo of 1979.
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THE FED IS TRAPPED - GOLD IS THE EXIT
Posted Wednesday, 26 September 2012
Darryl Robert Schoon
47% of US investors dependent on the Fed believe they are victimized by government, who believe they are entitled to enough liquidity to profit when risk is laid-off onto others, to society, to you-name-it...
On September 13th, the Fed announced QE3, a policy of open-ended bond purchases, which would add $1 trillion annually to the Fed's balance sheet. The Fed's decision to provide liquidity ad infinitum, i.e. QE etc., was framed in reasonable and carefully chosen language:
...These actions, which together will increase the Committee's holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative...
The measured wording gave the Fed sufficient cover to mask its increasingly desperate condition, i.e. how to keep its fatally-wounded credit and debt Ponzi-scheme functioning while searching for a solution that doesn't exist.
CAPITALISM'S CONSTANTLY COMPOUNDING DEBT IS THE DEVIL'S WHIP OF GROWTH
In capitalist economies, capital, i.e. money, is introduced by central banks into the economy in the form of loans; and because interest constantly compounds, economies must constantly expand in order to pay down and/or service those loans. This is why economists in capitalist systems are obsessed with growth.
Capitalism is, in actuality, a smoke and mirrors shell game where credit and debt have been substituted for money; and, as long as capitalism expands no one is the wiser because the fraud is so subtle. Capitalism, however, is no longer expanding. It is contracting.
Capitalism reached its peak in 2008 when Greenspan's historic credit bubble burst. What investors believed was a finely-tuned balancing act between credit and debt orchestrated by Fed Chairman Alan Greenspan turned out instead to be a speculative bubble fed by Easy Al's easy credit from the Fed's 24/7 discount window..
While Greenspan presided over the greatest credit expansion in the history of capitalism, Greenspan also presided over two of its largest speculative bubbles-the 1996-2000 dot.com bubble and 2002-2007 US real estate bubble. Greenspan would later refer to evidence of these bubbles as 'froth'; to those who lost homes and fortunes, it was blood.
THE 1990 JAPANESE NIKKEI - THE MOTHRA OF ALL BUBBLES
The collapse of Greenspan's two massive bubbles followed the spectacular collapse of the Japanese Nikkei. The catastrophic crash of Japan's stock market in 1990 was the world's largest since the US stock market had collapsed in 1929.
In Time of the Vulture: How to Survive the Crisis and Prosper in the Process, I wrote: ...fueled by excessive amounts of liquidity, [the price of Japanese real estate and stocks] exploded upwards. Japanese real estate prices increased 70 times over and stock prices increased over 100-fold, with the Nikkei reaching a market top at 38,992 in January 1990.
As with all speculative bubbles, the Nikkei collapsed-and the collapse of the Nikkei in 1990 unleashed deflationary forces not seen since the Great Depression of the 1930s. Prices of stocks and real estate in Japan began a long and steep multi-year descent.
Commercial real estate lost 80 % of its value in the next decade and the Nikkei fell from 38,992 in 1990 to 8,237 in 2003. Deflationary cycles are long and protracted and if not stopped will become deflationary depressions, an economic phenomenon for which there are no ready answers.
In 1990, Japan escaped a complete deflationary collapse only because Easy Al's credit bubble was underway in the West. Rising credit-driven Western demand combined with Japan's high savings rate helped slow Japan's inexorable descent into deflation. Nonetheless, after 1990, Japan would need to borrow increasingly large amounts of money in order to survive and borrow it did.
After the 2008 economic rendering, the central banks of the US, the UK and Europe have joined Japan in the desperate need to constantly increase money-printing to keep their economies afloat; and while reviving growth is their announced goal, the unspoken intent is to avoid a fatal deflationary collapse in demand.
As Credit Suisse recently noted: ...Japan's titanic struggle with private sector de-leveraging has spread to the rest of the developed world. Rapid succession of asset bubbles (at least 12 since 1980) led to the global private sector de-leveraging causing deflationary "winds", regularly stalling global growth and leading to waves of expansionary public sector response.
While the extent of an asset price collapse in Japan was far more severe than either the Dot.com or Subprime crises, the basic dynamic of subsequent response (i.e., private sector moving from borrowing to net lending, forcing public sector into stimulatory monetary and fiscal policies) was essentially the same in Japan in the 1990s as it has been in the US, the UK or Eurozone since 2008.
The Fed, the Bank of England, the European Central Bank and the Bank of Japan are all having to print more and more money to keep their economies functioning
CENTRAL BANKES ARE NOW PRINTING MONEY AD INFINITUM
EVERYTHING ENDS; EVEN AD INFINITUM
On September 18th, Ambrose Evans-Pritchard's commentary in The Telegraph UK was titled Japan launches QE8 as 20-year slump drags on. Evans-Pritchard noted that QE8, Japan's latest round of quantitative easing, i.e. money-printing, is only the latest of Japan's serial attempts to avoid a deflationary collapse.
Although Japan has survived deflation's endgame for over 20 years, the US, the UK and Europe will not be so lucky-nor, this time, will Japan. With all major economic zones deflating simultaneously, the West's demise will be far quicker than Japan's protracted agony; and when the West collapses, this time Japan will collapse with it.
The US, Japan, and Europe are all trapped in deflation's ever-widening net, i.e. a constantly expanding liquidity trap.
We're trapped too-unless we own gold and/or silver.
QE3: THE BANKERS' MONETARY DEATH MARCH
In 1949, the Austrian economist Ludwig von Mises wrote in Human Action:
The wavelike movement affecting the economic system, the recurrence of periods of boom, which are followed by periods of depression, is the unavoidable outcome of the attempts, repeated again and again, to lower the gross market rate of interest by means of credit expansion. There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved
Von Mises words, written in 1949, are being played out today. In the intervening years, bankers did not abandon credit expansion. They did the very opposite. After WWII, bankers continued expanding credit until what von Mises called a crack-up boom occurred-where excess credit and money drive valuations to all time highs (from 1982-2000 the Dow rose from 777 to 11,723, a increase of 1400% in 18 years).
The collapse of financial markets in 2008 signaled the beginning of the end; and ever since then, central bankers have been printing more and more money hoping to stave off a final collapse.
Money printing, however, will not prevent capitalism's systemic collapse. It will, in fact, do the opposite. Collective central bank money printing will trigger a final and total catastrophe of the currency system as von Mises predicted.
In August 2008, in Gold and the Collapse of Paper Money, I wrote:
We are about to see a variation of [the Great Depression], except this time it will be worse because this time sovereign monetary defaults will accompany the defaulting of debt and the contracting of credit. This time money itself will be a victim. Fiat paper money systems have always ended in failure. This time is no exception.
QE3 is the beginning of the bankers' monetary death march. Central banks in Japan, the US and Europe are now openly engaged in massive monetary debasement, printing more and more money in the futile hope they can reverse the deflationary collapse now in motion. They can't.
They can, however, in trying to do so, instead destroy the currency system.
My video, Wake-Up! The Crisis and the 2-Party System, is especially timely. Shot on October 29, 2011, it discusses today's relevant issues months before they happened.
Buy gold, buy silver, have faith,
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How Gold and Silver Provide a Safe Haven in Today's Troubled World
The reasons for holding precious metals as a relatively safe haven for one's personal wealth are numerous.
One common investing thesis for buying precious metals is that these intrinsically valuable commodities can hold their value in times of rising price levels. This characteristic can help American savers keep pace with credit expansion and paper currency debasement.
Diversify Out of the Dollar
For example, precious metals can provide a safe haven in terms of the diversification they offer relative to holding U.S. Dollars in cash or Dollar-denominated assets.
Physical gold and silver investments can take up a core position in an investment portfolio since they offer an easy way to have some wealth stashed out of Dollar-denominated assets. These hard assets also provide a viable alternative to holding foreign currencies or foreign equities.
Basically, precious metals allow investors to engage in a new way of thinking, where investment priorities are anchored to real value and permit advance planning for troubled times.
When the Dollar Bubble Bursts
In much the same way that market bubbles have been blown in various asset classes over the last 40 years, largely via Fed sanctioned interest rate manipulation, the overvalued U.S. Dollar seems like yet another bubble waiting to burst.
Basically, the value of silver has been artificially deflated in U.S. Dollar terms via price control implemented using contracts traded at global futures exchanges. The symbolic investigation of this so-called conspiracy by the CFTC just passed its fourth year.
Underpriced assets like silver will eventually lead the way back to what will very likely be the largest bubble the world has ever seen. The U.S. Dollar and the U.S. bond market appear destined for a long overdue crash.
Various factors point to this outcome. They include such things as: intrinsically worthless paper wealth, high frequency trading, a world where MF Globals can exist, the threat of taxation, and rampant money printing - otherwise known as Quantitative Easing.
Competing With the Banks for Credit
Major international banks have benefited disproportionately compared to the individual investor from credit expansion in recent years. Banks enjoy better profits from cheap money and can buy future cash flows very inexpensively.
Meanwhile, consumer credit has contracted leaving consumers holding the bag in many cases. People are also unable to consume as much because of a rise in general price levels and the failure of the troubled financial system to purge itself of bad debt.
If at any point the American consumer and banks are equalized with additional credit infusions, the tide will then begin to turn. Consumers can then free up more discretionary income as America goes back to work.
Nevertheless, until the two groups are made equal, credit will neither expand nor contract. Instead, credit supplies will stay constant, although prices will continue to rise relative to consumer incomes.
Precious metals provide a safe haven investment that can often help compensate an investor for such price rises. Furthermore, if at any point the system balances and allows for credit expansion to extend to Main Street, then precious metals investors will typically benefit.
For more articles like this, and to stay updated on the most important economic, financial, political and market events related to silver and precious metals, visit http://www.silver-coin-investor.com
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Traveling With Precious Metals
Written by International Man
By Robert E. BaumanOffshore Confidential
Imagine you are docilely going through the long security line at John F. Kennedy International Airport, headed for your overnight flight to London Heathrow. As your carry-on bag goes through the X-ray, a burly TSA agent is called over to confer with the machine operator. He then looks at you and says: "Please come with me, sir."
As you are led to a small cubicle, you nervously try to think of what you might have done wrong. While you open your bag as instructed, the stern-faced TSA agent points to a small package and demands to know what it contains. Inside are antique, collectible gold coins that you intend to sell to the same British dealer from whom you bought them years ago, but now they are worth much more.
Now the agent says: "I'm sorry, sir, I will have to confiscate them, but I will give you a receipt. You have the right to file an appeal."
You stand there dumbfounded, the whole purpose of your journey destroyed.
Safely Transporting Your Coins or Precious Metals
Serious problems can arise when gold or silver coins (or any precious metals) are transported personally out of the U.S. to other countries by auto, airplane, boat or public transportation - or the reverse, when entering the U.S.
In May 2010, the Houston reported that U.S. Immigration and Customs (ICE) agents and Border Protection officers at Houston's George Bush Intercontinental Airport confiscated more than $250,000 in cash and almost $160,000 in gold and silver in 14 separate seizures from individual travelers during that one month alone.
At the time, I checked with several precious-metal experts and none had ever heard of government agents doing what these ICE agents did. It was news to them - and to me. And Houston, of course, is one of many international airports and entry and exit points in the U.S. So those figures could be multiplied many times over.
Because of the confiscations that already have occurred, I urge you not to travel with precious metals in any form, including coins. Any border crossing with more than $10,000 or more in U.S. dollars or foreign equivalent in any form must be reported on U.S. Customs Declaration Form 6059B. If you're moving U.S.-issued gold or silver coins, some advisors claim that you need to declare only the face value; $50 for a one-ounce gold Eagle, for instance, but that may cause trouble. Your friendly Homeland Security Administration agent isn't likely to be terribly sympathetic to this argument, and just might seize your coins.
Also, when you arrive in your intended foreign country you may face another Customs gauntlet. However, if you declare the gold as "cash," you'll hopefully be permitted to proceed.
If you must personally carry coins, my advice is to contact the nearest office of the U.S. Customs and Border Protection Agency, well ahead of travel, and explain what you propose to do and ask them how you can conform to the law. You should ask for and receive a written response so that you can show it if questioned by ICE agents. Also ask Customs if you need to notify them of your date and departure flight as a precaution against the very real possibility that a local Customs agent at the airport may not know the rules that cover this situation.
You will need to complete and bring with you a Census Bureau Form 7525-V, Shipper's Export Declaration. This form is required for exported commodities with a value exceeding $2,500. At current silver and gold prices, many coins would exceed this reporting threshold. Failure to file this declaration can result in seizure. The consequences for stating incorrect information are severe, including confiscation. They may also result in a fine of up to $10,000 and/or imprisonment.
If you have difficulty dealing with the U.S. Customs office, call the office of your local Member of the U.S. House of Representatives or one of your U.S. Senators and ask for their assistance. They should be pleased to help you.
There probably will be reporting formalities and Customs duties payable when you enter a foreign country. Most require you to fill out, sign and submit Customs Declarations upon entry, asking if you are importing currency or the equivalent. You should contact your destination country's embassy or consulate here in the U.S. to determine how they deal with silver and gold imports or exports.
Don't give them any definitive identification or travel information in case they put you on a travelers watch list.
If you intend to import gold or silver coins from offshore, it is advisable to hire a U.S. customs broker in advance of your travel. The customs broker can appraise the value of the coins and arrange for payment of the foreign country's Customs or other goods and services taxes. Your local FedEx or UPS office can advise you about how to contact customs brokers in your area. Of course, you should also bring with you proof of your ownership of specific coins or precious metals, as well as a statement of appraised value from a recognized appraiser.
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|Odds & Ends
From Ben Stein
Paradoxical Quote of The Day From Ben Stein:
"Fathom the hypocrisy of a government that requires every citizen to prove they are insured... But not everyone must prove they are a citizen."
Now add this, "Many of those who refuse, or are unable, to prove they are citizens will receive free insurance paid for by those who are forced to buy insurance because they are citizens."
Think about it when you vote in November!
No. 472: GDP Revision, August Durable Goods, Household Income, New Home Sales - ShadowStats.com
By: John Williams
September 27th, 2012
- Unusually Large 2nd-Quarter Revisions: Headline GDP Growth Dropped to 1.3% from 1.7%,
Theoretically Equivalent GDI Dropped to 0.2% from 0.6%
- Plunging Automobile and Commercial Aircraft Sales Savaged Durable Goods Orders
- August Household Income Took a Hit
Subscribe to Shadow Stats to read the full article.
5 Min. Forecast
Wall Street: "We Want QE4" 5minforecast.agorafinancial.com
September 27, 2012
Alas, the markets have barely noticed. After three days of sulking, it seems Mr. Market is making a comeback... the Dow has leapt 102 points, to 13,516. The Nasdaq is up 44 points, to 3,137. The S&P 500 hopped up 16 points, to 1,449.
Oil is showing signs of life, jumping up nearly $2, to $91.88. Silver is up 64 cents, to $34.63... and gold has ascended to $1,777.80, up $24.50.
Regarding the price of gold, we were forwarded a curious chart. It depicts the rise in gold price versus the Fed's balance sheet + China's dollar-based reserves.
We're still trying to make sense of it. One interesting feature: When the Fed and China starting pairing back simultaneously, the gold price breaks out ahead of the curve... and then corrects. Only to start rising again when QE began again in earnest...
Coincidentally, banks on Wall Street are calling for QE4... already.
"QE3 will likely be insufficient," Adam Parker, Morgan Stanley's chief equity strategist told some talking heads on CNBC yesterday, "to significantly boost equity markets and we wouldn't be at all surprised to see the Fed dramatically augment this program (i.e., QE4) before year-end, particularly if economic and corporate news continue to deteriorate as they have over the past few weeks."
"If the recovery continues to disappoint," Goldman Sachs economists say, "additional steps are possible." Their prediction? QE3 of up to $2 trillion and "an increase in the pace of asset purchases as well as further changes in Fed communications."
If the correlation in the chart above holds... gold should climb to north of $2,200...
Continue reading at AgoraFinancial.com
Strikes Halt 39% of South Africa's Gold Production - CaseyResearch.com
By: Ed Steer
September 27, 2012
Here's a paragraph I stole from silver analyst Ted Butler's Saturday commentary to his paying subscribers...
"The most important change is the change to come. I would define that change as the move by the super big investors into silver. When enough new pension and hedge and other institutional funds take the time to learn the actual silver story and invest accordingly, the silver rig jig will be up. Most amazing of all is that this hasn't occurred yet. After all, these mega investors are hungry and on the prowl for sound investment ideas in a world never providing enough new good ideas. Let's face it - these super sharp investors have missed the silver boat to date. It is highly unlikely that they will miss it forever. In my experience, talk precedes action. By that I mean there is usually some time spent studying and learning a new investment idea before strong actual investment occurs. I see the literal explosion of Internet talk of JPMorgan and the silver manipulation over the past year or so as the precursor for substantial silver investment flows. Up until now, it's been mostly talk that has not yet led to big investor silver demand. But it would be a mistake to assume that all the talk won't result in greater awareness of the actual silver story. Perhaps we can't do much to overpower JPMorgan at this point besides make the allegations; but at some point, enough sharp hedge funds will see the great vulnerability that JPMorgan has placed itself in and become excited about taking JPM on. This is particularly true when the hedge funds learn how simple it would be to beat JPM by just buying metal. That's how it works."
Continue reading at CaseyResearch.com
Fed Virtually Funding the Entire US Deficit: Lawrence Lindsey - CNBC.com
By: Justin Menza
Published: Wednesday, 26 Sep 2012 | 12:02 PM ET
The latest round of extraordinary Federal Reserve stimulus is risky and leaves little room to maneuver should another crisis hit, economist Lawrence Lindsey told CNBC's "Squawk Box" on Wednesday.
Lindsey said that with the Fed purchasing at least $40 billion a month in mortgage debt through QE3, "they are buying the entire deficit."
"I have no problem doing extraordinary things in extraordinary times," said Lindsey, a former White House economic advisor under former president George W. Bush who now runs his own consulting firm.
Continue reading at CNBC.com
Global palladium supply faces substantial deficit-Stillwater Mining - MineWeb.com
Author: Dorothy Kosich
Posted: Thursday , 27 Sep 2012
With diminished Russian state inventories, "extremely constrained" palladium supply growth and steadily increasing demand, the palladium market is expected to be under supplied in the future, says Stillwater Mining.
In their analysis, Stillwater noted that if the 775,000 ounces in palladium sales reportedly supplied from the dwindling Russian government stockpile are excluded from 2011 supply figures, "the share of palladium supply from primary mine production, used for catalytic converters increased from 67% to 73% from total consumption."
The white paper asserted, "Palladium is facing a substantial supply deficit going forward that will likely be met by a combination of price-driven demand destruction and shifting back to platinum or using rhodium."
"With Russian state inventories diminished, palladium supply growth extremely constrained, and demand increasing steadily, the market is expected to be under supplied going forward," the company said.
Continue reading at MineWeb.com
Strikes halt 39% of South Africa's gold production - businessweek.com
By Carli Cooke on September 26, 2012
South African mine strikes have halted about 39 percent of national gold output, including at AngloGold Ashanti Ltd. and Gold Fields Ltd., as unofficial walkouts spread in the country amid demands for above-inflation pay increases.
AngloGold, the world's third-largest gold producer, today said all its South African mines have been stopped. Gold Fields lost a metric ton, or about 32,000 ounces, of output because of strikes at its KDC and Beatrix sites.
Gold-mine workers have been encouraged by the pay increase prompted by a wildcat strike in the platinum industry. A six-week walkout at Lonmin Plc's Marikana mine erupted into violence that killed 46, including 34 shot by police last month. Workers won wage gains of as much as 22 percent, more than four times the August inflation rate, before returning on Sept. 20. Coal of Africa Ltd. employees and about 20,000 transport workers are also on strike.
Continue reading at BusinessWeek.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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