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Eurozone Economic Confidence Rises

February 29, 2012 by · Leave a Comment 

The Daily Reckoning

I told you yesterday that the Australian dollar (AUD) was weaker because of the uncertainty of the leadership vote that Prime Minister Gillard won over the weekend, but that it would bounce back quickly, and that’s exactly what it did. I had just hit send, and I noticed the A$ ticking higher, and by midmorning, the A$ was back to $1.0750, where it seems to have stalled out, but remains a buy for those investors around the world looking for yield, and don’t want to go out on the limb with Brazil.

The euro (EUR) is stronger this morning by one-third of a cent. Yesterday morning, the euro looked as if it were about to catch a cold, and this morning, it looks as if it has beaten the cold back and is ready to move on. We’ve got a couple of very important things to look at this morning with regard to the euro.

First, eurozone confidence for economic outlook improved more than economists forecast this month. I can’t point out enough times, without sounding like a broken record, that this is another step in the stabilization of the eurozone that I talked about in December. Yes, while writers all over earth are writing about the eurozone breakup, I’m here alone, talking about stabilization, and so far, stabilization is winning. But that can all change in a heartbeat, so I’m not slapping myself on the back just yet. But again, like the so-called experts that called for a collapse of the Chinese economy more than two years ago — and I said it would be moderation instead — the experts that have far more gray matter than I — and have large numbers of research team members — say that the eurozone will break up… so it must be, eh? Not so fast! Not yet…

The other thing to talk about in the eurozone is tomorrow’s European Central Bank (ECB) LTRO (long-term recovery operations) day in which the old three-month loans get turned in and rolled for another term (most likely), and there is an amount allocated to new loans, which the ECB would love to not have to tap, but I think that’s like wishing for all the weight I’ve accumulated over the years to just melt away.

So here’s the skinny: There are three tenders expiring this week, totaling euro 255 billion. There are seven-day loans and three-month loans. I think that almost all the loans that are expiring will be rolled, and some will be rolled out to three years. I read those people that follow this very closely believe that new loans totaling euro 400 billion would be a good result, and any number greater than 500 billion would be a bad result.

I think this operation tomorrow holds the key to the near-term direction of the euro, folks. This is important to the euro’s value. Today, we could see a lot of forecasting of the outcome, and that could swing the euro in one direction and then another. So be careful today, this could get crazy today with the so-called “experts” calling for this and that.

And then, finally, with the euro: Italy sold 6.25 billion euros of debt in bonds this morning, 3.75 billion of 10-year bonds at 5.5%, the lowest rate on that tenor of bonds for Italy since last September. They sold 2.5 billion of five-year bonds at 4.19%, down from 5.39% at the last auction. And so on. The most-important thing here is the sign of additional stabilization.

The price of oil remains around $108. The other day, I highlighted the fact that the Canadian dollar/loonie, (CAD) which normally is sensitive to moves in the price of oil, was lagging the other petrol currencies’ reactions to the higher price of oil. Well, that remains to be true. The Russian ruble, (RUB) Norwegian krone (NOK), Brazilian real (BRL) and even the U.K. pound (GBP) are finding it easier to gain versus the dollar with the higher price of oil by their side, than the Canadian dollar/loonie.

I think that the markets are just leery of pushing the envelope with the loonie right now, given the nascent recovery in the U.S. But the loonie is back to parity with the green/peachback this morning, so maybe the loonie can play some catch-up.

I mentioned two of the four BRIC currencies above, in Russian rubles and Brazilian real, and right now, they look strong. But they bounce around so much. The other two BRIC currencies, the Indian rupee (INR) and Chinese renminbi, (CNY) are moving in the right direction again, after some weakness. So maybe these BRIC currencies can finally all get moving in the right direction.

Speaking of India, I was tough on the Beaver when I took the Indian Central Bank (RBI) to the woodshed for failing to identify the inflation pressures last year, which put the rupee behind the inflation eight ball. But in the past three months, the Indian rupee is the best-performing currency in Asia. Pretty unreal to me, given what was going on with the rupee three months ago!

Gold and silver are stronger this morning. I wanted to talk about silver for a minute, given all the talk I do about gold. I thought silver needed some love. Anyway, I read a report yesterday that highlighted what the writer thought was a tough line of resistance at $36 for silver. They drew a chart line and talked about how it indicated that $36 was going to be tough to move past.

And then I read a report by a Pfennig reader who I’ve highlighted before named Scott Pluschau. Scott says that “The path of least resistance will be higher.” So then I thought that doesn’t sound like $36 is going to be much of a problem to me. So I’ll stick with Scott’s version!

You can read the whole report here.

Besides, the demand for gold and silver remains strong.

The January trade deficit for New Zealand that I told you about yesterday is really weighing heavily on the New Zealand dollar/kiwi (NZD). For just when you thought it was safe to get back into the kiwi waters, the sharks return! If you go back four years, when New Zealand had the highest interest rates in the industrialized world, investors would look the other way when the country would print a trade deficit. I remember warning investors about this and saying that once the interest rate goes away, investors will notice the deficits.

This proves that point. First, we all know that the Reserve Bank of New Zealand (RBNZ) made emergency rate cuts after the two earthquakes last year, and that the RBNZ has chosen to not reverse those emergency rate cuts, thus leaving N.Z. with lower rates, which don’t hide the trade deficits. But don’t get too discouraged here. If we truly get back to fundamentals and the U.S. dollar heads back down, the kiwi will be pulled higher by the Aussie dollar.

Did you know that our government’s projected tax receipts for next year, 2013, total $2.90 trillion? Yes, that sounds good enough, right? Not so fast! $2.90 trillion is roughly equal to our government’s actual spending of $2.98 trillion in fiscal 2008! That’s right, I said 2008! What’s our projected spending for 2013? Oh, around $4.25 trillion, which is how we get the budget deficit of $1.33 trillion.

When will all this madness in deficit spending end? Not anytime soon, folks. The government will deficit spend until it hurts. Yes, when the government gets its credit card rejected by foreigners, the government will have to stop deficit spending. But not until then will they stop Which just continues to be a drag on the dollar and ruin your purchasing power. That is, unless you have taken steps to protect your purchasing power.

How does one do that? It’s simple! I personally believe that every investor all over the world needs to diversify their investment portfolio and allocate a portion of it to foreign currencies and metals. That way, should the dollar continue to be weighed down by debts and deficits, you will protect your purchasing power. Please notice that I said allocate a portion of your investment portfolio, not go “all in.” You’ll still need dollars, in this case, for gas, groceries and giggles.

Here’s another thing that will weigh heavily on the dollar going forward (thanks to Pfennig reader and friend Dennis for the information): Two out of every three American workers aged 21-64 that HAVE ACCESS to an employer-sponsored 401(k) DO NOT PARTICIPATE in the pretax retirement plan (Source: Employee Benefit Research Institute). No, instead these people are going to make demands on the government to take care of them in retirement.

And think about this too: 7,671 Americans turned 65 years old on average each day during calendar year 2011. And in 2012, the number will prove to be close to 10,000 per day. And for the next 18 years, these number of people turning 65 will be high.

Now think about the Debt Clock that I show you each week, and that “unfunded liabilities” number. Scary, eh?

Then there was this: Last night, the IMF Board concluded and approved the fifth review of the Irish bailout. The board cited “strong implementation” of the program. This allows Ireland to receive its next trance of funding (14 billion euros). The Irish beat the 2011 deficit target, continued to downsize their banking system, met other austerity measures and didn’t burn bank buildings doing it!

I’ve said it before: I think Ireland will be fine. You’ve got to love the way they’ve gone about the business of getting back in line very quietly.

To recap: The currencies and metals are rallying this morning. The euro saw some love after the eurozone economic confidence showed strength and Italy auctioned bonds at much-lower rates. The Australian dollar is back on terra firma after weathering the storm of the leadership vote this past weekend, and the BRIC currencies are finally moving in the same direction at once!


for

originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas.

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Zero Hedge: NY Fed buys building housing Plunge Protection Team

February 29, 2012 by · Leave a Comment 

GATA

8:30a ET Wednesday, February 29, 2012

Dear Friend of GATA and Gold:

Zero Hedge’s pseudonymous Tyler Durden yesterday noted the purchase by the Federal Reserve Bank of New York of the Wall Street building from which the Fed conducts its surreptitious market interventions. The commentary is headlined “New York Fed Buys Building Housing Plunge Protection Team” and it’s posted here:

http://www.zerohedge.com/news/new-york-fed-buys-building-housing-plunge-…

It refers to Zero Hedge commentary from 2009 about “the world’s most important trading desk,” the Fed’s own on the ninth floor of that building:

http://www.zerohedge.com/article/worlds-most-important-trading-desk-not-…

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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LIBOR manipulation probe turns criminal in U.S., Reuters says

February 29, 2012 by · Leave a Comment 

GATA

By Carrick Mollenkamp
Reuters
Tuesday, February 28, 2012

http://www.reuters.com/article/2012/02/28/us-libor-probe-idUSTRE81R1ZG20…

NEW YORK — The Justice Department is conducting a criminal probe into whether the world’s biggest banks manipulated a global benchmark rate that is at the heart of a wide range of loans and derivatives, from trillions of dollars of mortgages and bonds to interest rate swaps, a person familiar with the matter said.

While the Justice Department’s inquiry into the setting of the London interbank offered rate, or Libor, was known, the criminal aspect of the probe was not.

A criminal inquiry underscores the serious nature of a worldwide investigation that includes regulators and law-enforcement agencies in the United States, Japan, Canada and the UK.

Several major global banks, including Citigroup Inc, HSBC Holdings Plc, Royal Bank of Scotland Group Plc, and UBS AG, have disclosed that they have been approached by authorities investigating how Libor is set.

No bank or trader has been criminally charged in the Libor probes. It wasn’t clear which banks or traders the Justice Department is targeting in its criminal probe.

The Justice Department and the banks declined to comment.

Libor is set every day in London for 10 currencies for a range of maturities. The rate is supposed to reflect the rate at which banks lend to one another. Dollar Libor, for example, is calculated after 18 banks submit the costs to borrow dollars.

The rate underpins $10 trillion in loans to consumers and companies and another $350 trillion in derivatives. In the derivatives market, Libor is used in the pricing of the massive and popular interest-rate swaps market, where two parties swap floating- and fixed-rate interest payments. Libor typically is used as the basis for the floating rate.

The investigations are examining whether traders at the banks tried to influence whether the rate went up or down. A change in the rate could mean a windfall of tens of millions of dollars if a trader has bet correctly on the direction of Libor.

Swiss bank UBS is playing a key role in the probes because it agreed to come forward and cooperate in the inquiries.

The bank said in a regulatory filing it has been granted conditional leniency or conditional immunity by the antitrust division of the Justice Department and the Swiss Competition Commission.

In recent months, probes in Japan and Canada have focused on a group of interest-rate traders who attempted to manipulate yen Libor, according to court and regulatory documents.

In Ontario Superior Court, a Canadian antitrust regulator said that a “cooperating party” has provided information on how the alleged manipulation took place. The cooperator is UBS, people familiar with the situation said previously.

The Canadian documents provide examples of how a trader at the cooperating bank contacted traders at banks such as RBS to try to influence Libor.

* * *

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

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http://www.gata.org/node/16

Bill Murphy: Russia and China know what GATA discovered about gold

February 29, 2012 by · Leave a Comment 

GATA

3:35p ET Tuesday, February 28, 2012

Dear Friend of GATA and Gold:

GATA Chairman Bill Murphy, proprietor of LeMetropoleCafe.com, writes today that gold continues to rise in large part because Russia and China know what GATA discovered years ago — the Western central bank gold price suppression scheme and its vulnerabilities. Murphy’s commentary is titled “The Russians And Chinese Know What We Know and It Is SO Bullish” and it’s posted at GoldSeek here:

http://news.goldseek.com/LemetropoleCafe/1330458367.php

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


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Golden Phoenix Discusses Royalty Mining Growth Strategy
on ’21st Century Business’ on Fox Business Network

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“21st Century Business” has been airing for 15 years. Previous hosts have included Gen. Alexander Haig, Gen.l Norman Schwarzkopf, and Secretary of Defense Caspar Weinberger. Golden Phoenix appeared as paid programming on this broadcast.

To view the program with Golden Phoenix, please visit Golden Phoenix’s Internet site here:

http://goldenphoenix.us/fox-business-network/



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Or a colorful poster of GATA’s full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

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GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

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To contribute to GATA, please visit:

http://www.gata.org/node/16


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Lee Quaintance and Paul Brodsky: Why Buffett is wrong on gold

February 29, 2012 by · Leave a Comment 

GATA

3:25p ET Tuesday, February 28, 2012

Dear Friend of GATA and Gold:

In their latest market commentary Lee Quaintance and Paul Brodsky of QB Asset Management in New York respond to renowned investor Warren Buffett’s disdain for investing in gold. Quaintance and Brodsky argue that gold is simply superior money, less susceptible to devaluation.

Of course GATA would qualify that, arguing that gold indeed has been enormously devalued by government-supported issuance of immense paper claims to metal that doesn’t exist — that much if not most of what the world considers its gold supply is actually imaginary, that only this imaginary supply explains gold’s much-disparaged failure to keep pace with inflation, and that the gold market is vulnerable to a short squeeze of cosmic proportions. But that’s only another argument in gold’s favor.

The Quaintance-Brodsky rebuttal to Buffett is titled “Golden Boy” and it’s posted at GATA’s Internet site here:

http://www.gata.org/files/QBAMCO-GoldenBoy-02-2012.pdf

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

 

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QBAMCO-GoldenBoy-02-2012.pdf 136.14 KB

Iran considers taking gold as payment for oil

February 29, 2012 by · Leave a Comment 

GATA

By Monavar Khalaj
Financial Times, London
Tuesday, February 28, 2012

http://www.ft.com/intl/cms/s/0/c74e6f00-620d-11e1-807f-00144feabdc0.html

TEHRA, Iran — Iran is to consider accepting gold as payment for oil and other commodities in what is seen as a fresh attempt to skirt international sanctions on the country’s nuclear programme and ease their impact on Iranian businesses and consumers.

“In addition to the U.S dollar and currencies of the trading countries, Iran could take gold in its commercial transactions with other countries,” Mahmoud Bahmani, Iran’s central bank governor, told domestic Iranian news agencies.

In recent months, Western powers, notably the U.S. and the European Union, have tightened financial sanctions on the Islamic regime in an attempt to force Iran to scale back or halt its efforts to enrich uranium.


Since then, Tehran has struggled to repatriate the hard currency it earns from crude oil exports, its main foreign currency earner and the economic lifeblood of the country.

This has forced the government to consider alternative ways to receive payment or pay for imports.

Already, Iran has started to receive Indian rupees and Chinese renminbi instead of dollars for its oil sales from India and China, the two biggest importers of its crude oil.

A separate barter arrangement also exists. “Iran imports goods from China and India instead of the hard currency and faces no problem in this regard,” Mr Bahmani said. It is not clear how these barter deals work. It is also unclear if these agreements are designed to allow Iran to import grain to feed its population of 74 million or to help these countries clear the debt they have accrued through purchases of Iranian oil.

Mr Bahmani made clear that Iran’s trade with other countries would not be limited to the dollar and “any country could pay with either its own currency or gold.”

Local business people say Iran has already agreed with Turkey, South Korea, and Japan to carry out trade in their national currencies. Turkey said on Tuesday it was talking with countries such as Saudi Arabia and Libya to diversify its energy supply, which depends heavily on Iranian oil.

But Taner Yildiz, energy minister, added that Ankara was not bound by the US or the EU sanctions. “Turkey will never lose its strategic co-operation with Iran,” he said. Turkey, South Korea, India, and China have all increased their gold reserves in recent years.

Tehran is also in talks with some Asian businesses and governments about paying for rice and palm oil imports in currencies other than the dollar, importers say.

Mr Bahmani’s comments come less than a month after Iran’s oil minister, Rostam Ghasemi, said Tehran had not resorted to barter deals yet. At the time Mr Ghasemi did not reject the possibility of exchanging Iranian oil for goods from other countries.

Sanctions imposed by the EU and US have hit Iranian consumers and businesses hard in recent months. The national currency, the rial, has weakened by about 30 per cent since October, pushing up the price of of imported goods. In an effort to contain inflation and stabilise the currency, the government has said it will provide importers with hard currency at the official rate, which is more than 30 per cent lower than the open market rate.

Mr Bahmani reassured importers on Tuesday that the central bank would supply “needed foreign currencies” to them and they would face “no problem.”

* * *

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

Star-Spangled Banner Commemorative Coin Images Released

February 29, 2012 by · Leave a Comment 

With a release date set and prices already established, the U.S. Mint is quickly rolling out the other necessities of launching the 2012 Star-Spangled Banner Commemorative Coin products on Monday, March 5, 2012. These include images of each $5 gold and silver dollar commemorative coin, product pages for both plus the companion 2012 Star-Spangled Banner […]
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Nalco-Mining and Minerals Processing Expert and Water Treatment Solutions Provider

February 29, 2012 by · Leave a Comment 

Nalco is a world leader in the fields of mining, minerals processing and water treatment. The company provides the mining and minerals industries with expertise and technically, economically and environmentally sustainable solutions from mine-to-mill…

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Miner Elastomer Products Release Brochure on Mining Technology Website

February 29, 2012 by · Leave a Comment 

Leading suspension and shovel components manufacturer Miner Elastomer Products has released a new brochure on the Mining Technology website.

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Miner Elastomer Products Brochure

February 29, 2012 by · Leave a Comment 

Miner Elastomer Products Corporation has released a new brochure to showcase its products and services.

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