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WikiLeaks, Gold and Silver

November 30, 2010 by · Leave a Comment 

By James West, MidasLetter.com

November 30, 2010

I’ve always occupied the emotional frequencies ranging between disgusted and outraged when it comes to WikiLeaks. Regardless of your stance on governments and sovereign interference, putting the lives of human beings at risk by exposing their participation in intelligence programs is aiding and abetting in murder. The psychotic fundamentalists that perpetuate the bulk of the violent crimes on its own and foreign citizens need not be encouraged by the provision of a list of fresh targets by idealistic or simply amoral grandstanders desperate for attention.

Swathed in the self-assigned robes of righteous guardian and revealer of truths, WikiLeaks braves incarceration threats, smear campaigns (Swedish investigation of WikiLeaks founder Julian Assange on sexual abuse charges), and direct attacks on its I.T. infrastructure by intelligence agencies tasked with sabotaging the WikiLeaks site accessibility and functionality.

However, now somewhat consumed with the audacity of WikiLeaks, I’ve embarked on a part time mission to understand and assess whether in fact WikiLeaks is essentially misanthropic or altruistic in nature. My conclusion, after much research, is the latter.

In fact, anyone who spends any amount of time going over the information that has been brought to light by WikiLeaks is incapable of objectively concluding that there has been anything released at all the would constitute a direct threat to any individual’s security. The only security being compromised is that surrounding various governments’ attempts to gain advantage through covert activities against one another.

The bottom line is the WikiLeaks web site is ground zero for a re-emergent function of the free press, wherein public pressure is applied to entities like the United States who act unethically and immorally to destabilize governments, instigate revolt and sew discontent in populations where it regards regime change, or other significant political outcomes, to its advantage.

By exposing the extent of the unilateral actions of the United States in flagrant disregard for human life or sovereign autonomy, it makes it much more difficult for American covert agencies like the CIA to operate and receive funding, as the exposed information increases public outrage over such tactics.

The government of the United States and its allies are now engaged in a broad based campaign to restrict the international travel of Julian Assange and paint him as a traitor. But the question as to who is traitor must be asked in light of the arbitrary murder and assassinations that come to light in the revelations of the WikiLeaked information.

Hawks decry the release of classified information insisting that covert operations are crucial to the success of American military efforts to protect freedom and democracy. But if my freedom and democratic process must come at the cost of millions of lives of innocents in other countries, then thanks, but no thanks. To undertake murder on grand scale and shroud it in the mantle of the fight for freedom is the and always has been the essence of fascism. If anything, I’ve learned that WikiLeaks is a great source of education for just how deeply a fascist imperative dominates U.S. politics these days.

Now comes the news that Assange and WikiLeaks plan to reveal ‘flagrant violations’ at a major U.S. bank.

Whether ‘flagrant violations” amounts to fraud remains to be seen, according to Assange.

“It will give a true and representative insight into how banks behave at the executive level in a way that will stimulate investigations and reforms, I presume,” he told Forbes.

I can’t think of a more welcome development, in the context of the public interest, than the existence of a safe and secure anonymous ‘electronic drop box’ as WikiLeaks classifies its system, to accommodate whistleblowers who want to expose transgressions by leaders in both government and commerce.

Take, for example, the decade-plus long efforts by the Gold Anti-trust Action Committee, whose core premise is that the prices of gold and silver have long been subject to manipulation both to provide an unfair profit advantage to certain financially institutions, but also to influence the perception of citizens at large as to the health of the U.S. Dollar and the American economy.

Growing evidence and opinion supports the idea that illegal and unethical manipulation of gold, silver, and who knows what other markets has long existed. Even CFTC Commissioner Bart Chilton has opined that, “There have been fraudulent efforts to persuade and deviously control that price,” he said in reference the silver futures market.

What has long been absent, is abundant document evidence from within the banks who are allegedly behind the price manipulation schemes. Imagine how much easier the efforts of GATA Chairman William Murphy and CFTC Chairman Gary Gensler would be if such documents were available from a source such as WikiLeaks?

One can certainly make arguments that the severity of market bubble implosions like the tech market in 2001 and real estate in 2008 are partially exacerbated by such manipulations, in that they provide an apparent foundation to support the issuance of more currency and lower interest rates to fuel leveraged speculation.

If these illegal and unethical practices can be unequivocally exposed, and thus stopped, there is no doubt that a more secure and equitable global financial system would be the result.

Gold and silver are important barometers in a financial world dominated by fiat currencies backed by nothing physical. There unfettered ability to trade freely is in the international interest, not just the national interest. Those eventually discovered to be guilty of such manipulation should be charged and tried for treason, with the appropriate sentences fully applied.

But, unfortunately for Julian Assange, it is WikiLeaks credibility that is being called into question.

As an Australian national, pressure is being applied to the Australian government by the U.S. government to find a way to convict Assange of espionage.

U.S. Attorney-General Eric Holder confirmed that an investigation run jointly by the Justice Department and the Pentagon was underway.

”This is not sabre-rattling,” Mr Holder said. ”To the extent that we can find anybody who was involved in the breaking of American law … they will be held responsible. They will be held accountable. To the extent there are gaps in our laws, we will move to close those gaps.”

If only such indignant scrutiny was directed at the U.S. government and its financial services industry. We might finally, after hundreds of years, end the search for responsible government.

James West is the publisher of the highly influential and widely respected Midas Letter at midasletter.com. MidasLetter specializes in identifying emerging companies in gold and silver exploration at the beginning of their share price appreciation curves, and regularly delivers 10 baggers (stocks that increase in value by at least a factor of 10) to his premium subscribers.

Until December 31st, Subscribe right now for only $39 per month. After that the price increases to $49 per month:

Cups That Runneth Over

November 30, 2010 by · Leave a Comment 

By Warren Bevan, preciousmetalstockreview.com

As much as I do enjoy some time off there’s nothing like getting back to work either, since it’s something I love to do.  So over the weekend I got into one of my favourite books, and ran over some historical charts which highlighted one of my favourite patterns.  I figured I should share a few examples with you.

The pattern is termed the cup and handle.  My, and likely your day, is filled with cups and handles.  From morning coffee to a lunchtime Chia to an afternoon green tea to an after dinner tasty Guinness, or some other tasty treat.

But in this case I’ll be talking about cups full of money.

To begin with, Ivestopedia has a good definition;

A pattern on bar charts resembling a cup with a handle. The cup is in the shape of a “U” and the handle has a slight downward drift. The right-hand side of the pattern has low trading volume. It can be as short as seven weeks and as long as 65 weeks.

As the stock comes up to test the old highs, the stock will incur selling pressure by the people who bought at or near the old high. This selling pressure will make the stock price trade sideways with a tendency towards a downtrend for four days to four weeks… then it takes off.

Technical analysis is definitely a science, but also I view it as very subjective and almost a form of art since nothing is ever exactly the same or written in stone.

Chart patterns only have to fit the definition in a loose sense in general, although volume is a very important and key breakouts must always occur with strong volume or they will have a high probability of failure.

Also, cup and handle patterns are continuation patterns which means they continue along the primary trend once the consolidation is finished and the pattern is formed during this consolidation.

There is no volume on this chart so I The chart above of Gold is a weekly chart which means each candle represents a weeks moves.  Ideally we’d like to see the left rim of the cup higher than the right, but we take what we can get.took a look at the GLD chart volume and it was good.  Volume was low on the left cup coming into the low of the cup and higher moving back up where the right side of the cup was formed.  It was below average in the handle also.

So far the only issue with this one on a technical basis is that the right side is higher than the left.  This isn’t the end of the world but it’s something to at least be aware of.  Now let’s see the chart post cup and handle as it moved out of the pattern.

In this case The odd cup and handle pattern did indeed work out as if it were perfect.  The move so far has been over $200 an ounce which is great.

Now let’s look at potential targets.  In theory you measure the distance from the right peak to the cup low.  In this case it’s roughly $200.  So in theory we could have seen the end of this continuation pattern for Gold and now need to rest and consolidate and build another pattern, perhaps even another cup and handle.

We all know how easy it is to look at hindsight and say, see I told you so, or I should have done such and such.

Let’s take one example today in real-time and watch it play out over the next little while.  Full disclosure, myself and subscribers have already begun to amass positions to take advantage of this potentially powerful move heading into the end of this year.  And once a breakout occurs

we will be adding more.
The S&P has a superb looking cup and handle which is textbook except that the right rim is slightly higher than the left.

A target for this pattern would be over 200 S&P points higher.

But in reality target are only targets.  Their something you shoot at, but sometimes miss.  Often a stock will have powerful underlying fundamentals such as earnings growth, increasing margins or even a breakthrough product which pushes the stock past targets and higher for an undetermined amount of time.

This next chart is a textbook example of a bullish cup and handle pattern followed by a chart that just kept going and going even to today.  It’s from William J. O’neil’s must have book,

“How To Make Money In Stocks”
As you can easily see, targets were thrown out of the window with this stock as it moved from the $35 area to $140 before everything it crashed in 2008. (chart in log-scale…google it)

Let’s take a look at this stocks chart including all of 2008 and up to today.

In under 5 years this stocks went from $30 to now over $400.  It’s easy to see in hindsight but these are the types of opportunities we try and identify early.

It’s also prudent to note the power of a simple uptrend or downtrend.  You just need a ruler and you can easily identify major trends and generally steer clear of any major trouble coming.

I’ve talked many times in the past about the high probability of a rising stock market even as the economy crumbled around it simply due to the fact that the US dollar is being devalued.  Although the US dollar chart doesn’t look half bad at the moment.

Just because the market continues higher does not mean the purchasing power is increasing.  That’s why Gold and Silver account for such a large portion of my portfolio at this time.

Our investment philosophy remains the same.  Hold large percentages of physical Gold and Silver mainly, while actively managing and trading another portion in anything from mining stocks to mining indexes, to general equities and their indexes or even ETF’s.  Were are not limited from making money on the downside either as we enjoy the leverage options afford us at times as well.

Until next time take care and thank you for reading.

Warren Bevan

In my free, nearly weekly newsletter I include many links and charts which cannot always be viewed through sites which publish my work.  If you are having difficulties viewing them please sign up in the left margin for free at http://www.preciousmetalstockreview.com/ or send an email to warren@preciousmetalstockreview.com with “subscribe” as the subject and receive the newsletter directly in your inbox, links and all.  If you would like to subscribe and see what my portfolio consists of please see here.

If you found this information useful, or informative please pass it on to your friends or family.

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There is No Head and Shoulders Pattern in Gold

November 30, 2010 by · Leave a Comment 

By Jordan Roy-Byrne, CMT, The Daily Gold

In the past week I’ve seen more than a few mentions of the potential head and shoulders pattern in Gold. A head and shoulders pattern occurs when a market forms three peaks and the middle peak is noticeably higher than the left and right peaks. However, that is not enough for the pattern to play out as it can appear often. There are other important characteristics of this pattern, which many technicians ignore or are unaware of.

A real head and shoulders takes months not days or weeks to form. It is a reversal pattern so there is a long period of distribution as the pattern begins its setup. In other words, this pattern occurs at major market tops and bottoms. In a typical market, the pattern occurs only once or twice every ten years.

A perfect example is the 2007-2008 top in the S&P 500.

As you can see from the chart below, there are some important characteristics. The pattern takes a while to develop (at least a year), the pattern comes after a long uninterrupted rise (4 years) and momentum will begin its divergence before you even realize the market is beginning to top.

Presently, Gold has no chance of being in a head and shoulders pattern. Momentum just peaked two months ago, the market remains well above the moving averages and most importantly, the market has only been rising in uninterrupted fashion for a little over a year. The market may seem like it could be forming the pattern (as we highlight in the chart) but if it doesn’t fit any of the above characteristics, then there is no need to worry about a reversal.

In fact, in the larger picture, Gold is still in the early stages of a super bullish phase in which it could reach $2,000/oz in the next six to nine months. In past commentaries, we’ve noted how bull markets tend to begin their acceleration around the ninth or tenth year. Note in the chart what happened when Gold broke above channel 2. Even after a strong run to $420 to $500, Gold accelerated to $730. That was a 46% rise in only a few months.

Gold has already broken above channel 3 and only has small resistance left with channel 4. Moreoever, at the bottom of the chart we show the market’s distance from both the 80 and 40-week moving averages. Relative to past peaks, Gold still has room to run. Additionally, since the market is likely entering its most bullish phase, we could see new highs as far as the market’s distance from the 40 and 80 week moving averages.

Of course nothing is certain. We only deal in probabilities and reality. The reality is that Gold is in a major bull market. Its highly probable there is no head and shoulders pattern. Judging from our evidence, there is a good chance that Gold is in an accelerating mode. Sure, Gold could drop $50 or $75, but that won’t change the probabilities. My advice is to leave that to the traders.

The big money will be made in riding this bumpy trend to its zenith. George Soros, Jim Rogers, Warren Buffet and others have made their money by sticking with trends for a very long time. That is why we are sticking with Gold. Yet, in our service we seek to help investors and traders in managing their risk and riding what will be a very bumpy but spectacular bull market. Consider a free 14-day trial to our service, so we can help you profit tremendously from this bull market.

Jordan Roy-Byrne, CMT
Jordan@TheDailyGold.com

Gold/Silver – Controlling Your Trades, Money & Emotions

November 30, 2010 by · Leave a Comment 

By Chris Vermeulen, TheGoldAndOilGuy

Last week we had typical pre-holiday light volume trading going into US Thanksgiving. The previous week I warned every one to trade with extreme caution because of the light volume and the fact that the market is on the verge of a sizable drop for both stocks and commodities. Any price action could not be taken seriously because of the light volume. We will not know until later this coming week what the big money wants to do… Buy or Sell, also what the manipulators will do… Seems like there are a lot of wild cards out there with Europe issues and both unemployment and payroll numbers out on Friday morning.

Below are a few charts showing my intermediate term outlook for gold and silver.

Gold & Silver Futures – Daily Chart
You can see both metal are showing a possible reversal head and shoulders pattern. While they have yet to confirm and close below the neck line we must be aware of this pattern and the risk/potential it provides us with. Both metals are still in an uptrend but showing signs of weakness.

US Dollar Index – Weekly Chart
This chart is not really that helpful for trading stocks, commodities or options right now but I wanted to post it because it allows me to show you how I analyze the market and my trades.

As you can see, the past 3 weeks have been in a strong uptrend reaching the first resistance level. The point of this chart is to show you that if you step out to the next longer time frame you can get a solid feeling of where an investment will find major support and resistance levels. Any investment not matter if it’s a stock, commodity or currency, if the price is trading in the middle of a large range like this chart you should not be taking large positions because it almost becomes a 50/50 bet on the market which is not a good winning strategy unless you are very experienced at managing your trades and money.

If you are going to trade then you want to focus on the underlying trend and you do that by looking at the next larger time frame. For example: if you focus on trading the daily chart, then you must step back each week and review the weekly chart to be sure you are trading with the underlying trend which is up for the dollar right now.

Weekend Trading Ideas:
Tuesday morning we saw the SP500 gap lower and continue to sell off. Traders started panicking out of their long positions and we could see it using the intraday market internals charts, which I cover each morning in the pre-market trading videos. Me being a contrarian (buying into market fear, selling into market strength) I used that high level of fear in the market along with the expected light volume holiday week ahead as an excuse to book profits near the lows on SP500 using the SDS bear fund allowing us to profit from the falling market. I feel we are going to have some crazy moves on the markets going into year end and it should be a lot of fun if done correctly.

Trading in general is a very difficult task especially if you are doing it for a living and planning on using your monthly income to pay bills, salaries etc… We all know the stress which comes with trading and if do not have a solid trading strategy, rules and cannot properly manage yourself (emotions) then you are most likely running into problems like over-trading, getting shaken out of trades easily, and taking bigger risks than your account can handle. Each of these cause more traders to blow up their accounts and big up on trading.

I am giving away my book on how you can control your trades, money and emotions. This short and to the point guide is full of my trading techniques, tips and thoughts which will help you get a handle of your emotions turning the market noise into music.

Download Book:

Chris Vermeulen

Consumer Price Inflation: The Wolf at the Door

November 30, 2010 by · Leave a Comment 

By The Mogambo Guru

I knew I was pretty sloshed when I started giggling about the perverse idiocy in which bankrupted governments wallow, as The Wall Street Journal had a nice headline that said it all: “States Raise Payroll Taxes to Repay Loans.” Hahaha!

I mean, what kind of crazy crap is it when the government is so desperate for money that it is raising the cost of hiring people at the same time as 10% unemployment has, literally, decimated the workforce? This is crazy!

And as bad as it is being unemployed, this is at the same time that inflation is rising from the central banks of the world continuing to create so much new money, such an avalanche of new money, such a tidal wave of new money, so that their respective governments can deficit-spend it and provide bailouts to their Various And Sundry (VAS).

Oh, I’ve always had my fears about the inflation that comes from all this new money, and I knew that inflation would start showing up in real life as well as in my nightmares where prices are like ravenous wolves seeking to devour me, piece by piece, and while my neighbors are all around me being torn to pieces by the snarling rising price-wolves, I am whacking them on the head with a bar of gold, which gets bigger each time that a price-wolf takes a bite out of my leg, so that when I hit the wolf with it, I hit him so hard my leg grows back! Amazing!

I am sure that this is some kind of metaphor because of what I know about wolves, and I am not sure that I could successfully defend myself with a bar of gold against a pack of them, a knowledge gleaned from watching TV and reading books, one of which was the story of a single big, bad wolf devouring some old woman, whom I assume had a kitchen full of knives and cleavers to no avail, and a girl named Little Red Riding Hood.

Well, perhaps Little Red Riding Hood was British, as Britain seems to be leading the inflationary way. John Stepek of the Money Morning newsletter writes that their latest figures on inflation “came in at 3.2%.”

Junior Mogambo Rangers (JMRs) have doubtlessly noted the understated punctuation used by Mr. Stepek to announce 3.2% inflation, as those Truly Fearful Of Inflation (TFOI) would use at least one exclamation point!

Thus, a re-write would be “the latest figures on inflation ‘came in at 3.2%!’” followed by an explanatory, “We’re freaking doomed!”

And things must be heating up over here in the USA, too, as James Turk of The Free Gold Money Report notes that “since the date of its March 18, 2009 QE announcement, the CRB Continuing Commodity Index has risen 61.7%. Gold has risen 54.0%, while the US Dollar Index has dropped -7.2%.”

Predictably, I would immediately use this as a handy springboard to Go Freaking Berserk (GFB) that inflation in prices was over 3%, which is the historical dividing line between saving yourself from death by inflation in consumer prices and dying a horrible death from inflation in consumer prices, a fact of such importance that common sense says it should rate at least one exclamation point!

But Mr. Stepek is made of sterner stuff, and calmly goes on to disguise the horror of “if you look at the breakdown of all the items included in the CPI, not a single item actually fell in price compared to this time last year.”

This inflation is, of course, at the worst possible time, as he explains, “commodity price inflation at a time when unemployment is relatively high is stagflationary,” which is keenly felt in that “Your wages don’t rise to accommodate your rising cost of living, which is a grim situation to be in.”

Again with the lack of an exclamation point! Perhaps he would not be so stingy with his exclamation points if I give him an example that he can relate to: Imagine the year 1965. If you were 20 years old in 1965 and worked for 45 years, you would now be 65 years old and ready for retirement.

So how much retirement money did you put away in1965? Well, according to thepeoplehistory.com, the average income in 1965 was $6,500 a year, so you put away 10%, which is $650 a year.

By comparison, a new car cost $2,650 in 1965, rent was $118 per month, and a loaf of bread cost 21 cents.

Today, the average income in the private sector is around $40,000 a year, which is about right, since the Bureau of Labor Standards says that inflation since 1965 results in $1 of buying power in 1965 now requiring $6.94, which comes out to an annual inflation rate of 4.4% per year.

If you saved a whopping 10% of your 1965 gross income, or $650 a year, it would have to grow by a whopping 4.4% a year to $4,510 just to keep up with inflation, which is, sad to say, about what 10% of your $40,000 income today would be ($4,000).

And this is before paying taxes on the $3,860 gain, and not to mention all the fees and expenses paid along the way!

In short, because of inflation, expenses and taxes, you have to invest a month’s income to get a month’s income at retirement, meaning that your money did not grow at all.

And that is the absolute best-case scenario, in that investing is a zero-sum game, and with the government always taking money out, and the financial services industry always taking money out, there is less money for the investors to divide amongst themselves than was put in by the investors! Hahaha! “Investing for the long term!” Hahaha!

And if you needed another reason to buy gold, as if you needed another reason to buy gold when then Federal Reserve is creating so much money, then the fact that gold has kept up with inflation, without all the hassle, is it! Whee! This investing stuff is easy!

The Mogambo Guru
for The Daily Reckoning

Consumer Price Inflation: The Wolf at the Door originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

IMF says it sold less gold in October

November 30, 2010 by · Leave a Comment 

By Frank Tang and Lesley Wroughton
Reuters
Monday, November 29, 2010

http://af.reuters.com/article/metalsNews/idAFN2922871120101129

The International Monetary Fund has slowed the rate of selling its gold by 40 percent in October from the previous month, as interest among central banks to own the metal increased as a hedge against economic uncertainty.

The IMF sold 628,000 ounces (19.5 tonnes) of gold in October as part of its previously announced open-market bullion sales plan, an IMF spokesman said on Monday.

October’s gold sales were sharply below the 1.04 million ounces sold in September, when nearly a third of the sale was going to Bangladesh.

The IMF said late last year it would sell 403.3 tonnes or one-eighth of its total gold reserves to boost its lending resources. The fund said the sale would avoid disruptions to the gold market.

Many analysts expect world central banks as a group could become net buyers this year despite the IMF’s gold sales, reversing a trend in the last several decades.

Based on information from the IMF’s Financial Statistics database, the spokesman said cumulative on-market sales of IMF gold to the end of October was 4.8 million ounces (148.6 tonnes).

The sales were part of IMF plans announced in February to begin phased sales of 191.3 tonnes of gold in the open market this year.

Gold previously sold directly to central banks were 222 tonnes to India, 200 tonnes to Mauritius, 10 tonnes to Sri Lanka, and 10 tonnes to Bangladesh.

Gold prices hit an all-time high of $1,424.10 early this month before retreating. The rally was driven in part by expectations that the Federal Reserve would buy back U.S. Treasuries to stimulate economic growth.

However, gold’s rally appeared to stall despite concerns about the fiscal health of euro zone economies after a bailout on debt-stricken Ireland and rising tensions on the Korean peninsula.

On Monday, spot gold traded at around $1,365 an ounce. Still, the metal has rallied more than five-fold from about $250 an ounce back in 2001.

* * *

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

German bank’s analyst urges gold transparency, praises GATA

November 30, 2010 by · Leave a Comment 

1:22a ET, Tuesday, November 30, 2010

Dear Friend of GATA and Gold:

The chief market analyst for Bremer Landesbank in Bremen, Germany, Folker Hellmeyer, was interviewed this month by Lars Schall for ChaosTheorien.com and commented on the manipulative concentration of participants in the gold and silver markets, urged repatriation of Germany’s gold from the United States and greater transparency with central bank gold reserves, and called GATA and the proprietary Internet site of GATA Chairman Bill Murphy (LeMetropoleCafe.com) “the best provider of news regarding bullion in general for the past 10 years.” The interview is headlined “I Don’t Want Speculation; I Want Clear Investment” and you can find it at ChaosTheorien here:

http://tinyurl.com/2eym552

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

Senate fails to repeal $600 tax-filing requirement

November 30, 2010 by · Leave a Comment 

By Stephen Ohlemacher
Associated Press
via Yahoo News
Monday, November 29, 2010

http://news.yahoo.com/s/ap/us_health_care_repeal

WASHINGTON — The Senate on Monday rejected an effort to reduce tax-related paperwork for businesses when lawmakers couldn’t agree on whether they would make up the revenue the new requirement was expected to produce.

The filing requirement is part of President Barack Obama’s health care overhaul but not related to health care itself. It is expected to help the government collect an estimated $19 billion in taxes on underreported income over the next decade, and that revenue has been slated to help pay for changes in the health care system.

Under the new law, nearly 40 million U.S. businesses would start filing tax forms in 2012 for every vendor that sells them more than $600 in goods. Many Democrats who supported the filing requirement now acknowledge that it would create a paperwork nightmare, but whether to make up for the lost revenue has divided senators who agree it should be repealed.

Senators tried twice on Monday to amend an unrelated food safety bill to repeal the filing requirement. Both proposals, one by Sen. Max Baucus, D-Mont., and another by Sen. Mike Johanns, R-Neb., failed to get the necessary two-thirds majority.

The Johanns amendment would make up the lost revenue by requiring the Obama administration to tap unspent money in various federal accounts.

“Billions of taxpayer dollars sit in unspent accounts and a very small percentage of those funds would give small businesses a much-needed break from the impending tax paperwork tsunami,” Johanns said.

The Baucus proposal was not paid for. Democrats argued that the health care law would still reduce federal borrowing, even without the filing requirement.

The nonpartisan Congressional Budget Office estimates that the new health care law will reduce federal budget deficits by $143 billion over the next decade. Repealing the filing requirement would mean smaller savings.

Businesses already must file Form 1099s with the IRS when they purchase more than $600 in services from a vendor in a year. The new provision would extend the requirement to the purchase of goods, starting in 2012.

The goal of the provision was to prevent vendors from underreporting their income to the Internal Revenue Service.

The filing requirement would hit about 38 million businesses, charities and tax-exempt organizations, many of them small businesses already swamped by government paperwork, according to a report by the National Taxpayer Advocate. It would also create an avalanche of paperwork that could strain the IRS itself, wrote the advocate, an independent watchdog within the IRS.

The House voted in July against repealing the requirement, when House members could not agree on how to make up the lost revenue.

The food safety bill would increase Food and Drug Administration inspections of food processing facilities, give the FDA power to order recalls of tainted products and require farmers and manufacturers to follow stricter standards for keeping food safe. Senators voted to move forward with the bill Monday and are expected to vote on final passage Tuesday.

* * *

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

The Big Picture: Is Gold Going to $4,500?

November 30, 2010 by · Leave a Comment 

David Moenning submits:

Gold bugs are an interesting bunch. Traditionally known for extremely conservative political views as well as a passion for guns and canned goods, talking to a true gold bug can be a lot of fun if you have an open mind. However, these days, the gold-is-always-good crowd just might have a point or two worth considering.

To the average investor, something that has already moved up ~25% this year and has almost doubled over the past two-plus years may not be considered to be a great value. The average technician might even call such an investment “overbought.” But to the gold bugs who have studied history, it looks like gold is still a good buy as there might be some room to run yet – maybe even a LOT of room.

Read more »

Five Factors Affecting the Price of Gold and Physical Gold ETFs

November 30, 2010 by · Leave a Comment 

Tom Lydon submits:

Gold prices are affected by a multitude of factors, and potential investors looking for gold ETFs should assess what they include.

The main factors that are often cited include worries that China will raise key rates, no set policy on how to halt currency manipulation, gold speculation and volatile equity trading, writes Alix Steel for NuWire Investor.

Read more »

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