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June 29, 2012 by · Leave a Comment 

By Toby Connor, Gold Scents
I think it’s clear by the action in the dollar index this morning and the response by risk assets in general, that the bottom I have been looking for is here. 

Today will be the first day in a commodity rally that should last roughly 2 years topping in mid-to-late 2014 when the dollar puts in its next three year cycle low.

The next two or three weeks should produce an exceptionally violent rally from extreme oversold conditions followed by a consolidation period as the dollar bounces weakly out of its intermediate bottom and rolls over quickly signaling that the three year cycle has topped.

The last two three year cycle lows in 2006 and 2009 generated a 20% and 32% rally during the initial move out of the final low.

This is day one of what should be roughly a two year rally into a massive parabolic spike sometime in 2014.

Let me reiterate that the initial rally out of one of these major cycle lows is always extremely aggressive. Today you have a chance to get in on the first day of this initial move. Those that wait will end up chasing into overbought conditions very quickly.

As is often the case, gold sniffed out this bottom early in May. The rally today confirms that we have a daily cycle bottom in place and a new cycle beginning that should last 15-20 days before the next short-term correction.

Miners confirmed this major bottom with a 24% initial rally on huge volume. This should be a multi-year low that will not be violated until the secular bull comes to an end.

To find out how cycles analysis enabled me to predict this major bottom I have reactivated the one week trial subscription to the premium newsletter.

Toby Connor


A financial blog primarily focused on the analysis of the secular gold bull market.

If you would like to be added to the email list that receives notice of new posts to GoldScents, or have questions, email Toby.

Eurozone Leaders Surprise the Markets

June 29, 2012 by · Leave a Comment 

The Daily Reckoning

Good day, and a Happy Friday to one and all! I’m dragging the line this morning for sure, so I doubt I’ll be my normal self as I write. By missing yesterday, I missed out wishing what was once my little buddy, Alex, a happy 17th birthday! And a Happy Anniversary to darling daughter Dawn and her husband Jerry. Yes, they got married on Alex’s birthday. He thought the reception that night was his birthday party!

Front and center this morning, there’s been a development in the eurozone summit that needs to be addressed. In a move that surprised the markets, the eurozone leaders agreed to allow the bailout funds to recapitalize banks. This has been a real bottleneck for the eurozone, and now that it’s behind them, they can go about shoring up the troubled banks of Spain and Italy. Hey! Don’t look at me that way! No, this isn’t what Chuck would do. But the markets seem to love it as the euro (EUR) has rallied from 1.2444 yesterday to 1.2580 this morning…

What would Chuck do? Just here in the U.S. four years ago, I would have let the banks that made bad decisions fail. But there needs to be deposit insurance. Yes, things would have gotten really ugly. But in a couple of years, this would all be behind them and a “real recovery” could take place. But as I said, the markets like it.

They also like the news that the eurozone leaders have agreed to have just a single supervisor to oversee the eurozone’s banks. Is this the first step of a debt union to come? Maybe. But I still think Germany would roll over and play dead before they agreed to issue a eurozone bond.

Speaking of rolling over, with Germany’s loss in the Euro 2012 tournament, it will be an all PIIGS final of Spain and Italy.

The good thing about this tapping of the bailout funds is that when they shore up the banks in Spain and Italy, they won’t be adding to debt. So does all this meet the requirements that I put on the eurozone leaders to save the Union? No. But at least it’s a step in the right direction. And with that decision, not only has the euro recovered 1 cent, but gold has recovered $17 this morning on the news, and the commodity currencies are soaring as I write.

So we end the week with the markets happy with the eurozone decision and the risk-aversion campers are crawling back into the walls from which they came. So it’s a risk-on day for the risk assets of currencies, metals and stocks. I’m not seeing much slippage in the U.S. Treasury 10-year yield right now, so this must have been cash just sitting on the sidelines waiting to see what the eurozone leaders would do.

Did you see that the U.S. first-quarter GDP final reading was +1.9%. But remember, in the first three months of this year, we were still rocking and a rolling from all the easy money and stimulus. As the effects of all that stimulus began to fade, the second quarter has been much slower, the economic data continue to be weaker and the job creation has dropped like a bad habit. I know this is a bit premature, but I’m going to go out on a limb here: Don’t worry, I’ll pick out a big fat one to hold me and say that the second-quarter GDP will be less than 1%.

We might get an indication of the weakness in the second quarter this morning when two of my fave economic reports print. Personal spending and personal income. I think we’ll see personal spending will have dropped like a rock in the month of May. And for the first time in a month of Sundays, we will make more in May than we spent. But I doubt it’s going to feel good. The first preliminary report on second-quarter GDP won’t print for about a month. So go cool off by the pool until then!

But the backside of the financial storm is growing closer to our shores, for sure! While we’re talking about U.S. economic data, the weekly initial jobless claims that print every Thursday printed yet another stronger-than-forecast number of claims for last week and revised upward the previous week’s total to 392,000. These data have cooled off some in the first quarter, but have steadily risen in the second quarter back to the number of claims we were filing a couple of years ago.

A week from now, while most traders are gone as they stretch the Fourth of July holiday into a multiday mini-vacation, the Jobs Jamboree will print for June — and this is that proverbial fork in the road, folks. Will the June jobs data be weak like the April and May reports? Or will it find some legs? Remember: 1) It’s an election year, and 2) The BLS has added over 400,000 jobs to the monthly reports the past two months. Without those additions, April and May would have been negative months of job creation. So there are two wild cards, like one-eyed Jacks, for the Jobs Jamboree next Friday.

Right now — and I know, I know, it’s a week away — I think the number will be less than 100,000. And that will be disappointing, for sure! And I’ll be one of those traders that are stretching the holiday next week. So I need to start talking about the Jobs Jamboree now.

In the U.K. this morning, Bank of England (BOE) Gov. King told reporters that the banking sector was deteriorating. So the state of mind in England doesn’t change: constant doom and gloom. But the coming Olympics are going to give the U.K. economy a shot in the arm, and what they do with that remains the question going past the Olympics.

As I said above, the commodity currencies soared on the news from the eurozone summit. The Australian dollar (AUD) and New Zealand dollar/kiwi (NZD) have taken off this morning. The A$ is up over 1 cent, and kiwi is up nearly 1 cent. All the movement higher in these currencies has come as a result of the announcement at the eurozone summit. And while I would normally get to lathered up by something like this, I do have to say that it’s nice to see the rally take place, for the selling this week has come from the perceived disappointment that would come from the eurozone summit. So we’re back to where we were before all the “perceived disappointment” set in.

And gold. I told you earlier that it was up $17. Well, in that hour since I’ve been writing, gold has added another $7 and is now trading up $24 this morning. And it looks like one of those days that’s going to just give the price manipulators a rash, for gold looks to be on a mission from God, as the Blues Brothers would say.

So I touched on the eurozone summit’s decision that surprised the markets this morning and got things rolling. So what does Chuck think about this? It was low-hanging fruit for the eurozone leaders, so why not pick it? The fruit high up in the tree is the finalization of the blueprint or road map, if you will, toward fiscal integration. Other than something like that being done today, I doubt this is a lasting love affair for the euro. It certainly isn’t a game changer! So be careful out there!

Mom! He’s doing it again! China is taking another step toward a wider distribution of their currency by announcing that they plan to further develop the offshore renminbi/ yuan (CNY) market in Hong Kong. But then Australia knocked on the door. It’s Australia and they want to establish an offshore market for the Chinese currency!

Again, folks, you won’t see this stuff on the cable news or in the newspapers, because this is not good news for the dollar. These are baby steps that China is taking, but they are taking all the right baby steps. And then I saw a report by Larry Edelson, a well-respected analyst, who claims that China’s commercial banks have been given approval to dump and sell short U.S. dollars.

Yes, to me, there’s been no question whatsoever that the Chinese have gone well down the road to removing the dollar as the reserve currency of the world. It will take time — lots of time — but the Chinese have awaken from their slumber, and everything they’ve put their minds to they’ve accomplished. They wanted to be the biggest exporter, and now they are. The wanted to pass Japan as the second-largest economy in the world, and they did. And the list goes on. If you haven’t woken up to smell the coffee yet, here’s a hot cup of java for you!

Then There Was This: I was reading over stories this morning, trying to pick our TTWT story for today, and while a lot of the stuff centered on the health care announcement yesterday. I’m just not going to go there. So I decided to print this story that was on MarketWatch that talks about inflation and gold. So here you go!:

“Is inflation a good or a bad thing? It might sound like an easy question. But actually, it depends on who you are and what your portfolio looks like.

“If you have lots of debt, and own equities, property and commodities, then inflation is pretty good. If you are a creditor, and own mostly bonds, then it is a bad thing.

“Most of the time, there is a global argument going on between the people who want inflation and those who don’t. Whether prices rise or not depends on who wins.

“Until recently, the balance has been about even…

“But right now, that power balance is shifting. Europe and Japan are about to switch to inflation. That will have huge implications for the markets. Such as? Property and blue chip equities will do well. Bonds will do badly. Most of all, gold will spiral up into the next phase of its bull run.”

Could today be the beginning of that next bull run for gold? It’s now up $31 on the day, up $7 more since just half an hour ago!

To recap: The eurozone leaders surprised the markets and announced that the bailout funds would be allowed to recapitalize the troubled banks of Italy and Spain. This was HUGE for the markets, and they have gone on a risk-on day tear! The currencies led by the euro and commodity currencies are soaring, and gold is up $31!!!! Everything today is all about the eurozone summit, so continue to look for news coming out of Brussels.

Chuck Butler
for The Daily Reckoning

Eurozone Leaders Surprise the Markets 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. Recently Agora Financial released a video titled “What Causes Gas Price to Increase?“.

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Hathaway, von Greyerz see growing legitimacy for gold

June 29, 2012 by · Leave a Comment 


1:26p ICT Friday, June 29, 2012

Dear Friend of GATA and Gold:

Interviewed by King World News, Tocqueville Gold Fund manager John Hathaway sees signs in Europe and the United States that gold is being brought back into the financial system as the best sort of collateral if not as money itself:


Also at King World News, Matterhorn Asset Management’s Egon von Greyerz analyzes the financial turmoil, heaps contempt on the European political leadership, and says gold will come out on top:


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

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RBS and Lloyds drawn into rate-rigging scandal

June 29, 2012 by · Leave a Comment 


By Robert Winnett
The Telegraph, London
Thursday, June 28, 2012


Royal Bank of Scotland and Lloyds have been accused of systematically rigging financial markets in a growing international scandal that wiped billions off the value of shares in Britain’s biggest banks.

Bob Diamond, the chief executive of Barclays, is under pressure to resign after the bank admitted it had conspired to fix global interest rates, with David Cameron, the prime minister, saying he should take responsibility.

The scandal now threatens to engulf taxpayer-funded Lloyds and RBS, which according to court documents obtained by The Daily Telegraph have also been accused of routinely distorting basic financial data used to set interest rates.

As British banks faced a potential criminal investigation billions were wiped off their value, with shares in Barclays falling by 15.5%. RBS’s share price plunged by more than 10 percent yesterday, wiping more than L2 billion off the value of taxpayers’ stake in the bank.

Executives at HSBC are also being investigated alongside London-based financial firms for their role in the scandal, which is estimated to have cost consumers, investors, and businesses L30billion.

Mr Diamond’s position appears increasingly fragile. Vince Cable, the Business Secretary, said that he could be banned from running a British company following regulatory investigations.

David Cameron suggested that Mr Diamond should resign, saying that “people have to take responsibility for the actions” and that this process must go “all the way to the top.”

The growing scandal, which has international implications but largely took place in the City of London, has led to calls for the Prime Minister to establish a public inquiry into the banks.

Downing Street had initially tried to dismiss the situation as a “regulatory matter” but ministers yesterday queued up to condemn Barclays and other banks, as it emerged that:

– The Serious Fraud Office has begun talks with regulators over potential criminal investigations into senior Barclays executives and other bankers.

– George Osborne said the scandal was a “shocking indictment of the culture at banks like Barclays” as he pledged to tighten the law to make criminal prosecutions possible.

– A Barclays whistleblower accused the Government of failing to address the scandal which he first exposed more than four years ago.

– A former trader at the Royal Bank of Scotland claimed that it was “common practice” among senior employees to make requests to fix the Libor rate — and that senior management knew about the tactic.

– An independent analysis presented to American courts estimated that the scandal may have cost $45 billion (L30 billion) during the financial crisis alone. Most of the losses may have been incurred by pension funds and other investors.

– Senior financiers warned that the City’s position as a trustworthy place to conduct business was under threat by the action of the London bankers.

Earlier this week, Barclays was fined a record L290 million after it admitted that its traders and managers repeatedly made “false reports” in order to push Libor and other interest rate measures higher or lower than its true rate.

The manipulations helped increase traders’ profits and initially protected Barclays’ reputation.

However, they cost consumers and business dear. Market rules dictate that executives providing information to set Libor rates should be isolated from traders who have a financial interest in the rates.

One Barclays trader wrote: “Dude. I owe you big time! Come over one day after work and I’m opening a bottle of Bollinger.”

The country’s most senior politicians condemned Barclays and the bank’s executives.

Speaking in Brussels, the Prime Minister said: “I’m determined we learn all the lessons from what has happened at Barclays. People have to take responsibility for the actions and show how they’re going to be accountable for those actions. It’s very important that goes all the way to the top of the organisation.”

Mr Diamond is expected to be hauled before a Parliamentary Committee next week to answer “some serious questions.”

Vince Cable Business Secretary said that it would be “seriously premature” to decide now whether Mr Diamond should be sacked, but added that the Government did have powers to disqualify directors.

“If the facts suggested action — and obviously we would be subject to legal advice; this is a legal process — then indeed that could well follow,” he said.

Mr Diamond was resisting calls to resign and the Barclays board was said to be supportive of his ongoing position. However, the bank is likely to consider further actions — possibly including repaying previous bonuses — in the coming days.

Senior sources said they were “taken aback” by the political reaction to the scandal, but believed that part of the reason the share price had fallen yesterday was the concern that Mr Diamond would be forced to resign and this would damage the bank.

Mr Diamond, one of the country’s top paid bankers who previously headed Barclays’ investment banking division, has already acknowledged that the settlement over the scandal with regulators would damage customer trust in the bank, and said he and other senior executives would forgo bonuses this year.

The British Bankers Association (BBA), which establishes the parameters for how Libor is set each day, said it was “shocked” by the behaviour that led to Wednesday’s fine, and called on the government to look at imposing new rules.

“The banks which contribute to the Libor rate must meet the necessary obligations to their regulators,” the BBA said. “As part of this review we will now be asking the authorities to consider in what manner the Libor setting mechanism should be regulated in the future.”

More than 20 other banks are being probed by regulators from London to Japan and Brussels to North America.

“Barclays was extremely cooperative and the majority of these cases come down to not just the complexity but whether a firm is willing to cooperate and how much a firm is willing to cooperate above and beyond their legal requirements,” a regulatory source said.

Others who have already fired, suspended, or seen staff leave after internal investigations include JPMorgan, Deutsche Bank, RBS, and ICAP, run by former Conservative treasurer Michael Spencer.

“One of the reasons London is a major international financial centre is because of the perceived emphasis on trust and integrity in the London market,” said Simon Culhane, the chief executive of the Chartered Institute for Securities and Investment. “This scandal can only serve to damage London’s reputation.”

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First Uranium and Gold One delay Ezulwini sale

June 29, 2012 by · Leave a Comment 

First Uranium has agreed to delay the sale of its shares in Ezulwinig Mining Company to Gold One in order to satisfy terms and conditions surrounding the acquisition.

Read more….

Dutch Gold reaches JV agreement in Nicaragua

June 29, 2012 by · Leave a Comment 

Dutch Gold Resources (DGRI) has reached a definitive joint venture agreement with its partner in Nicaragua.

Read more….

Deals this week: Vale, L&LEnergy, Chaarat Gold and more

June 29, 2012 by · Leave a Comment 

Vale has closed the sale of its thermal coal assets in Colombia to CPC, an affiliate of Colombian Natural Resources, for total consideration of $407m.

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SA committed to working with Unesco on Mapungubwe

June 29, 2012 by · Leave a Comment 

South Africa remained committed to working with the United Nations Educational, Scientific and Cultural Organisation’s (Unesco’s) World Heritage Committee in ensuring effective implementation of the convention of the Mapungubwe Kingdom, the Department of Environmental Affairs (DEA) said Friday.

This comes as the committee considered the state of conservation of the Mapungubwe world heritage site during its 36th sitting held in St Petersburg, Russia.

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Competition Tribunal approves Petmin’s SamQuarz sale

June 29, 2012 by · Leave a Comment 

The Competition Tribunal on Friday approved Petmin’s R259-million sale of the SamQuarz silica mine, near Delmas, in Mpumalanga, to Thaba Chueu Mining.

In January, the Commission said it would not authorise the sale of SamQuarz owing to its strategic importance as a supplier to the producers of ferrosilicon and silicon metal in South Africa, sparking an appeal to the Competition Tribunal by Petmin and Thaba Chueu Mining against the decision.

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Delta dismisses CEO for alleged theft

June 29, 2012 by · Leave a Comment 

South Africa-based coal exploration and development company Delta Mining has dismissed its CEO with immediate effect on the grounds of alleged theft, the company said in a statement.

Heine van Niekerk was suspended in February pending an independent investigation into allegations of intellectual property and computer theft.

Read more….

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