‘By every metric’ gold is cheap, Rickards tells King World News

GATA

1:42a ET Sunday, July 31, 2011

Dear Friend of GATA and Gold:

In his latest interview with King World News, summarized incompletely for you Thursday (http://www.gata.org/node/10184), geopolitical analyst James G. Rickards disparages U.S. Treasury Secretary Timothy Geithner for creating a false panic about the U.S. debt ceiling and says U.S. government policy now is to weaken the dollar to boost exports. Rickards adds that “by every metric” gold is cheap, not in a bubble but rather underowned. Audio of the full interview has been posted at King World News here:

http://kingworldnews.com/kingworldnews/Broadcast/Entries/2011/7/30_Jim_R…

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

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Haynes, Norcini review precious metals’ week

GATA

12:15a ET Sunday, July 31, 2011

Dear Friend of GATA and Gold (and Silver):

In the weekly precious metals review at King World News, Bill Haynes of CMI Gold and Silver reports that coin premiums are normal even as some big purchases are being made, while futures market analyst Dan Norcini sketches support and resistance levels, finds a lack of conviction among both bulls and bears, calls the U.S. dollar chart “ugly,” and sees gold continuing its steady rise. You can listen to the interviews here:

http://kingworldnews.com/kingworldnews/Broadcast/Entries/2011/7/30_KWN_W…

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

Help keep GATA going

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Uncertainty and Panic Selling in Stocks Provide Major Opportunity!

By Chris Vermeulen, TheGoldAndOilGuy

Over the past seven trading sessions we have seen stocks plummet in price because of the debt issues in the United States. I think a lot of individuals including myself thought that a bill would have been passed last week and with a plan underway money would flow back into stocks for a relief bounce at minimum. Instead, nothing was passed and that lead to strong selling into Friday’s close.

The next couple weeks are going to be very interesting for stocks, bonds, currencies and commodities as traders and investors process this event as it unfolds.

Let’s step back and take a quick technical look at the chart…

SPY – SP500 Index ETF – 10 Minute Chart
I call this chart my sentiment chart because I use three indicators to get a feel for what the masses are doing. The first indicator which is the green spikes on the price chart is my own custom indicator to measure panic selling in the stock market. Usually I look for strong selling days followed by an exhaustion gap lower within 1-3 days.

As you can see below, the last panic selling spike took place on a large gap down only 2 days after we saw extreme panic selling which actually got stronger as the session grew older. This is a bullish sign in my opinion.

Also if you look at the two other indicators at the bottom we can see the NYSE advance decline line trading down in an oversold zone. And the very bottom indicator is the put/call ratio showing everyone is trading puts and that means they are betting on lower prices.

To sum this chart up quickly I can tell that traders are selling everything they own because they are scared, stocks have moved down to quickly and likely ready for a bounce and also that options traders are expecting lower prices. So if everyone is bearish and has already sold their positions it only makes sense that a bounce or rally should take place in the next few sessions.

Percentage of Stocks Trading Above the 20 Moving Average
This chart helps me get more of an intermediate trend analysis for if stocks are oversold or over bought. This chart tells us the percentage of stocks that are trading above their 20 day moving average.

This is how I use the info:
Example: If we are in a long term bull market which we currently are… then I look at buy during these oversold conditions. Once this chart reaches the 75%+ level I become more aggressive with my positions and actively manage them (Take partial profits, tighten stops).

Example 2: During a major bear market you to the opposite (build short positions on the bounces to 75%+ level and then cover partial positions and tighten stops once stocks are oversold and ready for a dead cat bounce once below the 25% level.

SPY Daily Chart
This chart below allows us to get a longer term view of my panic selling indicator. As we all know the market moves in waves (fear and greed). So with the SP500 traded by individual’s from all around the world it generally takes 5-15 days for everyone to become fearful and or greedy and to take action with their investments. This can be seen from looking at how long it takes for the sellers unload their positions.
If things play out in favor of what the charts are telling me we should have a nice bounce or rally just around the corner. Again this analysis is based strictly on technical analysis and not on economic data. Adding the economic/political data makes things very confusing and interesting to say the least and they do not always to hand-in-hand.

Weekend Trading Conclusion:
In short, this coming week the market has a big wild card on the table. Until we know what that is be very cautious with trading positions. Just now/tonight Obama said a deal was reached to end debt issue and urges both parties to do the right thing and support this deal over the next 2 days. This deal will raise the debt limit and will cut $2.5 trillion from the deficit over the next 10 years.

We are seeing a 20 point jump in the SP500 futures from this news just moments ago so this just may be the bounce/rally I am looking for.

Technically I feel higher prices should take place in stocks but we may have a couple volatile sessions with lower prices before a strong jump in price as this news is not set in stone just yet and we have a couple days before we know what the final decision is…

If you would like to receive these free weekly updated in your inbox please opt-in to my newsletter here: http://www.thegoldandoilguy.com/trade-money-emotions.php

Chris Vermeulen

China to Overtake India as World’s Biggest Gold Consuming Nation

The Daily Reckoning

Much like how China has surpassed the US in so many manufacturing and economic milestones — and South Africa in gold production — the world’s most populous country is now poised to topple India as nation with the strongest gold demand in the world.

China has long been interested in amassing gold reserves, and often from its own gold mines rather than the International Monetary Fund’s bullion (for example).

Similarly, its government has encouraged the Chinese citizenry to load up on the yellow metal as way of bolstering household savings. The Asian behemoth also sped up the gold purchasing process by allowing ordinary retail clients to easily change cash into gold at local branches of the Bank of China. Given these realities, it’s hardly surprising China has risen up through the gold consumption ranks so rapidly.

According to Bloomberg:

“‘Three or four years ago there was no one who would have expected Chinese physical demand for gold to surpass India,’ [Chuck Jeannes, chief executive officer of Goldcorp Inc.] said yesterday in a telephone interview from New York. ‘Now it looks like that could happen as early as the end of this year. And that’s while Indian demand is increasing.’

“While global demand for gold is advancing on concerns about financial turmoil in the U.S. and some European countries, consumers in China are buying larger amounts of the metal as an inflation hedge, Jeannes said.

“Investment demand in China more than doubled in the first quarter to 90.9 metric tons as the nation overtook India to become the largest market for coins and bars, the World Gold Council said in May. India was the largest consumer of gold jewelry last year, according to data compiled by Bloomberg.

“Gold reached a record $1,631.20 an ounce on July 27 in New York on concern about a potential U.S. default and is heading for an 11th straight annual increase.”

Although Jeannes originally anticipated gold at $1,600 in 2011, he’s now expecting its price to rise to $1,700 an ounce this year. Neither India, nor now China, are witnessing gold’s present dearness slow demand. You can read more details in Bloomberg’s coverage of how China’s gold demand may surpass India this year.

Best,

Rocky Vega,
The Daily Reckoning

China to Overtake India as World’s Biggest Gold Consuming Nation originally appeared in the Daily Reckoning. The Daily Reckoning provides 400,000+ readers economic news, market analysis, and contrarian investment ideas. Follow the Daily Reckoning on Facebook.

More articles from The Daily Reckoning….

Economic Rape of Europe Nearly Complete, Part IV

By Jeff Nielson, Bullion Bulls Canada

In the first three installments of this series I documented how U.S. economic terrorism had been unleashed on Euro-zone debt-markets, driving up their interest rates – and thus their deficits – exponentially. I then explained how the bankers and bond parasites had exploited this increased indebtedness to attach legal claims against the national gold-hoards which these Euro-zone economies purportedly possess. Lastly, I pointed out how the “loss guarantees” being imposed on these debts (starting with Greece) represented nothing less than perpetual debt-slavery.

In this final installment I will discuss the last “nail in the coffin” for individual Euro states, and their populations. The ultimate goal of these ruling Oligarchs is nothing less than the full, economic integration of Europe. Not only would this bind every European citizen to the debts of all the individual Euro states, but once full economic integration had been achieved then Europe’s wealth could be plundered as a single entity – much more efficient than their current nation-by-nation looting.

Naturally, this is not something which would be “welcomed” or even tolerated by most Europeans. First of all, national identities remain strong within these countries, and there is no desire for any greater degree of integration. Secondly, the economic atrocities inflicted upon us by Western bankers over the past three years have greatly exacerbated the regional economic disparities within Europe. Simply, the Northern “have’s” are adamantly opposed to what they see as the “subsidization” of the Southern “have not’s”.

Conversely, the banker-terrorists and bond Oligarchs are equally determined to impose a single, economic entity on all of the peoples of Europe. This became utterly imperative in the minds of these economic fascists in order to eliminate “the Iceland option”.

Knowledgeable readers will be aware that Iceland was initially a very eager “pawn” for the Western multinational banksters at the beginning of this millennium. However, after the Crash of ’08 exposed these banksters as the international crime syndicate we now know them to be, Iceland severed its ties with these thugs-in-suits – renouncing the fraudulent debts which the banksters sought to impose on the people of Iceland through loss guarantees.

At that point, the new mantra of these Oligarchs became “no more Icelands”. In part, this has been achieved by tightening their economic choke-hold on individual Euro zone economies – thus gaining added leverage on their weak, incompetent, and traitorous governments. The Oligarchs realized that they had been arrogant and sloppy in their handling of Iceland – never dreaming that the government of that tiny nation would be courageous enough to “call their bluff” and simply walk away from all of that fraudulent debt. They now seek to permanently eliminate the economic sovereignty of Euro states, ensuring that no other European nation can escape from the fascist debt-slavery these Oligarchs seek to impose.

The obvious question is: how can this be achieved? With most Europeans firmly opposed to any greater integration, and increasingly suspicious of the motives and actions of their own governments, it is highly unlikely that any of the current governments in Europe have the “political capital” to muscle-through such a plan.

As with most of the machinations of these villains, it is a multi-stage strategy. The first stage is nearing completion: taking several Euro-zone economies as close as possible to the brink of total economic collapse – without triggering outright bankruptcy/debt-default. The banksters realized that this had been part of their mistake with Iceland. At the time that they sought to impose their massive “loss guarantees” on Iceland (which would allow them to permanently blood-suck that economy), Iceland’s underlying economy was still reasonably prosperous/stable. Thus it was able to absorb the economic “shock” of walking away from the banksters’ debts – and the “penalty” of being shut out of international debt markets.

With Greece’s economy now in total ruin and Ireland, Portugal and likely Spain soon to follow, the banksters want to make these economies so ridiculously over-leveraged with debt, and debt-dependent that “walking away” would result in maximum economic devastation. At this point, there’s no reason to believe that they will fail to do to the other three “PIGS” what they have now accomplished with Greece.

More articles from Bullion Bulls Canada….

Gene Arensberg: Market signals turning against gold

GATA

11:53p ET Saturday, July 30, 2011

Dear Friend of GATA and Gold:

The Got Gold Report’s Gene Arensberg finds market signals turning against gold even as he acknowledges that geopolitical events could explode everything. His advice is caution. You can find it here:

http://www.gotgoldreport.com/2011/07/gold-and-silver-disaggregated-cot-r…

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

 

Deficits don’t matter — till China says they do

GATA

By Chris Powell
Journal Inquirer, Manchester, Connecticut
Saturday-Sunday, July 30-31, 2011

http://www.journalinquirer.com/articles/2011/07/30/chris_powell/doc4e331…

Convulsed over whether and how to raise the federal government’s debt ceiling, Congress, the president, and the public are prisoners of a misapprehension — that the federal government could run out of money.

But it is the government itself that issues money, and for the many decades since the United States abandoned commodity money — gold and silver — there has been no limit on how much money the government can issue. Indeed, the federal government needs neither to tax nor to borrow to obtain money; the government can simply issue it, as it did during the Civil War. A currency not formally convertible to a commodity like gold or silver is constrained only by currency devaluation through over-issuance.

When he was president of the Federal Reserve Bank of New York in 1945, the economist Beardsley Ruml noted that the federal government no longer needed taxes for revenue and that taxes now were important mainly as instruments of social policy. That is, taxes determine not how much money the federal government has but rather [ITALICS] who else has money and how much.

 

The real questions of taxation, Ruml wrote, had become these:

“Do we want a dollar with reasonably stable purchasing power over the years? Do we want greater equality of wealth and income than would result from economic forces working alone? Do we want to subsidize certain industries and economic groups? Do we want the beneficiaries of certain federal activities to be aware of what they cost?”

The federal government long has chosen to obtain money through taxation and borrowing rather than direct issuance. But the borrowing lately has been a bit of a fiction, insofar as the Treasury Department issues and sells bonds in the open market only for the Federal Reserve to buy many of them from intermediaries and turn them into cash, monetizing the debt. While this process now is bumping up against the statutory debt limit, there are ways around it.

U.S. Rep. Ron Paul, R-Texas, notes that the Fed holds more than a trillion dollars in U.S. government bonds for its own account and could just run them through the shredder, suddenly creating a lot of room under the debt ceiling.

Others, like Yale Law School Professor Jack M. Balkin, note the obscure law authorizing the Treasury to mint platinum coins in any denomination and theorize that the Treasury could mint a few, stamp them with the denomination of $1 trillion, deposit them at the Fed, and draw virtually infinite checks against them without affecting the debt ceiling at all. With such a device and others the entire national debt could be closed and the debt ceiling made irrelevant.

Of course that would flood the world with dollars as they were exchanged for U.S. government bonds, and thus risk hyperinflation, the dollar’s collapse. That would depend on the reaction of the bondholders, who would become cash holders. And yet the bondholders and world markets generally pretty much treat their U.S. government bonds as cash already and lock them up in central bank and treasury vaults. If the cash exchanged for bonds continued to sit in vaults, not much would change. Things would change only if the cash began to be spent.

At some point over-issuance of bonds and cash likely would cause serious devaluation and induce foreign holders to sell and spend. After all, big holders of U.S. debt like China, having worked for decades to manufacture real goods for sale in the United States, won’t really be paid until they exchange their bonds and dollars for real goods. So to a great extent the outcome of U.S. budget policy is now in the hands of foreigners. They are not concerned about easing unemployment and recession here through stimulative money creation; they want to maintain the value of the bonds they have purchased and the dollars they hold, even as the United States would like to devalue its debt and the dollar.

The other important question in the debt ceiling controversy is simply the size and scope of the government. Government and its transfer payments are now about half the economy and crowding out the private sector even as the country becomes impoverished. The economy is steadily less a matter of production and more a matter of political patronage. The rage of the tea party people may be blind and at times hypocritical, but there really is something for the private sector to be enraged about.

—–

Chris Powell is managing editor of the Journal Inquirer.

* * *

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:

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US Mint Issues Statement on Five Ounce Silver Coin Varieties and Finishes

Varying finishes on the America the Beautiful Five Ounce Silver Uncirculated Coins have been confirmed by the United States Mint in a statement issued Wednesday morning. This came following coin collector reports and after NGC announced the discovery of a 2010-P Grand Canyon five ounce silver coin variety with a "Light Finish" and the 2010-P […]

Gold Surges to Record $1,637.50 as Congress ‘Plays Chicken’ on U.S. Debt

Bloomberg.com
By Pham-Duy Nguyen
Jul 29, 2011 11:29 AM PT

Gold futures rose to a record $1,637.50 an ounce on demand for an investment haven amid mounting concerns on the U.S. debt impasse and signs of a faltering economy.

U.S. lawmakers are offering rival plans to avert a default as the Aug. 2 deadline for raising the $14.3 trillion debt limit nears. A government report today showed that gross domestic product rose less than forecast in the second quarter, driving the dollar lower. Gold had the biggest monthly gain since November 2009.

“The economy is weak, and these guys in Washington are playing chicken with the debt ceiling,” Matt Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. “It’s not a good mix, and gold may be one of the safe harbors that people find.”

Gold futures for December delivery rose $15, or 0.9 percent, to settle at $1,631.20 at 1:50 p.m. on the Comex in New York. The metal, up 8.5 percent in July, had four straight weekly advances.

The Standard & Poor’s 500 Index headed for its third straight monthly loss, the longest slump since 2008. The dollar was down for the third consecutive week against a basket of six major currencies.

Gold has climbed 15 percent this year, heading for the 11th straight annual gain. Yesterday, holdings in exchange-traded products backed by the metal rose 0.9 percent to a record 2,150.5 tons, data compiled by Bloomberg show.

‘Ability to Govern’

“People want to own gold,” Adam Klopfenstein, a senior strategist at Lind-Waldock, a broker in Chicago, said in a telephone interview. “Investors want something tangible to diversify away from U.S. assets. Everyone is uncertain about what’s going to become of the U.S. economy and our ability to govern and control our debt.”

The Federal Reserve has kept its benchmark interest rate at zero percent to 0.25 percent since December 2008 and bought back Treasuries to help bolster the U.S. economy. Moody’s Investors Service, Standard & Poor’s and Fitch Ratings have said they will cut the nation’s top-level credit rating should a failure to raise the debt ceiling lead to a default.

Silver futures for September delivery climbed 31.2 cents, or 0.8 percent, to $40.106 an ounce on the Comex, little changed for the week. The price gained 15 percent in July.

Platinum futures for October delivery declined $7.10, or 0.4 percent, to $1,785.30 an ounce on the New York Mercantile Exchange, down 0.7 percent this week. The price still climbed 3.4 percent in July.

Palladium futures for September delivery fell 40 cents to $827.70 an ounce. The metal gained 2.6 percent this week and climbed 8.8 percent in July, the most this year.

Read more….

The Complete Costs of Mining Silver

The inspiration to write this post was to clarify some issues with the costs of mining silver. I believe many of the investing public has mistaken what is termed as the “CASH COST” as the real cost of mining silver. According to the Silver Institute in 2010, the cash cost from primary mine production was $5.27 an ounce. The Silver Institute gets their info from the World Silver Surveys produced by GFMS. I have had an email exchange over the past several months with one of their metal analysts on various topics. I recently asked permission to reproduce their Cash Cost graph for this post, and was told I could do so for $1,500.

Read more….

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