Keiser Report: Neo-Feudal Gulag Casino State

This week Max Keiser and co-host, Stacy Herbert, report on the oil traders puking on markets and the gold confiscators eyeing Greece, Portugal, Spain and Italy. In the second half of the show, Max talks to former chief forex trader for VISA, Jon Matonis of TheMonetaryFuture.blogspot.com, about Bitcoin, the new peer-to-peer crypto-currency.

The Ticking Time Bomb

When I was young and in college we used to ask ourselves rhetorical questions just to show we could think. A favorite was, “What happens when an irresistible force meets an immovable object?" And the answer was, “Immeasurable energy."

We are about to learn if that thesis is true or not. The irresistible force is the $600 trillion in derivatives. The immovable object is the $60 trillion world economy. Basically a $60 trillion economy cannot support a $600 trillion bucket of used lottery tickets that everyone wants to pretend still have some value. They don't.

The only real question is just how much actual money is left and I suspect the answer is “near zero." That's the ticking time bomb.

I've always believed that the growth in derivatives from a low of about $60 trillion in 1997 to its high point of about $800 trillion in 2008 was the foundation stone for credit running totally out of control worldwide.

Brooksley Born famously attempted to regulate the Wild West environment of derivatives in 1997 only to be slapped down in a classic Washington DC turf war led by Alan Greenspan, Larry Summers and Robert Rubin. We are going to rue the day she lost that battle.

In pieces I've written since I first began warning 321gold readers about the dangers of derivatives in early 2002, I've made the comment a number of times I don't think there are ten people in the world who really understand derivatives. I'm not kidding. I think next to nobody actually understands this most dangerous of markets.

What is going on in Greece, Spain, Iceland and Ireland is all part of the same ticking time bomb. Some of the events almost defy imagination.

Three relatively small banks in Iceland issued over 50 billion euros in debt that blew up in early October of 2008. The governments of the UK and Holland made local savers in those countries whole and then demanded the citizens of Iceland repay the losses. After two nationwide votes, the citizens of Iceland basically told the UK and Netherlands governments to pound sand. Why should the citizens of Iceland have to repay the losses of the banks? It's a good question.

What is actually going on is all governments are trying to pretend the debts can be paid and all citizens are demanding the benefits continue. Irresistible force and immovable object. The citizens and all governments believe the good times will continue. They can't. We can't afford it.

Spain and Greece both used non-transparent derivatives to improve their financial books so they could enter the EU. The cooked books are now pretty obvious and Germans are objecting to having to work to the age of 67 so Greeks can retire at 50. Tick. Tick. Tick.

I was watching some of the violence taking place in Spain today and it caused me to realize I needed to write this piece. Greece is the proverbial canary in the coalmine. I think they are going to effectively default next week. When they do, the party stops at once as a series of cascading defaults consume the financial system far faster than governments can print money to dump on the problem.

I was working for EDS in New York when then President Nixon made his famous speech on August 15th, 1971 taking the US off the gold standard. You have to be pretty old to still remember it but his speech wasn't actually about gold or the dollar, the speech was about putting the US on Wage and Price Controls. The speech pissed me off because I knew Ross Perot would use it as an excuse to stop pay raises already promised. He did. Cheap bastard.

In any case, after the dust settled, I began to think of the implications of the US being totally off the gold standard. For most of the last 40 years, I have firmly believed the US dollar would die as a result of hyperinflation. I was an early adopter in the hyperinflation theory and now it's commonly accepted as how the dollar will end.

I may have been wrong, totally wrong. We know the $600 trillion in derivatives has to disappear. The chances of $600 trillion in derivatives being around for much longer are about the same as the future of a snowball in Hell. It's actually pretty surprising that the system has lasted as long as it has.

Greece, Spain, Ireland, Iceland, they are just part of the burning fuse. We hear very little rational discussion about the issues. The issues are simple. The world has far more debt than it can support. Unions and workers have extracted promises from government that can never be paid. We simply cannot afford the lever of government we have but no one wants to address the issue. They keep kicking the can down the road. One day very soon the music will stop and everyone will try to find a chair to sit in only to find in this epic game of musical chairs, there are no chairs.

It's heresy for me to suggest it but the very best investment for the next six months might well be cash. The kind of dirty filthy cash that you can shove under your mattress and use when the system comes to a grinding halt. Gold may well be the currency of choice to rebuild the system but to get through the chaos that is coming, I think you want the kind of cash you can hold and spend.

The revolution may have started in Egypt and Libya and Spain and Greece but I'll bet money, cash money, that revolution heads our way soon.

By: Bob Moriarty 

May 30, 2011 

www.321gold.com

How Gold Can Preserve Your Wealth

Egon and James Turk discuss why gold is the best way to preserve wealth for the long term and how we are living through very interesting times for the gold market. Central banks are debasing all major currencies and this will lead to much higher gold prices.

They discuss whether there are any other currencies that could serve as a safe haven, such as the Swiss franc. They come to the conclusion that all major currencies have abandoned hard money since the '70s and that gold is the only good refuge left. They note how a high CHF hurts Switzerland's competitiveness.

Egon explains to James why even in a world financial crisis, Swiss tradition of gold ownership and gold saving mean that Switzerland is one of the safest places in the world to keep your gold. They comment on confiscation and taxation issues and risks.

They talk about the massive financial problems in the world, from the EU to the USA. They comment on the hardships of Portugal, Spain, Italy and France. UK is, after the US, the most likely candidate for hyperinflation. Egon claims that this process is starting now, with the dollar's fall acting as the trigger. As Voltaire said "paper money eventually reaches its intrinsic value, which is zero".

They talk about how savers and investors are fooled by nominal prices and fail to see how their savings have lost value massively in the last decade. In terms of gold the US dollar and even the Dow have lost value since the '70s. They comment how easy it is to lose sight of how inflation and debasement eat away at purchasing power and savings, and how the US Dollar could lose the confidence of the market and stop being the reserve currency of the world. They talk about China's role in the world economy and Chinese plans for global monetary reform.

James asks Egon what his target for the future gold price is, he repeats his 8000$ per ounce by 2013-15 prediction. Egon's target was 6-12 thousand $/oz, however they both think that in view of current developments their previous estimates could be too conservative. They talk about hyperinflation and monetary crisis as a result of money printing. They discuss the coming monetary crisis and the importance of holding gold outside the banking system. They remark that the gold price is rising despite the fact that only 1% of world financial assets are in precious metals and that when the rush by fund managers to buy gold starts prices will go parabolic.

BBC HARDtalk - Jim Rogers Interview - 17/5/2011

Stephen Sackur talks to one of the world's most influential investors. Aged five,

Jim Rogers was selling peanuts for profit; he became a hedge fund pioneer, a

commodities trader and, years ago, he shifted much of his money, and his family too, out of the US and into Asia. But can even this maverick investor see new opportunities in a world riddled with economic uncertainty?

We need some brave leadership and knowledgeable decision making in the UK and elsewhere to bring back our manufacturing from China, enact agricultural and energy reforms and the necessary fiscal and monetary control/planning. Maybe then Jim would bring back some of his money to invest here given the opportunity.

Ira Sohn: Marc Faber Says Prepare for War, Inflation…What About Pestilence?

Famed doomsayer Marc Faber did not disappoint at the Ira Sohn investing conference Wednesday.

In a wide-ranging presentation filled with shots at Ben Bernanke and the Fed commissioners, Faber predicted the Fed will continue to print money.

That means cash and bonds should not be considered safe assets.

He also ominously predicted escalating tension with China and in the Middle East: “You have to prepare for the next war, and, in war commodities go ballistic.”

He urged investors to diversify assets and hold everything from precious metals and commodities to real estate and equities.

And if they hold gold, it might be good to spread their holdings all over the world — Australia, Switzerland, Singapore, Beijing.

“You have to prepare yourself. Diversify.”
By Avi Salzman

An Interview With GATA Chairman Bill Murphy

In this video, Bill Murphy, chairman of the Gold Anti-Trust Action Committee (GATA), discusses why GATA was formed and some of its recent activities. Murphy also discusses why GATA believes the gold and silver markets are being manipulated.

Murphy also talks about the problems afflicting the world economy -- and in particular, the US economy -- and examines what the prospects are for gold and silver returning to some countries as official currencies.

He also talks about his background and how he started GATA. The implosion of Long-Term Capital Management in 1998 was a watershed moment for him in terms of his awareness of gold price manipulation.

The interview was recorded in Munich, Germany, 29 April 2011.

Why Gold Is Going Higher

While there are many reasons that gold and silver are going to keep moving higher as the fiat currencies trend lower, at our recent Casey Research Summit in Boca Raton, faculty member Mike Maloney pointed out a fact that, while obvious in hindsight, I had never heard mentioned previously.

Namely that during the last major precious metals bull market in the 1970s, only about 10% of the world could own gold – either due to legal restrictions or a lack of liquid capital.

Today, few countries prohibit gold ownership, and a far higher percentage of the world’s population has transitioned out of poverty.

China provides the most germane example, having legalized gold and silver ownership for private citizens in 2004, and through the explosive growth in national GDP that has caused Chinese gold purchases to skyrocket.

Confirming the point, the following is an excerpt from a recent Wall Street Journal article:

Chinese investors are snapping up gold bars and coins, buying more than ever before in the first quarter of 2011 and overtaking Indian buyers as the world's biggest purchasers of the metal.

A growing middle-class in China is raising the appetite for gold there.

China's investment demand for gold more than doubled to 90.9 metric tons in the first three months of the year, outpacing India's modest rise to 85.6 tons, the World Gold Council said in its quarterly report on Thursday. China now accounts for 25% of gold investment demand, compared with India's 23%.

The report underscores the rising appetite for gold among the growing middle-class in China. Fears of the country's soaring inflation, as well as a search for new investments, is luring investors to gold, and marketing of the precious metal has also increased in recent months.

"I think people will be surprised by the strength in the Chinese demand, but we think this is a trend that is set to continue," said Eily Ong, an investment research manager at the gold council.

Notoriously active savers, stashing away on the order of 50% of their income, the Chinese are increasingly opting for gold over the renminbi to stash their wealth.

For those wondering just how big a development this is, consider that in 2007, just before investing in gold became “the thing to do,” gold demand in India was 61% of the world’s total while China’s gold demand was only 9%.

In other words, India is no longer the only elephant in the gold vault. And they are not alone – investors around the world are now able, and willing, to buy gold as a way of protecting their wealth from the inevitable decline of the fading fiat currencies.

I still don’t think we are out of the woods on a commodities correction, but there are so many black swans floating overhead that literally anything can happen, at any time. Thus buying in tranches on pullbacks over the next four to six months still makes a lot of sense.

But in the longer term, gold has almost nowhere to go but up.
By David Galland, Casey Research

Keiser Report: Gold Stands Rock Hard

This week Max Keiser and co-host, Stacy Herbert, report on American anger at gas prices, Middle East fears on wheat prices and the Chinese love for gold that has double in a year. In the second half of the show, Max talks to investment adviser, Ned Naylor-Leyland of Cheviot Asset Management in London, about thousand ounce silver bars and the precious metals market.

Silver Price Manipulation JP Morgan -v- Bunker Hunt

Australia's leading television broadcaster has compared JP Morgan as silver price manipulators similar to Bunker Hunt in the late 1970's, with one major difference. JP Morgan has a concentrated short position to drive the silver price lower.

Bullionmark CEO, Mark van der Sluys, who was interviewed by the Lateline Business program believes the silver price is manipulated lower to maintain confidence in paper currency in particular the US dollar. "It is well understood that interest rate markets are manipulated through Quantitative Easing and currencies are managed through market interventions, so why is it such a shock that large investment banks are managing silver prices lower to support broader central bank and government policy?"

When asked about the recent sell off in the silver price, van der Sluys suggests "that the silver fundamentals remain strong and precious metals are the ultimate hedge against Government and Central bank incompetence. Gold and Silver should be part of every investment portfolio."

PRECIOUS METALS: Gold, Silver Rise On Safe Haven Buying

NEW YORK (Dow Jones)--Gold futures Wednesday rose for a fourth-consecutive session on demand for safe-haven assets, while silver climbed by more than 4% as the metal continued to rebound after its recent lows.

The most actively traded gold contract, for June delivery, ended $3.40, or 0.2%, higher, at $1,526.70 a troy ounce on the Comex division of the New York Mercantile Exchange. Thinly traded May gold futures settled $3.40, or 0.2% higher, at $1,526.60 an ounce.

Worries about the ability of Europe's currency union to manage members' sovereign debt has sent investors looking for a refuge into gold recently.

"The ongoing themes in Greece and the rest of Europe keep making people look for a paperless currency," said Adam Klopfenstein, a broker with Lind-Waldock.

The yellow metal isn't as closely linked to industrial cycles as are some other commodities, and some investors buy gold on the belief that it holds its value well during turmoil in currencies or other markets.

Silver futures continued to rebound Wednesday, as traders bet that the sharp selloff at the beginning of the month pushed prices too low amid steady industrial demand for the metal. Futures had slipped from late-April highs above $49 a troy ounce down to as low as $32 an ounce, as Comex raised the cost of holding contracts and many commodities fell.

But investors have warmed to raw materials this week, pushing closely watched bellwethers such as copper and crude oil back above key psychological levels and lifting sentiment among silver traders.

Silver for July delivery, the most actively traded contract, ended $1.514, or 4.2%, higher, at $37.642 a troy ounce. May-delivery silver ended up $1.519, or 4.2%, at $37.640 a troy ounce. 

Other precious metals traded in New York also rose Wednesday. July-delivery platinum was up 1.1% at $1,782 a troy ounce, and palladium for June delivery rose 1.2% to $744.20 an ounce.
By Matt Day

QE2 Was a Bust - Economic Data Is Worse Than Before

BOSTON (MarketWatch) — It‘s cost $600 billion of your money. And it was supposed to rescue the economy. But has Ben Bernanke’s huge financial stimulus package, known as “Quantitative Easing 2,” actually worked as planned?

QE2 is being wound down in the next few weeks. Fed Chairman Ben Bernanke has said it has left the economy “moving in the right direction.” 

But an analysis of the real numbers tells a very different story.Turns out the program has created maybe 700,000 full-time jobs — at a cost of around $850,000 each. 

House prices are lower than before QE2 was launched. Economic growth is slower. Inflation is higher.

Yes, it’s sparked a massive boom on the stock market. Ordinary investors have started piling back into shares again. And last week we saw the latest example of the return of animal spirits on Wall Street, as stock in new dot-com LinkedIn LNKD +0.29%  skyrocketed on its debut. How to cash in on LinkedIn .

But even the stock market boom hasn’t been what it appears. An analysis shows that most of the rise in the Standard & Poor’s 500 Index SPX +0.32% under QE2 has simply been a result of the decline in the dollar in which shares are measured.

The truth? QE2 has created a massive new bubble in dollar-based financial assets, from stocks to gold. Meanwhile, it has had zero visible effect on the real economy.

Take jobs. According to the U.S. Labor Department, since last August the number of full-time workers has gone up by just 700,000, from 111.8 million to 112.5 million.At a cost of $600 billion, that’s $850,000 a job. 

The picture’s even more meager. Over the same period, the number of part-time workers has gone down by 600,000. In other words, we’ve basically shifted 600,000 or 700,000 workers from part-time jobs to full-time jobs.

The percentage of the population in work is actually lower today — 58.4%, compared to 58.5% last August. The percentage of the workforce in actual work, the so-called “participation rate,” has fallen by half a percentage point.

Some recovery.

Full Article

Vietnam Imports 19.7 Tons of Gold Q1/2011

Vietnam spent $878 million to import 19.2 tons of gold in the first quarter of this year, up 28 percent in value and 2 percent in volume year on year, according to a recent report from World Gold Council (WGC).

The report also showed that Vietnam’s year-on-year demand for gold jewelry and gold bullions for investment has increased by 7 percent to 5.5 tons and 1 percent to 14.2 tons respectively in Q1/2011. In the first three months of this year, the world consumed 981.3 tons of gold worth $43.7 billion, up 11 percent in volume and 40 percent in value over the same period last year. The demand for gold bullion for investment increased 310.5 tons, up 26 percent over the same period last year.

Gold is considered a safe haven for investors in the time of rising inflation worldwide.

Vietnam’s consumer price index (CPI) in May surged by 2.21 percent against April, bringing the country’s CPI to 12.07 percent this year – a 19.78 percent rise year on year, the highest in Asia-Pacific, according to Bloomberg.

Vietnam has yet to officially revise its inflation target in 2011 which was set at 7 percent at the beginning of this year, though Vo Hong Phuc, Minister of Planning and Investment, said he expected the figure to stand at 11.75 percent by the end of this year at the 44th annual meeting of the Asian Development Bank in Hanoi last month. – Tuoitre
Source

Walker: US Worse Off Financially Than Euro Nations

The US is spending $4 billion a day more than it is taking in, putting the country on an unsustainable fiscal path perpetuated by both Democrats and Republicans, according to David Walker, head of the Comeback America Initiative.

Solving America's problems will require a combination weighted toward spending reductions but one that also will require spreading the taxation burden around more evenly, said Walker, the former US comptroller general.

"We're not growing enough and we're not going to grow our way out of this problem," he said in a CNBC interview. "We would have to have double-digit real GDP growth for decades to grow our way out of this hole."

Walker's organization promotes fiscal stability and is warning that the US is trailing many other developed nations in terms of getting its fiscal policies in order. Comeback America is a conservative think tank funded mostly through a grant from the Peter G. Peterson Foundation, named for the founder the Blackstone Group private equity firm.

In fact, according to an index that Comeback America developed, the US is in worse shape from a fiscal standpoint than debt-plagued nations such as Italy or Spain, he said.

With the nation hitting its $14.294 trillion debt ceiling and in need of an extension, Congress is debating the proper mix of tax increases and spending cuts so that the US does not end up like weaker euro zone nations such as Greece, Spain and Portugal that are in danger of debt defaults.

Walker leans more towards the spending-cut side, but also sees inequities in the tax structure that must be corrected to help generate revenue.

"We have to broaden the base—51 percent of Americans don't have any income taxes," he said. "That's not acceptable in a democracy."

The richest Americans are paying just 18 percent income tax rates even while the top marginal rate is supposed to be 35 percent, he said.

Straightening out the imbalances will be a tough choice for politicians and, Walker said, will be an integral part of next year's presidential campaign.

"The 2012 election is going to have to be about what's the proper role for government," he said. "How are we going to solve our financial problems?"

Chinese Citizens Turn to Gold in One of Greatest Booms in Metal's History

The World Gold Council (WGC) released its quarterly "Gold Demand Trends" report last week and, as always, it was filled with fascinating data on the strength of the global gold market. Gold demand grew 11 percent to 981.3 tons during the first quarter of 2011, worth $43.7 billion at quarter-end's price levels.

The increase was driven by a significant rise in demand for gold as an investment, up 26 percent from a year ago, as emerging markets look to protect their assets from rising inflation. Demand for gold bars and coins was up 62 percent and 42 percent, respectively.

A slight pullback in prices during the middle of the quarter and "persistent high inflation levels" pushed China into the position as the world's largest market for gold investment. Chinese citizens devoured nearly 91 tons of gold bars and coins, more than double the amount of a year ago.

This isn't exactly a new phenomenon in China. From 2007 to 2010, investment demand grew at a compounded annual growth rate of 68 percent, according to the CPM Group. The firm forecast Chinese investment demand to increase 34.7 percent during 2011 but based on this new data, it may need to adjust its forecast.

Song Qing, director of Shanghai-based Lion Fund Management, told Bloomberg news that, "Gold has taken on a new role in China amid concern about inflation...Just imagine the total wealth in China and even a small percentage of that choosing to buy gold. This demand is going to be enormous."

The "Love Trade" was also in full swing during the first quarter. Led by India and China, jewelry demand rose 7 percent on a year-over-year basis. Combined, the countries accounted for roughly 67 percent of world total jewelry demand.

For the first time, the demand for gold in China was so strong it outpaced the combined total of the developed West during 2010. If you lump together the gold demand of the U.S., France, Germany, Italy, Switzerland, the U.K. and other European countries, the sum of these countries is still outpaced by China. That's despite triple-digit increases in demand from France, Germany and Switzerland.

The CPM Group says the origins of this milestone in China's gold market can be

traced back to the late 1980s when the government began lifting restrictions on gold ownership. This led to the establishment of the Shanghai Gold Exchange and other ways Chinese citizens could put a portion of their wealth in gold.

Then in 2001, the government lifted its final controls on the gold market, igniting one of the greatest booms in gold demand history. From 2001 to 2010, China's annual consumption of gold grew at a 7.5 percent compounded annual growth rate.

This chart shows how China's demand for gold jewelry has increased from just over 500,000 ounces in the late 1980s to over 12 million ounces at the end of 2010, in spite of gold going from $200 to $1,000 and now $1,500 an ounce.

The rise in gold prices and consumption has coincided with a dramatic rise in China's per capita incomes. The chart on the left shows that per capita incomes in China have risen from around the $3,000 level in 2000 to roughly $7,000 in 2010. This means that the average Chinese citizen has over twice the income he or she did in 2000. Today, China is second only to the U.S. with a middle class population of 157 million people, according to the Organization for Economic Co-operation and Development (OECD).

The chart on the right shows, at least in part, what many have chosen to do with that additional money-buy or invest in gold. On a per capita basis, per capita consumption of gold in China has more than doubled since 2005.

Despite this strong rise in per capita consumption, an analyst from Standard Chartered Bank said that there is still much room to grow, "In terms of gold consumption per capita, there is no doubt that [China and India] have a lot of catch-up potential and the impact on gold prices could be dramatic."

One way China's per capita consumption can catch up is if investors continue to seek safety from inflation in the yellow metal. Demand for gold as an investment has grown at a 14 percent annual clip since the Chinese government deregulated the local gold market in 2001.

This chart, courtesy of my friend Adrian Day, shows Chinese citizens' gold investment as a savings. Similar to the other charts I presented, it shows how much China's gold market has changed over the past 10 years.

The total amount of household savings invested in gold has grown from about $200 billion in the late 1990s to $1.2 trillion in 2010. In fact, the total savings invested just during the first quarter of 2011 is equal to the total amount invested in 2004, and more than the previous six years.

Recently, the government and state banks have encouraged citizens to purchase gold and initiated gold purchasing programs. In February, the Industrial and Commercial Bank of China (ICBC) and the WGC launched the "Only Gold Gift Bar" program which offers gold bars weighing 10, 20, 50, 100 and 1000 grams. In less than three months, this program has already generated orders totaling 1.8 tons, according to the WGC.

The first quarter of 2011's demand trends leads me back to the two drivers I've highlighted before and are captured in the new report - Two Key Drivers of Gold Demand: Fear Trade and Love Trade. In the U.S., the Fear Trade, a factor of negative real interest rates and increased deficit spending, is driving demand for gold. In China, India and other emerging markets, the Love Trade, a combination of rising incomes and a cultural affinity for gold, is driving demand for gold.

By:Frank Holmes
May 23, 2011
www.mineweb.com
SAN ANTONIO (U.S. GLOBAL INVESTORS)

US Inflation: Diane Swonk Vs Peter Schiff

Peter Schiff of Euro Pacific Capital schools Diane Swonk of Mesirow Financial

US 'Flashing Orange',Please Stand by for Financial Repression

This week Max Keiser and co-host, Stacy Herbert, report on color-coded prostitutes for Munich Re, financial repression for the U.S.A. and a New World Order of growth accelerated exploding watermelons for China. In the second half of the show, Max talks to a former banker at Goldman Sachs and Bear Stearns, Nomi Prins (author of It Takes a Pillage) about Matt Taibbis The People versus Goldman Sachs and about the IMF

Shift Towards Hard Assets: Financialisation of Commodities

Many economists fear that the commodities market has been slowly “financialised” (that is, made to look like the equity and bond markets), and that this has allowed excessive amounts of money to pour into commodities futures.

And they fear that in a slowing global economy hit by a major credit crisis and reeling from a falling dollar, it is likely that money flows seeking safe haven in hard assets is the key driver of recent volatility.

Recent global financial market turmoil has provided investors to look for alternative investment avenues to make profits. Surge in commodities has started a new debate about impact of higher commodities prices on the global economy. Recovery looks questionable at this point in the advance economies especially in the US. The US recovery is a mirage, financed by government borrowing and spending.

Borrowing has fuelled the supposed economic rebound. Now the USgovernment is backed up into a corner, facing a debt ceiling but with no clear way to make the economy grow without taking on even more debt. That means commodities will rise in price as investors dump their dollars anew.

The commodity market has become a classy asset for investors to increase their earnings yield as they navigate through turbulent times. The commodity market for the last eight years has continued to witness a surge and will probably stay on this path for the next five to 10 years. Most investors want to have commodities in their investment portfolio as part of their diversification strategy to weather the financial storm. Lately, commodities have taken a pullback due to change in the geo-political and geo-economic front after Osama’s death. However big cycles travel in patterns of 15 years to 20 years.

Like commodities in the 1970s or stocks in the 1980s and 1990s. Riding those bull moves is how you make money. Based on this premise, the commodity bull market has another five to 10 years left but it’s overdue for correction. The recent weakness is a part of this correction.

After 12 May 2011, it’s an interesting month to focus on; I expect gold and silver to consolidate before taking a pullback. But the commodities pullback shouldn’t be feared. It should be welcomed. It is a buying opportunity for potential financial players in the market to enter and take long positions. According to former GOP presidential candidate and Forbes Magazine Publisher Steve Forbes:

“A return to the gold standard by the US within the next five years now seems likely, because that move would help the nation solve a variety of economic, fiscal, and monetary ills … If the dollar was as good as gold, other countries would want to buy it.”

Many people have probably no idea that there is something wrong with the dollar and you cannot just trash your money without repercussions. But the shift is happening. Big financial investors are taking positions in the commodities market. Financial investors include governments [Central Banks], commercial banks, hedge funds, pension funds, private equity group, sovereign wealth funds, and big players/financial investors like Jim Rogers, Marc Faber, George Soros, Paulson, Chris Weber, and Bill Gross among others.

Frequently today investors rely on economically established perceptions that fail time and again, simply because the conditions in which they were established have changed. One of the economic clichés is that exchange rates will rise if interest rates rise. You can be sure that if there was still a Spanish Peseta or Greek Drachma and they were paying the sort of interest rates their sovereign bonds were paying now, these currencies would still be falling, why? Many investors strongly feel that if interest rates rise, gold would automatically fall. But is that going to be true?

We will take a look at that in the concluding part of this article.

The writer is an economist and graduate of the University of Chicago, Booth School of Business

Published in The Express Tribune, May 23^rd, 2011.
Source

A Malaysian State Introduces Gold & Silver Coins

 

Taipei, 14 August, (Asiantribune.com):

A Malaysian state has introduced the gold and silver coins as official currency, reviving a practice from early Islamic era. The Kelantan state of Malaysia has become the first to introduce the gold dinar and silver dirham for use.

The people can use the gold dinar and silver dirham coins at stores and restaurants, a Kelantan state official said on Friday. The coins came into circulation Thursday and can be purchased at various locations in Kelantan. Their worth is currently about $180 per dinar and $4 per dirham.

The gold dinar and silver dirham coins would provide an alternative to Malaysia's currency, the Ringgit, the state official said. The northeastern Kelantan state is governed by the Pan-Malaysian Islamic Party, a conservative opposition group that promotes religious policies in its rule.

Kelantan authorities also say the use of such coins is encouraged in the Quran. The gold dinar was the official currency of Muslim societies for centuries.

The value of the coins used in Kelantan can fluctuate according to market prices, but officials say it remains a better alternative to currency affected by the U.S. dollar and other foreign currency.

State officials have minted coins worth about $630,000 for use, and is made available at more than 1,000 outlets in Kelantan's capital, said Nik Mahani Mohamad, executive director of Kelantan Golden Trade, which mints the coins.

"It's a great, great moment for Muslims," Nik Mahani said. "We are providing an alternative means for the people to trade with."

Mentri Besar Datuk Nik Abdul Aziz Nik Mat said the state would strive to expand the use of gold dinar and silver dirham in its transactions, including the payment of civil servants’ remuneration. He also said about 1,000 traders so far had agreed to use the currency in their transactions besides Tabung Haji and Bank Islam Malaysia.

The state government also plans to give employees the option of receiving part of their salary in this currency, as well as introduce gold bars for large investments. Muslim alms can also be paid with the coins.

The Pan-Malaysian Islamic Party has governed Kelantan since 1990. Some of its policies over the years include banning gambling, nightclubs and rock concerts, and requiring Muslim female state employees to wear headscarves at work.

- Asian Tribune -
Source

THE MOVE TO STEAL YOUR IRA & 401K - Bob Chapman

Victor Sperandeo Talks About Precious Metals & World Economy With James Turk

In this video, renowned Wall Street trader and financial commentator Victor Sperandeo and James Turk, director of the GoldMoney Foundation, discuss whether or not gold is still a good buy at these prices, and some of the macroeconomic trends that have powered the gold and silver bull markets. Victor and James also talk about the dire fiscal position the US government is in, and some of the political and economic pressures that could affect the 2012 US presidential campaign. 

They talk about the prospect of international investors forcing up the US government's borrowing costs, and how interest payments are forming an ever-growing part of the Federal government's budget. They also discuss what the tipping point will be for the US economy, the dollar and the US government. In Trader Vic's view, Ben Bernanke and the Fed are hoping to inflate away the government debts and liabilities. 

They speak about the European sovereign debt crisis affecting countries like Greece and Ireland, and whether or not the euro and the European Union will survive in their present forms. At the end they discuss the recent movements in the silver price, and whether or not the recent Comex margin hikes were justified. Trader Vic also comments that given central banks efforts to debase paper currencies and keep real interest rates negative, investors should buy tangible inflation-proof assets such as precious metals and commodities.

Silver Crash not a Correction But a 'Drive-by Shooting' & a 'Criminal Act'

Report on a round table discussion on silver by a group of top specialist silver analysts which puts forward a hugely bullish case for investment in the precious metal.

Silver followers with an hour to spare - or those just interested in the junior precious metal - might benefit from listening to a round table discussion on YouTube, put together by silver guru David Morgan. Admittedly all those involved are from the bullish side of the silver investment scene, but all the points made on the discussion constitute an imposing case for investment in the precious metal. No doubt there are others who might disagree, but the people involved in the round table are all specialist followers of silver whereas many of the silver bears out there are non-specialist analysts who next week may be commenting on markets in hogs or soya beans and do not have the in-depth knowledge of those participating.

Let's look first at those who were involved in the discussion. Apart from David Morgan there were Eric Sprott, (Sprott Asset Management), Bill Murphy (GATA and Le Metropole cafe), Rob Kirby (KirbyAnalystics.com), Bob Quartermain (President of Pretium Resources and past President of Silver Standard Resources), James Anderson and journalist by the name of Sean of SGTReport.com.

The key question asked of the panel by David Morgan was "Is the bull market for silver over?" and, not surprisingly given the participants, the response was a resounding No. Much of what was said has been covered on Mineweb in various articles and podcasts in the past but nonetheless it is extremely interesting to listen to the comments on these subjects.

Common themes noted include the lack, so far, of institutional interest in silver, the amount of silver traded which is hugely in excess of physical availability, silver price manipulation, indirect doubts about the real physical silver holdings of the SLV ETF, the benefits of holding physical metal over paper metal and potential really big increases ahead for the silver price over the next five years or more.

Particular comment on the silver price crash of May 1st/2nd (depending where you were in the world) came from Rob Kirby who pointed to the fall in the silver price of $6 in 10 minutes at a time when virtually all the world's major markets were closed because of either the time at which this occurred or national holidays. He described this as not a 'correction' but rather a 'drive-by-shooting' and that this was technically a criminal act which needs to be investigated. Certainly this smacks of huge manipulation of the market, presumably by those holding enormous short positions in the metal.

Again this all comes back to the huge trade in paper silver which enormously outweighs the amount of physical silver available. For example it took several months for the Sprott Physical Silver Trust to be able to accumulate its silver. bullion suggesting a huge shortage of actual physical metal available. Indeed paper silver trade was described as a Paper Joke by one participant.

The lack of knowledge about silver amongst the general investment public was also noted along with the fact that so far there are few major institutions which have invested in the metal, which again is seen as a sign that the upside potential for silver is remarkably strong.

But overall one needs to listen to the round table comments for yourselves. There are four segments to the discussion on YouTube totaling around 45 minutes in all starting at http://www.youtube.com/watch?v=elzmzwaicl4&feature=related . Mineweb suggests that all those interested in the silver market should follow that link and draw your own conclusion from the bullish arguments. They are very convincing - but then there are no alternative views to counter the arguments expressed.

Lawrence Williams
May 19, 2011
www.mineweb.com
LONDON

Matt Taibbi: 'U.S. Politics - Reality Show Sponsored by Wall Street'

RT's Anastasia Churkina sits down with Matt Taibbi - journalist, author and contributing editor to Rolling Stone magazine.

Why Gold & Silver? FULL MOVIE - Mike Maloney Tells All

Contents of the film:

-Currency Vs Money

-United States M3 expansion

-Fiat Currency and how it is created

-The Federal Reserve is neither federal nor has reserves

-Fractional reserve banking

-How central banks steal wealth from the people

-The second wave of mortgage resets

-Out of control deficits

-Gold always accounts for an expanding fiat currency supply

-Gold and silver above ground supplies

-Differences between the 70s bull market and now

-Silver as an industrial metal

-Gold/Silver ratio and the Price Discovery Mechanism

-Growing awareness and New Media

-Ron Paul and the Constitution

-Price suppression via metals leasing

-GATA

-Fraudulent gold accounting by the US government and the change made in May of 2007

-Price manipulation via ETFs, includes sections of the SLV prospectus

-The privacy of physical precious metals

-Real Estate vs gold and silver - less than 500oz silver to buy a home?

-Dow vs gold and silver

-Why investment advisors won't recommend gold and why 10% of your portfolio in metals is ridiculous

-Cycles

Keiser Report: Suicide Banking

This time Max Keiser and co-host, Stacy Herbert, report on staging bomb blasts to unravel financial markets while Zimbabwe proposes a gold backed currency. In the second half of the show, Max talks to Gregor Macdonald of Gregor.us about paper versus real as future growth prospects dim on declining energy resources.

“Silver Price: The Least You Should Worry About”

I heard some disturbing reports about silver supply last month that I felt every investor should know. And while precious metals are currently in correction mode, the long-term concerns with supply won’t disappear anytime soon. In attempt to get a handle on the bullion market, I spoke to Andy Schectman of Miles Franklin, who has contacts that run deep in the industry. What he sees everyday might just compel you to count how many ounces you own…

Jeff Clark: Andy, tell us about your industry contacts and how you get the information you're privy to.

Andy Schectman: We source our product from three of the largest six primary U.S. mint distributors. Having 20 years of experience with these sources, as well as the dealers in the secondary market, we're as tied into the industry as anyone.

Jeff: You made some interesting comments to me about supply and premiums. Tell us what you’re hearing and seeing in the bullion market right now.

Andy: I feel as though I'm the boy who cries wolf or that I've been beating the same drum for too long. But in reality, it has been my feeling since late 2007 that ultimately this market will be defined less by the price going parabolic – which I think ultimately will happen – and more by a lack of supply. You see occasional reports that state it’s just a lack of refined silver or lack of silver in investable form. But as far as I'm concerned, there is a major supply deficit issue, and it’s getting worse.

Take the U.S. Mint, for example. Right now, as we talk, you can barely get silver Eagles. We’re seeing delivery delays of three to four weeks, and premium hikes of a dollar or more in the last three weeks. Most of the suppliers in the country are reluctant to take large orders on silver Eagles because they don’t know (a) when they’ll get them, and (b) what the premiums will be when they arrive.

I was talking to the head of Prudential Bache and asked him about silver Eagles. He said, "You know, as soon as the allocations come in, they’re sold out. We can't keep them in." This is coming from one of the largest distributors of U.S. Mint products in the country.

And this is all occurring in an environment that has only minimal participation by the masses. Few people in this country have ever even held a gold or silver coin. So, if it's this difficult to get bullion now, what's it going to be like when it becomes evident to the masses they need to buy? This is what keeps me up at night. 

Jeff: Some analysts say it's a bottleneck issue, that the mints have enough stock but just need more time or more workers to fabricate the metal into the bars and coins customers want.

Andy: No, I don’t believe that. What business do you know that if they had that much profit potential wouldn’t increase production and hire more workers to meet demand? To me, the “inefficient model” argument is an excuse.

Look at what the U.S. Mint alone has done: they haven’t made the platinum Eagle since 2008. They make maybe one-tenth as many gold Buffalos as they do gold Eagles. They’ve made hardly any fractional-ounce gold Eagles. Heck, they can’t even keep up with the demand for the products they do offer. Does that sound like a bottleneck to you? Or is it because there is far more demand than there is available supply? It’s pretty clear to me it’s the latter.

Jeff: What are you seeing in the secondary market; are investors selling bullion?

Andy: There is no secondary market. Absolutely none. Nobody is selling back anything, at least not to us. Think about that: if this was a traditional investment and your portfolio went up 100% in the last year, like silver has, you’d think some investors would take some profits and ride the rest out – but nobody’s selling anything.

This is why I think the lack of supply is the single biggest issue in this market. And in time, I think it will become much more obvious. [Ed. Note: We’re using the term “secondary market” in this instance to mean sellers of bullion and not the scrap market.]

There are only five major mints – U.S., Canada, South Africa, Austria and Australia. Yes, there is a Chinese Mint and a couple Swiss Mints and some private refiners, but they amount to very little in the overall scheme of things. We’re in a situation where the mints are limiting the selection and raising the premiums, and this is occurring at a time when most people own no bullion. As it becomes more apparent that people want bullion instead of paper dollars, I think you'll see premiums go parabolic and supply get even tighter.

Jeff: Are you getting a lot of new buyers to the bullion market?

Andy: More than ever. One of the interesting things we’re seeing is a lot of younger people dipping a toe in the water, buying little bits of silver here and there. We’re also seeing bigger orders, as well as more frequent phone calls from financial advisers asking us if we can help their clients. So yes, the base is broadening.

Jeff: That's very interesting. So are you seeing more demand for gold or silver right now?

Andy: 90% of the new business is in silver. And I think that’s indicative of the state of the economy. People are trying to get into precious metals, but they think gold is too high. I think they’re buying silver because they realize the fundamentals for owning gold also apply to silver. They think the profit potential is better in silver, too. This has actually made the supply for gold better than it is for silver right now, and a lot of that has to do with price.

Jeff: Why are premiums fluctuating so frequently?

Andy: Premiums are almost impossible to gauge right now. Because the availability of product is getting smaller and smaller and the demand is getting stronger and stronger, premiums are changing literally overnight. And it doesn’t take many large investors around the country to force premiums higher.

The net of this is that it's really hard for us to be able to say what the premium for a specific product will be two weeks out.

Jeff: You mentioned increased interest from fund managers. Tell us the kind of comments you’re hearing and why they’re buying bullion.

Andy: I think it’s coming from their clients. It’s my impression that people are taking it upon themselves to study a little bit more, to be more accountable for their assets, and I think they’re telling their financial advisors to buy gold. And in some cases it’s because they don’t want a paper derivative.

It’s no secret that financial advisors don’t like gold and silver. Once money goes to a bullion dealer, it’s not coming back to a stock portfolio anytime soon, so they discredit it. But now it’s my impression they’re being asked by their clients to buy it. So it’s not necessarily because the financial advisor wants gold as much as it is the client requesting it.

Here’s a good example. There’s a firm here in Minneapolis that represents the Pillsbury fortune, and they asked me to talk to their partners about precious metals a few months ago. At the end of the conversation they said, "Okay, we're going to place an order for one of our clients.” Upon hearing it was for one client, I thought it would be in the range of $50,000 to $100,000. Well, the order was for $5 million.

There are two astonishing things about this. First, that’s twice as big as the largest order I've ever had. It was one order, for one client, who’s brand new to the market. How many more potential buyers are out there like that? Second, they made it abundantly clear to me that it was out of pressure from one of their clients that they sought me out. So clients are increasingly demanding bullion, regardless of what their financial advisers say.

Jeff: Hearing about all this new buying might make some think we’re near a top in the market. Could that be the case?

Andy: No, no [chuckles]. I think Richard Russell says it best: "Bull markets die of exhaustion and overparticipation." Well, we’re nowhere near that point when so few people in this country own gold and silver. Heck, I’m a bullion dealer, and most of my peers don’t own any gold and silver! Yes, you're seeing more commercials, but there are just as many commercials to buy gold as there are to sell it. I think that’s an indication this market is not exhausted.

Remember that in the year 2000 everyone and his brother had some NASDAQ shares. That’s an example of an exhausted or overparticipated market. We’re nowhere near that.

Jeff: Where are the best premiums for silver?

Andy: The very best buy in silver right now is junk silver. And by the way, I think the term “junk” is unfair. It isn't junk anymore. It used to be junk in the ‘90s when silver was 3 or 4 bucks an ounce and it was sold basically at melt value and carried no premium. So I’d call it “90% dimes and quarters.” Anyway, junk silver has the lowest premium right now and, in my opinion, offers the best upside potential.

Next would be 10- and 100-ounce silver bars. And then one-ounce silver coins – but the Eagles are very expensive at the moment, if you can get them. The Austrian Philharmonic has the best value in a one-ounce silver coin right now, and they’re available. But again, premiums for all silver coins are escalating.

Jeff: What about gold?

Andy: Gold is not as bad. In fact, I would say that gold availability is decent right now for one-ounce coins and bars. There isn’t much available in fractionals. And Buffalos are still kind of hard to get. Other than that, the one-ounce coins with decent availability are Canadian Maple Leafs, Australian Kangaroos, and Krugerrands. And they all have decent premiums.

Jeff: So the take-away message is what?

Andy: First, I think you said it best with your recommendation to “accumulate.” Not only will it smooth out the volatility in price and premiums you pay, it will also give you a bird in the hand. If I'm right about this market, and I really believe I am, it will be defined by lack of availability of refined product. To combat that, just accumulate month in and month out, and be thankful when you're able to get what you want.

Second, it’s about the number of ounces you own. You want to get as many ounces as you can without being penny wise and pound foolish. Stick with the most recognized products – don’t buy 1,000-ounce bars, for example, because they’re illiquid. You want to maximize your liquidity, and you do that by buying the most common forms of bullion – one-ounce coins, bars, and rounds; 10- and 100-ounce products; and junk silver.

Last, keep in mind that premium and commission are two different animals. Commission is what the dealers make on top of the premium. Premium is what the industry bears. So if the U.S. Mint is selling silver Eagles for $3 over spot to the distributors, that's before they’re marked up to the public. So even though the “premium” is high, you're actually going to get most of that back when you sell. [Ed Note: It’s not uncommon for the buyer to recapture most of the premium when they sell, particularly during periods of high demand.]

So, buy gold and silver while it’s available, even if you don’t buy it from me, because if I'm right, getting it at all could soon be your biggest challenge.

Jeff: Thanks for your insights, Andy. 

By: Jeff Clark and Andy Schectman
Source

Ron Paul: 'Sell the Gold in Ft. Knox'

Ask a gold bug if he thinks that Franklin Roosevelt did the right thing in 1933 when he unilaterally confiscated the gold coins of all Americans. He will tell you "no." Why not? "Because it was a violation of property rights. The Federal government had no legal authority to do this."

But the Supreme Court authorized it, 5 to 4. The gold bug will tell you that the Supreme Court cannot be trusted.

Fast forward almost 70 years. Ron Paul announces at the Heritage Foundation that the government should sell its gold to reduce the national debt.

No one comes to his defense.

Understandably, the Treasury Department got one of its staffers to write a critique. The government should sell no assets, she insists. Congress must raise the debt ceiling. There are not enough assets to sell. She ridiculed the suggestion of a balanced budget through asset sales. With a deficit of $125 billion a month, she said, a fire sale would do no good.

Then, amazingly, she admitted that gold is central to the perception if the U.S. government as solvent.

A "fire sale" of the Nation's gold to meet payment obligations would undercut confidence in the United States both here and abroad, and would be extremely destabilizing to the world financial system.
Treasury Secretaries from both parties have made it clear that they would not sell gold in order to buy time in a debt limit impasse. As then-Treasury Secretary James A. Baker said: "President [Reagan] and I are not prepared to take that step because it would undercut confidence here and abroad based on the widespread belief that the gold reserve is the foundation of our financial system, and because the Congress clearly has the power to prevent a default by assuming its responsibility with respect to the debt limit." When President Reagan was asked whether he would consider selling gold, he told his Budget Director, James Miller, "absolutely not." Similarly, Treasury Secretary Robert E. Rubin said, "We will not sell the nation's gold supply."

In short, gold is not a barbarous relic. Gold in the vault at Fort Knox and in the Federal Reserve Bank of New York (a private corporation) is basic to the world's confidence.

But what about gold in the hands of Americans? She did not say. The Treasury has had contempt for that idea ever since 1933.

That a salaried government bureaucrat would oppose the sale is understandable. But equally incensed are gold bugs. Only one came to his defense: the #1 scholar of the American gold standard, Dr. Edwin Vieira, author of Pieces of Eight, a 1600-page history of the gold standard in America. "Redeemable currency is an oxymoron." The government has no plans to restore a gold standard of any kind. "They don't need the gold. They've just been sitting on it since Roosevelt stole it."

Everyone else was critical of Paul's suggestion to restore gold to the private sector.

What's going on here? If it was immoral and illegal for the government to confiscate the gold at $20 an ounce in 1933, why is it a bad idea for the government to sell back the gold to the public at a market price today?

We see once again that people who say they believe that gold is the basis of freedom do not believe it. They believe in the United States government. They believe that the government has the right to hang onto its stolen gold. Why? Because the government will someday establish a gold standard. The gold belongs to the government.

But what is a gold standard? It is a system in which the government buys and sells gold at a foxed price. We have not had that system since 1933. The government did make the promise to foreign governments and central banks, but Nixon unilaterally broke the promise on August 15, 1971.
 

The gold bugs have now converted to Franklin Roosevelt's idea of a gold standard: a system in which the government has the right to steal property at one price, hike the price later, and sit on the wealth. The gold bugs honestly trust the Federal government to restore a gold standard someday. There has not been one since since 1933 that any government on earth will do this, but somehow, the gold bugs believe, it will do it in the future.

Source