Thursday, December 3, 2009

Q&A with Eric Coffin

I recently had a chance to talk to Eric Coffin, who, along with his brother David, produces the HRA (Hard Rock Analyst) Advisories. Eric, Dave and I have been friends for 15 years and we run into each other several times a year at conferences we all speak at. I’ve talked about some of the companies we both follow in the past few months and wanted to get some more information from “the horse’s mouth.”

I’ve commented before that I think the Coffins produce some of the best material out there on exploration companies. They have decades of experience in the mining business between them, and David is one of those rare guys in the gold and resource newsletter business who can sit down with a map and geology report and actually understand them. David logs thousands of miles a year travelling to exploration projects for a hands-on look. That kind of background is worth a lot and it shows in the companies they pick. (more)

McAlvaney Weekly Commentary, Dec 2, 2009

Characteristics of a Failed State With Dr. Paul Craig Roberts

December 2nd, 2009

Dr. Paul Craig Roberts is an economist and a nationally syndicated columnist for Creators Syndicate. He served as an Assistant Secretary of the Treasury in the Reagan Administration earning fame as the "Father of Reaganomics". He is a former editor and columnist for the Wall Street Journal. Business Weekand Scripps Howard News Service. He is a graduate of the Georgia Institute of Technology and he holds a Ph.D. from the University of Virginia. He was a post-graduate at the University of California, Berkeley, and Oxford University where he was a member of Merton College.

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More Evidence Gold is Being Hoarded as Comex Fulfills Gold Contracts With Paper

My bet that by 2020 we will return to some form of gold standard is looking better. Something is up when gold is being hoarded to such an extent that the futures exchanges cannot fulfill with metal but have to try to stiff the contract holder with paper. Now, they have done this in the past, and gotten away with it, but according to this story, never so aggressively.

Prof. Antal Fekete has been on this story for several months, and has set forth in some detail how the gold basis is being manipulated, perhaps because of hoarding. (The basis is the delta between the cash price and the next futures price.) Yves has had several posts on Gold Panic, and it is consistent with the good Professor’s analysis. (more)

Arming Goldman With Pistols Against Public: Alice Schroeder

“I just wrote my first reference for a gun permit,” said a friend, who told me of swearing to the good character of a Goldman Sachs Group Inc. banker who applied to the local police for a permit to buy a pistol. The banker had told this friend of mine that senior Goldman people have loaded up on firearms and are now equipped to defend themselves if there is a populist uprising against the bank.

I called Goldman Sachs spokesman Lucas van Praag to ask whether it’s true that Goldman partners feel they need handguns to protect themselves from the angry proletariat. He didn’t call me back. The New York Police Department has told me that “as a preliminary matter” it believes some of the bankers I inquired about do have pistol permits. The NYPD also said it will be a while before it can name names. (more)

Comex No Longer Fulfilling Your Gold Contracts With Physical Gold

he division of the New York Mercantile Exchange commonly known as the Comex provides a commodities market for gold, as well as aluminum, copper, and silver. Without going so far as suggesting it’s impossible to get physical gold when exercising your Comex futures contracts, Jesse’s Cafe Americain explains that these days it just doesn’t seem very likely:

“We would not conclude that you cannot get gold from the Comex in the exercise of your futures contract. ‘Cash settled’ is nothing new, and we ourselves have done this in the past. But we also have taken delivery, and have been speaking with other traders and funds, and many are spotting a trend. (more)

The Corporatocracy: A New Economic System for the Connected Banking Sector and Political Elites

The typical American family is struggling with the current recession and is having a hard time pinpointing the nexus of the problem. Some try to argue the failures of capitalism but our current system is more of a corporatocracy. A system designed for the few by the few. Even Adam Smith argued that society would need to be vigilant against monopolies and charlatans. Yet somehow we arrive at our current time with gigantic investment banks pulling on political strings and operating under Darwinian economics where the overall health of the economy is only an afterthought. We are a very long way from the capitalism Adam Smith advocated. (more)

Britain faces return to Victorian levels of poverty

Labour's strategy for tackling poverty has reached the end of the road and Britain risks a return to Victorian levels of inequality, according to a major two-year study seen by The Independent.

With 20 per cent of the population still stuck in poverty, the report calls for sweeping reform of the tax and welfare systems under which higher earners would finance more generous, universal benefits. The £43,888-a-year ceiling on national insurance contributions (NICs) would be abolished, so people earning more would pay NICs at 11 per cent on all their income above that level, instead of the current 1 per cent. (more)

The Kondratieff Cycle

Economical cycles and demographics point down over the next few years.

Demographic trends

In my Global Forecast published in Financial Sense 21st of August 2009, I pointed out that the spending wave for the US and Europe (incl. Eastern Europe) has topped relative to the rest of the world. The peak was around 2007-2008 and the trend will be down until 2024-2025.

In this article I analyse major economical cycles and show how they fit into the declining demographics in the western part of the world.

The Kondratieff Cycle.

The Russian economist Nikolai Kondratieff was the father of applying cyclical activity to economics in modern times. In his book "The Major Economic Cycles" published in 1925 he identified economical long waves in western countries. According to Kondratieff, the capitalist societies rise in long waves of approx. 50-60 years. Each cycle consists of three phases: (more)

Yen, Dollar Weaken on Signs of Economic Recovery, Stock Gains

The yen weakened for a third day against the euro and the dollar also fell as signs the global economy is recovering boosted demand for riskier assets.

The yen slid against all of its 16 major counterparts before reports today that economists said will show European retail sales fell at a slower pace and U.S. service industries expanded. Australia’s dollar approached a one-week high versus the dollar after a government report showed retail sales rose in October after unexpectedly declining the previous month.

“With the global economy recovering, risk trades will weigh on the funding currencies” such as the yen and the dollar, said Soichiro Mori, manager of foreign-exchange promotion at FXOnline Japan Co., a margin-trading company. “Higher-yielding currencies will benefit from the liquidity-driven play.” (more)

Peter Schiff on CNBC's Fast Money: Bull Market in Gold or BS?

Analyst: Stocks Will Dive Back to March Lows

U.S. stocks are heading for a fall to below their lows of last March.

So says Albert Edwards in a recent research report. Edwards is an analyst and strategist with Societe Generale S.A., a major European financial services firm with headquarters in Paris.

The company was voted this year by an independent survey as the top European economics and strategy research firm, its third consecutive year as number one.

Edwards cites a weakening global economy in 2010 and overpriced equities as the causes behind the market dive he anticipates.

“Deep down even the fiercest equity bulls must surely be doubting themselves,” said Edwards, according to a report in Bloomberg. (more)