Thursday, September 6, 2012

Faber – The Most Dangerous Trend Facing The World Today / September 5, 2012

On the heels of news out of Europe that the ECB will do unlimited bond buying, today Marc Faber told King World News, “It was expected that they would start with a further monetary easing at some point.” Faber warned, “I believe central bankers are in this world to print money. They are, intellectually, completely dishonest or incompetent, and that’s all they know.”

Faber, who is author of the Gloom Boom and Doom Report, also stated, “This is a very dangerous trend, and I will always, always fight governments on every level I can because the larger the government is, the larger the abuse is in a system.” He also added: “I have roughly 25% of my assets in gold. I buy every month, and I will never, ever sell it as long as people such as Mitt Romney, Paul Ryan, Obama, Biden, Bernanke, and Gheitner are in government. I will never sell it. Never.”

But first, here is what Faber had to say upon learning about the news out of Europe: “It was expected that they would start with a further monetary easing at some point. And there is still some opposition from the Germans. We’ll have to see what the Germans decide in the high court in the next few days. But basically, globally, central bankers are there to print money, and nothing else. That’s all they know.”

Marc Faber continues:

“They will continue to do it (print money), and this will lead to a misallocation of capital as we had in the past, and to further bubbles here and there. They can sterilize it (bond buying) to some point, but I think, in general, what usually happens is these measures are not fully sterilized.

… I believe central bankers are in this world to print money. They are, intellectually, completely dishonest or incompetent, and that’s all they know. They never worked a day in their lives. They are all kind of grown in the academia….


Gold The Recent Rally: Martin Armstrong

The computer called for a high at this time a year ago. There is nothing new. The same old news of QE3 will be inflationary is just nonsense. We have massive deflation still going on. The key to watch is interest rates. Do a simple correlation and you will see that inflation requires rising interest rates – not declining. However, government is making the perfect mistake to set that stage for the explosive rally in gold. The Fed last year bought 61% of the new debt. That may appear to be inflationary from one side of the coin, but capital is contracting due to the witch hunt for money globally, the continued decline in bank assets, though starting to ease with real estate, and the massive increase in taxation. Even the banks are all moving their back offices now to Poland and India. That even includes banks in Singapore.

Once capital realizes that these trends are forcing it to invest, then you will see assets rise, debt will fall because interest rates are so low, people are not buying other than very short-term. Americans are being chased out of all banks worldwide, The government figures that capital will be forced home and then they can imprison people and confiscate that wealth. Sorry! The solution is to buy assets outside of the banking system – real estate, stocks, & gold (not in France). As capital shifts from banks and public assets into private, then we will see the inflation come home. That appears to hit in 2014 and we will see an explosive move to the upside thereafter. Hence, QE3 is only a confirmation that the trend is still contracting. It will be no more inflationary than QE1 or QE2. The danger these morons are creating is that with interest rates so low, they are likely to find NO BID for the bonds when they do need the cash. Then watch what happens! These morons will have created an explosive inflationary spiral. That takes place ONLY when capital shifts away from PUBLIC assets into PRIVATE and sees the light.

For now, gold may peak this week by the 7th. The key weeks are 9/17 and then 10/1. We will see volatility rise in October. Europe is still messing things up. Politicians are clueless and still think they can bully the private sector into paying their bills. They will have another thing coming very soon.

For now, the main resistance in gold is at the 1800-1810 area. This is purely a technical move. A low early next year should complete the normal 2 year correction process and from there we will be in a position to change course. The same turning point that the 1987 Crash was on in that 1989.95 wave will be next August. From there onward, a change in trend appears highly likely. We will be providing the specific targets for the next year with all the Reversals and Cycle Maps at the San Diego Conference 9/23-24.This is going to be a very important event.

GATA’s Bill Murphy on the JP Morgan Silver Shortage and the next Bullion Bank Run!

from Capital Account:

Welcome to Capital Account. Gold futures slipped ahead of the ECB policy-setting meeting this week, or so the story goes. Do these macro trends drive gold prices as much as the headlines indicate? Our guest Bill Murphy, Chairman of GATA, doesn’t think so and he has flown to our studio in Washington DC to make the case.

Last month after a report surfaced that US regulators planned to drop the silver market manipulation probe, CFTC Commissioner Bart Chilton described the report as premature and inaccurate. We haven’t heard much since, but our guest Bill Murphy has an update on the bank at the center of silver manipulation claims, JP Morgan. JP Morgan has a major problem with their massive short position according to GATA. Bill believes that it won’t be long before their role in the market manipulation scheme is exposed. Meanwhile, the silver market maybe the tightest it has ever been to secure physical supply in size, and delivery can take months. Bill Murphy, author of, forecasts the bank will have a problem with its short silver position in the near future. Could it explode this month? He says yes and explains why.

Plus, are lap dances an art form worthy of tax exempt status? New York’s highest court is scheduled to weigh the arguments for and against. Lauren and Demetri will give you their take on today’s “Loose Change.”

An Indicator With a 110-Year Record of Success Says 'Buy'

Today, I want to cover a popular market ETF that is a strong buy based on a momentum indicator that most traders ignore and a bullish chart pattern. While few traders follow this momentum indicator, it has a backtested history of consistent success since 1900.

Traders should never rely on a single indicator in their analysis. They should use at least two indicators, and each indicator should be independent of the other. A very simple but useful analysis can be done with a short-term momentum indicator that is used to time entries when the chart pattern is bullish. (more)

McAlvany Weekly Commentary

Bernanke in the Land of Oz

About This Week’s Show:
-Artificially low interest rates can’t last forever
-Hopes for QE3 force hopes for bad news?!
-Gold breaks out of pennant to upside

Read | Subscribe@iTunes

Santelli on $16 Trillion: “When the number gets this big, it better matter to someone”

Chart of the Day - McCormick & Company (MKC)

The "Chart of the Day" is McCormick & Company (MKC), which showed up on Tuesday's Barchart "All-Time High" list. McCormick on Tuesday posted a new all-time high of $62.40 and closed +1.42%. TrendSpotter has been long since June 18 at $58.35. In recent news on the stock, McCormick on Aug 20 announced an agreement to acquire Wuhan Asia-Pacific Condiments to expand its presence in Asia. McCormick & Company, with a market cap of $8 billion, is a diversified specialty food company that manufactures and sells spices, herbs, seasonings, flavorings and other specialty food products.


Gold Standard To Be Reinstated Through The Back Door

For the first time in over 30 years, talk of a return to the gold standard has become part of mainstream politics in the United States. Part of the official Republican policy adopted it at the recent Republican Convention and called for the commission to look at reestablishing the link between gold and the U.S. dollar. No doubt that plank was added to soothe supporters of Texas Congressman Ron Paul.

However, gold bugs holding gold bullion or even those holding gold ETFs such as the SPDR Gold Shares (NYSE: GLD) shouldn’t hold their breath in anticipation of the gold standard returning. There was a similar commission – the Gold Commission – set up in 1981 by President Ronald Reagan. After a lot of ‘commissioning’, the decision was made to go with the status quo of using fiat Federal Reserve dollars.

Any commission set up under the current president would likely come to the same conclusion. There are simply too many practical obstacles to return to a full-fledged gold standard. Even pro-gold advocates including the World Gold Council and the Gold Anti-Trust Action Committee (GATA) don’t see a gold standard returning.

The key problem would be at what price of gold would the United States peg its currency. Great Britain returned to the gold standard in 1925, after going off it in 1914, at the 1914 peg price. This was a mistake made by Winston Churchill (he called it the biggest he ever made) since it basically ignored the vast inflation in the British pound in those intervening years. The result was a vast overvaluation of the pound and deflation and high unemployment soon followed.

What price would a new Gold Commission set as the “correct” price of the U.S. dollar versus gold? $1,000? $2,000? $5,000? The answer is that there is no “correct” price. Whatever price is set will eventually be tested by the financial markets and fail much as the pegged currencies system failed. So there will be no return to the gold standard.

But that does not mean there will not be a ‘back-door’ gold standard. The move to such as a system is already underway as central banks all over the world are rebuilding their stockpiles of gold. After two decades of heavy selling, central banks became net buyers of gold in 2010 and the momentum has built since. Gold will likely end up being used as ‘good’ collateral by global central banks, as opposed to the shaky collateral sovereign bonds are turning into.

Central bank purchases, led by the emerging markets, are on track this year to hit a record high according to the World Gold Council. China alone in 2011 bought around 490 tons of gold. Other countries including Russia, Turkey and South Korea have added gold to their official holdings in recent months. This buying showed up as central bank purchases in the second quarter of 2012 were more than double the level reported a year earlier at 157.5 metric tons. If the buying continues at current levels, central banks gold purchases would total around 500 tons this year, easily surpassing last year’s 458 tons.

The bottom line for investors from the global central banks’ buying of gold? The gold standard is working its way back into the international monetary system through the back door. This should, in the long-term, put a floor under gold and help maintain it on its steady upward path.

Just last week we started to see gold bullion, silver bullion and gold miner share prices start to breakout to the upside of a 12 month consolidation pattern. This could be the start of the next major rally in precious metals as future uncertainty fears continue to rise. The large bullish technical pattern we see on the gold chart points to much higher prices over the coming 24 months. But keep in mind this is a monthly chart and it could still take months to truly breakout to new highs and start another rally.

Gold Bullion Trading

Gold Bullion Trading