Saturday, October 20, 2012

Silver and Gold Price Action – Winter Outlook / By The WealthCycles Staff / October 17, 2012
As markets never go anywhere in a straight line we have been licking our chops to explain to readers the small pull-back in silver and gold following a rally out of the summer consolidation period on new printing. Here is our projection for where we will head through early 2013 and why.

On July 17 veteran fund manager Marc Faber warned that investors “may lose up to 50 percent of their total wealth,” and said that “gold is oversold near-term” after observing two months of consolidation under the 1650 pivot point. For GoldSilver Insiders, Mike Maloney published videos at during the consolidation period, in which he said that “it is getting more bullish for gold and silver,” after commenting on the demoralized sentiment.

Citing little new web-based curiosity, Mike quipped that the “bull market hasn’t even gotten going yet,” despite gold’s actual rise ever since 1934, from twenty bucks an ounce to where we sit today.
Alternatively we could have said: “…despite the Fed’s dollar fall in purchasing power since 1934, from twenty bucks to buy an ounce of gold, all the way down to where we sit today.” In July, Mike said he “just does not think we have several months [more] before things start to move,” and that his preferred strategy was continuous diversification of savings into gold and silver.

Of course, as we know now, gold and silver prices did indeed rise above 1,700 dollars per ounce after the Federal Reserve (Fed) announced QEternity, pledging to print 40 billion new dollars a month without giving an end-date.

Richard Russell – What Current & Future Generations Face

from King World News
Today the Godfather of newsletter writers, Richard Russell, writes, “My kids and your kids and grandkids will curse the day when the Federal Reserve was secretly made master of the US monetary system.” Russell discussed gold, the Fed, market timing, and even Google in his latest note to subscribers. Here are Russell’s thoughts: “I’m torn between two emotions. I want to be bullish for the good of the nation and for the good of my five kids. But I’m miffed at myself because I wasn’t bolder and because I didn’t tell my subscribers to hop in on the bull side and play this rally.”
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Financial Collapse 2013 ~ The End of The Bretton Woods System

The Top 15 Economic 'Truth' Documentaries

On a regular basis we are placated by commercials to satisfy our craving to know which bathroom tissue is the most absorbent; debates 'infomercials' assuaging our fears over which vice-presidential candidate has the best dentist; and reality-shows that comfort our 'at least I am not as bad as...' need; there is an inescapable reality occurring right under our propagandized nose (as we noted here). Economic Reason has gathered together the Top 15 'reality' economic documentaries - so turn-on, tune-in, and drop-out of the mainstream for a few hours...
Originally posted at Economic Reason blog,

Top 15 Economic Documentaries

1. Overdose: The Next Financial Crisis – Directed by Martin Borgs
Based on the book “Financial Fiasco” by Johan Norberg this documentary depicts When the world’s financial bubble blew, the solution was to lower interest rates and pump trillions of dollars into the sick banking system. The solution is the problem, that’s why we had a problem in the first place. Featured guests; Peter Schiff, Gerald Celente, Dennis Hannon. ~46 min.  (more)

Happy Anniversary! / By Bill Holter / October 19th, 2012
October 19th, 1987… remember that day?  Do you remember the the day after?  Monday Oct. 19th was “Black Monday” when the market dropped 508 points or just over 22%, the next day was the day that the music “almost stopped.”  The next day, Tues. the 20th we opened up 200 points to a big sigh of relief, only to watch it go negative 100 points or more if I recall correctly.  I do remember the horrible feeling in my stomach and how deathly quiet my office had become.

Before I go any further I want to put this in context for you, I was a young lad of 27 years old, a little over 3 years in the brokerage business and working for Merrill Lynch (I can’t believe that was 25 years ago, “I got old fast!”) .  At the time, I was building client positions in 30yr “zero coupon Treasury bonds.”  I started buying a month or 2 earlier when rates went above 8%-8.5%.  Interest rates on the 30yr touched 10% on the previous Friday and I actually bought some at 10.25% early on Monday but was definitely beginning to question my logic as the losses from the earliest purchases were pretty significant by noontime on Monday.  Then, all of a sudden, interest rates started to tick downward a little bit in the afternoon.  The crash was a Godsend for this position as interest rates were back to 8% lickity split within 2 or 3 weeks as I recall.  I didn’t fully understand it at the time but my regional manager said on a conference call Wednesday morning that “interest rates were down as well as GOLD.”  The fact that investors had flocked to Treasuries as opposed to Gold meant that the system would survive.  (It took several years for me to finally understand this, which is why you should never have a stockbroker in their “early to mid 20′s”).

Gold Is Not Back In Favor Yet…

Despite the decline this past week, gold seems to be regaining favor with global investors, as just a week earlier it had been flirting with the $1,800 an ounce mark. Quite a change from the sentiment in early summer when some investors were questioning whether the yellow metal’s decade-long bull run was coming to a close.
The rebound in investor sentiment toward gold, of course, coincided with the launching of open-ended QE3 (or QE infinity) by the Federal Reserve. Since then gold has “barely paused for breath. It has, as discussed previously, touched all-time highs in terms of euros or Swiss francs.
QE3 certainly seemed to worry some investors. These people moving into gold are concerned about things such as competitive devaluations and the debasement of currencies in an attempt to pay back enormous debt loads with a cheaper currency. This road – currency debasement – eventually leads to inflation most believe.
So it is really is not surprising that, according to UBS, investors in exchange traded funds raised their holdings by 158 tons since the beginning of August to a record 2,681 tons of bullion recently.
Many of the world’s best investors are in agreement with the average person putting his or her money into gold. The list of names is impressive: George Soros, John Paulson, Ray Dalio and Bill Gross.
Ray Dalio, founder and chief investment officer of Bridgewater Associates – the world’s largest macro hedge fund, told CNBC viewers recently: “Gold should be part of everybody’s portfolio. We have a situation now when you have too much debt. Too much debt leads to the printing of money to make it easier to service. All of those things mean that some portion [of a portfolio] should be in gold.”
Dalio’s conclusion? “Only gold and real assets would survive.
All of this positive macro news about gold has managed to influence the gold chart too. According to asset manager Blackrock, “the gold chart has turned decidedly bullish.” Blackrock was speaking about the so-called “golden cross”. That occurs when the 50-day moving average moves above the 200-day moving average.
Blackrock noted that the last time gold’s chart looked so good was shortly after the Federal Reserve announced QE1, the first round of money printing. It said that if gold does the same thing it did back then, the price of the precious metal will hit $2,400 an ounce by next summer. Of course, macro factors like Chinese and Indian demand for physical gold will play a major role in whether we reach those lofty levels.
While I am bullish on gold longer term the chart patterns, volume and sentiment for both gold and silver are overwhelmingly bearish looking for the next couple weeks. I sharp pullback is likely to unfold before they take another run at resistance and breakout to new highs.
Gold Bull Market Investing

How A Metals Dealer Works / By Jim Sinclair / October 19, 2012, at 10:01 am
Happy to have brought a smile to you yesterday. Days can be long and trying at times, so a laugh is welcomed. I have hesitated for weeks to write this but I am not in sync, so here I go.
The action in the ‘Crimex’ this week was not unexpected. The political demands and possible (a hair’s breathe from) commercial signal failure, meant the paper gold printing machines would be pushed to emptied toner cartridges. As said, not unexpected. Temporary but not unexpected.
My head scratching comes from the question, where does the ‘physical’ metal come from to satisfy the growing buy stops hit as price comes down? And to piggy back on this question, do foreign entities, Central Banks , and investors ‘take’ delivery; in other words, leave the Bullion System with the metal? Or does it sit in their care? (lol)
Realizing they are ‘Bullion Banks’, could you step through how they receive their physical metal from miners/refiners and the mechanism used to arrive at that price (I am familiar and understand the ‘FIX’). But it appears that the industry ‘allows’ these banks to paper push the price paid around based solely on the Bank’s own contract positions.
This is where I scratch my head , WHY??? The miners hold the commodity and are at the mercy of the Bullion Banks for their very survival, as it appears to me . Where am I wrong?
Dear Earl,
Many are asking themselves the same question.
In order to explain to you the proper answer to this question I need to ask you a question. What is the “Strong Dollar Policy” of the US Treasury? The answer is it is a policy of support of the dollar at key technical points so that the dollar will decline in an orderly fashion. This has been in place since the dollar was trading in the mid one hundred and twenty-five area on the USDX. In comparison the “Weak Gold Policy” has been in place since $248 which means gold’s appreciation will not be an insult to the dollar by spiking to $3500 and beyond, but rather rise in an orderly fashion. How could you not have noticed this in both the dollar and gold? This opens the bonanza to the metals dealer to run what looks like a huge short but rather to operate their business where I was pleased to make one half a dollar unwinding the spread (a long position versus a short position offsetting between my buying product from the producer versus Comex short).
Today the metals dealer want to make fifty dollars, not 50 cents on that spread.
I owned a metals dealer here and in London. I made a cash market for gold. I know about what I speak. There might be outside of the gold banks less than five people who understand the big short that is always being screamed about by the so called gold experts, and COT is a crock. You are looking at least seventy-five percent at a managed spread position. What happened at $1800 then at $1775 and again at $1750 was the long side of the spread was dropped, leaving the short side exploded and the gold banks pounding the market to make a 50% profit by putting back on the long side of the spreads, locking the huge physical long versus the Comex short into a no risk position that reads on COT like the greatest short in human history. The same is true of silver. In this financially debased world, with the rules of a metal dealer’s company and a little help for standard financial fraud and you will never find this in the COT numbers.
I am telling you the truth. I am telling you how a metals dealer works. I know because I was successful in the entire 1970s gold bull market play against this game.

China’s GDP Growth Ponzi Scheme

by Greg Canavan, Daily
Surprise, surprise. China’s GDP growth for the third quarter came in bang on the consensus estimate of 7.4%, the slowest rate of growth in years. But the market liked it because on a quarter-on-quarter basis growth was 2.2%, up from 2% in the prior quarter. So on an annualised basis, the Chinese economy grew at a fast 8.8%.
Or did it?
We mentioned yesterday that the published numbers are a farce. They tell you what the Chinese Communist party wants you to know — that they are in control and everything is going according to plan.
For example, here’s the introduction to China’s GDP release from the National Bureau of Statistics of China:
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