Eric Sprott with SilverDoctors: THE SILVER CARTELS HAVE CHANGED THEIR M.O.

The Doc sat down with Sprott Asset Management’s Eric Sprott this weekend to discuss the European debt contagion, the latest gold and silver massacre, the massive rush into physical metals, and his outlook on gold and silver for the rest of 2012 and beyond.

When asked whether Thursday’s gold and silver raid coinciding with Bernanke’s testimony to Congress felt like Deja-Vu to the Leap Day Massacre Eric responded:
It might be that the silver cartels have changed their MO. The MO used to be that whenever the jobs number came out they’d go to work , which let them take a shot at the markets once a month.
The last jobs report backfired, and of course the jobs reports have been so poor. I think the key thing for the cartel is to time it, and to know when to do it. Three or four guys acting together can have a bigger impact if you all know exactly what second we’re going to do something.
Of course Bernanke releasing his comments at exactly 10am is the perfect time. Ok, let’s knock gold and silver down. It theoretically make’s Ben’s remarks seem all the more important, although you see the action in the market before anyone’s even had a chance to read his comments, but it sort of reinforces it.
I would not be surprised that the MO has changed, and now we do these things when Bernanke speaks or when the Fed announcements come out at 2:15 on June 20th next, that’s when they’ll act. They like to know when they have a common time when they can all go into shorting mode.

In Part 2, Eric discusses the bond managers coming into the gold market, gold rehypothecation, his outlook for gold and silver, and much more!

One of China's Biggest Growth Trends Is Breaking Down

For more than two years, I've been writing about a massive Chinese growth trend...

It returned as much as 120% over that time.

Now, this trend is broken. It's time to get out.

Macau is the greatest gambling spectacle in history. It's a tiny island on the southern coast of China. And it's the only place in China where gambling is legal.

In 2007, it surpassed Las Vegas as the largest gaming market based on revenue. Today, Macau generates five times more revenue than Las Vegas.

Over the past few years, Macau's growth numbers have been staggering.

In 2010, gambling revenue jumped to $23.5 billion. That was 70% higher than the previous year. In 2011, Macau's revenue surged again – to $34 billion. That's more than 40% higher than in 2010. Last month, though, Macau said gaming revenue only grew by 7.3%. (more)

Mark Carney Kicks the Can

mises.ca / by James E. Miller

Bank of Canada Governor Mark Carney takes a lot of cues from his U.S. equivalent and fellow central banker Ben Bernanke. Both took interest rates to anorexic levels in light of the financial crisis in 2008. Both used their positions of power as stewards of the people’s money to bail out the big banks. Both take credit for the gains of their respective stock markets and for guiding their economies through the global recession. Both are forever on a quest to rid of the world of the boogeyman of deflation.

And both are sewing the seeds of their own destruction by keeping interest rates artificially low and ultimately driving unsustainable investment that must eventually be liquidated. All around the world, the boom bust cycle continues to occur due to central banks attempting to induce economic growth with money printing. China’s economy is continuing to come apart as manufacturing output and real estate prices plummet. These sectors were bid up by double digit increases per annum in the country’s money supply over the past decade. Since inflationary growth, by definition, can’t go on forever, as its continuance results in what Ludwig von Mises called the “crack-up boom” and destruction of the currency, the chickens of the People’s Bank of China’s reckless monetary policy are finally coming home to roost. The PBOC has responded to the downturn by recently cutting interest rates for the first time since 2008 in what will likely be a vain effort to reinflate the bubble.

Over in Europe, the year over year change in the broad money supply has dropped dramatically since 2010. This provided the spark for the sovereign debt crisis which shows no sign of slowing down unless Angela Merkel and Germany concede to further inflationary measures by the European Central Bank. Just like her support for the big banks and the austerity measures that ensure idiotic bankers don’t take too much of a loss on their holdings of euro government bonds, Merkel will likely give in to money printing in the end as she has already endorsed the push for a political union.

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Southern Copper Corp. (NYSE: SCCO)

Southern Copper Corporation engages in mining, exploring, producing, smelting, and refining copper and other minerals in Peru, Mexico, and Chile. It is involved in the mining, milling, and flotation of copper ore to produce copper and molybdenum concentrates; smelting of copper concentrates to produce anode copper; and refining of anode copper to produce copper cathodes, as well as refined silver. The company operates Toquepala and Cuajone mines in the Andes Mountains located to the southeast of the city of Lima, Peru, as well as a smelter and refinery in the coastal city of Ilo, Peru. It also operates La Caridad and Buenavista copper mines, and smelting and refining plants in Mexico. In addition, the company operates five underground mines that produce zinc, copper, lead, silver, and gold; a coal mine which produces coal and coke; and a zinc refinery. It has 145,064 hectares of mineral rights in Peru; 176,250 hectares of exploration concessions in Mexico; 1,068 hectares of exploration concessions in Argentina; 35,958 hectares exploration concessions in Chile; and 2,544 hectares of exploration concessions in Ecuador. The company was founded in 1952 and is based in Phoenix, Arizona. Southern Copper Corporation is a subsidiary of Americas Mining Corporation.

Please take a look at the 1-year chart of SCCO (Southern Copper Coproration) below with my added notations:

There are (2) main price levels to watch on SCCO. First, the $30 level (red) was not only support from January thru April, but it has also been resistance here recently as the stock has tried to push back above it. The other level to watch is the $28 (blue) support level that has been formed over the last month or so.

The Tale of the Tape: The main levels to watch on SCCO are $28 and $30. You could buy SCCO if it comes down to $28 or breaks above $30. Short plays could be made on a rally up to $30 or on a breakdown of the $28 support.

How to Play the Collapse of the Euro

The euro crisis has been unfolding for over three years now... and it could very well last another three years. As a result, the euro has fallen sharply in the past few months. With Europe's leader's struggling to find a long-term solution, the fate of the 23-nation currency is now in question.

But Europe's problems offer traders the chance to make short-term gains by trading the troubled currency. The question, then, is how to play it. Here's two short-term trading ideas that could profit from the euro's struggles.

Europe's leaders are struggling to deal with a crisis that has been unfolding for over three years now. But as you'll see in a second, there is a trading opportunity developing as they take the next steps to fix their problems.

Greece, Spain, France, Portugal, Ireland? the list of troubled countries in Europe grows larger each week. A quick resolution appears unlikely as leaders seem to be unsure of what to do. While governments struggle with a long-term solution, traders can pursue short-term trading gains by trading movements in the eurozone's currency, the euro. The question that traders face is what trade they should make in order to profit from problems with the euro. (more)

IT ONLY TOOK A GLOBAL DEPRESSION TO REDUCE GAS PRICES BY 40 CENTS

You can’t watch the mainstream media propaganda channels for more than ten minutes without a talking head breathlessly announcing that gas prices have dropped for the 24^th day in a row and are now back to $3.55 a gallon. Wall Street oil analysts, who are paid hundreds of thousands of dollars per year to tell us why prices rose or fell after the fact, are paraded on CNBC to proclaim the huge consumer windfall from the drop in price. This is just another episode of a never ending reality show, designed to keep the average American sedated so they’ll continue to spend money they don’t have buying crap they don’t need. The brainless twits that pass for journalists in the corporate mainstream media never give the viewer or reader any historical context to judge the true impact of the price increase or decrease. The government agencies promoting the storyline of those in power extrapolate the current trend and ignore the basic facts of supply, demand, price and peak oil. The EIA is now predicting further drops in prices. Two months ago they predicted steadily rising prices through the summer. What would we do without these government drones guiding us?

As you can see from the chart, gas prices tend to be volatile and unpredictable in the short term. You can also see that since 1998 the trend has been relentlessly higher. The average inflation adjusted price of gasoline in 1998 was $1.41 per gallon, versus $3.55 today, a 152% increase in fourteen years. Over this same time frame the BLS manipulated CPI was up only 44%. If we are swimming in oil, as the MSM pundits claim, why the tremendous surge in price? It must be those evil oil companies. (more)

Watch for These Key Levels in the 3 Major U.S. Indices

Following up from last week’s post on “Triple Stock Index Key Levels,” let’s take a quick mid-week update on what’s happened and what support levels continue to be key focal points in the “Big Three” US Stock Market Indexes.

Let’s start with the S&P 500:

The prior update focused on the 1,300 support bounce with the 1,275 as a likely target point should 1,300 fail – which was the case.

The resulting sell-off cascaded price towards – and just under – the 1,275 confluence which has served so far as the key if not “Make or Break” support level to watch.

This level stretches back to the polarity swing highs from late 2011, as is the case in the other Indexes (though the Dow Jones broke under these prior highs briefly). (more)

Steve Keen: Why 2012 is Shaping Up to be a Particularly Ugly Year

At the high level, our global economic plight is quite simple to understand says noted Australian deflationist Steve Keen.

Banks began lending money at a faster rate than the global economy grew, and we’re now at the turning point where we simply have run out of new borrowers for the ever-growing debt the system has become addicted to.

Once borrowers start eschewing rather than seeking debt, asset prices begin to fall — which in turn makes these same people want to liquidate their holdings, which puts further downward pressure on asset prices.