http://www.zerohedge.com/news/2013-01-08/us-mint-sells-massive-39-million-ounces-silver-coins
Submitted by Tyler Durden on 01/08/2013 15:32 -0500
http://www.pimco.com/EN/Insights/Pages/Money-for-Nothin-Writing-Checks-for-Free.aspx
( Note Bill Gross also doubts gold is in fort Knox in his January 2013 letter... )
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Money for Nothin’
It was Milton Friedman, not Ben Bernanke, who first made reference to dropping money from helicopters in order to prevent deflation. Bernanke’s now famous “helicopter speech” in 2002, however, was no less enthusiastically supportive of the concept. In it, he boldly previewed the almost unimaginable policy solutions that would follow the black swan financial meltdown in 2008: policy rates at zero for an extended period of time; expanding the menu of assets that the Fed buys beyond Treasuries; and of course quantitative easing purchases of an almost unlimited amount should they be needed. These weren’t Bernanke innovations – nor was the term QE. Many of them had been applied by policy authorities in the late 1930s and ‘40s as well as Japan in recent years. Yet the then Fed Governor’s rather blatant support of monetary policy to come should have been a signal to investors that he would be willing to pilot a helicopter should the takeoff be necessary. “Like gold,” he said, “U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”
http://beforeitsnews.com/gold-and-precious-metals/2013/01/gold-in-fort-knox-is-there-any-2467138.html
http://www.caseyresearch.com/gsd/home
US Mint Sells Massive 3.9 Million Ounces Of Silver Coins In First Few Days Of 2013, Triple December's Total
Just a few days ago we noted the massive surge in physical gold coin sales from the US Mint, with silver surprisingly lagging. Today, we see an even more dramatic surge in the sales of physical Silver Coins in the first week of January, which in a few short days hit 3.94 million oz, already surpassing the entire December total of 1.64 million ounces. It seems that the paper-to-physical currency rotation is gathering pace even as, or thanks to the trillion dollar platinum coin mercifully ending its 15 minutes of page-clicking, ad revenue infamy. In the secondary market, inventories (via APMEX) of Silver coins remain negligible, if any: American Eagles are available as follows: 2013s may be available 1/18, maybe not; 2012 - 0; 2011 - 0; 2010 - 0; 2009 - 0; 2008 - 0; 2007 -0; 2006 - 0; 2005 - 0; 2004 - 0; 2003 - 0; 2002 - 0. They do have some 2000, 2001 and 2007, all about $5-6 over spot! It seems ever more people are getting nervous about the impact of currency wars on their "money"... or perhaps just want to make Silver shirts to attract the females?
http://www.pimco.com/EN/Insights/Pages/Money-for-Nothin-Writing-Checks-for-Free.aspx
( Note Bill Gross also doubts gold is in fort Knox in his January 2013 letter... )
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INVESTMENT OUTLOOK
Money for Nothin’
Writing Checks for Free
It was Milton Friedman, not Ben Bernanke, who first made reference to dropping money from helicopters in order to prevent deflation. Bernanke’s now famous “helicopter speech” in 2002, however, was no less enthusiastically supportive of the concept. In it, he boldly previewed the almost unimaginable policy solutions that would follow the black swan financial meltdown in 2008: policy rates at zero for an extended period of time; expanding the menu of assets that the Fed buys beyond Treasuries; and of course quantitative easing purchases of an almost unlimited amount should they be needed. These weren’t Bernanke innovations – nor was the term QE. Many of them had been applied by policy authorities in the late 1930s and ‘40s as well as Japan in recent years. Yet the then Fed Governor’s rather blatant support of monetary policy to come should have been a signal to investors that he would be willing to pilot a helicopter should the takeoff be necessary. “Like gold,” he said, “U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”
Mr. Bernanke never provided additional clarity as to what he meant by “no cost.” Perhaps he was referring to zero-bound interest rates, although at the time in 2002, 10-year Treasuries were at 4%. Or perhaps he knew something that American citizens, their political representatives, and almost all investors still don’t know: that quantitative easing – the purchase of Treasury and Agency mortgage obligations from the private sector – IS essentially costless in a number of ways. That might strike almost all of us as rather incredible – writing checks for free – but that in effect is what a central bank does. Yet if ordinary citizens and corporations can’t overdraft their accounts without criminal liability, how can the Fed or the European Central Bank or any central bank get away with printing “electronic money” and distributing it via helicopter flyovers in the trillions and trillions of dollars?
Well, the answer is sort of complicated but then it’s sort of simple: They just make it up. When the Fed now writes $85 billion of checks to buy Treasuries and mortgages every month, they really have nothing in the “bank” to back them. Supposedly they own a few billion dollars of “gold certificates” that represent a fairy-tale claim on Ft. Knox’s secret stash, but there’s essentially nothing there but trust. When a primary dealer such as J.P. Morgan or Bank of America sells its Treasuries to the Fed, it gets a “credit” in its account with the Fed, known as “reserves.” It can spend those reserves for something else, but then another bank gets a credit for its reserves and so on and so on. The Fed has told its member banks “Trust me, we will always honor your reserves,” and so the banks do, and corporations and ordinary citizens trust the banks, and “the beat goes on,” as Sonny and Cher sang. $54 trillion of credit in the U.S. financial system based upon trusting a central bank with nothing in the vault to back it up. Amazing!
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http://beforeitsnews.com/gold-and-precious-metals/2013/01/gold-in-fort-knox-is-there-any-2467138.html
In the classic 1964 movie Goldfinger, James Bond tries to prevent the main villain, Auric Goldfinger, from detonating a dirty nuclear bomb inside Fort Knox. While in Fort Knox, Bond says:
Well, if you explode it [the bomb] in Fort Knox, the… the entire gold supply of the United States would be radioactive for… fifty-seven years.
Goldfinger is only a work of fiction. Fort Knox wasn’t under the threat of a nuclear explosion (then again, who knows?). Nonetheless, it has been argued that it wouldn’t really make difference if the gold in the fort were radioactive – nobody has seen much of it since the 1950s. On December 4 and December 12, 2012 in our two-part story on gold and the U.S. dollar, we highlighted two possibilities: the dollar collapses, gold goes up like crazy or the dollar doesn't collapse, gold still appreciates. In those commentaries, we analyzed the possibilities of gold appreciating and tied possible price levels with a number of factors, for instance with U.S. gold reserves as presented on the chart below.
On December 4, 2012, we wrote the following:
This chart presents the (…) relation of U.S. debt to Treasury gold reserves – the amount of debt per one ounce of gold – up to 2012. The red line represents U.S. Treasury gold reserves in metric tonnes, while the yellow line denotes the amount of U.S. debt in dollars per ounce of gold. The debt per ounce has visibly increased since 1971, accelerating around 2000 and even more around 2008. In 2012, there were $61,796.11 of debt per one ounce of gold owned by the U.S. government.
Now, if a new gold standard is introduced and the agreement works like the Bretton Woods system, the dollar (or whatever other currency) would be tied to gold. As noted earlier in this essay, at the introduction of the Bretton Woods agreement in 1944 the debt coverage for the U.S. stood at 10.9% (or $319.90 of debt per one troy ounce of gold). If the new system were based on similar assumptions with debt coverage at 10%, this would imply a fixed price of $6,179.61 per ounce of gold ($6,179.61 per ounce of gold divided by $61,796.11 of debt per one ounce of gold gives us coverage of 10%).
Since the publication of this essay, we have received a particularly interesting question about the assumptions we used:
Dear Mr. Radomski
Your December 4, 2012 article (…) is exceeding well-written and researched, and I gained a lot of knowledge from reading it. However there is one potential problem I see in all the logic you are applying to the current situation. It seems to me you are assuming the USA actually has gold at Fort Knox and West Point. But there is mounting, but unproven evidence, both places have no gold in them at all, and are rather storage places for nerve gas. (…) An audit of the US gold holdings has been demanded by some for years, but the government will not allow it. The gold belongs to the American people, so why won’t they let us see it? Many think it is because it is no longer there. If that is indeed
the case, do we not face a “financial Armageddon?” Thanks for reading this and any response you might have. (I am not a conspiracy freak!) (…)
We always appreciate our readers’ feedback and would like to thank for it here. We also appreciate spot-on questions and see this particular one as intriguing, to say the least. Which brings us back to Fort Knox.
At first it may sound shocking, but the last audit of gold stored in Fort Knox took place in 1953. No typo here, 1953, just after U.S. President Dwight Eisenhower took office. Even though it is the last audit up to date, it can’t be described as satisfying. No outside experts were allowed and the audit team tested only about 5% of gold hoarded in the fort. So, there hasn’t been a comprehensive audit of Fort Knox in at least 60 (!!!) years. This is at least surprising, given the fact that large entities listed on stock exchanges are usually required to undergo an outside audit at least once a year. Of course, the U.S. Bullion Depository is no conventional company. Nonetheless, not auditing it independently for more than half of the century raises questions such as the one posted above.
This chart presents the (…) relation of U.S. debt to Treasury gold reserves – the amount of debt per one ounce of gold – up to 2012. The red line represents U.S. Treasury gold reserves in metric tonnes, while the yellow line denotes the amount of U.S. debt in dollars per ounce of gold. The debt per ounce has visibly increased since 1971, accelerating around 2000 and even more around 2008. In 2012, there were $61,796.11 of debt per one ounce of gold owned by the U.S. government.
Now, if a new gold standard is introduced and the agreement works like the Bretton Woods system, the dollar (or whatever other currency) would be tied to gold. As noted earlier in this essay, at the introduction of the Bretton Woods agreement in 1944 the debt coverage for the U.S. stood at 10.9% (or $319.90 of debt per one troy ounce of gold). If the new system were based on similar assumptions with debt coverage at 10%, this would imply a fixed price of $6,179.61 per ounce of gold ($6,179.61 per ounce of gold divided by $61,796.11 of debt per one ounce of gold gives us coverage of 10%).
Since the publication of this essay, we have received a particularly interesting question about the assumptions we used:
Dear Mr. Radomski
Your December 4, 2012 article (…) is exceeding well-written and researched, and I gained a lot of knowledge from reading it. However there is one potential problem I see in all the logic you are applying to the current situation. It seems to me you are assuming the USA actually has gold at Fort Knox and West Point. But there is mounting, but unproven evidence, both places have no gold in them at all, and are rather storage places for nerve gas. (…) An audit of the US gold holdings has been demanded by some for years, but the government will not allow it. The gold belongs to the American people, so why won’t they let us see it? Many think it is because it is no longer there. If that is indeed
the case, do we not face a “financial Armageddon?” Thanks for reading this and any response you might have. (I am not a conspiracy freak!) (…)
We always appreciate our readers’ feedback and would like to thank for it here. We also appreciate spot-on questions and see this particular one as intriguing, to say the least. Which brings us back to Fort Knox.
At first it may sound shocking, but the last audit of gold stored in Fort Knox took place in 1953. No typo here, 1953, just after U.S. President Dwight Eisenhower took office. Even though it is the last audit up to date, it can’t be described as satisfying. No outside experts were allowed and the audit team tested only about 5% of gold hoarded in the fort. So, there hasn’t been a comprehensive audit of Fort Knox in at least 60 (!!!) years. This is at least surprising, given the fact that large entities listed on stock exchanges are usually required to undergo an outside audit at least once a year. Of course, the U.S. Bullion Depository is no conventional company. Nonetheless, not auditing it independently for more than half of the century raises questions such as the one posted above.
This is no new topic. One of the first written accounts questioning the amount of gold really stored in Fort Knox appeared in 1974 in a tabloid, the National Tattler. An unnamed informant claimed that there was no gold left in Fort Knox. The sensational nature of the story, and of the newspaper, wouldn’t perhaps contribute to the credibility of the account but it was later revealed that the informant, Louise Auchincloss Boyer, secretary to Nelson Rockefeller, had fallen out of the window of her New York apartment and died three days after the publication in the Tattler. The tragic incident resulted in controversies over the possibility that the U.S. Bullion Depository may have misstated the actual amount of gold held in Fort Knox. Congressman John R. Rarick demanded aCongressional investigation and, on September 23, 1974 six Congressmen, one Senator and the press were allowed to enter Fort Knox to see for themselves if the gold was there or not.
The tour showed that there was gold in Fort Knox but, all the same, it sparked even more controversies. Only a fraction of the gold reserves were available to see. A photo of one Congressman published by Associated Press suggested that gold bars held in the fort may have been less heavy than would be usually expected.
Quite obviously, this has resulted in even more doubt about the fineness of gold in Fort Knox. None of these doubts have been put aside by any of the audits carried out since 1974. When the reserves were audited, the amount of the gold examined was fractional and there has been no comprehensive bar count and weighting. The same goes for assaying – if a fraction of gold bars were examined at all, then a fraction of this fraction were assayed. The methods used in the assaying process were not conventional. Usually, during an assay, gold bars are examined by means of drilling, which is called the core boring method. But the bars in Fort Knox were examined merely by cutting of small chips of the metal from their surface. This method only proved that the outer layer of the bars examined was made of gold.
This difference in assaying methods is important if you consider that counterfeit “gold bars” have been showing up in New York recently and that fake gold bars turned up in LBMA Approved Vaults in Hong Kong. All these bars had one common characteristic: they were made of tungsten, which has similar density as gold, and covered with a gold veneer. The problem here is that such bars can go undetected if they are examined with X-ray fluorescence scans or by means of simply scraping of a bit of the metal from the surface. So, to properly assess the fineness of gold bars in Fort Knox, a full core boring method should be employed.
In 2012, the German federal court ordered that the German central bank, Bundesbank, conduct anaudit of German gold reserves stored abroad, particularly in the U.S., U.K. and in France. The German authorities have never before conducted a comprehensive audit of their foreign gold reserves and the last time they were able to see their gold stored in the New York Federal Reserve vaults was supposedly in 1979/80. The Bundesbank has expressed that it doesn’t doubt the trustworthiness of the U.S. authorities but demands stricter control over its gold reserves. Because of that 150 tons of gold will be shipped from the U.S. to Germany to assess the fineness of the bars.
The tour showed that there was gold in Fort Knox but, all the same, it sparked even more controversies. Only a fraction of the gold reserves were available to see. A photo of one Congressman published by Associated Press suggested that gold bars held in the fort may have been less heavy than would be usually expected.
Quite obviously, this has resulted in even more doubt about the fineness of gold in Fort Knox. None of these doubts have been put aside by any of the audits carried out since 1974. When the reserves were audited, the amount of the gold examined was fractional and there has been no comprehensive bar count and weighting. The same goes for assaying – if a fraction of gold bars were examined at all, then a fraction of this fraction were assayed. The methods used in the assaying process were not conventional. Usually, during an assay, gold bars are examined by means of drilling, which is called the core boring method. But the bars in Fort Knox were examined merely by cutting of small chips of the metal from their surface. This method only proved that the outer layer of the bars examined was made of gold.
This difference in assaying methods is important if you consider that counterfeit “gold bars” have been showing up in New York recently and that fake gold bars turned up in LBMA Approved Vaults in Hong Kong. All these bars had one common characteristic: they were made of tungsten, which has similar density as gold, and covered with a gold veneer. The problem here is that such bars can go undetected if they are examined with X-ray fluorescence scans or by means of simply scraping of a bit of the metal from the surface. So, to properly assess the fineness of gold bars in Fort Knox, a full core boring method should be employed.
In 2012, the German federal court ordered that the German central bank, Bundesbank, conduct anaudit of German gold reserves stored abroad, particularly in the U.S., U.K. and in France. The German authorities have never before conducted a comprehensive audit of their foreign gold reserves and the last time they were able to see their gold stored in the New York Federal Reserve vaults was supposedly in 1979/80. The Bundesbank has expressed that it doesn’t doubt the trustworthiness of the U.S. authorities but demands stricter control over its gold reserves. Because of that 150 tons of gold will be shipped from the U.S. to Germany to assess the fineness of the bars.
All of this shows that the measures applied by the U.S. government to gold storage in Fort Knox and the Federal Reserve Bank of New York’s vaults are questionable and that this fact may have been recognized by German authorities. It’s hardly conceivable that there is no gold left in Fort Knox or the New York vaults. On the other hand, the lack of a comprehensive audit of either facility is unnerving. So are other irregularities associated with Fort Knox: missing shipments, audits acknowledging the existence of gold based on seals that were not broken, not on the actual count and examination of bars and so on.
Of course, a full audit of Fort Knox wouldn’t be an easy task because of the sheer amount of gold to be examined. But it’s feasible. The U.S. Mint estimated the cost of such an audit to stand at $60 million. The Treasury came up with a lower estimate – $15 million. Even if we take the higher value, and compare it to the value of gold stored in Fort Knox (as of December 31, 2012, $240.8 billion) it adds up to about 0.02% of these reserves. In this light the Treasury cannot really claim that this is too expensive.
Of course, a full audit of Fort Knox wouldn’t be an easy task because of the sheer amount of gold to be examined. But it’s feasible. The U.S. Mint estimated the cost of such an audit to stand at $60 million. The Treasury came up with a lower estimate – $15 million. Even if we take the higher value, and compare it to the value of gold stored in Fort Knox (as of December 31, 2012, $240.8 billion) it adds up to about 0.02% of these reserves. In this light the Treasury cannot really claim that this is too expensive.
So, what does all of this mean for the analysis we presented in our essay on gold and the dollar collapse? In short words, not much. Our price target for gold is to be treated as a general indication of where gold might go if the dollar collapses. If the value of the greenback is reduced to paper, we would expect gold to appreciate, but not exactly to $6,179.61. It could appreciate to $5,000 or to $10,000 (in today’s dollars). Nobody really knows that. The point is that if doubts about the amount of gold stored in Fort Knox are just that – unproven doubts – gold could be a lot more expensive (in dollar terms) than it is today. If, however, there’s any substance in these doubts and gold reserves in Fort Knox are lower than officially reported, gold could go even higher, and the price of $6,000 per ounce of gold could be viewed as the lower bound of where it might go.
The bottom line is that if the dollar collapses and the gold reported to be in Fort Knox is really there, gold could appreciate very strongly. If the dollar crashes and Fort Knox is (partially) empty, gold could go sky-high (in dollar terms).
For more information on how to structure your gold and silver portfolio to deal with both the possibility of the dollar collapsing and the possibility that it will endure in spite of the current U.S. debt levels, please consult our essay on gold and silver portfolio. For information on why we use past gold tops as reference points, check our essay on the 1980 top in gold.
Thank you for reading.
Sincerely,
Przemyslaw Radomski, CFA
The bottom line is that if the dollar collapses and the gold reported to be in Fort Knox is really there, gold could appreciate very strongly. If the dollar crashes and Fort Knox is (partially) empty, gold could go sky-high (in dollar terms).
For more information on how to structure your gold and silver portfolio to deal with both the possibility of the dollar collapsing and the possibility that it will endure in spite of the current U.S. debt levels, please consult our essay on gold and silver portfolio. For information on why we use past gold tops as reference points, check our essay on the 1980 top in gold.
Thank you for reading.
Sincerely,
Przemyslaw Radomski, CFA
And.....
Indian Man Buys $230,000 Solid Gold Shirt as 'Investment'
Jan
8
"The question still remains...are we done to the downside...or do JPMorgan et al still have more work to do?"
¤ YESTERDAY IN GOLD AND SILVER
The gold price did virtually nothing during Far East trading on Monday...and even the tiniest moves above $1,660 spot got sold off. Then nothing happened during morning trading in London, either...but not-for-profit sellers showed up the moment the Comex opened...and gold was down over twelve bucks in about an hour. From there it didn't do much, although it did recover a bit off its low of the day in the thinly-traded electronic market.
The high price tick...such as it was at around $1,663 spot...came shortly before 11:00 a.m. in Hong Kong...and the New York low [$1,641.50 spot] came a few minutes before 9:30 a.m. and the open of the equity markets. The 5-year intraday price movement chart for gold shows that 9:30 a.m. Eastern is the time that gold hits its daily low in New York over the years...and yesterday was just typical. I doubt very much that this is accidental.
The dollar index opened at 80.49 on Sunday night in New York...and then rallied to its high, around 80.69, which occurred at 8:00 a.m. in London right on the button on their Monday morning. It hung around that high until 8:00 a.m. in New York...and then down it went, with the low tick [80.12] coming moments before the close. The dollar close at 80.17.
The dollar lost about 40 basis points during the New York session...but the not-for-profit seller at the Comex open made sure that there was no correlation between the dollar index and the gold price yesterday.
The high price tick...such as it was at around $1,663 spot...came shortly before 11:00 a.m. in Hong Kong...and the New York low [$1,641.50 spot] came a few minutes before 9:30 a.m. and the open of the equity markets. The 5-year intraday price movement chart for gold shows that 9:30 a.m. Eastern is the time that gold hits its daily low in New York over the years...and yesterday was just typical. I doubt very much that this is accidental.
Gold closed at $1,646.90 spot...down $9.90 on the day. Net volume was fairly light...around 121,000 contracts.
It was very much the same story in silver...and the silver chart looks pretty much the same as the gold chart...with the high and low ticks coming at the same times as gold as well. The rally that came after the 9:30 a.m. Eastern time low, got smacked down just before the 3:00 p.m. GMT London close, which was 11:00 a.m. in New York.
Silver's Hong Kong high was around $30.45 spot...and it's 9:30 a.m. New York low was recorded by Kitco at $29.75 spot.
Silver closed at $30.16 spot...down 2 cents from Friday's close. Volume was around 39,500 contracts.
Silver's Hong Kong high was around $30.45 spot...and it's 9:30 a.m. New York low was recorded by Kitco at $29.75 spot.
Silver closed at $30.16 spot...down 2 cents from Friday's close. Volume was around 39,500 contracts.
The dollar lost about 40 basis points during the New York session...but the not-for-profit seller at the Comex open made sure that there was no correlation between the dollar index and the gold price yesterday.
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The CME's Daily Delivery Report showed that only 4 gold contracts were posted for delivery tomorrow within the Comex-approved depositories. As I've stated several times...January is not a regular delivery month for either gold or silver, so this lack of activity shouldn't be a surprise.
There was a smallish withdrawal out of GLD yesterday...43,259 troy ounces...and no reported changes in SLV. However, very late last night, many hours after GLD had been updated, they did up date SLV...and that update showed that a very chunky 1,644,590 troy ounces were added. Considering the monstrous engineered price decline in silver on Thursday and Friday of last week, this is an amazing turn of events. The boys over atshortsqueeze.com will update their short positions in GLD and SLV in a couple of days...and they should be a sight to see...based on the 6.0 million ounces deposited during the reporting period. However, yesterday's deposit won't be in that data.
Not surprisingly, it was a big sales day over at the U.S. Mint on Monday. They sold 6,000 ounces of gold eagles...a very chunky 10,500 one-ounce 24K gold buffaloes...and an eye-watering 3,937,000 silver eagles. I'm guessing it will be a record January for gold and silver bullion coins at the mint this month.
The Comex-approved depositories reported receiving only 8,846 troy ounces of silver on Friday...but shipped a chunky 1,022,991 ounce of the stuff out the door. The link to that activity is here.
You may remember a story from very late last week where Dennis Gartman was trashing gold...as he just loves to do, every time the opportunity presents itself. Well, reader Denis Roch sent me the following e-mail yesterday...and I thought it worth sharing..."If you want to see what Dennis Gartman has returned to those who invested in his Horizons Gartman ETF [HAG] have a look at HAG.TO. It's down 20% since its inception in the 1st quarter of 2009." [Good work, Dennis. Just think how much your investors would be ahead if you had invested in physical gold and silver instead... ;-) - Ed]
There was a smallish withdrawal out of GLD yesterday...43,259 troy ounces...and no reported changes in SLV. However, very late last night, many hours after GLD had been updated, they did up date SLV...and that update showed that a very chunky 1,644,590 troy ounces were added. Considering the monstrous engineered price decline in silver on Thursday and Friday of last week, this is an amazing turn of events. The boys over atshortsqueeze.com will update their short positions in GLD and SLV in a couple of days...and they should be a sight to see...based on the 6.0 million ounces deposited during the reporting period. However, yesterday's deposit won't be in that data.
Not surprisingly, it was a big sales day over at the U.S. Mint on Monday. They sold 6,000 ounces of gold eagles...a very chunky 10,500 one-ounce 24K gold buffaloes...and an eye-watering 3,937,000 silver eagles. I'm guessing it will be a record January for gold and silver bullion coins at the mint this month.
The Comex-approved depositories reported receiving only 8,846 troy ounces of silver on Friday...but shipped a chunky 1,022,991 ounce of the stuff out the door. The link to that activity is here.
You may remember a story from very late last week where Dennis Gartman was trashing gold...as he just loves to do, every time the opportunity presents itself. Well, reader Denis Roch sent me the following e-mail yesterday...and I thought it worth sharing..."If you want to see what Dennis Gartman has returned to those who invested in his Horizons Gartman ETF [HAG] have a look at HAG.TO. It's down 20% since its inception in the 1st quarter of 2009." [Good work, Dennis. Just think how much your investors would be ahead if you had invested in physical gold and silver instead... ;-) - Ed]
Here's a chart courtesy of Washington state reader S.A. that he 'borrowed' from somewhere...and it requires no further words of explanation, as the title says it all.
(Click on image to enlarge)
Here's a photo of that $230,000 gold shirt...and it's not just gold coloured, it's the real stuff. It tips the scales at just over 3 kilos...7 pounds. Scott Pluschau has a story about this in the 'Critical Reads' section just below.
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selected news.........
Drought still grips Corn Belt -- dry winter adds to farmers' fears
The U.S. Corn Belt - the world's top grain region - is seeing another dry winter after the worst summer drought in half a century, reducing prospects for a bumper summer harvest that would help ease global food prices, crop and climate experts said.
"We are still concerned about getting the leftovers out of the way from the drought of 2012. At this time we would not anticipate a national corn yield above the trend," said Iowa State University climatologist Elwynn Taylor, who has studied crop production for decades. "Rather, we would expect a fourth consecutive year of below-trend crop, not as far below as in 2012 but still not up to par."
The 2012 drought locked two-thirds of the U.S. continental land mass in severe drought last summer, cutting production of the biggest crop, corn, by 27 percent from early season estimates.
This article, filed from Chicago, was posted on the nbcnews.com Internet site on Saturday...and I thank Casey Research's own Dennis Miller for sending it our way. The link is here.
"We are still concerned about getting the leftovers out of the way from the drought of 2012. At this time we would not anticipate a national corn yield above the trend," said Iowa State University climatologist Elwynn Taylor, who has studied crop production for decades. "Rather, we would expect a fourth consecutive year of below-trend crop, not as far below as in 2012 but still not up to par."
The 2012 drought locked two-thirds of the U.S. continental land mass in severe drought last summer, cutting production of the biggest crop, corn, by 27 percent from early season estimates.
This article, filed from Chicago, was posted on the nbcnews.com Internet site on Saturday...and I thank Casey Research's own Dennis Miller for sending it our way. The link is here.
Model Reformer in Trouble: Ireland Lobbies to Have Europe Share Banking Risk
Ireland's reform policies have been widely praised for helping it emerge from the crisis, but the truth is bleaker. If the government fails to get European taxpayers to assume some of the risk of its ailing banking sector, the country could soon require another bailout.
Unfortunately, this gleaming façade obscures a rather dismal reality. Although Ireland's economy has stabilized, its debts continue to mount -- despite the fact that the country has been diligently fulfilling all of the demands made by the troika of lenders, which consists of the European Commission, the International Monetary Fund (IMF) and the European Central Bank (ECB). This year, Ireland's public debt is expected to increase to 122 percent of its annual gross domestic product (GDP) -- in other words, beyond the limit at which the IMF believes long-term debt sustainability can be achieved.
This story about Ireland's financial woes falls into the must read category...and it's Roy's second offering in a row from the spiegel.de website yesterday. The link is here.
For over two years -- and to the delight of the Anglo-Saxon media -- the conservative leader has been trying to get European taxpayers to foot the enormous bill for bailing out Ireland's ailing banking sector. But, taking their cue from the Germans, the Europeans have so far balked at the idea.
Instead, Chancellor Merkel has been quick to praise the way Ireland has implemented economic reforms and used money from European bailout funds over the past few years to emerge from the crisis: Exports have risen, the country has regained its competitiveness, and it has even succeeded in getting private creditors to lend it some money.Unfortunately, this gleaming façade obscures a rather dismal reality. Although Ireland's economy has stabilized, its debts continue to mount -- despite the fact that the country has been diligently fulfilling all of the demands made by the troika of lenders, which consists of the European Commission, the International Monetary Fund (IMF) and the European Central Bank (ECB). This year, Ireland's public debt is expected to increase to 122 percent of its annual gross domestic product (GDP) -- in other words, beyond the limit at which the IMF believes long-term debt sustainability can be achieved.
This story about Ireland's financial woes falls into the must read category...and it's Roy's second offering in a row from the spiegel.de website yesterday. The link is here.
Spain Drains Pension Fund In Borrowing Spree
“Spain has been quietly tapping the country’s richest piggy bank, the Social Security Reserve Fund, as a buyer of last resort for Spanish, raising questions about the fund’s role as guarantor of future pension payouts.
Now the scarcely noticed borrowing spree, carried out amid a prolonged economic crisis, is about to end, because there is little left to take. At least 90% of the €65 billion ($85.7 billion) fund has been invested in increasingly risky Spanish debt, according to official figures, and the government has begun withdrawing cash for emergency payments.
Although the trend has drawn little public attention or controversy, it has become a matter of concern for the relatively few independent financial analysts who study the fund, which is used to guarantee future payments of pensions. They say the government will soon have one less recourse to finance itself as it faces another year of recession and painful austerity measures to close a big budget deficit.”
This Wall Street Journal story that reader Norbert Wangnick sent me on Saturday, was subscriber protected, so I found it posted in the clear over at the Zero Hedge website...and the link is here.
Now the scarcely noticed borrowing spree, carried out amid a prolonged economic crisis, is about to end, because there is little left to take. At least 90% of the €65 billion ($85.7 billion) fund has been invested in increasingly risky Spanish debt, according to official figures, and the government has begun withdrawing cash for emergency payments.
Although the trend has drawn little public attention or controversy, it has become a matter of concern for the relatively few independent financial analysts who study the fund, which is used to guarantee future payments of pensions. They say the government will soon have one less recourse to finance itself as it faces another year of recession and painful austerity measures to close a big budget deficit.”
This Wall Street Journal story that reader Norbert Wangnick sent me on Saturday, was subscriber protected, so I found it posted in the clear over at the Zero Hedge website...and the link is here.
Italy bans card payments in Vatican over money laundering
The Bank of Italy suspended all bank card payments on Vatican territory from the start of the year and ordered Deutsche Bank Italia, which manages electronic payments for the world’s smallest country, to turn off its systems.
Italian newspapers reported that the action was taken after officials at the Italian central bank became worried that the Vatican was not prepared to implement new anti-money laundering rules.
The suspension of card services means that the Vatican museum, along with the territory’s pharmacy and post office, have all been unable to transfer money and accept payments.
Well, dear reader, if you really knew what went on inside the Vatican and it's banking system over the last century or so...it would probably make Jamie Dimon and JPMorgan Chase look like the patron saints of finance. This story was posted on the telegraph.co.uk Internet site last Thursday...and I thank Marshall Angeles for sending it. The link is here.
Italian newspapers reported that the action was taken after officials at the Italian central bank became worried that the Vatican was not prepared to implement new anti-money laundering rules.
The suspension of card services means that the Vatican museum, along with the territory’s pharmacy and post office, have all been unable to transfer money and accept payments.
Well, dear reader, if you really knew what went on inside the Vatican and it's banking system over the last century or so...it would probably make Jamie Dimon and JPMorgan Chase look like the patron saints of finance. This story was posted on the telegraph.co.uk Internet site last Thursday...and I thank Marshall Angeles for sending it. The link is here.
Banks Win 4-Year Delay as Basel Liquidity Rule Watered Down
Global central bank chiefs gave lenders four more years to meet international liquidity requirements and watered down the measures in a bid to stave off another credit crunch.
Banks won the delay to fully meet the so-called liquidity coverage ratio, or LCR, following a deal struck by regulatory chiefs meeting yesterday in Basel, Switzerland. They’ll be able to pick from a longer list of approved assets including equities and securitized mortgage debt as they seek to build up buffers of liquidity for use in a financial crisis.
Bank shares soared after the decision to overhaul the proposed ratio, which top officials such as European Central Bank President Mario Draghi argued would choke interbank lending and make it harder for authorities to implement monetary policies. Lenders have warned that the measure might force them to cut back loans to businesses and households.
The Bloomberg story was posted on their Internet site early yesterday morning Mountain Time...and jointly filed from Geneva and Brussels. I thank Ulrike Marx for sharing it with us...and the link is here.
Banks won the delay to fully meet the so-called liquidity coverage ratio, or LCR, following a deal struck by regulatory chiefs meeting yesterday in Basel, Switzerland. They’ll be able to pick from a longer list of approved assets including equities and securitized mortgage debt as they seek to build up buffers of liquidity for use in a financial crisis.
Bank shares soared after the decision to overhaul the proposed ratio, which top officials such as European Central Bank President Mario Draghi argued would choke interbank lending and make it harder for authorities to implement monetary policies. Lenders have warned that the measure might force them to cut back loans to businesses and households.
The Bloomberg story was posted on their Internet site early yesterday morning Mountain Time...and jointly filed from Geneva and Brussels. I thank Ulrike Marx for sharing it with us...and the link is here.
China blazes trail for 'clean' nuclear power from thorium
The Chinese are running away with thorium energy, sharpening a global race for the prize of clean, cheap, and safe nuclear power. Good luck to them. They may do us all a favour.
Princeling Jiang Mianheng, son of former leader Jiang Zemin, is spearheading a project for China's National Academy of Sciences with a start-up budget of $350m.
He has already recruited 140 PhD scientists, working full-time on thorium power at the Shanghai Institute of Nuclear and Applied Physics. He will have 750 staff by 2015.
The aim is to break free of the archaic pressurized-water reactors fueled by uranium -- originally designed for US submarines in the 1950s -- opting instead for new generation of thorium reactors that produce far less toxic waste and cannot blow their top like Fukushima.
This is the Holy Grail of nuclear energy...and whoever cracks this nut first, if it's possible, will change the world forever literally overnight. This Ambrose Evans-Pritchard commentary was posted on The Telegraph's website late on Sunday evening GMT...and it's Roy Stephens' final offering in today's column, for which I thank him. The link is here.
Princeling Jiang Mianheng, son of former leader Jiang Zemin, is spearheading a project for China's National Academy of Sciences with a start-up budget of $350m.
He has already recruited 140 PhD scientists, working full-time on thorium power at the Shanghai Institute of Nuclear and Applied Physics. He will have 750 staff by 2015.
The aim is to break free of the archaic pressurized-water reactors fueled by uranium -- originally designed for US submarines in the 1950s -- opting instead for new generation of thorium reactors that produce far less toxic waste and cannot blow their top like Fukushima.
This is the Holy Grail of nuclear energy...and whoever cracks this nut first, if it's possible, will change the world forever literally overnight. This Ambrose Evans-Pritchard commentary was posted on The Telegraph's website late on Sunday evening GMT...and it's Roy Stephens' final offering in today's column, for which I thank him. The link is here.
Six King World News Blogs/Audio Interviews
1. Citi analyst Tom Fitzpatrick: "Special U.S. Dollar Gold Chart Series". 2.Eric Sprott #1: "We Are in the Biggest Ponzi Scheme of All Time". 3. Eric Sprott #2: "Demand for Gold is Now Overwhelming Central Banks". 4.Richard Russell: "The 60-Year Shocker, Silver Shorts & Gold". 5. Michael Pento: "This Will Cause Oceans of Paper Money to Panic Into Gold". 6. Theaudio interview is with Art Cashin.
Why Platinum Coin Opponents Are All Wrong
This morning, Joe Weisenthal and I took our message in favor of minting a trillion-dollar platinum coin to "Bloomberg Surveillance," where we were met with the usual shock and horror from hosts Tom Keene and Sara Eisen. Platinum coin opponents are so distressed that one, Republican Representative Greg Walden, has said he will introduce legislation to ban the coin, citing my post from last week as a dangerous instigation.
Walden, Keene and Eisen are all wrong. Here are my responses to the most common objections we are getting to the platinum coin proposal, in increasing order of persuasiveness.
Something tells me aren't in Kansas anymore, Toto! This story was posted on the Bloomberg Internet site mid-morning Mountain Time...and I thank Washington state reader S.A. for our final story in today's column. The link is here.
* * *
Walden, Keene and Eisen are all wrong. Here are my responses to the most common objections we are getting to the platinum coin proposal, in increasing order of persuasiveness.
Something tells me aren't in Kansas anymore, Toto! This story was posted on the Bloomberg Internet site mid-morning Mountain Time...and I thank Washington state reader S.A. for our final story in today's column. The link is here.
* * *
¤ THE WRAP
To imagine that the Fed can "ease up" or "stop" their purchasing of US Government debt paper in current circumstances is ludicrous. The only way they could do that would be if the US government actually started to do something concrete about the size of their deficits. And there is NO sign whatsoever of that happening. Nor is this conundrum confined to the US. All over the world, central bankers and governments alike are talking feverishly about "putting up with" a potentially higher level of price inflation in order to keep economies "growing". They know much better than most other people that the only thing "growing" in global economies is debt. They also know that if that debt is going to maintain the facade of being a financial "asset", somebody is going to have to keep buying it. There is nobody with pockets deep enough to keep buying it - except the central banks. - Bill Buckler...Gold This Week...05 January 2013
Except for the counterintuitive sell-offs at the Comex open this morning, neither gold nor silver did very much on Monday...although it's almost impossible to tell what they might have done, given the opportunity...and a falling dollar index.
It's also impossible to tell what prices will do from here. And the question still remains...are we done to the downside...or do JPMorgan et al still have more work to do? I don't know...and neither does anyone else.
Today at the close of Comex trading is the cut-off for this Friday's Commitment of Traders Report and, with that report, we'll find out just how many short positions "da boyz" were able to cover in that engineered price smash on Thursday and Friday of last week.
Not much happened in Far East trading...and the two tiny rallies in both metals early in the Hong Kong trading session didn't amount to much...or weren't allowed to amount to much...and all is quiet during the first thirty minutes of London trading as well. But as I hit the 'send' button at 5:05 a.m. Eastern time, there are some signs of life, as gold is up about seven bucks and silver is up fifteen cents. Volumes are already very decent...and the dollar index is flat.
Except for the counterintuitive sell-offs at the Comex open this morning, neither gold nor silver did very much on Monday...although it's almost impossible to tell what they might have done, given the opportunity...and a falling dollar index.
It's also impossible to tell what prices will do from here. And the question still remains...are we done to the downside...or do JPMorgan et al still have more work to do? I don't know...and neither does anyone else.
Today at the close of Comex trading is the cut-off for this Friday's Commitment of Traders Report and, with that report, we'll find out just how many short positions "da boyz" were able to cover in that engineered price smash on Thursday and Friday of last week.
Not much happened in Far East trading...and the two tiny rallies in both metals early in the Hong Kong trading session didn't amount to much...or weren't allowed to amount to much...and all is quiet during the first thirty minutes of London trading as well. But as I hit the 'send' button at 5:05 a.m. Eastern time, there are some signs of life, as gold is up about seven bucks and silver is up fifteen cents. Volumes are already very decent...and the dollar index is flat.
Before heading out the door today, I thought I'd leave you with Bill Buckler's take on this new platinum coin being discussed in the U.S. This is what he had to say..."The “platinum scheme” may not come to fruition. That is not the point. The point is that the very fact that it is being discussed in reputable financial media in the U.S. is proof that money is being pulled out from under the “markets” at a speed and with a brazen arrogance never before approached." - The Privateer...06 January 2013
Enjoy your Tuesday...and I'll see you here tomorrow.
Enjoy your Tuesday...and I'll see you here tomorrow.
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