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Author Topic: Why gold is falling even as global economic fears intensify  (Read 7614 times)
Chadwick The Beta
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"Stop calling me by my name." - Karen M.


« Reply #125 on: May 27, 2013, 03:57:25 AM »

Anything you can "acquire" for free has a value - it's exactly zero.



This crudely drawn image changes everything. I no longer need to think. Just look at this picture. It says everything, in convenient picture form! It's like a Dr. Seuss book for money.


Garçon! I'll take 500 golds please! It all makes sense to me now, after seeing this crude Microsoft Paint infographic! And make it fast, before I end up having to get a J.O.B.!


And for all their wealth they haven't produced a single infographic as concise and powerful and full of useful facts for success as what we see above! The proof, ladies and gentlemen, is in the proverbial pudding.

Show Judi some respect!  She was once Miss Black Ontario.  hahahahahahahahahahahaha haha  oh, brother  Roll Eyes
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« Reply #126 on: May 28, 2013, 03:25:33 PM »

In other Global Currency Trends ...  Cheesy



Cooking The Gold Books
by Addison Wiggins
May 24, 2013


We got a small, if bitter, taste of gold’s “Zero Hour” in the second half of April.

Either that, or the world’s largest banks engineered a takedown of gold for the purpose of staving off  Zero Hour… for now.

As you’ll recall from these pages in March, “Zero Hour” is the name we give to the moment when the price of real, physical gold in your hand starts to break away from the quoted price on the commodities exchanges.

That is, the “physical price” becomes much higher than the “paper price” on CNBC’s ticker. The catalyst, we suggested, would be when a major metals exchange defaults on a gold or silver contract — settling in cash, instead of metal.

To be clear, Zero Hour did not take place when gold’s paper price plunged $150 in only two trading days — Friday, April 12, and Monday, April 15.

But what happened after that plunge hints at what the aftermath of Zero Hour would look like. Real metal suddenly became very hard to come by. We chronicled the worldwide scramble, in real-time, in The 5 Min. Forecast…

  • The Chinese Gold and Silver Exchange nearly ran out of bullion on Friday, April 19
  • There were reports of a “massive wave of physical gold buying” in Dubai
  • Monthly sales of U.S. Gold Eagles fell just short of a 26-year high during April.

Result: If you wanted real metal, you paid a substantial premium over the paper price. In silver, these premiums were off the charts. On Thursday, April 25, spot silver was $23.94… but a Silver Eagle from a major online dealer would set you back $29.54 — as high as the paper price before the mid-April crash!

Meanwhile, the premium on “junk silver” — U.S. dimes, quarters and halves dated before 1965 — sits at four-year highs, according to coin dealer Richard Nachbar. Usually, these coins trade at a small discount to the paper price of silver. Now? As the chart nearby shows, they fetch a 17% premium over spot… and that’s wholesale!



“The April gold crash,” sums up Agora Financial’s own Byron King, “was the beginning of emancipating real gold from paper gold. We’re about to see a ‘real’ price for gold, coming from the bottom up, not the top down. I suspect that we’ll see a solid price rise for gold over time. The market bullies who deal in paper products have just punched themselves in the nose.”

Meanwhile, if you’re still skeptical that “Zero Hour” is a real possibility, there’s new and compelling evidence.

Sprott Asset Management chief Eric Sprott believes Zero Hour is made inevitable by Western central banks “leasing” their gold to commercial banks at less than 1% a year. The commercial banks then sell that gold and plow the proceeds into higher-earning investments.

“Now,” Sprott writes in a new white paper, “our long search for the ‘smoking gun’ to prove our hypothesis appears to have finally materialized.”

The evidence lies in the monthly trade data from the Census Bureau. The December 2012 report revealed net gold exports of $2.5 billion — almost 50 tonnes. This staggering number prompted Sprott and his team to dig through the figures as far back as they exist — all the way to 1991.

The data show that net exports from 1991-2012 totaled 5,504 tonnes.

Here’s the problem: During that same period, U.S. supply mine production and recycling totaled 7,532 tonnes, while demand was 6,517 tonnes. That left only 1,015 tonnes available for export.

Where did the other 4,489 tonnes come from? “The only U.S. seller that would be capable of supplying such an astonishing amount of gold,” says Mr. Sprott, “is the U.S. government, with a reported gold holding of 8,300 tonnes.”

Yikes.

“If the Sprott analysis is accurate,” says our friend and Crash Course author Chris Martenson, “there’s a lot of missing gold in the U.S. equation, and it had to come from official sources, either of U.S. origin or belonging to other countries. Either way, the leased gold represents a tremendous liability of the Fed and the bullion banks to which it was loaned.”

“In this context,” Mr. Martenson continues, “the gold slam begins to smell like an operation designed to shake as much gold as possible out of weak hands so that the bullion banks can begin to recover it to square up their accounts.

“GLD, the gold ETF that so many small investors participate in, is one large, obvious target,” he adds, “as it was sitting on 1,350 tonnes as of January 2013.”

Sure enough, by the end of April, more than 250 tonnes of that total were gone. On the chart nearby, you can see how the drain on GLD’s inventory neatly tracks the paper price of gold.

“Gold and silver,” Mr. Martenson suggests, “are getting closer to the day when you or I will not be able to purchase physical bullion at any price.”


“I don’t even look at gold as gold anymore… they securitized it,” CNBC’s voluble Rick Santelli said on March 27 — weeks before the big beat-down.

“If things [went] badly in the world that I used to observe as the gold bug, the gold would end up in the hands of the gold bugs. If things go badly now, they’re going to end up with checks from ETFs! Sorry, it’s not the same. The reign of [paper] gold is the Ayn Rand end product. To me, that’s over. Game, set, match.”

"The endgame is getting closer. “What I believe is going to happen, probably in the not too distant future,” says Eric Sprott’s right-hand man John Embry, “is that the pricing mechanism of the gold and silver markets will swing to the physical market, which cannot be manipulated, because, basically, either you’ve got it or you haven’t.

“Whereas the paper market has been set up specifically so that it can be manipulated. I would not be too concerned about that, even though they’ve got the upper hand to date. I think that their power is going to be sharply eroded in the very near future.”

But that’s when you won’t be able to get any metal at any price. Best act before then: “The current sell-off in gold,” says Eric Sprott, “should be viewed not with extreme trepidation, but as an unbelievable opportunity to buy the metal at an artificially low value.”


Regards,

Addison Wiggin
for The Daily Reckoning

P.S. We’ve been tracking the gold price pretty closely ever since our friend and mentor, Bill Bonner, announced his Trade of the Decade back in 2000 — sell stocks on rallies; buy gold on dips. And while that turned out to be a tremendous trade, it’s only a small part of the much larger story about our favorite yellow metal… Subscribers to The Daily Reckoning email know this better than anyone.

Addison Wiggin is the executive publisher of Agora Financial, LLC, a fiercely independent economic forecasting and financial research firm. He's the creator and editorial director of Agora Financial's daily 5 Min. Forecast and editorial director of The Daily Reckoning. Wiggin is the founder of Agora Entertainment, executive producer and co-writer of I.O.U.S.A., which was nominated for the Grand Jury Prize at the 2008 Sundance Film Festival, the 2009 Critics Choice Award for Best Documentary Feature, and was also shortlisted for a 2009 Academy Award. He is the author of the companion book of the film I.O.U.S.A.and his second edition of The Demise of the Dollar, and Why it's Even Better for Your Investments was just fully revised and updated. Wiggin is a three-time New York Times best-selling author whose work has been recognized by The New York Times Magazine, The Economist, Worth, The New York Times, The Washington Post as well as major network news programs. He also co-authored international bestsellers Financial Reckoning Day and Empire of Debt with Bill Bonner.
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Chadwick The Beta
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« Reply #127 on: May 28, 2013, 03:44:34 PM »

a fiercely independent economic forecasting and financial research firm

oh, brother   Roll Eyes

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« Reply #128 on: May 28, 2013, 06:10:26 PM »

In other Global Currency Trends ...  Cheesy

Is Gold's fall, Fed's Doing?

By John Browne

Published: Saturday, May 25, 2013, 9:00 p.m.
Updated: Saturday, May 25, 2013

Asked what makes the United States the most powerful country, many readers likely would reply the military. In fact, it is the dollar.

The bill with George Washington's mug on it finances the government, its military and, as the international reserve currency, most of the world's trade. Its value affects the wealth of the United States and other nations.

But this crucial element of U.S. power is threatened by gold, the ubiquitous currency of recorded history. The danger arises from the Federal Reserve's practice of quantitative easing (QE), holding interest rates artificially lower by printing currency. Should foreign nations or Americans decide to start transacting business in gold, however, the dollar would be doomed.

And with it would go the supreme power of the U.S. government.

In its efforts to defend the Achilles' heel dollar, the government must squelch gold's attraction by any means possible, including price manipulation.

On May 17, The Wall Street Journal ran a headline article, “Gold's Allure Is Starting to Fade.” It described gold as being “mauled” by aggressive selling. But was the price collapse inspired by investor disillusion — or by Fed manipulation?

In December 2000, gold stood at $272 an ounce. By August 23, 2011, it reached $1,917 an ounce. This 704 percent decline in the value of the dollar against gold was a clear, acute threat to the United States at home and abroad.

Gold's rise coincided almost exactly with the Fed's opening of the monetary spigots after 9/11 under Fed Chairman Alan Greenspan and the wholesale QE engineered by his successor, Ben Bernanke.

In the 41⁄2 years since the birth of QE, the Fed has printed trillions of paper dollars to conceal the bad debts of the Greenspan boom. It threatened inflation and the abandonment of the dollar as the world's reserve currency. Loss of the dollar standard would remove America's power over international interest rates and its ability to maintain the nation's standard of living.

Combined with increased fears of a currency crisis, it encouraged wide investment in gold. As the gold price exploded, speculators, especially hedge funds, joined in. Unlike long-term investors, the speculators purchased the more readily tradable Exchange Traded Funds (ETFs), sometimes referred to as paper gold.

Today, there are two gold prices: one for ETFs, which is falling; one for the metal, which is sometimes firm or rises relative to paper gold.

On April 12, an estimated 124 to 400 tons of short sales hit the New York market. Even at 124 tons, that's some 40,000 futures contracts. By observing strict market “position limits,” this would have required 14 traders to hit the market almost simultaneously, giving rise to speculation of illegal conspiracy to manipulate the market.

The fact that no investigation was begun served only to heighten suspicions of a covert attack on gold by the most powerful financial institution in the world: the Fed.

By openly manipulating the bond markets, creating negative real interest rates and covertly casting doubt on the “safe haven” reputation of gold, the Fed appears to be encouraging — if not forcing — investors into the higher risk of equities.

Maybe it is time to “fight the Fed” and go for gold.


John Browne, a financial analyst and former member of the British Parliament, is a financial columnist for the Tribune-Review.
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« Reply #129 on: May 28, 2013, 07:04:36 PM »

In other Global Currency Trends ..   Cheesy

Grant Williams of Vulpes Investment Management in Singapore, editor of the "Things That Make You Go Hmmm..." financial letter, covered gold extensively in his presentation May 21 to the CFA Institute conference in Singapore, remarking that in April gold had come under "mathematically inexplicable pressure" and concluding that "the gold price is not the price of gold" --  that is, the gold futures market is not necessarily the market for real metal.Williams didn't quite say that the gold market has been subject to government intervention meant to propagandize and frighten, but the point probably will be understood by anyone except maybe developers of resort properties in Argentina's outback.

Williams' presentation is titled "Do the Math" and is posted at YouTube, and while at 49 minutes it's long, his review of the world economy is incisive and entertaining and those so inclined can skip to the gold section at 33:30:

DO THE MATH

<a href="http://www.youtube.com/watch?v=Osq1yxSFVG0" target="_blank">http://www.youtube.com/watch?v=Osq1yxSFVG0</a>
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