God Bless George Bailey

You're thinking of this place all wrong. As if I had the money back in a safe. The money's not here. Your money's in Joe's house...right next to yours. And in the Kennedy house, and Mrs. Macklin's house, and a hundred others. Why, you're lending them the money to build, and then, they're going to pay it back to you as best they can. Now what are you going to do? Foreclose on them?...Now wait...now listen...now listen to me. I beg of you not to do this thing. If Potter gets hold of this Building and Loan there'll never be another decent house built in this town. He's already got charge of the bank. He's got the bus line. He's got the department stores. And now he's after us. Why? Well, it's very simple. Because we're cutting in on his business, that's why. And because he wants to keep you living in his slums and paying the kind of rent he decides. Joe, you lived in one of his houses, didn't you? Well, have you forgotten? Have you forgotten what he charged you for that broken-down shack? Here, Ed. You know, you remember last year when things weren't going so well, and you couldn't make your payments. You didn't lose your house, did you? Do you think Potter would have let you keep it? Can't you understand what's happening here? Don't you see what's happening? Potter isn't selling. Potter's buying! And why? Because we're panicky and he's not. That's why. He's picking up some bargains. Now, we can get through this thing all right. We've got to stick together, though. We've got to have faith in each other.

George Bailey

Read more: http://www.finestquotes.com/movie_quotes/movie/Its%20a%20Wonderful%20Life/page/0.htm#ixzz2FHxCikCD

Mr Gundlach says re QE: "there is no exit”

 Worth a watch

http://www.cnbc.com/id/49086734

“I think it will be more likely that the Federal Reserve buys all the Treasury bonds that exist than starts selling them,” he said.

“I have no concept what the Fed exit will look like!”

 

Gotta love the greeks! The Europeans do!

http://www.bloomberg.com/news/2012-11-27/greece-wins-easier-terms-on-debt-as-eu-hails-rescue-formula.html

European finance ministers eased the terms on emergency aid for Greece, declaring after three years of false starts that Europe has found the formula for nursing the debt-stricken country back to health.
In the latest bid to keep the 17-nation euro intact, the ministers cut the rates on bailout loans, suspended interest payments for a decade, gave Greece more time to repay and engineered a Greek bond buyback. The country was also cleared to receive a 34.4 billion-euro ($44.7 billion) loan installment in December. The euro rose to a three-week high on the agreement.


It seems the Europeans are doing everything to try and hold the Greeks in the Euro.

Bravo. They "found the formula"..."Defer and pretend" - don't try this at home.

QE has done it's job so far...

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/11/19_Turk_-_This_Is_The_Chart_That_Every_Investor_Needs_To_See.html

...to lift asset values to make the debts appear manageable...some stats though you can't manage as well...the number of people on food stamps trends higher (recently).

All looks great UNTIL it doesn't

The 3 years before the GFC and the two years after. The market participants missed the extent of the carnage that was to come. Complacency? Blindsided? Blackswanned?

What is not priced in now? And by how much?

IF the "solution" to a debt bubble is "inflation" why would you be holding government bonds now? Timing though can be a killer - You can be right and very early.

I suspect few see "runaway inflation". Yet inflation has been the standard since the creation of the Federal reserve...except for some deflation in the 1930s (under the gold standard)

As Kyle Bass said recently (in his letter to investors)

The fallacy of the belief that countries that print their own currency are immune to sovereign crisis will be disproven in the coming months and years. Those that treat this belief as axiomatic will most likely be the biggest losers. A handful of investors and asset managers have recently discussed an emerging school of thought, which postulates that countries, as the sole manufacturer of their currency, can never become insolvent, and in this sense, governments are not dependent on credit markets to remain fiscally operational. It is precisely this line of thinking which will ultimately lead the sheep to slaughter.



 

 

 

When we hear things we do not like, we shut off...

“The truth is not always beautiful, nor beautiful words the truth.”
― Lao Tzu, Tao Te Ching

Delays by design

you can get the banks to come clean OR you can allow the facade to to remain

the system has not been repaired...

Fed Delays Basel III Bank Capital Rules

By Ronald D. Orol

Published November 09, 2012

MarketWatch Pulse

WASHINGTON – U.S. regulators on Friday agreed to delay indefinitely the effective date of a global agreement on greater bank capital buffers known as Basel III. The Federal Reserve and two other bank regulators introduced a proposal in June to implement the global agreement that suggested an effective date for institutions to comply of Jan. 1. However, the regulators agreed that "due to the wide range of views" expressed by interested institutions and others that a delay was necessary. They did not provide a substitute effective date for the rules, arguing that they are "working as expeditiously as possible to complete" them. The agreement is being implemented in response to the financial crisis of 2008. Other international agencies have delayed implementation of bank rules.
Copyright © 2012 MarketWatch, Inc.

Read more: http://www.foxbusiness.com/markets/2012/11/09/fed-delays-basel-iii-bank-capital-rules/#ixzz2C0IdCvs3

Greece - It's a GREAT Depression

Even if the EMU machine succeeds in keeping Greece in the system, is this any longer a remotely desirable goal? Has it not become a vicious and immoral policy in itself?

I agree with the IFO Institute’s Hans-Werner Sinn that upholding euro membership has by now become an act of cruelty. It not being done in the interests of Greeks. It is being done for the Project, by enforcers of the Project. Only by breaking free can Greece restore a minimum of economic vibrancy and national dignity.


http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100021180/who-will-stop-the-sado-monetarists-as-jobless-youth-hits-58pc-in-greece/


Trapped in a currency they can't control.
Unemployment rate of youth at 50% plus.

Does this sound like a "good" plan for the greeks?

"It's a maths problem"

http://www.sovereignman.com/expat/i-apologize-for-what-youre-about-to-read-9397/

Simon Black summarises it well (above link)

It took just 286 days to accumulate the most recent trillion (from $15 trillion to $16 trillion).
Last month alone, the first full month of Fiscal Year 2013, the US government accumulated nearly $200 billion in new debt– 20% of the way to a fresh trillion in just 31 days.


The big issue about to hit is the "fiscal cliff" - that is the gap between what the government brings in and spends. Certain tax breaks are due to expire meaning greater taxes will come from the taxpayer. Taxing will not lead to growth - growth is the only option the US has to get over the debt binge and prevent the banks from further writedowns.

The printing press must continue...

Are politicians going to take the soft political option?

What really broke Germany was the constant taking of the soft political option in respect of money. The take-off point therefore was not a financial but a moral one; and the political excuse was despicable, for no imaginable political circumstances could have been more unsuited to the imposition of a new financial order than those pertaining in November 1923, when inflation was no longer an option. The Rentenmark was itself hardly more than an expedient then, and could scarcely have been introduced successfully had not the mark lost its entire meaning. Stability came only when the abyss had been plumbed, when the credible mark could fall no more, when everything that four years of financial cowardice, wrong-headedness and mismanagement had been fashioned to avoid had in fact taken place, when the inconceivable had ineluct-ably arrived.


From When Money Dies by Adam Fergusson

Irving Fisher in 1933 summarised it well...

In summary, we find that: (1) economic changes include steady trends and unsteady occasional disturbances which act as starters for cyclical oscillations of innumerable kinds; (2) among the many occasional disturbances, are new opportunities to invest, especially because of new inventions; (3) these, with other causes, sometimes conspire to lead to a great volume of over-indebtedness; (4) this, in turn, leads to attempts to liquidate; (5) these, in turn, lead

(unless counteracted by reflation) 

to falling prices or a swelling dollar; (6) the dollar may swell faster than the number of dollars owed shrinks; (7) in that case, liquidation does not really liquidate but actually aggravates the debts, and the depression grows worse instead of better, as indicated by all nine factors; (8) the ways out are either

via laissez faire (bankruptcy) or scientific medication (reflation), and reflation might just as well have been applied in the first place.

 

http://fraser.stlouisfed.org/docs/meltzer/fisdeb33.pdf

 

It's a fine line...you go down austerity and you end up with Greece style growth and unemployment...and a lost generation...and a disturbance of the peace.

consolidations end..2 to 3 more weeks could do it...then GOLD must go higher

USD - countries are acting

we don't want your dollars!

http://www.nationmultimedia.com/business/Yen-yuan-direct-trading-to-begin-on-Friday-30183064.html

May 2012
Beijing - China and Japan have agreed to begin direct-trading of their currencies from Friday, avoiding use of the dollar as an intermediary currency, the two governments said.

The direct currency trading was designed to promote bilateraltrade, facilitate the use of the yuan and the yen in international trade settlement, and lower the cost of currency conversion, the China Foreign Exchange Trade System said Tuesday.

The People’s Bank of China, China’s central bank, said it would support the "important step in strengthening cooperation between China and Japan in developing financial markets." The move followed an agreement to strengthen financial cooperation by Chinese Premier Wen Jiabao and Japanese Prime Minister Yoshihiko Noda in December.

China is Japan’s largest trading partner with bilateral trade valued at 345 billion dollars last year.
An estimated 60 per cent of trade between China and Japan is settled in US dollars, China’s official Xinhua news agency said.

Using the dollar as an intermediary, the yuan can be tradeda gainst the currencies of Japan, the European Union, Britain, HongKong, Malaysia, Russia, Australia and Canada, the agency said.

http://www.theaustralian.com.au/business/markets/direct-a-yuan-conversion-to-save-costs-treasurer/story-e6frg94o-1226423563725
July 2012
AUSTRALIA will discuss with Chinese officials the potential for direct conversion of the Australian dollar and the Chinese yuan for transactions completed in mainland China, Treasurer Wayne Swan said today.   
...
The Reserve Bank of Australia and the People's Bank of China signed a $30 billion currency swap line in March to support liquidity in Australian dollar-yuan trades.




http://www.bbc.co.uk/news/business-18545978
July 2012

China and Brazil have agreed a currency swap deal in a bid to safeguard against any global financial crisis and strengthen their trade ties.

It will allow their respective central banks to exchange local currencies worth up to 60bn reais or 190bn yuan ($30bn; £19bn).

http://www.zerohedge.com/news/usd-trap-closing-dollar-exclusion-zone-crosses-pacific-brazil-signs-china-currency-swap

What we focus on, we see

Everyone says GOLD is in a bubble. They show a chart against the USD, like the one below.
Next to the USD line is the Mexican peso...they are tracking quite close. Strange isn't it?

Yet let's look at the 20 year period starting 1980...the Mexican peso was in trouble due to their economy...(marked in red)...was gold in a bubble, going up 15 times in 5 years then another 3 times in the 1995 period?

 

It's not gold going up...it's the currency going down...think about it.

“To see things in the seed, that is genius.” Lao Tzu

without comment, because when we comment we direct
when we allow others to ponder they discover

from Mr Lipps' book Gold Wars...

The Role of Oil Wealth and OPEC

   
At the beginning of the 1970s, wage and price inflation soared, leading to lofty energy prices and vice versa. The Arabs were very slow to understand dollar debasement, the currency in which their
bills were paid. For a long time they did not understand they had been cheated for years. The paper money they received for their black gold had dwindled in value. In 1973 and 1979, they massively increased their prices to compensate for the increment in the American Consumer Price Index. The sudden quasi quadrupling of the oil price turned many energy producers into megamillionaires in a very short time. In 1973, one barrel of oil bought one bushel of U.S. wheat. In 1980, the same barrel of oil bought nine bushels of U.S. wheat. By the middle of the 1970s, the demand for gold by investors from oil producing countries exploded.

Not only individual investors were buying gold, but OPEC nations were also in the market. Timothy Green commented: 

.[the] single most important development in the gold market since 1970 has been gold buying by

central banks (or other government institutions) in oil producing nations: Indonesia, Iran, Iraq, Libya, Qatar and Oman have all acquired gold..



comment: maybe many of us are slow to understand dollar debasement

Two questions

1. Why do Central bank hold gold?
http://www.smh.com.au/business/markets/central-bank-buying-gives-gold-a-boost-20121026-28950.html


2. Why are they demanding their gold back?
http://www.telegraph.co.uk/finance/financialcrisis/9631962/Bundesbank-slashed-London-gold-holdings-in-mystery-move.html

Australia - the lucky country...really?

http://www.marketwatch.com/story/australia-facing-a-hard-landing-andy-xie-2012-10-25?pagenumber=1

And Xie has got it right - the timing is the only question.
Those inside the bubble can't see it...2013 may be a little too early...but if this was a debt supercyle, why do Australians, with their love affair with debt fuelled housing think they can survive it's conclusion? They can't.


Any foreign capital-inspired asset bubble bursts when the flow reverses. It causes the monetary system to contract. As the central bank replaces the outflow with new money, the currency value drops, which frightens Asian retail investors who hold Australian dollar deposits. Their flight causes the currency to tank more and liquidity to tighten.

The property market will fall with the tightening liquidity and capital flight, which frightens away more foreign capital in the property market. The new equilibrium is defined by a much lower currency value and property price. In this new equilibrium, the currency value could be half of its peak value.

Mr Lipps, a Swiss private banker wrote in 2001

http://www.fame.org/pdf/Gold%20Wars%200-9710380-0-7%20%20-%2001.21.02.pdf

I demand to know from Western bankers and portfolio managers what confused logic compels them to leave no room for gold in their portfolios. They should know from history that the future of fiat money does not bode well for the survival of their clients. portfolios. I address the Western bankers because the people of the East have a better understanding of gold. Do the portfolio managers really think that stocks of companies with no earnings or bonds in troubled currencies are sensible long-term investments?

Should they not be more interested in sound monetary conditions? It would make their work easier.

I ask the central bankers of this world: Are you really concerned with what should be the main purpose of your jobs: to protect the purchasing power and the integrity of your country.s currency? Are you really sincere and acting to the best of your ability when you decrease your country.s gold holdings only to replace it with continuously depreciating paper claims that may not be honored? Remember, no serious farmer would sell his seeds. If not, you are clearly useless and should get out of the business.

I will not ask anything of the politicians because they will never change. All they have done with their politics is to destroy the purchasing power of money.

Be right and sit tight...Jim is the master at this for good reason

http://www.jsmineset.com/2012/10/24/manufactured-market-drama/

"And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars, I want to tell you this: It never was my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine-that is, they made no real money out of it. Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader, after he knows how to trade than hundreds did in the days of his ignorance."

Jesse Livermore

Whatever happens in the gold or any market...

will not change this one bit :-)

1 video explaining bubbles forming...and one to form

http://www.youtube.com/watch?v=b4zOAHoncF0&feature=relmfu


then 1 article which articulates well, what few really understand...

Thankyou Lan

http://www.economicsvoodoo.com/quantitative-easing-0-1-2-3-and-federal-reserve-banks-love-affair-with-its-member-banks-and-mortgage-bonds-levitating-the-black-hole/

The black hole is the balance sheet of the banks

a facade "papered" over with fiat paper.

In the late 70s, in the midst of a dollar crisis...it was clear what was needed

Clarity is coming on the unattractiveness of "paper"


http://www.laffercenter.com/1979/10/a-return-to-convertibility/

A Return To Convertibility
Tuesday, October 30th, 1979

Making the Dollar ‘as Good as Gold’

By Arthur B. Laffer

L.A. Times 10/30/79

The events of the past several weeks have served to make interest rates, reserve requirements and money supply targets of cocktail talk at all proper meeting places. What appears to be missing, however, is any serious discussion of a word understood by virtually everyone: gold. In my view, any successful solution to the monetary crises occurring at ever-more frequent intervals must include a reestablishing of dollar convertibility. Historically, convertibility of a currency has been into gold.




this is why those with grey hair get it...because it's not that new.

In 1977
http://www.foreignaffairs.com/articles/29522/jahangir-amuzegar/opec-and-the-dollar-dilemma
...
OPEC's worries about the continued erosion of its purchasing power, and the market's fears about the oil exporters' reactions, have been both serious and real. Between January 1977 (when the crude oil price was last raised) and April 1978 (when the dollar showed faint signs of stabilization), the U.S. currency depreciated by more than 22 percent against the Swiss franc, 21.5 percent against the Japanese yen, nearly 14 percent against the deutsche mark, 10 percent against the pound sterling, some 6 percent against the French franc, and even a small 3 percent vis-à-vis the Italian lira. While the decline of the U.S. dollar over a 21-month period, weighted in terms of U.S. trade, was much less than these figures might indicate1 - actually, only 7.5 percent - the damaging impact on OPEC as a whole, and particularly on some of its members, was considerable...

Insight from a successful money manager

Stephen Diggle - a successful hedge fund manager - having made around two-and-a-half billion dollars during the financial crisis.

what's he like now?

Watch the presentation and see...then reflect...finally decide for yourself

http://www.youtube.com/watch?v=6vqqHVUYXmc&feature=player_embedded&noredirect=1

in 1965 Charles De Gaulle said this...

“The fact that many countries, accept as a principle, dollars being as good as gold, for the payment of the differences existing to their advantage in the American balance of trade,” said De Gaulle, “this fact, leads Americans, to get into debt and to get into debt for free at the expense of other countries. Because what the US owes them it is paid, at least in part, with dollars the are the only ones allowed to emit. Considering the serious consequences a crisis would have in such a domain, we think that measures must be taken on time to avoid it.

We consider necessary that international trade be established as it was the case before the great misfortunes of the world, on a indisputable monetary base, and one that does not bear the mark of any particular country. Which base ? In truth no one sees how one could really have any standard criterion other than GOLD !”

http://www.americangoldreserveonline.com/why-precious-metals/flashback-de-gaulle-and-the-gold-standard/

Yet people have "faith" to flock to dollars now?

People think I'm negative

"Why all the focus on this? It sounds all doomsday."

I once got that response. Was I being negative trying to highlight something that was both coming and had implications for people and what they should be doing?

If I was a resident of Greece, telling people to get their money out of the banking system in 2009, would I be called negative? It's only negative if you only consider it from where you "think" you sit.

I wish you the opposite of ignorance.

When confidence is lost...it happens quickly

Shhhhh Warren, Daddy's talking

I warn you that politicians of both parties will oppose

the restoration of gold, although they may outwardly

seemingly favor it. Also those elements here and abroad

who are getting rich from the continued American

inflation will oppose a return to sound money. You must

be prepared to meet their opposition intelligently and

vigorously. They have had 15 years of unbroken

victory.

But, unless you are willing to surrender your children

and your country to galloping inflation, war and slavery,

then this cause demands your support. For if human

liberty is to survive in America, we must win the battle

to restore honest money.


Howard Buffet in 1948....Read the whole thing here...
http://www.fame.org/pdf/buffet3.pdf

 

Egon makes a good case (he has protected his clients over the last 10 years)

You don't have to agree with everything Egon says - but try to understand it before you dismiss it.

http://goldswitzerland.com/printing-money-price-of-gold-preservation-of-wealth/?utm_source=subscriber&utm_medium=rss&utm_campaign=rss

Printing Money – Price of Gold – Preservation of Wealth

by Egon von Greyerz – October 2012

1. Worldwide money printing continues unabated
2. Just In 10 years $120 trillion have been printed making global debt $200 trillion
3. World GDP has gone from $32 trillion to $70 trillion 2001-2011
4. Thus $120 trillion debt is required to produce a $38 trillion annual increase in GDP
5. The marginal return on printed money is negative in real terms
6. Thus the world is living on an illusion of paper that people believe is money
7. This illusionary paper wealth will implode in the next few years
8. The initial trigger will be the collapse of the world’s reserve currency – the US dollar
9. The dollar is backed by $120 trillion of US government debt and probably NO gold
10. All currencies will continue their race to the bottom and lose 100% in real terms against gold
11. This will create a worldwide hyperinflationary depression
12. All assets financed by the credit bubble will go down in real terms
13. This includes stocks, bonds, property and paper money of course
14. The financial system is unlikely to survive in its present form
15. The banking system including derivatives has total liabilities of around $1.2 quadrillion
16. With world GDP of $70 trillion, the world is too small to save a financial system which is 17x greater
17. This is why there will be unlimited money printing and hyperinflation
18. The only asset that will maintain its purchasing power is gold Click here for chart
19. Gold has been money for 5,000 years and will continue to be the only currency with integrity
20. Western countries’ 23,000 tons of gold is probably gone. See recent article by Eric Sprott.
21. The consequence is that most of the gold in the banking system is likely to be encumbered
22. This means that Central Banks one day will claim it back against worthless paper gold IOUs
23. Thus gold and all other assets within the banking system involve an unacceptable counterparty risk
24. Gold should be held in physical form and stored outside the banking system

Egon von Greyerz
9th October

Lao Tzu said many centuries ago...

Life is a series of natural and spontaneous changes. Don't resist them - that only creates sorrow. Let reality be reality. Let things flow naturally forward in whatever way they like.
Can you "see" reality as it is or how you have conditioned yourself to see it?

Kyle Bass says about the US Fiscal Cliff...I can't fix it

http://www.zerohedge.com/news/2012-10-03/kyle-bass-federal-budget-i-dont-know-how-fix

Mr Bass likes gold. He seems to know history and he certainly understands the maths.

US budget hole cannot be plugged!

Why all the focus on gold?

It's a measure of things not right...

- fiat currencies are being debased
- political promises cannot be kept
- budgets cannot be balanced
- financial systems cannot be trusted
- the imbalances in wealth need to be corrected

This is not new. But it is on a grand scale.

The odds of a smooth transition are lower than 50%...but a transition will occur. And in that process the healing will begin.

PIMCO says - the US is walking a tightrope...oh so own gold...

http://www.pimco.com/EN/Insights/Pages/Damages.aspx


Investment conclusions

So I posed the question earlier: How can the U.S. not be considered the first destination of global capital in search of safe (although historically low) returns? Easy answer: It will not be if we continue down the current road and don’t address our “fiscal gap.” IF we continue to close our eyes to existing 8% of GDP deficits, which when including Social Security, Medicaid and Medicare liabilities compose an average estimated 11% annual “fiscal gap,” then we will begin to resemble Greece before the turn of the next decade. Unless we begin to close this gap, then the inevitable result will be that our debt/GDP ratio will continue to rise, the Fed would print money to pay for the deficiency, inflation would follow and the dollar would inevitably decline. Bonds would be burned to a crisp and stocks would certainly be singed; only gold and real assets would thrive within the “Ring of Fire.”


http://www.pimco.com/EN/Insights/Pages/GOLD-The-Simple-Facts.aspx

For more than a millennium, gold has broadly managed to maintain its real value, even as various currency regimes have come and gone.

The supply of gold is constrained, and we see demand increasing consistent with global economic growth on a per capita basis.

Given current valuations and central bank policies, we believe investors should consider including gold and other precious metals in a diversified investment portfolio.

Comment: Large institutions and then smaller ones will take heed of the advice;
then advisers; then clients...the tidal wave is heading to shore...

$3,000 gold here we come!!

It's been a 12 month consolidation.

Gold has gone sideways in USD. The ingredients for the rise from here are in place - i.e. the macro ones and TIME...time is up. The rise in dollars should be dramatic. Few see it coming. They (the majority) soon will. And when they do...it will be too late. That is the nature of a crisis - few see it coming. What does a world with $3,000 gold look like?

Thankyou Jim

To devalue the debts you must cheapen the currency – it’s always been this way.

The balance sheets of the biggest Central Banks of the world have already exploded, yet we have seen another round of QE commenced by all of them again.

This point is missed on the many - where does any Central Bank get the “power” to do that? It makes it up. It is a necessary action – do not spend time judging it. What are the consequences?

To devalue the debts you must cheapen the currency – it’s always been this way.

 

http://goldswitzerland.com/concerted-qe-the-beginning-of-hyperinflation/

 

 

 

Bernanke goes all in!

QE3 begins "open ended purchases"

Lets call it QE to infinity in respect of Jim sinclair who called it a couple of years beforehand.

Gold loved it, so did the Stock market. A necessary action but not without consequences. The scale is massive - will the consequences be massive also?

note: Gold at over $1,770 by Friday
PM stocks had a stellar week


http://www.jsmineset.com/2012/09/13/in-the-news-today-1308/

Ray says - you don't know history or economics if you don't hold GOLD

We all get heaps of stuff to read or listen to…do yourself a favour…it is one hr long video…find some time tonight…it will give you a good understanding of the macro world…

 

http://www.businessinsider.com/ray-dalio-on-gold-2012-9

 

Gold is a currency. Throughout the history, I won't tell you in length, money was like a check in a checkbook and what you would do was get your gold and gold was like a medium. So gold is one of the currencies-- We have dollars, we have euros, we have yen and we have gold.

And if you get into a situation where there's an alternative in this world, where we're looking at 'What are the alternatives?' and the best alternative becomes clearly one thing, something like gold, there becomes a risk in that.

Now it doesn't have the capacity. The capacity of moving money into gold in a large number is a extremely limited. So the players in this world that I have contact with that move that money really don't view gold as an effective alternative, but it could be a barometer and it is an alternative for smaller amounts of money.

To this, Bartiromo asked if he owns gold.

"Oh yeah. I do. I think anybody, look let's be clear, that I think anybody who doesn't have...There's no sensible reason not to have some. If you're going to own a currency, it's not sensible not to own gold. Now it depends on the amount of gold. But if you don't own, I don't know 10%, if you don't have that and that depends on the world, then there's no sensible reason other than you don't know history and you don't know the economics of it.

this will get a few more interested...the tsunami is getting closer to shore...

http://www.bloomberg.com/video/gross-gold-a-better-investment-than-bonds-stocks-67gICY2RTwy3MytiYpX8jg.html

I just think it will be higher than it is today and certainly a better investment than a bond or stock, which will probably return only 3% to 4% over the next 5 to 10 years....B Gross the largest Bond Manager in the world

 

I don’t want to direct...you need to analyse and arrive at it yourself...so you believe it...you need to look at what is occurring and think it through, without reading the Financial Review or WSJ.

Consider the questions:

3.5 yrs after the GFC we have another round of QE – why?

China to stimulate – why?

US Fed to announce another easing in Sept?...Why?

Is history any guide to the repayment of massive debt build up?

Is their a message in the Gold market?

If something dramatic is happening or about to happen – will the many see it or the few?

A Golden Lion speaks about what is coming

a 43 min video worthy of your time...

http://ceo.ca/frank-giustra-long-form-interview/

By all accounts Giustra is brilliant, connected and wealthy. He made headlines in 2007 by pledging over $100 million and half of his future earnings to establish a charitable foundation with President Clinton. Outside of philanthropy however, Giustra has been reluctant to draw attention to himself, and rarely speaks publicly about investing.

2 small videos...Robert Johnson

http://jessescrossroadscafe.blogspot.com.au/2012/09/robert-johnson-unmasking-wall-street.html

Robert Johnson in 2 videos sees exactly what is happening...it's the last days of Pompeii, gold does not go to $3,000 with the band playing...it goes there shrieking...


QE all over the press this weekend after Jackson Hole...think! Will it go into productive assets?
"they can pump money into the system, but they can't regulate where it goes"

Further Wealth Transfer coming soon.

Gold at $1634; silver at $29+....hmmmmmm

Even with no QE, gold has behaved well the last 4 weeks.
Can this be the onset of the move. Alf Field thought so

He forecasts $4,500 in a violent move.

Meanwhile Paulson puts in 44%  of firm's assets into Gold...nothing to see here
http://www.bloomberg.com/news/2012-08-15/paulson-steps-up-gold-bet-to-44-of-firm-s-equity-assets.html


Interesting take by James Rickards on the next QE steps and why...maybe gold is sniffing this out
http://www.usnews.com/opinion/blogs/economic-intelligence/2012/08/20/how-china-is-driving-federal-reserve-policy

USD has been weak the last week - now under 82 on the USD Index

The Gold stocks have had a good bounce - gold closer to $1,700 might set them on fire...watch

Gold Stocks carnage continues...

if markets are created to send us crazy...the action in the gold stocks is doing it's job!

Stocks down by 40% to 60% plus - simply stunning.

Gold gone nowhere for nearly 12 months.

Can it hold these levels and proceed north by the end of the year - this next month should be interesting. Meanwhile Bank of Korea cuts their interest rate over night on the back of last week's drop by china and  QE by the BOE.

Monti says no bailout needed...

hmmmm....

On the 28th of May Rajoy said:

“There will not be any (European) rescue for the Spanish banking system,” Rajoy added, before backing calls for the euro zone bailout fund, which will be in place from July, to be able to lend to banks direct."

on the 8th of June - Spain received a bailout...


Pollies will have their hands forced by the market...no question!

Spain to get $100B plus...from where?

Where were these idle funds before?

With each bailout, systemic risk rises -

http://www.eidesiscapital.com/pdf/Barrons-Going-for-Gold-in-a-Dangerous-World6-4-12.pdf

By definition, many will suffer - one way or the other.

Yet gold, no-one's liability, will move closer to the system. If the article below comes to fruition, the barbarous relic callers may need to re-think...

http://www.theglobeandmail.com/report-on-business/international-business/european-business/a-golden-idea-to-save-or-doom-the-euro/article4243556/

Germany’s idea is coyly named the European Redemption Pact and it is nothing if not creative. While details are scant, here is roughly how this gilded baby would work. Countries with debts greater than 60 per cent of gross domestic product – the (ignored) limit under the European Union’s Maastricht Treaty – would transfer those debts into a redemption fund, which would be covered by joint bonds. The scheme has been called “euro bonds lite.”

Here’s the catch. Countries using the scheme (most would, including Germany, because of generally high debt-to-GDP ratios) would have to cover 20 per cent of their debt with collateral, payable in gold or currency reserves. Default on the payments and you lose your gold. The “sinking” fund would retire the debt over 20 years.

Einhorn mocks Buffett - my gold is on Einhorn

Done with class and tounge in cheek, Einhorn mocks Buffett!

http://www.forbes.com/sites/ycharts/2012/05/31/einhorn-trashes-buffett-cash-but-loves-gold/

“The debate around currencies, cash, and cash equivalents continues. Over the last few years, we have come to doubt whether cash will serve as a good store of value. If you wrapped up all the $100 bills in circulation, it would form a cube about 74 feet per side. If you stacked the money seven feet high, you could store it in a warehouse roughly the size of a football field. The value of all that cash would be about a trillion dollars. In a hundred years, that money will have produced nothing. In a thousand years, it is likely that the cash will either be worthless or worth very little. It will not pay you interest or dividends and it won’t grow earnings, though you could burn it for heat. You’d have to pay someone to guard it. You could fondle the money. Alternatively, you could take every U.S. note in circulation, lay them end to end, and cover the entire 116 square miles of Omaha, Nebraska. Of course, if you managed to assemble all that money into your own private stash, the Federal Reserve could simply order more to be printed for the rest of us.”

"We walk the edge of Chaos"

The real economy has been surpassed by the financial or "paper" economy. The debts are too large.The cashflows o not support them, whether private or public. The Greek like contraction is coming to the globe in a "austere" type environment. The Spanish seem to now be front and centre. A program of sorts is needed quick or Lehman 2 is on our doorstep.

As Rickards recently tweeted, "if you think a bank is TBTF, what about a country?"

Gold stocks "shooting fish in a barrel"

There is no reason to own gold stocks. Run by poor managers, who don't believe in their product, in countries all too eager to get their hands on more taxation. and yet that is a definition of a bottom...total disdain.

This chart from Morris Hubbartt...shows sentiment at rock bottom...

http://www.superforcesignals.com/images/stories/folder8/rydexpreciousmetalsmay18.jpg

May not be "shooting fish in a barrel" but the huge out performance of gold v the xau, will revert at some point...hopefully in the next 4 weeks...gold stocks can then take off!!..with a double fro here over the next 18 months!

ps - for full disclosure, I didn't see this sort of correction coming!....not with Gold at $1,600USD! Ouch

Very volatie week ends with pollies meeting on Europe...we are saved

A G8 meeting was held overnight where officials took lovely photos and smiled for the cameras. Pronouncements of significance were missing...let's see how the markets react this week. Last week was not good!! Maybe it will take a Dow move of another 1,000 points to get pollies acting.

Barron's had a good piece from Ray Dalio...

http://online.barrons.com/article/SB50001424053111904370004577390023566415282.html#articleTabs_article%3D1

ps - he says keep 10% in gold!

ps2 - markets are oversold this week. One measure I use...share price falls made the weekend news.

ps3 - Soros increase his gold

ps4 - a Japanese fund initiated a gold position...hmmmmmm

Japanese Pension Fund Switches to Gold
By Ben McLannahan
Financial Times, London
Wednesday, May 16, 2012

http://www.ft.com/intl/cms/s/0/1be7a2a2-9f3f-11e1-a255-00144feabdc0.html

TOKYO -- Okayama Metal & Machinery has become the first Japanese pension fund to make public purchases of gold, in a sign of dwindling faith in paper currencies.
Initially, the fund aims to keep about 1.5 per cent of its total assets of Y40 billion ($500 million) in bullion-backed exchange-traded funds, according to chief investment officer Yoshisuke Kiguchi, who said he was diversifying into gold to "escape sovereign risk."

The move into a non-yielding asset comes as funds in the world's second-biggest pension market are under increasing pressure to meet promised payments, as domestic interest rates remain rooted near zero.

Gold – Don’t blame the thermometer

When someone is sick we sometimes use a thermometer to take their temperature. A high reading indicating a possible infection. This can begin the process of finding the cause of the infection and treating it. Rarely do we question the reading, because the thermometer is good at noticing the temperature change. 

Gold is the thermometer of the fiat currency system. It is signalling it is not well. It needs to treated. Yet the majority, during gold’s ten year rise, continue to be perplexed or question’s it’s reading. A bubble. A nonsense. A barbarous relic. From the savvy to the novice. In a sense they cannot be blamed. Having known only this fiat money period, they see the world through this experience. A period seemingly normal. Reasonable. Average. Their experience defines their views. As it does all of us. But ask an Argentinian, a Zimbabwean, a Greek an Icelandic person. They are not as perplexed. They do not second guess the price of gold. They do question their own currency. Their experience now tells them to trust the thermometer.

Make no mistake, these moments in history do not end with a whimper. They end with a bang. Gold will rise until the correct course of action is taken. At an accelerating pace. Because, like the thermometer it will signal that treatment needs to be administered.

So as gold marches higher, the derision, the bubble calls will increase, because it is too negative to consider what it says about what they know, or they think they know. Until authorities (politicians and central bankers) make the difficult decisions to signal the value of our current money is safe and stable, confidence will continue to fall at an accelerating pace, and as it does, the thermometer will signal the illness of the patient. Those who care to stand back from their own experience, will understand the message of the thermometer. The patient is sick. Very sick. But most are questioning the thermometer.

Jim Sinclair - Thankyou Sir

Jim saw ahead what few could see
He made predictions that were uncanny
And even if it meant some ridicule and glee
He gave his time to teach the many

He’s counselled wisely with each daily word
Taught lessons on markets, emotions and life
His message remained constant, there to be heard
“Protect yourself from the coming strife”

A mastery that few can attain
And a team of CIGA’s working around the clock
To allay the fear and the regular gut wrenching pain
“stay with the physical, the paper market is a crock”

And for some, the path from here may not be clear
But one thing is certain and it must be told
your patience, care and kindness, cannot be,
measured in any fiat currency or even gold.

Gold stocks - deeply sold off

The markets have a habit of teaching us things.

Who would have thought that gold could be at $1,650 and gold stocks would have fallen over 30% in the last 9 months.  Many measures say they are cheap as they have been for a decade.

Cashflows are better, but everyone hates them. Their time is coming. But beware the liars as Charles Dickens called the miners.

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/4/22_John_Hathaway_-_8_Key_Charts,_Gold,_Fed_%26_The_Big_Picture.html

Meanwhile the Central Banks are buyers of the barbarous relic...

Mexico added 16.8 metric tons of gold valued at about $906.4 million to its reserves in March as nations including Turkey, Russia and Kazakhstan increased their holdings of the metal, International Monetary Fund data show.
 http://www.bloomberg.com/news/2012-04-24/mexico-raised-gold-reserves-in-march-imf-data-shows.html

Hiatus over...and so is the calm in the goldmarkets

Nothing has been fixed
QE to continue, else the debt in the system craters it.
Big corrections in gold and silver, compared to the equity markets, masks the coming storm!