East to West

http://www.ibtimes.com/golds-journey-west-east-switzerland-1393831


The gold is moving to the East (refer link).


Gresham's law is an economic principle that states: "When a government overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation."^[1] It is commonly stated as: "Bad money drives out good".
This law applies specifically when there are two forms of commodity money in circulation which are required by legal-tender laws to be accepted as having similar face values for economic transactions. The artificially overvalued money tends to drive an artificially undervalued money out of circulation^[2] and is a consequence of price control.
http://en.wikipedia.org/wiki/Gresham's_law


Would a government figure be worried that a rising gold price may send a signal to the sheepulation?


In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.
Alan Greenspan


An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense - perhaps more clearly and subtly than many consistent defenders of laissez-faire - that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.

• Gold and Economic Freedom, by Alan Greenspan, 1966.

Gold gets crushed...gold equities get demolished!...but CBs get physical

And yet the beat goes on...the beat being the need for QE to continue else economies collapse.

Spain records negative GDP, Japan goes QE full bore and now all the discussions centre around the need to cut back on austerity.

Central banks seeing the "inflation" set out to protect themselves
http://www.bloomberg.com/news/2013-04-24/gold-rout-for-central-banks-buying-most-since-1964-commodities.html

Jim Sinclair explains it here (lets get physical)...If he is a master, and I believe he is...something quite interesting this way comes.

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/4/25_Sinclair_-_This_Is_The_Beginning_Of_The_End_For_The_Gold_Shorts.html


Meanwhile gold equities behave as though gold goes to $900 from here. They are down 50% since November 2012, The SP500 makes new highs...

Just when you think you get things...your pants get pulled down.

Gold gets crushed in USD...down to 1545USD today

meanwhile...

Largest Dutch bank defaults on physical gold deliveries to customers April 3, 2013
By: Kenneth Schortgen Jr

Last week, a rubicon was crossed in the precious metals market as one of the largest banks in Europe defaulted on their gold contracts, and informed their customers there was no physical gold available for delivery.

ABN AMRO, the largest Dutch bank in the Eurozone, issued a letter to their gold contract customers of failure of delivery, and instead will pay account holders in a paper currency equivalent to the current spot value of the metal.

ABN AMRO, the biggest Dutch bank, has sent a letter to its clients stating that they will no longer be able to take physical deliveries of the gold they have bought through ABN. Instead they are offered money at the current market rate for gold. Basically, instead of owning a risk free, physical asset (a gold bar or a gold coin), the bank’s clients now own a monetary claim on ABN AMRO, being exposed to the bank’s credit risk. – Voice of Russia
http://www.examiner.com/article/largest-dutch-bank-defaults-on-physical-gold-deliveries-to-customers

They can't deliver?? Can't they just buy what everyone is selling?...shhhhh.... Ponzi Ponzi


meanwhile in Venzeula Gold does it's job!

Gold market unloved - Gold shares despised

Equity markets have been very upbeat the last 4 months or so. Meanwhile gold has been travelling sideways for nearly 20 months. Sentiment is very low and hedge fund managers are short.
The gold equities have been a very poor investment down close to 40%. Why hold them?

Becasue, nothing has been fixed - global liquidity by the central bankers is the key policy right now. Gold will reflect it soon and in due course the equities will follow. The train has nobody on it!

http://edegrootinsights.blogspot.ca/2013/03/gold-primed-for-unexpected-upside.html

Eric has some very good points in this article. A great analysis, by a very careful and thoughtful watcher of markets.

While Dan Norcini notes,
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/3/15_Incredibly_Important_Developments_In_Gold_%26_Silver_Markets.html

“Today the hedge funds are short a staggering 68,700 contracts. What makes this number even more amazing is that it represents an astounding 10+% of the entire open interest in the gold market of 667,000 contracts. So this is by far the hedge funds’ largest short position in percentage terms in history.
The bottom line is I don’t recall seeing anything like this since this bull market began 12 years ago. The hedge funds are now essentially battling against Middle-East and Far-East central banks and commercial banks. The problem is these central banks are behemoths compared to the hedge funds. 

Something has to give!

I will leave it to the doyens...express it clearly

the debt explosion has left a massive hole that is being filled via QE...but, nothing has been fixed...

Gold will call out the financial engineers on their grand experiment.
http://www.jsmineset.com/2013/02/05/golds-rise-in-price-cannot-be-stopped/



meanwhile Bill Gross keeps mentioning gold:

http://www.pimco.com/EN/Insights/Pages/Credit-Supernova.aspx

Summary

1) Why is our credit market running out of heat or fuel?

a) As it expands at a rate of trillions per year, real growth in the economy has failed to respond. More credit goes to pay interest than future investment.

b) Zero-based interest rates, which are the result of QE and credit creation, have negative as well as positive effects. Historic business models may be negatively affected and investment spending may be dampened.

c) Look to the Japanese historical example.

2) What options should an investor consider?

a) Seek inflation protection in credit market assets/ shorten durations.

b) Increase real assets/commodities/stable cash flow equities at the margin.

c) Accept lower future returns in portfolio planning.

and Kyle says:

http://kylebassblog.blogspot.com.au/2013/02/why-inflation-could-eat-into-stock.html

Bass suggests that investors "own productive assets," such as apartment complexes, oil wells, or global businesses that sell products in different currency areas.

"If you really want to protect yourself, you put long-term fixed rate debt on these businesses," he said.

People continue to scramble for yield," he said, "the U.S. rate curve is still basically flat and low. The Fed is actually doing the best job it can do, but it's also enabling the fiscal profligacy of Congress."

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.

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

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.

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...

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/

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.

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

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.”

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.

"You can avoid reality, but you cannot avoid the consequences of reality" Ayn Rand

Banks are insolvent...at current asset values and cashflows! Understanding the consequences of reality, you can prepare. Capital is working it out. Are you listening?

Meditate on the questions:

- Why is greece not allowed to fail?

- Why are banks not allowed to fail?

- Why is gold rising?

- Why are banks stocks falling?

- What is capital doing?

- How is all the debt to be re-paid?

- How does a reserve currency solve it's problems?

The USD - walks a fine line

The USD has been very weak during this stock market correction and the flight into government bonds. This is quite surprising given the problems in Europe. I'm not sure who coined or used the phrase recently, but he said "we walk on the edge of chaos" - he is right, and the USD right now is close to crossing that line. Once it does, GOLD will go higher, reflecting the loss of purchasing power of those dollars. Never has a global reserve currency been at such a point. This may be why Mr Sinclair, an extraordinary "harmonious" market reader, sees the beginnings of a hyperbolic move. Gold looks extended - but that's the definition of hyperbolic - the next month will give us the signal.

$1,800USD gold - Momentous!

Today gold hit $1,800 in USD terms. It has moved substantially in all currencies. It is a momentous day, because of what it announces to the world about fiat money – money backed by nothing other than the promises of government. Confidence is “officially” broken. The words of the Central bankers and governments are rendered meaningless. Worthless. Worth nothing. Gold now waits for actions. No, it screams for actions.

The sound money men are vindicated today. They warned of the 20 plus year policies that have led us to this point. Ridiculed, by academics and professionals everywhere, they stood alone, in the minority. They still are. But not for much longer! Gold has announced their arrival and before the final and dramatic act is over, monetary history will be learned by many, many more. Including the doubters and the “professionals” stuck, mindlessly in their recent history paradigm. The professionals - smart men? Yes. Wise? No.

The seeds of the great re-awakening are in this momentous day. By the end of this there will be a demand for sound money. It is coming.

I thankfully and gratefully acknowledge the independent and courageous thoughts and teachings of those men and women who understood history and the nature of the current system. They stood for something. They stood alone. I humbly say, thankyou!!

Specifically, I would like to list the following: James Turk, James Sinclair, Marc Faber, James Rogers, Eric King , Eric DeGroot, Dan Norcini, Eric Sprott, John Embry, John Hathaway, Ron Paul, the Austrians, DG, DM, CL....and many more