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.