Tuesday May 6, 2014
tableTable of Contents
The Holter Report: Another "Dot" Is Now Connected?
Andy Hoffman's Daily Thoughts: China Syndrome
Podcast with Kerry Lutz
Featured Articles: Larry Edelson, Casey Research, Richard Russell, King World News, Zero Hedge
Market Recap
About Miles Franklin 
davidFrom David's Desk
David Schectman

Quotes of the Day


Gold will give a short-term buy signal again on a close above 1325.

Silver will give a short-term buy signal again on a close above 19.70. However, according to cycles, it is too early for a longer-term buy

- Charles Nenner


We are now merely a few yards away from the time when I will scream from the rooftops "Backup the truck now in gold and silver!"

- Larry Edelson, Money and Markets, May 5, 2014


My immediate upside target is 1309.50, but if it's easily breached, look for a follow-through to at least 1321.30.

- Rick Ackerman, Rick Ackerman.com, May 5, 2014


We got our first glimpse of the first-quarter Gross Domestic Product (GDP) and it wasn't pretty. The preliminary number revealed only 0.1% growth - the weakest performance in approximately three years. This number fell significantly short of the estimate for 1.1% growth and the fourth-quarter GDP of 2.6%. What little growth the U.S. experienced in the first quarter was due to a 3% jump in consumer spending. And why was spending up? Were Americans buying new gadgets, homes or appliances? No. Americans were pouring their money into utilities and health care - you know, the polar vortex and Obamacare. Services spending increased 4.4% - the largest in nearly 14 years - while goods spending grew an anemic 0.4% - the smallest in almost three years. So the only thing standing between America and contraction was a health-care law that we didn't want. Despite the Fed's efforts to sugarcoat the GDP and cling to the hope that the economy is still turning around, things look bad for America. Since 2009, annual growth has averaged around 2%, below our national historical average of 3.3%. What little job growth we've seen has been limited to low-paying positions. In fact, business investment in equipment (which includes hiring new employees) dropped 5.5% in the first quarter -- the largest drop in five years. The housing market has slowed. Business spending has slowed. Consumer spending (other than utilities and mandatory health-care spending) has slowed. And while it may be hard to believe, government spending has slowed. In short, the recovery is failing. With debt still rising and jobs scarce, the economic picture is bleak. America is fast approaching a precipice that could send the United States down into violence and chaos the likes of which this country has never seen.

- The Sovereign Investor


(c) 2014 Sovereign Offshore Services LLC, t.b.a. The Sovereign Society. All international and domestic rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, without the written permission of the publisher, The Sovereign Society, 55 NE 5th Avenue, Suite 200, Delray Beach, FL 33483, Tel.: (561) 272-0413 Email: www.sovereignsociety.com/contact-us





Today's Featured Articles:


Larry Edelson (I'm going to tell you about the recent action in gold and silver, what it means, and some surprising conclusions.)


Casey Research (Time to Admit that Gold Peaked in 2011? Jeff Clark disagrees.)


Richard Russell (What I'm afraid of is that somewhere somebody is going to make a mistake -- and then -- war.)


King World News (Western Propaganda & The Road To A Catastrophic End)

Zero Hedge (Gold Jumps Back Above 200DMA As USDJPY & Stocks Continue Slide)






David Schectman
holterThe Holter Report
bill holter
Bill Holter

Another "Dot" Is Now Connected?

May 5, 2014


Saudi Arabia Shows Off Chinese Missiles  


I saw this headline over the weekend and could only think to myself, this is bad, really bad.  After opening the link...BAM! Right under the headline is the statement "Saudis send message to United States, Iran in military parade."   Well yes, they did.  


I must confess that I did not know that the Saudis even had Chinese missiles but this was one of the dots that I've speculated was going to be "connected."  We have known of high level Chinese/Saudi talks over the last six months and also of the meeting between Prince Salman and the Chinese President just a couple of months back.  It is very important that you understand the symbolism being displayed here.  These Chinese missiles were not meant to impress their populace (well maybe) they were not meant to scare the U.S., Iran (maybe) or any of their neighbors...Saudi Arabia made a very big, very loud statement for anyone willing to listen.  These missiles were 25 years old and only a small part of the arsenal "display" but they did not have the stamp "Made in America" on them which is oh so important.  


We knew that Saudi Arabia has been public about their displeasure with how the U.S. has handled the Syria situation.  We also knew that they recently sacked their intelligence chief, Prince Bandar who was one of their most "pro U.S." officials.  We have had these previous pieces to put together which showed a picture of the Saudis slipping away from the U.S. and towards China, parading these missiles was not by mistake nor without thought.  No, Saudi Arabia I believe just made a statement that the U.S., the Chinese and the rest of the world cannot mistake.  I also believe that this is merely a "warm up" for what naturally follows.


Displaying these missiles in my opinion was pure and simple "business," let me explain.  I would expect that at any time now we may hear that Saudi Arabia will accept payment for their oil in something other than dollars.  They may include several acceptable currencies or maybe they will skip the "courtship" altogether and require Yuan.  This would be the most drastic move and probably statistically least likely but it is a possibility.  The point is this; the Saudis have now put the U.S. "on notice."  I would say that this is the equivalent of a long lasting marriage that has gone downhill over the years and now one spouse is leaving an envelope from a well-known divorce attorney out in the open and on the kitchen table.  Make no mistake this was done purposely and publicly.  


I wrote about this last week in "The Nuclear Option?" where I speculated that part of the "plan" would be a switching of sides by Saudi Arabia.  This now appears quite likely.  I do want to remind you that if it were not for the Saudis accepting ONLY dollars for oil from 1973 on, we would not be where we are today.  It allowed the U.S. to blow up the biggest paper fiat/debt bubble in the history of the world by MANY orders of magnitude.  Were it not for this deal cut by Henry Kissinger, I believe that it would have been highly likely that the inflation that led to the 1980-82 twin recessions would have gone "hyper" and history would be very very different today.  The "demand" that was created for dollars by this deal allowed the U.S. to plaster the entire world with dollars.  In fact, because you could only buy oil with dollars, dollars became the lifeblood of every nation on the planet.  Without dollars, no nation could have survived because in effect they would have been shut off from oil.  This has been changing slowly for maybe the last 10 years and changing more rapidly now, we very well could see this culminate in a "flashpoint" where the dollar becomes an unacceptable pariah.


I am curious to see what will happen over the next days, weeks and months as both Saddam Hussein and Mohamar Qaddafi quickly met their maker after announcing plans to sell oil in euros.  My questions on this are wide ranging.  Were the Saudis to announce the acceptance of "non dollars" for oil, will the U.S. now come up with a reason to invade them?  In past years with past presidents I have no doubt that this somehow would have been arranged, your guess is as good as mine with the current occupant.  Of course then the questions swing to Russia, China and the Eurozone.  Will Europe pay Russia in rubles?  Or God forbid gold (if they even have it to deliver).  Will Russia even accept euros as payment?  Maybe, maybe not.  What about China?  Will Saudi Arabia now become their supplier and divert U.S. bound oil to China?  


How does the ally of Russia, Iran fit into all of this?  The Saudis clearly are not pals with the Iranians but do they now tolerate Iran if they are doing business with China...who is business partners with Russia...who are sympathetic to the Iranians?  Where does this leave Israel?  Please remember that the Chinese and Russians are set to ink a "Holy Grail" energy/pipeline deal this month ...was this display of Chinese missiles the equivalent of the Saudis "serving" divorce papers to the U.S.?  


There are all sorts of questions and I obviously don't have the inside knowledge or the answers but there are lots of clues.  As I wrote last week, I believe that Russia and China know that we (the West) are in a much weakened financial state.  I also believe that they have probably already received for delivery some of the pre "1960" gold bars that James Turk has reported are now showing up all over the world.  Has this tipped our hand?


Let me expand on this a little and sorry if it is a bit of a rehash of my piece last week but this is very important.  It only makes sense from a "strategy" standpoint to pull ALL of the triggers at once.  The display of Chinese missiles by the Saudis only fits in "time wise" with what else is going on.  Russia can now invade the Ukraine; they have the troops and machinery amassed to do this.  On Friday there were deaths of many pro Russians in the Ukraine so Mr. Putin now has the green light politically to do this.  We also know that China and Russia are set to ink a massive energy and pipeline deal within the next several weeks.  Saudi Arabia was a lingering question mark in all of this ...until now.  I could be wrong but it looks to me like this "dot" just got connected to all the rest.  If my analysis or theory holds any water, it looks like all system is now "go" for the isolation of the U.S.


hoffmanAndy Hoffman's Daily Thoughts

China Syndrome

May 5, 2014


It's Monday morning, and hallelujah - we not only did we not see a "Sunday Night Sentiment" attack for the first time in 40 weeks - as early attempts were rebuffed at the likely new floor level of $1,300/oz. but no "2:15 AM EST" raid occurred either. Quite shocking and laughably, even the typically fantastic Zero Hedge attributed gold's strength to "Ukraine fears" - as if the expanding instability in that dark corner of the Earth is "new news."




So here we are, just days after another Fed "tapering" lie, COMEX options expiration, and the most blatantly fabricated NFP report in U.S. history; and lo and behold, PMs are trading higher. Given their ragingly strong fundamentals, this should surprise no one with even a mild understanding of the reasons for - and mechanisms of gold and silver price suppression. However, what really is puzzling and alarming to the highest order - is the fact that despite increased "tapering" - in our view, a lieto start with particularly given "Belgium's" sudden Treasury buying surge; is the fact that Treasury yields, amidst a so-called economic "recovery," have plunged to seven-month lows.


Bloomberg put out a story this morning that new pension rules will yield dramatically increased Treasury bond demand in the coming years. However, its logic couldn't be more ridiculous - in claiming:

Pension plans, which oversee $16.3 trillion, are shifting into longer-term Treasuries to lock-in last year's stock gains by matching assets with their future liabilities as funding deficits narrow.

-Bloomberg, May 5, 2014


In other words, selling stocks to buy bonds and yet, not a peep about how doing so would crush the stock market; much less, the fiduciary madness of purchasing Treasury bonds near record low yields, amidst record money printing, surging real inflation, and exploding Federal debt. Granted, the fact that the Fed suicidally bought up a third of the entire Treasury market has tightened supply somewhat; but at such extremely overvalued levels, one would not expect such moronic "investment decisions" by the nation's largest fiduciaries - particularly given the sea of sovereign red ink anticipated in coming years. But alas, this is the bubble world the Fed has created which will continue in all its glory, until eventually it catastrophically collapses.


In many ways, Friday's comical NFP report represented an inflection point in TPTB's war against reality. It was inevitable they'd eventually overplay their psychotic game of money printing, market manipulation and propaganda; and watching the Fed clearly attempting to push rates up may just well be the denouement of this suicidal exercise. To wit, they no doubt anticipated the benchmark 10-year Treasury yield to jump back to the middle of their "managed" 2.6%-3.0% range when the BLS published the "huge" 288,000 job number. However, once the market realized just how fabricated the data was - and how ugly the internals underlying it - rates instead plummeted; and by late afternoon, were on the verge of breaking below the seven month-low of 2.60%. Eventually, the Fed lost this game, as the "quintuple bottom" at 2.60% was broken with rates this morning falling further to 2.57%, and appearing likely to fall much lower.


And why, you ask, is such lunacy continuing? Yep, expectations the Fed will not only end its "tapering" pretense in the near-future, but increase QE as it becomes painfully clear no recovery is present; nor ever was, or will be until the cancerous fiat currency regime, once and for all dies. Sure, the Cartel took some solace in capping Friday's gold rise at exactly 1.0% at exactly the 10:00 AM EST close of the physical markets, at exactly $1,300 with a prototypical "Cartel Herald" algorithm - replete with late day "walk down" to $1,299. However, this morning's increase - albeit, again capped at exactly 1.0% - negates that "victory"; and given the above, may well mark an upsurge in global physical demand, well above and beyond last year's historic levels.


The fact is, Central banks the world round have created bubbles in the world's ugliest most toxic assets via "promises" to support insolvent entities from "too big to fail" banks to sovereign Treasuries themselves. To wit, we have long documented how several PIIGS' sovereign yields are now, insanely, below those of U.S. Treasuries care of Draghi's July 2012 promise that the ECB would do "whatever it takes" to save the Euro. Ultimately, the largest bubbles of all are the currencies themselves which in due time - perhaps much sooner than most can imagine - will collapse like the 599 before them. David Stockman, a former Budget Office Director in the Reagan Administration, recently wrote a series of fantastic articles discussing such, like this one - describing the sorry state of the American consumer, per below...


Time wrote at the end of January:


Too many of us are living paycheck to paycheck. The CFED, or Corporate Federation of Enterprise Development, finds that 44% of Americans are living with less than $5,887 in savings for a family of four. The plight of these folks is compounded by the fact that the recession ravaged many Americans' credit scores to the point that now 56% percent have subprime credit.

-Davidstockmanscontracorner.com, May 1, 2014


...and this one depicting the abject failure of Japan's "Abenomics" - per below...


In a survey of 1,000 consumers on March 29-30 by broadcaster Fuji News Network, 69% said they had not made any special purchases ahead of the sales tax rise, and 77% said they didn't feel an economic recovery was under way.

-Zero Hedge, May 2, 2014


However, the most damning of all - inspiring today's article - was this dire depiction of the ongoing Chinese economic collapse, per below...


The borrowing, building and speculating mania in China has obviously gotten so extreme that even the new regime in Beijing has been desperately trying to cool it down. But this will end up as a catastrophic failure-not the 'soft landing' brayed about by Wall Street bulls who do not have the slightest comprehension of the difference between free market capitalism and the phony 'red capitalism' that has been confected by the party-controlled apparatus of the massive, intrusive, bureaucratic and hierarchically-driven Chinese State.

Davidstockmanscontracorner.com, May 2, 2014


Essentially, it describes the unprecedented real estate and construction speculation the Chinese government has fostered via unfettered money printing and lack of regulation of "shadow banking" lending. To the end of siphoning every imaginable job from the West, the Chinese government has indeed succeeded. However, in using such destructive fiscal and monetary policies - ironically, not much different than those employed by its Western peers - it has created the largest economic bubble in human history. We discussed such madness in March's "Most Terrifying Article We've Ever Read" - as well as the terrifying ramifications of the PBOC's decision to allow the Yuan to further weaken in April's "Chinese financial torture. However, given the importance of this potentially world-destroying event it makes sense to explore the issue from Stockman's unique angle as well.


And given the universal "karma" of writing of the TRUTH, take a look at the Chinese news that emerged simultaneously; starting with a leaked recording from the Vice-Chairman of Vanke Group, China's largest real estate developer - in which he stated:


It is a dangerous bubble, and already deflating'. China has reached its capacity limit for new construction of residential projects... and I don't see any possibility for a rise in home prices.

-Blogs.telegraph.co.uk, May 2, 2014


The below chart depicting parabolic growth in Chinese housing inventory confirms his fears, nearly doubling in the past two years...


Zero Hedge


...and this morning, China's Manufacturing PMI contracted for the sixth month in a row at just 48.1 making an utter mockeryof the government's 7.7% GDP growth projection made just two months ago. But the real shocker was news that Chinese home sales collapsed by an astounding 47% from a year ago, and an otherworldly 65% in "tier-2" cities...


  • 1st-tier city sales fall 40% y/y
  • 2nd-tier city sales drop 65% y/y
  • 3rd-tier and 4th-tier city sales decline 32% y/y


And thus, if anyone continues to harbor belief that somehow, somewhere, a miraculous economic "recovery" will save the day, it's time to embrace the "realization of reality" rapidly sweeping the planet. China has been the "world's growth engine" since Western economies peaked at the turn of the century but sadly, as you can see such "growth" was largely funded with the same debt, money printing, and lax regulation that destroyed the United States, Europe, and Japan. The "China Syndrome" is now melting down and with it, TPTB's last remaining prayer of salvaging its failed gambit of unprecedented money printing, market manipulation and propaganda.


Under such a scenario, how can anyone not consider protecting their net worth with at least a modicum of "financial insurance"; i.e., real money? To wit, gold and silver are decidedly NOT "investments"; but instead, the only assets known to have survived through 5,000 years of recorded history - as opposed to fiat currencies, none of which have survived more than 50 years without either collapsing or significantly devaluing. With global economies plunging, money printing, inflation, and social unrest surging and debt levels of all kind rising parabolically, it's only a matter of time before the dollar-based standard dies as well - and with it, the "Cartel's" ability to artificially suppress gold and silver prices.




Call Miles Franklin at 800-822-8080, and talk to one of our brokers.  Through industry-leading customer service and competitive pricing, we aim to EARN your business.



China Syndrome with Kerry Lutz

May 6, 2014


Andy Hoffman joins Kerry Lutz of the Financial Survival Network  to discuss unemployment and GDP numbers, stock market, bond market, housing sales declining, Ukraine keeps inching closer to war, gold and silver.  To download the audio, please click on the link below:


featuredFeatured Articles

Putin, gold and silver: What you need to know right now ... - www.moneyandmarkets.com

Larry Edelson | Monday, May 5, 2014 at 7:30 am


In a moment, I'm going to tell you about the recent action in gold and silver, what it means, and some surprising conclusions.

But first, you need to know more about the cycles of war that I've been telling you about, how they are ramping up so quickly, and more specifically, about Putin.

First, let's take a look at the war cycles. In early 2013, over a year ago, I warned everyone that the war cycles were set to explode higher, on the backbone of bankrupt Western economies.

It's a fait accompli. War and bankrupt economies go hand in hand. When desperate, like the governments of the United States and Europe are now, strange things start to happen.

You only need look at the historical record. The collapse of Rome was accompanied by many different civil rebellions and international conflicts.

Ditto for the Ottoman Empire. The British Empire, when it fell on desperate times. For Spain. For Germany.


For every major economic power throughout history, when governments became bankrupt and desperate for cash, they imploded by attacking others and their very own citizens, through sleight-of-hand tax increases, through confiscatory policies that first racked everyone's money, then confiscated it, through loss of civil liberties, through propaganda and more, lots more.

Weakened, they lash out. They prepare to rally the people; they look for distractions, reasons to spend even more money, all with the aim of consolidating the national psyche.

This is what the United States is doing now. Russia is doing the same thing. Putin is rallying the national psyche. The Russian economy, weakened internally by corruption, by alcoholism, by declining revenues from the three-year bear market in commodities, is not in much better shape than Europe or the United States.

So the battlefield is now prepped. Russia versus the West. Russia versus Europe and the United States.

And it is now entering a new, more dangerous phase. Military conflict is almost always preceded by economic warfare. And Putin is about to pull the trigger and respond to sanctions against Russia with his own sanctions against the West.

Billions of dollars in foreign investment in some of the world's biggest untapped oil reserves are at risk. Exxon Mobil Corp. (XOM), for instance, has drilling rights to 11.4 million net acres (46,134 square kilometers) in Russia, the company's biggest single cache of drilling rights outside the United States.


Other major companies with big investments in Russia include Royal Dutch Shell Plc (RDS-A), PepsiCo Inc. (PEP) and Alcoa (AA). Then there are a slew of medium- and large-sized companies from the West that are also at risk of getting hit by Putin.

U.K companies are most worried about their financial services in Russia. France is worried about military sales and luxury goods. Germany has the biggest trade with Russia. And Switzerland and Germany also have the biggest banking and loan exposure to Russia.

At the same time ...

Russia is hemorrhaging from capital outflows, a record $60 billion in Q1 alone.

Savvy Russian investors want out. They're not about to sit around and see their capital get caught up in an economic war, probably followed by military conflict.

So they're moving their money. Europeans are moving money out of Europe as well. Which leads me to my next point ...

During not-so-normal times like we have today, the flow of capital is what determines major market moves.

Not supply/demand fundamentals. Not GDP, inflation, central bank policies.

Not even price-to-earnings ratios, or corporate balance sheets or anything most analysts use to predict market movements.

It's capital flows, from one nation to another, from one stock market to another, from one savvy investor's pockets to any investment that can help that investor get their money to safety, off the grid to a market that is liquid, that offers a decent chance at some type of return, and where preservation of capital is also of utmost importance.

$60 billion coming out of Russia in Q1 may not seem like a lot, but when I look at the war cycles and how they ramp up for six more years ...

When I consider how quickly they are ramping up only two years into the process ...

And I consider the miserable shape that Europe is in ...

I am more confident than ever before that my forecasts are on track and that ...

First, we will soon see gold and silver take off like a bat out of hell.

Second, we will soon see the U.S. equity markets soar to one new record high after another (after a correction is complete).

Third, we will soon see the next wave down in the prices of sovereign bonds in Europe and the Unites States ...

And the next wave higher in interest rates ...

With all of this likely to happen in the face of a rising dollar, falling foreign currencies ...

While the majority of analysts and investors are caught flat-footed, on the wrong side of the markets.


Right now, gold and silver are still on the cusp of a major new bull market, one that could end up even more powerful than even I originally expected.

Chief reason: This past week's market action. Silver made a new low, taking out its December low, while gold remains nearly $100 above its equivalent December low.

This is what is called a "bearish non-confirmation" - a technical term that describes a situation when two related markets behave differently at an important low, where one market makes a new low and the other doesn't.

And typically, it is extremely bullish.

Only time will tell, but right now, the patterns I see emerging in gold and silver tell me that ...

  1. Gold and silver are about to take off to the upside. Or ...
  2. We have one more final low coming for both, a short swift downdraft ...


But one that will merely compress the springs all that much tighter and lead to an explosive rally immediately thereafter.

So just like the battlefield has been prepped between Russia and the West, the war cycles are now dominating the action in gold and silver ...

And they will soon create an explosive rally in the precious metals, the likes of which we have not seen in a very, very long time.

It's now not so much a matter of time, but of price level. Will gold take off from here, or slightly lower levels?

Either way, we are now merely a few yards away from the time when I will scream from the rooftops "Backup the truck now in gold and silver!"

If there is one thing you do the rest of this year to help insure you protect and grow your money, it is this: Stay tuned in, very tuned in, to all of my writings.

If you do not, you may miss the most explosive turnaround to the upside - ever - in gold and silver.


Continue reading on Money and Markets.com.



Time to Admit that Gold Peaked in 2011? - www.caseyresearch.com

Jeff Clark, Senior Precious Metals Analyst


Have you seen this "real price of gold" chart that's been making waves? Among other things, it purports to show the gold price adjusted for inflation over the past 223 years. Notice the 1980 vs. 2011 levels.

Casey Research

The chart makes it seem that on an inflation-adjusted basis, gold has matched its 1980 peak in 2011, or nearly so. A mainstream analyst who still thinks of gold as a "barbarous relic," a government official who doesn't want people to think of gold as money, or an Internet blogger looking for some attention might try to convince you that this proves that the gold bull market is over, arguing that the 2011 peak of $1,921 is the equivalent of the 1970s mania peak of $850 in January of 1980.

The logic is flawed, however; even if it were true that gold has matched its 1980 peak in inflation-adjusted prices, it would not prove that the top is in this time. This is not the 1970s, the global economy is under very different pressures, and there's no rational basis at all for saying the top this time has to be at the same or similar level as last time.

That's even if it were true that gold has matched its 1980 peak-but it hasn't.

Inflation-Adjusted Gold Has NOT Matched Its 1980 Peak


First, if you go by official US Bureau of Labor Statistic numbers (or just use the BLS's inflation calculator), $850 in 1980 is equivalent to $2,320 in 2011, when gold hit its peak thus far in the current cycle. (It's $2,403 in 2013 dollars, as is said to be used in the chart.)


We don't know what data the authors of the chart used, nor their inflation adjustment method, so it's hard to say what the problem is, but at the very least, we can say the chart is very misleading.


But there's more. As you probably know, the government has made numerous changes to the way it calculates inflation-the Consumer Price Index (CPI)-since 1980. So, even the BLS number we've given grossly underestimates the real difference between the 2011 and 1980 peaks.


For a more apples-to-apples comparison, we should adjust for inflation using the government's 1980 formula. And for that, who better to ask than John Williams of Shadow Government Statistics (AKA Shadow Stats), the world's leading expert on phony US government statistics?


I asked John to apply the CPI formula from January 1980 to the $1,921 gold price in 2011, to give us a more accurate inflation-adjusted picture. Here's what his data show.


Casey Research

Using the 1980 formula, the monthly average price of gold for January 1980 would be the equivalent of $8,598.80 today. The actual peak-$850 on January 21, 1980-isn't shown in the chart, but it would equate to a whopping $10,823.70 today.

The Shadow Stats chart paints a completely different picture than the first chart. The current CPI formula grossly dilutes just how much inflation has occurred over the past 34 years. It's so misleading that investment decisions based on it-like whether to buy or sell gold-could wreak havoc on a portfolio.

This could easily be the end of the discussion, but there are many more reasons to believe that the gold price has not peaked for the current bull cycle...

Percentage Rise Has Been Much Smaller


Inflation-adjusted numbers are not the only measure that matters. The percentage climb during the 1970s bull market was dramatically greater than what we experienced from 2001 to 2011. Here's a comparison of the percentage gain during both periods.


Casey Research

From the 1970 low to the January 1980 peak, gold rose 2,346%. It climbed only 535% from the 2001 low to the September 2011 high-nowhere near mimicking that prior bull market.

Silver Scantly Participated in the 2011 Run-Up


After 31 years of trading, silver has yet to even reach its nominal price from 1980. It surged to $48.70 in 2011-but it hit $50 in January 1980.


On an inflation-adjusted basis, using the same data from John Williams, silver would need to hit $568 to match its 1980 equivalent.


The fact that silver has lagged this much-when its greater volatility would normally move its price by a greater percentage than gold-further shows that 2011 was not the equivalent of 1980.


No Bubble Characteristics in 2011


I'll get some arguments from the mainstream on this one. "Of course gold was in a bubble in 2011-look at the chart!"


Yes, gold had a nice run-up that year. It rose 38.6% from January 1 to the September 6 peak. Anyone holding gold at that time was very happy. But that's not a bubble. One of the major characteristics of a bubble is that prices go parabolic.


And that's exactly what we saw in 1979-1980:

  • In the 12 months leading up to its January 21, 1980 peak, gold surged an incredible 270%.
  • In contrast, the year leading up to the September 6, 2011 peak, the price climbed 48%-very nice, but hardly parabolic, and less than a fifth of the 1970s runaway move.


No Global Phenomenon in 1980 (Next Time It Will Be)


In the 1970s, the "mania" was mostly a North American phenomenon. China and most of Asia didn't participate. When inflation grips the world from all the money printing governments almost everywhere have engaged in, there will be a much greater demand for gold than in 1980.


When that day comes, there will be severe consequences for those who don't have enough bullion. Not only will the price relentlessly move higher, but finding physical gold to buy may become very difficult.


Comparable Price Moves? So What?


The argument we started with is really the clincher. It doesn't matter how today's gold prices compare to those from prior bull markets; what matters are the factors likely to impact the price today. Are there reasons to own gold in the current environment-or not?


First, a comparison: Apple shares surged 112% in 2007. After such a run-up, surely investors should've dumped it, right? Well, those who did likely regretted it, since it ended that year at $180 and trades over $590 today. In fact, even though it had already risen dramatically and in spite of it crashing with the market in 2008, there were plenty of solid reasons to buy the stock then, not the least of which was the introduction of the iPhone that year.


So should we sell gold because it rose 535% in a decade? As with the Apple example above, that's not the right question.


There are, in fact, several more relevant questions for gold today:

  • What will happen with the unprecedented amount of money that's been printed around the world since 2008?
  • Why are economies still sluggish after the biggest monetary experiment in history?
  • Global debt and "unfunded mandates" are at never-before-seen levels; how can this conceivably be paid off?
  • Interest rates are at historically low levels-what happens when they start to rise?
  • Regardless of your political affiliation, do you trust that government leaders have the ability and willingness to do what's necessary to restore the economy to health?

If these issues were absent, maybe we'd change our position on precious metals. But until the word "healthy" can honestly be used to describe the fiscal, monetary, and economic state of our global civilization, gold should be held as an essential wealth-protection asset.

Continue reading on Casey Research.com.




Richard's Remarks - www.dowtheoryletters.com

May 5, 2014


I felt something changing last Friday. Was the truth breaking out? Lies, untruths and lies, propaganda, lies and damn lies. What are the lies? Lies that the Fed and the government are telling us -- Federal Reserve Notes ("dollars") are money and silver and gold are outdated relics of another age. What I sensed on Friday (with gold up 17 dollars and silver up 50 cents) was that the basket of lies was beginning to fall apart.


The US public will swallow lies for just so long, and then the truth breaks through the barriers. The public knows that "their" inflation is more like 12% than the 1.2% that the Labor Department says it is. The public is beginning to wake up to the fact that silver and gold are real money -- pure wealth that has been respected for thousands of years.


Meanwhile the Fed is pumping trillions of dollars into the banking system in an attempt to push core inflation up to 2 percent. The system absorbs all this liquidity, and actual "poor man's inflation" gradually increases. But somewhere ahead (I think it will be this year) inflation will break out of its current bounds, and today's "mild inflation" will turn into hyperinflation. That's when interest rates will break out and head violently higher. At that point the Fed will administer the only medicine it knows -- more QE, more liquidity.


Judging by past history, there are only two certain events -- wars and currency depreciation. This is the concept that scares me (I have a 35 year old son). Can it happen? As a World War II veteran, I've seen the horror of combat and what it does to people -- both mentally and physically. But look at all the possible spots where war might break out -- Israel, Iran, Japan-China, Ukraine, Syria, Egypt. Anywhere and everywhere.


What I'm afraid of is that somewhere somebody is going to make a mistake -- and then -- war. Of course, this may be a reason why gold and silver have been spurting higher. Wars are incredibly expensive and warring parties tend to go heavily into debt.


Below -- an important bull signal if gold hits the 1340 box. Note that gold is trading above its red declining trendline and above its blue ascending trendline.


Dow Theory Letters
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Western Propaganda & The Road To A Catastrophic End - www.kingworldnews.com

May 2, 2014


Today a 42-year market veteran warned King World News about Western mainstream media propaganda and the road the West is headed down which will lead to a catastrophic end game.  Below is what Egon von Greyerz, who is founder of Matterhorn Asset Management out of Switzerland, had to say.

Greyerz:  "Eric, it's hard to understand how the world economy can function at all.  We have near zero interest rates in many countries, massive debts, and we print to borrow more money than ever.  Despite all of this, GDP is not growing....

Continue reading on King World News.





Gold Jumps Back Above 200DMA As USDJPY & Stocks Continue Slide - www.zerohedge.com

Submitted by Tyler Durden on 05/04/2014 22:29 -0400


The weekend's re-escalation in Ukraine has sent gold popping $10 (and back above its 200DMA) and FX carry (and thus US equities) sliding in the early overnight trading. With Japan out (and Europe set for another holiday) volume are, and will likely remain, low. Critically, USDJPY is back under 102, even as Japan's central bank governor proclaims:


Continue reading on Zero Hedge.com.




The Good, And Bad News About US Jobs In One Chart- www.zerohedge.com

Submitted by Tyler Durden on 05/05/2014 10:58 -0400


While we are tired of seeing various numbers and charts "explaining" the US employment situation as much as the next guy, here is just one final, and decidedly simple chart, summarizing precisely where the US job market stands.

  • The good news: in April, 118.4 million Americans had a full-time job, the most since November 2008.
  • The bad news: in April 9.8 million Americans were unemployed, 92 million people were out of the labor force, and 27.3 million people had part-time jobs. A total of 129.1 million, the most since ever.

Continue reading on Zero Hedge.com.



recapMarket Recap
Monday May 5, 2014










GOLD - 1 year ago












SILVER - 1 year ago























































66.86 to 1


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