Monday December 22, 2014

Table of Contents

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From David's Desk

David Schectman

Quotes of the Day

A number of readers asked my opinion on the story circulating about the CME Group instituting various circuit breaker regulations on various metal futures on the COMEX and NYMEX.

Seeing as the CME and the COMEX are the main mechanism of the gold and silver price manipulation, it is prudent to be wary of anything they propose in precious metals trading. And I would agree that any changes the CME propose are most likely for their, as opposed to our, benefit.  I don't want to rain on anyone's parade, but these proposed changes by the CME are much ado about nothing.

The circuit breaker revisions that the CME is proposing have nothing to do with daily trading limits. If those circuit breaker limits are hit, the no trading chill out period is for a few minutes, not for the whole day, and will expand as often as necessary to generate trading. I understand the general distrust of the CME (and believe I have contributed to it), but I believe too much is being read into the proposals. After all, there were similar circuit breakers in effect for the last several years, including May 1, 2011 and every big sell-off in COMEX silver and gold.

- Silver analyst Ted Butler, Butler Research, December 13, 2014

 

Simon Johnson noted that six years after the crisis, the big banks are still only 5% capitalized (20:1 leveraged). Twenty-five European banks failed the stress test, which will force them to recapitalize. The largest banks were mandated by the Dodd-Frank Bill to "put their affairs together" with formal plans to ensure stability: the Federal Reserve and FDIC rejected all of them-a 100% failure rate. JPM has total assets of $2 trillion and a total derivative exposure of $71 trillion. Beware of flappy-winged butterflies. If the Fed taps the brakes, those guys are headed right through the windshield. If we hit a bump in the road, it's out through the moon roof.

 

"The tragedy is not that things are broken. The tragedy is that they are not mended again."

~Alan Paton, Cry, the Beloved Country

 

I have long talked about the massive amount of gold that is above ground. After reading "Gold Warriors" by Sterling and Peggy Seagrave and going through the thousands of support documents I have come to the conclusion that the 180,000 tons of available gold promoted by the likes of Jeffrey Christian of CPM Group and the World Gold Council are total and complete nonsense.

There are MILLIONS of tons of gold above ground!!

 

Is This Video Evidence that the Gold Conspiracies are True??

http://www.roadtoroota.com/public/1502.cfm

 

Of course...the answer is to SWAP your Gold for Silver!!

-Bix Weir, The Road to Roota, December 19, 2014

 

From the close on Friday, December 12 through Tuesday's low, the price of silver fell $1.50, or close to 9%. No other commodity, including crude oil, fell as much as silver did over that time. Generally, such a large percentage decline in any world commodity in less than two trading days is a pretty big deal and would only occur if there was some easily documented major supply/demand development. I follow silver pretty closely---and not only was I not able to uncover any major change in silver's actual supply/demand situation, I couldn't find even a minor development that would have accounted for the sudden large price decline. I would ask you to think about that for a moment.

Any investor or analyst of any world commodity must be able to account for and rationalize a 9% price move in less than two trading days; otherwise he or she couldn't possibly understand the dynamics of that commodity. Yet I received virtually no requests to explain the price drop. The facts are clear - the price of silver did decline by nearly 9% and there were no actual supply/demand developments to explain the decline. Therefore, something else had to account for the sudden silver price decline and judging by the lack of readers questioning why, the actual cause of the decline must have been fairly widely known.

Of course, the only possible explanation for what would normally be a massive price drop in any world commodity is trading activity on the COMEX. While this is nothing new to subscribers, my sense is that COMEX price rigging has reached such an incredibly dominant influence over the price of silver (and other commodities, like gold and copper) that it is more widely understood than ever before. I believe it has gotten to the point where it is impossible to even attempt to offer an alternative plausible explanation for large price moves in silver and other metals apart from COMEX trading without looking like a fool. I also believe that the growing and widespread recognition that prices are set on the COMEX greatly undermines the life expectancy of continued future price manipulation.

- Silver analyst Ted Butler, Butler Research, December 17, 2014

 

I must admit that the year is ending sort of up in the air for the precious metals.  As you already know, if it wasn't for the powers-that-be, we'd be looking at precious metal---and all commodity prices---many orders of magnitude higher than they are now.

Someday, as Alan Greenspan has alluded to recently, this will be the outcome.  But when, is the question.  All four precious metals are basically in a structural deficit---and have been for some time, so sooner or later this will manifest itself in the price.  At that moment, it certainly isn't being allowed to show up in the COMEX futures market.

- Ed Steer, Casey Research, December 20, 2014

 

 

  

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Today's Featured Articles

 

The Aden Forecast (How Will 2014 Fare?)

 

Investment Research Dynamics (Can We Believe Anything Coming From The U.S. Government?)

Marco Polo (The Golden Inconstant)

 

Zero Hedge (Conrad Black: The Saudis Fear Western Alliance With Iran; Crashing Oil Is Their Retaliation) (Martin Armstrong Asks "Will They Hang Bankers Again On Wall Street?") (Russia Busts "Gold-Selling" Rumors, Reports It Bought Another 600,000 Ounces Taking Gold Holdings To New Record High) ("Fed To The Rescue" - The Plunge Protection Team Makes The Front Page) ("Oil May Drop To $25 On Chinese Demand Plunge, Supply Glut, Ageing Boomers")(IMF Now Ready To Slam The Door On The U.S. And The Dollar) (This Wasn't Supposed To Happen: 7 In 10 Americans To Save, Spend Gas "Tax Cut" On Bills Not Gifts)

 

Ed Steer (Well, except for the willfully blind, it was another day where gold got hammered back below its 50-day moving average---and the $1,200 spot mark.) 

 

 

 

Sincerely,

 

David Schectman

The Holter Report

Bill Holter

Harry Dent Is Dangerously Delusional!

December 22, 2014

 

Before getting to my main topic, Harry Dent's monetary delusion, we have been barraged with information over the last two weeks.  Normally this time of year we do not see much in the way of news whether it be financial or geopolitical, not so this year!  In just the last two weeks we experienced some very strange combinations of news and actions.  It was just last Monday when I connected many dots for you.   China changed collateral rules, crashing oil has impaired low credit shale debt which is spreading to other high yield credits, Congress snuck $303 trillion worth of derivatives on to taxpayer's shoulders, Russia began testing their alternative SWIFT system and CME/COMEX announced wide collars beginning Dec. 22 for metals trading.

 

Here we are a whopping 5 business days later and a whole new set of data points are available to chew on.  First, the IMF seems to be targeting the dollar in their gun sights.  Will there be a try at supplanting the dollar with SDR's? Another new set of sanctions has been placed on Russia which are a cut and dry declaration of war (Congress).  Also, very quietly two more things happened last week.  The Volcker rules which would have mandated higher capital ratios at banks were postponed, again, why do you suppose this was?  Why can't the U.S. "allow" marking held assets to market?  Why can't we agree to capital ratios similar to those the rest of the world already agreed to ...4 years ago?  Why can't we play the game like the rest of the world wants to?  

 

We also learned Australia would like to have their 80 tons of gold, purportedly held in London, audited.  How odd is this?  Australia does not trust London?  What a turn of events, as I understand it, the Brits look at the Australians as "criminals" based on how (and "who") the country was originally born.  Sorry, but I view this piece of news as quite humorous, were Australia to join other recent European nations and ask for repatriation of their gold ... hilarious would be more like it!  

 

 ...Moving along, I must take Harry "Mr. Deflation" Dent to task regarding his adamant call of $250-$400 gold.  Normally I try not to call names or disparage people for their views but what he is doing is scaring people away from their only avenue of safety.  The only word I can think of which describes him in my mind is "DELUSIONAL".  I would also add "dangerously" before the word delusional because following his advice in my opinion will place you personally in grave danger.  Harry did an interview with Greg Hunter last Tuesday, please watch this from about minutes 7-20.  The first seven minutes I was thinking to myself, "He sounds logical".  Beginning at about the seven minute mark, he totally lost it in the logic department.  Greg asked him about his prediction of gold going to $700 and Harry said yes, "at a minimum," he then went on to forecast $250-$400 as a hard bottom over the next several years because of "deflation".  He contends gold can ONLY do well in an inflationary environment and uses the crash of 2008 as his example when gold went from north of $1,000 down to $690.  I am here to tell you "deflation" is THE BEST environment to hold gold.  The classic example of course being from 1929-1939.  Back then (until 1933), gold and the dollar were interchangeable.  You could go into a bank with dollars and leave with gold or vice versa.  Dollars were simply receipts for gold.  If you recall, gold was actually revalued higher by 69.33% in 1933 after it was "called in" (confiscated).  The public was paid $20.67 per ounce ...and presto, gold was revalued to $35.  So in the greatest "deflation" in U.S. history, gold outperformed dollars and dollars outperformed everything else.  Dollars were considered "as good as gold" until they were devalued, the unequivocal "king" of money was gold, NOT dollars. It is also interesting THE best investment of that time period were mining shares because of the leverage they had to gold itself but is a story for another day.  

 

This is the core flaw (among many) to Harry Dent's logic, he says dollars will "disappear" through defaults and bankruptcies.  Yes, this is correct but these dollars are issued BY a bankrupt entity...!  The dollar is not only no longer a "gold receipt," they are the OPPOSITE of gold.  Gold has value because "it is".  Dollars on the other hand have value because the government says they do, a bankrupt government!  Gold is no one's liability, dollars are the liability of a bankrupt issuer.  I would also like to point out, the U.S. was not "broke" in 1929, we were a surplus nation.  The U.S. carries a habitual trade deficit and has funded debt greater than 100% of GDP, if we were not the issuer of the reserve currency these two facts would have already relegated us to "banana republic" status!  So, two very material facts differ now from the last time we experienced deflation, we were on much more solid footing in both trade and finance ...AND gold was what backed our money and gave it value!

 

Dent also went on to say "Russia and China are dumb money" and they are the only ones buying gold ...everyone else is selling it.  Really?  He is missing a huge point, there is physical gold and then there is paper gold.  No Harry, "everyone else is not selling gold".  The physical market is showing all the signs of being very tight.  GOFO is negative, we see backwardation in Asia and refiners have been running flat out to meet demand.  From what I see at Miles Franklin, we are getting 200 purchases for every sale request.  The only place "selling" is taking place is on the paper exchanges ...where you do not need physical metal in order to sell it, all you need is collateral.  (As a side note, China sold over $100 billion worth of U.S. Treasuries last month)!

 

One huge error Dent is making is not distinguishing between real metal and paper contracts.  He very well may be correct, COMEX gold could possibly go to $250 per ounce ...or even zero for that matter, but, this will be accompanied by the real metal approaching "priceless".  If he is correct about a financial collapse (I believe he is), he is very dangerously (to the public) telling people to sell THE ONLY insurance policy with the ability to actually "pay out" when it will be needed!  How can dollars which are issued by a mathematically bankrupt entity and at the epicenter of the coming leveraged panic become worth more?  History has shown time after time going back to the days of Rome, early China and before, when a government goes too far into debt ...they print or debase their currency in order to make the debt cheaper.  Governments cannot debase gold and gold cannot default, these are two reasons (among others) that gold IS money and why governments detest it.

 

I am sure you have heard the old saying "cash is king" when it comes to financial collapses, this is very true.  The important thing for you to understand is what "cash" actually is.  Cash is money, "money" which cannot default.  Cash during normal times (when confidence is high) can include "currency" but we are not talking about normal times here.  We are talking about a global margin call leading to a global bankruptcy... and in it, many currencies will also "go broke".  

 

For further proof of Harry Dent's delusion, he suggests people move money balances to brokers and out of the banks.  Really?  Do you really believe the brokers will stay open if the banks are closed?  I haven't checked recently but SIPC had even less reserves to coverage than FDIC ...and they do not have a direct line of funding to the Treasury.  Next, what sort of "cash" investments is Harry Dent talking about?  Money markets?  Commercial paper?  Unless he is speaking about T-bills and only direct obligations of the Treasury he is pointing investors in front of another oncoming train!  

 

I for one just do not get it.  Harry Dent says "history proves that gold does poorly during deflation" but only uses recent history as proof.  He says "look at all the panics we've been through and yet the dollar always went higher," I would suggest that "control" was not lost ...which it certainly will during a global and systemic margin call!  All I can say is history is full of examples where gold was revalued higher during deflationary panics ...what is different now is for the first time in history, no money issued by any government on the planet has metals backing it.  This has been the case since 1971 and as I said, the very first time in human history where no currency, anywhere, had gold backing.  

 

Let me finish with this, it is clear to me Harry Dent does not understand what "money" really is.  He is confusing money and currency which many times do act similarly but NOT during times where confidence breaks.  He is also very dangerously suggesting to move to brokers in lieu of banks with cash balances, does he not believe broker after broker will fail in the scenario he is suggesting?  He says he uses Scott Trade as his broker, does he really believe they will stay solvent ALONG with all of his "cash" investments?  Does he not understand that when you deposit money with a bank or broker you will have risk the "end borrower" will default?  Even if he is correct and the dollar does strengthen versus foreign currencies (I do not believe so), this still does not guarantee the "borrower of your funds" will be able to pay.  Does he not understand what "money markets" actually are and what they are comprised of?  Please remember this and never forget it, when you "deposit" into a bank or broker and place it into a CD or a money market, you ARE LENDING the money to "someone".  If you put it into Treasuries, you are lending to the government.  If you hold gold in your hand, it is yours.  It does not matter who in the world goes broke which includes individuals, corporations or governments.  Gold has value because it is no one else's liability and cannot default.  It is THIS very truth as the reason why gold does better than all other currencies during a time of default and currency crisis.  Under Harry Dent's scenario of deflation, confidence will be at its lowest level.  Capital will seek the safest money available in stampede fashion.  Dollars have absolutely no traits of being money, they are a currency and a failing one at that!

 

So, that about does it for news from me until after the first of the year.  Next week I plan to pen a piece which so many of you have asked me for.  I will try to write a fictional account of "The Day After" and what types of hardships and events I believe might happen after the markets seize up.  If nothing else, it will be entertaining to me while writing it.  Hopefully for you the reader, something, anything you may have forgotten in your preparations may get jarred loose in your mind and acted on.  By no means will this missive be all encompassing as a full book is necessary but hopefully you get more out of it than pure fantasy!  

 

Wishing you all the best in this coming year!

 

 

Andy Hoffman's Daily Thoughts

853 Points of Infamy

December 19, 2014

 

First off, let me re-emphasize the most valuable piece of financial information imaginable - which I have discussed ad nauseum for the past decade. Which is in executing your personal due diligence process, to make sure your information sources include the handful of "good, smart people" that both know what they're talking about, and have your best interests at heart. Here at the Miles Franklin Blog, I have found a "home away from home," as for the first time in my 25-year career, I truly believe in what I do, with every ounce of my being. David Schectman, Bill Holter and our entire sales and management team, too, believe in precious metals with all of their hearts - and not just their ownership, but the service we provide to people entrusting their life's savings with our products.

 

Of course, the line between "good" and "bad" information sources is often blurred, which is why one should be particularly diligent in their "exploration process" - creating a "mosaic" of sorts, in judging how much credibility to give various media. A perfect example is Zero Hedge, which unequivocally gives the best real-time "news" of any financial media website. However, at times - rare as they may be - it publishes items which make me roll my eyes in disbelief. To wit, Wednesday's Zero Hedge article titled "No More "Considerable Time" - Meet the New, "Patient" Fed"; which I decidedly refuted in yesterday's MUST LISTEN Audioblog, detailing how not only did the Fed keep "considerable time" in Wednesday's policy statement, but verbatim to its October statement.

 

To that end, Zero Hedge wasn't "wrong" to write of "rumors floating around Wall Street" that Russia was selling gold in response to its currency crisis. Moreover, it's not like such rumors, even in the Cartel-dominated paper market could possibly have a material price impact; let alone, that if Russia in fact sold gold, they would do so directly to the Chinese, and NOT in "Cartel fashion" by dumping it at on the futures market.

 

First of all, to promulgate anything "Wall Street trading desks" say is sickening enough, given they are not only the mortal enemy of truth-seeking organizations like Zero Hedge, but the world's biggest liars - particularly regarding their "mortal enemies," gold and silver.

 

As to this specific rumor, it was particularly ridiculous given there is not a chance a private organization would know if Russia's Central bank was selling gold; let alone, a Western investment bank that represents all Vladimir Putin despises. Better yet, even Zero Hedge admitted the rumor emanated from France's Societe Generale, which is heavily exposed to Russian loans. In other words, SocGen is heavily incented to lie about Russian official actions, in hopes they can stabilize contagion fears.

 

Thus, when Russia came out this morning to say it not only didn't sell gold, but added to its record holdings in November, all I could say was "duh"; and, as always, warn all who would listen to be careful where they get information. In fact, I'd bet that when December's numbers come in, we'll see Russia dramatically increased its gold reserves further - knowing full well that only precious metals can truly protect them from the inevitable collapse of all fiat currencies - including their own.

 

In the Audioblog, titled "Laughable FOMC statement sets New Central Bank Credibility Low, Until the SNB One Ups it," we give a play by play of the past three days' news and "market action"; in my view, the most egregious cumulative propaganda and market manipulation salvo I have witnessed - ironically, surpassing a "record" achieved only last month, when TPTB utilized every illegal, immoral and unethical means imaginable to prevent the "Save our Swiss Gold" referendum from passing.

 

However, even the "market action" around the Swiss referendum pales in comparison to Wednesday's FOMC statement. Frankly, even I was amazed to see just how desperate they were to "prove a point" with this statement; and by a "point," I don't mean any actual policy change, but to make sure markets "painted the picture" they want painted.   With the efforts they exerted to make sure stocks and the dollar surged; the 10-year Treasury yield returned to the 2.2% "line in the sand" I wrote of two months ago; and, of course, capping precious metals, you'd think the fate of the fiat currency regime itself was at stake!

 

Sadly, this couldn't be truer - although the vast majority of the world's political and financial "elite" don't have the slightest clue. Fortunately, Miles Franklin Blog readers are well aware of this inevitability; and hopefully, the desperation of the past two months' manipulations helps you realize the aforementioned inevitability may be rapidly morphing into imminence. Heck, just watching my screen this morning - when, yet again, countless currencies are dramatically declining, it couldn't be clearer the "single most Precious Metals bullish factor imaginable" is playing out, NOW. To wit, following the Russian Ruble's collapse earlier this week, the Belarus Ruble and Nigerian Naira currencies have been halted, amidst their own horrific collapses. In the case of the Naira, which like the Ruble, is essentially a "petro-currency," the 173 million people that use it have been instantly impoverished - in large part due to the Federal Reserve itself; which not only catalyzed the oil price inflation that created massive excess capacity the world round, but in abusing its "reserve currency status," has caused a massive "liquidity vacuum" that has terrified capital fleeing anything not nailed down for the perceived "safety" of the dollar. It doesn't take a rocket scientist to predict how this will end for the "almighty dollar" - with the only remaining questions, being when and how.

 

As for the "recovering" U.S., the fact that the Fed, despite its relentless propaganda, did NOT take "considerable time" out of its policy statement screams loudly and poignantly of how its governors truly think. Not to mention, their average expectation for the Fed Funds rate at the end of 2016, in just the seven weeks since the last FOMC Meeting, plunged from 2.9% to 2.5%. And with good reason, as first on Tuesday - when the PMI Manufacturing report was released; and then yesterday, when the PMI Services report came out, even the government's "island of lies" data reporting couldn't hide the freefall America's economy is in. Which again, it doesn't take a rocket scientist to understand, given the entire world is amidst a rapidly expanding recession; by our estimation, the low global economic point of our lifetimes.

  

  

 

Thus, to watch precious metals so blatantly capped whilst the "Dow Jones Propaganda Average" was goosed by an unbelievable "853 points of infamy" between Tuesday morning's lows, and this morning's (Friday's) highs was truly galling - particularly when viewing how other markets performed during this period. To wit, when the markets were on the verge of collapse Tuesday morning, the WTI oil price was around its five-year low of $54/bbl.; which, what do you know, was exactly where oil closed Thursday night, with the Dow nearly 800 points higher. As for the CRB Commodity Index itself, it was 1.5% lower Thursday afternoon than Tuesday morning, led lower by base metals such as copper. And thus, the fact that gold and silver, which rocketed higher Tuesday morning due to their timeless safe haven status, were 2% and 5%, lower Thursday afternoon, amidst a veritable blizzard of PM-bullish news, demonstrates just how terrified TPTB were of a spreading financial contagion. Clearly, they had hoped to generate "confidence" with a heavily orchestrated incrementally "hawkish" FOMC statement. However, given the aforementioned "extraneous events" - from collapsing commodities and currencies; to the alarming result of the Greek snap elections; to horrible economic news in the U.S., Japan and Europe; and oh yeah, the "unexpected" Swiss Bank NIRP announcement; TPTB had to settle for the next best thing - i.e., one of history's most blatant stock goosings.

  

  

 

Never in history has such manipulation been attempted, and reading today that even in Europe - which from a financial engineering standpoint is light years behind America's expert riggers - 76% of all equity trading is of the high frequency variety, I can only gasp in considering how horrible the carnage will be when this historic House of Cards implodes. Heck, today alone, amidst incredibly illiquid pre-holiday trading conditions, the U.S. "e-mini" S&P futures contract traded a record volume at the open, whilst the staid old USA Today actually referred to the "Plunge Protection Team." Thus, it couldn't be more obvious that the "chasm of destruction" between economic reality and rigged financial markets has never been wider, or that the "game" is in its final blow-off stage.

 

As David Stockman eloquently put it, Central banks are now "uncorking the delirium phase" of market rigging; and in our view, this week's "853 points of infamy" may well be the denouement of such lunacy. Meanwhile, with gold trading at - I kid you not - $1,199/oz., after having been capped an additional three times at the Cartel's current "line in the sand" at the "key round number" of $1,200/oz., readers have the ability to buy history's most timeless safe haven assets for "pennies on the dollar."

 

PROTECT YOURSELF, and do it NOW!

 

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.

 

 

 

Interview with Caravan to Midnight Show

Andy Hoffman on Caravan to Midnight Show - December 19, 2014

December 22, 2014

 

Andy Hoffman talks to John Wells at the Caravan to Midnight Show (2:08:00) to discuss global economies are collapsing, oil prices declining, the Russian Ruble, gold and silver.  To listen to the interview, please click on link below.

 

Featured Articles

HOW WILL 2014 FARE? - adenforecast.com

 

We're just weeks away from year-end. And if gold can now stay above $1203, it will close the year higher than it closed the year in 2013.

Last year was clearly the worst and only down year for gold since the year 2000 when it was down 5.5%. This means, in spite of all the fluctuations and downward pressure since the highs of last March, gold may close up, or near unchanged for this year.

Gold lost almost 29% in 2013. Let's now see how this year closes out.

We can't rule out a steeper leg down, similar to 2013, but if gold continues to base above the lows and the indicator breaks up, then Nov 4 will likely end up being the low for this move. And it'll be great for the yearly gold action.

Keep an eye on $1140. As long as gold stays above this level, it will continue to base. If $1140 is clearly broken, however, we could see $1100 and possibly even $1000 as a worst-case scenario for a deeper leg down target. On the upside, a sustained rise above $1215 will confirm that an A rise is starting. If gold can then rise and stay above $1270, it'll be very positive and above $1325 would be super bullish.

Meanwhile, long-term investors should slowly accumulate physical gold.

Silver

Overall, silver is in a generally good buying area for the big picture, and while it could stay depressed a while longer, let's keep an eye on the key numbers.

Silver could bounce up to the $19.50 level, but the trend won't be changing to the upside until silver rises and stays above that level.

On the downside, silver, like gold, will continue to form a small bottom as long as it stays above its Nov lows at $15.

To read the full article, please subscribe to The Aden Forecast.

 

______________________ 

 

Can We Believe Anything Coming From The U.S. Government? - investmentresearchdynamics.com

December 20, 2014Financial Markets, Gold, Market Manipulation, U.S. EconomyBloomberg, CNBC, CNN, Crameradmin

 

It's gotten to the point at which, if Obama got on TV. and stated that the sun came up in the east today, I would have to search the Internet to make sure there was not any evidence that it didn't. But of course, the majority of the U.S. population is now nothing more than what I'll call "television zombies." The Government is well aware that if they plant anything on CNN and Fox News or in the NY Times and Washington Post that most Americans will believe it.

On Monday this week, reports started surfacing that Russia was selling gold. First Soc Gen and then JP Morgan. The reports cited "sources in Russia." When I read these reports I almost fell of my chair with laughter. This is one of those examples in which American TV. zombies will believe anything. This is a "tell 'em 2 plus 2 equals 1 and I bet they swallow it hook, line and sinker" report.

To begin with, Russia has no need to sell gold. In fact, Russia added 150 tonnes of gold to its Central Bank holdings in August, September and October. It didn't make any sense that Russia would then turn around and sell gold. Why? Russia runs a current account surplus - LINK. It has cash on its balance sheet. Something the U.S. can only dream about, as the U.S. Government has to issue debt every hour to fund itself. The last time the U.S. sniffed a positive balance of payments was in the 1980's.

Second, Russia just got through paying down a big chunk of sovereign debt during Q3. Its current Debt/GDP ratio is 10%. The U.S. Treasury Debt to GDP is over 100%. Note: this does not include direct obligations like the debt of Fannie Mae and Freddie Mac now guaranteed by the U.S. Government. The last time the U.S. had Debt/GDP of 10? I don't know, the Fed records only go back 1966 and the lowest that ratio got between then and now was about 30% - LINK.

The story planted in the media by the U.S. elitists just did not add up. And then Russia released its November Central Bank balance sheet, which revealed that it had bought another 600,000 ozs/17 tonnes of gold in November (source: goldchartsrus.com):

  

  

 

Well, so much for the lie that Russia was selling gold to raise capital. In fact, if Russia had sourced the gold it bought in November from the Comex - assuming the Comex reports, which are sourced from banks which lie, are valid - the purchase would have wiped out 78% of the gold which is listed as being available for delivery. Russia did dump $10 billion in Treasuries in October. Yes, Russia is selling U.S. Government bonds, not gold.

As the U.S. Government and Wall Street become increasingly desperate to hold onto their power - power that enables them to suck all the wealth out of our system - their lies and propaganda become increasingly blatant and absurd. Of course, they can get away with it because they know that American zombies will believe it as long as CNN, Fox, Bloomberg or CNBC reported it.

 

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The Golden Inconstant - freemarketcafe.com

By Marco Polo On December 20, 2014

 

Over the long run, there is plenty of evidence for an idea called the "golden constant." This is the concept that over the centuries, an ounce of gold has preserved more or less the same value when exchanged for goods such as food and clothing. In other words, the gold price rises along with price inflation. But in the short run, prices can oscillate significantly around the longer-term trend. The question on every investor's mind, therefore...

 

Is now a good time to be holding gold?

 

The price of gold has been up and down this year. First, it rose 14.5% to $1,382 per troy ounce on March 16. I noted at that time that the climb looked too fast and the price could fall again.

 

Soon afterward, it did just that, eventually reaching a new low of $1,191 per troy ounce on October 6, down 1.3% since the start of the year. At the time of writing, it's trading right around the $1,200 mark, more or less flat for the year.

 

According to a model developed by Atlas Pulse - which compares the price trend of gold with a basket of wages, food, housing and commodities since 1970 - gold "should" be trading around $1,211 per troy ounce. This assumes that the golden constant has been working since around the time the U.S. dollar was finally decoupled from physical gold (in 1971).

 

(Atlas Pulse is a service that does an excellent job of analyzing both old-school precious metals and ultra-new-school crypto currencies such as Bitcoin.)

 

This suggests that gold is trading more or less at fair value, having been overvalued in recent years. It's now back at the trend line, although could still fall further.

 

But what of the reasons for owning gold itself? Is the price going to go up or down?

 

Much of the analysis that's published focuses on short-term investor behavior, in the USA or elsewhere. But according to the World Gold Council, 58% of gold demand is driven by uses in jewelry and electronics.

 

This means that whatever is happening in short-term investment markets, it's physical demand that is the real driver of overall demand. And how that is met by new supply is what will determine the gold price.

 

It's also interesting to note here that the average all-in production cost for gold is $1,350 per troy ounce, according to GFMS-Thomson Reuters. This means that, on average, gold mining is a loss-making business at the current price of $1,229 per troy ounce.

 

The implication is that mined production is likely to fall if the price doesn't rise soon. Then, as supply falls, the price will be driven up by demand. This should result in a higher price than today's level, provided demand holds up.

 

So who is driving demand? Mainly people in the developing countries, especially the two giant gold-buying nations of China and India. The World Gold Council reports that Chinese consumers and investors bought 1,200 tonnes of gold last year. That's 20% more than the total holdings (note: not sales or purchases) of U.S.-listed gold ETFs.

 

So the big question is this: Will demand continue to increase in countries like China and India?

 

Most likely the answer is yes, just so long as per capita incomes keep rising. Wealthier people buy more gold, especially in countries that have a deep cultural affinity for it.

 

The World Gold Council recently produced two charts that illustrate this relationship well. They compare gold expenditure per capita of population to gross national income per capita. In simple terms, gross national income can be thought of as the total income generated during a year by residents of a given country, whether that income is generated at home or abroad.

 

First, here's the chart for China, in renminbi yuan:

 

Free Market Cafe

And here's the same for India, in rupees:

 

Free Market Cafe

  

These show a clear link between growing prosperity and growing levels of gold purchases in both these giant countries.

 

Ultimately, you have to ask yourself one question when it comes to knowing if the gold price will rise in coming years and decades: Will China, India and other developing countries become progressively richer?

 

We believe firmly that they will. For that reason, we think gold makes an excellent long-term investment as part of an overall portfolio.

 

Gold prices may be inconstant and fluctuating in the short run, but gold isn't going anywhere. Except perhaps onto the wrists, necks and ears, and into the vaults of hundreds of millions of people in China and India.

 

Cheers,

 

Marco Polo

Founder, OfWealth

 

Submitted by Tyler Durden on 12/21/2014 21:45 -0500

 

"The oil-price weapon, in the face of the terminal enfeeblement of the Obama administration, is the last recourse before the Saudis and Turks, whatever their autocues of racist rhetoric, invite Israel to smash the Iranian nuclear program from the air."

Continue reading on Zero Hedge.com.

 

***

 

Martin Armstrong Asks "Will They Hang Bankers Again On Wall Street?" - www.zerohedge.com

Submitted by Tyler Durden

 

What took place in Washington over the past two weeks with the repeal of Dodd Frank and then the effective repeal of the Volcker Rule sounds strikingly familiar to at least three previous periods in American History that led to total disaster. What the bankers just pulled off will lead to their demise.  They have played with a historical fire that may end in actual bloodshed. It would not be the first time they have been dragged from their palaces and hanged on the streets. That is what the term "BLACK FRIDAY" really stood for - the day a mob hanged bankers on Wall Street.

 

Continue reading on Zero Hedge.com.

 

***

 

Russia Busts "Gold-Selling" Rumors, Reports It Bought Another 600,000 Ounces Taking Gold Holdings To New Record High - www.zerohedge.com

Submitted by Tyler Durden on 12/19/2014 09:40 -0500

 

Yesterday, when we reported the latest rumor of Russian gold selling, this time out of SocGen, we said that "it should be noted that SocGen and its "sources" have a conflict: in an indirect way, none other than SocGen is suddenly very interested in Russia stabilizing its economy because as we wrote before, "Russia Contagion Spreads To European Banks : French SocGen, Austrian Raiffeisen Plummet" which also sent SocGen's default risk higher in recent days. So if all it will take to stabilize the RUB sell off, reduce fears of Russian contagion, and halt the selloff of SocGen stocks is a "source" reporting what may or may not be the case, so be it." Moments ago, as if to sway further speculation that Russia is indeed converting hard money earned from real resources for fiat paper, the Russian monetary authority made it quite clear, that at least in November, Russia not only did not sell any gold, but in fact bought another 600K ounces in the month of November.

 

Continue reading on Zero Hedge.com.

 

***

 

"Fed To The Rescue" - The Plunge Protection Team Makes The Front Page - www.zerohedge.com

Submitted by Tyler Durden on 12/19/2014 10:36 -0500

 

In October it was Jim Bullard's "QE4" hint that sent the stock market on an all-time record-breaking run of gains, which no lesser institution than the central banker's central bank - The BIS - lamented "the markets' buoyancy hinges on central banks' every word and deed." And then just two days ago, The Fed did it again: by the mere appearance of grandma Yellen (and the words "patient" and "considerable"), US stocks explode to their greatest back-to-back gains in almost six years. So it is perhaps ironic that no more mainstream media publication than USA Today has finally realized, there are no fundamentals anymore...

 

Continue reading on Zero Hedge.com.

 

***

 

 

"Oil May Drop To $25 On Chinese Demand Plunge, Supply Glut, Ageing Boomers"- www.zerohedge.com

Submitted by Tyler Durden on 12/17/2014 10:45 -0500

 

Most commentators remain in a state of denial about the enormity of the price fall underway. Some, failing to understand the powerful forces now unleashed, even believe prices may quickly recover. Our view is that oil prices are likely to continue falling to $50/bbl. and probably lower in H1 2015, in the absence of OPEC cutbacks or other supply disruption. Critically, China's slowdown under President Xi's New Normal economic policy means its demand growth will be a fraction of that seen in the past.

 

This will create a demand shock equivalent to the supply shock seen in 1973 during the Arab oil boycott. Today's ageing Boomers mean that demand is weakening at a time when the world faces an energy supply glut. This will effectively reverse the 1973 position and lead to the arrival of a deflationary mindset....

 

Prices have so far fallen $40/bbl. from $105/bbl. since we first argued in mid-August that a Great Unwinding was now underway. And there have been no production cutbacks around the world in response, or sudden jumps in demand. So prices may well need to fall the same amount again.

 

Continue reading on Zero Hedge.com.

 

***

 

IMF Now Ready To Slam The Door On The U.S. And The Dollar - www.zerohedge.com

Submitted by Tyler Durden on 12/17/2014 22:25 -0500

 

This is it, folks; this is the endgame right in front of our faces. The year of 2014 is the new 2007, with all the negative potential but 100 times more explosive going into 2015. Our nation has wallowed in slowly degrading financial conditions for years, hidden by fake economic statistics and manipulated stock prices. All of it has been a prelude to a much more frenetic and shocking event. We expect a hailstorm of geopolitical crises over the next year to provide cover for the shift away from the dollar.

Ultimately, the death of the dollar will be hailed in the mainstream as a "good and necessary thing." They will call it "karma." They will call it "progress." They will even call it "decentralization" and a success for the free market. But it will not feel like a positive development for the American public, who will suffer greatly as the dollar crumbles.

Continue reading on Zero Hedge.com.

***

 

This Wasn't Supposed To Happen: 7 In 10 Americans To Save, Spend Gas "Tax Cut" On Bills Not Gifts - www.zerohedge.com

Submitted by Tyler Durden on 12/17/2014 18:35 -0500

 

The lower-gas-price-tax-cut is "unequivocally good" meme is becoming more and more full of holes by the day. All that extra disposable income means more iPhones, more dining-out, and more GDP... right? Wrong! As CBS reports, a new poll finds 73% of Americans will not use any extra cash from lower gas prices to buy additional gifts. What is even worse for America's credit-growth-dependent economy - 69% of Americans will use this extra disposable income to pay down outstanding bills and expenses. The final nail in the coffin of exuberance, two-thirds of Americans say they see no benefits from lower gas prices. But apart from that... keep the narrative going...

Continue reading on Zero Hedge.com.

 

Is Russia Really On the Ropes-Could It Sell Its Gold? - www.caseyresearch.com

By Ed Steer

December 19, 2014

 

The Wrap

Well, except for the willfully blind, it was another day where gold got hammered back below its 50-day moving average---and the $1,200 spot mark.  Silver's sojourn above the $16 price mark was also short lived courtesy of JPMorgan et al.  The same can be said for platinum.

Nothing has changed, as 'da boyz' still have a headlock on the precious metals despite world economic, financial and monetary events unfolding that would normally have it over the moon by now.  But that's why these not-for-profit sellers are there, aren't they?

 

Casey Research

Casey Research

I have no idea how long this current situation in the precious metals is going to continue, or rather, be allowed to continue.  I have no special clairvoyant powers that allow me to see future events---and I'll happily leave those powers in the hands of the 'lunatic fringe' and their 'excessive hyperbole'.  The fact is that nobody knows, except maybe the powers-that-be, and they're not about to tell us.  But the day that it does come to an end, we won't---as Ted Butler has so eloquently put it---have to ask: "Is this it?" --- as it will be self-evident.

I mentioned the excellent precious metal share price action on Wednesday---and note once again that these particular equities put on a similar show yesterday.  Whether or not it was insiders loading up on cheap shares, or just a matter of them being dragged along for the ride on this melt-up in the general equity markets, because at these price levels I'm still not breaking out the party favors---or prepared to read anything to it.

One thing that I do know for sure, is that the precious metal mining companies will never lift a finger in defense of their shareholders or their industry.  However, I do acknowledge the comments on this issue by Keith Neumeyer over at First Majestic Silver from some months ago, but it's all been talk so far---and no action that I can see. 

Silver analyst Ted Butler, a world authority on such matters, has volunteered to help him wordsmith a letter to the CFTC that would really put the fox amongst the chickens.  But, as of yesterday, Ted's phone hasn't rung---and there's nothing in his in-box.

 

Continue reading on Casey Research.com.

 

 

Market Recap

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