Gold & Precious Metals

Six years after a recession that rocked the global financial system, there is no shortage of excitement. Especially during a season that is known as the “doldrums of summer,” it has been a week that has propelled equity markets to record levels. On Thursday of this past week, the NASDAQ touched levels not seen for the last twelve years, and the Standard and Poor’s 500 broke and closed above the physiological level of 1,700 for the first time in history.  The FOMC released their most recent policy announcement on Wednesday, and continued to distinguish for investors that tapering QE is independent of tightening credit conditions by raising interest rates. The other big news stories were the US Commerce Department’s initial estimates for second quarter GDP, followed by Weekly Jobless Claims report where the number of American’s filing for unemployment benefits drop to the lowest level in 5 and ½ years. And Friday, the marquee event is the always market consuming monthly labour survey or monthly unemployment report.

            So as an investor – is it time to be cautious?

            Let’s start with the FOMC. They really have no choice but to start tapering their asset purchases, and frankly this point has not been made clear enough. Currently, their monthly purchases of 85 billion break down between mortgage securities and long term treasuries in the amounts of 40 and 45 billion respectively. Annualized, that is 540 billion in treasury purchases. Many economists have estimated that the Fed is currently purchasing anywhere between 60 and 75 percent of the issued treasuries from auction in 2012. Moreover, as the Congressional Budget Office estimates the US Treasury to run smaller deficits in the upcoming years, the market does not require this much support. More to this though is that it exemplifies the role to which the US Fed plays in the treasuries market; Ben Bernanke and his board of governors have to be nervous about the long term consequences of this program, and thus will be looking to draw it down.

            According to the Commerce Department though, the US economy looks to be regaining its footing. Quarterly GDP reported on Wednesday of this week came in seven tenth of a percent greater than anticipated. This compensated for the miss in the first quarter of 2013, but the caveat is initial estimates for quarterly GDP have been revised lower on the last four occasions. It the reason the markets shrugged off the reading at first glance as it is still not all that convincing.  The other reason for caution, is historically nominal economic growth below 3% has preceded negative real growth and recession. Despite modest upticks in the Fed’s medium and long term outlooks for inflation, currently inflation is practically non-existent; therefore, the economy is more likely to underperform in months ahead.

            Good news can be taken from Thursdays jobless claims though as the fewest number of Americans filed for unemployment benefits in over 5 years, and this is a piece of the data that continues to illustrate the merely modest improvements being made in the labour market. And that is why Friday’s July survey becomes all that important. More than the jobless rate, the participation rate will illustrate whether discouraged workers are re-entering the labour force, and as well whether or not the private sector can continue to be the engine of job creation.

            This action packed week of what is supposed to be the summer slowdown will set the stage for financial markets going into fall. No question the debate around the Fed’s taper schedule will grow louder and louder, but as an investor the nominal amounts of their bond purchases is of miniscule significance. What is more important is this labour market needs to see gains in participation and quality full time jobs, and this economy requires enough steam to escape a period of disinflation. If not, don’t worry about the doldrums of summer; worry about the doldrums of the United States.

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On ‘Keiser Report,’ bullion trader Maguire describes run on the London gold banks

Interviewed yesterday by Max Keiser on the “Keiser Report” on the Russia TV television network, London bullion trader and silver market rigging whistleblower Andrew Maguire said there is a run on the London bullion banks, that the Federal Reserve’s big dumping of paper gold in April bought a little time for the banks but only increased the offtake of real metal from the grossly overleveraged fractional-reserve gold banking system, that the Bank of England is advancing metal into the London market every day to avert defaults, that the United Kingdom’s gold sales begun in 1999 were undertaken to rescue gold short Goldman Sachs, and that the Western gold banking system is now in the same short squeeze that threatened it 14 years ago. Yesterday’s “Keiser Report” is posted at YouTube and the interview with Maguire is about 13 minutes long and begins at the 13-minute mark here:

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Gold prices were higher in European trade following Wednesday’s accommodative statement from the Federal Reserve and are set to start North American dealings on firmer footing.

At 7:44 a.m. EDT most-active December gold futures on the Comex were up $11.50 an ounce at $1,324.50. September silver rose 12.7 cents to $19.755. Nymex September palladium rose $5.45 to $731.80, and October platinum gained $11.10 to $1,440.40.

The strength in precious metals prices comes as the markets rebounded from weakness seen on Wednesday. Market participants were apparently soothed by the statement from the Federal Open Market Committee, analysts said, which came out after the metals ended their day session.

“We don’t have to look any further than the Fed’s comments from last night. On balance they were helpful to people who are hoping QE (quantitative easing) doesn’t end soon. The Fed said there are downside risks to the economy, inflation is too low, the risk of deflation is there, mortgage rates are rising,” said Robin Bhar, head of metals research at Societe Generale.

….read more HERE

Rick Rule On Gold & Resources: “The Stage Is Set For An Absolutely Dramatic Recovery”

Rick-Rule1I had the opportunity this week to reconnect with legendary resource financier and investor, Rick Rule, Chairman of Sprott US Holdings.

It was a fascinating conversation as Rick spoke to the characteristics of market capitulations, of which set the stage, “for absolutely dramatic recoveries”. Rick added that it’s the duty of honest investors to“reorganize their portfolio’s at the bottom”, to ensure they are exposed to the best names in the business, ahead of the inevitable recovery.

Speaking to the capitulation which he’s seen only a few times in his career, Rick noted….

…..continue reading HERE

Gold, silver & Newton’s Third Law

Paper Gold will soon be priced differently from Physical Gold


Gold, silver & Newton’s Third Law

In the last couple of months we have worked hard to study the gold market and illustrate to readers all of the different parts that make it up. The overriding conclusion is that demand for paper gold and demand for physical gold are two very different phenomena and we believe soon, they will no longer be priced under the same umbrella.

When will this be? Who knows, says Michael Noonan, author of today’s Best of the Web, but should it make any difference to when you decide to buy gold bullion or silver? The futures market, which, for so long as driven the gold price appears to be ‘fraying at the edges’ meaning that the number of chances of getting gold and silver whilst they are so low, are falling each month.

Our clarion call is for the physical market to soon take over the actual price for buying and selling. When, we do not know? Timing is now less critical than actual possession, from this point forward.

The probability of a new low, in futures, may be 50-50. It was much higher a month ago. The odds of successfully picking a bottom are remote. Not to pick on Richard Dennis, but he is a poster boy for losing big time when he tried to pick a bottom in sugar, to the extent of decimating one or a few of his funds. How hard could it have been to lose so much money buying sugar when it was under 5 cents, at the time?

The point is, never think you know more about the market than the market itself. It is for that reason we always say to follow the market’s lead. Too many try to get ahead of it, speculating that it will catch up to one’s brilliant “market timing.” Margin departments are usually the first ones to let the ego-driven speculators know that their [questionable] prescience has gotten a little more expensive, in the process.

The odds of being able to buy physical gold and silver, at current levels, diminish with each passing month. In terms of pricing for buying physical precious metals, [PMs], we are more than likely looking at the lows. The timing for buying and holding as much gold and silver as you can will not be much better than at current prices for a few generations. If anyone wants to pick a bottom in physical gold and silver, the odds are against them.

If silver were to go to $140 the ounce, will it matter if you paid $20 or $24? Same for gold.

Here is how we see it.

If there is one law that is not on any known government’s books, but one that none of them can avoid, it is Newton’s Third Law of Motion: To every action there is always an equal and opposite reaction. All government, Keynesian, and central planner idiots abuse this law profusely, and at the expense of the masses, throughout history. Every once and awhile, it catches up to them, and we stand fortunate enough to be the beneficiaries for decades suppressed prices.

Decades, we say, and not just since the 2011 highs. The New World Order, [NWO] has had marching orders for their central bankers to keep gold prices low, especially since the United States was placed into their receivership hands by Socialist Franklin Delano Roosevelt, in 1933. Price has been steadily rising, ever since, with a few upside bursts that the NWO has tried to contain. That is about to come to an end.

The fiat game has run its course. We also said there is no evidence of a change in trend. That was last week. This week is different.

JPMorgan has been the recognized culprit for suppressing the paper market by naked shorting by the tens of thousands of contracts. It does not matter if others were acting in concert, the intervention was intentional: Scare everyone out of the gold and silver market. It worked, in a small part, pretty much destroying the futures market, and it failed on a grand scale by attracting world-wide pent-up demand for bargain prices of the physical metals. Unprecedented demand!

The natural law of supply and demand has been unnaturally distorted, and the fiat buzzards are about to have their paper asses handed back to them, with their heads still up there. The final push to keep PM prices artificially low has created such a tightly coiled spring that once the pressure lets up, or is forced up, the reaction is going to push gold and silver to levels unknown that will be equal and opposite to the misplaced energy spent keeping them down.

….read page 2 HERE