With no meaningful Government and industry association economic reports due out, the Federal Reserve good cop/bad cop comedy routine will be in full force today. Three regional Federal Reserve Bank presidents will be out today making their empty rhetorical speeches either in favor or against reducing QE. But all three represent nothing more than a modified Abbot and Costello slap-stick comedy routine.
The EU agreed new rules yesterday for bank bailouts or “bail-ins.”
The new system will take effect from 2016 but emergency resolutions can be brought forward in the event of banks failing in the interim period. The “bail-in” will require that shareholders, bondholders and importantly now depositors will all suffer ‘haircuts’ or be burnt if a financial institution is in trouble.
The European parliament confirmed in a statement overnight that depositors with more than 100,000 euros ($137,000) would be bailed in after shareholders and bondholders. It is important to note that the 100,000 figure is an arbitrary figure and there is a possibility that this figure could be reduced by an insolvent government faced with an imploding banking system.
What happens when the Dollar finally collapses (AS ALL FIAT CURRENCIES DO) including the $100 trillion in paper assets? Where are investors going to store and protect their wealth?
Because the gold and silver market are so small, any move into the precious metals will make their values increase to insane levels.
The world is awash in ENERGY IOU’s masquerading as paper assets. Gold and silver are not Energy IOU’s, as they are bought and paid for ECONOMIC ENERGY. While this may be hard to quantify with data as the future is hard to predict, we can be rest assured that what happens going forward will be directly related to Energy values and physical assets and not paper trading based on Financialization.
Business as usual in the world will be over when the impact of peak energy is finally felt. Well, let me clarify that…. the market is already feeling the pain of peak oil, but due to the Fed and Central Bank monetary printing it is being masked.
What the h*ll happens when interest rates rise? The whole thing blows up in their face.
Silver and Gold will become great stores of value and excellent investments in the future due to Peaking of the Driver of the Economy — ENERGY.
This week the the Hong Kong Census and Statistics Department officially released their trade numbers from October.
Most significant is the amount of gold net exported to the mainland, up 21 tons from 109 tons in September to 130.2 tons in October, + 19 % m/m, +446 % y/y, just shy of the all time record of 130.3 tons in March, reinforcing an upward trend that began in 2011.
Year to date Hong Kong’s net gold export to the mainland stands at 957 tons, a massive 200% increase relative to the same period in 2012.
When QE1 ended there was a substantial stock market correction, and when QE2 ended there was a substantial stock market correction. And if you will remember, the financial markets threw a massive hissy fit a few months ago when Federal Reserve Chairman Ben Bernanke suggested that the Fed may soon start tapering QE3. Clearly Wall Street does not like it when their supply of monetary heroin is interrupted. The Federal Reserve has tricked the American people into supporting quantitative easing by insisting that it is about “stimulating the economy”, but that has turned out to be a massive hoax.
So what is going to happen when the Fed starts pulling back the monetary crack and the bubble bursts?
“If you repeat a lie often enough, people will believe it.” Sadly, that appears to be the approach that the Obama administration and the mainstream media are taking with the U.S. economy. They seem to believe that if they just keep telling the American people over and over that things are getting better, eventually the American people will believe that it is actually true.
There has been absolutely no employment recovery.
The reality of the matter is that we should have seen some sort of an economic recovery by now. Those running our system have literally been mortgaging the future in a desperate attempt to try to pump up our economic numbers. The federal government has been on the greatest debt binge in U.S. history and the Federal Reserve has been printing money like crazed lunatics. All of that “stimulus” should have had some positive short-term effects on the economy.
Sadly, all of those “emergency measures” do not appear to have done much at all.
BOE Says U.S. “Could Do Today” And U.S Authorities Doing Simulation Exercises.
The U.S. already has in place plans for bail-ins in the event of banks failing. Indeed, the U.S. has conducted simulation exercises with the U.K. in recent weeks and will do so again in 2014.
On October 12, Art Murton, the FDIC official in charge of planning for resolutions, and the Bank of England’s Deputy Governor Paul Tucker, both confirmed that the U.S. system is ready to handle a big-bank collapse.
The Bank of England’s Tucker, who has worked with U.S. regulators on the cross-border hurdles to taking down an international firm said that “U.S. authorities could do it today — and I mean today.”
We know you have been to the 4th circle of hell, broken through support there, and kept dropping into the 6th circle. We know that you refer to the mining stock table on your computer as “The Red Sea”. Even self-medicating doesn’t help much, because that bottle of scotch seems comforting at first but then it reminds you that liquor companies are up 41% over the last two years. For that matter, pretty much EVERYTHING is up 41% in the last two years. Dog poop is probably up 41% in the last two years. So I tell you with complete sincerity that you have my deepest sympathies, and I am truly sorry for what you have been through. You deserved better, and instead you got one of the most bizarre devaluations any of us have ever seen.
That said, I want today to discuss a possible scenario that I have considered, and I believe it may be worthwhile for us to think it through. Please understand I am not saying or predicting this is going to happen, only that it is possible and I want to be ready if it does.
The three-part hypothesis of this post is very simple:
1. Miners have been absolutely slaughtered, diverging tremendously from the overall stock market
2. Stocks in general are overbought and may be poised for a significant correction
3. If this happens, it could take miners to truly insane lows. I want to be ready.
The experience of the last five years with huge budget deficits and zero interest rates has shown the Keynesian approach has failed: no one can claim that attempts to revive our animal spirits have succeeded. And a moment’s thought informs us of the illogicality of stimulating consumer demand and ignoring production.
Unfortunately all this spending on intangible animal spirits has been going on since the 1930s, and has resulted in a stifling debt burden for both governments and their private sectors. Instead, inflation of money and bank credit is increasingly seen as the means to postpone a debt reconciliation that can only result in widespread bankruptcies. By following economic policies that ignored the truth of Say’s Law many governments have got themselves and their citizens into a debt trap from which there is no visible escape.
This week has seen a mighty struggle as the bears tried to push the gold price below the $1200 level. However on both occasions the price rallied strongly afterwards.
Both gold and silver paper markets are currently highly vulnerable to a bear squeeze. Silver has the added problem for the shorts that industrial users, who would have budgeted 2013’s cost of silver at over $30 last December have been buying futures to lock in windfall profits. At the same time with the gold price close to production costs, mine managers have sold gold forward into price rallies to avoid operational losses.
A few more trading sessions like this are likely to undermine the confidence that shorting gold is a good substitute for shorting bonds.
JPM wants their gold back before the current fractional reserve bullion banking system breaks, prices skyrocket again and a new global currency regime takes hold.
And now, for the first time ever, they’ve cornered the Comex gold futures market in order to ensure that it happens.
“QE to infinity” is on the way out, and GDI is in. What is GDI?
It’s “gold demand to infinity”.
Inflating serial asset bubbles is no substitute for rising real incomes.
Income for the bottom 90% has been stagnant for forty years, and has declined 7% in real terms since 2000.
This stagnation is not the “new normal”: the new normal is much worse, as labor’s share of the national income has fallen off a cliff.
Why are we stuck with an economy that only generates serial credit/asset bubbles that crash with catastrophic consequences? The answer is actually fairly straightforward. Let’s start with the ideal conditions for an economy that depends on consumer spending.
In this MUST LISTEN interview, Dr. Dave Janda joins the SGTReport to WAKE UP THE MASSES about Obamacare which Dave says is, “a New World Order BOMB designed to destroy our healthcare system.”
An orthopedic surgeon and the host of ‘Operation Freedom’, Dave says, “I’ve read Obamacare several times, and I’m not even sure that Barack Obama has read Obamacare based on the things that come out of his mouth because he is so factually incorrect about the things he says.”
This conversation quickly becomes a CALL TO ACTION for every listener as Dave explains the only way to fix Obamacare: “There’s ONE solution to Obamacare and this is it, Obamacare has to be IMMEDIATELY repealed. Obamacare is about the ultimate control of the people.”
The United States is crumbling from within, engaging in self-destruction. It has been helped, actually intentionally directed by what we call the New World Order, those elitists who control the entire Western banking system. It has been the purpose of the moneychangers to overtake and destroy from within the capitalistic United States. That plan has succeeded. The New World Order has been in direct charge of the United States since 1933, when the US went bankrupt, shutting down the entire banking system and reopening it with the privately owned, [by the elites], Federal Reserve in charge.
The one asset no banker can control or diminish in value is gold and silver. Both metals are the wooden stake in the heart of all fiat. The answer, at least for us, as to why there has been such a disparity between ever-increasing world demand for gold and silver, and ever decreasing price levels for the past few years, is the control which the financial elites exert over all Western governments.
The US is at the end game of its survival. Those who are buying, accumulating, and personally holding physical gold and silver stand the best chance for economic survival when and as the US “dollar” is devalued and the financial system collapses.
Last week’s action in the dollar tells us the market is starting to perceive just how ugly the U.S. economic and financial situation is. No one is talking about the next budget/Treasury debt limit fight, but it’s right around the corner. A lot of players at the dollar “poker table” are folding their cards and chairs and walking away from the game.
The Fed has no hope of reducing QE and the market is perceiving that. That’s why the dollar has sold off hard despite the parade of positive headline economic reports. Under the hood is a different matter. Be careful with your dollar-based assets. The stock market right now is more dangerously over-valued vs. the fundamentals than it was in early 2000. I’m not the only one saying this. Jim Rogers made this statement recently: “Be prepared, be worried, and be careful…this is going to end badly.“
The US Mint shut down production of 2013 Silver Eagles today as SilverDoctors’ readers are likely aware, but the 3 weeks early end to 2013 production failed to prevent an all-time sales record for the popular bullion coin.
Coming in at 42,401,000 oz, the Mint bested the previous annual sales record of 39.8 million oz set in 2011 by over 2.5 million oz, even with production shut down after only 926,000 oz were sold in December.
With nearly all of December’s sales pushed into 2014, don’t be surprised to see a new all-time monthly record set in January, as we project 6-8 million ASEs will be reported sold in January.
We cannot state strongly enough to buy, and personally hold as much silver as you can.
The stage is set. Do not be fooled by the suppressed price of silver.
Common sense says it will not last.
Not only is there a battle going on between the East and West when it comes to increasing physical gold reserves, there’s also a gold production war taking place amongst these same nations.
The four Western gold producers (USA, Australia, Canada and South Africa) have already peaked in gold production while the top Eastern countries (China & Russia) are still in an upward trend.
The gold story will become more interesting in the future when the global financialization of debt with derivatives comes crashing down. Those who hold the most gold at this time, will be in much better shape than those who leased it out for a temporary paper gain.
It took a great deal of effort and several decades, but the Eastern gold producers have beaten their Western competitors by a wide margin.
Bearing in mind Veneroso’s conclusion in 2002 that there must be 10,000-15,000 tonnes out on lease and loan from the central banks at that time, one could imagine that this figure has increased significantly. Officially, the signatories of the Central Bank Gold Agreement, plus the U.S. and U.K. own 20,393 tonnes. A number of other central banks are likely to have been persuaded to “invest” their gold, but this is bound to exclude Russia, China, the Central Asian states, Iran, and Venezuela. Taking these holders out (amounting to about 3,000 tonnes) leaves a balance of 8,401 tonnes for all the rest.
If we further assume that half of that has been deposited in London, New York, or Zurich and leased out, that means the total gold leased and available for leasing since 2002 is about 12,000 tonnes. And once that has gone, there is no monetary gold left for the purpose of price suppression.
Could this have disappeared since 2002 at an average rate of 1,000 tonnes per annum? Quite possibly, in which case, the central banks are very close to losing all control over the gold price.
What would you do if you logged in to your bank account one day and it showed that you had a zero balance and that your bank had absolutely no record that you ever had any money in your account at all? What would you do if hackers shut down all online banking and all ATM machines for an extended period of time? What would you do if you requested a credit report and discovered that there were suddenly 50 different versions of “you” all using the same Social Security number? Don’t think that these things can’t happen. According to Symantec, there was a 42 percent increase in cyberattacks against U.S. businesses last year. And according to a recent report in the Telegraph, big banks are being hit with cyberattacks “every minute of every day”. These attacks are becoming more powerful and more sophisticated with each passing year. Most of the time the general public never hears much about the cyberattacks that are actually successful because authorities are determined to maintain confidence in the banking system. But if people actually knew the truth about what was going on, they would not have much confidence at all.