Thursday, October 31, 2013

In a Sophie Scholl frame of mind

Sophie Scholl (1921 - 1943)
Feeling in a bit of a funk tonight, maybe it was the Belgium beer and the Thai curry, or the daily revelations of further NSA digital atrocities, I am not sure.

“The real damage is done by those millions who want to 'get by.' The ordinary men who just want to be left in peace. Those who don’t want their little lives disturbed by anything bigger than themselves. Those with no sides and no causes. Those who won’t take measure of their own strength, for fear of antagonizing their own weakness. Those who don’t like to make waves—or enemies.

Those for whom freedom, honour, truth, and principles are only literature. Those who live small, love small, die small. It’s the reductionist approach to life: if you keep it small, you’ll keep it under control. If you don’t make any noise, the bogeyman won’t find you.

But it’s all an illusion, because they die too, those people who roll up their spirits into tiny little balls so as to be safe. Safe?! From what? Life is always on the edge of death; narrow streets lead to the same place as wide avenues, and a little candle burns itself out just like a flaming torch does.

I choose my own way to burn.”

Sophie Scholl, 1942

Why invest in gold? Gold’s role in long-term strategies

World Gold Council - Gold Investor Volume 4, October 2013

Download Gold Investor, Volume 4

Download the infographic: Gold as long-term strategic asset

The merits of gold as an investment receives a lot of attention. Investors and market commentators fervently debate whether it could or should be used to protect against inflation, to hedge US dollar exposure, or even tail risk events. And while there is enough literature for and against gold’s roles in a portfolio, or what measures should be used to assess its effectiveness, they are quite often inadequately defined.

Misunderstandings about gold’s properties have led to multiple articles contesting gold’s role as an inflation hedge, currency hedge, and tail risk hedge, among others. We contend that by properly defining these functions and using appropriate measures, gold’s purchasing power preservation qualities and risk management characteristics become apparent. While gold’s ability to hedge inflation or protect against a very specific kind of risk could be replicated by including securities constructed specifically with that objective, these can often be costly and add an additional set of risks, such as credit or counterparty risk exposure.

Gold is a well rounded, cost effective strategic asset, which held even in a modest amounts (typically 2%-10% of a portfolio) can help investors reduce risk without sacrificing long term returns.

India, Fed tapering and the impact of lower tail risk for gold

According to HSBC's James Steel, the market was on a high-octane fuelled rally for a good five years so it is unsurprising things have cooled somewhat but that doesn't mean there is no further upside. Listen to the Mineweb interview here

Rand Paul Threatens to Block Yellen Nomination

Yes the Federal Reserve needs consistent printing.

 

Jim Sinclair: Gold Will be $50,000 per Ounce

From Greg Hunter

Published on Oct 29, 2013

http://usawatchdog.com/jim-sinclair-5... - According to Jim Sinclair of JSMineset.com, by 2016, "Gold will be $3,200 to $3,500 an ounce." By 2020, Sinclair predicts, "Emancipated gold will be $50,000 per ounce." As far as gold confiscation goes, Sinclair says that Its not going to happen, but a windfall tax could definitely be in the cards. Join Greg Hunter as he goes One-on-One with renowned gold expert Jim Sinclair.



Gerald Celente - Trends In The News - "Know Nothing World"

From trendsjournal

No Taper - QE to go on and on.....

TURBULENCE

FOMC Statement

Release Date: October 30, 2013
For immediate release

Information received since the Federal Open Market Committee met in September generally suggests that economic activity has continued to expand at a moderate pace. Indicators of labor market conditions have shown some further improvement, but the unemployment rate remains elevated. Available data suggest that household spending and business fixed investment advanced, while the recovery in the housing sector slowed somewhat in recent months. Fiscal policy is restraining economic growth. Apart from fluctuations due to changes in energy prices, inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will pick up from its recent pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished, on net, since last fall. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term.

Taking into account the extent of federal fiscal retrenchment over the past year, the Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program as consistent with growing underlying strength in the broader economy. However, the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases. Accordingly, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee's dual mandate.

The Committee will closely monitor incoming information on economic and financial developments in coming months and will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. In judging when to moderate the pace of asset purchases, the Committee will, at its coming meetings, assess whether incoming information continues to support the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective. Asset purchases are not on a preset course, and the Committee's decisions about their pace will remain contingent on the Committee's economic outlook as well as its assessment of the likely efficacy and costs of such purchases.

To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Charles L. Evans; Jerome H. Powell; Eric S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action was Esther L. George, who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.

Keiser Report: Bitcoin - Resistance Starts Here!

From RT

Published on Oct 29, 2013

In this episode of the Keiser Report, Max Keiser and Stacy Herbert, discuss the revolutionary solution that takes money and power from those who hate and gives it to those who will no longer wait for celebrities and pundits to cogitate, agitate and debate whether or not wristbands and hashtags - oh so quaint - can stop the plunder and pillage by the conmen, hucksters, and banksters backed by the state. Yes, bitcoin. The currency is already creating economic value across Africa, China and the developing world while Brits destroy economic value by moving their money into yet another corrupt bank. In the second half, Max interviews Simon Dixon of BankToTheFuture.com about peer to peer lending and the future in which the population can deploy their own capital in more productive ways.



Tuesday, October 29, 2013

David Morgan - Alan Greenspan Warns of Huge Inflation

From silver investor.com


Martin Armstrong - Will Qantitative Easing lead to a major market crash?


Listen to the "This Week in Money" interview with Martin Armstrong here

As Ye Sow, So Shall Ye Reap

By Paul Craig Roberts

Article link

The year 2014 could be shaping up as the year that the chickens come home to roost.

Americans, even well-informed ones, don’t know all of the mistakes made by neoconized and corrupted Washington in the past two decades. However, enough is known to see that the US has lost economic and political power, and that the loss is irreversible.

The economic cost of this loss will be born by what remains of the middle class and the increasingly poverty-stricken lower class. The one percent will have offshore gold holdings and large sums of money in foreign currencies and other foreign assets to see them through.

In the political arena, the collapse of the Soviet Union presented Washington with the grand opportunity to reallocate the Pentagon budget to other uses. Part of the reduction could have been returned to taxpayers for their own use. Another part could have been used to improve worn out infrastructure. And another part could have been used to repair and improve the social safety net, thus insuring domestic tranquility. A final, but perhaps most important part, could have been used to begin repaying the Treasury IOUs in the Social Security Trust Fund from which Washington has borrowed and spent $2 trillion, leaving non-marketable IOUs in the place of the Social Security payroll tax revenues that Washington raided in order to fund its wars and current operations.

Instead, influenced by neoconservative warmongers who advocated America using its “sole superpower” status to establish hegemony over the world, Washington let hubris and arrogance run away with it. The consequence was that Washington destroyed its soft power with lies and war crimes, only to find that its military power was insufficient to support its occupation of Iraq, its conquest of Afghanistan, and its financial imperialism.

Now seen universally as a lawless warmonger and a nuisance, Washington’s soft power has been squandered. With its influence on the wane, Washington has become more of a bully. In response, the rest of the world is isolating Washington.

The prime minister of India, Manmohan Singh, recently declared China and Russia to be India’s “most important partners” with whom India shares “common strategic interests.” Prime Minister Singh said: “ India and Russia have always had a convergence of views on global and regional issues, and we value Russia’s perspective on international developments of mutual interest.”

India joined China in expressing concerns about the Federal Reserve’s practice of printing money in order to cover Washington’s vast red ink. The BRICS (Brazil, Russia, India, China, South Africa) are taking steps to create their own method of settling trade accounts in order to protect themselves from the looming dollar implosion,

China has forcefully called for a “de-Americanized world.” After watching the “superpower” offshore a large part of its GDP to China and then add to the diminished tax base the burden of $6 trillion in wars that brought no booty and served no US interest, China has concluded that American power is spent. The London Telegraph thinks “it is only a matter of time before the renminbi replaces the dollar as the primary currency for trading commodities and resources.”

The Obama regime attempted to attack Syria based on the sort of lies that the Bush regime used to invade Iraq, only to be slapped down by the British Parliament and Russian government. This rebuke was followed by the childishness of the government shutdown and threat of default. Consequently, the Washington morons have lost their monopoly on economic and political leadership. A few days ago the British government announced a historic agreement that permits British investors direct access to China’s markets and allows Chinese banks to expand their operations in Great Britain.

In Australia, the US dollar will no longer be used as the currency in which to settle the Australian trade accounts with China. Instead of dollars, trade will be settled in the Chinese currency.

Washington served as cheerleader, as did most economists and libertarians, while US corporations, greedy for short-term profits and executive bonuses, offshored US industry and manufacturing, calling it free trade. The obvious and predicted result is that China’s demand for resources needed to fuel its industrial and manufacturing power now dominates markets. This means that the US dollar is being displaced as world currency. The only market that America dominates is the market for financial fraud.

When industrial, manufacturing, and tradeable professional service jobs are offshored, they take US GDP and tax base with them. The foreign country gets the benefit of the relocated economic activity. Due to the revenues lost from jobs offshoring, there is a large gap between federal revenues and federal expenditures. As Washington’s irresponsible behavior has raised so many doubts about the dollar’s value and the government’s commitment to stand behind its massive debt, foreign countries with trade surpluses with the US are less and less willing to recycle those surpluses into the purchase of US Treasury debt.

Today the two largest holders of US Treasury debt are not investors or even foreign central banks. The two largest holders are the Federal Reserve and the Social Security Trust Fund.

As for those $6 trillion wars, that’s to pay for national defense to protect us from women, children, and village elders in far away countries devoid of air forces and navies, and to provide those recycled taxpayer monies from the military/security complex that find their way into political contributions.

The Wall Street gangsters sighed for relief over the last minute debt ceiling agreement. This shows how short-term Wall Street’s outlook is. All the October agreement did was to push off the crisis to January and February. The “debt ceiling agreement” did not produce a new debt ceiling that would last beyond February, and it did not resolve the large difference between federal revenues and expenditures. In other words, the can was again kicked down the road. A repeat of the October fiasco won’t play well.

Obamacare is causing the premiums on private insurance polices to rise substantially, almost doubling in some situations unless people move to the uncertain exchanges, and Obamacare’s raid on Medicare payroll tax revenues has resulted in a cut in Medicare payments to health care providers. The result is a further reduction in consumer discretionary income and a further drop in the economy.

This in turn means a larger federal budget deficit and the need for the Federal Reserve to purchase more debt.

Another reason the Federal Reserve is faced with increasing, not tapering, quantitative easing (money printing) is the decline in foreign purchases of US Treasury bills, notes, and bonds. As the instruments pay interest that is less than the rate of inflation, holding Treasury debt makes no sense when the dollar’s value and the potential of default are open questions.

According to reports, not only are foreign governments, such as China, ceasing to buy US Treasury debt, China has started to sell off its holdings, substituting gold in the place of US Treasury debt.

This means that the bonds must be purchased by the Fed or interest rates will rise as the increased supply of bonds on the market drives down bond prices. The only way the Fed can purchase a larger supply of bonds is by printing more money, that is, by more quantitative easing.

With the world moving away from using the dollar to settle international accounts, as the Fed prints more dollars the rate at which foreign holders of dollar assets sell off their holdings will rise.

To get out of dollars requires that the dollar proceeds from selling Treasuries, US stocks and US real estate be sold in the currency markets. The selling of dollars drives down the exchange value of the US dollar and results in rising US inflation. The Fed can print money with which to purchase Treasury debt, but it cannot print foreign currencies with which to purchase dollars.

The decline in the dollar’s exchange value and the domestic inflation that results will force the Fed to stop printing. What then covers the gap between revenues and expenditures? The likely answer is private pensions and any other asset that Washington can get its hands on.

Initially, private pensions will be taxed at a rate to recover the tax-free accumulation in the pensions. The second year a national emergency will be used to confiscate some share of pensions. Those relying on the pensions will find themselves with less income. Consumer spending will decline. The economy will worsen. The deficit will widen.

You can see where this is going, and there seems to be no way out. Policymakers, economists, and corporation executives are in denial about the adverse effects of offshoring, which they still, despite all the evidence, maintain is good for the economy. So nothing will be done about offshoring. Republicans will blame the budget deficit on welfare and entitlements, and if those are cut consumer spending will decline further, widening the budget deficit. Inflation will rise as incomes fall, and social cohesion will break down.

Now you know why Homeland Security purchased 1.6 billion rounds of ammunition, enough ammunition to fight the Iraq war for 12 years, has its own para-military force and 2,700 tanks. If you think the “terrorist threat” in America warrants a domestic armed force of this size, you are out of your mind. This force has been assembled to deal with starving and homeless people in the streets of America.

September employment report: According to the Bureau of Labor Statistics (BLS), September brought 148,000 new jobs, enough to keep up with population growth but not reduce the unemployment rate. Moreover, John Williams (shadowstats.com) says that one-third of these jobs, or 50,000 per month on average, are phantom jobs produced by the birth-death model that during difficult economic times overestimates the number of new jobs from business startups and underestimates job losses from business failures.

The BLS reports that 22,000 of September’s jobs were new hires by state governments, which seems odd in view of the ongoing state budgetary difficulties.

In the private sector, wholesale and retail trade produced 36,900 new jobs, which seems odd in light of the absence of growth in real median family income and real retail sales.

Transportation and warehousing produced 23,400 new jobs, concentrated in transit and ground passenger transportation. This also seems odd unless the price of gasoline and pinched budgets are forcing people onto public transportation.

Professional and business services accounted for 32,000 jobs of which 63% are temporary help jobs.

So here you have the job picture that the presstitutes, hyping “the jobs gain,” don’t tell you. The scary part of the September job report is that the usual standby, the category of waitresses and bartenders, which has accounted for a large part of every reported jobs gain since I began reporting the monthly statistics, shows job loss. Seven thousand one hundred waitresses and bartenders lost their jobs in September. If this figure is not a fluke, it is bad news. It signals that fewer Americans can afford to eat and drink out.

The unemployment rate that is reported is the rate that does not count as unemployed discouraged workers who are unable to find jobs and cease to look. This favored rate, the darling of the regime in power, the presstitutes, and Wall Street, also is not adjusted for the category of “involuntary part-time workers,” those whose hours have been cut back or because they are unable to find a full-time job. Obamacare, as is widely reported, is causing employers to shift their work forces from full time to part time in order to avoid costs associated with Obamacare. The BLS places the number of involuntary part-time workers at 7,900,000.

The announced 7.2% unemployment rate is a meaningless number. The rate can decline for no other reason than people unable to find jobs drop out of the work force. You are not counted in the work force if you are discouraged about finding a job and no longer look for a job.

The phenomena of discouraged workers shows up in the measure of the labor force participation rate, which has declined in the 21st century. The opportunities for American labor are so restricted that a rising percentage of the working age population have given up looking for jobs.

Yet, the Obama regime, the Wall Street gangsters, and the pressitute media tell us how much better the economic situation is becoming as more small businesses close, as memberships decline in golf clubs, as more university graduates return home to live with their parents, who are drawing down their savings to live, as Fed Chairman Bernanke has made it impossible for them to live on interest payments on their savings.

According to the US census bureau, real median household income in 2012 was $51,017, down 9% from $56,080 in 1999, 13 years ago. In contrast, annual compensation in 2012 for US CEOs broke all records. Two CEOs were paid more than $1 billion, and the worst paid among the top ten took home $100 million. When the presstitutes speak of economic recovery, they mean recovery for the one percent.

America is in the toilet, and the rest of the world knows it. But the neocons who rule in Washington and their Israeli ally are determined that Washington start yet more wars to create lebensraum for Israel.

Early in the 21st century the liberal Democrat Senator from New York, Chuck Schumer, and I coauthored an article in the New York Times about the adverse effects on the US economy of jobs offshoring. The article caused a sensation. The Brookings Institution in Washington quickly convened a conference which was covered by C-SPAN. C-SPAN rebroadcast the conference several times. During the conference I said that if jobs offshoring continued, the US would be a third world economy in 20 years.

Wall Street quickly shut up Senator Schumer, but I am sticking by my forecast. Indeed, I think we are already there.

Eric Sprott and Andrew Maguire on King World News

Eric Sprott and Andrew Maguire discuss recent happenings in the gold and silver market, and how the enablers of paper bullion are now playing the man instead of the ball. Listen to the KWN interview here

Monday, October 28, 2013

Max Keiser - Crowdfunding George Galloway | London Real

From London Real

GCHQ - Snowden files reveal spy agency's efforts to escape legal challenge

From RT

Published on Oct 26, 2013

British intelligence has been trying desperately to keep its surveillance practices secret - wary of public anger and legal challenges. That's emerged from internal documents leaked by Edward Snowden, and obtained by the Guardian newspaper. But as RT's Sara Firth reports, the spy agencies' worst fears are already coming true. To discuss the controversial techniques used by British intelligence, and the ongoing backlash, former MI5 agent Annie Machon joins RT.


Sunday, October 27, 2013

ANZACs - 1 : Afghans - 0


GoldSeek Radio with Stephen Leeb

GoldSeek Radio interviews my favourite commodities analyst Dr. Stephen Leeb.

From GoldSeek.com Radio

Keiser Report: Silent but Violent Emissions

From RT

Published on Oct 26, 2013

In this episode of the Keiser Report, Max Keiser and Stacy Herbert, discuss the impossibility of tapering a ponzi scheme, Alan Greenspan's return to the hot airwaves and why QE has failed. In the second half, Max interviews Trond Andresen, a lecturer in control systems at the Norwegian University of Science and Technology, about a digital crisis currency or bitcoin as a solution to a man-made disaster like Greece.


Saturday, October 26, 2013

CrossTalk: Saudi Pivot

From RT

Published on Oct 25, 2013

Should we take the talk of Saudi Arabia pivoting away from Washington seriously? What explains the timing of the Saudi public announcement? Is Washington's interest in engaging Tehran at the heart of the matter? And can Saudi Arabia realistically disentangle the relationship with the US without endangering its security? CrossTalking with James Carafano, Ali Alyami and Jim Lobe.

Alasdair Macleod: "Swiss Refiners Working 24/7 Producing Kilo Bars Headed to China"

From SilverDoctors

The Ying and Yang of Insecurity Threats


Intelligence Agencies Banned Lenovo PCs After Chinese Acquisition

By Mathew J. Schwartz

Article link

Since at least 2006, personal computers manufactured by Lenovo have been banned from being used to access classified government networks in the United States, as well as in Australia, Britain, Canada and New Zealand.

That revelation was first reported by Australia's Financial Review (AFR), which said the blanket ban on using Lenovo's equipment to access "secret" or "top secret" government networks stemmed from fears that the Chinese government may have altered the equipment's firmware or added back doors to the hardware to allow it to be monitored by its own espionage agencies.

Those fears started after Beijing-based Lenovo acquired IBM's personal computing division for $1.25 billion in 2005.

In 2006, the U.S. State Department purchased 16,000 Lenovo PCs, at least 900 of which were to be used on classified networks. But after facing pressure from Congress, the State Department said that it would restrict the devices for use on "unclassified" networks and alter future procurement policies to reflect that change.

Read more

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NSA Revelations Kill IBM Hardware Sales in China
By Wolf Richter

Article link

The first shot was fired on Monday. Teradata, which sells analytics tools for Big Data, warned that quarterly revenues plunged 21% in Asia and 19% in the Middle East and Africa. Wednesday evening, it was IBM’s turn to confess that its hardware sales in China had simply collapsed. Every word was colored by Edward Snowden’s revelations about the NSA’s hand-in-glove collaboration with American tech companies, from startups to mastodons like IBM.

.... there was nothing to spin in Asia-Pacific, where revenues plunged 15%. Revenues in IBM’s “growth markets” dropped 9%. They include the BRIC countries – Brazil, Russia, India, and China – where revenues sagged 15%. In China, which accounts for 5% of IBM’s total revenues, sales dropped 22%, with hardware sales, nearly half of IBM’s business there, falling off a cliff: down 40%.

Read more

Friday, October 25, 2013

Weekend Chillout - Spying in Hundreds of Languages

This week brought further revelations of NSA spying. This time it was reveled that the NSA spied on Angela Merkel and 35 other government leaders. You have to love the irony of the NSA getting caught spying on an ex-East German, Putin must be pissing himself laughing, being a former KGB agent based in East Germany.

With the scope of the NSA dragnet they must be literally spying in hundreds of languages.


Keiser Report: Debtocholics Anonymous

From RT

Published on Oct 24, 2013

In this episode of the Keiser Report, Max Keiser and Stacy Herbert, discuss George Osborne in China from where he dissed the jumper class while refusing to come up with more than a 5 day plan for UK command and control economic and monetary policies favoring the bankster class. In the second half, Max interviews Dan Collins of TheChinaMoneyReport.com about calls in China for a de-Americanization and a rapidly rising pot of savings.



Comment of the Week

Thursday, October 24, 2013

Chris Martenson on the Shadow Banking Crisis and the Fed's Painted Corner

From ChrisMartensondotcom


Gerald Celente - Trends In The News - "The Royal Mafias"

From Gerald Celente


Silver Prices and the Flow of Physical

By Dr. Jeffrey Lewis, Silver-Coin-Investor:

The Center of Price Discovery

The CME owned COMEX remains the largest and most important exchange for world price discovery in the world. The major players on the COMEX, the most important futures market and the basis for world silver prices, are perfectly happy to exchange paper rather than physical.

The fact that the largest players are neither producers nor users of the metal is all one really needs to understand about the integrity of the exchange. The advent of algo driven high frequency trading, and the complete capture of regulators has made the physical delivery and warehousing a secondary concern among the dominate traders.

Often we see ratios between the amount of physical stock and paper traded blow out to more than sixty times without creating a panic.

The ratio of open interest to available stock has often stretched beyond comprehension. However, it is the simple fact of large concentrated positions (not subject to limits-hedged or no) which have enabled the ultimate), which have enabled the ultimate, disconnect in pricing reality. While the LBMA is a much less transparent exchange, the same could be assumed without stretching the imagination. Paper trading is profitable.

COMEX and LBMA Default

While the thought of default on these giant exchanges seems remote given their size and influence, it is possible for delivery delays to develop without major disruption. Significant enough delays could move price discovery toward the physical market, which would have at least two major effects.

First off, premiums for physical metal would likely move significantly higher – leading to real backwardation. More importantly, price discovery could migrate toward exchanges that deal primarily in physical – not paper dominated. This would likely move in an eastward direction toward Asia.

Buyers at the Margin

If physical price discovery were to suddenly or even gradually manifest, demand could explode.

It almost goes without saying that just-in-time delivery practices for some of the most important industrial uses of silver are a constant albatross for the paper delivery game. One or two user stock piling panics could send the white metal well beyond its inflation adjusted average highs.

In addition, the pool of retirement assets and liquid cash held by individual investors and fueled by the speed of information could result in an ocean of demand. Such demand would also propel fiat prices beyond anything resembling imaginable. The silver story is always compelling, but potentially very dramatic as new demand awakens.

While the masters of sentiment have governed the last remaining supply of readily available silver, failure is just one “accident away”. We’ve already experienced unprecedented counter-intuitive price and demand relationships in the physical market. Prepare accordingly while you still can.

Peter Schiff - Why the Gold Surge is Just Starting

From Peter Schiff


China, gold prices & US default threats

By William Engdahl, originally posted on RT.com:

In the very days when a deep split in the US Congress threatened a US government debt default, the gold price should normally jump through the roof, yet the opposite was the case. It is worth a closer look why.

Since August 1971, when US President Richard Nixon unilaterally tore up the Bretton Woods Treaty of 1944 and told the world that the Federal Reserve ‘gold window’ was permanently closed, Wall Street banks and US and City of London financial powers have done everything imaginable to prevent gold from again becoming the basis of trust in a currency.

On Friday, October 11, when there was no sign of any deal between US Congress members and the Obama White House that would end the government shutdown, the Chicago CME Group, which operates Comex – the Chicago Commodity Exchange, where contracts in gold derivatives are traded – announced that at 8:42am Eastern time the trading was halted for 10 seconds after a safety mechanism was triggered because a 2-million-ounce (56.7 million grams) gold futures sell order was executed.

Something rotten in gold market

The result of that huge paper gold sale was that at just the time when a possible US government debt default would send investors in a panic rush to the safety of buying gold, instead, the price plunged $30 an ounce to a three-month low of $1,259.60 an ounce. Market insiders believe the reason was direct market manipulation.

David Govett, head of precious metals at bullion broker Marex Spectron, calls the sudden huge futures sale suspicious.

“These moves are becoming more and more prevalent and to my mind have to either be the work of someone attempting to manipulate the market or someone who really shouldn’t be trusted with the sums of money they are throwing around. There are ways of entering and exiting a market so that minimum damage is caused and whoever is entering these orders has no intention of doing that,” Govett said.

UBS gold trader Art Cashin echoed the suspicion.

“…if that happens once it could be an accident of technology, or it could be a simple error. But when it happens five times over a period of months, it does raise questions. Is it being done purposefully? Is somebody trying to influence the market?”

That ‘someone’ market sources believe is the Obama White House, in league with the Federal Reserve and key Wall Street banks that would be ruined were gold to really rise.

In March 1988, five months after the worst one-day stock market plunge in history, President Ronald Reagan signed Executive Order 12631. Order 12631 created the Working Group on Financial Markets, known on Wall Street as the ‘Plunge Protection Team’ because its job was to prevent any future unexpected financial market panic selloff or ‘plunge’.

The group is headed by the US Treasury Secretary and includes the chairman of the Federal Reserve, the head of the Securities & Exchange Commission, and the head of the Commodity Futures Trading Commission (CFTC) which is responsible for monitoring derivatives trading on exchanges.

Numerous times since 1988, reports have surfaced of secret interventions by the Plunge Protection Team to prevent a market panic selloff that could threaten the role of the US dollar. Former Clinton White House staff chief George Stephanopoulos admitted in 2006 that it was used to support the markets in the 1998 Russia/LTCM crisis under Bill Clinton, and again after the 9/11 terrorist attacks in 2001.

He said, “They have an informal agreement among major banks to come in and start to buy stock if there appears to be a problem.”

Clearly stocks are not the only thing the government manipulates. Gold these days is a prime focus. The price of gold in recent years—since the eruption of the US dot.com IT stock bubble in 2000—has exploded from around $300 an ounce to a recent record high above $1,900 in August, 2011. Gold rose an impressive 70 percent from December 2008 to June 2011, after the Lehman Brothers collapse and the start of the Greek crisis in the eurozone.

Since then, with no clear reason, gold has reversed and lost more than 31 percent, despite the fact that talk of a unilateral Israeli military strike on Iran and the US financial debacle combined with a euro crisis, and now, threat of US government default, created overall huge demand for investment in gold.

This past April 10, the heads of the five largest US banks, the Wall Street ‘Gods of Money’ — JPMorgan Chase, Goldman Sachs, Bank of America and Citigroup — requested a closed door meeting with Obama at the White House. Fifteen days later, on April 25, the largest one-day fall in history in gold took place. Later investigation of trading records at Comex revealed that one bank, JP Morgan Securities, was behind the huge selloff of gold derivatives. Derivatives are pieces of paper or bets on future gold or other commodity prices. To buy gold futures is very inexpensive compared with gold but influence the real physical gold price, largely because the US Congress, under lobby influence from Wall Street, since 2000 and the Commodity Trading Modernization Act, has left gold derivatives unregulated. The President’s Plunge Protection Team was at work now as well, clearly.

China smiles & buys

In effect a war, a financial war, is underway between the Wall Street giant banks and their close allies, including the major City of London banks and banks like Deutsche Bank on the one side, using paper gold derivatives trading in the unregulated COMEX, with covert support of the US Treasury and Fed. On the other side are real investors and Central Banks who believe that the world financial system, especially the dollar system, is teetering on the brink of disaster and that physical gold is the historical best safe haven in such a crisis.

Here, the recent buying of gold reserves by several central banks including Russia, Turkey and especially China, are notable. The short-term derivative gold price manipulations by JP Morgan and Goldman Sachs are creating smiles at the Peoples’ Bank of China and the Russian Central Bank among other buyers of physical gold. Since 2006 Russia’s central bank has increased its gold reserves by 300 percent.

Now, the Chinese central bank has just revealed data showing that China imported 131 gross tons of gold in the month of August, a 146 percent increase compared to a year prior. August was the second highest gold importing month in its history. More impressively, China has imported more than 2,000 tons of gold in the past two years. According to a 2011 cable made public by WikiLeaks, the Peoples’ Bank of China is quietly seeking to make the renminbi (the yuan) the new gold-backed reserve currency.

Hmmmm.

According to unofficial calculations, the Peoples’ Bank of China today holds about 3,500 tons of monetary gold, surpassing Germany, to make it number two in the world after the Federal Reserve.

And there are grave doubts whether the Federal Reserve actually holds the 8,044 tons of gold it claims it does. The former International Monetary Fund director, France’s Dominique Straus-Kahn, demanded an independent audit of the Federal Reserve gold after the US refused to deliver to the IMF 191 tons of gold agreed to under the IMF Articles of Agreement signed by the Executive Board in April 1978 to back Special Drawing Rights issuance. Immediately before he could rush back to Paris, he was hit by a bizarre hotel sex scandal and abruptly forced to resign. Straus-Kahn had been shown a secret Russian intelligence report prepared for President Vladimir Putin in which ‘rogue’ CIA agents revealed that the US Federal Reserve had no gold reserves and only lied that it did.

The stakes for Washington and Wall Street in depressing the gold price are staggering. Were gold to soar to $10,000 or more, where many believe current demand-supply pressures would find it, there would be a panic selloff of the dollar and of US Treasury bonds. China now holds a record $3.7 trillion of foreign currency reserves and the US Treasury bonds and bills are about half that.

That selloff would send US interest rates sky-high, forcing a chain-reaction of corporate and personal bankruptcies that have been avoided since the financial crisis broke in 2007 only owing to record near-zero Federal Reserve interest rates. That selloff, in turn, would be the end of the US as the world’s sole superpower. Little wonder the Obama Administration is manipulating gold. It cannot last very long at this pace, however.

William Engdahl is an award-winning geopolitical analyst and strategic risk consultant whose internationally best-selling books have been translated into thirteen foreign languages.

Wednesday, October 23, 2013

Australia, where gold grows on trees

A CSIRO study shows that gold has been absorbed by gum trees in the region of Kalgoorlie, Western Australia.

Jordan Eliseo - Physical demand will drive gold price

Physically Backed Diamond Investment Vehicles Won't Work

(Kitco News)

Article link

Diamonds will need to continue to sit on the sidelines, waiting to be called off the bench to perform as a physically-backed investment vehicle.

The irony of what’s keeping diamonds from becoming a physically-backed commodity is that the uniqueness in each diamond is one driving factor that propels the price upwards, and is also what’s holding it back.

Paul Zimnisky, chief executive officer of PureFunds, a company that was the first to successfully bring a diamond ETF -- PureFunds ISE Diamond/Gemstone ETF (GEMS) -- to investors, doesn’t see a physically-backed diamond investment vehicle becoming available any time soon. The GEMS ETF includes retailers, companies that provide servicing equipment to the diamond cutting and polishing industry, among others.

“I applaud the attempt(s), but I don’t see the vehicle working,” Zimnisky told Kitco News. “I don’t see what they can do to make it work because the underlying fundamental issue is that physical diamonds are not fungible, they’re not price transparent.

“There’s a reason we don’t have one right now and it’s because diamonds lack fungibility, they all have different characteristics, different values, they’re individually graded,” Zimnisky said. “You’re trying to create a fungible asset out of something that’s not (fungible), you’re forcing the issue, and, when people buy an ETF, they buy it because there’s pricing transparency, there’s liquidity and you’re just not going to have that.”

There are several different ways to grade diamonds, which poses a significant obstacle. Zimnisky pointed out that there’s no spot market for diamonds. He also noted that there’s varying opinion over what diamond prices actually are.

Read more

Economic Power Handed to China & Russia - Bill Murphy & Alasdair Macleod

From FinanceAndLiberty


Gold and Silver bounce on poor US jobs report

Gold and Silver bounced overnight on poor US Jobs data, crushing any further talk of the Fed easing off on the monetary accelerator for the foreseeable future. As of writing both metals are up a suspiciously similar 1.96%


Charts from goldprice.org

Eric Sprott's Open Letter to the World Gold Council

Dear World Gold Council Executives;

As you very well know, the business environment for gold producers has been extremely challenging over the past few years. While demand for physical gold remains extremely strong, prices on the COMEX have fallen precipitously. This contradictory situation is the single most important obstacle to a healthy gold mining industry.

In my opinion, the massive imbalance between supply and demand is not reflected in prices because available statistics are misleading. It is not the first time that GFMS (and World Gold Council) statistics have come under pressure from the investment community. In his now celebrated “The 1998 Gold Book Annual”, Frank Veneroso demonstrated the inconsistencies in GFMS gold demand data and proceeded to show how they grossly underestimated demand. The tremendous increase in the price of gold over the following years vindicated his conclusions.

For very different reasons, we are now at a similar pivotal point for gold. Over the past few years, we have seen incredible incremental demand from emerging markets. Indeed, so much so that the People’s Bank of China has announced that it is planning to increase the number of firms allowed to import and export gold and ease restrictions on individual buyers.1 In India, the government has been fighting a losing battle against gold imports by imposing import taxes and restrictions.2 Moreover, Non-Western Central Banks from around the world are replacing their U.S. dollar reserves by increasing their holdings of gold.3

But, demand statistics reported by the World Gold Council (WGC) consistently misrepresent reality, mostly with regard to demand from Asia.

To illustrate my point, Table 1 below contrasts mine production with demand from some of the world’s largest gold consumers. According to WGC/GFMS data, the world will mine, on an annualized basis, about 2,800 tonnes of gold for 2013.

But, I adjusted these figures to reflect mine production from China and Russia, which never leaves the country and is used solely to satisfy domestic demand. After adjustments, we have a total world mine supply of about 2,140 tonnes. On the demand side, I make some in-house adjustments to better represent demand from emerging markets. To proxy for gold consumption in China, Hong Kong, India, Thailand and Turkey, I use net imports of gold, as reported by their various governmental agencies. While imports might in general be an imperfect proxy for demand, those countries see very little re-export of what they import and keep most of it for themselves, so it is not unreasonable to assume that what they import they “consume”, on top of their domestic production. To this I add the demand, as estimated by the GFMS, from other countries and that of central banks. I annualized the year-to-date figures and found that for this year, annualized total demand is approximately 5,200 tonnes. On that basis, “core” annualized demand is approximately 3,000 tonnes more than mine supply.

TABLE 1: WORLD GOLD SUPPLY AND DEMAND 2013, IN TONNES


Sources: GFMS data comes from the WGC’s “Gold Demand Trends” publications for 2013 Q1 & Q2. Chinese mine supply comes from the China Gold Association and is up to August 2013, the annualized number is a Sprott estimate.5 Russian mine supply comes from the WBMS (Bloomberg ticker WBMGOPRU Index) and is for 2012, 2013 statistics are still unavailable. Chinese data is taken from the Hong Kong Census and Statistics Department and covers the period Jan.-Aug. 2013 and is annualized to account for the 4 missing months to the year. Changes in Central Bank gold reserves are taken from the IMF’s International Financial Statistics, as published on the World Gold Council’s website for 2013 Q1 & Q2 and include all international organizations as well as all central banks. Net imports for Thailand, Turkey and India come from the UN Comtrade database and include gold coins, scrap, powder, jewellery and other items made of gold. The data is for 2013 Q1 & Q2. ETFs data comes from Bloomberg’s ETFGTOTL Index.

However, these figures also exclude what the GFMS dubs “OTC investment and stock flows”, which is a name for a simple plug because no one really knows what is traded in the OTC market. Also, to remain conservative and avoid possible double counting, I exclude the category “technology” from my demand estimate, which the WGC/GFMS estimates to be about 400 tonnes a year.6 Certainly, some of this demand is captured by the demand numbers for China, Turkey, India or Thailand, but it is near impossible to disentangle them. Nonetheless, it should be kept in mind that my demand estimate is conservative and probably understated by a few hundred tonnes.

Of course, another important source of supply is gold recycling, which the GFMS estimates at about 1,300 tonnes for the year. However, this number is questionable at best as gold recycling is hard to estimate. But, most importantly, a large share of it is probably done in India and China, which as mentioned before do not re-export their gold. In the context of my analysis, recycling from those countries should therefore be excluded from the total supply number.

The real incremental source of supply this year has been the flows out of ETFs. According to data compiled by Bloomberg, and as shown at the bottom of Table 1, ETFs have seen outflows of approximately 724 tonnes year-to-date. On an annualized basis, this represents an additional supply of 917 tonnes. But, this incremental supply is only temporary. As shown in Figure 1 below, ETF holdings of gold seem to have stabilized at around 1,900 tonnes after a rapid decline in the first few months of 2013.

The evidence presented here is clear, demand for physical gold is extremely strong and, in reality, without the massive outflows from ETFs (half of world mine supply), it is hard to imagine how this demand would have been met. Since ETFs have a finite size (about 1,900 tonnes left), these outflows cannot continue for much longer (see our article on the topic).7 All these observations point to a considerable imbalance between supply and demand (unless Western Central Banks decide to fill this void with what is left of their reserves). If recycling was reduced by one half (China, India and Russia) and the temporary sales from ETFs were excluded, demand could be as high as 5,185 tonnes versus supply of 2,140 tonnes. The supply-demand imbalance is obvious to all.

FIGURE 1:TONNES OF GOLD IN ETFS

Source: Bloomberg

As was the case when Frank Veneroso first published his book in 1998, the GFMS methodology understates demand and the World Gold Council, by using data from the GFMS, misleads the market place.

To conclude, I urge the leaders of the World Gold Council, for the benefit of their own members, to improve the quality of their data and find alternative sources than the GFMS, which paints a misleading picture of the real demand for gold. This lack of quality information has certainly been one of the driving factors behind the lack of investors’ confidence towards gold as an investment. Gold has been one of the best performing asset classes since 2000, and the World Gold Council should be promoting it accordingly.

Regards,


Eric Sprott

Keiser Report: Bandits, Bankers & Brokers

From RT

Published on Oct 22, 2013

In this episode of the Keiser Report, Max Keiser and Stacy Herbert, discuss the bandits, banksters and brokers who will have taken all that we have got. No dollar, euro, yen or drachma will be left behind. And inflation, deflation and confiscation will take every last nickel and dime. They also discuss Americans turning their bodies into cash machines as they start selling off various organs to make ends meet. In the second half, Max interviews economist and professor, Constantin Gurdgiev, about Bail-Ins, Bail-outs and Troikas. They also discuss 'second-rate' Britain and a de-Americanizing rest of the world.


Tuesday, October 22, 2013

Alex Jones and Greg Palast discuss the $13B fine levied against JP Morgan

From TheAlexJonesChannel


Blue to Red

The Blue Mountains (West of Sydney) have suffered the worst bush fires in 50 years this week. Our thoughts go out to those who have lost their homes and possessions and those that are currently fighting to save their's. For the latest on the fires go here


Bush fire smoke over the CBD of Sydney

JS Kim - Banking 101: How I Know the US Dollar Will Become Worthless

From smartknowledgeu

Published on Oct 16, 2013

Throughout history there have been 775+ fiat currencies backed by nothing. Not ONE has survived the test of time, with the average lifespan being 27 years after huge price devaluation of said currencies. The only currencies that have held their value over 100s of years have been hard currencies backed by gold.



Marc Faber - "We Are The Bubble...There Is No Exit Strategy"



Gold Seek Radio GSR interviews Bill Murphy

From GoldSeek.com Radio


Abby Martin interviews "Economic Hitman" John Perkins

From breakingtheset

Published on Oct 18, 2013

Abby Martin speaks with John Perkins, best-selling author of 'Confessions of an Economic Hitman' & 'Hoodwinked', about the corporate takeover of world governments and the need to eradicate the death economy.


Doug Casey & Jim Rogers: Legendary Investors' Roundtable

From WallStForMainSt

NSA Starting Diplomatic Fires Around the World

From RTAmerica

Published on Oct 21, 2013

The latest Edward Snowden leaks reveal an NSA very much interested in spying on friends as well as enemies. New documents show citizens, business leaders, and politicians within Mexico and France were all targeted by NSA spying programs, leaving the White House having to put out diplomatic fires around the world. All of these allegations seem to go against the NSA's own mission statement. RT's Sam Sacks reports.


James Turk on Sprott Money News

From Sprott Money


Monday, October 21, 2013

Eric Sprott on world Gold and Silver demand

Eric discusses the massive movement of gold through Hong Kong to China, dubious scrap refining numbers and the 300% increase of Silver imports to India. Listen to the KWN interview with Eric here

IMF Proposes 10% Wealth Tax/ Gov't Bail In for EU

From SilverDoctors

Truth About Markets


Max and Stacy's weekly radio show from London.

Some of the issues in this week's show:

Michael Gove: governments must stop lying to children about life chances | Education secretary says ‘inflated’ GCSE figures were used in past to tell pupils they could go to university or get skilled work
 
Thousands of UK’s poor in court over non-payment of council tax: Courts across country fill up with people on lowest incomes as introduction of new council tax charges in April begins to bite
 
George Osborne says ‘second-rate Britain’ must rediscover its ‘can do’ attitude: Chancellor dismisses suggestions that China has a ‘sweatshop’ economy and wishes Britain would be more like the communist country


Keiser Report - Post-Kaboom Period

From RT

Published on Oct 19, 2013

In this episode of the Keiser Report, Max Keiser and Stacy Herbert, discuss post-kaboom period of a de-Americanized world where risk is redistributed and financial systems are re-architected away from the daisy chains of credit without collateral.

In the second half, Max interviews Leo Johnson, co-author of Turnaround Challenge: Business and the City of the Future about the three possible cities of the future: Petropolis, Cyburbia or Distributed City.



Dylan Ratigan on the Extraction of Wealth from the US


Greg Hunter - Everybody Loses Debt Ceiling Debate

From Greg Hunter


Sunday, October 20, 2013

The Biggest Scam In The History Of Mankind - Hidden Secrets of Money Ep. 4

From whygoldandsilver

Keiser Report: Walmart & Wall Street's Sugar Daddy

From RT

Published on Oct 17, 2013

In this episode of the Keiser Report, Max Keiser and Stacy Herbert, discuss the EBT 'free lunch' card chaos at Walmart when an 'unlimited' benefits glitch causes card holders to pile shopping carts high with 'free' goods, while on Wall-Street, the 'free lunch' card of Quantitative Easing has caused a similar misallocation of capital into property and toxic debt instruments. Finally, they discuss the world about to shut off America's 'free lunch' card, otherwise known as the Exorbitant Privilege' of having the world's reserve currency.

In the second half, Max interviews Alasdair Macleod of GoldMoney.com about the $640 million sell order of gold. They also discuss Alasdair's new theory on money supply (FMQ) and his differences with Professor Fekete, a recent guest on the Keiser Report, regarding whether or not there is deflation.


Saturday, October 19, 2013

9 Signs That China Is Making A Move Against The US Dollar

By Michael Snyder of The Economic Collapse blog

On the global financial stage, China is playing chess while the U.S. is playing checkers, and the Chinese are now accelerating their long-term plan to dethrone the U.S. dollar. You see, the truth is that China does not plan to allow the U.S. financial system to dominate the world indefinitely. Right now, China is the number one exporter on the globe and China will have the largest economy on the planet at some point in the coming years.

The Chinese would like to see global currency usage reflect this shift in global economic power. At the moment, most global trade is conducted in U.S. dollars and more than 60 percent of all global foreign exchange reserves are held in U.S. dollars. This gives the United States an enormous built-in advantage, but thanks to decades of incredibly bad decisions this advantage is starting to erode. And due to the recent political instability in Washington D.C., the Chinese sense vulnerability. China has begun to publicly mock the level of U.S. debt, Chinese officials have publicly threatened to stop buying any more U.S. debt, the Chinese have started to aggressively make currency swap agreements with other major global powers, and China has been accumulating unprecedented amounts of gold. All of these moves are setting up the moment in the future when China will completely pull the rug out from under the U.S. dollar.

Today, the U.S. financial system is the core of the global financial system. Because nearly everybody uses the U.S. dollar to buy oil and to trade with one another, this creates a tremendous demand for U.S. dollars around the planet. So other nations are generally very happy to take our dollars in exchange for oil, cheap plastic gadgets and other things that U.S. consumers "need".

Major exporting nations accumulate huge piles of our dollars, but instead of just letting all of that money sit there, they often invest large portions of their currency reserves into U.S. Treasury bonds which can easily be liquidated if needed.

So if the U.S. financial system is the core of the global financial system, then U.S. debt is "the core of the core" as some people put it. U.S. Treasury bonds fuel the print, borrow, spend cycle that the global economy depends upon.

That is why a U.S. debt default would be such a big deal. A default would cause interest rates to skyrocket and the entire global economic system to go haywire.

Unfortunately for us, the U.S. debt spiral cannot go on indefinitely. Our debt is growing far, far more rapidly than our GDP is, and therefore our debt is completely and totally unsustainable.

The Chinese understand what is going on, and when the dust settles they plan to be the last ones standing. In the aftermath of a U.S. collapse, China anticipates having the largest economy on the planet, more gold than anyone else, and a respected international currency that the rest of the globe will be able to use to conduct international trade.

And China is not just going to sit back and wait for all of this to happen. In fact, they are already doing lots of things to get the ball moving. The following are 9 signs that China is making a move against the U.S. dollar...

#1 Chinese credit rating agency Dagong has downgraded U.S. debt from A to A- and has indicated that further downgrades are possible.

#2 China has just entered into a very large currency swap agreement with the eurozone that is considered a huge step toward establishing the yuan as a major world currency. This agreement will result in a lot less U.S. dollars being used in trade between China and Europe...

The swap deal will allow more trade and investment between the regions to be conducted in euros and yuan, without having to convert into another currency such as the U.S. dollar first, said Kathleen Brooks, a research director at FOREX.com.

"It's a way of promoting European and Chinese trade, but not doing it with the U.S. dollar," said Brooks. "It's a bit like cutting out the middleman, all of a sudden there's potentially no U.S. dollar risk."

#3 Back in June, China signed a major currency swap agreement with the United Kingdom. This was another very important step toward internationalizing the yuan.

#4 China currently owns about 1.3 trillion dollars of U.S. debt, and this enormous exposure to U.S. debt is starting to become a major political issue within China.

#5 Mei Xinyu, Commerce Minister adviser to the Chinese government, warned this week that if the U.S. government ever does default that China may decide to completely stop buying U.S. Treasury bonds.

#6 According to Yahoo News, China has already been looking for ways to diversify away from the U.S. dollar...

There have been media reports this week that China's State Administration of Foreign Exchange, the body that handles the country's $3.66 trillion of foreign exchange reserve, is looking to diversify into real estate investments in Europe.

#7 Xinhua, the official news agency of China, called for a "de-Americanized world" this week, and also made the following statement about the political turmoil in Washington: "The cyclical stagnation in Washington for a viable bipartisan solution over a federal budget and an approval for raising debt ceiling has again left many nations' tremendous dollar assets in jeopardy and the international community highly agonized."

#8 Xinhua also said the following about the U.S. debt deal on Thursday: "[P]oliticians in Washington have done nothing substantial but postponing once again the final bankruptcy of global confidence in the U.S. financial system". The commentary in the government-run publication also declared that the debt deal "was no more than prolonging the fuse of the U.S. debt bomb one inch longer."

#9 China is the largest producer of gold in the world, and it has also been importing an absolutely massive amount of gold from other nations. But instead of slowing down, the Chinese appear to be accelerating their gold buying. In fact, money manager Stephen Leeb says that his sources are telling him that China plans to buy another 5,000 tons of gold. There are many that are convinced that China eventually plans to back the yuan with gold and try to make it the number one alternative to the U.S. dollar.

So exactly what would happen if the Chinese announced someday that they were going to back their currency with gold and would no longer be using the U.S. dollar in international trade?

It would change the face of the global economy almost overnight. In a previous article, I described some of the things that we could expect to see happen...

If China does decide to back the yuan with gold and no longer use the U.S. dollar in international trade, it will have devastating effects on the U.S. economy. Demand for the U.S. dollar and U.S. debt would drop like a rock, and prices on the things that we buy every day would soar. At that point you could forget about cheap gasoline or cheap Chinese imports. Our entire way of life depends on the U.S. dollar being the primary reserve currency of the world and being able to import things very inexpensively. If the rest of the world (led by China) starts to reject the U.S. dollar, it would result in a massive tsunami of currency coming back to our shores and a very painful adjustment in our standard of living. Today, most U.S. currency is actually used outside of the United States. If someday that changes and we are no longer able to export our inflation that is going to mean big trouble for us.

The fact that we get to print up giant mountains of money and virtually everyone around the world uses it has been a huge boon for the U.S. economy.

When that changes, the word "catastrophic" is not going to be nearly strong enough to describe what is going to happen.

According to a Rasmussen Reports survey that was released this week, only 13 percent of all Americans believe that the country is on the right track. But the truth is that these are the good times. The American people haven't seen anything yet.

Someday people will look back and desperately wish that they could go back to the "good old days" of 2012 and 2013. This is about as good as things are going to get, and it is only downhill from here.

Weekend Chillout - They are all Guilty

With Barry signing off on a deal that allows the US to continue to spend money the markets have bounced back, and even gold and silver are shinning brighter. Although we all know that all that has been achieved is that the guilty have been let free to again cause havoc with other peoples money.