Wednesday, February 16, 2011

Martin Armstrong - On Gold

In case you missed reading Martin Armstrong's recent essay on Egypt and gold, it can be accessed here.

The most relevant parts pertaining to gold were:

Jeffrey Sachs on the US Govt. budget

How Big is the U.S. Debt?

Economics professor Antony Davies illustrates the size the U.S. federal government's debt and unfunded obligations. He breaks down the total U.S. debt and obligations into parts and compares them with the size of the GDP of countries around the world, showing the magnitude of America's fiscal situation.

Want to give that graph a closer look? Prof. Davies has made it available on his website here:

James Turk interviews Mexican billionaire Hugo Salinas Price

In this video silver advocate Hugo Salinas Price, President of the Mexican Civic Association Pro Silver, A.C., is interviewed by James Turk, Founder/Chairman of GoldMoney and Director of the GoldMoney Foundation. Hugo explains what led him to believe that silver coins should be money again. Hugo and James discuss the essence of sound money.

I have had email discussions with Hugo, he is such a gentle and brilliant man. Tears of the Moon.

Keiser Report: Shoe Throwing Index

This week Max Keiser and co-host, Stacy Herbert, talk about the Shoe Throwing Index, Saudi oil reserves and haircuts on investors. In the second half of the show, Max talks to investment adviser, Barry Ritholtz, about program trading and agnotology.

Fed dictator Bernanke needs to be toppled

By Paul B. Farrell, MarketWatch

ARROYO GRANDE, Calif. (MarketWatch) — Fed boss Ben Bernanke is the most dangerous human on earth, far more dangerous than Hosni Mubarak, Egypt’s 30-year dictator, ever was. Bernanke rules a monetary dictatorship that will trigger the coming third meltdown of the 21st century.

But this reign of economic terror will end.

Just as Mubarak was blind to the economic needs of the masses and democratic reforms, Bernanke is blind to the easy-money legacy that’s set the stage for revolution, turning the rich into super rich while the middle class stagnates and peanuts trickle down to the poor.

Warning, Egypt also had a huge wealth gap before its revolution. Bernanke is the final egomaniac in America’s bubbling 30-year wealth gap, where the top 1% went from owning 9% of America’s wealth to owning 23% during this dictatorship.

Bernanke’s ruling ideology is the culmination of a 30-year economic war that has forged together Reaganomics for the super rich, former Fed chairman Alan Greenspan’s toxic allegiance to Wall Street, the extreme Ayn Rand’s capitalist dogma, culminating in the toxic bailouts of Treasury Secretaries Hank Paulson and Tim Geithner, two Wall Street Trojan Horses corrupting government from within.

Since 1981 this monetary dictatorship has caused enormous collateral damage, systematically sabotaging democracy, capitalism and the American dream while fueling the rise of our most dangerous new enemy, China. See “Secret China war plan: trillions in U.S. debt.”

When Obama reappointed Bernanke a couple years ago, “Black Swan’s” Nicholas Taleb was “stunned.” Bernanke “doesn’t even know that he doesn’t understand how things work,” that Bernanke’s economic methods are so inadequate they make “homeopath and alternative healers look empirical and scientific.”

We called Bernanke, the “Captain of the Titanic,” warning that he was setting up the third meltdown of the 21st century, predicted by “Irrational Exuberance’s” Robert Shiller, a coming crash worse than the 2000 dot-com crash and the subprime credit meltdown of 2008 combined. See See “Capt. Bernanke sinks the U.S.S. Titanic.” on

According To Its National Bureau Of Statistics, Chinese Food Prices Have Increased By 4.6% In Ten Days!

From Zero Hedge:

This is simply stunning. A quick parsing of the data released every ten days by the National Bureau Of Statistics of China indicates that the average price of food in 50 cities in the January 21-31 period has increased by 4.6% compared to the prior 10 day period (and 416% annualized)! Granted, this is a simple average calculation of the 29 food items tracked without any weighing, although a quick glance at the components confirms that tonight's Chinese CPI will likely be a doozy. Some of the key changes: cucumbers up 28.2% in ten days, kidney beans up 21.9%, rapes [no pun] up 14.5%, tomatoes up 12.9%, hair tails up 4.7%, bananas up 3.6%, chickens up 3.1%. And this, again, is in the past 10 days! But not all is lost: Soybean oil actually dropped by 0.1%. Time for China to release an adjusted adjusted CPI which excludes all foodstuffs except for Soybean oil (and remember, in China, food is 31.4% of CPI)... which actually is exactly what is about to happen.

From the NBSC, which is somehow more transparent, and accurate, than the US' own Department of Truth.

But fear not: that 31.4% for food as % of CPI...that's about to be revised dramatically lower. And that will make inflation disappear.

Chinese stocks jumped more than 1 percent in early trade on Monday on talk of slower-than-expected inflation in January.

Traders said that consumer prices may have risen 4.9 percent in the year to January, well below the consensus forecast of 5.3 percent. The official data will be announced on Tuesday.

But they added that the surprisingly low reading may have been the result of changes to the weighting of the consumer price index (CPI).
The benchmark Shanghai Composite Index was up 1.5 percent at 0237 GMT.

The National Bureau of Statistics regularly adjusts the composition of the CPI basket, conducting small tweaks every year and a major adjustment every five years. It is due for the five-year shift.

The statistics agency is expected to reduce the weighting of food in CPI and, with rising food prices having led the pick-up in Chinese inflation in recent months, such a change would likely lead to a lower inflation reading.

So all shall be well, and people will never be hungry on paper ever again. In the meantime, buy stocks. Unlike gold and crude, paper is edible, if completely inert in the human digestive tract. Time for some biotech to come up with a drug allowing the stomach to decompose cellulose.

h/t John Lohman

Precious Metals Rise Immediately on Higher than Expected UK Inflation

From GoldCore:

Silver and particularly gold rose sharply on the release of the higher than expected UK inflation data. It showed that UK inflation quickened to 26 month highs at 4.0%. Currency debasement and higher food and energy prices are leading to an inflation surge in both developed and emerging markets.

Gold in British Pounds - 1 Day (Tick) GoldCore

Gold in British Pounds - 1 Day (Tick)

The extent of the surge is being masked as the figures in the UK and internationally underestimate real inflation. Increasingly many economists are concerned that official statistics are misleading and hide the true increase in the cost of living (see ‘Official statistics hide true increase in cost of living' in News today). A double-digit jump in food prices pushed China's inflation higher in January - seeing consumer prices rise 4.9 percent, driven by the 10.3 percent jump in food costs.

The Chinese inflation data appears to be even more misleading and manipulated than that in western economies. Many governments are attempting to manage consumers perceptions regarding the significant increase in the cost of living as fiat currencies are debased.

Silver is now less than 2% from its 30 year nominal high of $31.25/oz seen at the start of the year and looks set to challenge and surpass this level in the coming days due to continued robust physical demand (both investment and industrial) and the fact that the futures market is seeing some big money go long again after the recent correction.

Silver remains in backwardation with spot trading at $30.68/oz while the July 11 contract trades at $30.55/oz and the December 14 at $30.40/oz.


(Bloomberg) -- Soros Cuts Stake in Monsanto, Leaves Gold Shares Unchanged
Billionaire investor George Soross hedge fund cut its stake in Monsanto Co. and left its bet in gold unchanged, according to a quarterly filing with the Securities and Exchange Commission.

The $27 billion Soros Fund Management, based in New York, cut its shares in the St. Louis, Missouri-based agricultural company to 3.29 million shares from 6.52 million in the previous quarter, according to the regulatory filing. As of Dec. 31, the shares were worth $229 million.

Soros, who called gold "the ultimate asset bubble," left his gold bet little changed.

(Bloomberg) -- Paulsons SPDR Gold Holdings Unchanged at 31.5 Million Shares
Paulson & Co.s SPDR gold holdings were unchanged at 31.5 million shares as of Dec. 31 compared with three months earlier, according to a U.S. Securities and Exchange Commission filing.

(Bloomberg) -- Soros Raises SPDR Gold Holding 0.5% in Fourth Quarter (Update2)
Investor George Soros increased his SPDR Gold Trust share holding by 0.5 percent in the fourth quarter and John Paulson kept his investment unchanged, filings with the U.S. Securities and Exchange Commission show.

Soros Fund Management LLC held 4,721,808 SPDR Gold Trust shares as of Dec. 31, compared with 4,697,008 shares at the end of the third quarter, according to the filing. Soross call options on 705,000 shares in the trust as of Sept. 30 were not listed in the latest report. Paulson & Co.s holding, the largest in the SPDR fund, was 31.5 million shares.

A decade-long surge in gold has attracted investors seeking better returns than equities or bonds, and helped boost holdings in exchange-traded products backed by the metal to a record in December. The metals climb last year to an all-time high was more than triple the gain in global equities, and bullion beat shares in five of the past six years.

"Investment demand remains the most important driver for the gold market," said Daniel Brebner, an analyst at Deutsche Bank AG in London. "The entrance or exit of large funds in and out of exchange-traded products can give an idea of the conviction by these investors as to the prospects for gold."

Investors in 10 gold-backed exchange traded products own metal valued at $88.6 billion as of yesterday, according to Bloomberg calculations, even after cutting assets in tons by 4.5 percent since Dec. 20 when holdings peaked. Immediate-delivery gold traded at an all-time high of $1,431.25 an ounce on Dec. 7 and erased more than 4 percent since then to $1,365.47 today.

Soros, Paulson
Michael Vachon, a spokesman for Soros, declined to comment on gold investments and the filing, when asked before its release. Armel Leslie, a Paulson spokesman, declined to comment.

Soros Fund Management LLC manages about $27 billion. The companys SPDR Gold Trust holding was worth $655 million as of Dec. 31, the filing showed, representing 8.5 percent of the $7.7 billion total in the SEC filing.

The firms holdings in the iShares Gold Trust of 5 million shares, also backed by the metal, remained unchanged as of Dec. 31 from the preceding quarter.

Soros described gold at the World Economic Forums meeting in Davos, Switzerland, in January last year as "the ultimate asset bubble." In a Nov. 15 speech in Toronto the 80-year-old said conditions for the metal to keep rising were "pretty ideal" and at this years Davos forum he said the boom in commodities may last "a couple of years" longer.

(Bloomberg) -- Gold Advances in Asia as Chinas Inflation Fuels Hedge Demand
Gold advanced in Asia on speculation rising inflation across the globe will fan demand for the metal as a store of value after Chinas consumer prices exceeded the governments 2011 target for a fourth month.

Immediate-delivery bullion rose 0.3 percent to $1,365.43 an ounce at 1:46 p.m. Singapore time after falling as much as 0.2 percent. Gold for April delivery was little changed at $1,365.70 after weakening as much as 0.3 percent to $1,361.30 an ounce.

"The market is directionless given that theres no immediate incentive to influence traders," said Paul Yamamura, Tokyo-based trader with Sumitomo Corp. "Gold prices may gain steam after some consolidation on inflation fears."

China last week joined India, Indonesia, Thailand and South Korea in boosting interest rates as Asian policy makers sought to cool the economies leading a global rebound. Chinese consumer prices advanced 4.9 percent in January from a year earlier after a 4.6 percent gain in December, todays report showed.

(Financial Times) -- Largest bond fund cuts US government holdings
The worlds largest bond fund sharply cut its exposure to US government-related debt in January, before US bond yields rose this month to their highest level in almost a year.

Pimcos Total Return Fund, run by Bill Gross, a founder of Pimco, reported that its holdings of US government-related securities fell from 22 per cent in December to 12 per cent in January.

The proportion of US government-related holdings, which includes US Treasuries, is at the lowest level held by the $239bn fund since January 2009 when it held 15 per cent of its assets in the category.