Saturday, July 9, 2011

'US wages wars to build empire'

From: PressTVGlobalNews | Jul 7, 2011

The British defense ministry has confirmed that its unmanned Reaper drone aircraft killed four Afghan civilians and injured two others in an attack in March.

The New Pan Asian Gold Exchange : A GAME CHANGER?

SILVER GURUS: Paper to Physical Ratio of 25, 100, 500 to 1? Sprott, Martenson & Bix Weir

Negative Real Interest Rates Continue to Provide Gold With a Perfect Environment

By Ronald Stoeferle:

Inflation has never been the primary driver of the gold sector on its own. Given that gold, as is well known, does not pay interest, the real interest rates equal the opportunity costs. During the 20 years of the gold bear market in the 1980s and 1990s, real interest rates were about 4%. They were negative in only 6.7% of the months. The situation was completely different in the 1970s. Real interest rates were negative in 54% of the months. Since 2000 real interest rates have been negative in 47% of the months, which constitutes an optimal environment for gold.

Real interest rates vs. gold price since 1970

Real interest rates vs. gold price since 1970

Sources: Erste Group Research, Datastream

When we break down the real interest rates (in this case 10Y yields minus CPI according to Shadowstats) into quintiles and analyse the performance of gold in the subsequent year, we find that there is a clear link between real interest rates and the development of the gold price. In the first quintile (annual real interest rates < -4.3%) gold increases by 21%. With the real interest rates between -4.3% and -1.7%, gold tends to gain close to 20%. It is only when real interest rates rise above 0.99% that the performance of gold weakens significantly.

Real interest rates vs. subsequent gold price performance 1970-2010

Real interest rates vs. subsequent gold price performance 1970-2010

Sources: Erste Group Research, Shadowstats

Negative real interest rates reduce interest expense by default and eat into the existing debt. They therefore constitute a transfer from the savers to the debtors. The following chart illustrates the fact that this form of financial repression seems to be in vogue among the majority of nations these days.

Real interest rates worldwide

Real interest rates worldwide

Sources: Datastream, Bloomberg, Erste Group Research

“Throughout history, feckless governments have dodged their fiscal responsibility by turning to their monetary authority to devalue the currency, monetize debt and inflate their way out of structural deficits“ Richard Fisher, President of the Federal Reserve Dallas, March 2011

By. Ronald Stoeferle of Erste Group

Erste Group is the leading financial provider in the Eastern EU. More than 50,000 employees serve 17.4 million clients in 3,200 branches in 8 countries (Austria, Czech Republic, Slovakia, Romania, Hungary, Croatia, Serbia, Ukraine). As of 31 December 2010 Erste Group has reached EUR 205.9 billion in total assets, a net profit of EUR 1,015.4 million and cost-income-ratio of 48.9%

Repeat after me - 'the Gold Market is Not Rigged'

For those who think anyone who says that the Gold market (and silver market at certain times) is rigged are just conspiracy nutters, then explain to me the kitco graph below. How can the random and chaotic interactions of millions of individuals buying and selling gold 24 x 7 on two days (and separated by one day) have a greater than 90% correlation over a 16 hour period - is this meant to be "the chance we can believe in" ?

Crowds occupy Cairo's Tahrir Square

How Fiat Currency can have you dragged off the street and beaten by government thugs

Note: Belarus "devalued" (debased) its currency against the US$ by 56% in late May

by on Jul 4, 2011

Over one hundred and forty activists will face trial in Belarus after they were detained during an anti-government protest on Sunday. Witnesses say police used tear gas and beat activists as they tried to round up the latest silent demonstration marked only by clapping.

Weekend Chillout

This weekend's chillout is inspired by the flock of vulture capitalists who have descended on the carcass of the Greek, Irish, Portuguese and Spanish economies, picking them clean of any government owned income producing entities.

Cher ~ Gypsys, Tramps & Thieves