Thursday, August 4, 2011

Minority Rules: Scientists Discover Tipping Point for the Spread of Ideas

I was interested to discover it takes over 10% of the population to hold an unshakable belief before the majority of society even take that belief seriously. This has incredible significance for gold and particularly silver as an investment. With under 1% of global financial assets held in gold and almost none held in silver, and with gold and silver bugs also being as rare as the metals themselves one has to conclude that over 10% of society attaining an unshakable belief in precious metals is light years away!

So next time you hear a friend, or financial advisor say that gold & silver are in a bubble, ask them: "Do more than 10% of the population own and share an unshakable belief that precious metals will continue to rise, as was the case during the and real estate bubbles?" ~ you can't have a bubble in an asset that almost no one owns.


Scientists at Rensselaer Polytechnic Institute have found that when just 10 percent of the population holds an unshakable belief, their belief will always be adopted by the majority of the society. The scientists, who are members of the Social Cognitive Networks Academic Research Center (SCNARC) at Rensselaer, used computational and analytical methods to discover the tipping point where a minority belief becomes the majority opinion. The finding has implications for the study and influence of societal interactions ranging from the spread of innovations to the movement of political ideals.

“When the number of committed opinion holders is below 10 percent, there is no visible progress in the spread of ideas. It would literally take the amount of time comparable to the age of the universe for this size group to reach the majority,” said SCNARC Director Boleslaw Szymanski, the Claire and Roland Schmitt Distinguished Professor at Rensselaer. “Once that number grows above 10 percent, the idea spreads like flame.”

As an example, the ongoing events in Tunisia and Egypt appear to exhibit a similar process, according to Szymanski. “In those countries, dictators who were in power for decades were suddenly overthrown in just a few weeks.”

The findings were published in the July 22, 2011, early online edition of the journal Physical Review E in an article titled “Social consensus through the influence of committed minorities.”

Read more at RPI News.

Emerging world buys $10 billion in gold as West wobbles

(Reuters) - Central banks of emerging market countries such as Korea and Thailand have added more than $10 billion of gold to their reserves this year in a sign of waning faith in the West's benchmark bonds and currencies like the dollar and the euro.

International Monetary Fund data for June on Wednesday showed Thailand bought gold for the second time this year, raising its reserves by nearly 19 tonnes to over 127 tonnes, while Russia bought another 5.85 tonnes, bringing its reserves to 836.7 tonnes, the world's eighth largest official stash of the metal.

So far in 2011, emerging market central banks have bought nearly 180 tonnes of gold, more than double the roughly 73 tonnes purchased by central banks globally in the whole of 2010.

The spot price of gold has risen by more than 17 percent this year to a record $1,672.65 an ounce, driven chiefly by investor concerns over the impact on the developed world's economy of its debt burdens and sluggish growth.

Mexico has been the largest buyer of gold in the year to date, with $5.3 billion worth of purchases, or 98 tonnes of gold, followed by Russia, which has bought 48 tonnes, worth $2.6 billion at current prices.

Earlier this week, Korea confirmed it had bought 25 tonnes of gold in June and July.

"Central banks evidently do not regard the price level as too high and are diversifying their currency reserves. This was the first purchase of gold for the Korean central bank in over ten years," said Commerzbank metals analyst Daniel on

Thai Central Bank buys another 30 tonnes of Gold

From The Bangkok Post:

Thailand has purchased another 30 tonnes of gold recently, increasing the total gold reserve to 130 tonnes, Bank of Thailand governor Prasarn Trairatvorakul said on Thursday.

"The amount of gold reserves represents three per cent of the country's international reserves.

"The central bank is studying whether it should raise the ceiling to more than three per cent," Mr Prasarn said.

The BOT also planned to invest in other foreign currencies besides the US dollar, the euro and Japan's yen. It now had about seven billion yuan to support the liquidity of commercial banks, he said.

Gold Traders' Association chairman Jitti Tangsithpakdi said he expected gold prices to rise further after reaching a new high last on

S. Korean Central Bank buys gold for first time in 13 years

From The Bangkok Post:

South Korea's central bank said Tuesday it bought gold for the first time in 13 years, diversifying its foreign exchange reserves away from the US dollar.

The Bank of Korea said in a statement it bought 25 tonnes of gold from the global market between June and July, bringing its total gold reserves to 39.4 tonnes as of the end of July.

"The gold purchase, as a safety net, will help us cope with volatile global financial markets and enhance investor confidence in Korea in times of crises," Hong Taeg-Ki, head of the bank's reserve management group, told Dow Jones Newswires.

He had no comment on whether there would be more purchases.

It was the first time the bank has bought gold since it purchased the precious metal from Koreans during the 1997-1998 East Asian financial crisis.

Individuals at that time collected gold from their homes to help their country overcome the crisis.

Since the 2008 financial meltdown, gold has become increasingly attractive to central banks worldwide, and prices have risen sharply.

Europe's money markets freeze as crisis escalates in Italy and Spain

From the UK Telegraph:

The European money markets have begun to seize up as pressure mounts on the Italian and Spanish banking systems, tracking the pattern seen during the build-up towards the financial crisis in 200

The three-month euribor/OIS spread, the fear gauge of credit markets, reached the highest level in two years today, jumping 7 basis points to 40 in wild trading.

"Europe's money markets are undoubtedly starting to freeze up," said Marc Ostwald from Monument Securites.

"It's not as dramatic as pre-Lehman but it is alarming and shows the pervasive degree of fear in the markets. People are again refusing to lend except on a secured basis."

The credit stress was triggered by fresh mayhem in the southern European bond markets and ominously in parts of the eurozone's soft core as well, including Belgium. Spanish yields pushed further into the danger zone to 6.42pc. Italian debt reached a post-EMU high of 6.22pc before falling back slightly on reports of Chinese buying.

"We have a revolt taking place by foreign investors in these bond markets," said Hans Redeker, currency chief at Morgan Stanley. "There have been hardly any purchases for several months. We are seeing net disinvestment because people fear that these countries lack the potential to grow their way out of the problem, and risk falling into a Fisherite debt trap." on

Pimco's Gross says "we are at a tipping point"

Aug 2, 2011

Too Big to Bail - Italy, Spain next on Eurozone crisis 'death list'?

From: RussiaToday | Aug 3, 2011
In Europe, borrowing costs for Italy and Spain surged drastically, as traders rush to rid themselves of risky investments. Crisis talks beween Italy and the EU are already underway, as its bond yields reached their highest level since the Euro was adopted. For more on the implications of this RT talks to economics journalist Patrick Young.

Paul Craig Roberts - Debt ceiling doesn't fix the economy

From: RTAmerica | Aug 3, 2011

Lawmakers have built up the suspense for the last several weeks about the debt ceiling issue and let the clock run down almost to the last second. Yesterday the bill passed in the House and today the Senate passed the bill as well. Obama has already signed off on the bill that will cut $2.1 trillion in the next 10 years. So did the US government solve the problem or create new ones? Who will this bill affect the most? Doctor Paul Craig Roberts, columnist and former Reagan Administration official, gives us some insight.