tag:blogger.com,1999:blog-82064618517019328902024-03-12T20:53:54.552-07:00 The Golden Economizer Accurate Information For Making Real Life Decisions
Your Future Depends On ItThe Golden Economizerhttp://www.blogger.com/profile/16559943632453709417noreply@blogger.comBlogger11125tag:blogger.com,1999:blog-8206461851701932890.post-2158189681707558072014-12-31T22:24:00.000-08:002014-12-31T22:27:44.036-08:00Three Malaysian Owned Airliners Shot Down in Nine Months - False Flag?<div class="gmail_default" style="font-family: tahoma,sans-serif;">
From Goldeneconomizer.blogspot.com</div>
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December 31, 2014 </div>
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__________________________</div>
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<br /></div>
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<span style="font-size: medium;">When
I first heard that only three, (then later six), bodies had been recovered
(after an earlier claim of 40 by the Indonesian Air Force) and there was no floating luggage or identifiable debris, my
false flag radar went off. I also found it suspicious that one of the bodies was a Malaysian stewardess in uniform, about a one in twenty three chance, (or about 4%) assuming a crew of seven and 162 total passengers:</span></div>
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<span style="font-size: medium;"><br /></span>
<blockquote class="tr_bq">
AirAsia has stated that there were 162 passengers on board: 156
Indonesians, one Singaporean, one Malaysian, one French, and
three South Koreans.</blockquote>
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<blockquote>
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</div>
<div class="gmail_default" style="font-family: tahoma,sans-serif;">
Source: http://rt.com/news/218147-air-asia-flight-missing/</div>
</blockquote>
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--------------<br />
<blockquote class="tr_bq">
Only 6 bodies have been recovered so far from the missing AirAsia
flight, despite earlier claims of 40. Objects resembling parts of the
plane, as well as what was thought to be the plane’s outline underwater,
were seen in the search area.<br />
<span style="background-color: initial;">The Indonesian navy
initially said 40 bodies had been recovered, but the figure was
later corrected. The plane itself has yet to be found.</span>
<br />
One of the three bodies recovered on Wednesday morning was female
dressed in a stewardess uniform .....</blockquote>
</div>
<blockquote>
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Source: http://rt.com/news/218623-airasia-plane-missing-wreckage/</div>
</blockquote>
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----------------</div>
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<br /></div>
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<span style="font-size: medium;">This crash <i>could</i> possibly have been due to an equipment failure, but if so, black boxes will eventually be recovered, or at least their signal detected.<br /><br />https://en.wikipedia.org/wiki/<wbr></wbr>AirAsia<br /> </span></div>
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<span style="font-size: medium;">Bingo. <u>Air Asia is a Malaysian owned airline</u>. The beeping of my false flag radar has now become deafening.</span></div>
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<span style="font-size: medium;">Three Malaysian owned airline crashes in a row <i>should</i> arouse suspicion, but how many people will even <i>hear</i> the fact (in the mainstream media) that AirAsia is Malaysian owned?</span></div>
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<span style="font-size: medium;"><br /></span></div>
<div class="gmail_default" style="font-family: tahoma,sans-serif;">
<span style="font-size: medium;"><b>So all three recent plane crashes were Malaysian owned airliners. The black boxes were <i>missing</i> from
the first one (MH 370), <i>still</i> <i>impounded after five months</i> by Dutch authorities
on the second (MH 17) with only preliminary information released, and
<i>missing likely never to be recovered</i> on the third (Air Asia).</b></span></div>
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<span style="font-size: medium;"><br /></span></div>
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<span style="font-size: medium;">20 Indonesian Air Force divers have already been dispatched to search for more bodies, the plane and the black boxes: </span> <br />
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<blockquote class="tr_bq">
Currently, at least 30 vessels, 15 planes, and seven choppers are
looking for the AirAsia jet, Indonesian officials have stated.
Most of the search is conducted by Indonesia, but Singapore,
Malaysia and Australia are taking part as well.
<br />
Thailand is planning to join the search, while the US has sent a
warship to help.<br />
<br />
Source: http://rt.com/news/218623-airasia-plane-missing-wreckage/</blockquote>
-------------------
<br />
<span style="font-size: medium;">If nothing more is ever recovered to prove conclusively that this is the crash site of the missing AirAsia flight, I, for one, will be convinced that this was a false flag. T</span><span style="font-size: medium;"><span style="font-size: medium;">he pilot who made the observation marked </span>the observed location using GPS , but subsequent claims could always be made that underwater currents carried off or buried the wreckage.</span></div>
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</div>
<div class="gmail_default" style="font-family: tahoma,sans-serif;">
<span style="font-size: medium;">A reader comment by knesebeckbleibtreu on the above RT article: </span></div>
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<span style="font-size: medium;"></span></div>
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<span style="font-size: medium;"></span></div>
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<span style="font-size: medium;"><br /></span>
<blockquote class="tr_bq">
"It's pretty easy to determine a real plane wreck with floating bodies,
luggage and wreckage from something like MH370 which has revealed none
of the above. The MH370 investigation requires far more than burning
jet fuel over vast stretches of the south seas. It's almost impossible
for the US military sitting there in Diego Garcia to not know jack
about the events of that day. Of course they're withholding knowledge
of the fate of American citizens on that flight. Proper investigation
is also required for the likes of UA93 and AA77 which both left next to
nothing in their "crash". Even when a flight is blown up, like that
over Ukraine, you get remains scattered. Or even when the Air France
flight hit the ocean at 300km/hr, you still find bodies, luggage and
parts afloat within days, yet washing ashore for years. Where was the
luggage, bodies and fuselage at the Pentagon, or in Shanksville? How on
earth did the black boxes at the twin towers vanish out of sight a la
MH370? What cracks me up most is people who cower and whine whenever
legitimate questions like these are brought up. It's very scary to
have a government-provided worldview questioned."</blockquote>
</div>
<blockquote>
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</div>
<div class="gmail_default" style="font-family: tahoma,sans-serif;">
Source: <span style="font-size: small;">http://rt.com/news/218623-airasia-plane-missing-wreckage/</span></div>
</blockquote>
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<span style="font-size: small;">--------------------</span></div>
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</div>
<blockquote class="tr_bq">
<div class="gmail_default" style="font-family: tahoma,sans-serif;">
<span style="font-size: small;">Malaysian low-cost airline AirAsia is believed to be one of the
safest air carriers in the world. Until today there have been
only two incidents with its aircraft. In both cases they overran
runways. One took place in November 7, 2004, at Malaysia’s Kota
Kinabalu airport (Flight 104, Boeing 737). Another incident with
Flight 5218 (Airbus A320-200) occurred in Malaysia’s Kuching on
January 10, 2011. </span></div>
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<span style="font-size: small;"><br /></span></div>
<div class="gmail_default" style="font-family: tahoma,sans-serif;">
<span style="font-size: small;">Source: http://rt.com/news/218147-air-asia-flight-missing/</span></div>
</blockquote>
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<span style="font-size: small;">-------------------</span></div>
TIMELINE:<br />
<br />
<u>Wednesday, December 31</u><br />
<br />
<div class="update-time">
02:53 <span style="background-color: initial;">UTC</span>:</div>
<span style="background-color: initial;">One of the three newly
recovered bodies was female dressed in a stewardess uniform, F. H.
Bambang Soelistyo, chief of Indonesia's search and rescue agency said.
The other two bodies were male.</span><br />
<br />
<div class="update-time">
02:01 <span style="background-color: initial;">UTC</span>:</div>
<span style="background-color: initial;">Three additional bodies have
been found in the morning, according to the National Search and Rescue
Agency (BASARNAS) chief, Channel News Asia reports. The total of six
recovered bodies have not yet been brought to shore to Pangkalan Bun in
Kalimantan due to bad weather.</span><br />
<br />
<u><span style="background-color: initial;">Tuesday, December 30</span></u><br />
<br />
<div class="update-time">
15:13 <span style="background-color: initial;">UTC</span>:</div>
A pilot flying a C-130 Hercules aircraft taking part in the search
operation said he spotted seven or eight bodies in the water at the
Karimata Strait on Tuesday, Indonesian media outlet Kompas reported. He added that three of the bodies appeared to be holding hands.<br />
<br />
<div class="update-time">
09:36 <span style="background-color: initial;">UTC</span>:</div>
The Indonesian navy says they have pulled more than 40 dead bodies out of the sea.<br />
<br />
Source: http://rt.com/news/218155-missing-airasia-flight-updates/<br />
<br />
05:50 UTC<br />
The Indonesia National Search and Rescue Agency (BASARNAS) Air Force Hercules found an object described as a shadow at the bottom of the sea in the form of a plane.<br />
<br />
https://en.wikipedia.org/wiki/Indonesia_AirAsia_Flight_8501#cite_note-Flightradar24-6<br />
-----------<br />
<br />
<u>Monday, December 29</u><br />
<br />
06:15 <span style="background-color: initial;">UTC</span><br />
<b>2.15PM:</b> Passengers on other flights arriving at
Changi Airport, Singapore, from Surabaya tell our reporters there was
"nothing unusual" about weather conditions at point of departure. "It
was slightly cloudy but there were no delays in the aircraft taking
off," a Singapore Airlines passenger said.<br />
Mr Hendrich Sugiarto,
who was on Garuda Indonesia flight GA854 from Surabaya to Singapore
about 1.5 to 2 hours behind the AirAsia flight, wrote on Channel
NewsAsia's Facebook page that the flight was smooth with no turbulence.
"Nothing was unusual...the sky was blue and not cloudy," he said.<br />
<br />
23:26 <span style="background-color: initial;">UTC</span> Sunday, December 28 <br />
<b>07.26AM: </b>With daybreak, the search for the missing AirAsia flight QZ8501 has resumed, reports Indonesia's TV1. <br />
<span style="background-color: initial;"> </span><br />
<u><span style="background-color: initial;">Sunday, December 28</span></u><br />
<span style="background-color: initial;"><br /></span>
11:26 <span style="background-color: initial;">UTC</span><b><b> </b></b><br />
<b><b>7:22PM: </b>Search and locate operations have been suspended for tonight, Indonesian reports say<b>.</b> Three
planes had been combing three areas where QZ8501 was suspected to have
lost contact for about two hours with no progress, the person in charge
of Indonesia's search team was quoted as saying.</b><br />
The search operations were suspended at 6:30pm
Singapore-time "because it was getting dark", AFP quotes transport
ministry official Hadi Mustofa as saying. He says they will resume the
search at 7am or earlier.<br />
<br />
11:04 <span style="background-color: initial;">UTC</span><b></b><br />
<b>7:04PM: </b>AirAsia has issued a correction to the nationality breakdown of passengers and crew on board. There was one person from the UK on board and the French person is part of the crew.<br />
Nationalities of passengers: 1 Singapore, 1 Malaysia, 3 South Korea, 1 United Kingdom, 149 Indonesia<br />
<br />
Nationalities of crew: 1 France, 6 Indonesia<br />
<br />
08:42 <span style="background-color: initial;">UTC</span> <br />
<b>4.42PM:</b> The Jakarta Post has quoted an official from
Indonesia's National Search and Rescue Agency as saying that flight
QZ8501 is believed to have crashed at the location 03.22.46 South and
108.50.07 East, in waters around 80 to 100 nautical miles from Belitung. <br />
<br />
06:50 <span style="background-color: initial;">UTC</span><b></b><br />
<b>2.50PM:</b> AirAsia QZ8501's return flight from Singapore
to Surabaya, QZ8502, has been delayed by eight hours, and is now
scheduled to take off from Changi Airport's Terminal 1 at 10.35pm <span style="background-color: initial;"> </span><br />
<br />
<span style="background-color: initial;">05:45 </span><span style="background-color: initial;"><span style="background-color: initial;">UTC</span> </span><br />
<span style="background-color: initial;"><b>1.45PM:</b> AirAsia has released another statement
on missing flight QZ8501: "The aircraft was an Airbus A320-200 with the
registration number PK-AXC, and had undergone its last scheduled
maintenance on Nov 16. The captain in command had a total of 6,100
flying hours and the first officer a total of 2,275 flying hours." </span><br />
<br />
<span style="background-color: initial;">05:30 </span><span style="background-color: initial;"><span style="background-color: initial;">UTC</span> </span><br />
<span style="background-color: initial;"><b>1.30PM: </b>Officials said that AirAsia QZ8501 lost contact
between Tanjung Pandan and Pontianak in West Kalimantan. According to
Indonesian officials, in their last contact with the flight, the pilot
asked to rise to 38,000ft to avoid clouds. </span><br />
<br />
<span style="background-color: initial;">03:41 UTC </span><br />
AirAsia
announced on Facebook and Twitter (six minutes later) that it regrets
to confirm that AirAsia flight QZ8501 from Surabaya to Singapore has
lost contact with air traffic control.<br />
<br />
<span style="background-color: initial;">"AirAsia Indonesia regrets to confirm that flight QZ8501 from Surabaya to Singapore</span><br />
<span style="background-color: initial;">has lost contact has lost contact with air traffic control at 07:24 hrs this morning. </span><br />
<br />
<span style="background-color: initial;"><span style="background-color: initial;">Source: http://www.channelnewsasia.com/news/singapore/liveblog-airasia-qz8501/1553132.html</span></span><br />
<span style="background-color: initial;"></span><br />
<span style="background-color: initial;">03:22 UTC</span><br />
<br />
<span style="background-color: initial;"> </span>Search and rescue (SAR) operations were activated by the Indonesia National Search and Rescue Agency<br />
<br />
<u><span style="background-color: initial;">Saturday, December 27</span></u><br />
<br />
<span style="background-color: initial;">23:55 UTC </span><br />
<br />
<span style="background-color: initial;">AirAsia Flight QZ8501 was officially declared missing. Its last known position is over the Java Sea, Karimata Strait between the islands of Belitung and Kalimantan </span><br />
<br />
<span style="background-color: initial;">23:18 UTC</span><br />
<br />
<span style="background-color: initial;">ADS-B transponder signal was lost, with last position reported as <span class="plainlinks nourlexpansion"><span style="white-space: nowrap;"><a class="external text" href="https://tools.wmflabs.org/geohack/geohack.php?pagename=Indonesia_AirAsia_Flight_8501&params=-3.3708_N_109.6911_E_dim:500km_region:ID_type:event" style="white-space: normal;"><span class="geo-default"><span class="geo-dec" title="Maps, aerial photos, and other data for this location">3.3708°S 109.6911°E</span></span></a></span></span>, according to Indonesia's Ministry of Transport </span><br />
<br />
<span style="background-color: initial;">23:17 UTC </span><br />
<br />
<span style="background-color: initial;">Radar contact was lost, according to AirNav Indonesia. (AirAsia initially reported that contact was lost at 23:24.) </span><br />
<br />
<span style="background-color: initial;">23:12 UTC</span><br />
<br />
Pilots requested ATC clearance to divert left from the flight plan and
climb from 32,000 ft (9,800 m) to 38,000 ft (12,000 m) to avoid bad
weather. Jakarta air traffic controllers allowed the diversion, but
deferred the request to climb because of traffic.<br />
<br />
<br />
<span style="background-color: initial;">22:35 UTC </span><br />
Flight departed from Juanda International Airport.<sup class="reference" id="cite_ref-19"><a href="https://en.wikipedia.org/wiki/Indonesia_AirAsia_Flight_8501#cite_note-19"></a></sup> Scheduled departure was 22:20.<br />
------------ <br />
Source: https://en.wikipedia.org/wiki/Indonesia_AirAsia_Flight_8501#cite_note-Flightradar24-6<br />
<span style="background-color: initial;"> </span>
The Golden Economizerhttp://www.blogger.com/profile/16559943632453709417noreply@blogger.com0tag:blogger.com,1999:blog-8206461851701932890.post-67175287413474457502011-12-31T13:44:00.000-08:002011-12-31T13:44:42.137-08:00Bearish on Gold and Silver? What Fools These Mortals Be!<!--[if gte mso 9]><xml> <w:WordDocument> <w:View>Normal</w:View> <w:Zoom>0</w:Zoom> <w:TrackMoves/> <w:TrackFormatting/> <w:PunctuationKerning/> <w:ValidateAgainstSchemas/> <w:SaveIfXMLInvalid>false</w:SaveIfXMLInvalid> <w:IgnoreMixedContent>false</w:IgnoreMixedContent> <w:AlwaysShowPlaceholderText>false</w:AlwaysShowPlaceholderText> <w:DoNotPromoteQF/> <w:LidThemeOther>EN-US</w:LidThemeOther> <w:LidThemeAsian>X-NONE</w:LidThemeAsian> <w:LidThemeComplexScript>TH</w:LidThemeComplexScript> <w:Compatibility> <w:BreakWrappedTables/> <w:SnapToGridInCell/> <w:ApplyBreakingRules/> <w:WrapTextWithPunct/> <w:UseAsianBreakRules/> <w:DontGrowAutofit/> <w:SplitPgBreakAndParaMark/> <w:DontVertAlignCellWithSp/> <w:DontBreakConstrainedForcedTables/> <w:DontVertAlignInTxbx/> <w:Word11KerningPairs/> <w:CachedColBalance/> <w:UseFELayout/> </w:Compatibility> <w:DoNotOptimizeForBrowser/> <m:mathPr> <m:mathFont m:val="Cambria Math"/> <m:brkBin m:val="before"/> <m:brkBinSub m:val="--"/> <m:smallFrac m:val="off"/> <m:dispDef/> <m:lMargin m:val="0"/> <m:rMargin m:val="0"/> <m:defJc m:val="centerGroup"/> <m:wrapIndent m:val="1440"/> <m:intLim m:val="subSup"/> <m:naryLim m:val="undOvr"/> </m:mathPr></w:WordDocument> </xml><![endif]--><!--[if gte mso 9]><xml> <w:LatentStyles DefLockedState="false" DefUnhideWhenUsed="true"
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</style> <![endif]--> <div align="center" class="MsoNormal" style="text-align: center;"><span style="font-size: 20.0pt;">Bearish on Gold and Silver?</span></div><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-size: 20.0pt;">What Fools These Mortals Be!</span></div><div align="center" class="MsoNormal" style="text-align: center;"><br />
</div><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-size: 16.0pt;">Mark J. Lundeen</span></div><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-size: 16.0pt;"><a href="mailto:Mlundeen2@Comcast.net">Mlundeen2@Comcast.net</a></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">30 December 2011</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">I’m having difficulty dealing with current market sentiment for gold and silver.<span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>The idiot-box keeps pounding into my head that gold and silver are sensitive to downturns in the global economy, and precious metals are not a safe harbor from the storm during good times or bad. <span style="mso-spacerun: yes;"> </span>What a frightening thought <i>that</i> is, when we consider that from 1980-2000, as the economy roared upwards, and the latest price quote for Microsoft or Intel was the price for peace of mind, gold and silver saw bear-market declines of 69% and 91%. <span style="mso-spacerun: yes;"> </span>These idiot-box “experts” must be expecting even <i>worse</i> declines in gold and silver as the global bond and stock markets melt-down sometime in the next few years.</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">Maybe the <i>real</i> problem with gold and silver isn’t that the economy goes up or down, but as the Federal Reserve approaches its centennial, there still is an economy?<span style="mso-spacerun: yes;"> </span>The problem with that theory is that it wasn’t until 2001, after the NASDAQ bubble crashed, and after the “Masters-of-the-Universe” began making $250K sub-prime mortgages to the chronically unemployed, that gold and silver finally responded positively to Washington’s bubble economics.<span style="mso-spacerun: yes;"> </span>We should also note that it wasn’t until 2000 when gold and silver began their bull markets, as Congress was inflating the mortgage bubble (2001-07), though the precious metals continued to appreciate <i>long after</i> the mortgage bubble crashed (2008-09).<span style="mso-spacerun: yes;"> </span></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">That would suggest that gold and silver have appreciated for the past eleven years</span></div><div class="MsoNormal"><br />
</div><div align="center" class="MsoNormal" style="text-align: center;"><u><span style="font-size: 22.0pt;">* BECAUSE *</span></u><span style="font-size: 22.0pt;"></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">the “policy makers” have grossly overburdened the shrinking global economy with backbreaking levels of unserviceable debt, and insanely inflated the global-money supply to such extremes that global currencies can no longer be said to be backed by faith in sovereign credit, but by the economic ignorance of the masses. <span style="mso-spacerun: yes;"> </span></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">Looking at the world in <i>this</i> light, it makes perfect sense to believe that gold and silver <u>* MUST *</u> continue appreciating as the US Federal Reserve and European Central Bank continue bailing out the select but powerful few, at the expense of the many. <span style="mso-spacerun: yes;"> </span>But since this is undoubtedly true, why on earth is my idiot-box telling me to sell gold and silver, and buy financial stocks and bonds? <span style="mso-spacerun: yes;"> </span>Yes indeed: why?</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">Well one thing is for sure, the economy is seeing difficult times, as recorded in <a href="http://online.barrons.com/public/page/9_0210-pulseoftheeconomy.html">Barron’s Pulse of the Economy</a>.<span style="mso-spacerun: yes;"> </span>Even government statistics have to deal with the fact that the economy has not returned to its pre 2007-09 Credit Crisis levels.<span style="mso-spacerun: yes;"> </span>In fact, just looking at the chart below informs us that economic activity has not even returned to the levels of the 1990s high-tech bubble.</span></div><div class="MsoNormal"><br />
</div><div align="center" class="MsoNormal" style="text-align: center;"><span style="mso-bidi-font-size: 14.0pt; mso-no-proof: yes;"><img alt="Description: C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 221 (No 219 or 220)\Cap Ulitzation.gif" border="0" height="454" src="file:///C:/Users/NEWUSE%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image002.png" width="624" /></span><span style="mso-bidi-font-size: 14.0pt;"></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">Ah, but I hear that housing is on the rebound!<span style="mso-spacerun: yes;"> </span>In fact, housing starts are up 41% over the past three years. That sounds mighty impressive coming from the talking heads in the idiot-box, until one examines the past forty two years of data in the chart below.<span style="mso-spacerun: yes;"> </span>The fact <i>is</i>, the US housing industry was hamstrung, and will continue to be crippled for the next ten years, or more, because Congress with its Clinton era “affordable housing legislation” created unlimited inflationary funding in the mortgage market.<span style="mso-spacerun: yes;"> </span>If the United States didn’t have a Federal election every other year, I suspect housing prices would have already declined by more than 50%.<span style="mso-spacerun: yes;"> </span>It’s no secret that the banking system is holding <i>years</i> of supply off the market for fear of what this inventory would do to housing prices, and in the process, preventing the American people from having affordable housing.</span></div><div class="MsoNormal"><br />
</div><div align="center" class="MsoNormal" style="text-align: center;"><span style="mso-bidi-font-size: 14.0pt; mso-no-proof: yes;"><img alt="Description: C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 221 (No 219 or 220)\Hous Perm & Starts.gif" border="0" height="425" src="file:///C:/Users/NEWUSE%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image004.png" width="624" /></span><span style="mso-bidi-font-size: 14.0pt;"></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">The media and the government are not the <i>only</i> entities to supply defective economic information to a gullible public.<span style="mso-spacerun: yes;"> </span>On December 21, 2011 the National Association of Realtors announced (in an article deceptively titled “</span><span style="color: #00b050; mso-bidi-font-size: 14.0pt;"><a href="http://www.realtor.org/press_room/news_releases/2011/12/ehs_nov">Existing-Home Sales Continue to Climb in November</a></span><span style="mso-bidi-font-size: 14.0pt;">”) that they were revising their figures to show that 3.54 million existing home sales since 2007 <i>never took place</i>!<span style="mso-spacerun: yes;"> </span>That’s right, folks.<span style="mso-spacerun: yes;"> </span>You thought the real estate market was bad already, <i>how about now</i> with the “benchmark revisions” the NAR was so kind to make promptly, <i>years</i> after the fact so as not to panic the public with the truth.</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="color: #00b050; mso-bidi-font-size: 14.0pt;"><a href="http://www.jsmineset.com/2011/12/21/in-the-news-today-1063/">Courtesy of John Williams of Shadowstats.com and Jim Sinclair</a>:</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="color: #984806; mso-bidi-font-size: 14.0pt;">“The National Association of Realtors (NAR) corrected its estimates of existing home sales today (December 21st), and 3.54 million previously reported home sales vanished, in revision, since January 2007. Put in perspective, the amount of sales wiped out was the total amount of seasonally-adjusted existing home sales that previously had been reported in 2011, through October. Post-2006, 14.3% of existing home sales were eliminated, with sales in the Northeast taking a 30.9% hit, followed by a 14.2% reduction in the Midwest, 12.3% loss in the South and 5.3% loss in the West.</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="color: #984806; mso-bidi-font-size: 14.0pt;">In revealing recognized reporting problems, the NAR has addressed issues not commonly taken on by trade groups that report industry data, or by the federal government. Where the nature of some of the problems (overly optimistic underlying assumptions) are common with many government series, including payroll employment and retail sales, the government would do well to overhaul much of its reporting.</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="color: #984806; mso-bidi-font-size: 14.0pt;">Reflecting adjustments for some double-counting, mis-estimates of homes for sale by owner, and some improper inclusion of new home sales, the revisions were structured in such a way as to preserve as much as possible of the previously reported month-to-month and year-to-year patterns. Sales levels were reduced by 10% to 11% starting in 2007, hitting a peak reduction of 17% in late-2008, and averaging around 14.5% in the most-recent reporting.”</span><span style="mso-bidi-font-size: 14.0pt;"></span></div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;"><span style="mso-spacerun: yes;"> </span></span></div><div align="center" class="MsoNormal" style="text-align: center;"><span style="mso-bidi-font-size: 14.0pt;">End of Quote</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">The sticky residue of the housing bubble (US mortgages) is still gumming up the world’s pension funds and insurance companies’ financial reserves.<span style="mso-spacerun: yes;"> </span>It’s just not reasonable to expect any real change for the better until Mr Bear is allowed to scrub clean the global financial system’s balance sheets with an industrial-strength degreasing agent.<span style="mso-spacerun: yes;"> </span>So who is stopping the furry fella from going to work?<span style="mso-spacerun: yes;"> </span>The same “policy makers” who are responsible for the mortgage mess in the first place!<span style="mso-spacerun: yes;"> </span>These geniuses have yet to discover the correct verbiage to explain to pension fund beneficiaries worldwide that hundreds of billions of dollars or euros they’re relying on for support in their old age are in fact mostly fictitious ledger entries.<span style="mso-spacerun: yes;"> </span></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">These “policy” dudes are mostly former college professors, so they aren’t stupid. <span style="mso-spacerun: yes;"> </span>I’m sure the “best-and-the-brightest” in “public service” long ago figured out that if they said nothing, pension beneficiaries would eventually discover their retirement problem on their own.<span style="mso-spacerun: yes;"> </span>So why draw the current attention and future wrath of the masses by bringing up the subject now?<span style="mso-spacerun: yes;"> </span><i>That</i> is how these people think!</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">On this one issue (private and public sector pensions), we’ve barely begun seeing the earliest signs of the current economic upheaval that hangs over everyone’s head.<span style="mso-spacerun: yes;"> </span>Everything these people touch dies.<span style="mso-spacerun: yes;"> </span>So, until Professors Twiddle Dumb and Twiddle Dee, and their big ideas are driven from the halls of power, nothing will ever change.</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">Well, isn’t unemployment improving?<span style="mso-spacerun: yes;"> </span>It is according to the US Department of Labor.<span style="mso-spacerun: yes;"> </span>The only problem with this data is that it comes from the US Department of Labor, who employs plenty of college level Ph.Ds to their dirty work.<span style="mso-spacerun: yes;"> </span>With a presidential election coming in 2012, it’s a political necessity that unemployment comes down.<span style="mso-spacerun: yes;"> </span>So, I have great doubts we are looking at the real world in the chart below, rather than a new method of statistical manipulation required to keep incumbent politicians, and the US Secretary of Labor in office. <span style="mso-spacerun: yes;"> </span>If the Dept. of Labor claims that unemployment is below 9%, I suspect it’s actually above 20%.</span></div><div class="MsoNormal"><br />
</div><div align="center" class="MsoNormal" style="text-align: center;"><span style="mso-bidi-font-size: 14.0pt; mso-no-proof: yes;"><img alt="Description: C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 221 (No 219 or 220)\US Unemployment.gif" border="0" height="453" src="file:///C:/Users/NEWUSE%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image006.png" width="624" /></span><span style="mso-bidi-font-size: 14.0pt;"></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">Come on Mark; give us a glimmer of hope.<span style="mso-spacerun: yes;"> </span>Well you can forget about that from anything I write, at least until Mr Bear finishes his cleaning duties, at which time I’ll become a roaring bull!<span style="mso-spacerun: yes;"> </span>But as Obama offers you hope, from me you’ll get charts; like electrical power consumption (EP) which not only refuses to return to its highs of August 2008, but has completed a fourteen month inverted-bowl pattern to the downside.<span style="mso-spacerun: yes;"> </span>Unlike the government’s funded data, EP in December 2011 is measured in the same exacting engineering unit used in August 1930; the kilo-watt.<span style="mso-spacerun: yes;"> </span>This makes variations in EP invulnerable to the whimsical and ever changing statistical methods used by dubious government statisticians.<span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">One look at EP’s long-term chart below should tell you that our current economic situation really <u>* IS *</u> different.<span style="mso-spacerun: yes;"> </span>Not since the post WW2’s retooling of the American economy, from wartime to peace time production, has EP declined so drastically.<span style="mso-spacerun: yes;"> </span>Not since the Great Depression has so much time passed from one BEV Zero (new all-time high in electrical power consumption) to the next.<span style="mso-spacerun: yes;"> </span>But what in the economy isn’t powered by electricity?<span style="mso-spacerun: yes;"> </span>Unsold condos, shut-down assembly lines in darkened factories; stuff like that.<span style="mso-spacerun: yes;"> </span>As goes the economy, so goes EP.<span style="mso-spacerun: yes;"> </span>And right now, EP is once again contracting.</span></div><div class="MsoNormal"><br />
</div><div align="center" class="MsoNormal" style="text-align: center;"><span style="mso-bidi-font-size: 14.0pt; mso-no-proof: yes;"><img alt="Description: C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 221 (No 219 or 220)\Electrical Usage BEV 1930-12.gif" border="0" height="453" src="file:///C:/Users/NEWUSE%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image008.png" width="624" /></span><span style="mso-bidi-font-size: 14.0pt;"></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">Below is EP’s chart from 2000 to 2011, and I direct your eyes to the red circle.<span style="mso-spacerun: yes;"> </span>In Barron’s 26 Dec 2011 issue, EP has broken below its BEV -1.5% line.<span style="mso-spacerun: yes;"> </span>A week later (Barron’s 01 Jan 2012 issue) EP slipped to -1.90%. We’ve had a warm winter so far, so maybe this decline is due to seasonal factors.<span style="mso-spacerun: yes;"> </span>However, when I consider the idiots, morons and moral reprobates in charge of “economic planning” of our “free enterprise system”, I can’t rule out the possibility that we are witnessing the beginnings of an economic downturn that will eventually rival the -17.32% EP decline seen in 1933.<span style="mso-spacerun: yes;"> </span></span></div><div class="MsoNormal"><br />
</div><div align="center" class="MsoNormal" style="text-align: center;"><span style="mso-bidi-font-size: 14.0pt; mso-no-proof: yes;"><img alt="Description: C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 221 (No 219 or 220)\EP 2000-2014.gif" border="0" height="454" src="file:///C:/Users/NEWUSE%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image010.png" width="624" /></span><span style="mso-bidi-font-size: 14.0pt;"></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">Okay, the economy is in decline, but why isn’t that bad for the price of gold and silver?<span style="mso-spacerun: yes;"> </span>Well it <i>might</i> be if the “policy makers” were attempting to <i>cause</i> the current decline in economic activity, as they’ve done many times in the past to eliminate the “excesses” in the economy.<span style="mso-spacerun: yes;"> </span>In the past, they induced recessions by raising interest rates, forcing banks call in business loans.<span style="mso-spacerun: yes;"> </span>This would result in a contraction in the Fed’s monetary aggregates; M1 and M2.<span style="mso-spacerun: yes;"> </span>In other words, they raised interest rates to contract the money supply, knowing that economic activity would slow down.<span style="mso-spacerun: yes;"> </span>However; that is <u>* NOT *</u> the case today!<span style="mso-spacerun: yes;"> </span></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">Since October 2008, at the peak of the Credit Crisis, as our Congress held hearings on live TV, and Hank Paulson (then Secretary of the Treasury) told Congress he needed a bazooka to battle the beams of deflationary radiation directed at the US mortgage market from an unknown, possibly inter-galactic source, the Fed Funds rate has been held below 1%.<span style="mso-spacerun: yes;"> </span>Okay, I’m making up the bit on deflation rays from outer-space, but today’s “0% Fed Funds Rate” (actually below 0.10% per annum) indicates the “policy makers” are frantically attempting to re-inflate the economy with absolutely no success.</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">One look at the Fed Funds Rate chart below tells us that Doctor Bernanke is riding on the back of a tiger.<span style="mso-spacerun: yes;"> </span>He doesn’t dare raise the Fed Funds Rate back above 1% because he knows if he does, the monetary monster he and his predecessors created will consume him, and his precious Federal Reserve System.</span></div><div class="MsoNormal"><br />
</div><div align="center" class="MsoNormal" style="text-align: center;"><span style="mso-bidi-font-size: 14.0pt; mso-no-proof: yes;"><img alt="Description: C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 221 (No 219 or 220)\Fed Funds 1954-2014.gif" border="0" height="453" src="file:///C:/Users/NEWUSE%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image012.png" width="624" /></span><span style="mso-bidi-font-size: 14.0pt;"></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">But if the good doctor can’t raise short-term interest rates, he sure <i>can</i> print dollars and “inject” massive volumes of cash into the economy.<span style="mso-spacerun: yes;"> </span>And since he became chairman of the Federal Reserve in 2006, that’s exactly what he’s done.</span></div><div class="MsoNormal"><br />
</div><div align="center" class="MsoNormal" style="text-align: center;"><span style="mso-bidi-font-size: 14.0pt; mso-no-proof: yes;"><img alt="Description: C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 221 (No 219 or 220)\US CinC 1920-2012.gif" border="0" height="453" src="file:///C:/Users/NEWUSE%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image014.png" width="624" /></span><span style="mso-bidi-font-size: 14.0pt;"></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">The dollars Doctor Bernanke creates may no longer be backed by ounces of gold and silver, but instead by something more socially scientific, and so much better for “policy”: US Treasury debt.<span style="mso-spacerun: yes;"> </span>The wisdom of the debt-backed dollar and the folly of the gold standard had been beaten into the defenseless minds of college students since the days when tuition for college could be financed by the efforts of students themselves, (maybe with some help from their relatives).<span style="mso-spacerun: yes;"> </span>But the quality of college education, instruction that provided actual economic benefits to the student didn’t last long after government began its guaranteed student loans program, even though the college professors and administrators of higher education prospered as never before.<span style="mso-spacerun: yes;"> </span></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">It’s not surprising that our educational elite present a united front in opposing the return of the gold standard.<span style="mso-spacerun: yes;"> </span>When gold was money, costs for college, like everything else were set by market forces.<span style="mso-spacerun: yes;"> </span>This was actually beneficial for students, as colleges kept their expenses down, <i>and they actually cared</i> that their students could go out into the world and become financially successful.<span style="mso-spacerun: yes;"> </span>Grateful graduates had a way of becoming alumni, generous to their Alma Mater.<span style="mso-spacerun: yes;"> </span></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">But this superb system no longer exists. With the debt-backed dollar, a dollar managed by this same educational elite, the only factor limiting the price increases for tuition and text books (written by professors) is how much “aid” their colleagues in government are willing to extend in the form of student loans.<span style="mso-spacerun: yes;"> </span>And as we all know, Washington has been very generous to “education” with its student loan program.<span style="mso-spacerun: yes;"> </span>Today, any institutional interest colleges formerly had in the financial success of their graduates has been short circuited by the current college system’s direct connection to the hose of “liquidity” from the Federal Reserve.<span style="mso-spacerun: yes;"> </span>Educational standards for both professors and students in our college system have been drastically cut to facilitate enrollment expansion, because that is how the big bucks in education are made.<span style="mso-spacerun: yes;"> </span>And today, education is all about the big bucks. <span style="mso-spacerun: yes;"> </span>That many, if not most of our educational system graduates struggle with crippling debt for many years, is something not discussed in polite academic society.</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">And in 2011, exactly how much “liquidity” has the college system injected into our youth?<span style="mso-spacerun: yes;"> </span>I haven’t a clue.<span style="mso-spacerun: yes;"> </span>But I’ll stick my neck out and guess that in 2011 alone,</span></div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">the school loan program “injected” more inflation into their students than the total national debt of the United States in July 1938: $37 billion.</span><span style="color: #00b050; mso-bidi-font-size: 14.0pt;"></span></div><div class="MsoNormal"><br />
</div><div align="center" class="MsoNormal" style="text-align: center;"><span style="mso-bidi-font-size: 14.0pt; mso-no-proof: yes;"><img alt="Description: C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 221 (No 219 or 220)\US Debt 38-11.gif" border="0" height="425" src="file:///C:/Users/NEWUSE%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image016.png" width="624" /></span><span style="mso-bidi-font-size: 14.0pt;"></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">Well, now that I have all that off my back, let’s see just how bad things <i>really</i> are for gold and silver as 2011 draws to a close.<span style="mso-spacerun: yes;"> </span>No better chart than a Bear’s Eye View to illustrate how bad things <i>really</i> are, and after taking a quick look at how little success Mr Bear has had in clawing down the price of gold since 2001, all I’ve got to say to you “men” out there (and I use the term loosely) is: you’re pathetic!<span style="mso-spacerun: yes;"> </span>As the year 2011 came to its close, the “policy makers” have done their worst in the gold market and they failed to get the price of gold to break below its BEV -20% line.<span style="mso-spacerun: yes;"> </span>That is correct, since gold’s highs of August this year, on a daily closing basis, gold’s maximum decline in this correction was only 18.47%</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">If this is all the worst they can do, then the end of their reign of terror in the gold market draws nigh, and all I hear is boo-hoo-hooing from people who should know better!</span></div><div class="MsoNormal"><br />
</div><div align="center" class="MsoNormal" style="text-align: center;"><span style="mso-bidi-font-size: 14.0pt; mso-no-proof: yes;"><img alt="Description: C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 221 (No 219 or 220)\Gold BEV 69_10.gif" border="0" height="425" src="file:///C:/Users/NEWUSE%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image018.png" width="624" /></span><span style="mso-bidi-font-size: 14.0pt;"></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">Let’s take a good hard look at the price of gold since 1969 with the Bear’s Eye View (BEV).<span style="mso-spacerun: yes;"> </span>In a BEV chart, every new all-time high is converted into a zero percent, because to Mr Bear, that’s all a new high is worth to him – nothing!<span style="mso-spacerun: yes;"> </span>Mr Bear is only interested in how large a percentage he can claw back from the bulls’ profits.</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">Geez Louise, look at the corrections Mr Bear inflicted on the gold bulls between 1969 and 1980!<span style="mso-spacerun: yes;"> </span>From 1969-75, gold seldom saw more than a few new all-time highs before Mr Bear gnawed 20% from the bull’s gains.<span style="mso-spacerun: yes;"> </span>And from 1969-75, did the gold bulls begin blubbering like a gaggle of girlie-men when gold declined over 20%?<span style="mso-spacerun: yes;"> </span>THEY DID NOT!<span style="mso-spacerun: yes;"> </span>Like men, real men, they kept a steely eye on their compass; and an iron hand on the tiller, even as gold declined 48% from an all-time high in August 1976. </span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">Now compare the 1969-80 bull market with ours. Gold clawed its way back from the dead with barely a pause in its advance, and ONLY ONE PRICE CORRECTION <i>in the past twelve years</i> that might be compared with something from the 1970s, and that less than 30% correction DID NOT HAPPEN in 2011!</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">Last week I listened to Eric King’s interview with Jim Sinclair. <span style="mso-spacerun: yes;"> </span>Mr Sinclair, has blood-shot eyes manning a 24 hour gold-bug suicide hot line, because the “policy makers” failed in their attempt to get gold to decline below its BEV -20% line.<span style="mso-spacerun: yes;"> </span>Well it’s true, so-called gold bugs are in an emotional state of panic, keeping poor Mr Sinclair up all night because the former “Masters-of-the-Universe” failed to whack gold down 20% from its highs of August.<span style="mso-spacerun: yes;"> </span>Funny, Wall Street’s Masters-of-Disaster could do a plus 20% whack-job on gold in 2001, 2006 (twice) and 2008.<span style="mso-spacerun: yes;"> </span></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">Let’s look at the next chart, with the BEV series beginning at the absolute low of the 1980-99 bear market.<span style="mso-spacerun: yes;"> </span>What’s wrong with you gold bugs?<span style="mso-spacerun: yes;"> </span>We are seeing the fourth deepest correction from 1999 to present, a correction of less than 19%, and you’re ready to run to the tall grass like a pack of poltroons!</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">And what’s wrong, New York and London; is this less than 19% decline all you got?<span style="mso-spacerun: yes;"> </span>Of course not!<span style="mso-spacerun: yes;"> </span>The GLD ETF must still hold a few bars of gold you can still lend, swap or somehow collateralize and entangle in the open market.<span style="mso-spacerun: yes;"> </span>Hey, it’s what banks <i>do</i> with other peoples’ assets; they take a deposit of one and lend it to ten, or more people.<span style="mso-spacerun: yes;"> </span>We would be foolish to believe the big banks haven’t maximized their own profits, by risking the assets of other people held in any precious metal ETF they control.</span></div><div class="MsoNormal"><br />
</div><div align="center" class="MsoNormal" style="text-align: center;"><span style="mso-bidi-font-size: 14.0pt; mso-no-proof: yes;"><img alt="Description: C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 221 (No 219 or 220)\Gold BEV 1999-2014.gif" border="0" height="453" src="file:///C:/Users/NEWUSE%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image020.png" width="624" /></span><span style="mso-bidi-font-size: 14.0pt;"></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">Hey you Big Shot Bankers; maybe one more huge margin increase would do the job, sending the price of gold towards its BEV -30% line.<span style="mso-spacerun: yes;"> </span>But you’d better not take any chances, so you guys will need to whack another commodity futures trading firm, and then send the poor souls whose lives you’ve ruined into regulatory purgatory at the CFTC, exactly as you did with MF Global.<span style="mso-spacerun: yes;"> </span>Hey!<span style="mso-spacerun: yes;"> </span>Do you know what would <i>really</i> be funny?<span style="mso-spacerun: yes;"> </span>Have your willing-tools at the CFTC send an official letter to all your future victims informing them they have to personally appear at the offices of the Commodity and Futures Trading Commission to be photographed and take a number for service.<span style="mso-spacerun: yes;"> </span>Have the number series start at some odd number over a million.<span style="mso-spacerun: yes;"> </span></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">Who is there to stop you?<span style="mso-spacerun: yes;"> </span>I’ll tell you who: Mr Bear.<span style="mso-spacerun: yes;"> </span>When I think of all the dollars of currency and debt you’ve created with your debt-backed dollar since 1980 (the end of gold last’s bull market), I know that you are growing weaker, as Mr Bear grows stronger.<span style="mso-spacerun: yes;"> </span>That’s why since 1999 you’ve been <u>* UNSUCESSFUL *</u> in dragging the price of gold down a full 30% from a new all-time high <i>even once.</i><span style="mso-spacerun: yes;"> </span>To my way of thinking, that makes Mr Bear is the biggest gold bug in the market, and <i>he</i> is someone Washington and Wall Street can’t stop out!</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">That’s enough free “financial advice” for the malignant narcissists community; let’s move on to the table below and see just how good the markets have been to people who were wise enough to buy and take delivery of their metal, and refrained from playing the devil’s favorite game at the COMEX: trading paper metal.</span></div><div class="MsoNormal"><br />
</div><div align="center" class="MsoNormal" style="text-align: center;"><span style="mso-no-proof: yes;"><img border="0" height="447" src="file:///C:/Users/NEWUSE%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image022.png" width="602" /></span><span style="mso-bidi-font-size: 14.0pt;"></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">Look at the cumulative gains in gold and silver since 2000, and then tell me that precious metals haven’t been a safe harbor for investors during the financial turmoil of the past decade. <span style="mso-spacerun: yes;"> </span>As always, for thousands of years anyways, gold and silver have been the investment of choice during times of economic trouble.</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="mso-bidi-font-size: 14.0pt;">Against my better judgment, I was listening to the idiot-box (CNBC) with the volume turned up as their “experts” were making their predictions for 2012.<span style="mso-spacerun: yes;"> </span>Guess what; they made the same predictions they’ve been making since 2000, and once again gold and silver didn’t make the cut.<span style="mso-spacerun: yes;"> </span>Well; stupid is what stupid does, year after year.<span style="mso-spacerun: yes;"> </span>So I’d like to recommend a New Year’s Resolution for my gold and silver buddies: in 2012 we will all turn down the volume on the idiot box, we will not leverage our positions, and most importantly, we will all grow some guts.<span style="mso-spacerun: yes;"> </span>Come on, let Mr Sinclair get a little sleep!</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><br />
</div><div align="center" class="MsoNormal" style="text-align: center;"><span style="mso-bidi-font-size: 14.0pt;">Mark J. Lundeen</span></div><div align="center" class="MsoNormal" style="text-align: center;"><span style="mso-bidi-font-size: 14.0pt;"><a href="mailto:Mlundeen2@Comcast.net">Mlundeen2@Comcast.net</a></span></div><div align="center" class="MsoNormal" style="text-align: center;"><span style="mso-bidi-font-size: 14.0pt;">30 December 2011</span></div>The Golden Economizerhttp://www.blogger.com/profile/16559943632453709417noreply@blogger.com0tag:blogger.com,1999:blog-8206461851701932890.post-26167715228652977942011-03-23T22:50:00.001-07:002011-03-23T23:59:40.426-07:00Aggressive Retirement Portfolio For the Next 3 Years<span xmlns=""></span><br />
<span xmlns="">Yesterday I put up <a href="http://goldeneconomizer.blogspot.com/2011/03/simple-retirement-portfolio.html">an article on a simple retirement portfolio for the next three years</a>, and described the results of the picks I had made three years ago (with much less market knowledge than today).<br />
</span><br />
<span xmlns="">This was an exercise to illustrate how well a simple portfolio of just ten equities could perform compared to a widely diversified portfolio constructed using standardized financial planning principles. The idea was to show how identifying a long term fundamental market trend and investing to capitalize on that trend would outperform a portfolio designed on fixed percentage allocations in various asset classes. <br />
</span><br />
<span xmlns="">The major issue to be debated is how much extra risk is involved with this strategy. Certainly, if you misidentify the long term trend on which you base your portfolio choices, the risk would be greatly magnified. This article assumes that you correctly identify a market trend, in this case, the extreme underpricing of silver based on years of price suppression and exhaustion of above ground inventories, and closing of primary silver mines which were no longer economically viable. Also, the long term uptrend in food and oil prices driven by population growth and peak oil. <br />
</span><br />
<span xmlns="">In the year 2000, a median priced home in the USA cost about $225K. Silver was about $5 an ounce. The average home would have cost you 45,000 ounces of silver.<br />
</span><br />
<span xmlns="">Today, a median priced home in the USA costs about $175K, and silver is currently at $37.35 an ounce, so today the average home would only cost you 4,685 ounces of silver. <br />
</span><br />
<span xmlns="">If you sold your home in 2000 and bought silver, today you could buy nine identical houses with the proceeds and still have $105,000 left over.<br />
</span><br />
<span xmlns="">I will not be going into the supply and demand fundamentals of silver here. For those unfamiliar, here is an incredibly well written, well researched series of articles by Jeff Nielson to use as a starting point:<br />
</span><br />
<span xmlns=""><a href="http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=541:history-of-silver-part-i-the-metal-of-the-moon&catid=49:silver-commentary&Itemid=130">History of Silver, Part I: the Metal of the Moon – Jeff Nielson</a><br />
</span><br />
<span xmlns=""><a href="http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=548:history-of-silver-part-ii-the-great-build&catid=49:silver-commentary&Itemid=130">History of Silver, Part II: the great "build" – Jeff Nielson</a><br />
</span><br />
<span xmlns=""><a href="http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=552:history-of-silver-part-iii-inventories-gone&catid=49:silver-commentary&Itemid=130">History of Silver, Part III: inventories gone! – Jeff Nielson</a><br />
</span><br />
<span xmlns=""><a href="http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=11299:the-silver-price-spiral-part-i-today&catid=49:silver-commentary&Itemid=130">The Silver Price-spiral, Part I: today – Jeff Nielson</a><br />
</span><br />
<span xmlns=""><a href="http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=11302:the-silver-price-spiral-part-ii-paper-qinventoriesq&catid=49:silver-commentary&Itemid=130">The Silver Price Spiral, Part II: paper "inventories" – Jeff Nielson</a><br />
</span><br />
<span xmlns=""><a href="http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=11360:the-silver-price-spiral-part-iii-tomorrow&catid=49:silver-commentary&Itemid=130">The Silver Price Spiral, Part III: tomorrow – Jeff Nielson</a><br />
</span><br />
<span xmlns=""><a href="http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=12786:fifty-years-of-suppressing-silver&catid=49:silver-commentary&Itemid=130">Fifty Years of Suppressing Silver – Jeff Nielson</a><br />
</span><br />
<span xmlns="">Before posting the more aggressive model portfolio, I need to emphasize that I would NEVER recommend for ANYONE to put 100% of their investment capital into equities of ANY kind. Depending on your age and personal situation, I would recommend for EVERYONE to have at least 50% to 90% of your investment capital in physical silver and gold bullion kept IN YOUR OWN POSSESSION. This is because of the MANY layers of counterparty risk involved with ANY investment in equities. For the uninitiated, I will list a few of them here:<br />
</span><br />
<ol><li><span xmlns="">Currency collapse <br />
</span></li>
<span xmlns="">
<li>Bank closures (euphemistically called "bank holidays")<br />
</li>
<li>Insolvency of or mismanagement by your brokerage<br />
</li>
<li>Changes in government taxation policy<br />
</li>
<li>Government confiscation or forced annuitization of retirement accounts<br />
</li>
<li>Dilution of common stock equity by secondary share offerings <br />
</li>
<li>Mismanagement, embezzlement, fraud by company management (think Enron)<br />
</li>
<li>Large scale internet outage (think you'll be able to get your broker on the phone?)<br />
</li>
<li>Interest rates will likely double soon, causing ALL bonds to lose 50% of their principal<br />
</li>
<li>Temporary or permanent closure of stock exchanges<br />
</li>
</span></ol><span xmlns="">Don't think your stock exchange can close up shop? The NYSE closed for one week after the 9-11 attacks, and lost 7% of its value on the next trading day. It also <a href="http://pages.stern.nyu.edu/%7Ewsilber/Article%20What%20Happened%20When%20%20JFE%205%2020%2005%20FINAL%20PAPER.pdf">closed for 4 ½ months at the onset of World War I</a> and <i>the US was not yet even a combatant</i>. The Egyptian stock exchange closed yesterday, and when it reopened today, it was closed again <i>after just one minute of trading</i>. No investment strategy is without its risks. I am just highlighting here the risks involved in holding equities, that most people never even consider.<br />
</span><br />
<span xmlns=""><br />
</span><br />
<span xmlns=""> Aggressive Retirement Portfolio For the Next Three Years<br />
</span><br />
<span xmlns=""><span style="text-decoration: underline;">Ticker %Holding Sector Equity___________________<br />
</span></span><br />
<span xmlns="">PSLV 20% PM Sprott Physical Silver Trust ET<br />
</span><br />
<span xmlns="">SIVR 20% PM ETFS Physical Silver Shares <br />
</span><br />
<span xmlns="">PHYS 5% PM Sprott Physical Gold Trust ETV<br />
</span><br />
<span xmlns="">GTU 5% PM Central Gold Trust<b><br />
</b><br />
</span><br />
<span xmlns="">CEF 5% PM Central Fund of Canada Limited<br />
</span><br />
<span xmlns="">SLW 10% PM Silver Wheaton Corp<br />
</span><br />
<span xmlns="">EXK 5% MINING Endeavour Silver Corp<br />
</span><br />
<span xmlns="">GPL 5% MINING Great Panther Silver Limited Or<br />
</span><br />
<span xmlns="">GDXJ 5% MINING Market Vectors Junior Gold Miners ETF<br />
</span><br />
<span xmlns="">BPT 5% OIL BP Prudhoe Bay Royalty Trust<br />
</span><br />
<span xmlns="">CAG 5% FOOD ConAgra Foods, Inc<br />
</span><br />
<span xmlns="">KFT 5% FOOD Kraft Foods Inc<br />
</span><br />
<span xmlns="">RGR 5% WEAPONS MFG Sturm, Ruger & Company<b><br />
</b></span><br />
<span xmlns=""> <br />
</span><br />
<span xmlns="">This new model portfolio was prepared quickly with very little analysis of the individual stocks. The purpose was not to be reckless, but to illustrate how quick and easy it is to improve on the returns of standard investment strategies. This time I expanded the portfolio from ten to thirteen different equities, and once again it includes no bonds. I wanted stocks in well established companies that were in industries with good prospects for the next few years, in either good or bad economic times. I also added a couple of junior precious metals miners to add some leverage to the precious metals play. I will be coming back 1, 2, and 3 years from now to gloat, or possibly, to eat crow. Time will tell. I wouldn't be surprised to see this portfolio double in the next one to two years.<br />
</span><br />
<span xmlns="">Once again, the aggressive model portfolio is heavily concentrated in precious metals (80%) and heavily overweighted in silver, with 10% in food, 5% oil and 5% in a weapons manufacturer. All 13 equities in the model portfolio will be purchased at today's closing price. Clearly, I'm not looking for diversification here, I'm looking for profits, and to beat the major indexes and standard portfolio allocations, without taking any excessive risk. There are no inverse funds and no leveraged funds, or funds of any kind other than precious metals and miners. Out of the seven individual common stocks of corporations, four have respectable dividend yields, and the three that don't are two junior miners, and Silver Wheaton, a unique company with all the benefits of a silver miner and few of the risks. There are a lot of other investments with excellent prospects over the next few years, but these were eliminated to minimize portfolio risk. Such investments include a dollar depreciation play (UDN), a rare earths play (MCP) and an inverse bond play (TBT). I'm sure all will do quite well based on current trends. The only way I can see that this portfolio losing money over the next three years is if the primary trend in precious metals were to reverse, but it is clear (if you've done your homework) that we are still quite early in the precious metals bull.<br />
</span><br />
<span xmlns="">Disclaimer: Do not use this model portfolio as investment advice. Your own portfolio should be customized for your individual situation. Always consult a financial professional, but avoid the 98% of financial professionals that don't think for themselves, and don't have a thorough knowledge of the fundamentals and long term trends in the precious metals markets.<br />
<br />
Disclosure: I hold none of the equities listed in the above article, and have no intention of purchasing any in the near future. I am long physical precious metals.<br />
</span>The Golden Economizerhttp://www.blogger.com/profile/16559943632453709417noreply@blogger.com3tag:blogger.com,1999:blog-8206461851701932890.post-43306082466116661092011-03-22T16:58:00.001-07:002011-03-22T22:22:30.549-07:00Simple Retirement Portfolio<span xmlns=""></span><br />
<span xmlns="">Three years ago I designed a simple retirement portfolio to illustrate to a close friend how poorly his professional investment advisor was handling his investments. This was a man in his early eighties who had no desire to manage his own investments. At that time, I had far less market knowledge than I have now and I was just starting to get a glimpse of the big picture.<br />
</span><br />
<span xmlns="">I decided to limit the portfolio to a total of ten equities for simplicity, and admittedly it was very concentrated and not "well diversified." It contained no bonds. There was no trading over the three year period, just ten picks that were bought and held with no fine tuning. If actual money had been invested, I would certainly have unloaded the two inverse funds at some point, and if that had been the only two trades, would have significantly improved the three year portfolio return.<br />
</span><br />
<span xmlns="">Here are the holdings and three year returns of that portfolio, really only an exercise to illustrate a point:<br />
</span><br />
<span xmlns=""><span style="text-decoration: underline;">Equity % holding Sector 3 yr gain/loss<br />
</span></span><br />
<span xmlns="">GLD 30% PM <span style="color: #00b050;">+<b>47.16%</b></span><br />
</span><br />
<span xmlns="">SLV 30% PM <span style="color: #00b050;">+<b>87.05%</b></span><br />
</span><br />
<span xmlns="">BPT 5% OIL <span style="color: #00b050;">+<b>37.39%</b></span><br />
</span><br />
<span xmlns="">PGH 5% OIL + GAS <span style="color: red;">-<b>27.89%</b></span><br />
</span><br />
<span xmlns="">ERF 5% OIL + GAS <span style="color: red;">-<b>26.74%</b></span><br />
</span><br />
<span xmlns="">XLE 5% ENERGY <span style="color: #00b050;">+<b>0.34%</b></span><br />
</span><br />
<span xmlns="">JJA 5% AGRICULTURE <span style="color: red;">-<b>8.59%</b></span><br />
</span><br />
<span xmlns="">DBA 5% AGRICULTURE <span style="color: red;">-<b>19.91%</b></span><br />
</span><br />
<span xmlns="">SKF 5% INVERSE FINANCIAL <span style="color: red;">-<b>44.33%</b></span><br />
</span><br />
<span xmlns=""><span style="text-decoration: underline;">SRS 5% INVERSE REAL ESTATE <span style="color: red;">-<b>84.47%</b></span><b><br />
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<span xmlns=""><b>Total 100% <span style="color: #00b050;">+35.55%</span></b><br />
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<span xmlns="">So, overall, the model portfolio was 60% invested in precious metals, 20% in energy, 10% in agriculture, and 10% in short positions. Yes, this would generally be considered very speculative holdings for a retiree, but looking at the results, it still outperformed any <i>standard</i> asset allocation recommended by professionals, with a relatively low level of risk. <br />
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<span xmlns="">Diversification for the sake of diversification may limit the amount of loss in a portfolio based on the generalization that some investments go up as others go down, so holding many various investments will average out to limit total losses. By this same exact reasoning, diversification will also limit total gains.<br />
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<span xmlns="">From February 24, 2008 to today, March 22, 2011, <b>this portfolio returned 35.6% in capital gains, and roughly 40% total return including cash distributions</b> over a 37 month period, resulting in a total return of approximately 1% per month.<br />
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<span xmlns="">These total portfolio returns were realized <i>even though four of the ten picks had negative total returns, and six of the ten picks had capital losses</i>.<br />
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<span xmlns="">During this same period, the S&P 500 index lost 3.75%<br />
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<span xmlns="">During this same period, ten year US Treasury yields declined from 3.53% to 3.33%, so holding ten year US Treasuries would have yielded about 10% in total interest and 5.67% in capital gains.<br />
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<span xmlns="">This three year period included the sharpest market decline since the Great Depression of the 1930's, beginning with the market collapse in October 2008 which ultimately bottomed in March 2009.<br />
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<span xmlns="">This exercise was designed to illustrate the benefits of identifying a long term market trend and making simple, undiversified bets on that trend, with no short or medium term trading. Even though many of the choices did not perform well, the portfolio did well based on the identification of the <b>long term primary UP trend in precious metals</b>, and concentrating in that area.<br />
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<span xmlns="">This next model portfolio is based on the same principle, along with an incredible amount of market knowledge gained through thousands of hours of reading over the last three years.<br />
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<span xmlns="">It is even <i>more </i>concentrated (less diversified) than the first portfolio, but that is based on market trends and fundamental changes I observed over the last three years. The question here is not, "do you want to allocate according to established principles and standards of investment professionals?" The relevant question is "do you want to make money/protect your savings against inflation?"<br />
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<span xmlns="">I designed this next portfolio without much analysis of the individual holdings, spending only about half an hour total on Sunday, March 20<sup>th</sup>, 2011, using the closing prices from the Friday, March 18 trading session. Once again, I limited the portfolio to a total of ten equities for simplicity. Once again, no bonds or bond funds are included, even though interest rates are <i>clearly </i>headed higher, and an inverse bond fund would clearly be a good investment at this point in time for a long term hold. I just decided to go with a slightly more conservative approach. Silver has been greatly overweighted compared to gold, as the supply and demand fundamentals are far stronger. The overall portfolio is even <i>more </i>concentrated in precious metals than before (80% vs 60%), but is now diversified into six separate holdings instead of just two.<br />
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<span xmlns="">3/20/2011 - Portfolio for the next three years:<br />
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<span xmlns=""><span style="text-decoration: underline;">Equity % holding Sector </span><br />
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<span xmlns="">PSLV 30% PM<br />
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<span xmlns="">SIVR 30% PM<br />
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<span xmlns="">PHYS 5% PM<br />
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<span xmlns="">CEF 5% PM<br />
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<span xmlns="">GTU 5% PM<br />
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<span xmlns="">SLW 5% PM<br />
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<span xmlns="">BPT 5% OIL<br />
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<span xmlns="">K 5% FOOD<br />
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<span xmlns="">CAG 5% FOOD<br />
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<span xmlns="">KFT 5% FOOD<br />
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<span xmlns="">This portfolio is already up 3.74% at close of trading today after only two days, but I don't intend to check it regularly. I will come back to analyze the progress after one year, two years, and three years.<br />
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<span xmlns="">Disclaimer: This is only an exercise to illustrate a point: that standard portfolio allocations by most investment professionals are FINANCIAL SUICIDE! I would NEVER in real life recommend to have 100% of your investments or retirement portfolio in equities (of ANY kind). I would recommend that most people keep 80% of more of their precious metals holdings in PHYSICAL BULLION (bars and rounds) and pre-1965 US 90% silver dimes, quarters, and half dollars (junk silver). The main purpose of holding physical metal is to <b>eliminate the MANY layers of unnecessary counterparty risk</b> involved with holding ANY kind of equity. I recommend against holding numismatic coins, or ANY kind of "collectible" as an investment. Owning one small piece of real estate to use as a primary residence would be advisable for many, preferably with no mortgage, or a small, fixed rate mortgage.<br />
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<span xmlns="">Do not use this model portfolio as investment advice. Your own portfolio should be customized for your individual situation. Always consult a financial professional, but avoid the 98% of financial professionals that don't think for themselves, and don't have a thorough knowledge of the fundamentals and long term trends in the precious metals markets.<br />
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<span xmlns="">Disclosure: I hold none of the equities listed in the above article, and have no intention of purchasing any in the near future. I am long physical precious metals.<br />
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</span>The Golden Economizerhttp://www.blogger.com/profile/16559943632453709417noreply@blogger.com2tag:blogger.com,1999:blog-8206461851701932890.post-83660827273822681102011-01-07T21:35:00.001-08:002011-01-09T18:36:36.740-08:00Method, Means, Motive, and Opportunity – The Mechanism of Chinese Silver Accumulation<span xmlns=""></span><br />
<span xmlns=""><span style="font-size: 14pt;">January 7, 2011 - I was gratified to see how well my recent article <a href="http://goldeneconomizer.blogspot.com/2010/12/is-china-big-silver-short.html">(Is China Behind The Big Silver Short Dec 25<sup>th</sup>, 2010)</a> was received, when over 50 websites worldwide picked it up in the first 24 hours. But I am afraid that a fair bit of confusion was created by that article, which I want to clarify here.<br />
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<span xmlns=""><span style="font-size: 14pt;">First, I am not presenting this as fact. I am presenting this as a theory that explains the observable facts.<br />
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<span xmlns=""><span style="font-size: 14pt;">With no transparency in the banking industry, we will never get a chance to see the swap books of JP Morgan or HSBC to find out which of their clients are shorting silver, or how much of the money behind silver shorts comes from JPM's own proprietary trading desk, and this is how it SHOULD be. But the presumption IS that the CFTC is monitoring these books, and would perform their duty to investigate any clearly manipulative and excessively large short positions not being held by legitimate hedgers of mine production. Sadly, we cannot depend on the CFTC to put fair, realistic position limits in place, or even to enforce the unrealistic position limits already in place, which are far too high compared to annual silver production and compared to above ground silver inventories to actually succeed in limiting anything.<br />
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<span xmlns=""><span style="font-size: 14pt;">Since the CFTC is just another captured "regulatory agency" like the SEC and there will never be any transparency in the shady operations of the mega banks, let's look at the circumstantial evidence available to us and build a case against them, just as any criminal investigator would: <b>using method, means, motive, and opportunity.<br />
</b></span></span><br />
<div style="background: #00b0f0;"><span xmlns=""><span style="font-size: 14pt; text-decoration: underline;"><b>METHOD: <br />
</b></span></span></div><span xmlns=""><span style="font-size: 14pt;"><span style="background-color: yellow;"><b>Last week's article never intended to state that China had a NET SHORT POSITION IN SILVER.</b></span> The title of the article was in question form, and the body of the article explained <span style="text-decoration: underline;">my theory</span> that <span style="background-color: cyan;"><b><i>the Chinese have both long and offsetting short positions in silver</i></b>, which may result in combined net position of zero.</span> I stated that <span style="background-color: yellow;">the Chinese were using these opposing positions</span>, in which China may hold the same exact same number of long COMEX future contracts and short COMEX future contracts resulting in no net long or short position, <span style="background-color: yellow;"><b>AS A MECHANISM WHO'S PURPOSE IS TO ACCUMULATE SILVER METAL AND DISPOSE OF EXCESS US DOLLAR RESERVES</b></span>, which are constantly accumulating in the Chinese Central Bank month after month as a result of the persistent trade deficit. <span style="background-color: cyan;">The brilliance of this mechanism is that it could allow the Chinese to secretly drain physical silver metal inventory away from the COMEX without spiking the market price of silver,</span> which would hurt their producers and exporters. They merely need to hold their long contracts to maturity and take delivery of the physical silver, while selling their short contracts before maturity for cash, and using the proceeds to buy more short contracts with maturities further into the future (roll their shorts forward for longer dated shorts). The money they lose on the shorts (paper) as the silver price gradually climbs can just be considered additional acquisition cost on the longs (silver bars).</span></span><br />
<div style="background: #00b0f0;"><span xmlns=""><span style="font-size: 14pt; text-decoration: underline;"><b>MEANS:<br />
</b></span></span></div><span xmlns=""><span style="font-size: 14pt;">We Americans have been accumulating Chinese produced goods for many years now, about four times the amount of American goods being consumed by the Chinese. <span style="background-color: yellow;">We settle the difference in US dollars, a good deal for the US: we trade freshly printed paper for scarce resources and labor.</span> The Chinese already pay for all the American goods they require by exchanging a greater quantity of their own goods, so they are constantly accumulating US dollar reserves in the Chinese Central Bank, and want to find a way to use or invest these dollars so they don't sit idle. As these dollars continue to build up in China, the <b>Chinese have accumulated nearly a trillion dollars worth of US Treasury bonds, and another trillion dollars worth of US Agency bonds</b> (bonds of Fannie Mae, Freddie Mac and Ginnie Mae). All these bonds pay a below market rate of interest because they are implicitly or explicitly guaranteed by the US government, but it still amounts to more than allowing the reserve dollars to remain idle in the Chinese Central bank. <br />
</span></span><br />
<div style="background: #00b0f0;"><span xmlns=""><span style="font-size: 14pt; text-decoration: underline;"><b>MOTIVE:<br />
</b></span></span></div><span xmlns=""><span style="font-size: 14pt;">But now the Chinese realize that: <br />
</span></span><br />
<ol><li><span xmlns=""><span style="font-size: 14pt;">The principal returned on their maturing bonds is worth less and less every time because of the incessant <b>quantitative easing</b> (money printing) by the federal reserve, which<b> is a form of gradual default</b><br />
</span></span></li>
<span xmlns="">
<li><span style="font-size: 14pt;">Fannie Mae, Freddie Mac, and even the US Treasury may default outright on their bonds at some point in time<br />
</span></li>
<li><span style="font-size: 14pt;">Hard assets and commodities represent a safer store of value than fiat currency<br />
</span></li>
</span></ol><span xmlns=""><span style="font-size: 14pt;">One measure that the Chinese have taken is to reduce their purchases of US Treasury Bonds, even though the trade deficit with the US continues at high levels. In January 2008, China was the single largest buyer of US Treasury Bonds, with purchases totaling $153 billion. In September 2008, the Chinese became the largest holder of US Treasury bonds, surpassing the Japanese for the first time. <br />
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<span xmlns=""><span style="font-size: 14pt;">By June 2009, China became a net seller of US Treasury bonds, and their purchases have continually moved to the shorter maturities. <a href="http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt">According the US Treasury Website</a>, Chinese holdings of US Treasury bonds have declined by about 4% year over year from October 2009 to October 2010, even though they have been steadily accumulating treasuries since July 2010.<br />
</span></span><br />
<span xmlns=""><a href="http://www.bloomberg.com/news/2010-12-02/china-gold-imports-jump-almost-fivefold-as-inflation-outlook-spurs-demand.html"><span style="font-size: 14pt;">According to a recent Bloomberg article</span></a><span style="font-size: 14pt;">, China imported 209 metric tons of gold during the first ten months of 2010, compared to 49 tons imported in all of 2009<b>. Even though they are the world's biggest gold producer, they exported zero tons in 2009.</b> Only India consumes more. Although India's gold consumption is mainly in the form of jewelry, this is deceptive. The Indians may wear it around their necks and wrists, but they use it as more of a savings account, especially in rural India. The savings of Chinese citizens amount to about 40% of their personal income, so what more perfect vehicle than gold bullion to protect their savings from inflation and government instability?<br />
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<span xmlns=""><span style="font-size: 14pt;"><span style="background-color: cyan;"><b>In April 2009, China's Central Bank announced that they had covertly accumulated 454 tons of gold since 2003</b>, <b>raising the official figure on Chinese gold reserves from 600 tons to 1054 tons in one day, after remaining unchanged for six years.</b></span><b><br />
</b></span></span><br />
<span xmlns=""><span style="font-size: 14pt;"><i>Since the Chinese are wisely accumulating gold, why not silver?</i> We have no public announcement by the Chinese Central Bank to go by, or any official figures of their silver holdings (if any), so we need to see if we can base a theory on the available facts. <br />
</span></span><br />
<span xmlns=""><span style="font-size: 14pt;">The Chinese have a long established cultural affinity for silver. <a href="http://en.wikipedia.org/wiki/Chinese_currency">Silver began to be used as a currency</a> in Guangdong, China in 1423 when it became legal tender for payment of taxes. Provincial taxes had to be remitted to the capital in silver after 1465. In 1914, the National Currency Ordinance established the Silver Dollar as the national currency of the Republic of China. In 1949 the incoming Communist regime took China off the silver standard, but there are still many Chinese alive today who can remember a time when silver was used as money in China. In 2004, China legalized private ownership of gold and silver bullion for its private citizens, and in 2008 they began actively encouraging their people to invest their retirement savings in gold and silver. The Chinese word for "bank" uses the same symbol as silver.<br />
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<span xmlns=""><span style="font-size: 14pt;"><span style="background-color: cyan;"><b>So the primary MOTIVE of the Chinese Central Bank in accumulating silver is to wisely transfer dollar reserves to tangible assets</b></span>, as they have already admitted they are doing with gold, to protect themselves against the out of control money printing by the Fed. <br />
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<span xmlns=""><span style="font-size: 14pt;"><span style="background-color: cyan;"><b>Another MOTIVE is to start an asset backed currency at some time in the future</b>.</span> As the US dollar is continually overprinted by the Fed, its days as the world's reserve currency are numbered. The Chinese are just biding their time, trying to cash in as much of their US debt holdings (while they still maintain SOME purchasing power), before the day when the Yuan ultimately becomes the world's reserve currency by default. The first steps have already been put into place, such as the currency swaps and bilateral trade agreements with Brazil, Australia, Indonesia, Turkey and Russia. These countries all have natural resources that China needs, and are markets for exports of Chinese finished products. When the dollar, pound and euro implode from overprinting, the world will need a new reserve currency, and will not trust another one consisting of nothing but unbacked fiat paper. <span style="background-color: yellow;">By accumulating a huge cache of gold and silver, the traditional, historical monetary metals, the Chinese will be ready to back the Yuan when the world's oil exporters will be demanding payment in hard assets.</span> The level of gold/silver redeemability chosen for the Yuan will determine the value of all other world currencies from that day forward, by their free market exchange rate with the Yuan.<br />
</span></span><br />
<span xmlns=""><span style="font-size: 14pt;"><span style="background-color: cyan;"><b>A third MOTIVE for the Chinese to be accumulating silver now is the increasing necessity of silver as a raw material for high tech goods produced in China</b>.</span> There is no substitute for silver in many applications, and the demand is the most inelastic of any commodity. China would like to dominate future production of solar panels, switches, flat panel TV's, computers, cell phones, GPS units, batteries of all kinds, especially hybrid car batteries, silver bearings, silver solder, and the list goes on. A ready stockpile of silver will protect the productive capacity of Chinese industry in the face of expected future silver shortages.<br />
</span></span><br />
<div style="background: #00b0f0;"><span xmlns=""><span style="font-size: 14pt; text-decoration: underline;"><b>OPPORTUNITY:<br />
</b></span></span></div><span xmlns=""><span style="font-size: 14pt;">I now consider it much more likely that the Chinese Central Bank has it's short COMEX silver position with HSBC bank, the largest international bank in China and known to have a huge silver short position, (which is unlikely to be a legitimate producer hedge), and probably have their corresponding long COMEX silver position with JP Morgan, although this might also be with HSBC. I am just speculating that keeping the positions at two different banks, under two different names, would help to camouflage their strategy of accumulating precious metals and dumping US dollars. With all the global banking secrecy, there is never any shortage of opportunity to unload a bunch of US dollars. But their window of opportunity is closing because of the historically low inventory levels of silver at the COMEX.<br />
</span></span><br />
<span xmlns=""><span style="font-size: 14pt;">This opportunity appears to be coming to an end with looming delivery defaults at the COMEX. In September 2010, there were 3002 silver contracts standing for delivery at the COMEX on first notice day, August 30, 2010. <a href="http://agaupm.com/can-comex-deliver-silver-and-gold-in-dec-2010/">Of those, 84% of the holders (2519 contracts totaling 12.595 million oz) actually took physical delivery</a>, In the next delivery month, December 2010, there were were 17,208 contracts standing for delivery on first notice day, November 26, 2010. Using the same 84% ratio of contracts that actually took delivery in September (presumably 16%, probably more, were talked into settling in cash, likely at a hefty premium to the contract's value based on spot), that leaves 72.3 million ounces of silver actually delivered to long contract holders by the COMEX in December 2010, more than six times as many silver bars as delivered three months earlier in September. As of January 6, 2011 the COMEX released inventory figures of only 48.9 million remaining ounces of silver registered for delivery.<br />
</span></span><br />
<span xmlns=""><span style="font-size: 14pt;">There is an internet rumor going around that <span style="background-color: cyan;">billionaire hedge funds</span> (on the advice of former JP Morgan traders and in competition with the Chinese) <span style="background-color: cyan;">settled their December long contracts at expiration for large cash premiums</span> by posting the necessary cash and demanding (threatening) to take physical delivery on their long contracts. This would help explain the 9% gain in the price of silver during November, on top of a 14% gain in September and a 9% gain in October, never once having fallen below the 20 day, 50 day, or 200 day Moving Average during those three months. <br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgD6RYCss1gQBSxC_skNlSKwr20eGZVXE5gXsazwTIVfTU_oqiP9pFQHH1E2AwwnX-RAB4hlyrF-Zx5ZO_IBC6Jth9qpmnTRSsBO8IBdG7qkFRIJOr5TWqfi1XXRNR7Wki_Q3OPIx_dTww/s1600/SLV+6+mo+chart+1-7-11.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="283" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgD6RYCss1gQBSxC_skNlSKwr20eGZVXE5gXsazwTIVfTU_oqiP9pFQHH1E2AwwnX-RAB4hlyrF-Zx5ZO_IBC6Jth9qpmnTRSsBO8IBdG7qkFRIJOr5TWqfi1XXRNR7Wki_Q3OPIx_dTww/s640/SLV+6+mo+chart+1-7-11.jpg" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">SLV 6 Month Chart - 1-7-2011</td></tr>
</tbody></table><div style="text-align: center;"><span xmlns=""><span style="font-size: 14pt;"><br />
</span></span></div><span xmlns=""><a href="http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_J/threadview?m=te&bn=10073&tid=381868&mid=381868&tof=2&frt=2"><span style="font-size: 14pt;">Here is a link to a financial message board where an apparent market insider posted Wednesday</span></a><span style="font-size: 14pt;"> that the participants were so happy with their easy COMEX silver profits in December, that they plan to make much larger purchases of COMEX silver long contracts in the last few weeks of February, 2011, and stand for delivery in March, the next delivery month for COMEX silver. I will be looking at the March COMEX silver delivery figures with great interest, and will not be at all surprised to see major gains in the February and March price of silver. The post also warns of a planned takedown of gold (and indirectly, silver) during the month of January in order to cover some of their silver shorts (scare investors into selling their silver) in time to minimize the banksters' pain in March. This is portrayed as a desperate, last resort tactic since there are enough existing gold inventories available for the banksters to work with, but no silver and buying silver on the open market would only spike the price.<br />
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</span> </span>The Golden Economizerhttp://www.blogger.com/profile/16559943632453709417noreply@blogger.com0tag:blogger.com,1999:blog-8206461851701932890.post-63504644774458086942010-12-25T22:37:00.001-08:002010-12-25T22:40:23.113-08:00Is China The Big Silver Short?<span xmlns=""></span><br />
<span xmlns=""><span style="font-family: Arial; font-size: 12pt;">It is well known that the Chinese have been accumulating gold for at least a decade, and presumably silver as well, gold primarily for its monetary value, and silver for both its monetary and industrial value. <b>In April of 2009, the <a href="http://www.marketskeptics.com/2009/04/china-increasing-gold-reserves.html">Chinese Central Bank announced that it had secretly acquired 454 tons of gold bullion</a> over the previous six years</b>, supposedly all from Chinese domestic production, increasing their total stock from 600 metric tons to 1054 metric tons, <b>and making them the fifth largest holder of gold bullion in the world.</b> Quoting Dow Jones Newswire, April 24, 2009:<br />
</span></span><br />
<span xmlns=""><span style="font-family: Arial; font-size: 12pt;"><i><span style="background-color: silver;">"<span style="background-color: #d0e0e3;">T</span></span><span style="background-color: #d0e0e3;">he new figure leaves China as the fifth biggest holder of gold after the U.S, Germany, France and Italy.</span><span style="background-color: #d0e0e3;"> Inc</span><span style="background-color: #d0e0e3;">luding Switzerland's 1,040 tons, six countries and the IMF now have gold holdings of more than 1,000 tons.</span><span style="background-color: #d0e0e3;">"</span><br />
</i></span></span><br />
<span xmlns=""><span style="font-family: Arial; font-size: 12pt;"><span style="background-color: cyan;">I find these numbers most curious and suspicious. The reputed 454 tons that the Chinese central bank claims to have acquired between 2003 and mid 2009 is <b>just enough to put the Chinese ahead of the Swiss</b>, (1054 tons to 1040 tons) <b>making China the world's fifth largest holder of gold bullion by just 14 tons</b>. I would wager they have a lot more gold stockpiled than that.</span><br />
</span></span><br />
<span xmlns=""><span style="font-family: Arial; font-size: 12pt;">This also begs several other questions: <i>Why would the Chinese make this announcement at that particular point in time</i> if their aim was secrecy in gold accumulation? If they admitted publically to holding 1054 tons, <i>how much more do they really have?</i> Was this alleged 454 tons all actually acquired from domestic sources or were they also buying through straw buyers on the Hong Kong exchange? And if they are secretly accumulating gold, <b><i>are they also accumulating silver on the sly?</i></b><br />
</span></span><br />
<span xmlns=""><span style="font-family: Arial; font-size: 12pt;">Since China has been continually accumulating dollars for years as the unintended consequence of its large continual trade deficit with the US, <i>they are always looking for new outlets to unload or invest them</i> other than buying more US Treasuries and Agencies, with which they are already overloaded. <br />
<br />
Using their excess dollar reserves to stockpile strategic, monetary, and industrial commodities as a hedge against dollar inflation is clearly a wise strategy, even before the advent of QE1 and QE2. We can already see the effects of this stockpiling on commodity prices, most notably copper and rare earths, which are at record levels. The Chinese have also offered to bail out failing European economies with their excess dollars, among them Greece and Portugal.<br />
</span></span><br />
<span xmlns=""><a href="http://www.bloomberg.com/news/2010-10-19/silver-shipments-from-china-biggest-exporter-may-slump-by-40-this-year.html"><span style="font-family: Arial; font-size: 12pt;">As reported by Bloomberg on October 19, 2010</span></a><span style="font-family: Arial; font-size: 12pt;">, Chinese silver exports declined 60% in the first eight months of this year. There could be several reasons for this: increased investment demand by the Chinese public, hoarding for industrial use by Chinese businesses, and accumulation by the Chinese Central Bank. China is now the world's third largest silver miner after Mexico and Peru, and the <i>world's largest refiner of silver</i>. There have been rumors that Chinese silver exports may be reduced to zero in 2011. Although they are now the world's biggest gold producer, China exports no gold, and increased their gold imports by nearly 500% in the first ten months of 2010, <a href="http://www.bloomberg.com/news/2010-12-02/china-gold-imports-jump-almost-fivefold-as-inflation-outlook-spurs-demand.html">according to Bloomberg</a>.<br />
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Silver is a crucial material input for many high tech goods produced in China, and the Chinese government economists are surely wise enough to see that it will continue to get scarcer and more expensive in the coming years. They will be needing a ready supply of silver to dominate the world market in flat panel TV's, cell phones, computers, hybrid car batteries, solar collectors, and many more products too numerous to mention.<br />
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<span xmlns=""><span style="font-family: Arial; font-size: 12pt;">The respected silver authority, <a href="http://www.investmentrarities.com/ted_butler_comentary12-21-10.shtml">Ted Butler, speculates in his recent December 21<sup>st</sup> article</a>, "A Show Stopper," that the Chinese are behind the big concentrated short position in COMEX silver, which is currently about 300 million ounces among the eight largest commercial traders (and 500 million ounces total). The biggest single short position in COMEX silver in 2010, presumably held by JP Morgan, has been as high as 35% to 40% of total short interest according to CFTC commissioner Bart Chilton. This is a staggering concentration, obviously intended to suppress the price of silver, and has gone on continuously for several years at similar levels. <br />
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<span xmlns=""><span style="font-family: Arial; font-size: 12pt;"><i>Butler goes on to say "that would not appear to make sense" and "It will go down as the single dumbest trade in history." </i>But I believe that Butler has underestimated the Chinese.<i><br />
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<span xmlns=""><span style="font-family: Arial; font-size: 12pt;"><b><span style="background-color: #d0e0e3;">What if the Chinese were going long buying silver on the COMEX and taking delivery, draining silver inventories, while simultaneously shorting silver on the COMEX and settling those contracts in cash or rolling them forward?</span><br />
</b></span></span><br />
<span xmlns=""><span style="font-family: Arial; font-size: 12pt;"><span style="background-color: cyan;"><b><i>Even if they took a loss on all their shorts, they would still be steadily accumulating physical metal, and the net result would be that they would be steadily and covertly acquiring physical silver at a higher than market price, but still keeping the market price suppressed to their own industrial producers, while at the same time propping up the weak currencies of the world's buyers of Chinese exports in developed countries.</i></b></span><br />
<br />
Only about 2% of COMEX silver contracts are actually settled by physical delivery, and the rest are settled for cash or rolled over. <b>All the Chinese would have to do is take delivery on a greater quantity of physical metal from their longs than was demanded to close out their short positions, and they would be constantly accumulating physical silver without ever spiking the COMEX silver price.</b><br />
</span></span><br />
<span xmlns=""><span style="font-family: Arial; font-size: 12pt;"><b>Ted Butler</b> also says in his article that he <b>was "rocked" to discover</b> at the recent December CFTC hearing on silver position limits <b><i>that the CME/COMEX, not the CFTC, has, up until now been making all the decisions</i></b> on whether short positions in excess of the current very high position limits on the COMEX qualified for the exemption as true production hedges. <b>Basically, the COMEX has been self regulating, a clear conflict of interest.</b> This apparently will be changing soon.<br />
</span></span><br />
<span xmlns=""><span style="font-family: Arial; font-size: 12pt;">It has been suggested that the Chinese could simply use their massive buying power to go long COMEX silver and accumulate all they want by spiking the price (cornering the market), shutting out most other buyers. They certainly have sufficient dollar reserves to do this, but this would drive up the price of silver to Chinese domestic industry as well, thus raising the price of Chinese exports and cutting profits of Chinese producers and exporters.<br />
</span></span><br />
<span xmlns=""><span style="font-family: Arial; font-size: 12pt;">Also, if the Chinese were to drive up the price of silver by directly buying large quantities on world markets, they would crash the dollar, the euro, etc, reducing their own exports in the process.<br />
</span></span><br />
<span xmlns=""><span style="font-family: Arial; font-size: 12pt;"><b>So far, the US government and their pawn, the CFTC, have been happy to look the other way on these manipulative, concentrated silver positions since they prop up the dollar and prevent the price of silver going to the stratosphere</b>, but have completely neglected the consequences: a <i>worldwide silver shortage</i>, and <i>allowing the Chinese to dominate the future market in high tech goods</i>. So don't be expecting anything substantive to come out of next month's CFTC hearings as far as putting into place a realistic, enforceable limit on concentrated silver positions.<br />
</span></span><br />
<span xmlns=""><span style="font-family: Arial; font-size: 12pt;">What does this mean for silver investors?<br />
</span></span><br />
<span xmlns=""><span style="font-family: Arial; font-size: 12pt;">Get yourself some physical silver and take possession if you want any certainty of cashing in before the paper silver derivatives become worthless.<br />
</span></span><br />
<span xmlns=""><span style="font-family: Arial; font-size: 12pt;">If the Chinese are playing both the long and short sides of COMEX futures as I theorize, then it explains:<br />
</span></span><br />
<ul><li><span xmlns=""><span style="font-family: Arial; font-size: 12pt;">Why the massive silver price suppression scheme has been able to go on for years<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: Arial; font-size: 12pt;">Where the rapidly vanishing silver inventory is going<br />
</span></li>
<li><span style="font-family: Arial; font-size: 12pt;">Who is taking the big losses on the short side if not JP Morgan and the bullion shorting banks<br />
</span></li>
<li><span style="font-family: Arial; font-size: 12pt;">How much higher the true unmanipulated price of silver should be compared to the current market price<br />
</span></li>
</span></ul><span xmlns=""><span style="font-family: Arial; font-size: 12pt;">Decades of market manipulation has made silver the most underpriced commodity in history. Be thankful that you have realized this in time to capitalize. Looks like China very well could be the Big Silver Short, and I suspect they're not as dumb as Ted Butler thinks.<br />
</span></span><br />
<div style="text-align: center;"><span xmlns=""><span style="font-family: Arial; font-size: 12pt;">December 25, 2010<br />
</span></span></div><div style="text-align: center;"><span xmlns=""><a href="http://goldeneconomizer.blogspot.com/"><span style="font-family: Arial; font-size: 12pt;">The Golden Economizer Blog</span></a><span style="font-family: Arial; font-size: 12pt;"><br />
</span></span></div><div style="text-align: center;"><span xmlns=""><a href="mailto:goldeneconomizer@gmail.com"><span style="font-family: Arial; font-size: 12pt;">goldeneconomizer@gmail.com</span></a><span style="font-family: Arial; font-size: 12pt;"><br />
</span></span></div>The Golden Economizerhttp://www.blogger.com/profile/16559943632453709417noreply@blogger.com2tag:blogger.com,1999:blog-8206461851701932890.post-64351140019352894142010-11-11T14:24:00.001-08:002010-11-11T19:29:35.411-08:00The Day The Silver Suppression Stopped – Tuesday November 9, 2010<span xmlns=""><span style="font-size: 14pt;">Tuesday was a landmark day in Silver Metal Trading in the United States. Trading action this day clearly indicates to those attuned to the Silver Market that the long term price manipulators have finally lost control over the price of Silver Futures Contracts on the COMEX, and thus over Physical Silver Metal as well. Who are these manipulators? The largest are undoubtedly JP Morgan Chase and HSBC who have <a href="http://www.telegraph.co.uk/finance/newsbysector/industry/mining/8115810/HSBC-and-JP-Morgan-accused-of-manipulating-silver-market.html">recently been indicted</a> </span></span><span style="font-family: "Calibri","sans-serif"; font-size: 14pt;">in a class action suit in connection with an alleged conspiracy to manipulate silver futures and options contracts on the COMEX.</span><span xmlns=""><span style="font-size: 14pt;"> Unfortunately, <a href="http://bullionbullscanada.com/index.php?option=com_content&view=article&id=16230:debating-silver-manipulation&catid=49:silver-commentary&Itemid=130">this will probably only result in a slap on the wrist</a> for these powerful banks, if that.</span></span><br />
<span xmlns=""> <div style="text-align: center;"><br />
<span style="font-size: 16pt;"><b>Fed Rescues Bear Stearns From Chapter 11 to Obscure Its Huge Silver Short Position From The Public Eye<br />
</b></span></div><span style="font-size: 14pt;">It is common knowledge by those more well informed on the recent history of Silver Trading on the COMEX that JP Morgan has been sitting on a Huge Short Position In Silver for years, about equal to a full years' production from US mining, part of which was inherited from the "takeover" of Bear Stearns for mere pennies on the dollar in 2008. The more well informed of us recognize that the Last Minute Deal To Save Bear Stearns when no legitimate buyers could be found was more of a White Elephant, Gifted From The Treasury and Fed to JP Morgan rather than an <i>actual</i> corporate acquisition (Bear Stearns had a negative fair market value because of the reckless, losing silver short position, but was allowed to go under because they were threatening to start covering it), with the unstated obligation implicit that JP Morgan would safeguard and perpetuate the huge Bear Stearns Silver Short Position. This is certainly the reason why Bear Stearns was not allowed to fail and go through Chapter 11 bankruptcy, in which case their short position would have been made public and forcibly unwound by the courts causing silver to explode upward in price, thereby exposing the worthlessness of federal reserve notes.<br />
</span><br />
<span style="font-size: 14pt;">Since JP Morgan is also the custodian for SLV, the largest of the Silver Bullion ETF's, any sane person would view this as an obvious conflict of interest. Shorting a vital commodity such as Silver should by all rights be limited to those with a valid need to hedge production, and a short this size is obviously being held by JP Morgan's Own Proprietary Trading Desk, since the mathematical odds of them having enough legitimate hedging clients to justify a position of this magnitude would be astronomical. NAKED SHORTING SHOULD BE ILLEGAL by every player and market maker in Every Commodity and Every Security in Every Market as it amounts to NOTHING MORE THAN COUNTERFEITING.<br />
</span><br />
<span style="font-size: 14pt;">For those of you interested in why such a large position as this is prima facie evidence of manipulation of the silver market, I refer you to <a href="http://www.investmentrarities.com/ted_butler_comentary09-14-10.shtml">a recent article by Ted Butler</a> , THE most respected authority in the field. He suggests that you file a complaint with the CFTC, and has a sample letter you might want to use or customize.<br />
</span><br />
<span style="font-size: 14pt;">So let's have a look at the wild fluctuations in Silver Futures Prices on Tuesday at the COMEX. The short term contract for December delivery closed Monday, November 8<sup>th</sup> at $27.76, a thirty year record high. On Tuesday Nov 9<sup>th</sup>, it opened at $28.00, and powered steadily higher throughout the day until it reached a new 30 yr intraday record high of $29.45 shortly after 1pm eastern time. And then a curious thing happened: After climbing 6% intraday to a new 30 year intraday record high, and completing a 65% runup since the close on August 23, just 2 ½ months earlier, it <i>plummeted 10% from its peak</i>, recovering slightly to close at $26.95, down 2.9% on the day. <span style="text-decoration: underline;">A ten percent swing in one day is unheard of in any precious metals market</span>. Something was clearly up. So what happened shortly after 1:00 o'clock on Tuesday to cause Massive Panic Dumping Of Silver Futures Contracts on the COMEX? </span><br />
<span style="font-size: 14pt;"><br />
</span></span><span xmlns=""><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQ8Gf4e7tqa1N6ypmryrLDT4PAOAnpasOgKq0ASFETffjMOPnuan516rnJ91gy8bW0p4QKSODSO44gaLHWtj-hNoLMO8Zc4rUUZ_FN0TqSMJD8OiNxCQo-APYsgEgfEfNSED0Z6NVwJlU/s1600/SILVER+SPOT+MON+NOV+8+%2526+TUES+NOV+9+NYMEX+TRADING.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="404" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQ8Gf4e7tqa1N6ypmryrLDT4PAOAnpasOgKq0ASFETffjMOPnuan516rnJ91gy8bW0p4QKSODSO44gaLHWtj-hNoLMO8Zc4rUUZ_FN0TqSMJD8OiNxCQo-APYsgEgfEfNSED0Z6NVwJlU/s640/SILVER+SPOT+MON+NOV+8+%2526+TUES+NOV+9+NYMEX+TRADING.gif" width="640" /></a></div><div style="text-align: center;"><br />
</div><div style="text-align: center;"><br />
</div><span style="font-size: 14pt;">Coin dealers and other Sellers of Actual Physical Silver Metal all closed up shop for the day at that point and refused to part with any of the physical metal at any price, until they could learn what had happened to justify this wild gyration in the futures price. A few large wholesale distributors started charging oppressively large premiums over spot instead, to discourage any physical buying from taking place. <i>There was a great disturbance in the force.</i> These reactions were perfectly understandable, since no dealer wanted to part with such a scarce resource that had been on such a steep, continuous, upward price trajectory for several months without having a clue how much it would cost them to replace their inventory over the next few days. So instead, they just closed up shop for the day, and sat on their assets while trying to figure out the market direction and the cause of the instability.<br />
</span><br />
<span style="font-size: 14pt;">Then the news that Margin Requirements Had Been Increased on the COMEX filtered slowly down to the interested silver traders and suppliers from the Commodities Exchange Members. No public announcement had been made, but CME group, owner of the COMEX commodities exchange had sent a memo to its members, suddenly Raising The Margin Requirements By 30% For Silver Metal Alone, and for no other commodity, <span style="text-decoration: underline;">IN MID TRADING DAY</span>. Not only was this unprecedented, but was a Major Milestone In The Silver Market, and its significance should not be underestimated. Gold margin requirements were left unchanged, but the Spillover Effect From The Stunning Silver Margin Requirement Increase also Caused Gold To Reverse Course From All Time Record High Levels of $1,425.50 at 1 pm that day to close at just $1400.60. <br />
</span></span><br />
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjwweq4cXDKEE3-YgISzd7hD7YWKrNID0bGh73Haa426dPPT_LIga-yhCBypwdizeE54MoqDxO7ja4YguDFAbJKK4ngCDTS81wpXOlsYbxsdbUFBIGuM8nD7ERnyPiUezpITSRsqG6ZEqA/s1600/GOLD+PRICE+DROP+11-9-2010.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjwweq4cXDKEE3-YgISzd7hD7YWKrNID0bGh73Haa426dPPT_LIga-yhCBypwdizeE54MoqDxO7ja4YguDFAbJKK4ngCDTS81wpXOlsYbxsdbUFBIGuM8nD7ERnyPiUezpITSRsqG6ZEqA/s1600/GOLD+PRICE+DROP+11-9-2010.gif" /></a></div><span xmlns=""><br />
<div style="text-align: center;"><span style="font-size: 14pt;"><br />
</span></div><span style="font-size: 14pt;">Not only was such a move by the COMEX historically significant, but the exact timing of the announcement was highly noteworthy. Contracts for December Silver Delivery were trading at $29.45 at 1:05 PM when the announcement came down, and seemed likely they were on their way to breaking $30 by end of trading that day, a highly significant psychological level. Silver with a 3 handle would have been an entirely new psychological level of support, and would be instantly embedded in the minds of the dollar investing public, ESPECIALLY since the price had just broken $20 two months earlier on September 7<sup>th</sup> for the first time this year. Even the clueless talking heads on TV would have been forced to acknowledge it publicly. It is truly amazing how mainstream financial broadcasters have somehow managed to Ignore Silver's Precipitous Climb of late, despite the fact that it's clearly been the Best Performing Asset class for some time.<br />
</span><br />
<span style="font-size: 14pt;">This news was obviously the cause of the Precipitous Price Plunge, which obviously had been caused by speculators and investors dumping Silver Futures Contracts. The initial dumping was probably done by Frontrunning Speculators who quickly realized that Overextended Weak Hands would be shaken out by margin calls over the next day or two, followed by more dumping by the Actual Weak Hands who were either scared out of the market by this paradigm shift in policy, or didn't have the cash to pony up to maintain their positions.<br />
</span><br />
<span style="font-size: 14pt;">So what caused this highly unusual move by the owners of the commodity exchange? And why couldn't they at least have waited until the end of the trading day? My take is that the Big Bullion Banks, HSBC and JP Morgan, went whining to the fed to support their Huge, Losing Short Positions In Silver, and the fed twisted the arms of their good buddies who owned the commodities exchange to do their bidding. All these banksters CLAIM to want free markets, but certainly not when their own year end bonuses are at stake. The Few Surviving Big Banks KNOW that they are insolvent and their days are numbered. Of course it is also in the fed's own interest to camouflage the runaway commodity price inflation their Out Of Control Money Printing is already causing, and to hide the ever more rapid deterioration of the federal reserve note's purchasing power from the public.<br />
</span><br />
<span style="font-size: 14pt;">What no one has mentioned is that suppressing the silver price over the long term takes a supply of physical metal to sell into the market. This recent price explosion tells me that the Secret Stockpiles of Silver that the manipulators have been using to Suppress the Silver Price over the years have now been exhausted, overwhelmed by Worldwide Investor Demand and a multitude of new industrial uses. Years of price suppression has caused many mines to become uneconomic to the point that most of the world's silver production is now the by product of base metal mining.<br />
</span><br />
<span style="font-size: 14pt;">The Crybaby Bullion Banks are Such Sore Losers, they whined until they got the commodities exchange to change the rules for them, not just in mid game, but in mid trading day. This was obviously devised to cause panic selling. How effective will this move be? Who will benefit? Who will lose?<br />
</span><br />
<span style="font-size: 14pt;">Well, Maxed Out, Overextended Speculators on Margin forced to liquidate during Silver's Spectacular Climb will certainly be penalized. And the Big Silver Shorts, Naked Silver Shorts, All Silver Shorts will certainly benefit – at least temporarily. Those shorts who managed to cover during the brief period of speculative and margin call dumping will get a short term windfall. But then what? I'm expecting Silver To Resume Its Climb. Nothing has changed fundamentally. The can has been kicked a little further down the road, that's all.<br />
</span><br />
<span style="font-size: 14pt;">Demand for Silver Metal is now global and India and China are the largest consumers. India's consumption is up 500% this year, and China's is up 400%. The Chinese government legalized the private ownership of gold and silver bullion two years ago, and ever since have been running aggressive television advertising, urging their citizens to get their savings into bullion investment coins and bars. This is an easy sell in China, where the cultural affinity for precious metals is already strong, and the pent up demand after years of private ownership being illegal is considerable. Bullion investment coins as small as three grams are available at every post office in China. And if/when the Chinese government/central bank finally decides to establish a bullion backed currency, it will give them a built in domestic supply to confiscate and add to the government coffers.<br />
</span><br />
<span style="font-size: 14pt;"> The uses of metallic silver are expanding every year. It's in everything around you, computers, cell phones, flat panel TV's, switches, Prius batteries, polyester cloth and most of it can never be recovered as scrap.<br />
</span><br />
<div style="text-align: center;"><span style="font-size: 16pt;"><b>Déjà vu – Commodities Exchange Tightens Silver Margin Requirements, Sinking the Hunt Brothers</b></span><span style="font-size: 14pt;"></span><br />
<span style="font-size: 14pt;"><br />
</span></div><span style="font-size: 14pt;">When the forerunners of the COMEX raised the margin requirements for silver futures on January 7<sup>th</sup>, 1980, it was the beginning of the end for the Hunt Brothers' fortune. It was said that the Hunt Brothers, in cooperation with the Saudis, had <i>already</i> managed to corner about 35% of the above ground silver market, causing the futures price to peak at $48.70 an ounce, the All Time Record High Closing Price. After the sudden, unexpected change in margin requirements, the price dropped in half in only four trading days. The Hunt brothers were already over leveraged, and when the Saudis pulled out of the deal, they were ruined. This was following a period of excessive over printing of the US dollar in the 70's, quite similar to the one we are experiencing today, and I suspect the fed and treasury were culpable in the sudden change in margin requirements that ruined the Hunts. Gold and silver going parabolic made the monetary policies of the fed at that time look bad. The Recently Fiat Federal Reserve Notes were being exposed to the light of day for what they really were – Unbacked Pieces of Paper that had Completely Failed as a Store of Value – arguably the most important function of a currency. Without this capability, federal reserve notes would only be useful as a Medium of Exchange Substantially Superior to Barter, but had been Exposed as Useless for Long Term Savings, or as a Conduit for Long Term Contracts, crucial to any economy. Legal Tender Laws prevented anything else from being used, and it was illegal to demand payment of any contract in bullion.<br />
</span><br />
<div style="text-align: center;"><span style="font-family: Times New Roman; font-size: 16pt;"><b>Navigating Today's Silver Market in the Aftermath of Margin Requirement Changes</b></span><br />
<span style="font-family: Times New Roman; font-size: 16pt;"><b><br />
</b></span></div><span style="font-size: 14pt;">Today, the Overextended Long Speculators in Silver hold smaller positions than the Hunts. They will be forced by the exchange to liquidate positions to meet the new margin requirements, and in a few days normal trading patterns will resume. Silver Will Resume Its March, upward and onward, unobstructed by the manipulators who are now out of ammo, and trampling on the Bullion Bank Short Conspiracy along the way. Tuesday, November 9, 2010 was The Day They Fired Their Last Silver Bullet. <br />
</span><br />
<span style="font-size: 14pt;">The Biggest Silver Consumers in the world, China and India, will be largely unaffected, and will see this as a buying opportunity, as will Smart Investors Worldwide. Long Term Silver Investors can smell blood in the water, and they want to eat the Big Bullion Banks for lunch. They will be holding and adding to positions for the most part. Most industrial demand for silver is highly inelastic as well, so the steady rise in price will have little effect on industrial consumption. As the silver price continues to rise, silver jewelry will become trendy, and will no longer be looked down on as junk jewelry. <i>The Coming Price Increase of Silver Will Cause an Increase In Demand For Silver Jewelry.</i> This may seem counterintuitive, but I believe it will come to pass.<br />
</span><br />
<span style="font-size: 14pt;">So have we truly seen an end to Thirty Years of Silver Price Suppression? If the Suppressors of Silver are really out of Silver Bullets, are there any more hidden bombshells left in their arsenal? Well, margin requirements could still be raised on the COMEX, again and again until they reach 100%. Then they would be completely out of those howitzer shells, but I believe future raises in Silver Margin Requirements will be less and less effective as Silver Speculators are now expecting them, and thus will be less vulnerable and overextended. It would be a slap in the face to the Whiny Silver Suppressors if they managed to finagle another increase in margin requirements, and it resulted in little or no panic selling. <br />
</span><br />
<span style="font-size: 14pt;">What about more Naked Shorting? Well, this would be a Desperate Last Ditch Measure By the Bullion Banks, with the risk of getting caught with unlimited losses on an increased short position as Silver Prices Continue Steadily Upward, paralleling the increases in the money supply as more and more unbacked dollars are continually printed. But the bullion banksters don't really care because they know that their Uncle Sammy and Daddy Bernanke will keep funneling them more worthless paper federal reserve notes to cover these positions in a pinch. After all, it costs them nothing to print, and these spoiled stepchildren of the fed are officially too big to fail now that the global economy is in such a precarious position, right? So, the next time that the manipulators do a planned take down the equities markets as they did in 2008, you can expect to see a bunch more Naked Shorting By the Bullion Banks in tandem with it, just like in 2008. So just be careful not to get caught out on margin, or you could be shaken out of your speculative long position for a loss, instead of being able to hold on for a year or so until Silver Continues Its Inexorable Climb To The Stars. Holding Physical Silver and Gold is the way to protect your hard earned savings from the Vicious, Unprincipled Manipulators of Markets and Dastardly Dilutors of the Dollar, and Silver Is Far More Undervalued Than Gold at this point in time.</span></span><br />
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<span style="font-size: 14pt;"> </span></span><span style="font-size: 14pt;"><a href="http://www.cmegroup.com/tools-information/lookups/advisories/clearing/files/Chadv10-461.pdf">Link to CME Group Memo Announcing New Silver Margin Requirements</a><br />
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<span xmlns=""><span style="font-size: 14pt;"> </span><br />
<div style="text-align: center;"><a href="http://goldeneconomizer.blogspot.com/"><span style="font-size: 14pt;">The Golden Economizer Blog</span></a><span style="font-size: 14pt;"><br />
</span></div><div style="text-align: center;"><a href="mailto:goldeneconomizer@gmail.com"><span style="font-size: 14pt;">goldeneconomizer@gmail.com</span></a><span style="font-size: 14pt;"><br />
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</span> </span>The Golden Economizerhttp://www.blogger.com/profile/16559943632453709417noreply@blogger.com0tag:blogger.com,1999:blog-8206461851701932890.post-64293727774724730412010-10-18T12:33:00.000-07:002010-10-18T12:33:07.465-07:00Which Is A Better Buy Today - SLV or GLD?<!--[if !mso]> <style>
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<div class="MsoNormal"><span style="font-family: "Arial","sans-serif"; font-size: 12pt; line-height: 115%;">Answer: they’re both great buys.<span> </span>Both gold and silver have been on a tear for nearly two months now. But if you are choosing where to deploy capital today, how would one choose?</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: "Arial","sans-serif"; font-size: 12pt; line-height: 115%;">Let’s look at the short term technicals, starting with the 20, 50 and 200 day EMA’s of GLD.</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><br />
</div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgkAqaCc4OVRFJHFqda77eeHPsvG8Yi6gjGsOEeeDgx5tkNQahfP7ne0loYI3O-4FSbGAIwJb7yyDv7xXqgplF8QW9RBCM3QdyPO-f1HIYaSqY9Xb1nySeXadmOljpDk8qxmnNsE3TcTqc/s1600/zz.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="281" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgkAqaCc4OVRFJHFqda77eeHPsvG8Yi6gjGsOEeeDgx5tkNQahfP7ne0loYI3O-4FSbGAIwJb7yyDv7xXqgplF8QW9RBCM3QdyPO-f1HIYaSqY9Xb1nySeXadmOljpDk8qxmnNsE3TcTqc/s640/zz.png" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: "Arial","sans-serif"; font-size: 12pt; line-height: 115%;">Since GLD closed at $119.78 on August 23<sup>rd</sup>, 2010, it is up by 11.6% as of its Friday, October 15<sup>th</sup> close of $133.68, a nice gain in less than two months.</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: "Arial","sans-serif"; font-size: 12pt; line-height: 115%;">Its closing high on Friday is currently 3.0% above its 20 day EMA, 6.4% above its 50 day EMA, and 14.4% higher than its 200 day EMA.</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: "Arial","sans-serif"; font-size: 12pt; line-height: 115%;">What is striking about this chart is seeing the green SLV price line soaring above GLD’s price and all its EMA’s.</span></div><div class="MsoNormal"><br />
</div><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: "Arial","sans-serif"; font-size: 12pt; line-height: 115%;"></span><span style="font-family: "Arial","sans-serif"; font-size: 12pt; line-height: 115%;"></span></div><div class="MsoNormal"><span style="font-family: "Arial","sans-serif"; font-size: 12pt; line-height: 115%;">Next, a look at SLV and its short term technicals.</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><br />
</div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-YSO8yDRpkJGMIOOP3eWocS6oyJy1gz7E3SFM7LuTiJIp2Vf4i2P0kfHI0YOn5xtgAwA5jN04wSInP9FIwu1fhxnTbEbl3GOLTgT0bpcaTI6TDKd2P4IY5l8kjnhqlFD9g0T2FYcltbc/s1600/z.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="281" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-YSO8yDRpkJGMIOOP3eWocS6oyJy1gz7E3SFM7LuTiJIp2Vf4i2P0kfHI0YOn5xtgAwA5jN04wSInP9FIwu1fhxnTbEbl3GOLTgT0bpcaTI6TDKd2P4IY5l8kjnhqlFD9g0T2FYcltbc/s640/z.png" width="640" /></a></div><div class="MsoNormal"><span style="font-family: "Arial","sans-serif"; font-size: 12pt; line-height: 115%;"></span></div><div class="MsoNormal"><br />
</div><div class="separator" style="clear: both; text-align: center;"></div><div class="MsoNormal"><span style="font-family: "Arial","sans-serif"; font-size: 12pt; line-height: 115%;"> </span></div><div class="MsoNormal"><br />
</div><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: "Arial","sans-serif"; font-size: 12pt; line-height: 115%;"></span><span style="font-family: "Arial","sans-serif"; font-size: 12pt; line-height: 115%;"></span></div><div class="MsoNormal"><span style="font-family: "Arial","sans-serif"; font-size: 12pt; line-height: 115%;">Since SLV closed at $17.61 on August 23<sup>rd</sup>, 2010, it has climbed a spectacular 34.9% as of its Friday, October 15 close, an annualized gain of 277%!</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: "Arial","sans-serif"; font-size: 12pt; line-height: 115%;">Even SLV’s 20 day EMA soars above GLD’s price line.<span> </span>Is SLV too toppy, we might ask?<span> </span>Let’s check the technicals and see.</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: "Arial","sans-serif"; font-size: 12pt; line-height: 115%;">It’s closing high of $23.75 on Friday, October 15<sup>th</sup> was 7.7% above its 20 day EMA, 15.5% above its 50 day EMA, and 29.6% above its 200 day EMA.</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: "Arial","sans-serif"; font-size: 12pt; line-height: 115%;">I would have to say from looking at the moving averages alone that SLV is on a trajectory twice as steep as GLD, making it a far better buy in the short term.</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: "Arial","sans-serif"; font-size: 12pt; line-height: 115%;">Fears that the fed will announce a massive QE2 in early November are probably already baked into the cake for both GLD and SLV, and if they suddenly are overcome with an urge to change to a more responsible monetary policy, both GLD and SLV could take a short term hit, with SLV likely to take a bigger hit, but my money is on more irresponsibility.<span> </span>The good news is that the long term fundamentals for both GLD and SLV are extremely strong, so in the highly unlikely event that the market takes the next FOMC announcement as a shift toward more conservative monetary policy, you should be able to safely ride it out in either ETF.<span> </span></span></div><div class="MsoNormal"><span style="font-family: "Arial","sans-serif"; font-size: 12pt; line-height: 115%;"><span> </span></span></div><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: "Arial","sans-serif"; font-size: 12pt; line-height: 115%;"><a href="http://goldeneconomizer.blogspot.com/">The Golden Economizer Blog</a></span></div><div align="center" class="MsoNormal" style="text-align: center;"><br />
</div><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: "Arial","sans-serif"; font-size: 12pt; line-height: 115%;"><a href="mailto:goldeneconomizer@gmail.com">goldeneconomizer@gmail.com</a></span></div>The Golden Economizerhttp://www.blogger.com/profile/16559943632453709417noreply@blogger.com0tag:blogger.com,1999:blog-8206461851701932890.post-22178844288060774672010-10-15T17:34:00.000-07:002010-10-16T13:56:37.223-07:00America Should Open Its Vaults and Sell Gold - What gold? A response to the former Assistant US Treasury SecretaryOctober 15, 2010<br />
<br />
This article was originally published in the London financial times by Edwin M Truman, former Federal Reserve economist and former assistant U.S. Treasury Secretary. I added a few thoughts of my own. <br />
<br />
Chris Powell of gata.org writes “For years Truman has been turning up at the center of the gold price suppression scheme, but GATA and its supporters might agree with him in principle on this one, insofar as getting central banks out of the gold business is the first step toward a free market in gold.”<br />
<b><br />
When I ran a google search on “No Gold Left in Fort Knox”, I got 275,000 results.</b><br />
<br />
America Should Open Its Vaults and Sell Gold<br />
<br />
By Edwin Truman<br />
Financial Times, London<br />
Tuesday, October 12, 2010<br />
<br />
The original article can be found here:<br />
<br />
http://www.ft.com/cms/s/0/2bbd4dbe-d5fe-11df-94dc-00144feabdc0.html<br />
<br />
or google search: Edwin Truman gold<br />
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Gold is back in the news. Its price is soaring in what some analysts say is a reflection of a weak economy and a lack of confidence in government policies. <b>(Stating the obvious)</b> Naturally, investors are looking at a new sure thing in the expectation that prices will continue upward. <b>(Subtly criticizing gold investors by calling it a “sure thing,” and insinuating that gold is in a bubble, with no supporting facts) </b> My advice to the US government, however, is that this may be the best time -- to sell. Doing so would help President Barack Obama and Congress reduce indebtedness, at little cost. <b>(If the dollar price of gold WAS ACTUALLY at a multi year peak, it might be the best time to sell, but that is clearly not the case. Only a return to sound fiscal and monetary policy by the federal government would cause that to happen, and what are the chances that politicians will suddenly turn honest? Also, the entire REPORTED gold supply of the United States Treasury and federal reserve would only bring in less than $400 billion at current prices. The fed creates that much currency for free in two seconds to spend on needless foreign wars, bailouts for its cronies, stimulus that doesn’t create jobs, and Mrs. Obama’s 20 Whitehouse staffers (servants). Not to mention, the US ACTUALLY OWNS ZERO OUNCES OF GOLD BULLION as reported by the Reagan Gold Commission in 1982. It is all owned, however much is now left, by the federal reserve as collateral for the national debt.)</b><br />
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It is an article of faith in bullion markets that the US will be the last country to dispose of its gold stock. <b>(Idle speculation to cover the fact that it’s already been disposed of)</b> For 30 years it has had a no-net-sales policy for reasons ranging from resistance by US gold-producing interests to concerns about the international monetary system. That assumption may remain plausible. Yet the administration has an obligation to re-examine its policy. <b>(What policy? You can’t sell what you’ve already sold.)</b><br />
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The market price of gold has risen for more than a decade <b>(and the dollar now buys 65% as much goods and services as a decade ago, so what’s your point?)</b> propelled by low interest rates, the hype of the bullion dealers (holding large inventories)<b>(Hype, what hype? Inventories? What inventories? Those are the LAST reasons that people are buying bullion today at these prices)</b>, and no doubt the normal amount of fraud and misinformation accompanying asset price bubbles.<b>(blah, blah, blah Can you provide a few facts, please?)</b> The Financial Times has reported that the precious metals industry expects the price to increase by a further 11 per cent over the next year. <b>(A blatant underestimate. Gold has been appreciating an average of 17% annually in dollar terms over the past decade, and is currently accelerating.)</b><br />
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Meanwhile, the US Treasury holds 261.5 million fine troy ounces of gold. <b>(I’ll believe THAT when I see the results of next year’s audit. And only if they assay the bars, not just count’em)</b> The government has been sitting on it since the Great Depression, receiving no return. At the current market price of $1,300 per ounce, the US gold stock is worth $340 billion. The Treasury secretary, with the approval of the president, has the power to sell (and buy) gold on terms that the secretary considers most beneficial to the public interest. Revenues from sales must be used to reduce the national debt.<br />
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If the US were to sell its entire gold stock at the current market price, it would reduce the gross government debt by 2 1/4 per cent of gross domestic product. <b>( A drop in the bucket. About 1/4th of our current annual deficit, 1/10th of our annual federal budget)</b> (US net government debt would decline by essentially the same amount because the US gold stock, listed as an asset on the balance sheet, is valued at only $42.22 an ounce.)<b>(Yes, this would reverse the effect of a falsified accounting entry)</b> Based on the average interest cost from 2005 to 2008, this reduction in debt would trim the budget deficit by $15 billion annually. <b>(How wonderful! This would lower our current $1.5 Trillion dollar annual budget deficit by a staggering 1%, on a one time basis, and our entire national cache of gold bullion would be gone forever. This amounts to less than a rounding error.)</b> Thus, the Obama administration would be doing something about the US fiscal debt and deficit without reducing near-term support for the ailing economy. <b>(Yes, they would be making a token gesture to camouflage the extent of government’s continual theft of the people’s savings through inflation of the money supply.)</b><br />
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This proposal has other benefits too. First, the US would be obeying the maxim to buy low and sell high. <b>(Oh, please! When did the US govt ever buy any gold bullion? They stole it from the people in exchange for worthless bits of paper. Not to mention all the gold that was deposited with the fed during the 1930’s by Europeans seeking shelter from the invading Germans, which the US govt has still never returned. And sell high? Compared to what? The govt paid $20.67 an ounce for the gold they confiscated under threat of imprisonment from the US citizens in 1933. Adjusted for inflation, they would be getting about the same amount of federal reserve notes back. This sale will obviously never take place.)</b><br />
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Second, it would be performing a socially useful function. Demand for gold exceeds normal production, driving up the price. To the extent that the gold craze <b>(another slight to gold investors)</b> is being fed by concern (rational or irrational) about government policies, public welfare would be enhanced by giving citizens something tangible to hang around their necks or place in safe deposit boxes. <b>(Well, that is true enough. Getting the gold back into the hands of the people would be a positive thing. But this is a meaningless threat for the purpose of continuing to suppress the true market price of gold in today’s dollars. The federal government has little or no physical gold to sell. Jawboning the price down is the only weapon left in the arsenal now to prop up the failing dollar) </b>Third, if the price is a bubble, as seems likely, the sooner it is burst, the better for the average investor. <b>(I can’t see how exactly, please explain. Wouldn’t this depend on when the investor purchased, and whether or not he was savvy enough to sell at the peak?)</b><br />
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Some people point to possible costs. Aside from political pressures from those who want to protect the value of their holdings, above or below ground, two principal arguments are made against US gold sales. The first is that they would disrupt the market. But the US can be cautious in its sales, avoiding disruption of the sales programmes of other countries, as it has in the past. <b>(Sure, if it had any actual bullion left to sell)</b> There is little risk. In recent years, sales under the Central Bank Gold Agreement have dwindled, and some other central banks are buying gold. <b>(A lot more central banks are buying now than the few central banks that are actually selling)</b> (The US is not a party to the agreement.) Also the International Monetary Fund has completed more than three-quarters of its own planned sales of 403.3 metric tons.<b>* (In 2009, the world’s central banks became net buyers of gold bullion after 19 consecutive years of net selling. The parties to the most recent Central Bank Gold Agreement failed to meet their sales quota for the first time. This year (2010) I would be extremely surprised if they managed to meet even 1/4th of their quota, that is, if the agreement doesn’t disintegrate completely. Central bankers are not stupid enough to continue selling a finite, appreciating asset such as gold in exchange for one that is constantly inflating and will eventually become worthless, just like every other fiat currency has throughout history. Today the world’s longest running fiat currency is the British Pound, one of the weakest currencies among all developed countries, and at greatest risk of failure.)</b> <br />
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Another counterargument is that the US should hold on to its stock in anticipation of a return -- by itself alone or with other nations -- to a monetary system based on gold. But returning to the gold standard would reinstate a system associated with unstable prices, wages, output, and employment.<b>(On the contrary, the most stable period of wages and prices in history was during the classic gold standard from 1590 up until 1914, when the classic gold standard was finally abandoned to finance WWI. It was never fully reinstated, although gold coins continued in circulation as US legal tender until 1933)</b> It has not existed for a century; and will not make a comeback. <b>(On the contrary, China has already been laying the ground work for a gold backed currency by initiating currency swaps with Indonesia, Brazil, Australia, and other countries that have natural resources to sell, accumulating gold secretly until June 2009 when they announced that their central bank had increased their holdings by 400 tons, and legalizing gold ownership by their citizens for the first time since the Maoist revolution. Not only did they legalize it, they are encouraging it. You can now buy gold coins as small as 3 grams at any post office in China, and their govt has been running advertising campaigns on TV urging the citizens to put their retirement savings into gold and silver bullion (that much more to confiscate once the time comes). Once this gold backed currency is established, the US dollar will have no value at all other than the current exchange value into Chinese currency at that day’s exchange rate, and for payment of US taxes. On that day, both the Chinese Yuan and gold coins will become accepted as payment for purchases in the United States.)</b> Official discussions of the reform of the international monetary system do not include any advocates of a return to gold<b>(big surprise, the monetary bigwigs want to preserve the status quo)</b>, and the IMF articles of agreement prohibit it. The sooner thoughts of such a return are laid to rest, the better. <b>(Better for whom? The money printers, of course.)</b><br />
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A related argument is to keep the US gold stock as a "rainy day" precaution. But after the recent economic and financial crisis and with the prospect of misery for several more years, how much more rain must pour before the US acts?<br />
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End of London Financial Times Article<br />
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*On September 28, 2009, the IMF's Executive Board approved gold sales of nearly 13 million ounces, representing one eighth of the Fund's total holdings. During October and November 2009, the Fund sold half of this quantity to the Reserve Bank of India, the Bank of Mauritius, and the Central Bank of Sri Lanka. On September 7, 2010, the Fund sold 10 metric tons to the Bangladesh Bank. They have been selling the rest gradually into the market to suppress the gold price, but not very successfully. The recent surge in gold prices may indicate that this quantity has been exhausted.<br />
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<a href="http://www.imf.org/external/np/exr/faq/goldfaqs.htm">http://www.imf.org/external/np/exr/faq/goldfaqs.htm</a><br />
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We must have owed those countries a big favor. Dozens of countries around the world would have been more than glad to exchange some of their country’s reserves, composed of depreciating assets such as US Treasuries and Agencies, and various foreign currencies, for any hard asset, especially precious metals. My guess is that Sri Lanka, Mauritius and Bangladesh have some sort of natural resource that the US govt needs, probably rare earths. And India is a valuable ally in a very strategic location. We probably need them as a place to spy on Pakistan and China, and as a place to refuel our ships.<br />
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The IMF declined to reveal the price at which it sold 200 tons of gold bullion to the Central Bank of India on November 3, 2009, but the closing price that day at the NYBOT was $1084.50 The IMF claims on their website that their gold sales are conducted at market prices.<br />
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Looking at last week’s price of $1379.50, it looks to me like India got a pretty good deal, a 27% profit in less than a year, with many more years of appreciation to come. How long can these sales continue? Certainly not indefinitely with the annual world production of gold falling short of demand now for over ten straight years, and considering that the quantity of physical gold ostensibly held and traded by the world's central banks, bullion banks, and futures exchanges is significantly overstated, according to gata.org<br />
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Edwin Truman's entire article is just one big smokescreen to preserve the misconception that the US govt's gold supply is still intact and the same as they claimed to have forty years ago. If that was true, why would the federal reserve be so adamant about not allowing an audit of Fort Knox? This would be routine at any private corporation, is required by law, and would only serve to quiet concerns if the gold WAS STILL ACTUALLY THERE AND UNENCUMBERED.<br />
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"Gold is a barometer of the common stock of a country, and right now gold is sniffing out weakness in the management of the United States as a business." <br />
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James Sinclair, gold investor<br />
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Mr. Sinclair became famous in the business community when he sold 900,000 ounces of gold at an average price of $810 in early 1980, just before the price peaked.The Golden Economizerhttp://www.blogger.com/profile/16559943632453709417noreply@blogger.com0tag:blogger.com,1999:blog-8206461851701932890.post-19686874072236246092010-10-15T10:07:00.000-07:002010-10-15T11:15:52.576-07:00Demise of the Dollar – How Fast Must It Happen Before People Begin to Notice?October 14, 2010<br />
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Since the first week of June, 2010 the US Dollar Index (USDX) has dropped from 88.3 to 76.7. Well, what does that mean, you say? It means that the dollar has lost 11.6% of its value in just over four months. Compared to what you say? Compared to a basket of international currencies which are all declining. So what does that tell us? Not much, not much at all.<br />
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To get a better idea of the actual decline of the dollar’s purchasing power over the same period, let's look at the dollar price of gold:<br />
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June 3, 2010 spot gold on the NYBOT closed at $1205.80<br />
October 14, 2010 spot gold on the NYBOT closed at $1379.50<br />
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Over that same period of time, gold has appreciated 14.4% measured in US dollars. Or more accurately, the dollar has depreciated 14.4% measured in gold. Hence the dollar has lost more than 14% of its purchasing power compared to gold in a little more than four months.<br />
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And why did gold appreciate over this period of time? The SUPPLY fundamentals of gold are as constant as the flow of the Mississippi River. Freshly mined gold supplies increase the world supply consistently by 2% to 3% annually, year after year like clockwork. The two other main sources of supply are: scrap gold recovery and central bank sales. Have you seen the television ads for companies like Cash4Gold.com? Mail us your old gold jewelry and we’ll pay you whatever the hell we think it’s worth! Imagine the brilliant people who fall for that one. Now if the dollar price of gold doubled tomorrow, do you think that the flow of scrap gold to these companies would double? Doubtful. Maybe at first it would, but the scrap supply to the market is limited and would eventually have to drop off.<br />
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Another traditional source of supply has been from central bank reserves. In 2009, the world’s central banks became net buyers of gold bullion after 19 straight years of being net sellers. My not so bold prediction is that we will see this trend continue indefinitely. The central banks are not fool enough to exchange a finite, and appreciating asset, gold, for one that is inflating towards infinity: the US dollar.<br />
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In May 1999 Gordon Brown chose to sell well over half the UK's national gold reserves, over 415 tons, at what turned out to be rock bottom prices.<br />
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Since the early 1980’s central banks around the world have consistently sold bullion into the market to contain the gold price (support the currency price), but by now they surely must be running low on physical reserves, and the immediate losses they would be facing by continuing to sell gold into the market now would just be too large. So forget about central bankers as a continuing source of supply in the future. <br />
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The fact is that the current production of newly mined gold is strictly limited. Existing mines are mining lower and lower grades of ore as time goes on. Currently, the average mine has to dig up 40 tons of gold ore, grind it to the consistency of sand, and extract it with toxic chemicals in order to produce one single ounce of pure gold. Add in the expense of petroleum used in production, rising labor costs, geopolitical costs to mine foreign sources, and the cost of minting the coin, and you can clearly see where the future price of gold is going, INDEPENDENT of the rapid and continual dilution of the currency by central bankers around the world (thank you Ben Bernanke).<br />
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What if you struck gold on your property today? Oh, lucky day! What is that average length of time from a gold strike to the time the mine produces its first ounce of gold ore? Ten years. Ten years of money invested before it begins to produce any income at all. Ten years of money going out, nothing coming in.<br />
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The other two main sources of gold supply, scrap recovery and central bank sales, both involve gold that was mined in the past, so by definition are limited.<br />
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What about gold’s DEMAND fundamentals, you say? Well, jewelry demand tends to fluctuate a bit. Industrial demand has always been minimal, and with the global economic recession it has declined, and should continue to decline for years. Investment demand has been steadily increasing for years as uncertainty and fear of inflation (well founded) continue to drive up purchases of coins and bars. Regular shortages of blanks at the mints have been causing supply disruptions over the last few years. Just ask your local coin dealer.<br />
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Think you're going to retire on your savings in dollar denominated investments? Think again.<br />
Gold has appreciated 17% a year against the dollar on average over the past decade. Which means that the dollar has depreciated 17% a year on average in real terms. Is your IRA or 401K increasing by 17% a year, EVEN INCLUDING YOUR ANNUAL CONTRIBUTIONS? I don’t think so.<br />
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Think you’re going to collect on your pension? Well you might. Let’s think about it. Most pension funds have modeled their payouts on an 8% annual return on investment. Where can one currently get such a yield? Nowhere I can think of with any degree of safety. Most pension funds are heavily invested in bonds, especially US Treasuries. As the Treasury Bonds they are currently holding mature, they might want to reinvest that money into more Treasuries so it doesn’t sit idly by on their balance sheets with a zero return. Currently the 30 year US Treasury Bond is paying about a 3.8% yield. Why would anyone in their right mind tie up their money for thirty years at that pathetic yield when the dollar is vaporizing right before their eyes? And if your pension fund was foolish enough to do so, it would be taking in less than half the amount needed to continue payouts to its pensioners. <br />
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Also, with bond prices at record highs and interest rates at record lows, the risk of principal loss of 50% or more overnight as market forces inevitably drive interest rates up gives bonds a very poor risk/reward ratio as an investment.<br />
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What about municipal bonds, agency bonds (Fannie Mae, Freddie Mac, Ginnie Mae debt), or corporate bonds? They pay a slightly higher return, with a far greater risk of default.<br />
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Interestingly enough, some high quality blue chips such as Proctor & Gamble or Johnson & Johnson have started selling corporate bonds with lower coupons (interest rates) than US Treasuries of comparable maturity. What does that signify, you ask? Just that the US government now has to pay more to borrow than certain private companies. How could that be, you ask? Well, it’s because shrewd bond investors have identified the US Government as a worse risk to lend their money to than these blue chip companies. And with good reason. The government produces nothing, tax revenues are declining and will continue to decline as the population ages, and the government is already insolvent EVEN WITHOUT the incredible, unsustainable burden of social insecurity, medicareless, and medicbandaid.<br />
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Think that your pension fund has stock pickers good enough to produce a consistent 8% annual return in today’s stock markets? Well, maybe, if they are good at short selling, a highly risky practice with an unlimited potential downside, hence not employed by the vast majority of pension funds.<br />
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The truth is that most pension funds buy whatever investments their broker recommends (sucker bets). Lots of them have already lost huge amounts of their company’s employee’s money in mortgage backed securities, and other risky derivatives that they didn’t even understand, based solely on their broker’s recommendations. The country of Iceland already went broke buying these. Let’s hope that your pension fund administrator is better at investing than the country of Iceland’s financial advisors.<br />
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Unfortunately, the sad truth is that even if you DO manage to collect on social insecurity and your hard earned pension, at the rate that the dollar is being devalued, intentionally and continually, by the federal reserve, the money you’d end up with won’t buy you diddly squat by the time you can finally collect. You’d be far better off liquidating that IRA or 401K today, paying the tax penalty and putting what’s left into gold bullion at today’s price. They can’t PRINT any more of that. The most conservative investment advisors say to put 5% to 10% of your net worth into precious metals. I would say, conservatively, you would be better off putting 100% of the money that you don’t plan to spend over the next 5 to 10 years into physical gold and silver bullion, take possession, and sit on it.The Golden Economizerhttp://www.blogger.com/profile/16559943632453709417noreply@blogger.com3tag:blogger.com,1999:blog-8206461851701932890.post-44517735543392963572010-10-11T20:24:00.000-07:002010-10-11T23:03:23.831-07:00Playing the HARP - How to Benefit from a Federally Subsidized Mortgage Refinance<span style="color: red;">This article was first published in May 2009, when the HARP program was brand new. There have been a few changes since then, including extending the program to cover 125% LTV loans (loans up to 125% of the current appraised value) although these may be difficult or impossible to actually obtain in the real world. If you are interested in refinancing a 1 - 4 unit residential property in California, you may contact me directly at goldeneconomizer@gmail.com</span> <br />
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As a mortgage broker in the state of California I now have access to two new Home Affordable Refinance Programs (<a href="http://seekingalpha.com/symbol/harp">HARP</a>), which were recently made available by federal legislation passed in February, the "Helping Families Save Their Homes Act". This was announced in March 2009, and finally implemented by mortgage lenders in April 2009, as a part of the 2009 Stimulus Act.<br />
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There are two separate programs, one which you may qualify for if Fannie Mae holds your current mortgage, and the other if Freddie Mac holds your mortgage. I will not do a point by point comparison of the two programs, because your existing mortgage can only be eligible for one or the other, and they are not interchangeable.<br />
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You may not be eligible for either program if your mortgage is held by a private party, small bank or credit union, and even if your loan is held by Freddie Mac, you may not be eligible depending on whether or not your loan servicer has chosen to participate in the program. I have personally seen more than one borrower declined for the program even though their mortgage was held by Freddie Mac and the servicer was participating in the program. There was no explanation offered by the lender for declining either borrower.<br />
Having said that, I believe that well over 25% of the mortgages in the USA are eligible for refinancing under the HARP programs, and many homeowners that do not qualify for a conventional refinance will be able to benefit greatly from the refinance opportunity provided by these programs.<br />
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This article will cover in detail the Fannie Mae DU Refi Plus program. The Freddie Mac Relief Refinance Program is similar. Since Fannie Mae holds about three quarters of the conforming mortgages in the USA, far more people may be eligible for the benefits of refinancing under the Fannie Mae DU Refi Plus program. <br />
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The information presented here is from my own personal experience as a mortgage broker, and the published guidelines from Fannie Mae and Freddie Mac.<br />
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You should try to find a conscientious mortgage broker who will read the guidelines carefully in advance. <br />
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There are many fine points involved in these programs, so be sure to consult an experienced mortgage professional. Each lender may have their own variations on the general program guidelines. I can cover the highlights here, but not every detail.<br />
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Most of my direct knowledge of the program guidelines come from Wells Fargo Bank’s version.<br />
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Here are the major benefits of the Fannie Mae DU Refi Plus program:<br />
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1. Refinance from 80% up to 105% LTV, with no limit on CLTV<br />
2. No new mortgage insurance required<br />
3. No limit on financed closing costs<br />
4. Appraisal might be waived<br />
5. No reserves required<br />
6. No maximum debt ratio (with DU approval)<br />
7. Your loan may be placed with any Fannie Mae approved lender<br />
8. No limit on number of financed properties<br />
9. Mortgage payment can increase if borrower is realizing other benefits<br />
10. The subject property may be currently listed for sale<br />
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Here are the major restrictions on the Fannie Mae DU Refi Plus program:<br />
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1. No cash out is allowed (borrower cannot receive more than $250 at closing)<br />
2. New loan amount can go up to conforming maximum of $417K on a single family residence in certain areas. Program guidelines allow for up to $729,500 in some areas, but individual lenders will probably not allow you to exceed $417K. Check with your mortgage broker to confirm maximum loan amount in your area.<br />
3. New loan must benefit borrower, either by lowering the monthly principal and interest payment, shortening the loan term, or changing to a fixed rate<br />
4. Borrower must qualify under conventional guidelines (must be approved by DU and provide all documentation required by DU)<br />
5. No new secondary financing is allowed, and existing secondary financing must be subordinated (kept in place), or paid off with borrower’s own funds. Second mortgage cannot be paid off with the new first.<br />
6. No 60 day late mortgage payments allowed during the previous 12 months<br />
7. None of the original borrowers may be removed from the new loan<br />
8. All loans delivered to Fannie Mae after February 28, 2009, FHA, VA, second mortgages, and reverse mortgages are ineligible, and some lenders may not refinance subprime, ALT-A, Expanded Approval, and other loan types under this program<br />
9. Loan term may not be lengthened<br />
10. Standard add-ons to the fee apply to condos over 75% LTV<br />
11. Standard add-ons to the fee apply to 2 to 4 unit properties<br />
12. Add-ons to the price for non-owner occupied properties make the program unattractive for refinances above 75% LTV. Standard add-ons still apply at or below 75% LTV<br />
13. Add-ons to the fee apply to LTV’s over 95%<br />
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The primary benefit for most borrowers is being able to refinance a property that has declined in value up to an LTV of 105%, which may not be able to meet conventional refinance guidelines. Current interest rates are near 50 year lows, and a large percentage of homeowners who purchased or pulled cash out in the last five years might be unable to refinance otherwise.<br />
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What this means is that a borrower who purchased a $400,000 property with a 20% down payment might be unable to refinance under conventional guidelines if his property value has declined to $300,000 since the purchase. A conventional refinance at 80% of the property value (80 LTV) would now qualify the borrower for a maximum loan amount of $240,000 with no mortgage insurance requirement. The borrower would need to come up with $60K to $80K out of pocket, plus closing costs to qualify.<br />
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Under the Fannie HARP refinance program, the loan could be made at 105% of the current property value, or $315,000 with no pricing add-ons to the fee up to 95%.<br />
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If the principal balance of the original $320K loan had been paid down to $310K since the purchase, it would leave $5K that could be used for financing the closing costs.<br />
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Borrowers are allowed to use their own funds to buy the new loan amount down to 105% in order to qualify, if the property is too far underwater (above 105%).<br />
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Mortgage refinances that exceed 80% LTV because of declining property values would normally be subject to the added expense and further complicated by the requirement to add mortgage insurance, which is eliminated under the Fannie Mae DU Refi program.<br />
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Loans with existing mortgage insurance would be required to replace it with the same level of coverage, but most lenders would disqualify these properties from using the program.<br />
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Consult your mortgage broker if your loan has existing mortgage insurance.<br />
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Mortgage insurance only protects the lender, and has no benefit to the borrower.<br />
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Since there is no limitation on combined (total) LTV, the borrower can refinance his first mortgage up to 105% of current property value, regardless of the size of any current second mortgage, but the second mortgage must be subordinated (kept in place) or paid off from the borrower’s own funds. It cannot be added into the new loan. (The new lender may require the existing second to meet standard guidelines, so not every existing second will qualify for subordination and may be required to be paid off, a deal killer for most homeowners.)<br />
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No new or replacement secondary financing is allowed.<br />
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So, using the above example, if the borrower had purchased a $400,000 home with a first mortgage of $320K and a second mortgage of $80K (100% financing, zero down payment) which had declined in value to $300K, the borrower could still refinance the first mortgage to a maximum of $315K (105% LTV), and subordinate the second mortgage (keep it in place).<br />
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The borrower would have to qualify for the new first mortgage including the payment on the existing second mortgage, which should not be a problem assuming that the borrower’s income has remained the same or increased, the payment is declining on the new first mortgage, and the other monthly debt payments have not increased by more than the savings on the new first mortgage.<br />
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Any amount of non-recurring closing costs (points and fees) may be financed in to the new loan amount and any amount of recurring closing costs (property tax, homeowner’s insurance, mortgage interest, etc) plus up to $250 cash back to the borrower can be financed in to the new loan amount, as long as the new loan amount does not exceed 105% of the property’s appraised value.<br />
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This enables homeowners that are not pushing the maximum program LTV to buy their interest rate down to the low 4% range, without paying anything out of pocket.<br />
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The reality of current lending programs makes only the 15 year fixed, 20 year fixed and 30 year fixed rate loan programs practical and desirable under the Fannie DU Refi Plus program. Balloon and interest only programs are not allowed and adjustable rates are priced worse than fixed rates.<br />
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Here is one point that may not be obvious to most consumers: there is no cash out allowed on this program. What that means is:<br />
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1. Any amount of closing costs can be financed in and not be considered a cash out loan.<br />
2. The borrower can receive a maximum of $250 in cash at closing and not be considered a cash out loan.<br />
3. Even if the borrower is receiving no cash at the closing and paying all closing costs out of pocket, the new loan is ineligible for the program, and considered a cash out loan, if any new second mortgage has been taken out in the past twelve months before the new loan closes, <br />
Or:<br />
An advance has been made from any existing equity line of credit on the property within the last twelve months before the new loan closes.<br />
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The first step is to find out if your loan is currently held by Fannie Mae. You can go to the following link:<br />
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http://www.fanniemae.com/loanlookup/<br />
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If Fannie Mae holds your current mortgage, any mortgage broker can place your refinance at any Fannie Mae approved lender.<br />
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Here is a link to frequently asked questions about whether your existing loan qualifies for the Fannie Mae DU Refi Plus:<br />
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https://www.efanniemae.com/sf/mha/pdf/loanlookuplenderfaq.pdf<br />
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If Fannie Mae does not own your mortgage, you can try the following link to see if Freddie Mac owns it:<br />
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https://ww3.freddiemac.com/corporate/<br />
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Here is a link to frequently asked questions about whether your existing loan qualifies for the Freddie Mac Relief Refi program:<br />
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http://www.freddiemac.com/sell/factsheets//relief_refi_faqs.html<br />
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Unfortunately, you may not be able to use the Freddie Mac Relief Refi program if your current loan servicer has decided not to participate, EVEN IF FREDDIE MAC OWNS YOUR MORTGAGE. Unlike Fannie Mae, this program requires you to refinance the loan through the original lender, either directly or through a broker.The Golden Economizerhttp://www.blogger.com/profile/16559943632453709417noreply@blogger.com0