Currencies, Gold, Silver and Oil

[elZorro]

Thought I'd plonk this post here, about the oil price: the cost of new barrels of crude is US$92 on average. From CHFIR in Canada.


MARK'S MARKET INTEL


"The price of West Texas Intermediate (WTI) is trading today at US$96.11 per barrel on the NMEX New York Mercantile Exchange. Oil prices continue their strong performance and we expect the price of WTI to trade between US$90 and US$100 per barrel over the next year.
Some analysts are in agreement with our forecast while another group of analysts has the price of oil falling to below US$80/bbl next year. One of the reasons that we expect prices to stay at these levels is the latest oil demand forecast from the International Energy Agency that has demand rising by 800,000 barrels a day to 90.6 million bpd in 2013. In addition a recent report from Bernstein Research indicates that the price of producing a new barrel of oil for the 50 largest publically traded companies is US$92 per barrel which means that the cost of producing a marginal barrel of oil has risen by 14% per year since 2001. This would indicate that a price below US$80/bbl would not last for long as oil companies would shut-in due to the higher cost of oil production.
Saudi Arabia and its allies, Kuwait and the United Arab Emirates, want to keep oil prices at or near present levels. These countries have become the swing producers in OPEC as they are the only OPEC members who can cut production levels in order to prevent oil prices from declining. These three countries can cut production because they have continued to run balanced budgets and they have amassed substantial currency reserves over the past four decades as a result of their massive oil exports.
The price of Canadian crude continues to trade at a significant discount relative to WTI due to the lack of pipeline capacity. One of the major contributing problems has been the Obama Administration’s reluctance to approve the Keystone Pipeline despite the fact that both the US Senate and the House of Representatives have overwhelmingly voted in favour of the project. We are expecting that the pipeline will gain approval in the next two months and the differential per barrel prices will start to narrow.

[Daytr]

Thanks Elzorro. The whole WTI vs Brent price has been fascinating since the Brent price blew up over WTI a few years back & is now slowly being reigned in. The investment in gas in the US in the coming years will have big implications in my view & I'm sure we will see other countries follow suit. Its not the most energy efficient way to produce more energy, but if the US builds infrastructure off the West Coast to export to Asia then it will have interesting price implications for the massive gas projects being built off Australia imo.

[tricha]

When the US stop printing, its all over!


Jim Rogers: Never In History Has This Been Seen

http://www.youtube.com/watch?v=fzV9d67Tt-U

Slip sliding away. What next.!

Money safe in a bank, NO! Money safe in bonds, NO. Money safe in term investments, NO.
I just need to look at the Tasman District Council and the Nelson City Council as another example, of taking on debt.
Interest rates only need to rise a couple of % and the sh.t hits the fan, a worldwide risk.


14 June 2013 Last updated at 20:42 GMT Detroit defaults on some of its debtshttp://news.bbcimg.co.uk/media/images/68186000/jpg/_68186129_68183279.jpg Kevyn Orr said Detroit was on the "brink of financial and operational ruin"
Continue reading the main story (http://www.sharetrader.co.nz/#story_continues_1) Related Stories

Emergency chief: Detroit 'insolvent' (http://www.sharetrader.co.nz/news/business-22514588)
Detroit gets new financial manager (http://www.sharetrader.co.nz/news/business-21794157)
Cheery carmakers flock to Detroit (http://www.sharetrader.co.nz/news/business-20983619)


Detroit will immediately stop debt payments, the city's financial manager has announced, as he set out a proposal to creditors that would see them take a drastic cut on the money they are owed.
Kevyn Orr announced a moratorium on all Detroit's payments on unsecured debt.
That money will instead be used to keep the city operating, and $1.25bn (£800m) will be reinvested in public services over the next decade, he said.
Creditors were asked to accept 10 cents on the dollar of what they are due.
According to figures presented by Mr Orr, Detroit has some $11.5bn of unsecured debt.
A further $7bn is secured, and the emergency chief said secured creditors would get better treatment, without going into specific details.
Other measures in Mr Orr's proposed plan include spinning off Detroit's Water and Sewerage Department to be run by an independent authority, and reducing city-provided healthcare for retirees.
'Recovery begins today' Bankruptcy lawyer Mr Orr was appointed in March as Detroit's emergency manager to take over the city's finances and tasked with turning around what was described as a "crisis" situation.
Continue reading the main story (http://www.sharetrader.co.nz/#story_continues_2) Detroit in decline

Population has shrunk from a peak of 2 million in the 1950s to 713,000 today
Highest violent crime rate of any major US city, with 15,245 reported incidents in 2011
Some 78,000 abandoned and blighted buildings
40% of street lights do not work
Only a third of the city's ambulances are in service
Just 53% of owners paid their 2011 property taxes

Source: City of Detroit Proposal for Creditors (http://www.detroitmi.gov/Portals/0/docs/EM/Reports/City%20of%20Detroit%20Proposal%20for%20Creditors.p df)

On Friday morning he met as many as 150 people representing banks, insurers and companies holding Detroit debt, and laid out his detailed proposal. (http://www.detroitmi.gov/Portals/0/docs/EM/Reports/City%20of%20Detroit%20Proposal%20for%20Creditors.p df)
"Detroit's recovery begins today," he said. "Financial mismanagement, a shrinking population, a dwindling tax base and other factors over the past 45 years have brought Detroit to the brink of financial and operational ruin."
Mr Orr repeated his belief that Detroit was insolvent and that there was a 50-50 chance of the city filing for bankruptcy.
Insolvency and inability to pay debts are two tests a government must meet in order for a judge to accept a Chapter 9 municipal bankruptcy.
'Too much' If Detroit were to file for bankruptcy, it would be the first major US city to do so.
"It looks and feels like a pre-packaged bankruptcy plan," said Richard Ciccarone, managing director at McDonnell Investment Management.
One bondholder, who asked not to be named, said it was "too much" of a cut to ask creditors to accept just 10 cents on the dollar.
Leaders of some of Detroit's public sector unions were also upset by Mr Orr's proposals, and suggested that industrial action could be on the cards.
"When you're backed into a corner, the only thing you can do is fight and the only way we can fight is to strike," said Mike Mulholland, secretary and treasurer of AFSCME Local 207, the union that represents water and sewerage workers.

P.S In Gold we trust.
At the end of the day, it will be the only safe place, that is, if you can hide it from the Govt.

[Skol]

P.S In Gold we trust.
At the end of the day, it will be the only safe place, that is, if you can hide it from the Govt.
-------------------------------------------------------------------------------------------------------

I've been hearing that for years, you're like a broken record tricha, a bit like KWN and Zerohedge, promising the ultimate financial Armageddon every 2 weeks, but it never arrives.
I thought you would have learned your lesson from the peak oil thread. I'd love $1 for every goldbug that's said "just wait". lol

[Skol]

This has been posted on another goldbug website:

-------------------------------------------------------

REPRESENTATIVE TRAFICANT REPORTS ON THE BANKRUPTCY OF THE UNITED STATES



United States Congressional Record, March 1, 1993 VOL. 33, page H-1303 The Speaker, Rep. James Traficant, Jr. (Ohio), addressing the House...


Mr. Speaker, we are here now in chapter 11. . . Members of Congress are official trustees presiding over the greatest reorganization of any Bankrupt entity in world history, the U.S. Government. We are setting forth hopefully, a blueprint for our future. There are some who say it is a coroner's report that will lead to our demise.

It is an established fact that the United States Federal Government has been dissolved by the Emergency Banking Act, March 9, 1933, 48 Stat. 1, Public Law 89-719; Declared by President Roosevelt, being bankrupt and insolvent. H. J. R. 192, 73rd. Congress in session June 5, 1933 - Joint Resolution To Suspend The Gold Standard and Abrogate The Gold Clause dissolved the Sovereign Authority of the United States and the official capacities of all United States Government Offices, Officers and Departments and is further evidence that the United States Federal Government exists today in name only.
etc. etc.
---------------------------------------------------------------------------------------

This post was received quite enthusiastically and got lots of thumbs-up from enthusiastic, but ignorant goldbugs. Traficant was a scamster, the document is 20 years old and the USA is still solvent. Anything that's anti-USA and pro-gold gets a warm welcome in the gold bug ranks.

----------------------------------------------------

James Anthony Traficant, Jr. (born May 8, 1941) was a Democratic politician and member of the United States House of Representatives from Ohio. He represented the 17th Congressional District, which centered on his hometown of Youngstown and included parts of three counties in northeast Ohio's Mahoning Valley. He was expelled after being convicted of taking bribes, filing false tax returns, racketeering, and forcing his aides to perform chores at his farm in Ohio and houseboat in Washington, D.C..[1] He was sentenced to prison and released on September 2, 2009, after serving a seven years sentence.

------------------------------------------------------------------------

Just goes to show what a bunch of yes-men goldbugs are.

[JBmurc]

Great to see brent oil now top 113.50 AUD must be round it's highs for along time now thanks to the US pesto is moving strongly against the AUD...

disc-holding a few oilers

[Skol]

Great to see brent oil now top 113.50 AUD must be round it's highs for along time now thanks to the US pesto is moving strongly against the AUD

The US 'pesto'........., presumably you mean 'peso', pretty rich coming from you considering you own 1500 oz of silver, the worst performing asset on the planet, down 61% from its high.

[JBmurc]

The US 'pesto'........., presumably you mean 'peso', pretty rich coming from you considering you own 1500 oz of silver, the worst performing asset on the planet, down 61% from its high.

Yet still worth more than I paid in NZD LOL

[Skol]

Yet still worth more than I paid in NZD LOL

Really? How about the stash you bought at $42?

[JBmurc]

Really? How about the stash you bought at $42?

Peanuts compared to the Bulk I brought @$20-$25per oz NZD have also sold some as high as $60oz Cheapest I could buy currently is $27-28oz NZD yet going on the likes of Trademe the cheapest is $30oz for the bigger bars 100oz etc

[tricha]

Trick or Treat ? As long as you are prepared does it rally matter that much.
We now own our own power station ( a little one), look at all those poor people who the govt suckered into buying 49% of nothing.

A lot more fruit trees have been planted, a bigger vegetable plot.
Planning for a conservatory\ green house to extend the growing season.

As you all know there are two sides to a coin, although the FED\Media would like you to believe there is one and it is all rosy. (maybe it is)
Food for thought folks!


Refutation of Economic Illusion Friday July 05, 2013 15:46

As a general rule, the most successful man in life is the man who has the best information
Illusions trick us into perceiving something different than what actually exists and the mainstream media is very good at creating them. Currently they have the herd convinced there is an economic recovery underway.
We all need to understand that to have a real and sustainable recovery for an economy that relies on consumer spending for 70 percent of its activity we need to have a jobs recovery.
Okun’s Law holds that an economy, its GDP, must grow above its potential to reduce the unemployment rate. Year-on-year economic growth of two percent above the trend (considered to be 2–3 percent) is needed to lower unemployment by one point.
http://www.kitco.com/ind/Mills/images/20130705Richard_image002.jpg
Acrossthestreet.met.wordpress.com
A third downgrade of U.S. economic growth for the first quarter 2013 showed the country’s GDP grew at just a 1.8 percent annualized pace.
Bloomberg and IHS Global Insight estimate the U.S. economy will grow by 1.6 percent this year.
Industrial production was unchanged in May, the second straight weak monthly report. Capacity utilization – a measure of how fully the nation's mines, factories and utilities are deploying their resources – fell to 77.6 percent, well below the average of 80.2 percent experienced from 1972-2012.
The Commerce Department revised growth in private investment to 7.4 percent in the first quarter, down from its original estimate of 12.3 percent.
Imports were originally reported as growing by 5.4 percent but the revised number is now 0.4 percent.
Sequestration – what remains of the ‘fiscal cliff’ after the U.S. Congress passed the American Taxpayer Relief Act - could trim economic growth in 2013 by 0.6 percentage points by cutting $85 billion worth of Federal government spending this year. Over its ten year life sequestration will cut $600 billion of government spending from the economy.
“The drop in growth rate is not temporary, but over the span of at least 10 years in which the sequestration will take effect. And its impact will be more strongly felt in later years, once the fiscal sequestration translates through its negative multiplier effects.” Benjarong Su****iri, ‘After Fiscal Cliff, Sequestration’ nationmultimedia.com
Hourly pay for U.S. nonfarm workers fell a record 3.8 percent annualized in the first quarter, the largest decline since records started being kept in 1947. This record first quarter decline was on top of the 2012 third weakest annual increase in hourly pay since 1947. Hourly worker pay rose only 1.9 percent in 2012, barely keeping up with the 1.8 percent gain in the fudged downward and much maligned consumer price index.
The growth rate of consumer spending was revised downward to 2.6 percent annualized in the first quarter from an earlier estimate of 3.4 percent.
The labor force participation rate is the percentage of working-age persons in an economy who:


Are employed
Are unemployed but looking for a job

“Working-age persons" is defined as most people between the ages of 16-64. Excluded are students, homemakers, and people under the age of 64 who are retired.
According to the Bureau of Labor Statistics the labor force participation rate dropped 0.2 percentage points to 63.3 percent. This is the lowest rate in 34 years.
Considering population growth in the U.S. is positive and is one of the highest rates in developed countries, you’d think labor force participation would be growing, not dropping. The U.S. economy needs to add 150,000 to 250,000 jobs per month just to absorb the workforce's new entrants never mind make up for what’s been lost since the Great Recession.
“February's headline unemployment rate was portrayed as 7.7%, down from 7.9% in January. The dip was accompanied by huzzahs in the news media claiming the improvement to be "outstanding" and "amazing." But if you account for the people who are excluded from that number—such as "discouraged workers" no longer looking for a job, involuntary part-time workers and others who are "marginally attached" to the labor force—then the real unemployment rate is somewhere between 14% and 15%.” Mortimer Zuckerman, ‘The Great Recession Has Been Followed by the Grand Illusion,’ wsj.com
U.S. labor force participation is now down to where it was in 1979. The unprecedented 2.5 percentage point decline in labor force participation under President Obama amounts to 6.2 million Americans being pushed out of the job market - 6,200,000 have stopped looking for work, these people have been forced to give up.
Many of the jobs that are being created are part-time low wage second or third jobs going to those already working. The average work week is now a very short 34.5 hours because employers are shortening workers' hours or asking employees to take unpaid leave.
“The financial crisis destroyed some $16 trillion in household wealth. Americans have only recovered 45 percent of that amount…But when you break down that wealth recovery by income level, it gets worse. The Fed estimates that 62 percent of that wealth people have regained since the depths of the recession has come in the form of higher stock prices. And 80 percent of stock wealth is held by people in the top 10 percent of the income distribution.” Erika Eichelberger, ‘Sorry, There's Been No Economic Recovery for Poor and Minority Households’
Here’s a few facts:


Medium household income has declined. Adjusted for inflation household incomes are now back to levels last seen in the 1990s - average per capita wage is around $26,000, household median income is at $50,000
Few Americans own any significant amount of financial wealth. The bottom 80 percent of Americans hold roughly 5 to 8 percent of all financial wealth (non-housing related)
U.S. Employment rate is not recovering, one in 12 Americans are jobless
The number of Americans living in poverty has now reached a level not seen since the 1960s. There are 50 million poor people in America. There are more than 146 million Americans considered either poor or low income
There are over 47 million Americans on food stamps
The banking system backs $7.4 trillion in insured deposits with $32 billion, that’s just .43 percent
1 out of 3 Americans have no savings
Nearly half of American’s die broke
There are less Americans working manufacturing jobs today than in 1950 even though the country’s population has doubled
The U.S. has run a trade deficit with the rest of the world of more than 8 trillion dollars since 1975
The U.S. Social Security system is facing a 134 trillion dollar shortfall over the next 75 years

“The employment trend in manufacturing is overwhelmingly negative and has been for nearly twenty years. This country does not simply lack manufacturing jobs, it lacks entire industries.
The Manufacturers Alliance for Productivity and Innovation (MAPI) released a report in January 2013 detailing the generational decline in manufacturing output and capacity in the United States. In general, for every two new plants that come on line, three others are shut down. For every two jobs created at one plant, three are lost somewhere else.
The companies that make up our so-called “manufacturing base” often survive, but they do so by moving jobs and production overseas. The MAPI report shows dramatic increases in overseas production and sales by the foreign affiliates of American multinationals alongside virtual stagnation of domestic metrics in the United States.” Craig Harrington, The Continued Decline of American Manufacturing, economyincrisis.org
Global
According to the Organization for Economic Co-operation and Development (OECD), the combined government debt held by the world’s advanced economies is at its highest point since the Second World War. In 1945, the debt topped out at 116 percent of GDP; at the end of 2012 it hit 114.4 percent. The OECD says we’ll hit a new high in 2013.
Global trade has slowed. According to the World Trade Organization (WTO) international trade rose 5.2 percent in 2011, two percent in 2012 and growth has been revised downward to 3.3 percent in 2013 instead of the 4.5 percent the WTO predicted last September.
According to The Economist world GDP grew by just 2.1 percent during the first quarter of 2013. The UN Department of Economic and Social Affairs (DESA) says growth of world gross product (WGP) is now projected at 2.3 per cent in 2013, the same pace as in 2012.
In a report titled ‘Update to Global Macro Outlook 2013-14: Loss of Momentum,’ Moody's, an international credit rating agency, expected the euro area economy to experience a deeper and lengthier recession than previously thought. Moody’s also expects the real GDP growth of developed economies in the G20 countries to stand at around 1.2 percent in 2013 followed by 1.9 percent in 2014.
Unemployment in the euro area has reached an all-time high and is forecast to average 12.8 per cent in 2014.
“A prolonged period of subdued growth and fiscal austerity in many economies has added about 4 million more to the ranks of the unemployed.” Assistant Secretary-General for Economic Development Shamshad Akhtar
Chinese May exports rose by just one percent year on year – the lowest rate since last July – while imports fell by 0.3 percent. Exports to Japan were down by 5.7 percent, exports to the US decreased by 1.6 percent and by 9.7 percent to the European Union. Exports to both the U.S and EU have been falling for three months in a row.
Two gauges of China’s manufacturing fell in June - an official Purchasing Managers’ Index dropped to 50.1 from 50.8 – 50.1 is the lowest level in four months. The PMI report showed declines in sub-categories including output, new orders, input prices and employment – the export orders sub-index was reported at 47.7, the lowest reading since February.
A private PMI from HSBC Holdings Plc and Markit Economics was 48.2, the weakest since September - readings above 50 signal expansion.
The June HSBC/Markit PMI for the services industry (the services sector accounted for 46 percent of China's economy in 2012) inched up to 51.3 in June from May's 51.2. Growth in new orders hit a 55 month low and business confidence slumped to 2005 levels.
“China's President Xi Jinping said over the weekend that officials should no longer be evaluated against economic growth but with consideration to other indicators including welfare and ecological improvements and social development.” Reuters, ‘China June HSBC services PMI expands modestly’
Growth in India has slowed significantly over the last two years while Markit factory gauges for South Korea slipped to the lowest level since November 2012.
http://www.kitco.com/ind/Mills/images/20130705Richard_image004.jpg
Japan, the world’s third largest economy, would seem to be an economic ray of sunshine as its economy grew at an annualized 4.1 percent in the first quarter. A closer look under the hood reveals it was done by flooding the system with money. The flood of fiat has depreciated the yen by 25 percent against the U.S. dollar since the start of the year. A weaker yen has helped boost exports and drive local stock exchanges higher, to five year highs.
"In Japan, a dynamic relaxation of macroeconomic policy has sparked an uptick in activity, at least over the short-term." The Japan Times News, ‘Japan growth estimate gets World Bank boost’
Abenomics is going to fail because:


Consumers in Japan remain convinced the threat is deflation, not inflation, they are not spending
Japan’s debt is 240 percent of GDP limiting government spending
The Prime Ministers own party is against structural reforms
Japanese corporations are not buying into ‘Abenomics’ – corporate investment fell by 4.9 percent in the first quarter
Abenomics is nothing more than a policy of beggaring your neighbor.

Conclusion
The world’s four largest economies - the U.S., China, Japan and the EU - face extremely strong headwinds on their way to recovery; the lack of jobs and consumer spending, a liquidity crisis and an insolvency crisis. The much ballyhooed recovery is simply an illusion bought and paid for by the world’s central banks with loose monetary policy - money printing has driven the rise in stock markets and house prices.
“The global financial crisis that began in the United States in the summer of 2007 was triggered by a bank run, just like those of 1837, 1857, 1873, 1893, 1907 and 1933.” Yale economist Gary Gorton’s Misunderstanding Financial Crises, Why We Don’t See Them Coming
Gorton writes the 2007-2008 crisis was systemic, spreading from one institution to another, and set off by a run on “repos and asset backed commercial paper” which are“forms of bank debt that grew to significant amounts and were vulnerable to being run on.”
Panic set in, selling becomes widespread - everyone was trying to squeeze out a narrow exit at the same time - from shorter term instruments like repos and commercial paper to longer term obligations like bonds, stocks, commodities and real estate.
Firms thought too big to fail, like Merrill Lynch, Lehman Brothers, Bear Stearns, Wachovia, Washington Mutual and Countrywide Financial disappeared.
In this author’s opinion it’s going to happen again.
It certainly couldn’t be a bad thing to have a little gold and silver tucked away for a rainy day. The recent drop in bullion prices makes for perfect timing.
Is establishing an easily accessible rainy day fund consisting of cash, gold and silver on your radar?
If not, maybe it should be.

By Richard (Rick) Mills
rick@aheadoftheherd.com
www.aheadoftheherd.com (http://www.aheadoftheherd.com/)

[tricha]

Trick or treat folks ?


Happy hunting!


Get Ready: The Great Transfer of Wealth in Gold & Silver Is ComingBy Steve St. Angelo (http://www.financialsense.com/contributors/steve-st-angelo)08/16/2013



Print (http://www.financialsense.com/print/contributors/steve-angelo/get-ready-the-great-transfer-of-wealth-in-gold-and-silver-is-coming)

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http://www.financialsense.com/sites/default/files/imagecache/desktop/users/u247/images/2013/the-end-is-near.jpg (http://www.financialsense.com/sites/default/files/users/u247/images/2013/the-end-is-near.jpg)The U.S. Economy stands at the edge of the abyss while the financial MSM debates whether or not the Fed will taper in the fall. Silly analysts. Serious cracks are beginning to appear in the economy while the precious metals have now seemingly decoupled from the broader stock market in a big way.
The heartbeat of the U.S. retail economy is in serious trouble when we see this in the headlines, "WalMart Earnings Disaster Exposes a Collapsing Economy: Davidowitz." (http://finance.yahoo.com/blogs/breakout/walmart-earnings-miss-exposes-collapsing-economy-davidowitz-142435260.html) I have been watching Howard Davidowtiz for years, and you got to like the guy because he doesn't sugar coat anything — just calls it like it is. He says that the real unemployment is closer to 14% because 75% of the jobs created so far this year are low-wage part-time jobs. Basically, Davidowitz says the U.S. economy is collapsing.
Listen: Barry Bannister: The Biggest Risk to the Economy Is Government Policy, Not Fundamentals (http://www.financialsense.com/financial-sense-newshour/guest-expert/2013/05/23/barry-bannister/biggest-risk-to-economy)
Furthermore, the housing market is about to hit a brick wall, "Mortgage Activity Plunges 50% to April 2011 Levels." (http://www.zerohedge.com/news/2013-08-14/mortgage-activity-plunges-50-april-2011-levels) We can see from the Zerohedge chart below, that existing home sales (shown in brown) are about to fall in a big way as mortgage applications have dropped to three-year lows:

http://www.financialsense.com/sites/default/files/imagecache/desktop/users/u247/images/2013/mortgage-home-sales.jpg (http://www.financialsense.com/sites/default/files/users/u247/images/2013/mortgage-home-sales.jpg)The continued health of the housing market is based on low-interest rates. However, bond rates have been rising substantially over the past 3-4 months which impacts the mortgage rates for the housing market. Since May, the 10 year U.S. Treasury yield has increased a staggering 63%:

http://www.financialsense.com/sites/default/files/imagecache/desktop/users/u247/images/2013/10-year-bond-rate.jpg (http://www.financialsense.com/sites/default/files/users/u247/images/2013/10-year-bond-rate.jpg)The whole idea of the Fed's QE3 program was to keep interest rates down while stimulating the housing market and overall economy. Well, as we can see... both of these critical components of their QE3 program are rapidly disintegrating.
Foreigners: Getting a Whiff of the Stinky U.S. Bond MarketWell, the U.S. Treasury TIC data came out today, and it showed what most of us in the precious metal community realized... and that is a broad sell-off. If we look at the table below, foreigners unloaded $56.5 billion of U.S. Treasuries and Bonds in the month of June.

http://www.financialsense.com/sites/default/files/imagecache/desktop/users/u247/images/2013/tic-data-u-s-treasuries-june-2013.jpg (http://www.financialsense.com/sites/default/files/users/u247/images/2013/tic-data-u-s-treasuries-june-2013.jpg)As you can see from the highlighted area on the top of the table, China & Japan sold the most at nearly $42 billion combined. Furthermore, Hong Kong dumped $12.2 billion, the Oil Exporting Nations dropped $7.7 billion and Russia decreased its holdings by $5.4 billion.
Listen: Doug Noland on the Granddaddy of All Super Bubbles, the Global Sovereign Bond Market (http://www.financialsense.com/financial-sense-newshour/guest-expert/2013/03/22/doug-noland/granddaddy-super-bubbles)
It seems as if the Eastern and Middle East countries are beginning to realize that the U.S. Treasury market may not be the traditional safe haven for much longer. With this in mind, how is the Fed going to taper its QE3 program at a time when foreigners are dumping treasuries and bonds by adding more supply to the market? This means that the Fed will have to purchase more, not less treasuries if it doesn't want the interest rates to skyrocket.
The U.S. Brontosaurus WarningThere's all this talk about the infamous Hindenburg Omen that signals a huge stock market crash on the horizon. However, I believe the U.S. has a much worse omen starring it in the face — the Brontosaurus Warning.
It's one thing to see the negative signs in a single market, but another to witness the disintegration of an entire economic system. The indicators below reveal the Brontosaurus Warning of an "Extinction level event" for the U.S. economy:
Markets (Aug 15th)
Dow Jones = -220 points
U.S. Dollar = -48 points
10 Year = +4 points
Gold = +29.70
Silver = +$1.28
Not only are the broader stock markets down in a big way, so is the U.S. Dollar. Moreover, the U.S. Treasury 10 year rate is up 4 points when it should be negative and gold is up nearly $30 while silver is up almost 6% at $1.28.
These indicators paint a very bad picture for the whole U.S. economy going forward. There is no way the Fed can stop QE3 as foreigners are already dumping their bonds while buying a great deal of gold and silver bullion.
At some point in time this whole situation will get very ugly forcing people to move into the historic safe havens of gold and silver.
The Great Transfer of Wealth is Just BeginningOnly a fraction of the public are ready for what is coming. Most are still totally invested in paper assets that have no future... and the future is now here. Even though many in the East are buying gold and silver, those in the West are totally asleep at the precious metal wheel.
I wanted to re-post these charts from a previous article to show how little is invested in gold and especially silver:

http://www.financialsense.com/sites/default/files/imagecache/desktop/users/u247/images/2013/global-gold-investment.jpg (http://www.financialsense.com/sites/default/files/users/u247/images/2013/global-gold-investment.jpg)http://www.financialsense.com/sites/default/files/imagecache/desktop/users/u247/images/2013/global-silver-investment-2007-2012.jpg (http://www.financialsense.com/sites/default/files/users/u247/images/2013/global-silver-investment-2007-2012.jpg)According to the CityUK Fund Management Report, there are over $85.2 trillion in conventional assets under management. These include pension funds, insurance funds and mutual funds. In 2012, total gold investment was $234 billion which turns out to be only 0.3% of world conventional assets.
Now, if we look at the silver chart we can see just how little has been invested in the precious metal compared to gold as well as global assets under management. In 2012, for every dollar that went into gold, a little more than 3 cents went into silver. Total silver investment in 2012 was 3.4% of gold and 0.009% of all the money held in pensions, mutual & insurance funds. This is precisely why I believe silver will outperform gold in percentage terms in the future.
Listen: David Morgan on the Fundamentals Behind Owning Silver (http://www.financialsense.com/financial-sense-newshour/guest-expert/2013/07/23/david-morgan/investors-still-holding-silver)
Mike Maloney talks about this great wealth transfer into gold and silver in his newest video, "Hidden Secrets of Money — Seven Stages of Empire." (http://hiddensecretsofmoney.com/) In the video, Mike explains the past 140 years of monetary history in ten minutes and also discusses why countries makes the same mistakes over and over again by what he labels as the "Seven Stages of Empire". Basically, the world goes back and forth between "quality money" and "quantity currency."

http://www.financialsense.com/sites/default/files/imagecache/desktop/users/u247/images/2013/seven-stages-of-empire-140-year-history-of-money.jpg (http://www.financialsense.com/sites/default/files/users/u247/images/2013/seven-stages-of-empire-140-year-history-of-money.jpg)The world is entering the last stage in which we shift back into sound money such as gold and silver and away from the worthless fiat dollar. This is becoming more apparent as we see the huge amounts of physical precious metal buying from the East as well as the decoupling of their prices from the broader stock markets.
Not only will the values of gold and silver increase substantially in the future, but they will also be an excellent investment due to the upcoming global energy constraints. It's one thing to re-value gold and or silver to match the amount of fiat money in the world, and another to become one of the best investments while the value of most other asset classes will continue to disintegrate.
Comments are always welcome at SRSrocco @ gmail.com

[Skol]

tricha,

Check out my posts on the gold and silver threads as to where they'll end up if a 1980 redux occurs.

Gold $672
Silver $5
===========
"History repeats itself all the time in Wall Street."

Edwin Lefevre
================

Problem is suckers never learn.

[tricha]

tricha,

Check out my posts on the gold and silver threads as to where they'll end up if a 1980 redux occuGold $672
Silver $5
===========
T"History repeats itself all the time in Wall Street."

Edwin Lefevre
================

Problem is suckers never learn.

i thought u were a bit smarter than that Skol, history repeats that's very true, on average the world has a depression every 70 years.
The USA is running a Ponzi scheme, when it stops, gold might just be your life insurance.
No one knows how this will play out, are you prepared? I guess not!

[Skol]

i thought u were a bit smarter than that Skol, history repeats that's very true, on average the world has a depression every 70 years.
The USA is running a Ponzi scheme, when it stops, gold might just be your life insurance.
No one knows how this will play out, are you prepared? I guess not!

Gold's about as much insurance as a vintage car, might be worth something, might not, and it's illiquid.
Ther idea that gold's a currency is absurd, I'll believe that when you can take your gold to the local supermarket and buy the weekly groceries.

[Skol]

That's what I mean by illiquid Yankiwi, it's not a currency, you have to go to a gold dealer, sell your gold and then buy your bread. They'll laugh me out of town turning up at a supermarket with gold.

[Skol]

i thought u were a bit smarter than that Skol, history repeats that's very true, on average the world has a depression every 70 years.
The USA is running a Ponzi scheme, when it stops, gold might just be your life insurance.
No one knows how this will play out, are you prepared? I guess not!

And btw tricha, there won't be a depression this time because Ben Bernanke is well versed on what caused the big one in the 1930's. You guys have been crying Armageddon for years, I'm afraid the gold Armageddon premium is off.

[JBmurc]

That's what I mean by illiquid Yankiwi, it's not a currency, you have to go to a gold dealer, sell your gold and then buy your bread. They'll laugh me out of town turning up at a supermarket with gold.

As you would if you tried paying with a NZD you then have to find a currency exchange to convert NZD fiat to local fiat currency no difference to the gold coin ...

[Skol]

As you would if you tried paying with a NZD you then have to find a currency exchange to convert NZD fiat to local fiat currency no difference to the gold coin ...

Except I can't go to a bank, right?

[tricha]

Except I can't go to a bank, right?

Bank, go back to 1929 Skol, they closed the banks.

Go back to last year in Greece, they did the same. If the $US Ponzi scheme closes, so will the banks.

Nice coins Yankiwi, I wished I had collected all those kiwi coins that used to have silver in them, they would be worth a mint.

[JBmurc]

#1 Most people that hear this statistic do not believe that it is actually true, but right now an all-time record 102 million working age Americans do not have a job. That number has risen by about 27 million since the year 2000.
#2 Because of the lack of jobs, poverty is spreading like wildfire in the United States. According to the most recent numbers from the U.S. Census Bureau, an all-time record 49.2 percent of all Americans are receiving benefits from at least one government program each month.
#3 As society breaks down, the government feels a greater need than ever before to watch, monitor and track the population. For example, every single day the NSA intercepts and permanently stores close to 2 billion emails and phone calls in addition to a whole host of other data.
#4 The Bank for International Settlements says that total public and private debt levels around the globe are now 30 percent higher than they were back during the financial crisis of 2008.
#5 According to a recent World Bank report, private domestic debt in China has grown from 9 trillion dollars in 2008 to 23 trillion dollars today.
#6 In 1985, there were more than 18,000 banks in the United States. Today, there are only 6,891 left.
#7 The six largest banks in the United States (JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley) have collectively gotten 37 percent larger over the past five years.
#8 The U.S. banking system has 14.4 trillion dollars in total assets. The six largest banks now account for 67 percent of those assets and all of the other banks account for only 33 percent of those assets.
#9 JPMorgan Chase is roughly the size of the entire British economy.
#10 The five largest banks now account for 42 percent of all loans in the United States.
#11 Right now, four of the “too big to fail” banks each have total exposure to derivatives that is well in excess of 40 trillion dollars.
#12 The total exposure that Goldman Sachs has to derivatives contracts is more than 381 times greater than their total assets.
#13 According to the Bank for International Settlements, the global financial system has a total of 441 trillion dollars worth of exposure to interest rate derivatives.
#14 Through the end of November, approximately 365,000 Americans had signed up for Obamacare but approximately 4 million Americans had already lost their current health insurance policies because of Obamacare.
#15 It is being projected that up to 100 million more Americans could have their health insurance policies canceled by the time Obamacare is fully rolled out.
#16 At this point, 82.4 million Americans live in a home where at least one person is enrolled in the Medicaid program.
#17 It is has been estimated that Obamacare will add 21 million more Americans to the Medicaid rolls.
#18 It is being projected that health insurance premiums for healthy 30-year-old men will rise by an average of 260 percent under Obamacare.
#19 One couple down in Texas received a letter from their health insurance company that informed them that they were being hit with a 539 percent rate increase because of Obamacare.
#20 Back in 1999, 64.1 percent of all Americans were covered by employment-based health insurance. Today, only 54.9 percent of all Americans are covered by employment-based health insurance.
#21 The U.S. government has spent an astounding 3.7 trillion dollars on welfare programs over the past five years.
#22 Incredibly, 74 percent of all the wealth in the United States is owned by the wealthiest 10 percent of all Americans.
#23 According to Consumer Reports, the number of children in the United States taking antipsychotic drugs has nearly tripled over the past 15 years.
#24 The marriage rate in the United States has fallen to an all-time low. Right now it is sitting at a yearly rate of just 6.8 marriages per 1000 people.
#25 According to a shocking new study, the average American that turned 65 this year will receive $327,500 more in federal benefits than they paid in taxes over the course of their lifetimes.
#26 In just one week in December, a combined total of more than 2000 new cold temperature and snowfall records were set in the United States.
#27 According to the U.S. Census Bureau, median household income in the United States has fallen for five years in a row.
#28 The rate of homeownership in the United States has fallen for eight years in a row.
#29 Only 47 percent of all adults in America have a full-time job at this point.
#30 The unemployment rate in the eurozone recently hit a new all-time high of 12.2 percent.
#31 If you assume that the labor force participation rate in the U.S. is at the long-term average, the unemployment rate in the United States would actually be 11.5 percent instead of 7 percent.
#32 In November 2000, 64.3 percent of all working age Americans had a job. When Barack Obama first entered the White House, 60.6 percent of all working age Americans had a job. Today, only 58.6 percent of all working age Americans have a job.
#33 There are 1,148,000 fewer Americans working today than there was in November 2006. Meanwhile, our population has grown by more than 16 million people during that time frame.
#34 Only 19 percent of all Americans believe that the job market is better than it was a year ago.
#35 Just 14 percent of all Americans believe that the stock market will rise next year.
#36 According to CNBC, Pinterest is currently valued at more than 3 billion dollars even though it has never earned a profit.
#37 Twitter is a seven-year-old company that has never made a profit. It actually lost 64.6 million dollars last quarter. But according to the financial markets it is currently worth about 22 billion dollars.
#38 Right now, Facebook is trading at a valuation that is equivalent to approximately 100 years of earnings, and it is currently supposedly worth about 115 billion dollars.
#39 Total consumer credit has risen by a whopping 22 percent over the past three years.
#40 Student loans are up by an astounding 61 percent over the past three years.
#41 At this moment, there are 6 million Americans in the 16 to 24-year-old age group that are neither in school or working.
#42 The “inactivity rate” for men in their prime working years (25 to 54) has just hit a brand new all-time record high.
#43 It is hard to believe, but in America today one out of every ten jobs is now filled by a temp agency.
#44 Middle-wage jobs accounted for 60 percent of the jobs lost during the last recession, but they have accounted for only 22 percent of the jobs created since then.
#45 According to the Social Security Administration, 40 percent of all U.S. workers make less than $20,000 a year.
#46 Approximately one out of every four part-time workers in America is living below the poverty line.
#47 After accounting for inflation, 40 percent of all U.S. workers are making less than what a full-time minimum wage worker made back in 1968.
#48 When Barack Obama took office, the average duration of unemployment in this country was 19.8 weeks. Today, it is 37.2 weeks.
#49 Investors pulled an astounding 72 billion dollars out of bond mutual funds in 2013. It was the worst year for bond funds ever.
#50 Small business is rapidly dying in America. At this point, only about 7 percent of all non-farm workers in the United States are self-employed. That is an all-time record low.
#51 The six heirs of Wal-Mart founder Sam Walton have as much wealth as the bottom one-third of all Americans combined.
#52 Once January 1st hits, it will officially be illegal to manufacture or import traditional incandescent light bulbs in the United States. It is being projected that millions of Americans will attempt to stock up on the old light bulbs before they are totally gone from store shelves.
#53 The Japanese government has estimated that approximately 300 tons of highly radioactive water is being released into the Pacific Ocean from the destroyed Fukushima nuclear facility every single day.
#54 Back in 1967, the U.S. military had more than 31,000 strategic nuclear warheads. That number is already being cut down to 1,550, and now Barack Obama wants to reduce it to only about 1,000.
#55 As you read this, 60 percent of all children in Detroit are living in poverty and there are approximately 78,000 abandoned homes in the city.
#56 Wal-Mart recently opened up two new stores in Washington D.C., and more than 23,000 people applied for just 600 positions. That means that only about 2.6 percent of the applicants were ultimately hired. In comparison, Harvard offers admission to 6.1 percent of their applicants.
#57 At this point, almost half of all public school students in America come from low income homes.
#58 Tragically, there are 1.2 million students that attend public schools in the United States that are homeless. That number has risen by 72 percent since the start of the last recession.
#59 According to a Gallup poll that was recently released, 20.0 percent of all Americans did not have enough money to buy food that they or their families needed at some point over the past year. That is just under the all-time record of 20.4 percent that was set back in November 2008.
#60 The number of Americans on food stamps has grown from 17 million in the year 2000 to more than 47 million today.
#61 Right now, one out of every five households in the United States is on food stamps.
#62 The U.S. economy loses approximately 9,000 jobs for every 1 billion dollars of goods that are imported from overseas.
#63 Back in 1950, more than 80 percent of all men in the United States had jobs. Today, less than 65 percent of all men in the United States have jobs.
#64 According to one survey, approximately 75 percent of all American women do not have any interest in dating unemployed men.
#65 China exports 4 billion pounds of food to the United States every year.
#66 Overall, the United States has run a trade deficit of more than 8 trillion dollars with the rest of the world since 1975.
#67 The number of Americans on Social Security Disability now exceeds the entire population of Greece, and the number of Americans on food stamps now exceeds the entire population of Spain.
#68 It is being projected that the number of Americans on Social Security will rise from 57 million today to more than 100 million in 25 years.
#69 Back in 1970, the total amount of debt in the United States (government debt + business debt + consumer debt, etc.) was less than 2 trillion dollars. Today it is over 56 trillion dollars.
#70 Back on September 30th, 2012 our national debt was sitting at a total of 16.1 trillion dollars. Today, it is up to 17.2 trillion dollars.
#71 The U.S. government “rolled over” more than 7.5 trillion dollars of existing debt in fiscal 2013.
#72 If the U.S. national debt was reduced to a stack of one dollar bills it would circle the earth at the equator 45 times.
#73 When Barack Obama was first elected, the U.S. debt to GDP ratio was under 70 percent. Today, it is up to 101 percent.
#74 The U.S. national debt is on pace to more than double during the eight years of the Obama administration. In other words, under Barack Obama the U.S. government will accumulate more debt than it did under all of the other presidents in U.S. history combined.
#75 The federal government is borrowing (stealing) roughly 100 million dollars from our children and our grandchildren every single hour of every single day.
#76 At this point, the U.S. already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain.
#77 Japan now has a debt to GDP ratio of more than 211 percent.
#78 As of December 5th, 83 volcanic eruptions had been recorded around the planet so far this year. That is a new all-time record high.
#79 53 percent of all Americans do not have a 3 day supply of nonperishable food and water in their homes.
#80 Violent crime in the United States was up 15 percent last year.
#81 According to a very surprising survey that was recently conducted, 68 percent of all Americans believe that the country is currently on the wrong track.
#82 Back in 1972, 46 percent of all Americans believed that “most people can be trusted”. Today, only 32 percent of all Americans believe that “most people can be trusted”.
#83 According to a recent Pew Research survey, only 19 percent of all Americans trust the government. Back in 1958, 73 percent of all Americans trusted the government.

The Economic Collapse Blog:

[tricha]

Will 2014 be the reset year or will they keep the greatest Ponzi scheme alive a bit longer.

The golden question.

[Skol]

Must be something in the water in the South Island, the rest of the World is progressing quite normally.

Have a nice Xmas hunkering down there and preparing for end of days while everyone else enjoys themselves. lol

If I owned gold or silver it's possible I'd be depressed too.

[tricha]

Will 2014 be the reset year or will they keep the greatest Ponzi scheme alive a bit longer.

The golden question.

A: What is a Ponzi Scheme? http://www.ask.com/question/who-was-ponzi
A Ponzi scheme is when money is not earned from profit but rather transfer from one party to another. The phrase Ponzi scheme comes from Charles Ponzi who became Read More » (http://www.ask.com/question/who-was-ponzi)

The American Dollar is such.

The Greatest Pyramid Scheme of All Time
http://www.youtube.com/watch?v=IZZ6i4WDZ-0

[tricha]

A: What is a Ponzi Scheme? http://www.ask.com/question/who-was-ponzi
A Ponzi scheme is when money is not earned from profit but rather transfer from one party to another. The phrase Ponzi scheme comes from Charles Ponzi who became Read More » (http://www.ask.com/question/who-was-ponzi)

The American Dollar is such.

The Greatest Pyramid Scheme of All Time
http://www.youtube.com/watch?v=IZZ6i4WDZ-0

the million dollar question, when does the music stop?

[peat]

How in the world do you expect a currency to make a profit like a company? Profits are made through speculation, nothing more, nothing less.

Incorrect Moosie.
Currency profits can be made through interest rate differentials.

[JBmurc]

Here’s how shale oil is different from conventional oil:

5292

[Valuegrowth]

Here’s how shale oil is different from conventional oil: It is very interesting. Thank you.



5292The U.S. could surpass Russia and Saudi Arabia as the world’s top oil producer by 2015 due to booming output from shale. It is expected to produce large scale shale gas production by the 2020s to boost the UK’s energy security. As I expected oil could stay below $100 level in 2014 and it could go down to around $80 dollar Pb.

My ideas are not a recommendation to either buy or sell any security, commodity or currency. Please do your own research prior to making any investment decisions.

[Valuegrowth]

Here’s how shale oil is different from conventional oil:
5292

It is very interesting. Thank you.

The U.S. could surpass Russia and Saudi Arabia as the world’s top oil producer by 2015 due to booming output from shale. It is expected to produce large scale shale gas production by the 2020s to boost the UK’s energy security. I believe oil could stay below $100 level in 2014 and it could go down to around $80 dollar Pb.

My ideas are not a recommendation to either buy or sell any security, commodity or currency. Please do your own research prior to making any investment decisions.

[Daytr]

Wow there is some pretty sobering stats. in there JB!

[JBmurc]

Wow there is some pretty sobering stats. in there JB!

Yes the great USA oil/gas boom ...it won't last for long(compared to the damage it will leave) I see many older areas of the booming shales i.e Wyoming shale industry have left one hell of a mess >>

By Dustin Bleizeffer
— May 21, 2013
The Powder River Basin coal-bed methane gas industry that drilled at a pace of 2,500 wells annually for a decade has been in sharp decline in recent years. Operators have mostly stopped drilling and are now idling thousands of wells, and perhaps thousands more have been abandoned — “orphaned” — by operators struggling financially.

Last week, Wyoming lawmakers heard testimony that the number of orphaned wells likely exceeds 1,200 — and more will be added to the list of liabilities to the state.



The Powder River sometimes runs dry in this arid region of northeast Wyoming, yet only a small portion of groundwater associated with coal-bed methane gas development was put to beneficial use. (Dustin Bleizeffer/WyoFile — click to view)

State officials say they’re having difficulty measuring the exact scope of the problem due to complex record-keeping among multiple agencies. Ryan Lance, director of the Office of State Lands and Investments, told WyoFile that his staff is working through stacks of files to try to determine which operators owe money, and how much.

In some cases, the orphaned wells devalue ranch properties, and in other cases they complicate a promise that the industry made at the onset of the play: that some wells would be transferred to ranchers for use in watering livestock on the arid high plains.

Coal strata are often aquifers in the region. In some areas, the production of coal-bed methane gas has substantially drained the coal aquifer because operators had to pump large volumes of water from the coal to get the methane gas also contained there to flow to the surface. By 2010, the industry had pumped 783,092 acre feet of water from the coals, according to the Wyoming State Geological Survey. That’s enough water to fill Lake DeSmet three times.

Only a small percentage of that water was put to beneficial use.

“There’s concern from land and mineral owners who are not getting surface use and damage payments anymore. … Money is spent on attorneys trying to recoup surface use payments,” as well as royalties, said Jill Morrison of the Powder River Basin Resource Council, a landowner advocacy group based in Sheridan.

Morrison testified before the Joint Minerals, Business and Economic Development Interim Committee last week in Gillette.

Committee member Rep. James Byrd (D-Cheyenne) said that for years he and others on the committee have heard warnings about the potential for orphaned wells and unpaid bills in the coal-bed methane gas play, “and now it is happening.”

While some operators, such as Anadarko Petroleum Corp., are financially sound enough to plug wells that are no longer commercial, a handful of smaller operators flirt with bankruptcy and fail to conduct required maintenance on the wells, creating potential hazards to human health and the environment. Some operators have simply walked away from their coal-bed methane properties in the basin.

That leaves the job of plugging wells and reclamation to the state, which will rely on an industry-funded orphan well account to cover the cost. The task of plugging and reclaiming orphaned coal-bed methane facilities, and collecting unpaid user fees and royalties, is divided among state agencies and the Wyoming Bureau of Land Management. So far, the state agencies do not have a complete picture of the scope of the problem and the resources available to address it.

The clean-up job

The state’s orphan well fund comes from a “conservation tax” mill levy imposed on all oil and gas producers in the state. “There are no citizen tax dollars paid to plug these wells,” Wyoming Oil and Gas Conservation Commission supervisor Grant Black told the commission.

The state legislature allocates $2 million per biennium from the fund to the Oil and Gas Conservation Commission. A portion of the money is also used to operate the commission’s operations. The commission’s board can vote to increase the mill levy if it appears in danger of being tapped dry.

The state has plugged and reclaimed about 100 wells per year on average, so it could take more than a decade to fix the current orphan well liability. “So if you’re a rancher or landowner, and you have wells on your property, you may be a decade or more out on getting these wells plugged,” Morrison told committee members.

Black was noncommittal about a timeframe for plugging and reclaiming the current count of 1,200 orphaned wells and many more wells that will likely become orphaned in years to come. That didn’t satisfy members of the minerals committee. Sen. Chris Rothfuss (D-Laramie) said, “I’d like to see that,” referring to a timeframe for completing the job.

Sen. John Hines (R-Gillette) is a rancher in Campbell County. He said he and his neighbors live with idle and abandoned coal-bed methane gas wells. He told Black, “To wait 10-12 years to get a mess on your property cleaned up that you had nothing to do with is unacceptable.”

Ownership of surface and minerals involved in coal-bed methane gas is divided between fee (or private), state and federal. It’s unclear how many wells fall under jurisdiction of the state and how many fall under jurisdiction of Wyoming BLM. Unlike the state of Wyoming, BLM doesn’t have an orphan well fund.

Wyoming BLM officials said that at the start of fiscal year 2013, there were 196 idle coal-bed methane wells on federal minerals, and no orphaned wells on federal minerals. “The bonds that are in place on the idled CBM wells range from $0 to $300,000 depending on the operator,” Wyoming BLM spokeswoman Lesley Elser told WyoFile via email. “There have not been any actions at this point that would require us to step in and collect the bond.”

[tricha]

A: What is a Ponzi Scheme? http://www.ask.com/question/who-was-ponzi
A Ponzi scheme is when money is not earned from profit but rather transfer from one party to another. The phrase Ponzi scheme comes from Charles Ponzi who became Read More » (http://www.ask.com/question/who-was-ponzi)

The American Dollar is such.

The Greatest Pyramid Scheme of All Time
http://www.youtube.com/watch?v=IZZ6i4WDZ-0


Or the "Biggest scam in the history of mankind"

http://www.youtube.com/watch?v=iFDe5kUUyT0 (http://www.youtube.com/watch?v=iFDe5kUUyT0)

[tricha]

Or the "Biggest scam in the history of mankind"

http://www.youtube.com/watch?v=iFDe5kUUyT0 (http://www.youtube.com/watch?v=iFDe5kUUyT0)



Interesting times ahead in more ways than one. Do u have your life insurance yet(GOLD)


Debt Rattle Jan 23 2014: In Debt We Trust (http://www.theautomaticearth.com/debt-rattle-jan-23-2014/) Jan232014
January 23, 2014 Posted by Raúl Ilargi Meijer (http://www.theautomaticearth.com/author/ilargi/) at 12:55 pm Finance (http://www.theautomaticearth.com/category/finance/)




http://www.theautomaticearth.com/wp-content/uploads/2014/01/ForThemBombs1943.jpg (http://www.shorpy.com/node/16845?size=_original#caption)
Jack Delano “FOR THEM, BOMBS : Chicago, Union Station” January 1943
Does the Chinese alphabet have a question mark? If not, this would be a good time to get one. After writing again yesterday about the enormous amounts of leveraged debt in the country, that threaten to bring down investment products closely linked to the shadow banking system, which at the same time is fast becoming a huge political force just through its sheer size, here’s another question about China. How is manufacturing really doing? A private survey of manufacturers can at least potentially be expected to not only be party propaganda, something that can’t be said for any of the official numbers.
HSBC’s January index not just indicates poor growth, it even shows contraction. It is truly time to seriously worry about China. Ironically, the HSBC spokesperson says that “the policy focus should tilt towards supporting growth”. How, pray tell? Issuing more money/credit/debt through the PBOC? We saw yesterday that M2 went up 1000% since 1999. Pouring on ever more may not be the cure here. Or does he mean: loosen the strings for the shadow system? That would increase leverage even further, and raise risk to even higher levels. Is it maybe time to work towards less growth, instead of more?
• Weak China manufacturing reading rattles Asia (FT) (http://www.ft.com/intl/cms/s/0/f6ca31d2-83db-11e3-86c9-00144feab7de.html)

Asian equities and the Australian dollar fell after a closely watched private survey of Chinese manufacturers suggested industrial activity in the world’s second-biggest economy is contracting. HSBC’s preliminary Purchasing Managers’ Index slipped to 49.6 in January from 50.5 in December, just below the 50 mark that separates growth and contraction.
HSBC analysts said the PMI survey might convince the Chinese government to embark on another round of stimulus spending. “As inflation is not a concern, the policy focus should tilt towards supporting growth to avoid repeating growth deceleration seen in [the first half of] 2013,” HSBC’s Qu Hongbin said. [..]


http://www.theautomaticearth.com/wp-content/uploads/2013/12/HorLine300px.pngAmbrose talks about China as well, and also writes about the need to pour more money into the system. He does mention something hardly anyone else has: the velocity of money is very low in China. So no, indeed, inflation is not the biggest concern. But again, Beijing has poured in so much already, and let the shadow banks do even more, that you need to question whether that is the real answer. The risks would only grow that investments blow up, and who wins when that happens?
• Trying to deleverage China without blowing up the system (AEP) (http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100026436/trying-to-deleverage-china-without-blowing-up-the-system/?utm_source=dlvr.it&utm_medium=twitter)

China is walking a tightrope without a net. There is an acute cash crunch. Credit at a viable cost is being fiercely rationed. Foreign buyers with money in hand can – and are – buying up nearly completed buildings from distressed developers for a song.
The shadow banking system has risen to 30% of all lending from 20% in barely more than a year. The growth generated by each extra yuan of credit has fallen by three quarters from 1.0 to 0.25 in five years, evidence of credit exhaustion.
“They are trying to deleverage without blowing the whole thing up,” said CITIC’s Zhang Yichen. “The M2 money supply is 120 trillion RMB but that is still not enough cash because velocity of money is very slow, and interest rates are going up.”

http://www.theautomaticearth.com/wp-content/uploads/2013/12/HorLine300px.pngBritain’s in a bind that the BOE gave no forward guidance for: the government lending schemes (yes, more credit, more debt) have been so “successful” that they have to make true on what they did “forward guide”, raising rates when unemployment got to 7%. Well, it has, as temporary as that may be, but the BOE, like the Fed, is smart enough to understand that fulfilling the forwarded promises is a self-defeating action. How will they spin this one? Stay tuned …
• Bank of England seeks to ease rate hike fears as pound soars (Independent) (http://www.independent.co.uk/news/business/news/bank-of-england-seeks-to-ease-rate-hike-fears-as-pound-soars-9077215.html)

City traders sent the pound soaring following a shock fall in unemployment and the first explicit signal from the Bank of England on how it would handle a hike in interest rates. The fall in unemployment to 7.1% in the quarter to November brings it to the brink of the Bank’s 7% threshold for considering rate hikes under the forward guidance regime introduced only last summer.
The figures — showing a far steeper fall than predicted by City economists — pushed the pound up to a year high of 1.2220 against the euro and up 0.7 cents to $1.6552, also triggering a sell-off in gilts as the UK’s 10-year cost of borrowing rose by five basis points to 2.88%.

http://www.theautomaticearth.com/wp-content/uploads/2013/12/HorLine300px.pngOne of the main effects of a central bank rate hike, both in the US and UK, would be to seriously risk blowing up the illusionary housing recovery. Illusionary, because it’s been bought with debt.
• Interest rate rises will hit British households hard (Guardian) (http://www.theguardian.com/business/2014/jan/22/interest-rate-rises-millions-british-households-debt-economists)

Interest rate rises would tip millions of already-precarious households into financial disaster, according to economists, who warn it would cost the average family nearly £3,000 a year in extra mortgage payments if rates returned to levels that were typical before the credit crunch.
The Resolution Foundation thinktank has forecast that about 1 million households would face perilous debts if Bank of England base rates rose to 3%, with 2 million forced to spend more than half of their income on servicing a mortgage if rates returned to the 5% level common before the onset of the financial crisis in 2007.
British households remain among the most indebted in the world, warned the Trades Union Congress, and with wages falling in real terms they have struggled to pay off loans taken on during the boom. “We will start seeing really serious stress on household budgets if rates rise to 3.5-4%,” said a TUC senior economist, Duncan Weldon.

http://www.theautomaticearth.com/wp-content/uploads/2013/12/HorLine300px.pngAustralians too have binged on debt. Which seemed so cheap to do. Until it won’t be. Among overvalued housing markets, Oz is only 5th, behind Canada, New Zealand, Norway and Belgium. Good luck all of you.
• Australians in Record Loan Spree as House Prices Soar (Bloomberg) (http://www.bloomberg.com/news/2014-01-22/australians-in-record-loan-spree-as-house-prices-soar-mortgages.html)

Australian homebuyers are borrowing at the fastest pace in four years amid record prices, straining debt levels already among the developed world’s highest as interest rates are set to climb. The value of new mortgage approvals jumped 25% in November from a year earlier, the fastest annual pace since September 2009, to a record A$26.9 billion ($23.8 billion), according to the statistics bureau.
[B]Consumers from Canada to Scandinavia are on a borrowing binge, taking advantage of cheap credit that in Australia has pushed mortgage rates to a four-year low and underpinned a rally in home prices to unprecedented levels. Australians’ preference for variable-rate loans and investor demand for rental properties is setting the stage for delinquencies to rise as interest rates climb.
Australia’s housing market was the fifth-most overvalued among countries in the Organization for Economic Cooperation and Development relative to rents, the International Monetary Fund said in a December report. The leader is Canada, followed by New Zealand, Norway and Belgium.

http://www.theautomaticearth.com/wp-content/uploads/2013/12/HorLine300px.pngEx-Bundesbank Axel Weber can finally say what he pleases. Turns out, he understands it all after all. That doesn’t mean EU bank stress tests will be honest in their findings. That would be too risky, and expensive. Still, it looks certain that a number of banks will be closing their doors, but it’s an exercise in futility. Maybe the European elections this spring can conjure up some truth serum in Brussels and Frankfurt.
• Crippled eurozone to face fresh debt crisis this year (AEP) (http://www.telegraph.co.uk/finance/financetopics/davos/10590134/Crippled-eurozone-to-face-fresh-debt-crisis-this-year-warns-ex-ECB-strongman-Axel-Weber.html)

A top panel of experts in Davos has poured cold water on claims that the European crisis is over, warning that the eurozone remains stuck in a low-growth debt trap and risks being left on the margins of the global economy by US and China.
Axel Weber, the former head of the German Bundesbank, said the underlying disorder continues to fester and region is likely to face a fresh market attack this year. “Europe is under threat. I am still really concerned. Markets have improved but the economic situation for most countries has not improved,” he said that the World Economic Forum in Davos.
Mr Weber, now chairman of UBS, said the European Central Bank’s stress test for banks in November risks setting off a new sovereign debt scare, reviving the crisis in the Mediterranean countries. “Markets are currently disregarding risks, particularly in the periphery. I expect some banks not to pass the test despite political pressure. As that becomes clear, there will be a financial reaction in markets,” he said.
Harvard professor Kenneth Rogoff said the launch of the euro had been a “giant historic mistake, done to soon” that now requires a degree of fiscal union and a common bank resolution fund to make it work, but EMU leaders are still refusing to take these steps. “People are no longer talking about the euro falling apart but youth unemployment is really horrific. They can’t leave this twisting in wind for another five years,” he said. [..]
Mr Rogoff said it would be much easier for Europe to cope if the euro exchange rate was $1.10 to the dollar rather than $1.35, up 8pc in trade-weighted terms in the last 18 months. Mr Weber retorted that the euro will come down to earth as the tightening by the US Federal Reserve and other central banks leave Europe as the odd man out. “The ECB has an easing bias. Fast forward another year or two, and relative monetary policy will become obvious to everybody,” he said.

http://www.theautomaticearth.com/wp-content/uploads/2013/12/HorLine300px.pngOh no, not again. Not the debt ceiling. For g-d’s sake, blow up the thing already! Let’s move on.
• U.S. Likely To Hit Debt Ceiling Sooner Than Believed (http://www.huffingtonpost.com/2014/01/22/us-debt-ceiling_n_4646696.html)

The country’s next fiscal crisis will come sooner than advertised.
Treasury Secretary Jack Lew on Wednesday sent a letter to House Speaker John Boehner (R-Ohio) warning that the country would likely exhaust the extraordinary measures used to stay beneath the debt limit by late February. In a previous letter to Boehner, Lew had projected the deadline might not be hit until early March. “While this [new] forecast is subject to inherent variability, we do not foresee any reasonable scenario in which the extraordinary measures would last for an extended period of time,” Lew wrote.
In the deal reached in mid-October to end the government shutdown, lawmakers extended the nation’s debt limit into the first week of February. It was always understood that Treasury could take extraordinary measures to extend the deadline even further. But in his note to Boehner, Lew made clear that those tools weren’t as potent as they have been in previous debt limit crises, partly because of limits on borrowing capacity and partly because of financial constraints that are unique to the month of February.

http://www.theautomaticearth.com/wp-content/uploads/2013/12/HorLine300px.pngIf after the demise of mankind more intelligent (how hard can that be?) life evolves, they will remember us as the species that poisoned itself to extinction. And wonder how that was ever possible. Wonder why we thought it was smart to first poison ourselves and then think we could “cure” it all right after. What are we thinking? To make money, we need to inject toxins in our bodies, and to make more money, we need to find a way to get rid of them. It is so stupid as a concept, there is no way it will ever succeed. Nor should it. Then again, how about seeing it in a positive way: we found the perfect antidote to overpopulation!
• Toxic Chemicals Driving Up Health Care Costs (HuffPo) (http://www.huffingtonpost.com/2014/01/22/bpa-health-care-costs_n_4644372.html)

Health care spending in the U.S. has surged more than eightfold since the 1960s. Skyrocketing in that same time: Rates of chronic disease, use of synthetic chemicals, and evidence that many of these widely used substances may be wreaking havoc on human health. “We know that these chemicals are reaching people. We know that chemicals can cause disease,” said Dr. Philip Landrigan, chairman of the department of preventative medicine at the Mount Sinai School of Medicine in New York. “Those diseases cost money,” Landrigan added.
New research published on Wednesday offers an example of this financial burden, widely overlooked in the health care debate. The use of bisphenol A, or BPA, in food and beverage containers, according to the study, is responsible for an estimated $3 billion a year in costs associated with childhood obesity and adult heart disease. “One could argue that’s absurdly conservative,” said Leonardo Trasande, an associate professor in pediatrics, environmental medicine and health policy at New York University’s Lagone Medical Center and author of the study.
Trasande’s calculations didn’t take into account other health issues that studies have begun linking to BPA exposure, such as prostate and breast cancers, asthma, migraine headaches, reproductive disorders and behavioral problems.

http://www.theautomaticearth.com/wp-content/uploads/2013/12/HorLine300px.png37.2% seems high for a US unemployment number, and just about everyone will discard it. But all Wall Street consiglieri David John Marotta wrote in what – probably – was not meant for publication is that “it does describe how many people are not able to, do not want to or cannot find a way to work“. Or, in other words, people of working age who do not have a job.
• Actual US unemployment 37.2%, record number of households on food stamps(RT) (http://rt.com/business/us-unemployment-economy-crisis-assistance-006/)

Perhaps the most worrying yet least reported aspect of the so-called US recovery involves the national labor picture. Although the official US unemployment rate is 6.7 percent, this figure obscures the reality, according to an influential Wall Street adviser. In a leaked memo to clients, David John Marotta calculates the actual unemployment rate of Americans out of work at an astronomic 37.2%, as opposed to the 6.7% claimed by the Federal Reserve.
“The unemployment rate only describes people who are currently working or looking for work,” he said. “Unemployment in its truest definition, meaning the portion of people who do not have any job, is 37.2%. This number obviously includes some people who are not or never plan to seek employment. But it does describe how many people are not able to, do not want to or cannot find a way to work,” he and colleague Megan Russell reveal in their client report, which was leaked to the Washington Examiner.
Contrary to expectations, a drop in the unemployment rate, Marotta argues, is presently a sign that the unemployed are simply dropping out of the job market. The “officially-reported unemployment numbers decrease when enough time passes to discourage the unemployed from looking for work,” said Marotta and Russell. “A decrease is not necessarily beneficial; an increase is clearly detrimental.”

http://www.theautomaticearth.com/wp-content/uploads/2013/12/HorLine300px.png“A committee has been set up to consult on improving the fixing”, this says. Say no more. That’s all we need to know.
• London seeks to reform 100-year-old ‘gold fix’ (RT) (http://rt.com/business/london-gold-fixing-reform-016/)

Pricing probes have forced London’s biggest banks to consider a systemic overhaul of the dated practice of “fixing” gold prices, which sets spot pricing for the world’s $20 trillion physical gold market.
A committee has been set up to consult on improving the fixing, which is set twice a day by five banks – Barclays Plc, Deutsche Bank AG, Bank of Nova Scotia, HSBC Holdings Plc, and Societe General SA, Bloomberg News reports, citing an anonymous inside source who wasn’t named because the review is not yet public.
The practice dates back to 1919 and helps determine the price of the precious metal on exchanges worldwide. The ‘fixing’ method has come under fire from US, UK, and European regulators who say it lacks transparency. Representatives of the five banks set the benchmark gold price in a teleconference call, and either recommend a higher or lower price to meet supply with demand. The prices are then used as a guide for miners, jewelers, as well as traders that sell securities tied to metals prices.

http://www.theautomaticearth.com/wp-content/uploads/2013/12/HorLine300px.pnghttp://1.bp.blogspot.com/-r8m8TEniMh0/UpdDAVFgEtI/AAAAAAAAMYg/v-ruyUQ1YCQ/s1600/65x2pxFiller.jpg

http://www.theautomaticearth.com/wp-content/uploads/2013/12/3.0TiticacaForFTFXMas.png (http://theautomaticearth.com/store-and-donations/)
http://3.bp.blogspot.com/-ei8YRjqg5A0/UoIBYv72sHI/AAAAAAAAMUg/qsKk5nZQZO0/s1600/100x10Filler.jpg
This article addresses just one of the many issues discussed in Nicole Foss’ new video presentation, Facing the Future, co-presented with Laurence Boomert and available from the Automatic Earth Store (http://theautomaticearth.com/store-and-donations/). Get your copy now, be much better prepared for 2014, and support The Automatic Earth in the process!

[tricha]

Wow, just like every other year, the entire world is going to hell. Ever heard of the "Wall of Worry" the market continually has to climb tricha? It appears the market has been climbing it quite well for the past 4 years and finally has a good foothold, but it appears you won't even make the first rung of it, am I wrong?

I also note you are primarily invested In property as well. That must keep you awake, taking coffee and amphetamines at all hours of the night and day, worrying about that bubble!

Take a stab at the wall and stop being Dr Doom. I promise you'll like it ;)

I have not a worry in the world. Property yes, debt zero. I sleep like a rock.

I do not know what you are invested in Moosie, Auckland property? Where did you buy your Rose tinted glasses from ? I suggest you take them of and buy some reading ones.
History repeats. When the music stops which chair are you going to be sitting in :confused:


Debt Rattle Jan 23 2014: In Debt We Trust (http://www.theautomaticearth.com/debt-rattle-jan-23-2014/)

Jan232014
January 23, 2014 Posted by Raúl Ilargi Meijer (http://www.theautomaticearth.com/author/ilargi/) at 12:55 pm Finance (http://www.theautomaticearth.com/category/finance/)




http://www.theautomaticearth.com/wp-content/uploads/2014/01/ForThemBombs1943.jpg (http://www.shorpy.com/node/16845?size=_original#caption)
Jack Delano “FOR THEM, BOMBS : Chicago, Union Station” January 1943
Does the Chinese alphabet have a question mark? If not, this would be a good time to get one. After writing again yesterday about the enormous amounts of leveraged debt in the country, that threaten to bring down investment products closely linked to the shadow banking system, which at the same time is fast becoming a huge political force just through its sheer size, here’s another question about China. How is manufacturing really doing? A private survey of manufacturers can at least potentially be expected to not only be party propaganda, something that can’t be said for any of the official numbers.
HSBC’s January index not just indicates poor growth, it even shows contraction. It is truly time to seriously worry about China. Ironically, the HSBC spokesperson says that “the policy focus should tilt towards supporting growth”. How, pray tell? Issuing more money/credit/debt through the PBOC? We saw yesterday that M2 went up 1000% since 1999. Pouring on ever more may not be the cure here. Or does he mean: loosen the strings for the shadow system? That would increase leverage even further, and raise risk to even higher levels. Is it maybe time to work towards less growth, instead of more?
• Weak China manufacturing reading rattles Asia (FT) (http://www.ft.com/intl/cms/s/0/f6ca31d2-83db-11e3-86c9-00144feab7de.html)
Asian equities and the Australian dollar fell after a closely watched private survey of Chinese manufacturers suggested industrial activity in the world’s second-biggest economy is contracting. HSBC’s preliminary Purchasing Managers’ Index slipped to 49.6 in January from 50.5 in December, just below the 50 mark that separates growth and contraction.
HSBC analysts said the PMI survey might convince the Chinese government to embark on another round of stimulus spending. “As inflation is not a concern, the policy focus should tilt towards supporting growth to avoid repeating growth deceleration seen in [the first half of] 2013,” HSBC’s Qu Hongbin said. [..]

http://www.theautomaticearth.com/wp-content/uploads/2013/12/HorLine300px.pngAmbrose talks about China as well, and also writes about the need to pour more money into the system. He does mention something hardly anyone else has: the velocity of money is very low in China. So no, indeed, inflation is not the biggest concern. But again, Beijing has poured in so much already, and let the shadow banks do even more, that you need to question whether that is the real answer. The risks would only grow that investments blow up, and who wins when that happens?
• Trying to deleverage China without blowing up the system (AEP) (http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100026436/trying-to-deleverage-china-without-blowing-up-the-system/?utm_source=dlvr.it&utm_medium=twitter)
China is walking a tightrope without a net. There is an acute cash crunch. Credit at a viable cost is being fiercely rationed. Foreign buyers with money in hand can – and are – buying up nearly completed buildings from distressed developers for a song.
The shadow banking system has risen to 30% of all lending from 20% in barely more than a year. The growth generated by each extra yuan of credit has fallen by three quarters from 1.0 to 0.25 in five years, evidence of credit exhaustion.
“They are trying to deleverage without blowing the whole thing up,” said CITIC’s Zhang Yichen. “The M2 money supply is 120 trillion RMB but that is still not enough cash because velocity of money is very slow, and interest rates are going up.”
http://www.theautomaticearth.com/wp-content/uploads/2013/12/HorLine300px.pngBritain’s in a bind that the BOE gave no forward guidance for: the government lending schemes (yes, more credit, more debt) have been so “successful” that they have to make true on what they did “forward guide”, raising rates when unemployment got to 7%. Well, it has, as temporary as that may be, but the BOE, like the Fed, is smart enough to understand that fulfilling the forwarded promises is a self-defeating action. How will they spin this one? Stay tuned …
• Bank of England seeks to ease rate hike fears as pound soars (Independent) (http://www.independent.co.uk/news/business/news/bank-of-england-seeks-to-ease-rate-hike-fears-as-pound-soars-9077215.html)
City traders sent the pound soaring following a shock fall in unemployment and the first explicit signal from the Bank of England on how it would handle a hike in interest rates. The fall in unemployment to 7.1% in the quarter to November brings it to the brink of the Bank’s 7% threshold for considering rate hikes under the forward guidance regime introduced only last summer.
The figures — showing a far steeper fall than predicted by City economists — pushed the pound up to a year high of 1.2220 against the euro and up 0.7 cents to $1.6552, also triggering a sell-off in gilts as the UK’s 10-year cost of borrowing rose by five basis points to 2.88%.
http://www.theautomaticearth.com/wp-content/uploads/2013/12/HorLine300px.pngOne of the main effects of a central bank rate hike, both in the US and UK, would be to seriously risk blowing up the illusionary housing recovery. Illusionary, because it’s been bought with debt.
• Interest rate rises will hit British households hard (Guardian) (http://www.theguardian.com/business/2014/jan/22/interest-rate-rises-millions-british-households-debt-economists)
Interest rate rises would tip millions of already-precarious households into financial disaster, according to economists, who warn it would cost the average family nearly £3,000 a year in extra mortgage payments if rates returned to levels that were typical before the credit crunch.
The Resolution Foundation thinktank has forecast that about 1 million households would face perilous debts if Bank of England base rates rose to 3%, with 2 million forced to spend more than half of their income on servicing a mortgage if rates returned to the 5% level common before the onset of the financial crisis in 2007.
British households remain among the most indebted in the world, warned the Trades Union Congress, and with wages falling in real terms they have struggled to pay off loans taken on during the boom. “We will start seeing really serious stress on household budgets if rates rise to 3.5-4%,” said a TUC senior economist, Duncan Weldon.
http://www.theautomaticearth.com/wp-content/uploads/2013/12/HorLine300px.pngAustralians too have binged on debt. Which seemed so cheap to do. Until it won’t be. Among overvalued housing markets, Oz is only 5th, behind Canada, New Zealand, Norway and Belgium. Good luck all of you.
• Australians in Record Loan Spree as House Prices Soar (Bloomberg) (http://www.bloomberg.com/news/2014-01-22/australians-in-record-loan-spree-as-house-prices-soar-mortgages.html)
Australian homebuyers are borrowing at the fastest pace in four years amid record prices, straining debt levels already among the developed world’s highest as interest rates are set to climb. The value of new mortgage approvals jumped 25% in November from a year earlier, the fastest annual pace since September 2009, to a record A$26.9 billion ($23.8 billion), according to the statistics bureau.
[B]Consumers from Canada to Scandinavia are on a borrowing binge, taking advantage of cheap credit that in Australia has pushed mortgage rates to a four-year low and underpinned a rally in home prices to unprecedented levels. Australians’ preference for variable-rate loans and investor demand for rental properties is setting the stage for delinquencies to rise as interest rates climb.
Australia’s housing market was the fifth-most overvalued among countries in the Organization for Economic Cooperation and Development relative to rents, the International Monetary Fund said in a December report. The leader is Canada, followed by New Zealand, Norway and Belgium.
http://www.theautomaticearth.com/wp-content/uploads/2013/12/HorLine300px.pngEx-Bundesbank Axel Weber can finally say what he pleases. Turns out, he understands it all after all. That doesn’t mean EU bank stress tests will be honest in their findings. That would be too risky, and expensive. Still, it looks certain that a number of banks will be closing their doors, but it’s an exercise in futility. Maybe the European elections this spring can conjure up some truth serum in Brussels and Frankfurt.
• Crippled eurozone to face fresh debt crisis this year (AEP) (http://www.telegraph.co.uk/finance/financetopics/davos/10590134/Crippled-eurozone-to-face-fresh-debt-crisis-this-year-warns-ex-ECB-strongman-Axel-Weber.html)
A top panel of experts in Davos has poured cold water on claims that the European crisis is over, warning that the eurozone remains stuck in a low-growth debt trap and risks being left on the margins of the global economy by US and China.
Axel Weber, the former head of the German Bundesbank, said the underlying disorder continues to fester and region is likely to face a fresh market attack this year. “Europe is under threat. I am still really concerned. Markets have improved but the economic situation for most countries has not improved,” he said that the World Economic Forum in Davos.
Mr Weber, now chairman of UBS, said the European Central Bank’s stress test for banks in November risks setting off a new sovereign debt scare, reviving the crisis in the Mediterranean countries. “Markets are currently disregarding risks, particularly in the periphery. I expect some banks not to pass the test despite political pressure. As that becomes clear, there will be a financial reaction in markets,” he said.
Harvard professor Kenneth Rogoff said the launch of the euro had been a “giant historic mistake, done to soon” that now requires a degree of fiscal union and a common bank resolution fund to make it work, but EMU leaders are still refusing to take these steps. “People are no longer talking about the euro falling apart but youth unemployment is really horrific. They can’t leave this twisting in wind for another five years,” he said. [..]
Mr Rogoff said it would be much easier for Europe to cope if the euro exchange rate was $1.10 to the dollar rather than $1.35, up 8pc in trade-weighted terms in the last 18 months. Mr Weber retorted that the euro will come down to earth as the tightening by the US Federal Reserve and other central banks leave Europe as the odd man out. “The ECB has an easing bias. Fast forward another year or two, and relative monetary policy will become obvious to everybody,” he said.
http://www.theautomaticearth.com/wp-content/uploads/2013/12/HorLine300px.pngOh no, not again. Not the debt ceiling. For g-d’s sake, blow up the thing already! Let’s move on.
• U.S. Likely To Hit Debt Ceiling Sooner Than Believed (http://www.huffingtonpost.com/2014/01/22/us-debt-ceiling_n_4646696.html)
The country’s next fiscal crisis will come sooner than advertised.
Treasury Secretary Jack Lew on Wednesday sent a letter to House Speaker John Boehner (R-Ohio) warning that the country would likely exhaust the extraordinary measures used to stay beneath the debt limit by late February. In a previous letter to Boehner, Lew had projected the deadline might not be hit until early March. “While this [new] forecast is subject to inherent variability, we do not foresee any reasonable scenario in which the extraordinary measures would last for an extended period of time,” Lew wrote.
In the deal reached in mid-October to end the government shutdown, lawmakers extended the nation’s debt limit into the first week of February. It was always understood that Treasury could take extraordinary measures to extend the deadline even further. But in his note to Boehner, Lew made clear that those tools weren’t as potent as they have been in previous debt limit crises, partly because of limits on borrowing capacity and partly because of financial constraints that are unique to the month of February.
http://www.theautomaticearth.com/wp-content/uploads/2013/12/HorLine300px.pngIf after the demise of mankind more intelligent (how hard can that be?) life evolves, they will remember us as the species that poisoned itself to extinction. And wonder how that was ever possible. Wonder why we thought it was smart to first poison ourselves and then think we could “cure” it all right after. What are we thinking? To make money, we need to inject toxins in our bodies, and to make more money, we need to find a way to get rid of them. It is so stupid as a concept, there is no way it will ever succeed. Nor should it. Then again, how about seeing it in a positive way: we found the perfect antidote to overpopulation!
• Toxic Chemicals Driving Up Health Care Costs (HuffPo) (http://www.huffingtonpost.com/2014/01/22/bpa-health-care-costs_n_4644372.html)
Health care spending in the U.S. has surged more than eightfold since the 1960s. Skyrocketing in that same time: Rates of chronic disease, use of synthetic chemicals, and evidence that many of these widely used substances may be wreaking havoc on human health. “We know that these chemicals are reaching people. We know that chemicals can cause disease,” said Dr. Philip Landrigan, chairman of the department of preventative medicine at the Mount Sinai School of Medicine in New York. “Those diseases cost money,” Landrigan added.
New research published on Wednesday offers an example of this financial burden, widely overlooked in the health care debate. The use of bisphenol A, or BPA, in food and beverage containers, according to the study, is responsible for an estimated $3 billion a year in costs associated with childhood obesity and adult heart disease. “One could argue that’s absurdly conservative,” said Leonardo Trasande, an associate professor in pediatrics, environmental medicine and health policy at New York University’s Lagone Medical Center and author of the study.
Trasande’s calculations didn’t take into account other health issues that studies have begun linking to BPA exposure, such as prostate and breast cancers, asthma, migraine headaches, reproductive disorders and behavioral problems.
http://www.theautomaticearth.com/wp-content/uploads/2013/12/HorLine300px.png37.2% seems high for a US unemployment number, and just about everyone will discard it. But all Wall Street consiglieri David John Marotta wrote in what – probably – was not meant for publication is that “it does describe how many people are not able to, do not want to or cannot find a way to work“. Or, in other words, people of working age who do not have a job.
• Actual US unemployment 37.2%, record number of households on food stamps(RT) (http://rt.com/business/us-unemployment-economy-crisis-assistance-006/)
Perhaps the most worrying yet least reported aspect of the so-called US recovery involves the national labor picture. Although the official US unemployment rate is 6.7 percent, this figure obscures the reality, according to an influential Wall Street adviser. In a leaked memo to clients, David John Marotta calculates the actual unemployment rate of Americans out of work at an astronomic 37.2%, as opposed to the 6.7% claimed by the Federal Reserve.
“The unemployment rate only describes people who are currently working or looking for work,” he said. “Unemployment in its truest definition, meaning the portion of people who do not have any job, is 37.2%. This number obviously includes some people who are not or never plan to seek employment. But it does describe how many people are not able to, do not want to or cannot find a way to work,” he and colleague Megan Russell reveal in their client report, which was leaked to the Washington Examiner.
Contrary to expectations, a drop in the unemployment rate, Marotta argues, is presently a sign that the unemployed are simply dropping out of the job market. The “officially-reported unemployment numbers decrease when enough time passes to discourage the unemployed from looking for work,” said Marotta and Russell. “A decrease is not necessarily beneficial; an increase is clearly detrimental.”
http://www.theautomaticearth.com/wp-content/uploads/2013/12/HorLine300px.png“A committee has been set up to consult on improving the fixing”, this says. Say no more. That’s all we need to know.
• London seeks to reform 100-year-old ‘gold fix’ (RT) (http://rt.com/business/london-gold-fixing-reform-016/)
Pricing probes have forced London’s biggest banks to consider a systemic overhaul of the dated practice of “fixing” gold prices, which sets spot pricing for the world’s $20 trillion physical gold market.
A committee has been set up to consult on improving the fixing, which is set twice a day by five banks – Barclays Plc, Deutsche Bank AG, Bank of Nova Scotia, HSBC Holdings Plc, and Societe General SA, Bloomberg News reports, citing an anonymous inside source who wasn’t named because the review is not yet public.
The practice dates back to 1919 and helps determine the price of the precious metal on exchanges worldwide. The ‘fixing’ method has come under fire from US, UK, and European regulators who say it lacks transparency. Representatives of the five banks set the benchmark gold price in a teleconference call, and either recommend a higher or lower price to meet supply with demand. The prices are then used as a guide for miners, jewelers, as well as traders that sell securities tied to metals prices.
http://www.theautomaticearth.com/wp-content/uploads/2013/12/HorLine300px.pnghttp://1.bp.blogspot.com/-r8m8TEniMh0/UpdDAVFgEtI/AAAAAAAAMYg/v-ruyUQ1YCQ/s1600/65x2pxFiller.jpg

[blackcap]

Good call Moosie. You are right in saying that many on mortgages are going to be hurting very soon. If you budgeted for 5% rates as I think many may have done they are going to get a huge shock when rates get up to 8%. That is a 60% increase in interest payments and could be the last straw in the bubble that is the NZ property market.

[JBmurc]

However, as with all great thing they must, at some point, come to an end. The OCR is going to rise fast this year as NZ's economy kicks into higher gear. That easy lending that everyone thought was great on very low interest terms? Yeah, that's going to end as well, and ALOT of people who got sucked into mortgages on low rates they could barely afford chasing an ever climbing market are going to start hurting really soon....

--------------------------------------


I agree in part moose but there's no way rates will move up fast ...Our dollar is very high on a histrionic basis with many of are trading partners.( I should know as in my job we export to Aus and have seen are earnings drop 10%+).

-NZD is seen international as a fairly safe high yielding currency ..you throw rates up to fast ...the International Funds will flood into our dollar pushing it through the roof in turn wiping out many exporters i.e the backbone of the economy .....

-And like you say so many Kiwis are ticked to the eyeballs with household debt ....No Government that whats to stay in power is going want to see voters losing Jobs and have record bankruptcies

No I really think all the OCR increase talk is hot air currently trying to rein in the housing boom they may well do a small token increase but forget the old average 7% for a few more years yet

[JBmurc]

Don't own any RYM or SUM (good stocks though). Still focussed on tech as always.

JB, where do you think the OCR will end up then? I have the NZRB meeting 8 times this year. The average increase/decrease is in the .25-.50 range. So, from a base rate of 2.5 right now and let's say 5 meetings with increases of .25 and 3 witj none, I get an end of year OCR of 3.75 (I'm pretty sure that's what economists are predicting as well). Double that for the average mortgage rate and you're pushing 7%...

Well of course I could be dead wrong and we could have floating mortgage rates over 7% ... 2014 ..but this will be dead against are biggest trading partners like Aussie with their current OCR of 2.5% talk of even going lower... US UK EURO 0.5% longer term no major increases back to old averages...

Christine Lagarde, managing director of the International Monetary Fund, warns that deflation remains a real risk to economic recovery in the eurozone......

Yet little old NZ with one of the smallest traded currencies will charge ahead lifting rates with the direct outcome of a mass of foreign capital flows into New Zealand and this puts upward pressure on the exchange rate in turn wiping out many Exporters = Political suicide

IMHO we will see OCR increase very slowly i.e 3% for 2014 - 3.25-3.5% 2015 etc and maybe not at all on the backof new data or laws passed

The Whole reason why we are talking about increasing rates is because of investment imbalances in property this majority caused by foreign investment into Auckland and the CHCH rebuild IMHO

It's not like Kiwi incomes are growing we still have one of the worst debt to household incomes in the OECD ...NZ median income 29k ?

Would send even more Kiwis to Aus if morg rates are 7% V's 4-5% aus etc while av. incomes are also much in Aus higher NZD/AUD helping kiwi's dollar go further

Also Tourism will be affected badly here ....

[tricha]

I have no debt other than my student loan which is much lower than a lot of people my age (27). My kiwisaver is looking healthy and the stock market has treated me well the past 3 years.

As I am still young and treat the real estate market as per any market I am not buying high just to see it all fall. I live in Napier which is considered "highly unaffordable" rather than "severely unaffordable" like Auckland/Tauranga etc. but that's enough for me to stay away! I have not had the fortune to be around for years to buy into an ever climbing property market like the old timers. I am, unfortunately, part of the "lost generation" that went through higjer education between busts, find it very hard to find a job and bitch and moan about just about everything. Luckily I have a job and keep my mouth shut (most of the time!).

However, as with all great thing they must, at some point, come to an end. The OCR is going to rise fast this year as NZ's economy kicks into higher gear. That easy lending that everyone thought was great on very low interest terms? Yeah, that's going to end as well, and ALOT of people who got sucked into mortgages on low rates they could barely afford chasing an ever climbing market are going to start hurting really soon. Only last week the median buy price of houses in Auckland dropped $20k (3.4%) as LVR hit home.

(I love it how Aucklanders cried wolf [and showed the latent racism inherent in NZ] about Asians buying up the market when a study showed they made up only 5% of the market while Aussies and Poms made up 25% with most of the rest being locals chasing momentum btw!).

Point is Kiwis have been sucketed in to thinking the only real investment is in property. It sure isn't and gold isn't a good choice either right now is it?! When everyome wakes up and starts flooding to the NZX because the property market is falling and gold is even worse, who do you think is going to benefit from it? it isn't going to be those holding gold! The market is very risk on right now as seen by the past 2 weeks following WYN, PEB, XRO, GEO, BFW etc. (take your pick really!).

To sum it up: There is a time and a place for gold and property. Property bubble good for those who bought early, not when its about to hit headwinds this year. Gold? Not a chance!

Hope you are holding at least some stock for '14 ;)


Hi Moosie

A great reply.

Here is the difference. I'm 57 and u r 27. If the market crashes u will live to fight another day. You have another 30 good years of work ahead.
Like me when the market crashed in 1987.

I do not need to take risks any more.

I have read a little about history. It repeats.

The world has a depression on average, every 70 years. ( It is used to reset the financial system, new currencies are established usually based on gold and silver)
Currencies come and go.
Never in the history of the world has all major currencies been printing Ponzi dollars at once.
The day before the crash of 1929, everything was rosy.
A 1% interest rate rise will be a disaster, in most countries in the world.

Right now the markets are akin to musical chairs. Which chair are you going to be sitting in when the music stops :confused: ( note- the market can stay irrational longer than one can imagine)
So that is the six million dollar :confused:

Best of luck Moosie.

For me, I do not need any luck.

All our ducks are home.
Our gold is an insurance scheme, not an investment. ( remember it is only a small proportion of our assets)

I do hold shares. but not many now.

Cheers Tricha

[skid]

Can be a dangerous assumption ,thinking that the share market is a leading indicator of the state of the economy.
I guess it all boils down to which one of those US unemployment figures is really right-the official 6.7 or the 37.2% and other similar scenarios.
Just how much serious stuff is being swept under the carpet and its potential repercussions is up for debate,but its worth considering.
I can understand why you dont want to jump into the housing market,I probably wouldnt either,but dont underestimate the power of those overseas buyers(theres alot of people with deep pockets in China alone,even if it does take a dip)
Now that you have settled here im sure you can see the potential benefits of NZ to some of those other places.(as long as they keep slack rules on overseas buying)
No matter how fast and loose you play the sharemarket,you will get burned.
Its just a matter of time-but hopefully keeping abreast of things will keep that to a minimum.
Just dont make the mistake of thinking your shares are bullet proof like some of those on the PEB thread.
There have been plenty of ''darlings'' that people have fallen in love with that have crashed and burned(sometimes along with the whole share market) (It used to be oil shares)
Of course us oldies with property under our belt are going to lean toward conservative-but dont write off warnings as scare mongering without some research.
No matter what is happening domestically here in NZ,-It will get kicked to kingdom come if bad things happen out there including the $Kiwi.
Keep reminding yourself.
If you save or make enough dosh and things settle in the property market,it might be a good idea to consider something like a small plot with a relocatable as a start.
Dont forget we have just come out of a pretty good run on the share market so of course alot of shares have done well. Dont think that its always the norm--keep your finger near the button and run stop losses if possible.
What you are saying about property can also be applied to the share market and world economy IMHO

[skid]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11192418

[tricha]

In gold we trust, when paper money turns to dust :eek2:

Gold Mint Runs Overtime in Race to Meet World Coin Demand By Debarati Roy Jan 27, 2014 8:22 PM GMT+1300




http://www.bloomberg.com/image/iFl5V12sQjaU.jpg (http://www.bloomberg.com/photo/balls-of-gold-/-iFUM8yagyU98.html) Photographer: Gianluca Colla/Bloomberg Small balls of solid gold are collected in a basin during the semi-automated gold... Read More (http://www.bloomberg.com/news/2014-01-27/gold-mint-runs-overtime-in-race-to-meet-world-coin-demand.html#)

Small balls of solid gold are collected in a basin during the semi-automated gold manufacturing process at a precious metal refinery near Mendrisio, Switzerland. Close (http://www.bloomberg.com/news/2014-01-27/gold-mint-runs-overtime-in-race-to-meet-world-coin-demand.html#)

http://www.bloomberg.com/image/iE.oQMm43rSY.jpg
Close
Open Photographer: Gianluca Colla/Bloomberg Small balls of solid gold are collected in a basin during the semi-automated gold manufacturing process at a precious metal refinery near Mendrisio, Switzerland.







Austria (http://topics.bloomberg.com/austria/)’s mint is running 24 hours a day as global mints from the U.S. to Australia (http://topics.bloomberg.com/australia/) report climbing demand for gold coins even while Goldman Sachs Group Inc. says this year’s price rebound will end.
Austria’s Muenze Oesterreich AG mint hired extra employees and added a third eight-hour shift to the day in a bid to keep up with demand. Purchases of bullion coins at Australia’s Perth Mint rose 20 percent this year through Jan. 20 from a year earlier. Sales by the U.S. Mint (http://topics.bloomberg.com/u.s.-mint/) are set for the best month since April, when the metal plunged into a bear market (http://topics.bloomberg.com/bear-market/).
Global mints are manufacturing as fast as they can after a 28 percent drop in gold prices (http://topics.bloomberg.com/gold-prices/) last year, the biggest slump since 1981, attracted buyers of physical metal. The demand gains helped bullion rally for five straight weeks, the longest streak since September 2012. That won’t be enough to stem the metal’s slump according to Morgan Stanley, while Goldman Sachs Group predicts bullion will “grind lower” over 2014.
“The long-term physical buyers see these price drops as opportunities to accumulate more assets,” said Michael Haynes, the chief executive officer of American Precious Metals Exchange, an online bullion dealer. “We have witnessed some top selling days in the past few weeks.”
http://www.bloomberg.com/image/iX8AQO7DNQ0o.jpg (http://www.bloomberg.com/photo/vienna-philharmonic-euro-gold-coins-/-i28dI7XPpKgs.html) Photographer: Balint Porneczi/Bloomberg A collection of newly-stamped Vienna Philharmonic 100 euro gold coins sit on display at... Read More (http://www.bloomberg.com/news/2014-01-27/gold-mint-runs-overtime-in-race-to-meet-world-coin-demand.html#)

A collection of newly-stamped Vienna Philharmonic 100 euro gold coins sit on display at the Austrian mint in Vienna. Close (http://www.bloomberg.com/news/2014-01-27/gold-mint-runs-overtime-in-race-to-meet-world-coin-demand.html#)

http://www.bloomberg.com/image/itcuE38mL2WU.jpg
Close
Open Photographer: Balint Porneczi/Bloomberg A collection of newly-stamped Vienna Philharmonic 100 euro gold coins sit on display at the Austrian mint in Vienna.





Gold futures in New York (http://topics.bloomberg.com/new-york/) climbed 5.2 percent this month to $1,268.29 an ounce, heading for the first gain since August. The Standard & Poor’s GSCI Spot Index of 24 raw materials slid 1.1 percent, while the MSCI All-Country World index of equities dropped 2.9 percent. The Bloomberg Dollar Spot Index, a gauge against 10 major trading partners, advanced 0.7 percent.
Prices ReboundPrices rebounded more than 7 percent since reaching a 34-month low in June as physical buying rose. The Shanghai Gold Exchange, China (http://topics.bloomberg.com/china/)’s largest bullion bourse, delivered 2,197 metric tons to customers in 2013, compared with 1,139 tons in 2012, it said Jan. 15. The Asian country topped India (http://topics.bloomberg.com/india/) as the world’s top buyer last year as demand probably reached a record, the World Gold Council estimates.
The U.K.’s Royal Mint, which traces its history back more than 1,000 years, ran out of 2014 Sovereign gold coins because of “exceptional demand,” it said in a statement on Jan. 8. Coins weren’t available to customers until six days later when inventories were replenished. Sales by the Perth Mint, which also has workers producing coins in three shifts a day, will probably beat last year’s record, Ron Currie, the marketing director, said Jan. 20.
Goldman, MorganBullion tumbled in 2013 after some investors lost faith in the metal as a store of value, snapping 12 straight years of gains. Holdings through exchange-traded products (http://www.bloomberg.com/quote/.GLDTONS:IND) fell 33 percent in the past 12 months, erasing $69.1 billion from the value of the funds, data compiled by Bloomberg show. Prices also fell as U.S. equities rallied and inflation remained low.
Goldman expects bullion to fall to $1,050 in the next 12 months as the Federal Reserve (http://topics.bloomberg.com/federal-reserve/) reduces monetary stimulus, analysts led by Jeffrey Currie (http://topics.bloomberg.com/jeffrey-currie/), the bank’s head of commodities research, said in a report Jan. 12. Precious metals are Morgan Stanley’s “least preferred” commodities, and physical demand won’t be enough to buoy prices, analysts Adam Longson, Bennett Meier and Peter Richardson (http://topics.bloomberg.com/peter-richardson/) said in a Jan. 17 report. The bank cut its 2014 target 12 percent to $1,160 on Jan. 22.
“Prices are likely to drop further as global economic conditions are stabilizing and tapering worries continue,” said Rob Haworth, a senior investment strategist in Seattle (http://topics.bloomberg.com/seattle/) at U.S. Bank Wealth Management, which oversees about $110 billion of assets. “There is no doubt that physical demand has improved, but it will not be enough to support prices.”
Coin SalesThe U.S. Mint, the world’s largest, sold 89,500 ounces (http://www.bloomberg.com/quote/AEBSGTOO:IND) so far this month. The Austrian mint that makes Philharmonic coins, saw sales jump 36 percent last year and expects “good business” for the next couple of months, Andrea Lang, the marketing and sales director of Austria’s Muenze Oesterreich AG, said in an e-mail.
“The market is very busy,” Lang said. “We can’t meet the demand, even if we work overtime.”
The price (http://www.bloomberg.com/quote/COINGPHL:IND) for the Austrian mint’s 1-ounce Philharmonic gold coin slumped 27 percent last year, according to data from the Certified Coin Exchange.
“It’s been a very bad year for gold,” said Frank McGhee (http://topics.bloomberg.com/frank-mcghee/), the head dealer at Integrated Brokerage Services LLC in Chicago (http://topics.bloomberg.com/chicago/). “People who bought coins have lost value, but they are not looking at short-term gains, and hope springs eternal.”
To contact the reporter on this story: Debarati Roy in New York at droy5@bloomberg.net
To contact the editor responsible for this story: Millie Munshi at mmunshi@bloomberg.net

[Skol]

If in gold we trust, why is the price dropping?

[tricha]

If in gold we trust, why is the price dropping?

Skol, are u thick or do u need a new set of glasses :confused: Gold is not an investment. It's an insurance policy.
It is set a side for a rainey day. It is also a small percentage of ones assets.

P.S It should also be noted, as it is not an investment, it relates to persons aged 50 years plus. The likes of Moosie who are around 27 years of age, generally do not need it, as they can still take a hit or two.

In gold we trust, when paper money turns to dust :eek2:

Gold Mint Runs Overtime in Race to Meet World Coin Demand By Debarati Roy Jan 27, 2014 8:22 PM GMT+1300




http://www.bloomberg.com/image/iFl5V12sQjaU.jpg (http://www.bloomberg.com/photo/balls-of-gold-/-iFUM8yagyU98.html) Photographer: Gianluca Colla/Bloomberg Small balls of solid gold are collected in a basin during the semi-automated gold... Read More (http://www.bloomberg.com/news/2014-01-27/gold-mint-runs-overtime-in-race-to-meet-world-coin-demand.html#)

Small balls of solid gold are collected in a basin during the semi-automated gold manufacturing process at a precious metal refinery near Mendrisio, Switzerland. Close (http://www.bloomberg.com/news/2014-01-27/gold-mint-runs-overtime-in-race-to-meet-world-coin-demand.html#)

http://www.bloomberg.com/image/iE.oQMm43rSY.jpg
Close
Open Photographer: Gianluca Colla/Bloomberg Small balls of solid gold are collected in a basin during the semi-automated gold manufacturing process at a precious metal refinery near Mendrisio, Switzerland.







Austria (http://topics.bloomberg.com/austria/)’s mint is running 24 hours a day as global mints from the U.S. to Australia (http://topics.bloomberg.com/australia/) report climbing demand for gold coins even while Goldman Sachs Group Inc. says this year’s price rebound will end.
Austria’s Muenze Oesterreich AG mint hired extra employees and added a third eight-hour shift to the day in a bid to keep up with demand. Purchases of bullion coins at Australia’s Perth Mint rose 20 percent this year through Jan. 20 from a year earlier. Sales by the U.S. Mint (http://topics.bloomberg.com/u.s.-mint/) are set for the best month since April, when the metal plunged into a bear market (http://topics.bloomberg.com/bear-market/).
Global mints are manufacturing as fast as they can after a 28 percent drop in gold prices (http://topics.bloomberg.com/gold-prices/) last year, the biggest slump since 1981, attracted buyers of physical metal. The demand gains helped bullion rally for five straight weeks, the longest streak since September 2012. That won’t be enough to stem the metal’s slump according to Morgan Stanley, while Goldman Sachs Group predicts bullion will “grind lower” over 2014.
“The long-term physical buyers see these price drops as opportunities to accumulate more assets,” said Michael Haynes, the chief executive officer of American Precious Metals Exchange, an online bullion dealer. “We have witnessed some top selling days in the past few weeks.”
http://www.bloomberg.com/image/iX8AQO7DNQ0o.jpg (http://www.bloomberg.com/photo/vienna-philharmonic-euro-gold-coins-/-i28dI7XPpKgs.html) Photographer: Balint Porneczi/Bloomberg A collection of newly-stamped Vienna Philharmonic 100 euro gold coins sit on display at... Read More (http://www.bloomberg.com/news/2014-01-27/gold-mint-runs-overtime-in-race-to-meet-world-coin-demand.html#)

A collection of newly-stamped Vienna Philharmonic 100 euro gold coins sit on display at the Austrian mint in Vienna. Close (http://www.bloomberg.com/news/2014-01-27/gold-mint-runs-overtime-in-race-to-meet-world-coin-demand.html#)

http://www.bloomberg.com/image/itcuE38mL2WU.jpg
Close
Open Photographer: Balint Porneczi/Bloomberg A collection of newly-stamped Vienna Philharmonic 100 euro gold coins sit on display at the Austrian mint in Vienna.





Gold futures in New York (http://topics.bloomberg.com/new-york/) climbed 5.2 percent this month to $1,268.29 an ounce, heading for the first gain since August. The Standard & Poor’s GSCI Spot Index of 24 raw materials slid 1.1 percent, while the MSCI All-Country World index of equities dropped 2.9 percent. The Bloomberg Dollar Spot Index, a gauge against 10 major trading partners, advanced 0.7 percent.
Prices Rebound

Prices rebounded more than 7 percent since reaching a 34-month low in June as physical buying rose. The Shanghai Gold Exchange, China (http://topics.bloomberg.com/china/)’s largest bullion bourse, delivered 2,197 metric tons to customers in 2013, compared with 1,139 tons in 2012, it said Jan. 15. The Asian country topped India (http://topics.bloomberg.com/india/) as the world’s top buyer last year as demand probably reached a record, the World Gold Council estimates.
The U.K.’s Royal Mint, which traces its history back more than 1,000 years, ran out of 2014 Sovereign gold coins because of “exceptional demand,” it said in a statement on Jan. 8. Coins weren’t available to customers until six days later when inventories were replenished. Sales by the Perth Mint, which also has workers producing coins in three shifts a day, will probably beat last year’s record, Ron Currie, the marketing director, said Jan. 20.
Goldman, Morgan

Bullion tumbled in 2013 after some investors lost faith in the metal as a store of value, snapping 12 straight years of gains. Holdings through exchange-traded products (http://www.bloomberg.com/quote/.GLDTONS:IND) fell 33 percent in the past 12 months, erasing $69.1 billion from the value of the funds, data compiled by Bloomberg show. Prices also fell as U.S. equities rallied and inflation remained low.
Goldman expects bullion to fall to $1,050 in the next 12 months as the Federal Reserve (http://topics.bloomberg.com/federal-reserve/) reduces monetary stimulus, analysts led by Jeffrey Currie (http://topics.bloomberg.com/jeffrey-currie/), the bank’s head of commodities research, said in a report Jan. 12. Precious metals are Morgan Stanley’s “least preferred” commodities, and physical demand won’t be enough to buoy prices, analysts Adam Longson, Bennett Meier and Peter Richardson (http://topics.bloomberg.com/peter-richardson/) said in a Jan. 17 report. The bank cut its 2014 target 12 percent to $1,160 on Jan. 22.
“Prices are likely to drop further as global economic conditions are stabilizing and tapering worries continue,” said Rob Haworth, a senior investment strategist in Seattle (http://topics.bloomberg.com/seattle/) at U.S. Bank Wealth Management, which oversees about $110 billion of assets. “There is no doubt that physical demand has improved, but it will not be enough to support prices.”
Coin Sales

The U.S. Mint, the world’s largest, sold 89,500 ounces (http://www.bloomberg.com/quote/AEBSGTOO:IND) so far this month. The Austrian mint that makes Philharmonic coins, saw sales jump 36 percent last year and expects “good business” for the next couple of months, Andrea Lang, the marketing and sales director of Austria’s Muenze Oesterreich AG, said in an e-mail.
“The market is very busy,” Lang said. “We can’t meet the demand, even if we work overtime.”
The price (http://www.bloomberg.com/quote/COINGPHL:IND) for the Austrian mint’s 1-ounce Philharmonic gold coin slumped 27 percent last year, according to data from the Certified Coin Exchange.
“It’s been a very bad year for gold,” said Frank McGhee (http://topics.bloomberg.com/frank-mcghee/), the head dealer at Integrated Brokerage Services LLC in Chicago (http://topics.bloomberg.com/chicago/). “People who bought coins have lost value, but they are not looking at short-term gains, and hope springs eternal.”
To contact the reporter on this story: Debarati Roy in New York at droy5@bloomberg.net (droy5@bloomberg.net)
To contact the editor responsible for this story: Millie Munshi at mmunshi@bloomberg.net (mmunshi@bloomberg.net)
'''''''''''''''''''''''
'''''''''''''''''''''''''''''''''''''''''''''''''' '''''''''''''''''''''''''''''''''''''''''''''''
http://www.youtube.com/watch?v=QovBLFZhQME (http://www.youtube.com/watch?v=QovBLFZhQME)

[skid]

Could someone please explain to me how they plan to greatly reduce quantitative easing and keep interest rates down at the same time? And then could you explain how things will carry on their merry way with higher interest rates?

[Skol]

I don't need an insurance policy that performs so abysmally. It's the home of manipulation conspiracy theorists and Fed haters. The reason gold performed so well for a few years was because it was a mania, not an insurance policy. When it all turns to sh*t you need land, food, soap, a generator, firewood, machinery, water, shelter and firearms, not gold.

I've got all of them.

I'm not one of those survivalist looneys you see on TV either, I use all my stuff in everyday life.

[skid]

Gettin a bit ahead of yourself there Skol--i think there may be a few stops between where we are now and your ''total destruction'' scenario.

Hows the insurance on your house performing?

[skid]

Maybe you could help me out with an explanation of my previous question #1820 Got any clues?

[Skol]

Could someone please explain to me how they plan to greatly reduce quantitative easing and keep interest rates down at the same time? And then could you explain how things will carry on their merry way with higher interest rates?

They aren't going to end QE overnight and interest rates won't spike up overnight. When I was younger, interest rates got to 25%, the world didn't end, I'd locked my mortgage in for a few years at lower rates.

Gold didn't go to the moon either, the 1981 gold mania and subsequent crash left lots of suckers licking their wounds.

[skid]

Its not the same world as when you were younger--whether it happens overnight or not-there will be some collateral damage,you can count on it.--
Once the easy money dries up,it will be time to pay---The already astronomical debt will become more expensive.
The facade is still holding,but like Enron at some stage something will have to give.
Because we have survived ok up to now ,we will continue to be fine.--Do you really buy the status quo argument?
I dont think there are many out there who really think things will just take care of themselves although there are some who would like you to believe that.
Go back and look at the debt levels when interest was at 25%---The world wont end -but it wont be the same as now---''Its the world Jim-but not as we know it''

[Skol]

Its not the same world as when you were younger--whether it happens overnight or not-there will be some collateral damage,you can count on it.--
Once the easy money dries up,it will be time to pay---The already astronomical debt will become more expensive.
The facade is still holding,but like Enron at some stage something will have to give.
Because we have survived ok up to now ,we will continue to be fine.--Do you really buy the status quo argument?
I dont think there are many out there who really think things will just take care of themselves although there are some who would like you to believe that.
Go back and look at the debt levels when interest was at 25%---The world wont end -but it wont be the same as now---''Its the world Jim-but not as we know it''

The goldbugs have been banging on about economic catastrophes for years, and has it happened? Of course not, it won't either. Property and stocks are where the real money is, anyone overexposed to precious metals is going under.

According to Marc Faber, looney Pastor Lindsey Williams, Jim Willie and loads of other conspiracy theory cranks the USA and world economy was supposed to have collapsed by now , but it all looks to be doing damned well to me.

[Bobcat.]

The price of Gold is lifting nicely off a base of 1250USD (previous resistance has become the latest confirmed support). Most of us were expecting it to drop away after reaching the Bear's downward trendline sitting at around 1270USD, which it did but not in a huge way at all. Its Bear market looks to be over - with its price consolidating to trade over the next few weeks IMO within the range 1250 to 1300. Fed decision to taper very little if at all will impact to the upside.

Trading to it.

BC

[skid]

http://www.marketwatch.com/story/the-bulls-are-getting-nervous-2014-01-28?link=kiosk

[tricha]

They aren't going to end QE overnight and interest rates won't spike up overnight. When I was younger, interest rates got to 25%, the world didn't end, I'd locked my mortgage in for a few years at lower rates.

Gold didn't go to the moon either, the 1981 gold mania and subsequent crash left lots of suckers licking their wounds.

The 6 million dollar question, when. Sunday afternoon listening. Most people have probably already seen it.
Most people have probably forgotten it also, going By the amount of spending on credit cards recently:p

Overdose: The Next Financial Crisis https://yt4.ggpht.com/-Xs83JYB4N28/AAAAAAAAAAI/AAAAAAAAAAA/Fr6y4xA5VVA/s48-c-k-no/photo.jpg (http://www.youtube.com/user/journeymanpictures?feature=watch)Journeyman Pictures (http://www.youtube.com/user/journeymanpictures?feature=watch) http://s.ytimg.com/yts/img/pixel-vfl3z5WfW.gif


http://www.youtube.com/watch?v=4ECi6WJpbzE

[Skol]

The 6 million dollar question, when. Sunday afternoon listening. Most people have probably already seen it.
Most people have probably forgotten it also, going By the amount of spending on credit cards recently:

Spending plenty on mine tricha, you only live once, right? Airline business in boom mode, making hay while the sun shines. May it last until I retire, then I'll cash in my superannuation scheme and spend some more.

[skid]

May it last until he retires--so he can sit in his mansion ,with his money,and look out at all those unfortunate souls who didnt have his riches ,but unfortunately listened to him.

[Skol]

May it last until he retires--so he can sit in his mansion ,with his money,and look out at all those unfortunate souls who didnt have his riches ,but unfortunately listened to him.

No one will get rich owning gold unless they got out 3 years ago. You've got my word for it. Even a menial term deposit thrashes the yellow stuff, and with a fraction of the risk.

Check to the gold price now.

[tricha]

May it last until he retires--so he can sit in his mansion ,with his money,and look out at all those unfortunate souls who didnt have his riches ,but unfortunately listened to him.

superscheme he says, wait till the music stops and see it vaporise.

Shame he can not read.

[tricha]

The 6 million dollar question, when. Sunday afternoon listening. Most people have probably already seen it.
Most people have probably forgotten it also, going By the amount of spending on credit cards recently:p

Overdose: The Next Financial Crisis https://yt4.ggpht.com/-Xs83JYB4N28/AAAAAAAAAAI/AAAAAAAAAAA/Fr6y4xA5VVA/s48-c-k-no/photo.jpg (http://www.youtube.com/user/journeymanpictures?feature=watch)Journeyman Pictures (http://www.youtube.com/user/journeymanpictures?feature=watch) http://s.ytimg.com/yts/img/pixel-vfl3z5WfW.gif


http://www.youtube.com/watch?v=4ECi6WJpbzE

back to reality!

[Skol]

superscheme he says, wait till the music stops and see it vaporise.

Shame he can not read.

It's all in cash tricha, not a great return, cash +3% last year, but beats the sh*t out of gold, -24%.

And when I retire interest rates are likely to spike on my spend-up alone, you only live once. Lucky I haven't had any of my dosh in gold over the last few years.

Ever watched that TV programme 'Doomsday Preppers' tricha? Gotta be right up your alley, all kinds of cranks waiting for financial collapse, atomic war, global warming, flooding, race riots, no oil, black holes, no water, no food, asteroid collisions etc.

Where's your bug-out location tricha? Hahaha

Problem is, it never happens, goldbugs would love it though. Which reminds me, aren't we supposed to have run out of oil by now? Airline business doesn't think so.

[skid]

Will the USAs greed and disregard for other markets come back and bite them?
http://www.reuters.com/

[skid]

http://www.reuters.com/article/2014/01/25/us-davos-kerry-idUSBREA0N1O920140125

Uh..Mr Kerry..I think they are talking about what effect your economical decisions have on developing countries...We already know you get involved (often forcefully) if theres a buck in it for you.

Instead of trying to help to remedy the situation,the US ''dismisses'' this as a myth--is that arrogant or what?

[skid]

http://www.truthdig.com/report/item/us_pushing_new_treaties_at_expense_of_national_sov ereignty_20131119

And to think our leaders actually have fallen for the free trade agreement scam:confused::scared:

[Skol]

If the Superbowl Indicator is any guide, should the Seattle Seahawks win tomorrow, there's an 80% chance the S&P will be up this year, an average of 10%.

Good for stocks, bad for gold.
----------------------------------

To the point, Bespoke Investment Group’s number cruncher Paul Hickey set out to analyze the Super Bowl theory, which unequivocally has shown that when an NFC team wins, the S&P 500 (^GSPC) has rallied an average of 10% in the ensuing 11 months and was positive 80% of the time, which is more than double the 4% gains that follow an AFC victory.

[skid]

Well,there you have it:ohmy::ohmy:

Ive always thought that American football reflected their psyche quite well

to bad for the AFC(whoever that is)--(as he slaps a high five -crashes helmets with team mates,and a variety of other neanderthal gestures)

[Skol]

Well,there you have it:ohmy::ohmy:

Well, not exactly, gold's going down the tubes irrespective of the game result.

[tricha]

The 6 million dollar question, when. Sunday afternoon listening. Most people have probably already seen it.
Most people have probably forgotten it also, going By the amount of spending on credit cards recently:p

Overdose: The Next Financial Crisis https://yt4.ggpht.com/-Xs83JYB4N28/AAAAAAAAAAI/AAAAAAAAAAA/Fr6y4xA5VVA/s48-c-k-no/photo.jpg (http://www.youtube.com/user/journeymanpictures?feature=watch)Journeyman Pictures (http://www.youtube.com/user/journeymanpictures?feature=watch) http://s.ytimg.com/yts/img/pixel-vfl3z5WfW.gif


http://www.youtube.com/watch?v=4ECi6WJpbzE

You need a pair of decent pair of reading glasses Skol, your cash is to be come worthless paper trash.
Your rose tinted ones are about to be exposed.

[Bobcat.]

DJIA and S&P technicals are now looking bearish. Have a look at the five day charts here:

http://nz.finance.yahoo.com/echarts?s=%5EDJI

http://finance.yahoo.com/echarts?s=%5Egspc+interactive

Note that Thursday's break through 15950 (DJIA) and 1795 (S&P500) were not sustained yesterday. A major correction is underway. I'll be looking to sell all my stocks that are not companies digging for precious metals, this coming Monday.

BC

[Skol]

Well,there you have it:ohmy::ohmy:

Ive always thought that American football reflected their psyche quite well

to bad for the AFC(whoever that is)--(as he slaps a high five -crashes helmets with team mates,and a variety of other neanderthal gestures)

Symptomatic of an America-hating goldbug. No mention of rugby violence of course. Goldbugs hate America, love socialism, hate democracy, despise 'fiat money' (even though they can't do without it) and love conspiracy theories.

Hypocrites.

[tricha]

Skols pile of cash will turn to ash :scared:, history is soon forgotton, unfortunately it repeats.


http://www.sharetrader.co.nz/images/misc/quote_icon.png Originally Posted by tricha http://www.sharetrader.co.nz/images/buttons/viewpost-right.png (http://www.sharetrader.co.nz/showthread.php?p=458361#post458361) The 6 million dollar question, when. Sunday afternoon listening. Most people have probably already seen it.
Most people have probably forgotten it also, going By the amount of spending on credit cards recently:p

Overdose: The Next Financial Crisis https://yt4.ggpht.com/-Xs83JYB4N28/AAAAAAAAAAI/AAAAAAAAAAA/Fr6y4xA5VVA/s48-c-k-no/photo.jpg (http://www.youtube.com/user/journeymanpictures?feature=watch)Journeyman Pictures (http://www.youtube.com/user/journeymanpictures?feature=watch) http://s.ytimg.com/yts/img/pixel-vfl3z5WfW.gif


http://www.youtube.com/watch?v=4ECi6WJpbzE (http://www.youtube.com/watch?v=4ECi6WJpbzE)

[tricha]

This is the 1st time in history that, not a single currency is backed by anything :confused: Best to change that cash for gold while you can Skol, ASH Monday coming.;)

http://www.youtube.com/watch?v=OOQ2jUZKKic

[Skol]

This is the 1st time in history that, not a single currency is backed by anything :confused: Best to change that cash for gold while you can Skol, ASH Monday coming.;)

http://www.youtube.com/watch?v=OOQ2jUZKKic

You're not listening to me tricha. The last thing I want to own is gold, it's toxic. What's it like losing all that money tricha, must be unpleasant, right? You've been promising Armageddon ever since I started posting here years ago, forget the conspiracy theories and get into the real world. Looney Pastor Lindsey Williams believes all that nonsense, whoever compiled the Youtube video can't even spell.

Off the top of my head here's just a few reasons I wouldn't touch the stuff, I'll think of more if you give me time.

Gold's a 20 year flash-in-the-pan

ETF's selling - tonnes

The taper

Technically weak

Stocks and property are where the real money is. Property here is up 26.3% in the last year

Record gold production, 3000+ tonnes this year

Everything eventually reverts to the mean, and for gold that's a lot lower than where it is now

Unsustainable chinese purchases, the chart is exponential

Gold mining shares are worse than having a STD

Gold has no yield

Feng Shui geomancers predict a bad year for precious metals, and you can bet that 2 billion + asians believe it.

[tricha]

This is the 1st time in history that, not a single currency is backed by anything :confused: Best to change that cash for gold while you can Skol, ASH Monday coming.;)

http://www.youtube.com/watch?v=OOQ2jUZKKic

what is your cash backed by Skol:confused: Not a single currency backed by anything:ohmy:Not worth the paper it is written on.

I remember as a kid, older coins had silver in them. Now it all an illusion and unfortunately u do know what happens to illusions :confused:

[tricha]

The market only pays what it thinks something is worth tricha. Doesn't matter what it is or isn't made of (Bitcoins being a great example of a currency REALLY backed by nothing at all!). All this is a state of mind so your argument is severely flawed...

Flawed, who knows.

What I do know, there is a giant Ponzi scheme happening, led by the USA. When the music stops is the 6 million dollar question.
No one knows.


All major govts in the world can not print money, backed by thin air and at 0 % interest.
Something has to give.

History repeats. Study history.

[Skol]

what is your cash backed by Skol:confused: Not a single currency backed by anything:ohmy:Not worth the paper it is written on

I take it when you go to Pak'N Save you pay them with krugerrands.

[tricha]

I take it when you go to Pak'N Save you pay them with krugerrands.

The manager loves them!

In the mean time - This is good reading, shows the other side of the coin. Here in NZ we have spending on debt again ramping up and In the rest of the world spending on the back of printing phony money. What is the end game

:confused:http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11195578
Ditch the credit card debt Credit card debt has reached a record high - and if you're keen to get rid of yours faster, it pays to hunt for the best deal.

Debt Rattle Feb 1 2014: Meanwhile Back Home The Thumbscrews Are Tightened (http://www.theautomaticearth.com/debt-rattle-feb-1-2014-meanwhile-back-home-thumbscrews-tightened/) Feb012014
February 1, 2014 Posted by Raúl Ilargi Meijer (http://www.theautomaticearth.com/author/ilargi/) at 3:19 pm Finance (http://www.theautomaticearth.com/category/finance/)

[Bobcat.]

ETF's selling - tonnes



Why then was SPDR Gold trust holding 789.56 tonnes on the 10th of January and now holds 793.16 tonnes? That doesn't look like they are selling tonnes. Are you sure that you are not being blinded by your own biased rhetoric?

BC

[corran]

I have a honours degree in history tricha. History repeats, just like the gold bubble in 1980 eh?



Yeah, I reckon history has a tendancy to repeat. Given that golds history as money extends back a few thousand years I'm not so sure it's the 1980 buble that we're going to see repeating this time.

I like this quote from Winston Churchill: The farther back you look, the farther forward you are likely to see

[Skol]

Why then was SPDR Gold trust holding 789.56 tonnes on the 10th of January and now holds 793.16 tonnes? That doesn't look like they are selling tonnes. Are you sure that you are not being blinded by your own biased rhetoric?

Nope, you need to do some more homework.

ETF's sold 826 tonnes of gold in 2013, and SPDR GLD is now 793 tonnes, was 1500 tonnes 2 years ago.

On July 1st 2013, SPDR GLD owned 970 tonnes, now it owns 793. It's down on average .84 tonnes every day.

Overall ETF sales in 2013 averaged 2.3 tonnes/day, chinese can buy it if they like but they don't seem to have worked out that they're losing money.

'Very clever chinese', yeah right! lol

I've got absolutely no idea why punters get so excited about gold, in the big picture it's trivia. All the 8,800 tonnes the USA owns would only pay 25% of the defence budget for one year.

[Bobcat.]

Nope, you need to do some more homework.

ETF's sold 826 tonnes of gold in 2013, and SPDR GLD is now 793 tonnes, was 1500 tonnes 2 years ago.


I did do my homework, Skol - SPDR Gold trust was holding 789.56 tonnes on the 10th of January 2014 (not last year!) and now holds 793.16 tonnes. That is, over the past three weeks, they (along with other paper traders) have been PURCHASING gold.

You're living in the past with a blind dogma - it's time to step into the present, anticipating the future...

BC

[Skol]

I did do my homework, Skol - SPDR Gold trust was holding 789.56 tonnes on the 10th of January 2014 (not last year!) and now holds 793.16 tonnes. That is, over the past three weeks, they (along with other paper traders) have been PURCHASING gold.

You're living in the past with a blind dogma - it's time to step into the present, anticipating the future...

BC

Yes, I can see you've got a calculator, up 4 tonnes in 20 days, now work out 1450 tonnes minus 793. That's how much SPDR GLD has lost
----------------------
Holdings of the world's largest gold ETF – SPDR Gold Shares (NYSEARCA:GLD) – dropped 6.6 tonnes last week – as the price of gold was rallying. At 790.4 tonnes GLD holdings are at the lowest level since January 2009 after a whopping 552 tonnes left the fund last year.------------------

Dated Jan 27 2014.

[tricha]

Yeah, I reckon history has a tendancy to repeat. Given that golds history as money extends back a few thousand years I'm not so sure it's the 1980 buble that we're going to see repeating this time.

I like this quote from Winston Churchill: The farther back you look, the farther forward you are likely to see

I never thought of this side of it Corran and I certainly hope not. (WAR)


Trends Journal’s Gerald Celente: Currency War Will Lead to World War


Friday, 22 Feb 2013 08:08 AM
By Michelle Smith



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There is a currency war, insists Gerald Celente, editor and publisher of the Trends Journal, and it’s going to degenerate into all out combat.

Celente's declaration and forecast stand in sharp contrast to those of global finance leaders who are aiming to bury concerns about a currency war, as the act of competitive currency devaluation is called.

At last weekend's G-20 meeting, the finance leaders promised to “refrain from competitive [currency] devaluation.”

Declassified: ‘Financial War’ Could Wipe Out 50% of Your Wealth’ (http://w3.newsmax.com/a/currency-wars/video_uwr.cfm?promo_code=F847-1)

“It’s quite clear … that everyone around the table wants to avoid any sort of currency dispute,” Canadian Finance Jim Flaherty told reporters, according to Reuters.

“We all agreed on the fact that we refuse to enter any currency war,” Reuters said French Minister Pierre Moscovici told reporters.

“Who are they kidding?” Celente asked.

“The only reason the world economies — the United States, Europe and even China — are doing anything is because of all the cheap money they are dumping into the system. But they don't call it currency wars. They have white shoe boy names for them,” he told Yahoo.

Names such as OMT, or Outright Monetary Transactions, and QE, or quantitative easing, sound nicer. They sound “proper,” he noted. But Celente said these programs and efforts by the likes of Japan and Venezuela to devalue their currency are part of a currency war that is definitely occurring.

If he is correct, many would cite much cause for concern, as this type of competitive action is considered risky. According to Celente, it is more than that. It's disastrous because history shows that the outcome of a currency war is world war.

“Japan during the 30s went off the gold standard. [They] lowered their currency. It devalued 60 percent against the dollar, 40 percent against the pound sterling. It was a trade war that was first, then the world war,” Celente said.

Now he points to the same cycle. There was the great global recession of 2008. That was followed by a depression that is occurring in much of the world right now, in places like Spain, Portugal, Greece, Slovenia and even a lot of America, he explained.

He encourages a look around that globe at the other events that are also occurring. There is combat in places like Syria and Yemen. There is class warfare in Portugal and Spain.

“The world wars are already beginning. People are ignoring the facts,” Celente said.

Look at the trade sanctions against China and the complaints, which have “quadrupled.” And then too Japan is back tinkering with their currency again. Driving down the value is helping to boost exports, but simultaneously it drives up the cost of their imports.

“These are only financial games when they lose all else they take you to war. It's a repeat of history,” Celente declared.

Declassified: ‘Financial War’ Could Wipe Out 50% of Your Wealth’ (http://w3.newsmax.com/a/currency-wars/video_uwr.cfm?promo_code=F847-1)
© 2014 Moneynews. All rights reserved.




Read Latest Breaking News from Newsmax.com http://www.moneynews.com/FinanceNews/Celente-currency-war-world-war-trade/2013/02/22/id/491523#ixzz2sLLab27o
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[tricha]

I have a honours degree in history tricha. History repeats, just like the gold bubble in 1980 eh?

What if us new generation decide Bitcoins are much more useful than gold (and they are being taken by shops all over the world now and has also gone through two bubbles!)? "Value" and "store of wealth" are just a figment of imagination, just like goldbugs like to say for fiat currency. Gold may have history backing it, but i can assure you that society cares very little for history these days.

This "value" only works because its accepted by the majority of the population. So, if gold is out tomorrow and let's say Rhodium is in, will you still hold on to your belief that gold is the only way to go?

Unfortunately, even though goldbugs feel like the minority, they are also only "sheeple" (such a derogatory term!) following what society says is worth something (today...).

Food for thought ;)

Economics Moosie, "The greatest Ponzie scheme the world has ever seen"

3 February 2014 Last updated at 18:12Jack Lew: US could default on debt by 'end of month'http://news.bbcimg.co.uk/media/images/72729000/jpg/_72729915_72729910.jpg Mr Lew said now was not the time to cut the US government's budget dramatically
Continue reading the main story (http://www.bbc.co.uk/news/world-us-canada-26021640#story_continues_1) US debt ceiling (http://www.bbc.co.uk/news/world-us-canada-24547609)

US Treasury Secretary Jack Lew has warned the US may default on its debt by the end of the month if Congress does not raise its borrowing limit.
Mr Lew said he could rely on emergency measures to pay US debts after the limit is reinstated on 7 February.
But he anticipated the treasury's reserves would quickly be exhausted as it issues annual income tax refunds.
Congress suspended the debt limit in October as part of a deal to reopen the federal government after a shutdown.
The $16.7tn (£10.2tn) cap will be reinstated on Friday.
"Without borrowing authority, at some point very soon, it would not be possible to meet all of the obligations of the federal government," Mr Lew said at the Bipartisan Policy Center in Washington on Monday.
The treasury secretary said the US treasury department could resort to accounting mechanisms to avoid breaching the limit until the end of February.
But soon after, the US will only be able to pay its debt and other obligations with cash on hand.
And in the spring, Mr Lew noted, the US issues tax refunds to Americans who overpaid income taxes last year, straining its cash reserves.
While Republicans have in the past demanded budget cuts in return for agreeing an increase in the borrowing limit, the party's leaders have signalled reluctance to do so this time around.
Long-term fiscal challenges In any case, the White House has said it will not negotiate budget policy in exchange for raising the debt limit.
And Mr Lew argued that dramatically cutting back on the federal government's spending was unnecessary for the moment.
"I'm not sure this is the year for the long-term fiscal challenge to be dealt with," he said, adding the US deficit had been declining. "I actually believe that we've made so much progress in the short and medium term, we have a little time to deal with the longer term."
During the partial government shutdown in October, Republican lawmakers threatened to block a rise in the debt limit unless the Democrats agreed to undermine or repeal President Barack Obama's signature healthcare reform law.
In 2011, the Republicans won reductions in US government spending in return for agreeing to raise the limit.
Now, the debt limit debate returns to the fore as the Democrats and Republicans appear to have called a momentary truce in their long-running budget fight.
Cross-party negotiations in Congress in December and January yielded a two-year federal budget.

[tricha]

Economics Moosie, "The greatest Ponzie scheme the world has ever seen"

3 February 2014 Last updated at 18:12Jack Lew: US could default on debt by 'end of month'

http://news.bbcimg.co.uk/media/images/72729000/jpg/_72729915_72729910.jpg Mr Lew said now was not the time to cut the US government's budget dramatically
Continue reading the main story (http://www.bbc.co.uk/news/world-us-canada-26021640#story_continues_1) US debt ceiling (http://www.bbc.co.uk/news/world-us-canada-24547609)



US Treasury Secretary Jack Lew has warned the US may default on its debt by the end of the month if Congress does not raise its borrowing limit.
Mr Lew said he could rely on emergency measures to pay US debts after the limit is reinstated on 7 February.
But he anticipated the treasury's reserves would quickly be exhausted as it issues annual income tax refunds.
Congress suspended the debt limit in October as part of a deal to reopen the federal government after a shutdown.
The $16.7tn (£10.2tn) cap will be reinstated on Friday.
"Without borrowing authority, at some point very soon, it would not be possible to meet all of the obligations of the federal government," Mr Lew said at the Bipartisan Policy Center in Washington on Monday.
The treasury secretary said the US treasury department could resort to accounting mechanisms to avoid breaching the limit until the end of February.
But soon after, the US will only be able to pay its debt and other obligations with cash on hand.
And in the spring, Mr Lew noted, the US issues tax refunds to Americans who overpaid income taxes last year, straining its cash reserves.
While Republicans have in the past demanded budget cuts in return for agreeing an increase in the borrowing limit, the party's leaders have signalled reluctance to do so this time around.
Long-term fiscal challenges In any case, the White House has said it will not negotiate budget policy in exchange for raising the debt limit.
And Mr Lew argued that dramatically cutting back on the federal government's spending was unnecessary for the moment.
"I'm not sure this is the year for the long-term fiscal challenge to be dealt with," he said, adding the US deficit had been declining. "I actually believe that we've made so much progress in the short and medium term, we have a little time to deal with the longer term."
During the partial government shutdown in October, Republican lawmakers threatened to block a rise in the debt limit unless the Democrats agreed to undermine or repeal President Barack Obama's signature healthcare reform law.
In 2011, the Republicans won reductions in US government spending in return for agreeing to raise the limit.
Now, the debt limit debate returns to the fore as the Democrats and Republicans appear to have called a momentary truce in their long-running budget fight.
Cross-party negotiations in Congress in December and January yielded a two-year federal budget.

we all know Russia owes the US and China owes Japan Karma.

we also know China and Russia are now in bed together.

Both countries are flat out hoarding gold.

All leading to a new reserve currency and backed by gold.
There Is no alternative .

gold is a life insurance option, your option.

[Skol]

we all know Russia owes the US and China owes Japan Karma.

we also know China and Russia are now in bed together.

Both countries are flat out hoarding gold.

All leading to a new reserve currency and backed by gold.
There Is no alternative .

gold is a life insurance option, your option.

You've been reading that KWN crap again tricha, gold's the worst investment, you're looking in the rear-vision mirror hankering for the the good ol' days of $1900 gold and $147 oil, but it's all over.

Stocks and property are the place to be, I'd thoroughly recommend Auckland property, for the long haul you can't miss, every one I've owned I've doubled or tripled in value.

[tricha]

You've been reading that KWN crap again tricha, gold's the worst investment, you're looking in the rear-vision mirror hankering for the the good ol' days of $1900 gold and $147 oil, but it's all over.

Stocks and property are the place to be, I'd thoroughly recommend Auckland property, for the long haul you can't miss, every one I've owned I've doubled or tripled in value.

Well there must be a lot of people like you out there Skol, that are going to get severely burnt. (toasted)

Trouble with rose tinted glasses, u can not see the smoke. Cash will be trash and debt is toxic.

The Russians and the Chinese have got a few points to settle.
They will be the new world currencies backed by gold. The counterfeit US dollar Ponzi scheme is set for collapse.
The US empire will collapse, they still need a billion a dollars a day for their oil addiction. Paper will not buy it, neither will credit.

Markets Are Still Loving the Economy’s Increasing Problems (http://www.financialsense.com/contributors/sy-harding/markets-still-loving-economy-s-increasing-problems)http://www.financialsense.com/sites/default/files/pictures/picture-248.jpg (http://www.financialsense.com/contributors/sy-harding)
by Sy Harding (http://www.financialsense.com/contributors/sy-harding) 02/21/2014

The economic reports turn ever uglier, and the stock market loves it. Something seems wrong with that picture. In recent months, it has been the unexpected widening of the U.S. trade gap, as exports decline and imports rise.

[skid]

While I agree that the situation is looking dire (in many ways)indeed,I have begun to change my view that the American Empire will collapse.
They have 19 Aircraft carriers and drones coming out their ying yang,not to mention their downright scarey surveillance.---No,they will continue to eat up smaller less fortunate countries resources to feed their addiction.
Currencies will crash,the world bank will move in,excuses will be made(PR) and they will continue to take what they decide is best for them.
When have you last heard a conciliatory American foreign policy remark?
Its the rest of the world that will suffer.
History does not repeat--the situations that cause it do.-Because it comes in a different form the ''status quo'' dont see it coming.
I would certainly protect yourself as best you can,but i dont think the damage will be at Americas expense.(at least not the Gov. and Corporations)

[Skol]

Well there must be a lot of people like you out there Skol, that are going to get severely burnt. (toasted)

Trouble with rose tinted glasses, u can not see the smoke. Cash will be trash and debt is toxic.

The Russians and the Chinese have got a few points to settle.
They will be the new world currencies backed by gold. The counterfeit US dollar Ponzi scheme is set for collapse.
The US empire will collapse, they still need a billion a dollars a day for their oil addiction. Paper will not buy it, neither will credit.

How long have you been predicting world and US economic collapse now tricha? Years.
In the meantime property and stockmarkets have rocketed away, there's between 12,000 - 14,000 houses, apartments and terraced buildings planned not far from here.

I don't have any debt.

Guess who's the loser? lol

[Skol]

tricha,

I think you've got some strange idea that China's gonna take over the world.

6 days after typhoon Haiyan hit the Phillipines the USA had a carrier fleet there.
--------------------------------------

A significant sign of stepped up relief efforts was Thursday's arrival of the USS George Washington, an aircraft carrier teeming with 5,500 crew. It's accompanied by eight more ships that, together, have 80 aircraft -- including 21 helicopters -- that can deliver supplies to hard-to-reach areas and conduct search-and-rescue missions for those still holding on six days after the epic storm.
----------------------------------------
What did China do? SFA, because they're completely incapable of organising a mission like that, not that they'd care anyway, they're too busy exterminating their own population.

Maybe I'll see you on 'Doomsday Preppers' on TV with your escape tunnel, fireproof/bulletproof vehicle and machineguns.lol

[tricha]

tricha,

I think you've got some strange idea that China's gonna take over the world.

6 days after typhoon Haiyan hit the Phillipines the USA had a carrier fleet there.
--------------------------------------

A significant sign of stepped up relief efforts was Thursday's arrival of the USS George Washington, an aircraft carrier teeming with 5,500 crew. It's accompanied by eight more ships that, together, have 80 aircraft -- including 21 helicopters -- that can deliver supplies to hard-to-reach areas and conduct search-and-rescue missions for those still holding on six days after the epic storm.
----------------------------------------
What did China do? SFA, because they're completely incapable of organising a mission like that, not that they'd care anyway, they're too busy exterminating their own population.

Maybe I'll see you on 'Doomsday Preppers' on TV with your escape tunnel, fireproof/bulletproof vehicle and machineguns.lol

I thought the Americians have bases in the Phillipines. Anyway nukes exterminate everyone.

On a brighter note I see you do not have debt.:) With this going on, why not lever into it :confused: (In the meantime property and stockmarkets have rocketed away)

I'm guessing sanity prevails and you know exactly what is going on. When the music stops :confused:, no warning, you do not want to be holding the parcel.
Freehold property is fine. You live to fight another day. The stock market crashes, you lose a bit of paper, so what.
Debt on the other hand :scared: is a killer.

The USA has held 0% interest for seven years. They can not raise it and they are still piling on more debt.

It is, as Jim Rogers says, going to end badly.

[Skol]

I thought the Americians have bases in the Phillipines. Anyway nukes exterminate everyone.

On a brighter note I see you do not have debt.:) With this going on, why not lever into it :confused: (In the meantime property and stockmarkets have rocketed away)

I'm guessing sanity prevails and you know exactly what is going on. When the music stops :confused:, no warning, you do not want to be holding the parcel.
Freehold property is fine. You live to fight another day. The stock market crashes, you lose a bit of paper, so what.
Debt on the other hand :scared: is a killer.

The USA has held 0% interest for seven years. They can not raise it and they are still piling on more debt.

It is, as Jim Rogers says, going to end badly.

Jim Rogers changes his mind every week. I can find plenty of idiots out there that say it's all going to end badly, mostly amongst the Armageddon goldbug community like Jim Willie, Gerald Celente and the most moronic of all David Icke.

To their surprise the world hasn't ended and it won't, humans are very ingenious at extracting themselves from the problems they cause.

I used to have loads of debt years ago, enough to make your eyes water, but I'm going to stop work at the end of this year, debt isn't something I need, and it's time you stopped listening to the Armageddon 'experts'.

Jim Rogers says there's lots of problems in China, but nothing that can't be resolved, but I found this excellent letter you might like to read.
--------------------

Well China is due to revert to mean no matter how badly the government screws it up. China was estimated to be 1/3 of global GDP before industrial revolution, so returning to that would not be surprising.

That said, the country is still being run by an authoritarian cabal of sinister characters who have little accountability beyond the risks of street rioting due to lack of democratic outlets. There is massive corruption, unstable factions, and little credibility in public accounting & auditing. They are still quite capable of creating more disasters.

Mr. Rogers is sugarcoating this, and it is telling when he blames exploding debt levels on "foreign money" when the Chinese government itself authorized some quite massive loan and equity stimulus over the past 5 years. Funneled through opaque & corrupt government banks, local governments, to many investment projects of dubious economic value that are now non-performing. We don't know the extent of this due to non-existent accounting.

There are quite a few economic landmines buried in China, and how they go off as the economy transitions from government directed manufacturing-export economy to a more modern consumer-service economy is anyone's guess (and those book writers predicting doom may not be wrong in the end). With all the government distortions and political pressures that are bottled up under authoritarian rule, there is also revolutionary risk.
----------------------------------

In other words, it's not the USA that's the problem, it's China.

[JBmurc]

Fact is so far 2014 has been a Great turn round year for Oil/Gas & Gold/Silver

[JBmurc]

that is if you didnt get absolutely crushed holding it last year! ;)

Or if your been holding for the long term 2013 was a major bump in the road ...

[CAM]

While I agree that the situation is looking dire (in many ways)indeed,I have begun to change my view that the American Empire will collapse.
They have 19 Aircraft carriers and drones coming out their ying yang,not to mention their downright scarey surveillance.---No,they will continue to eat up smaller less fortunate countries resources to feed their addiction.
Currencies will crash,the world bank will move in,excuses will be made(PR) and they will continue to take what they decide is best for them.
When have you last heard a conciliatory American foreign policy remark?
Its the rest of the world that will suffer.
History does not repeat--the situations that cause it do.-Because it comes in a different form the ''status quo'' dont see it coming.
I would certainly protect yourself as best you can,but i dont think the damage will be at Americas expense.(at least not the Gov. and Corporations)

In summary... The one with the biggest gun wins :)

[JBmurc]

In summary... The one with the biggest gun wins :)

well has the biggest ego -Vietnam,Korea,Iraq/afghan shows even if you do have the biggest gun doesn't mean you win the War etc ....the most dire situation I could see for the USA would be the states dividing apart aka like USSR

I also don't believe in USA collapse aka DOOMSDAY but no reason the Empire of the USA couldn't one day slip to an "Asian Empire" just like the "British empire" fell ...

I wonder how many people know that round 1930 there was a USA plan to invade Canada and start a war with the British empire Even Winston Churchill said while people regarded a war with the U.S. as inconceivable, it was not....(and yes that would have meant NZ/Aus would have also been at war with the USA)

[digger]

well has the biggest ego -Vietnam,Korea,Iraq/afghan shows even if you do have the biggest gun doesn't mean you win the War etc ....the most dire situation I could see for the USA would be the states dividing apart aka like USSR

I also don't believe in USA collapse aka DOOMSDAY but no reason the Empire of the USA couldn't one day slip to an "Asian Empire" just like the "British empire" fell ...

I wonder how many people know that round 1930 there was a USA plan to invade Canada and start a war with the British empire Even Winston Churchill said while people regarded a war with the U.S. as inconceivable, it was not....(and yes that would have meant NZ/Aus would have also been at war with the USA)

Canada was invaded by the USA in 1812 to 1814. Just a fact I was taught in Canada as a school boy. It was a all out effort by Canada and a divided effort by the US. In the end the US was so luke warm about the whole thing that it decided not to bother anymore.

Have to say I have never heard of the 1930 plans.

[bermuda]

Canada was invaded by the USA in 1812 to 1814. Just a fact I was taught in Canada as a school boy. It was a all out effort by Canada and a divided effort by the US. In the end the US was so luke warm about the whole thing that it decided not to bother anymore.

Have to say I have never heard of the 1930 plans.

Sadat and Assad had an agreement to completely destroy Israel and take it off the map. They agreed a 10 month program to develop the mother of all arsenals.

While Sadat was celebrating, Israel crossed the Suez Canal...... Egypt and Syria were forced to back off.

Who knows what plans are out there.

Surely our leaders seek peace.

[JBmurc]

Canada was invaded by the USA in 1812 to 1814. Just a fact I was taught in Canada as a school boy. It was a all out effort by Canada and a divided effort by the US. In the end the US was so luke warm about the whole thing that it decided not to bother anymore.

Have to say I have never heard of the 1930 plans.

Yes same,,,,till I watched it on SKY history channel .....

[Skol]

well has the biggest ego -Vietnam,Korea,Iraq/afghan shows even if you do have the biggest gun doesn't mean you win the War etc ....the most dire situation I could see for the USA would be the states dividing apart aka like USSR

I also don't believe in USA collapse aka DOOMSDAY but no reason the Empire of the USA couldn't one day slip to an "Asian Empire" just like the "British empire" fell ...

I wonder how many people know that round 1930 there was a USA plan to invade Canada and start a war with the British empire Even Winston Churchill said while people regarded a war with the U.S. as inconceivable, it was not....(and yes that would have meant NZ/Aus would have also been at war with the USA)

The USA is a democracy unlike China or the Soviet Union, it doesn't have ethnic groups like Tibetans, Tatars, Siberians, Ukrainians, Uighurs etc. The USA probably had a look over the Canadian border and decided there wasn't anything there worth fighting for, which there isn't, I've flown over it hundreds of times.

How about some proof of this 1930 plan, I've never heard of it and I'm a history buff.

[JBmurc]

Very Easy look up "WAR PLAN RED" was declassified in 1974

here's the doco-http://www.youtube.com/watch?v=1ZNBwYFOxd8

[Skol]

WAR PLAN RED, a plan drawn up for a HYPOTHETICAL war.
------------------------------
Joint Army and Navy Basic War Plan Red was a war plan created by the United States Army and Navy in the late 1920s and early 1930s to estimate the requirements for a hypothetical war with Great Britain (the "Red" forces).
--------------------------------

The US armed forces were weak in that era and they wouldn't have been keen to fight any war, whereas Britain still ruled the waves.

[tricha]

In summary... The one with the biggest gun wins :)

No, no winners. Nukes level the playing field and everything turns to dust.

A bit like the US $, when the music stops, Skols cash will turn to ash. It is a cycle that repeats through out history.
In gold we trust.;)

[tricha]

Ever heard of MAD (Mutually Assured Destruction)? No one will ever yse nukes, even on a non-nuclear nation, for fear of swift and punishing destruction. Technology, logistics and the ability to use strategy and tactics effectively have always been war winners. The USA is the clear winner every time there so ya might as well kepp buying those evil, evil dollars because nothing is hoing to change in the near or medium term ;)

Do not bet on it, China And Russia are buying gold, America is broke. New currency coming now.

No one knows how long they can keep this Ponzi scheme going.

[tricha]

Russia can't even keep its ex-Soviet Union mate in line, how do you think they're going to make the ruble the dominant world currency?

China ain't squeaky clean on debt either, let alone with a pseudo Communist government and massive shadow banking system (not even taking into account corruption).

http://www.nationaldebtclocks.org/debtclock/china

Don't get me wrong, I'm Canadian so hate America by default, but we need to be a bit realistic about it all. The more things change the more they stay the same...

Sounds like the whole world hate the States.

The States still import about 8,000,000 barrels of oil a day and they pay for it with a Ponzi currency. About $900,000,000 a day for their addiction.

Russia is the world biggest oil producer. They also supply a big chunk of the gas supply to Europe. They also hate the yanks and it is deserved.
Russia and China are working together and accumulating gold.

Watch this space.

[skid]

In summary... The one with the biggest gun wins :)

I guess you could say that in a general way CAM but the world is a different place than it was before--The military is still there (make no mistake) but the weapon of choice now is the World bank.
Wait till a country gets in trouble (often helped along by the very powers that are there to bail out) World bank moves in and does a bail out with major strings attached(that look suspiciously like hangmen nooses) and presto -you have control of the domestic policy of that country,sometimes complete with a new puppet ruler.
Ofcourse we are talking about less powerful countries (with something the big guy wants) Nukes would certainly spoil the party (can you blame Iran for wanting them-to be like Israel-China -Pakastan-India-etc. etc.
Remember we are talking more along the lines of large corporations that cross political boundary's (but usually still get the benefit of being under the wing of the ''big one'' with its Nukes-19 aircfraft carriers-most sophisticated weapons including drones so machines can do your dirty work and your ''ma and pa''dont complain cause Johnny doesnt come home in a box.
Information gathering has become an important weapon also to combat anything that gets in the way of corporate profits ( and maybe .001% of the time it might turn up a terr. or two along with the scores of falsely accused.
I see it as a bit like searching for oil--only the oil is another weaker country that is ripe for the picking.
Of course it can be a complicated process with the PR battle to win first. -but its cheap to send your CIA boys to make an offer--make a threat--carry out that threat--and in the words of a former CIA operative ''If they dont like it .Tough''

[skid]

Russia can't even keep its ex-Soviet Union mate in line, how do you think they're going to make the ruble the dominant world currency?

China ain't squeaky clean on debt either, let alone with a pseudo Communist government and massive shadow banking system (not even taking into account corruption).

http://www.nationaldebtclocks.org/debtclock/china

Don't get me wrong, I'm Canadian so hate America by default, but we need to be a bit realistic about it all. The more things change the more they stay the same...

Russia--They dont have to make the Ruble the world currency, Moosie--Only detract the US$ from being the world currency---But these things take time.
Its interesting how they are flexing their muscles in your country--They are literally forcing your Canadian banks to spend millions on software to do the job of their own tax collecting by rooting out any American citizens and report them (even though in most cases they have been living in Canada for most of their life-have citizenship-and have always paid fair taxes to Canada,their country of residence.)
You may not like it-but Canada has really just become an ''arm'' of the States (in a corporate sense)
My wife is Canadian--when we go back for a visit I am amazed at the miles of Nike-Gap-etc. etc. outlet shops along the expressway (never far from a good ole Cosco or Walmart...

[Skol]

skid thinks Russia is a sophisticated place. I talked to a Russian flight attendant a while back who says she would prefer to spend 24 uncomfortable hours on a train rather than risk life and limb on a 1 hour flight from Moscow because there's so many aircraft crashes in Russia.

In the meantime you might enjoy this compilation of driving in Russia.

http://kottke.org/12/12/driving-in-russia

[skid]

Do I think Russia is a sophisticated place and is going to shake America off of its pedestal by itself---not a chance--but together with China,they can make the game America is trying to play -much harder.
My guess is that if they want to do business in some other currency than US$ they certainly will and politically--well..you dont see the US rushing into Syria do you?

[Skol]

Do I think Russia is a sophisticated place and is going to shake America off of its pedestal by itself---not a chance--but together with China,they can make the game America is trying to play -much harder.
My guess is that if they want to do business in some other currency than US$ they certainly will and politically--well..you dont see the US rushing into Syria do you?

I wouldn't rush into Syria either, let them self-destruct. A dictator and Hezbollah vs Al-Qaeda, it's like the Hells Angels fighting the Mongrel Mob. lol

[skid]

Oh-but they would love to ,my friend
http://economy.money.cnn.com/2013/09/05/why-syria-matters-to-oil-markets/

[Skol]

Oh-but they would love to ,my friend
http://economy.money.cnn.com/2013/09/05/why-syria-matters-to-oil-markets/

That's crap, the USA is swimming in oil, by 2020 the USA will exceed the output of Saudi Arabia, in fact oil companies in the USA have been urging the govt. to lift the ban on exporting oil. The USA exports diesel to the EU.

http://www.economist.com/news/united-states/21596553-benefits-shale-oil-are-bigger-many-americans-realise-policy-has-yet-catch

Aren't we supposed to have run out of oil by now? Hahaha

[Skol]

Don't get me wrong, I'm Canadian so hate America by default, but we need to be a bit realistic about it all. The more things change the more they stay the same...

Canadian eh?

Then why do so many Canadians live in the USA?

To escape the leftist politics, the exorbitant taxation, the divisive Indian land handouts, the French language police in Quebec and last but certainly not least, the weather.

Indians don't pay any tax either, correct? Because they're special, the 'tangata whenua'. It's apartheid, Canucks hate it.

Probably not supposed to call them indians, the PC expression is 'first nations'. lol

Canada is even more PC than NZ so you know how bad it is, in fact about 3 years ago I wrote to the mayor of Vancouver about all the spongers living on the streets, one tried to pick up my daughter who was 12 at the time, some are very aggressive. Nice place to visit but wouldn't want to live there unless I could afford one of those flash apartments behind the seaplane terminal.

[Daytr]

The US will become the largest produce of oil just as Toyota role out their hydrogen cell vehicles & have openly stated they will build the infrastructure to support if need be. The first production model is supposed to be out by the end of next year. If the oil producers ignore the no very real threat of alternative fuel, high cost production such as the US & Canada has, will be the first to be hit.

[skid]

Dont worry Moosie -Canada is just not Imperialist enough for Skol---The real question is why is he not living in the USA?

French speaking police in Quebec----give me a break....:confused:

[Skol]

Oh it gets pretty bad regarding French vs English. Google "Quebec language watchdog" and see what you get...

Goes to show how much skid reads the news, a current affairs layman.

[tricha]

Unfortunatley all Ponzi schemes come to an end. How long has the biggest one in history got to run.:confused: If you are holding money in your bank, it's no different to holding a bitcoin.
That's the very reason, one should hold some gold and silver as an insurance policy. In gold we trust.


The rise, fall and rise of bitcoin

By Joanna Mathers
11:57 AM Sunday Mar 2, 2014


The collapse of a major digital currency trading exchange sent the bitcoin into freefall this week - but it doesn't worry the increasing number of Kiwis who prefer electronic money to cold hard cash.

[clip]

Unfortunatley all Ponzi schemes come to an end. How long has the biggest one in history got to run.:confused: If you are holding money in your bank, it's no different to holding a bitcoin.
That's the very reason, one should hold some gold and silver as an insurance policy. In gold we trust.


The rise, fall and rise of bitcoin

By Joanna Mathers
11:57 AM Sunday Mar 2, 2014


The collapse of a major digital currency trading exchange sent the bitcoin into freefall this week - but it doesn't worry the increasing number of Kiwis who prefer electronic money to cold hard cash.

The collapse of Mt.Gox caused a crash in the price of bitcoin for approximately.. 1 day. http://bitcoincharts.com/charts/bitstampUSD#rg10ztgSzm1g10zm2g25zv
No biggie, unless you had your BTC on mtgox - which has been called gox dollars for some time, due to them being worthless on account of not being able to extract them from the exchange

[Skol]

The US will become the largest produce of oil just as Toyota role out their hydrogen cell vehicles & have openly stated they will build the infrastructure to support if need be. The first production model is supposed to be out by the end of next year. If the oil producers ignore the no very real threat of alternative fuel, high cost production such as the US & Canada has, will be the first to be hit.

Daytr dreaming as usual. Toyota is gonna produce a vehicle that will destroy the oil industry according to daytr.

Make up your own mind about this dude, you won't need to be a member of Mensa.

[Bobcat.]

Setting yourself up for a fall there, Skol. Daytr's advice hasn't been too bad lately. Are you still bagging gold, and predicting sub $1000USD per oz?

When we point a finger, the hand's other three are usually pointing back at us.

If any company has the foresight and market muscle to pull off a viable and marketable hydro-cell vehicle, it is Toyota.

[Skol]

Setting yourself up for a fall there, Skol. Daytr's advice hasn't been too bad lately. Are you still bagging gold, and predicting sub $1000USD per oz?

When we point a finger, the hand's other three are usually pointing back at us.

If any company has the foresight and market muscle to pull off a viable and marketable hydro-cell vehicle, it is Toyota.

Bobcat,
Read daytr's posts, they're a bet both ways. Of course I'm still betting gold will be sub $1,000, I'm with Warren Buffett, onwards and upwards.

[JBmurc]

Bobcat,
Read daytr's posts, they're a bet both ways. Of course I'm still betting gold will be sub $1,000, I'm with Warren Buffett, onwards and upwards.

LOL just like you were betting Oil was heading back to $60bbl hey skol ....

[Daytr]

Hey BC, just to be a little picky, I never give advice, just supply a view & hopefully its right far more times than it is wrong. :)

Re Toyota, I am just conveying what Toyota released in the media a couple of months back. When Clinton was president he put up a billion bucks for car companies to spend on R&D to develop hybrids. It was only available to US companies. The US companies took the money & never fronted with a realistic production model between them. I think one very inferior model actually got produced. Toyota saw this as a very real threat & concentrated on two things, fuel efficiency & developing a hybrid i.e. the Prius. Within a few years they became they had become the number 1 car seller in the US & forced the US companies from building massive tanks that consumed a ridiculous amount of fuel right when oil prices were sky rocketing. Now they have decided to lead the pack again. I would never underestimate Toyota, they are a brilliant & innovative company.

[skid]

I guess you could say that in a general way CAM but the world is a different place than it was before--The military is still there (make no mistake) but the weapon of choice now is the World bank.
Wait till a country gets in trouble (often helped along by the very powers that are there to bail out) World bank moves in and does a bail out with major strings attached(that look suspiciously like hangmen nooses) and presto -you have control of the domestic policy of that country,sometimes complete with a new puppet ruler.
Ofcourse we are talking about less powerful countries (with something the big guy wants) Nukes would certainly spoil the party (can you blame Iran for wanting them-to be like Israel-China -Pakastan-India-etc. etc.
Remember we are talking more along the lines of large corporations that cross political boundary's (but usually still get the benefit of being under the wing of the ''big one'' with its Nukes-19 aircfraft carriers-most sophisticated weapons including drones so machines can do your dirty work and your ''ma and pa''dont complain cause Johnny doesnt come home in a box.
Information gathering has become an important weapon also to combat anything that gets in the way of corporate profits ( and maybe .001% of the time it might turn up a terr. or two along with the scores of falsely accused.
I see it as a bit like searching for oil--only the oil is another weaker country that is ripe for the picking.
Of course it can be a complicated process with the PR battle to win first. -but its cheap to send your CIA boys to make an offer--make a threat--carry out that threat--and in the words of a former CIA operative ''If they dont like it .Tough''

Meanwhile ,hear comes John Kerry to the Ukraine with a pocket full of bail out money...

[pietrade]

......and a bag full of 'strings' to go with it.

[tricha]

In Gold we trust.

The World Is Screaming For A New Financial Systemhttp://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2012/01/20120103_JPM_reserve_0.png (http://peakoil.com/publicpolicy/the-world-is-screaming-for-a-new-financial-system) One of the key lessons we can take away from history is that the global financial system changes… frequently.
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2012/01/20120103_JPM_reserve_0.png (http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2012/01/20120103_JPM_reserve.png) [12]

In ancient times, Roman coins were used across the region by Romans and non-Romans alike who engaged in trade and commerce.
Given how destructively successive Roman governments debased their coins, however, the reserve burden eventually fell to the Byzantine Empire, whose gold solidus coin became the dominant currency in world trade.
Over the centuries, this standard changed several more times. The Venetians, Florentines, Spanish, French, British, etc. each issued the world’s dominant currency at one point or another.
But the fundamentals of those currencies changed. Governments engaged in wanton debasement, mismanaged their economies, and accumulated massive debt levels. And eventually the world shifted to new currencies.
Since the end of World War II, the US dollar has been the dominant currency in the world.
And even though Richard Nixon ended the dollar’s convertability to gold and unilaterally abandoned the US government’s obligations under the Bretton Woods system back in 1971, the world has still clung to the dollar for the past 43-years.
But this is changing rapidly.
The Chinese, which have their own economic issues to deal with, are starting to dump Treasuries in record numbers.
Central banks are buying up more gold. Foreign countries are entering into bilateral currency swap arrangements with one another. And world governments are starting to (rather embarrassingly) demand that the US get its budget and fiscal house in order.
Most tellingly, though, member nations of the International Monetary Fund are starting to revolt.
As one of the major organizations spawned from the post-war financial structure, the IMF’s original goal was to ensure the smooth development of a new global financial system.
Over 180 countries have since become members of the IMF. But the organization runs on a quota system, with each member nation having a certain percentage of the IMF’s overall votes.
The US, for example, has the most power by far with a 16.75% share of the vote. Japan is a distant second with a 6.23% share.
This puts the US in the driver’s seat. And it’s been that way for decades.
But most of the other 180+ nations have had enough. And they’re pushing the United States to massively overhaul the current quota system.
Even typical allies are breaking ranks. Australian Treasurer Joe Hockey recently told reporters at a financial conference that they will “actively lobby” the US to reform the IMF quota issues, and that “Congress must understand that it is in the interest of the US to reform the IMF. . .”
India. China. Just about everyone imaginable is pushing for major IMF reform. Everyone except the Land of the Free. The US government seems to like things the way they are. And Congress has been very intransigent in adopting any planned reforms.
These people have their heads buried in the sand so deep that they can’t even hear the rest of the world SCREAMING for a new financial system.
This is going to happen, whether the US wants it to or not.
And while no foreign government wants a collapse of the dollar, they do very much want an orderly rebalancing of the financial system. This is already under way.
The US government may pretend that everything is fine and dandy. But given the overwhelming objective evidence out there, folks who aren’t on board with this major trend are ignoring it at their own peril.
Sovereign Man blog (http://www.sovereignman.com/trends/the-world-is-screaming-for-a-new-financial-system-13809/)

[Skol]

You're living in the past tricha, very quaint. Won't be any chinese currency, that place is fraught with danger, won't be the ruble as it currently crashes and everyone scrambles to get their money out, won't be the Euro, so you get one guess what it's going to be.

[tricha]

You're living in the past tricha, very quaint. Won't be any chinese currency, that place is fraught with danger, won't be the ruble as it currently crashes and everyone scrambles to get their money out, won't be the Euro, so you get one guess what it's going to be.

Sorry Skol your cash is soon to turn to ash.
A Sunday afternoon history lesion.

http://www.youtube.com/watch?v=y-IemeM-Ado

Death Of The Dollar - Hidden Secrets Of Money Ep 3- Mike Maloney

[tricha]

Do you have an insurance policy yet.? When the music stops it will be to late Skol.

Cash will be toast.



http://www.peakprosperity.com/sites/default/files/imagecache/article_photo/content/article/article-photo/gold-megaphone-124073473.jpg valdis torms/Shutterstock




The Screaming Fundamentals For Owning Gold Updated 2014 edition



by Chris Martenson
Friday, April 4, 2014, 9:44 AM






This report lays out the investment thesis for gold. Silver is mentioned only where necessary, as a separate report of equal scope will be forthcoming on that topic. Various factors lead me to conclude that gold is one investment that you can park for the next ten or twenty years, confident that it will perform well. Timing and logic for both entering and finally exiting gold as an investment are laid out in the full report.
The punch line is this: Gold (and silver) is not in bubble territory, and its largest gains remain yet to be realized; especially if current monetary, fiscal, and fundamental supply-and-demand trends remain in play.
IntroductionIn 2001, as the painful end of the long stock bull market finally seeped into my consciousness, I began to grow quite concerned about my traditional stock and bond holdings. Other than a house with 27 years left on a 30 year mortgage, these paper holdings represented 100% of my investing portfolio. So I dug into the economic data to discover what the future likely held. What I found shocked me. It's all in the Crash Course (http://www.peakprosperity.com/crashcourse), in both video (http://www.peakprosperity.com/crashcourse) and book (http://www.peakprosperity.com/crash-course-book) form, so I won't go into that data here; but a key takeaway is that the US is spending far more than it is earning, and supporting that gap by printing a whole lot of new money.
By 2002, I had investigated enough about our monetary, economic, and political systems that I came to the conclusion that holding gold and silver would be a very good idea. So I poured 50% of my liquid net worth into precious metals, and sat back and waited.
So far so good. But the best is yet to come... unfortunately. I say 'unfortunately' because the forces that are going to drive gold higher in current dollar terms are the very same trends that are going to leave most people, and the planet, much worse off than they are now.
Part 1: Why Own Gold?The reasons to hold gold (and silver), and I mean physical bullion, are pretty straightforward. So let’s begin with the primary ones:


To protect against monetary recklessness
As insulation against fiscal foolishness
As insurance against the possibility of a major calamity in the banking/financial system
For the embedded 'option value' that will pay out handsomely if gold is re-monetized

Monetary RiskBy ‘monetary recklessness,’ I mean the creation of money out of thin air and the application of more liquidity than the productive economy actually needs. The central banks of the world have been doing this for decades, not just since the onset of the 2008 financial crisis. In gold terms, the supply of above-ground gold is growing at 1.7 % per year, while the money supply has been growing at more than three times that yearly rate since 1960:
http://media.peakprosperity.com/images/MZM-rate-growth-gold-report.jpg
Over time, that more than 5% growth differential has created an enormous gap due to the exponential 'miracle' of compounding.
Now this is admittedly an unfair view, because the economy has been growing, too. But money and credit growth has still handily outpaced the growth of our artificially and upwardly-distorted GDP measurements by a wide margin. Even as the economy stagnates under this too-large debt load, the credit system continues to expand as if perpetual growth were possible. Given this dynamic, we continue to expect all the resulting extra dollars, debts and other assorted claims on real wealth to eventually show up in prices of goods and services.
And since we live in a system where money is loaned into existence, we also have to look at the growth in credit, as well. Since 1970 the US has been compounding its total credit market debts at the astounding rate of nearly 8% per annum:
http://media.peakprosperity.com/images/TCMD-gold-report.jpg
This desperate drive for continuous compounding growth in money and credit is a principal piece of evidence that convinces me that hard assets, of which gold is perhaps the star representative for the average person, are the place to be for a sizeable portion of your stored wealth.
Negative Real Interest RatesReal interest rates are deeply negative (meaning that the rate of inflation is higher than Treasury bond yields). This is a forced, manipulated outcome courtesy of central banks that are buying bonds with thin-air money. Of course, the true rate of inflation is much higher than the officially reported statistics by at least a full percent or possibly two, and so I consider bond yields to be far more negative than your typical observer. Historically, periods of negative real interest rates are nearly always associated with outsized returns for commodities, especially precious metals. If and when real interest rates turn positive, I will reconsider my holdings in gold and silver, but not until then. That's as close to an absolute requirement as I have in this business.
Dangerous PoliciesMonetary policies across the developed world remain as accommodating as they’ve ever been. Even Greenspan's 1% blow-out special in 2003 was not as steeply negative in real terms as what Bernanke engineered over his more recent tenure. But it is the highly aggressive and ‘alternative’ use of the Federal Reserve balance sheet to prop up insolvent banks and to sop up extra Treasury debt that really has me worried. There seems to be no way to end these ever-expanding programs, and they seem to have become a permanent feature of the economic and financial landscape. In Europe, the equivalent is the sovereign debt now found on the European Central Bank (ECB) balance sheet. In Japan we have prime minister Abe's ultra-aggressive policy of doubling the monetary base in just two years. Suffice it to say that such grand experiments have never been tried before, and anyone that has the vast bulk of their wealth tied up in financial assets is making an explicit bet that these experiments will go exactly as planned.
Chronic DeficitsFederal fiscal deficits are seemingly out of control and are now stuck in the $1 trillion range. Massive deficit spending has always been inflationary, and inflation is usually gold/silver friendly. Although not always, mind you, as the correlation is not strong, especially during mild inflation (less than 5%). Note, for example, that gold fell from its high in 1980 all the way to its low in 1998, an 18 year period with plenty of mild inflation along the way. Sooner or later I expect extraordinary budget deficits to translate into extraordinary inflation.
Banking System RiskReason #3, insurance against a major calamity in the banking system, is an important part of my rationale for holding gold.
And let me clear: I’m not referring to “paper" gold, which includes the various tradable vehicles (like the "GLD" ETF) that you can buy like stocks through your broker. I’m talking about physical gold and silver because of their unusual ability to sit outside of the banking/monetary system and act as monetary assets.
Literally everything else financial, including our paper US money, is simultaneously somebody else’s liability. But gold and silver bullion are not. They are simply, boringly, just assets. This is a highly desirable characteristic that is not easily replicated.
Should the banking system suffer a systemic breakdown, to which I ascribe a reasonably high probability of greater than 1-in-3 over the next 5 years, I expect banks to close for some period of time. Whether it's two weeks or six months is unimportant; no matter the length of time, I'd prefer to be holding gold than bank deposits.
During a banking holiday, your money will be frozen and left just sitting there, even as everything priced in money (especially imported items) rocket up in price. By the time your money is again available to you, you may find that a large portion of it has been looted by the effects of a collapsing currency. How do you avoid this? Easy; keep some ‘money’ out of the system to spend during an emergency. I always advocate three months of living expenses in cash, but you owe it to yourself to have gold and silver in your possession as well.
The test run for such a bank holiday was recently tried out in Cyprus where people woke up one day and discovered that their bank accounts were frozen. Those with large deposits had a very material percentage of those funds seized so that the bank's more senior creditors, the bondholders, could avoid the losses they were due.
Most people, at least those paying attention, learned two things from Cyprus:


In a time of crisis those in power will do whatever it takes to assure that the losses are spread across the population rather than taken by the relatively few institutions and individuals that should take the losses.
If you make a deposit with a bank, you are actually an unsecured creditor of that institution; which means you are legally last in line for repayment should that institution fail.

Re-monetization PotentialThe final reason for holding gold, because it may be remonetized, is actually a very big draw for me. While the probability of this coming to pass may be low, the rewards would be very high for those holding gold should it occur.
Here are some numbers: The total amount of 'official gold,' or that held by central banks around the world, is 31,320 tonnes (http://en.wikipedia.org/wiki/Gold_reserve), or 1.01 billion troy ounces. In 2013 the total amount of money stock in the world was roughly $55 trillion.
If the world wanted 100% gold backing of all existing money, then the implied price for an ounce of gold is ($55T/1.01BOz) = $54,455 per troy ounce.
Clearly that's a silly number (or is it?). But even a 10% partial backing of money yields $5,400 per ounce. The point here is not to bandy about outlandish numbers, but merely to point out that unless a great deal of the world's money stock is destroyed somehow, or a lot more official gold is bought from the market and placed into official hands, backing even a small fraction of the world's money supply by gold will result in a far higher number than today's ~$1,300/oz.
The Difference Between Silver and GoldOften people ask me if I hold goldandsilver as if it were one word. I do own both, but for almost entirely different reasons.
Gold, to me, is a monetary substance. It has money-like qualities and it has been used as money by diverse cultures throughout history. I expect that to continue.
There is a slight chance that gold will be re-monetized on the international stage due to a failure of the current all-fiat regime. If or when the fiat regime fails, there will have to be some form of replacement, and the only one that we know works for sure is a gold standard. Therefore, a renewed gold standard has the best chance of being the ‘new’ system selected during the next bout of difficulties.
So gold is money.
Silver is an industrial metal with a host of enviable and irreplaceable attributes. It is the most conductive element on the periodic table, and therefore it is widely used in the electronics industry. It is used to plate critical bearings in jet engines and as an antimicrobial additive to everything from wall paints to clothing fibers. In nearly all of these uses, plus a thousand others, it is used in vanishingly-small quantities that are hardly worth recovering at the end of the product life cycle -- so they often aren't.
Because of this dispersion effect, above-ground silver is actually quite a bit less abundant than you might suspect. When silver was used primarily for monetary and ornamentation purposes, the amount of above-ground, refined silver grew with every passing year. After industrial uses cropped up, that trend reversed, and today it's thought that roughly half of all the silver ever mined in human history has been irretrievably dispersed.
Because of this consumption dynamic, it's entirely possible that over the next twenty years not one single net new ounce of above ground silver will be added to inventories, while in contrast, a few billion ounces of gold will be added.
I hold gold as a monetary metal. I own silver because of its residual monetary qualities, but more importantly because I believe it will continue to be in demand for industrial uses for a very long time, and it will become a scarce and rare item.

NOTE: PeakProsperity.com reserves its deeper analysis for our enrolled members, which is usually contained in Part 2 of our reports. Given the importance and widespread interest in this particular topic, we are exercising the rare exception to make Part 2 (below) available to the public.
Part 2: Supply & Demand Are Shockingly Out Of BalanceGold DemandGold demand has gone up from 3,200 tonnes in 2003 to 4,400 tonnes in 2013, and that's even with a massive 800 tonnes being disgorged from the GLD tracking fund over 2013 (purple circle, below):
http://media.peakprosperity.com/images/Gold-Demand-2013.jpg
(Source (http://www.gold.org/sites/default/files/GDT_Q4_2013.pdf))
Note the dotted red line in this chart: it shows the current level of mine production. World demand has been higher than mine production for a number of years. Where has the additional supply come from to meet demand? We'll get to that soon, but the quick answer is: it had to come from somewhere, and that place was 'the West.'
A really big story in play here is the truly historic and massive flows of gold from the West to the East, with China being the largest driver of those gold flows.
ChinaAlasdair McLeod of GoldMoney.com has assembled the public figures on China's cumulative gold demand which, notably, do not include whatever the People's Bank of China may have bought. Those are presumably additive to these figures unless we are to believe that the PBoC now purchases its gold over the counter and in full view (which they almost certainly do not).
Using publicly available statistics only, it's possible to calculate that in 2013 China alone accounted for more than 2,600 tonnes of demand, or more than 60% of total demand or, as we'll soon see, almost all of the world's total gold mine production:
http://media.peakprosperity.com/images/China-Gold-Demand-McLeod.jpg
(Source (http://www.goldmoney.com/research/analysis/chinas-gold-demand))
Of course China has a lot of money to spend, a long and comfortable relationship with gold as a legitimate asset to hold, and has to be very pleased by the repeated bear raids in the western markets that drive the price of gold down, even as gold demand has surged to record highs as a consequence of these lower prices.
Of course the big risk in all that Chinese demand for gold is that China may stop buying that much gold in the future for a variety of reasons.
One could be that the Chinese bubble economy finally bursts and people there no longer feel wealthy and so they stop buying gold.
Another could be that the Chinese government reverses course and makes future gold purchases illegal for some reason. Perhaps they are experiencing too much capital flight, or they want to limit imports of what they consider non-essential items.
Who knows?
I do know that Chinese demand has been simply incredible and, keeping all things equal, I expect that to continue, if not increase.
IndiaIndia, long a steady and traditional buyer of gold, saw so much buying activity as a consequence of the lower gold prices that the government had to impose controls on the amount of gold imported into the country, even banning imports for a while:
http://media.peakprosperity.com/images/India-gold-imports-II.jpg
(Source (http://seekingalpha.com/article/2105403-india-set-to-import-twice-as-much-gold))
Central BanksAnother factor driving demand has been the reemergence of central banks as net acquirers of gold. This is actually a pretty big deal. Over the past few decades, central banks have been actively reducing their gold holdings, preferring paper assets over the 'barbarous relic.' Famously, Canada and Switzerland vastly reduced their official gold holdings during this period (to effectively zero in the case of Canada), a decision that many citizens of those countries have openly and actively questioned.
The UK-based World Gold Council is the primary firm that aggregates and reports on gold supply-and-demand statistics. Here's their most recent data on official (i.e., central bank) gold holdings:
http://media.peakprosperity.com/images/central-bank-gold-holdings.jpg
(Source (http://www.gold.org/government_affairs/gold_reserves/))
Note that the 2009 data is lowered by slightly more than 450 tonnes in this chart to remove the one-time announcement by China that it had secretly acquired 454 tonnes over the prior six years, so this data may differ from other representations you might see. I thought it best to remove that blip from the data. Also, the data for 2012 and 2013 must also be lacking official China data because the last time they announced an increase in their official gold holdings was in 2009.
In just 2013 alone, the gap between China's apparent and reported gold consumption was over 500 tonnes (http://www.ft.com/intl/cms/s/0/885b6272-92d4-11e3-9e43-00144feab7de.html#axzz2w94Qjlms) and the Chinese central bank, for a variety of reasons, is the most likely candidate to have absorbed such a quantity. If true, then China alone increased its official reserves by more than the rest of the world combined in 2013.
The World Gold Council puts out what is considered by many to be the definitive source of gold statistics, which are the source data for the above chart. I do not consider the WGC to be definitive since their statistics do not comport well with other well reported data, but let's first take a look at what the WGC had to say about gold demand in 2013:
http://media.peakprosperity.com/images/WGC-total-gold-demand-2013.jpg
(Source (http://www.gold.org/sites/default/files/downloads/Demand_Tonnes.pdf))
The big story there, obviously is that investment demand absolutely cratered even as jewelry and coins and bars rose to new heights. And nearly all of that investment drop was driven by flows out of the GLD investment vehicle. That is, gold was chased out of the weak hands of mainly western investors and into the strong hands of Asian buyers who wanted physical bullion and jewelry.
This huge drop in total demand, led by plummeting investment demand, fits quite well with the 15% price drop recorded in 2013. So the WGC tells a nice coherent story so far.
But the problem with this tidy story is that it simply does not fit with the above data about China's voracious appetite for gold, let along India's steady demand and rising demand in Europe, the Middle East, Turkey, Vietnam or Russia.
The summary of the fundamental analysis of gold demand is


there is a huge and pronounced flow of gold from the West to the East
there is rising demand from all quarters except for the hot money GLD investment vehicle (which I have never been a fan of)
all of this demand has handily outstripped mine supply which means that someone's vaults are being emptied (the West's) as someone else's are rapidly filling (the East's)

Now about that supply...
Gold - SupplyNot surprisingly, the high prices for gold and silver in 2010 and 2011 stimulated quite a bit of exploration and new mine production. Conversely, the bear market from 2012 to 2014 has done the opposite.
However, the odd part of the story for those with a pure economic view is that with more than a decade of steadily rising prices, there has been relatively little incremental new mine production. For those of us with an understanding of depletion it's not surprising at all.
In 2011 the analytical firm Standard Chartered calculated a rather subdued 3.6% rate of gold production growth over the next five years based on lowered ore grades and very high cash operating costs:

Most market commentary on gold centres on the direction of US dollar movements or inflation/deflation issues – we go beyond this to examine future mine supply, which we regard as an equally important driver. In our study of 375 global gold mines and projects, we note that after 10 years of a bull market, the gold mining industry has done little to bring on new supply. Our base-case scenario puts gold production growth at only 3.6% CAGR over the next five years.
(Source - Standard Chartered)
Since then, the trends for lower ore grade and higher costs have only gotten worse. But the huge drop in the price of gold in 2011 and 2012 was the final nail in the coffin and resulted in the slashing of CAPEX investment by gold mining companies.
Of course, none of this is actually surprising to anyone who understands where we are in the depletion cycle, but it's probably quite a shock to many an economist. The quoted report goes on to calculate that existing projects just coming on-line need an average gold price of $1,400 to justify the capital costs, while green field, or brand-new, projects require a gold price of $2,000 an ounce.
This enormous increase in required gold prices to justify the investment is precisely the same dynamic that we are seeing with every other depleting resource: energy costs run smack-dab into declining ore yields to produce an exponential increase in operating costs. And it's not as simple as the fuel that goes into the Caterpillar D-9s; it's the embodied energy in the steel and all the other energy-intensive mining components all along the entire supply chain.
Just as is the case with oil shales that always seem to need an oil price $10 higher than the current price to break even, the law of receding horizons (where rising input costs constantly place a resource just out of economic reach) will prevent many an interesting, but dilute, gold ore body from being developed. Given declining net energy, that's that same as "forever" as far as I'm concerned.
Just like any resource, before you can produce it you have to find it. Therefore the relationship between gold discoveries and future output is a simple one; the more you have discovered in the past, the more you can expect to produce in the future, all things being equal.
This next chart should tell you everything you need to know about where we are in the depletion cycle for gold, as even with the steadily rising prices between 1999 and 2011 (going from $300 and ounce to $1,900), gold discoveries plummeted in 1999 and remained on the floor thereafter:
http://media.peakprosperity.com/images/Gold-discoveries2.jpg
(Source (http://www.vaneck.com/mutual-funds/international-investors-gold-fund/class-c/iigcx/portfolio-analytics/))
Here we see that the 1990's decade saw quite a number of large discoveries that are currently in production but which were not matched in later years. Since it takes roughly ten years to bring a mine into full production following discovery, it's fair to say that we are currently enjoying production from the discoveries of the 1990's. Future gold production will largely be shaped by the discoveries made since then.
In other words: expect less gold production in the future.
Meanwhile, there will be more money, more credit, and more people (especially in the East) competing for that diminished supply of gold going forward.
Let's take another angle on gold supply, but which circles back and supports the above chart showing fewer and smaller discoveries in recent years.
The United States Geological Survey, or USGS, keeps a mountain of data on literally every important mined substance. I think it's staffed by credible people, doing good work, and I've yet to detect political influence in their reported statistics.
At any rate, the latest assessment on gold reveals that their best guess for world supply is that something on the order of 52,000 tonnes of reserves are left. Which means that, at the 2012 mining rate of 2,700 tonnes, there are 19 years of reserves left:
http://media.peakprosperity.com/images/Gold-Supply-USGS.jpg
(Source (http://minerals.usgs.gov/minerals/pubs/commodity/gold/mcs-2013-gold.pdf))
This doesn't mean that in 19 years there will be no more new gold to be had, as reserves are always a function of price; but it gives us a sense of what's out there right now at current prices.
As much as I like the folks at the USGS, I will point out one glaring discrepancy in their data as a means of exposing why I think these reserves, like those for many other critical things like oil, are probably overstated. And that story begins with South Africa (highlighted in the table above with the blue dotted line.)
There you'll note that, at 6,000 tonnes, South Africa has the second largest stated country reserves. However, according to official South African data, they claim to have an astonishing 36,000 tonnes of reserves. Which is right?
Neither as it turns out.
First, the true story of South African gold production is completely obvious from the production data. It's a story of being well and truly past the peak of production:
http://media.peakprosperity.com/images/South-African-Gold-Production.jpg
(Source (http://en.wikipedia.org/wiki/File:S_Africa_Gold_Production.png))
And not just a little bit past peak, but 44 years past; down a bit more than 80% from the peak in 1970. The above chart is simply not even slightly in alignment with the claims of the South African government to have 36,000 tonnes of reserves. But pity the poor South African government which knows that gold exports represent fully one third of all their exports. Of course they will want to claim massive reserves that will support many future years of robust exports.
Instead, the South African production data can be modeled by the same methods as any other depleting resource and one such analysis has been done (http://www.sajs.co.za/sites/default/files/publications/pdf/101-391-1-PB.pdf) and arrived at the conclusion that there are around 2,900 tonnes left to be mined in South Africa.
http://media.peakprosperity.com/images/South-African-Gold-Production-II.jpg
(Source (http://www.sajs.co.za/sites/default/files/publications/pdf/101-391-1-PB.pdf))
The analysis is quite sound; and the authors went on to point out that the social, economic, energy, and environmental costs of extracting those last 2,900 tonnes are quite probably higher than the current market value of those same tonnes. If they are extracted, South Africa will be net poorer for those efforts. This is the same losing proposition as if it took more than one barrel of oil to get a barrel of oil out of the ground - the activity is a loss and should not be undertaken.
For lots of political and economic reasons, however, gold mining will continue in South Africa. But, realistically, someone in government there should be thinking this through quite carefully.
The larger story wrapped into the South African example is this: perhaps there are 19 years of global gold reserves left (at current rates of production), but I doubt it.
Instead, the story of future gold production will be one of declining production at ever higher extraction costs -- exacerbated by the 80,000,000 new people who swell the planet's population every twelve months, the hundreds of millions of people in the East who enter the ranks of the middle class annually, and trillions of new monetary claims that are forced into the system each year.
And this brings me to my final point of this part of the public part of this report.
ScarcityIf we cast our minds forward ten years and think about a world with oil costing 2x to maybe 4x more than today, we have to ask ourselves some important questions:


How many of our currently-operating gold and silver mines, or the base metal mines from which gold and silver are by-products, will still be in operation then?
How many will simply shut down because their energy costs will have exceeded their marginal economic benefits?

After just 100 years of modern, machine-powered mining, all of the great ore bodies are gone, most of the good ones are already in operation, and only the poorest ones are left.
By the time you are reading stories like this next one, you should be thinking, Why are we going to all that trouble unless that's the best option left?

South African Miners Dig Deeper to Extend Gold Veins' Life Spans
Feb 17, 2011
JOHANNESBURG—With few new gold strikes around the world that can be turned into profitable mines, South Africa's gold miners are planning to dig deeper than ever before to get access to rich veins.
The plans raise questions about how to safely and profitably mine several miles below the surface. Success would mean overcoming problems such as possible rock falls, flooding and ventilation challenges and designing technology to overcome the threats.
Mark Cutifani, chief executive officer of AngloGold Ashanti Ltd., has a picture in his office of himself at one of the deepest points in Africa, roughly 4,000 meters, or 13,200 feet, down in the company's Mponeng mine south of Johannesburg. Mr. Cutifani sees no reason why Mponeng, already the deepest mining complex in the world, shouldn't in time operate an additional 3,000-plus feet deeper.
"The most critical challenges for all of us in South Africa are depths and depletion of reserves," Mr. Cutifani said in an interview.
The above article is just a different version of the story that led to the Deepwater Horizon incident. Greater risks and engineering challenges are being met by hardworking people going to ever greater lengths to overcome the lack of high quality reserves to go after.
By the time efforts this exceptional are being expended to scrape a little deeper, after ever smaller and more dilute deposits, it tells the alert observer everything they need to know about where we are in the depletion cycle, which is, we are closer to the end than the beginning. Perhaps there are a few decades left, but we're not far off from the day where it will take far more energy to get new metals out of the ground compared to scavenging those already above ground in refined form.
At that point we won't be getting any more of them out of the ground, and we'll have to figure out how to divvy up the ones we have on the surface. This is such a new concept for humanity -- the idea of actual physical limits -- that only very few have incorporated this thinking into their actions. Most still trade and invest as is the future will always be larger and more plentiful, but the data no longer supports that view.
We are at a point in history where we can easily look forward and make the case for declining per-capita production of numerous important elements just on the basis of constantly falling ore grades. Gold and silver fit into that category rather handily. Depletion of reserves is a very real dynamic. It is not one that future generations will have to worry about; it is one with which people alive today will have to come to terms.
The issue of Peak Cheap Oil only exacerbates the reserve depletion dynamic by adding steadily rising energy input costs to mix. Should oil get to the point of actual scarcity, where we have to ration by something other than price, then we must ask where operating marginal mines slot onto the priority list. Not very highly, would be my guess.
Part 3: Protecting Your Wealth With GoldFor all the reasons above, it's only prudent to consider gold an essential element of a sound investment portfolio.
In Part 3: Using Gold to Protect Yourself In Advance of the Greatest Wealth Transfer of Our Lifetime (http://www.peakprosperity.com/insider/85067/using-gold-protect-yourself-advance-greatest-wealth-transfer-our-lifetime) we detail out the specifics of how much of your net worth to consider investing in gold, in what forms to hold it, which price targets are gold and silver most likely to reach, and which eventual indicators (likely years away) to look for that will signal that it's time to sell out of your precious metal investments.
The battle to keep gold's price in check is truly one for the ages. Not because gold deserves such treatment, but because the alternative is for the world's central planners to admit that they've poorly managed an ill-designed monetary system of their own creation. As a result, price manipulation is an additional important factor to be aware of, and to address in your accumulation strategy.
Make sure you're taking steps today to ensure that the purchasing power of your wealth is protected, if not enhanced, when the trends identified above arrive in full force.
Click here to access Part 3 (http://www.peakprosperity.com/insider/85067/using-gold-protect-yourself-advance-greatest-wealth-transfer-our-lifetime)of this report (free executive summary, enrollment required for full access).

[Bobcat.]

http://m.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=11235663

Tricha, if you expect people to read your posts, you really do need to a) be more selective with your copy and pastes, and b) summarise/abstract the salient points. My guess is that nobody has the time or inclination to read a 5000 word essay with numerous charts. I've also erred in that respect although I do believe my largest post has not exceeded 500 words!

I see in the NZ Herald this morning an AP article on US objections to Russia buying 500,000 barrels a day from Iran, claiming it undermines their efforts to negotiate the Nuclear deal. That's bull***t. What it underminds is the US Administration's attempts to force Iran to use USD-backed petro dollars for its oil exports under the guise of a 'nuclear' deal.

[skid]

Is there anyone who is still naive enough to think its not about oil and the international currency?

[skid]

So heres a question--If the sharemarket continues to tank will the $US fall from loss of faith or will it rise as investors run to a ''safe heaven'' currency--there fore ditching the $Aus and $Kiwi?

[tricha]

So heres a question--If the sharemarket continues to tank will the $US fall from loss of faith or will it rise as investors run to a ''safe heaven'' currency--there fore ditching the $Aus and $Kiwi?

my bet is the us$ is toast, along with all fiat currencies.

gold, silver and tangible assets will be King.

And because China holds so much gold, a new world currency.

[Bobcat.]

Australia is upping the ante on using Chinese currency for its international trade.

https://au.finance.yahoo.com/news/aust-china-look-free-currency-013415646.html

[Skol]

my bet is the us$ is toast, along with all fiat currencies.

gold, silver and tangible assets will be King.

And because China holds so much gold, a new world currency.

You've been preaching that for years tricha, it's not going to happen, I've got an idea though. How about some exposure to Auckland property? Up 13.3% in the last year, beats working for a living.

[skid]

Reserve currencies of the world are Euro and USD. My bets would go on money going home to Treasuries and the almighty Greenback...

Well I hope so -Im getting tired of not getting interest on my Uncle Sam dollars--Took a punt at .85nz so in the red ATM (but it payed off last time I bought at that rate) Can always be worse--could have used it to buy into Xero and PEB.

[skid]

my bet is the us$ is toast, along with all fiat currencies.

gold, silver and tangible assets will be King.

And because China holds so much gold, a new world currency.

Logic would say that if thats the case it may be a longer time frame.
I still think in the short term investors will run to reserve currency if things get worse---doesnt mean it wont eventually happen though.

[tricha]

Logic would say that if thats the case it may be a longer time frame.
I still think in the short term investors will run to reserve currency if things get worse---doesnt mean it wont eventually happen though.

The reserve currency is already worthless. We will wake up one morning soon and all hell will have broken loose. If you have not acted now, it's not to late.
Buy fixed tangible assets and have no debt.
It could be tomorrow or in five years. The million dollar question .:confused: I'm erring on tomorrow.;)
We have choices.
No One Will Ring The Bell At The Top
http://www.zerohedge.com/sites/default/files/pictures/picture-5.jpg (http://www.zerohedge.com/users/tyler-durden)
Submitted by Tyler Durden (http://www.zerohedge.com/users/tyler-durden) on 04/09/2014 10:26 -0400

Submitted by Lance Roberts of STA Wealth Management,
The market has had a rough start of the year flipping between positive and negative year-to-date returns. However, despite all of the recent turmoil from an emerging markets scare, concerns over how soon the Fed will start to hike interest rates and signs of deterioration in the underlying technical foundations (http://streettalklive.com/index.php/daily-x-change/2-analysis/the-daily-x-change/2124-chink-in-the-market-s-armor.html) of the market, investors remain extremely optimistic about their investments. It is, of course, at these times that investors should start to become more cautious about the risk they undertake. Unfortunately, the "greed factor," combined with the ever bullish Wall Street "buy and hold so I can charge you a fee" advice, often deafens the voice of common sense.One of my favorite quotes of all time is from Howard Marks who stated:




"Resisting – and thereby achieving success as a contrarian – isn't easy. Things combine to make it difficult; including natural herd tendencies and the pain imposed by being out of step, since momentum invariably makes pro-cyclical actions look correct for a while. (That's why it's essential to remember that 'being too far ahead of your time is indistinguishable from being wrong.') Given the uncertain nature of the future, and thus the difficulty of being confident your position is the right one – especially as price moves against you – it's challenging to be a lonely contrarian."That quote is truest at extremes as markets can remain "irrational" far longer than would otherwise seem logical. This is particularly the case when, despite clear signs of overvaluation (http://streettalklive.com/index.php/5-questions-that-every-market-bull-should-answer/2-analysis/the-daily-x-change/1878-the-market-in-pictures.html) and excess, central banks worldwide are dumping liquidity into economies in a desperate attempt to "resolve a debt bubble with more debt."It is interesting that when you ask most people if they would bet heavily on a "pair of deuces" in a game of poker, they will quickly tell you "no." When asked why, they clearly understand that the "risk to reward" ratio is clearly not in their favor. However, when it comes to the investing the greater the risk of loss, the more they want to invest. It is a curious thing particularly when considering that the bets in poker are miniscule as compared to an individual's "life savings" in the investment game.However, that is where we clearly find ourselves today. There was never a clearer sign of excessive bullish optimism than what is currently found within the levels of margin debt. Even as the markets sold off sharply in February, investors sharply levered up portfolios and increasing overall portfolio risk.

http://streettalklive.com/images/1dailyxchange/2014/MarginDebt-NetCredit-040814-2.PNG (http://streettalklive.com/images/1dailyxchange/2014/MarginDebt-NetCredit-040814-2.PNG)Even professional investors, who are supposed to be the "smart money," are currently at the highest levels of bullishness seen since 1990. (The chart below is the 4-month moving average of the net-difference between bullish and bearish sentiment.)http://streettalklive.com/images/1dailyxchange/2014/INVI-BullishSentiment-040814.PNG (http://streettalklive.com/images/1dailyxchange/2014/INVI-BullishSentiment-040814.PNG)Franklin Roosevelt, during his first inaugural address (http://historymatters.gmu.edu/d/5057/), made one of his most famous statements:




"So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself..."However, when it comes to the stock market it is the "lack of fear" that we should be most fearful of. Throughout human history, the emotions of "fear" and "greed" have influenced market dynamics. From soaring bull markets to crashing bear markets, tulip bubbles to the South Sea, railroads to technology; the emotions of greed, fear, panic, hope and despair have remained a constant driver of investor behavior. The chart below, which I have discussed previously (http://streettalklive.com/daily-x-change/1858-are-we-entering-the-3rd-stage-of-the-bull-market.html), shows the investor psychology cycle overlaid against the S&P 500 and the 3-month average of net equity fund inflows by investors. The longer that an advance occurs in the market, the more complacent that investors tend to become.http://streettalklive.com/images/1dailyxchange/2014/Investor-Psychology-Cycle-040814.PNG (http://streettalklive.com/images/1dailyxchange/2014/Investor-Psychology-Cycle-040814.PNG)Complacency is like a "warm blanket on a freezing day." No matter how badly you want something, you are likely to defer action because it will require leaving the "cozy comfort" the blanket affords you. When it comes to the markets, that complacency can be detrimental to your long term financial health. The chart below shows the 6-month average of the volatility index (VIX) which represents the level of "fear" by investors of a potential market correction.http://streettalklive.com/images/1dailyxchange/2014/S&P-500-VIX-6mo-Avg-040814.PNG (http://streettalklive.com/images/1dailyxchange/2014/S&P-500-VIX-6mo-Avg-040814.PNG)The current levels of investor complacency are more usually associated with late stage bull markets rather than the beginning of new ones. Of course, if you think about it, this only makes sense if you refer back to the investor psychology chart above.The point here is simple. The combined levels of bullish optimism, lack of concern about a possible market correction (don't worry the Fed has the markets back), and rising levels of leverage in markets provide the "ingredients" for a more severe market correction. However, it is important to understand that these ingredients by themselves are inert. It is because they are inert that they are quickly dismissed under the guise that "this time is different."Like a thermite reaction, when these relatively inert ingredients are ignited by a catalyst they will burn extremely hot. Unfortunately, there is no way to know exactly what that catalyst will be or when it will occur. The problem for individuals is that they are trapped by the combustion an unable to extract themselves in time. I recently wrote an article entitled "OMG! Not Another Comparison Chart" (http://streettalklive.com/index.php/5-questions-that-every-market-bull-should-answer/2-analysis/the-daily-x-change/2117-omg-not-another-comparison-chart.html) because there have been too many of these types of charts lately. The reason I make that distinction is that the next chart is NOT a comparison for the purposes of stating this market is like a previous one. Rather, it is an analysis of what a market topping pattern looks like.http://streettalklive.com/images/1dailyxchange/2014/S&P-500-MarketTop-2011-2014-040814.PNG (http://streettalklive.com/images/1dailyxchange/2014/S&P-500-MarketTop-2011-2014-040814.PNG)As you can see, during the initial phases of a topping process complacency as shown by the 3-month volatility index at the bottom remains low. As the markets rise, investor confidence builds leading to a "willful" blindness of the inherent risks. This confidence remains during the topping process which can take months to complete. With individuals focused on the extremely short term market movements (the tree) they miss the fact that the forest is on fire around them. However, as shown, by the time investors realize the markets have broken it is generally too late.As Seth Klarman recently wrote (http://www.zerohedge.com/news/2014-03-08/seth-klarman-born-bulls-bitcoin-truman-show-market):




"The survivors pledged to themselves that they would forever be more careful, less greedy, less short-term oriented. But here we are again, mired in a euphoric environment in which some securities have risen in price beyond all reason, where leverage is returning to rainy markets and asset classes, and where caution seems radical and risk-taking the prudent course. Not surprisingly, lessons learned in 2008 were only learned temporarily. These are the inevitable cycles of greed and fear, of peaks and troughs. Can we say when it will end? No. Can we say that it will end? Yes. And when it ends and the trend reverses, here is what we can say for sure. Few will be ready. Few will be prepared."It is in that statement that we find the unfortunate truth. Individuals are once again told that this time will be different. Anyone who dares speak against the clergy of bullishness is immediately chastised for heresy. Yet, in the end, no one will ring the bell at the top and ask everyone to please exit the building in an orderly fashion. Rather, it will be "Constanza moment" as the adults (professionals) trample the children (retail) to flee the building in a moment of panic.It is only then that anyone will ask the question of "why?" Why didn't anyone warn me? Why did this happen? Why didn't we see it coming? Why didn't someone do something about it?

[skid]

Not betting the farm on these dollars--otherwise cashed up and debt free-so not to worried.
The kiwi is flying right now but it doesnt take much to knock it off its perch. Time will tell:)

[Skol]

tricha,

Tyler Durden, lol. Another of Zerohedge's morons.

He's been preaching hellfire and brimstone for years and I'm still waiting.

[tricha]

tricha,

Tyler Durden, lol. Another of Zerohedge's morons.

He's been preaching hellfire and brimstone for years and I'm still waiting.

It's moving down the track, who is next, turkey, France or someone else.

" In gold we trust"

WA National World Tech Leadership Boardroom Q+A Boardroom Radio Markets Events
Moody's downgrades Turkey outlook to 'negative'


April 12, 2014, 12:31 am

[tricha]

D Day or Gold day not far away, with the US dollar collapse leading the way. Read history, since Aug 1971 the US went off the gold standard to the petro dollar. ( about the say time they went from an oil exporter to a oil importer)
They still import around 7,500,000 barrels of oil a day. They pay for it with a Ponzi scheme. The scheme is close to breaking point. You still have time to exit before the music stops.

When they ring the bell its to late.;)

Jim Sinclair: Russia Can Collapse US Economy, Gold Update, Silver is Gold on Steroids & More ,

http://www.youtube.com/watch?v=KXGPzDq45gM

[Skol]

Jim Sinclair: Russia Can Collapse US Economy, Gold Update, Silver is Gold on Steroids & More
--------------------------

I'm surprised Sinclair's still solvent.

[JBmurc]

Breaking Putin stranglehold on energy

http://www.telegraph.co.uk/finance/newsbysector/energy/10779504/Breaking-Putins-stranglehold-on-energy-Good-luck-Ed-Davey.html

[tricha]

Breaking Putin stranglehold on energy

http://www.telegraph.co.uk/finance/newsbysector/energy/10779504/Breaking-Putins-stranglehold-on-energy-Good-luck-Ed-Davey.html


hmm, those Russians, are Petro powerful.

The Organisation of Petroleum Exporting Countries already estimates that the marginal production cost of shale in the US as high as $90 (£53) per barrel compared with about $10 in Saudi.

[JBmurc]

Richard Schodde, of MinEx Consulting, has studied past exploration cycles in detail. He says we are seeing a tightening of the sector, as the availability of capital has plummeted. Costs of exploration are coming down as companies cut back on high-salaried employees and reduce operating costs.


The amount of money spent exploring rose during the last decade from $2.9 in 2002 to $29.4 billion in 2012, before falling back to $21 billion in 2013 says Mr. Schodde. Over the time-frame 2002-12 $136 billion was spent world-wide on non-bulk exploration, resulting in 647 significant new discoveries, of which only 18 are considered to be ‘top tier.’
Despite a 10-fold increase in the amount of money spent on exploration over the last decade, the amount of new discoveries was relatively unchanged – meaning that more money was spent per new discovery. Mr. Schodde explains that as more money went into the sector, expenses related to exploring went up. Geologists and engineers demanded higher salaries. Drilling equipment and operators became more expensive, and money was spent liberally on general and administrative expenses.
As an ebullient market sentiment took hold, money was also wasted on projects with negligible odds of success or likelihood of development and often incompetent management. So despite high expenditures of capital, the pace of discoveries remained relatively tame.
Mr. Schodde notes that today, salaries and G&A expenses have come down since 2012, and he believes that this trend will continue as capital remains scarce.
Adding to the challenge, finding new deposits will become much tougher for the exploration industry, he says, because most ‘easy-to-find’ deposits have already been discovered. Explorers will have to drill deeper in known mineral-rich locations, such as Western Australia, or look in problematic jurisdictions, such as Central Africa. Making discoveries should become more costly for these reasons.
Already, new discoveries are barely keeping pace with depletion, says Mr. Schodde.
As he explains, only about half of new decently-sized deposits will later become a mine.1Depending on the commodity and location it will take 10-15 years on average for a discovery to become a mine. So we must discover about twice as much metal today as we will be using in a decade from now in order to maintain supply.
Looking ahead to expected production rates in 2020, gold is being discovered at 1.5 times the expected depletion rate. New copper deposits are being discovered at 1.7 times the projected consumption rate in 2020, which is also below the ‘replacement rate’ for the metal.
The exploration sector is contracting — spending less money and pursuing fewer projects – and is being forced to be more efficient, Mr. Schodde explains.
While exploration expenses have come down, the need for new deposits is strong. The exploration industry will need to make more new discoveries, despite decreasing capital available, or the supply of mined metals is likely to decline in coming years.
Richard Schodde has over 30 years of experience in a wide variety of project analysis and strategic planning roles within the international resources industry – including 15 years at WMC (in its Business Development Group and as Strategic Planning Manager for the Exploration Division) and more recently, 4 years at BHP Billiton (as Minerals Economist in their Global Exploration Team). In 2008 he founded MinEx Consulting to provide strategic and economic advice to mining and exploration companies.