Archive for November, 2010
Monday, 29 Nov 2010 | 9:56 AM ET
By: Sharon Epperson and Jessica Golden
The price of silver is surging and so is business at many coin dealers across the country. At Plaza Collectibles, an appraisals shop in Manhattan, owner Lee Rosenbloom says he’s seeing a tremendous demand both in new and older silver coins. “This is probably the strongest demand there’s been in the last 25 years,” he says. Silver prices have soared 60 percent in 2010, driven in large part by a strong investment demand, particularly strong buying of exchange-traded funds, or ETFs, backed by the physical metal.
“ETF demand has been an important driver of prices because investors have prepositioned themselves for this central bank buying by emerging markets” says Francisco Blanch, Head of Global Commodity Research at Bank of America-Merrill Lynch [BAC 11.31 0.19 (+1.71%) ].
Other leading gold analysts agree this buying frenzy will continue. Philip Klapwijk, executive chairman of the consulting firm GFMS, says he expects to see $4 billion on a net basis flurrying into silver and gold investment this year. Holdings in the largest silver exchange-traded fund, iShares Silver Trust, are near a record high, trading up 62 percent year to date (as of closing on November 23).
According to Blanch, the increase in silver prices has also been spurred by a rise in industrial demand, which is up 18 percent year over year. A hike in demand for silver from solar panels and pent up demand from the industrial sector is helping to push up prices. He expects to see further growth next year but at a slower pace.
For many investors, silver is a more affordable alternative to gold. Gold coins are traded based on a spot price that is currently almost $1,400 an ounce.
Silver coins are based on futures prices that are under $30 an ounce. “Silver coins are a relatively cheap gift and way for people to accumulate wealth,” says Blanch.
The strong interest in silver has created a record month for sales of the 2010 Silver American Eagle bullion coin, according to the U.S. Mint. Silver coin sales are up 22 percent compared to this period last year and 30 percent since 2007.
Alternative Investing – A CNBC Special Report
Yet, analysts say investors who want to get in on the action and are deciding between holding the actual silver metal or an ETF should weigh their options carefully, since coins ultimatley may cost a higher premium.
Read the entire article HERE.
Tim Geithner recently accused China of manipulating it’s currency when the US was the first to start quantitative easing. China is protecting it’s currency by NOT devaluing it’s currency through quantitative easing. Fiscally conservative countries such as Singapore and Malaysia are experiencing growth in their economies. China does not want to finance the US and is dumping the dollar for which China holds almost 2 Trillion of. This will result in a currency war and more dollars in circulation. Considering the addition of the TARPS and QE2, severe inflation will likely be the result for the US. A recent article stating that TARP funds had been repaid by GM does not tell the entire story. First, is there an official US bank statement that will hold up in a court of law, that shows this money being repaid or are we simply going to take the word of news agencies who apparently can just say they were misinformed if the information was incorrect? Second, when TARP or QE2 funds are received they are generated at the Federal Reserve where the money is literally made out of nothing. The money is essentially taken from the savings of taxpayers and future taxpayers to finance. Therefore to repay the taxpayer, the money should be destroyed or eliminated from the money supply just as it was brought into existence born from nothing. However, the money that was repaid from GM was given back to the Federal Reserve, with no guarantee that the money will not be used for other purposes. Have the US Taxpayers been repaid or has the money simply been given to someone or something else. Are inflationary forces still in play with the dollar? An interesting take on US Debt below…
“There is no possibility of agreement at the upcoming G20 summit because the U.S. is declaring financial war on other countries, believes American economist Michael Hudson. The U.S. has been pushing China to revalue its currency — at a time when Washington has been pumping billions of dollars into its economy — a move viewed by other countries as an attempt to deliberately weaken the greenback. The issue of exchange rates is expected to be one of the toughest discussion points at the G20 summit in South Korea later this week. Michael Hudson, a renowned economist and Wall Street financial analyst and advisor, says the meeting in Seoul will not bring an end to global currency wars. “The U.S. is going to China and saying ‘we want you to commit economic suicide just like Japan did. We want you to follow the same way: we want you to re-value your currency, we want you to squeeze your companies, we want you to go bankrupt so we can make our profit at your expense,” says Hudson.”
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By Su Qiang and Li Xiaokun
Updated: 2010-11-24 08:02
St. Petersburg, Russia – China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday.
Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies.
“About trade settlement, we have decided to use our own currencies,” Putin said at a joint news conference with Wen in St. Petersburg.
The two countries were accustomed to using other currencies, especially the dollar, for bilateral trade. Since the financial crisis, however, high-ranking officials on both sides began to explore other possibilities.
The yuan has now started trading against the Russian rouble in the Chinese interbank market, while the renminbi will soon be allowed to trade against the rouble in Russia, Putin said.
“That has forged an important step in bilateral trade and it is a result of the consolidated financial systems of world countries,” he said.
Putin made his remarks after a meeting with Wen. They also officiated at a signing ceremony for 12 documents, including energy cooperation.
The documents covered cooperation on aviation, railroad construction, customs, protecting intellectual property, culture and a joint communiqu. Details of the documents have yet to be released.
Putin said one of the pacts between the two countries is about the purchase of two nuclear reactors from Russia by China’s Tianwan nuclear power plant, the most advanced nuclear power complex in China.
Putin has called for boosting sales of natural resources – Russia’s main export – to China, but price has proven to be a sticking point.
Russian Deputy Prime Minister Igor Sechin, who holds sway over Russia’s energy sector, said following a meeting with Chinese representatives that Moscow and Beijing are unlikely to agree on the price of Russian gas supplies to China before the middle of next year.
Russia is looking for China to pay prices similar to those Russian gas giant Gazprom charges its European customers, but Beijing wants a discount. The two sides were about $100 per 1,000 cubic meters apart, according to Chinese officials last week.
Wen’s trip follows Russian President Dmitry Medvedev’s three-day visit to China in September, during which he and President Hu Jintao launched a cross-border pipeline linking the world’s biggest energy producer with the largest energy consumer.
Wen said at the press conference that the partnership between Beijing and Moscow has “reached an unprecedented level” and pledged the two countries will “never become each other’s enemy”.
Over the past year, “our strategic cooperative partnership endured strenuous tests and reached an unprecedented level,” Wen said, adding the two nations are now more confident and determined to defend their mutual interests.
“China will firmly follow the path of peaceful development and support the renaissance of Russia as a great power,” he said.
“The modernization of China will not affect other countries’ interests, while a solid and strong Sino-Russian relationship is in line with the fundamental interests of both countries.”
Wen said Beijing is willing to boost cooperation with Moscow in Northeast Asia, Central Asia and the Asia-Pacific region, as well as in major international organizations and on mechanisms in pursuit of a “fair and reasonable new order” in international politics and the economy.
Read the entire article HERE.
by David Campbell
Professional Investor and Developer
Founder of Hassle-free Cashflow Investing
November 22nd, 2010
Regardless of your political opinion about whether quantitative easing is good or bad for our country, the government is telling us they are printing dollars as fast as they can. The question is are you prepared to profit from this inflationary phenomena?
QE2 is a fancy term for “hidden tax on savers, seniors, and foreign nations for the benefit of the US federal government, banks, and owners of leveraged commodities.“ If you know who benefits from, or is hurt by, quantitative easing (aka inflation), doesn’t it make sense to put your chips on the winning side of the equation? Rising prices makes private lending more attractive because as the price of a lender’s collateral rises, the loan to price ratio becomes more favorable (safer) to the lender. Rising prices make owning leveraged commodities such as positive cashflow real estate more attractive. As price of commodities rise with inflation, rents go up, real estate prices go up, and debt can be repaid with ‘cheaper dollars’.
I frequently talk about inflation because it is the most important economic force in our lives. It is by political design that very few people talk about or understand what is happening with inflation. Here are some excellent Youtube videos describing what is happening with inflation and the dollar – Quantitative Easing Explained,
Glenn Beck: Just Realize What’s Going On – Part 1
Glenn Beck: Just Realize What’s Going On – Part 2
Peter Schiff on FOX news
The Attack On the Dollar by Richard Maybury
High inflation in the United States in the foreseeable future is inevitable for the following reasons:
1) The federal government controls inflation and they have the most to gain from it. It’s like the fox guarding the hen house. Congress and the Fed have publicly stated their desired rate of inflation is a doubling of commodity prices every 15 years. This is one way for the US to fund their current budget obligations while staying ahead of the cost of interest on the national debt. If the US government is successful with their monetary agenda, a hamburger that cost $5 today will be $10 in 2025, $20 in 2050, and $40 in 2065. While it is hard for me to comprehend $40 hamburgers, it’s equally hard to imagine my parents going to the movies as children and only paying twenty-five cents!
2) It is more popular to inflate than to raise taxes. Inflation is a way for the federal government to tax your savings, because as prices rise, the dollars in your savings account buy less. Savvy investors with political influence know how to profit from inflation and simultaneously shift the tax burden onto the financially illiterate working class. Americans are indoctrinated into a compulsory system of government controlled education which teaches: get a good education, work hard at a job for 40 years, and save your money in banks, the social security retirement fund, and invest in Wall Street. This is another example of the fox watching the hen house. People are starting to realize this system doesn’t work, because inflation is consistently outpacing the profits generated by savings accounts and Wall Street investments.
3) Inflation is a tax upon foreign nations. The US dollar is the world’s reserve currency for oil. Every country in the world buys or sells oil denominated in US Dollars. Regardless of whether you are Japan, China or France, every country in the world must hold huge reserves of US Dollars to buy or sell oil. As the US prints more money, each dollar in circulation buys less stuff and is therefore the dollars they are holding are robbed of valued (inflation). Foreign governments don’t like this because this gives the US an unfair advantage. The US can print an infinite number of dollars with the click of a mouse to purchase valuable commodities such as oil from foreign nations. As long as the nations of the world are forced to conduct international oil commerce in US dollars, there will be a need for them to hold US dollars. It is hugely important to note that more US dollars are held by foreign nations than by Americans. The moment OPEC starts trading oil in a currency other than US Dollars, there would be sudden and catastrophic inflation in the United States as foreigners race to trade in their worthless paper money for commodities denominated in US currency such as US real estate, food, and precious metals. (Digression: I haven’t met anyone who can explain why the US military is in the Middle East, but making sure OPEC does not denominate oil in a currency other than US Dollars seems just as plausible a reason as anything else.)
Fortunately, profiting from inflation is relatively simple and I will be covering this topic extensively in my upcoming newsletters.
Real Estate Investor / Developer / Financial Mentor
Founder of Hassle-Free Cash Flow Investing
PART TWO CAN BE FOUND HERE.
By: Bob Chapman, The International Forecaster
Something is going on that your government does not want you to know about. Very few journalists have written about it and little or nothing has appeared in the mainstream media. The story could be one of major stories of our time.
Western powers have tried to destroy gold as a backing for currencies for many years. Presently the major media won’t touch the story and that is understandable.
Something we have been writing about for years is the Shanghai co-operation organization known as SCO. Few have been listening and few have been interested in what their mission is and what they have been up to.
Some of the members are large oil producers and some, like China, are large oil users. Some have very large US dollar surpluses. As well, some are large commodity and gold and silver buyers. In fact, members are in a great part responsible for driving these prices higher. It is debatable, but we believe there is a conscious effort to accumulate gold and silver, dump dollars and to back their currencies with gold. China and Russia are both large gold producers and for a number of years have been buying up domestic gold and silver production, so that it never reaches the market and does not affect prices. If anything the absence of sales tends to push the markets higher. As a matter of fact Russia and India are visible buyers. Even Iran with its oil surplus recently announced that they had purchased 340 tons of gold. Their recent gold purchases are very significant as affiliate members, which have access to the present and ultimate direction of the group. You might say buying gold has been a protective effort to shield members and close observers from the problems generated by dollar policies. They are accumulating gold, as many have been worldwide, for the past ten years, but particularly over the past few years. This buying, for protection, has served to thwart the efforts of US policymakers, the Treasury, other central banks in Europe and the Fed, from being able to continue the blatant suppression of both gold and silver prices. The malefactors, except for forays into derivatives and futures, which are transitory, have lost control and suppression of gold and silver prices, and it is only a matter of time before all visages of any control will be visible. Since 1988, in August when Present Reagan signed the Executive Order creating, “the President’s Group on Financial Markets” and the subsidiaries that have grown out of that policy, that the Treasury won many if not most of the battles. The SCO in part changed that and now they and the public are winning the war for a fair and free gold and silver market. The current class action lawsuits, including RICO, are a testament to the market manipulation in silver, which is finally coming to an end. HSBC and JPMorgan Chase, the latter that is the major owner of the Fed, are going to be finally prohibited from rigging these markets. Their officers all belong in jail, but elitists never go to jail; they pay fines, and keep right on robbing the public.
Other SCO members and observers are accumulating gold as well, be it in smaller amounts. We might add that other nations observing Russia and China and their gold purchases are buying as well. These participants must believe that there could be a return to sound money; otherwise they wouldn’t be gold buyers. Buying gold is certainly preferable to holding US dollars, which have consistently fallen in value versus other currencies over the past ten years. Then again all currencies have fallen versus gold over that period, some 19.6% annually. It is nice to see nations are finally waking up to the reality that fiat currencies will all over time deteriorate versus gold. The temptation is enormous to deficit spend.
The most interesting aspect of the SCO is that they do not strive for political agreement such as the European Union. They are interested in economic stability and development and security. There is no overall binding laws. Nations retain their sovereignty, which is the exact opposite of what the elitists in the US and Europe desire, and that is world government. The SCO has provided great flexibility something that is non-existent in elitist controlled countries. Another interesting facet is that the SCO probably represents half of the world’ population, far more than the US and Europe. As these nations accumulate gold so does some of their citizens, which puts strong upward pressures on gold prices on a continuing basis.
In addition some of these nations, such as China, are spending dollars by buying natural resources and other things in other nations in an attempt to relieve themselves of excess dollars earned in trade. Both Russia and China fully realize that the US dollar is in serious trouble and has been for a number of years due to fiscal debt and the unbridled creation of money and credit by the Federal Reserve. They well know the dollar is in serious trouble and what the outcome will probably be.
As the economies of the US and Europe become more deeply mired in problems the economies of SCO nations more and more resemble the free economies of old that were very successful. You might say they have found their way back to basics and sound money. As the dollar comes under further downward pressure more nations will probably join the SCO to escape the clutches of European and American imperialism and bureaucracy, which for some years has been onerous and unsuccessful. What we see is a natural path by nations to extricate themselves from the control of Wall Street and the City of London, which have dominated the world for so long. All these facts considered we believe gold will find its way substantially higher with the participation of these nations, a factor the West never figured on. These ten nations are sucking excess gold out of the market every day and that will continue indefinitely.
These SCO nations are well aware that the surge of hot dollars created by the Fed out of thin air are headed their way and with them inflation. Brazil was the first nation to attempt to stop this onslaught by imposing a 6% tariff on interest and dividend paying Brazilian securities, purchased with US dollars. Over the last two years between stimulus and the Fed $2.5 trillion has been injected into the US and world financial system. As a result commodity and gold and silver prices have exploded. This has caused the dollar to fall in value versus other currencies and gold. There is no question more and higher inflation is on the way, as the Fed gets into QE 2. You can also bet that QE2 will not be $600 billion, but more than $2 trillion. Inflation is already showing up in food, petroleum products, airline fares and in many other items that we use every day. As usual the government says there is little or no inflation. Even competent economists still use government’s bogus figures. What can they be thinking of? They know what is going on as well as we do. That means we are embarking on the highest inflation rates in US history. Thus far the undertow of deflation has been superseded by government banking and Fed aggregate creation. The Fed, in order to subdue deflation and such spending has to always overshoot the inflation they create, so that they can be sure that deflation cannot take hold. This money and credit is in the process of working its way through the economy, spreading inflation as it winds its way through.
The only investors who are being afforded protection are those who have invested in gold and silver and commodities. That is less than 2% of the American population. We predicted in mid-May that QE2 and QE3 would take place for a combined $5 trillion over the next two fiscal years. In fact, the Fed was late in starting in June and as a result 4th quarter GDP growth will probably be 1% and the 1st quarter of 2011 will probably be in the minus column, as unemployment heads to 25% and extended benefits run out. We are not seeing growth; we are seeing forced feeding.
The Fed’s promises are not worth the paper they are written on. Ben Bernanke will print money until he cannot anymore and we have hyperinflation. That is because he has no other choice. He has no way out and he knows it won’t work. Tragically, this is where we are headed and there is no way to stop what the elitists have put deliberately in motion.
Read the entire article HERE.
By JAMES GRANT
New York Times
Published: November 13, 2010
BY disclosing a plan to conjure $600 billion to support the sagging economy, the Federal Reserve affirmed the interesting fact that dollars can be conjured. In the digital age, you don’t even need a printing press.
This was on Nov. 3. A general uproar ensued, with the dollar exchange rate weakening and the price of gold surging. And when, last Monday, the president of the World Bank suggested, almost diffidently, that there might be a place for gold in today’s international monetary arrangements, you could hear a pin drop.
Let the economists gasp: The classical gold standard, the one that was in place from 1880 to 1914, is what the world needs now. In its utility, economy and elegance, there has never been a monetary system like it.
It was simplicity itself. National currencies were backed by gold. If you didn’t like the currency you could exchange it for shiny coins (money was “sound” if it rang when dropped on a counter). Borders were open and money was footloose. It went where it was treated well. In gold-standard countries, government budgets were mainly balanced. Central banks had the single public function of exchanging gold for paper or paper for gold. The public decided which it wanted.
“You can’t go back,” today’s central bankers are wont to protest, before adding, “And you shouldn’t, anyway.” They seem to forget that we are forever going back (and forth, too), because nothing about money is really new. “Quantitative easing,” a k a money-printing, is as old as the hills. Draftsmen of the United States Constitution, well recalling the overproduction of the Continental paper dollar, defined money as “coin.” “To coin money” and “regulate the value thereof” was a Congressional power they joined in the same constitutional phrase with that of fixing “the standard of weights and measures.” For most of the next 200 years, the dollar was, in fact, defined as a weight of metal. The pure paper era did not begin until 1971.
The Federal Reserve was created in 1913 — by coincidence, the final full year of the original gold standard. (Less functional variants followed in the 1920s and ’40s; no longer could just anybody demand gold for paper, or paper for gold.) At the outset, the Fed was a gold standard central bank. It could not have conjured money even if it had wanted to, as the value of the dollar was fixed under law as one 20.67th of an ounce of gold.
Neither was the Fed concerned with managing the national economy. Fast forward 65 years or so, to the late 1970s, and the Fed would have been unrecognizable to the men who voted it into existence. It was now held responsible for ensuring full employment and stable prices alike.
Today, the Fed’s hundreds of Ph.D.’s conduct research at the frontiers of economic science.“The Two-Period Rational Inattention Model: Accelerations and Analyses” is the title of one of the treatises the monetary scholars have recently produced. “Continuous Time Extraction of a Nonstationary Signal with Illustrations in Continuous Low-pass and Band-pass Filtering” is another. You can’t blame the learned authors for preferring the life they lead to the careers they would have under a true-blue gold standard. Rather than writing monographs for each other, they would be standing behind a counter exchanging paper for gold and vice versa.
If only they gave it some thought, though, the economists — nothing if not smart — would fairly jump at the chance for counter duty. For a convertible currency is a sophisticated, self-contained information system. By choosing to hold it, or instead the gold that stands behind it, the people tell the central bank if it has issued too much money or too little. It’s democracy in money, rather than mandarin rule.
Today, it’s the mandarins at the Federal Reserve who decide what interest rate to impose, and what volume of currency to conjure.
The Bank of England once had an unhappy experience with this method of operation. To fight the Napoleonic wars of the early 19th century, Britain traded in its gold pound for a scrip, and the bank had to decide unilaterally how many pounds to print. Lacking the information encased in the gold standard, it printed too many. A great inflation bubbled.
Later, a parliamentary inquest determined that no institution should again be entrusted with such powers as the suspension of gold convertibility had dumped in the lap of those bank directors. They had meant well enough, the parliamentarians concluded, but even the most minute knowledge of the British economy, “combined with the profound science in all the principles of money and circulation,” would not enable anyone to circulate the exact amount of money needed for “the wants of trade.”
Read the entire article HERE.
James Grant, the editor of Grant’s Interest Rate Observer, is the author of “Money of the Mind.”
Prior to being assassinated, John F Kennedy on June 4, 1963, signed an order to strip the Federal Reserve Bank of its power to loan money to the government at interest. On that day President John F. Kennedy signed Executive Order No. 11110 that returned to the U.S. government the power to issue currency, without going through the Federal Reserve. Mr. Kennedy’s order gave the Treasury the power “to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury.” This meant that for every ounce of silver in the U.S. Treasury’s vault, the government could introduce new money into circulation. In all, Kennedy brought nearly $4.3 billion in U.S. notes into circulation. The ramifications of this bill are enormous. The powers that be could not allow this to happen. The rest is now history.
Following JFK’s assassination, Vice President Lyndon B Johnson became president and set into motion events that would give that power back to the Federal Reserve Bank.
Eight years later the Bretton Woods system was ended on August 15, 1971 by President Richard Nixon which ultimately ended the trading of gold at the fixed price of $35/ounce. At that point for the first time in history, formal links between the major world currencies and real commodities were severed. The gold standard has not been used in any major economy since that time. This allowed the Federal Reserve to print US Dollars from thin air at an alarming pace with no oversight whatsoever by the federal government deteriorating the value of the dollar and stripping US Citizens of their wealth. This very thing is what weakens and destroys the US Economy. Below is a historical account of what led up to this event and what was to follow:
THE SHADOWS – CIA EXPOSED
The following videos are clips from Jesse Ventura’s Conspiracy TruTV Show which aired November 19, 2010.
Chris Martenson describing himself:
“First of all, I am not an economist. I am trained as a scientist, having completed both a PhD and a post-doctoral program at Duke University, where I specialized in neurotoxicology. I tell you this because my extensive training as a scientist informs and guides how I think. I gather data, I develop hypotheses, and I continually seek to accept or reject my hypotheses based on the evidence at hand. I let the data tell me the story.”
November 17, 2010
Berkshire Hathaway Inc. (NYSE: BRK-A) has recently released its quarterly holdings and the changes were more than in any recent quarter. This morning CNBC has been interviewing Warren Buffett about his opinions on taxes, future taxes, QE2, currency, stock market levels and the bond market. This morning’s interview was after Buffett wrote an op-ed “thank you note” in the New York Times.
There is one standout. In the interview, CNBC’s Becky Quick and Joe Kernen asked many questions but the one that stood out the most was whether or not the U.S. was in a bond bubble after QE2 has started. You know Buffett will leave himself wiggle room, but this was about as close to an overwhelming “YES” answer as the Oracle of Omaha will give:
* “I think short-term and long-term bonds are a very poor investment at the present time.”
He might not use the word “BUBBLE” but that is close enough. The 10-Year Treasury yield is roughly 2.83% and the 30-Year Treasury’s Long Bond yields approximately 4.27% this morning. So far we are seeing a slight gain in the ProShares UltraShort 20+ Year Treasury (NYSE: TBT) as it is ‘double short’ the 20+ year Treasury Index. It closed at $36.59 yesterday and is around $36.80 in early bird pre-market trading. The iShares Barclays 20+ Year Treas Bond (NYSE: TLT) is indicated lower as well. After a $96.14 close, it is indicated around $95.95, but it lacks the leverage and therefore lacks the volatility.
Buffett did note that he would rather be in stocks over bonds at the present time. He also noted that the tax code should hit those making more harder. He did note something a tad less damning on the bond bubble, and that is that the dilutive effect of QE2 won’t be huge.
Read the entire article HERE.