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Posts Tagged ‘IMF’

by Gonzalo Lira
December 27, 2011
ZeroHedge

Nine weeks after its bankruptcy, the general public still hasn’t quite realized the implications of the MF Global scandal.

My own sense is, this is the first tremor of the earthquake that’s coming to the global financial system. And how the central banks and financial regulators treated the “Systemically Important Financial Institutions” that had exposure to MF Global—to the detriment of the ordinary, blameless customer who got royally ripped off in its bankruptcy—is both the template of how the next financial crisis will be handled, and an accelerator that will make the next crisis happen that much sooner.

So first off, what happened with MF Global?

Simple: It went bankrupt—because it made bad bets on European sovereign debt, by way of leveraging positions 100-to-1. Yeah, I know: Stupid. Anyway, they went bankrupt—which in and of itself is no big deal. It’s not as if it’s the first time in history that a brokerage firm has gone bust. But to me, the big deal in this case was the way the bankruptcy was handled.

Now there are several extremely serious aspects to the MF Global case: Specifically, how their customers were shut out of their brokerage accounts for over a week following the bankruptcy, which made it impossible for those customers to sell out of their positions, and thus caused them to lose serious money; and of course how MF Global was more adept than Mandrake the Magician at making money disappear—about $1 billion, in fact, which still hasn’t turned up. These are quite serious issues which merit prolonged discussion, investigation, prosecution, and ultimately jailtime.

But for now, I want to discuss one narrow aspect of the MF Global bankruptcy: How authorities (mis)handled the bankruptcy—either willfully or out of incompetence—which allowed customer’s money to be stolen so as to make JPMorgan whole.

From this one issue, it seems clear to me that we can infer what will happen when the next financial crisis hits in the nearterm future.

Brokerage firms hold clients’ money in what are known as segregated accounts. This is the money that brokerage firms hold for when a customer makes a trade. If a brokerage firm goes bankrupt, these monies are never touched—because they never belonged to the firm, and thus are not part of its assets.

Think of segregated accounts as if they were the content in a safety deposit box: The bank owns the vault—but it doesn’t own the content of the safety deposit boxes inside the vault. If the bank goes broke, the customers who stored their jewelry and pornographic diaries in the safe deposit boxes don’t lose a thing. The bank is just a steward of those assets—just as a brokerage firm is the steward of those customers’ segregated accounts.

But when MF Global went bankrupt, these segregated accounts—that is, the content of those safe deposit boxes—were taken away from their rightful owners—that is, MF Global’s customers—and then used to pay off other creditors: That is, JPMorgan.

(The mechanics of how this was done are interesting, but insanely complicated, and ultimately not relevant to this discussion. To grossly simplify, MF Global pledged customer assets to JPMorgan, in a process known as rehypothecation—customer assets which MF Global did not have a right to. Needless to say, JPMorgan covered its ass legally. Ethically? Morally? Black as night.)

This was seriously wrong—and this is the source of the scandal: Rather than being treated as a bankruptcy of a commodities brokerage firm under subchapter IV of the Chapter 7 bankruptcy law, MF Global was treated as an equities firm (subchapter III) for the purposes of its bankruptcy.

Why does this difference of a single subchapter matter? Because in a brokerage firm bankruptcy, the customers get their money first—because after all, it’s theirs—while in an equities firm bankruptcy, the customers are at the end of the line.

In the case of MF Global, what should have happened was for all the customers to get their money first. Then everyone else—including JPMorgan—would have picked over the remaining scraps. And the monies MF Global had already pledged to JPMorgan? They call it clawback for a reason.

The Chicago Mercantile Exchange, which handled the bankruptcy, should have done this—but instead, the Merc was more concerned with making JPMorgan whole than with protecting the money that rightfully belonged to MF Global’s 40,000 customers.

Thus these 40,000 MF Global customers had their money stolen—there’s no polite way to characterize what happened. And this theft was not carried out by MF Global—it was carried out by the authorities who were charged with handling the firm’s bankruptcy.

These 40,000 customers were not Big Money types—they were farmers who had accounts to hedge their crops, individuals owning gold (like Gerald Celente—here’s his account of what happened to him)—

—in short, ordinary investors. Ordinary people—and they got screwed by the regulators, for the sake of protecting JPMorgan and other big fry who had exposure to MF Global.

That, in a nutshell, is what happened.

Now, what does this mean?

It means that nobody’s money is safe. It means that regulators care more about protecting the so-called “Systemically Important Financial Institutions” than about protecting Ordinary Joe investors. It means that, when crunchtime comes, central banks and government regulators will allow SIFI’s to get better, and let the Ordinary Joes get fucked.

So far, so evil—but here comes the really troubling part: It is an open secret that there are more paper-assets than there are actual assets. The markets are essentially playing musical chairs—and praying that the music never stops. Because if it ever does—that is, if there is ever a panic, where everyone decides that they want their actual asset instead of just a slip of paper—the system would crash.

And unlike with fiat currency, where a central bank can print all the liquidity it wants, you can’t print up gold bullion. You can’t print up a silo of grain. You can’t print up a tankerful of oil.

Now, question: When is there ever a panic? When is there ever a run on a financial system?

Answer: When enough participants no longer trust the system. It is the classic definition of a tipping point. It’s not that all of the participants lose faith in the system or institution. It’s not even when most of the participants lose faith: Rather, it’s when a mere some of the participants decide they no longer trust the system that a run is triggered.

And though this is completely subjective on my part—backed by no statistics except scattered anecdotal evidence—but it seems to me that MF Global has shoved us a lot closer to this theoretical run on the system.

As I write this, a lot of investors whom I know personally—who are sophisticated, wealthy, and not at all the paranoid type—are quietly pulling their money out of all brokerage firms, all banks, all equity firms. They are quietly trading out of their paper assets and going into the actual, physical asset.

Note that they’re not trading into the asset—they’re simply exchanging their paper-asset for the real thing.

Why? MF Global.

“The MF Global scandal has made it clear that the integrity of the system has disappeared,” said a good friend of mine, Tuur Demeester, who runs Macrotrends, a Dutch-language newsletter out of Brugge. “The banks are insolvent, the governments are insolvent, and all that’s left is for the people to realize what’s going on—and that will start a panic.”

He hit it on the head: Some of the more sophisticated people—like Tuur, like some of my acquaintances, (like myself, frankly)—have realized that the MF Global scandal means that there is no safety for any paper investment: The integrity of the systems has been completely shattered. If in the face of one medium-sized brokerage firm going under, the regulators will openly allow ordinary people to be ripped off for the sake of protecting the so-called “Systemically Important Financial Institutions”—in this case JPMorgan—what will happen if there is a system-wide run? What if two or three MF Globals happen simultaneously?

Will they protect the citizens’ money? Or will they protect the “Systemically Important Financial Institutions”?

I think we know the answer.

And I think we all know the answer to the question of whether there will be crisis flashpoint in the near-term future: After all, as Demeester pointed out, all the banks and all the governments are broke.

Thus it’s only a matter of time before they come for your money.

At SPG, we’ve been putting together Scenarios for other black swan events which are becoming increasingly likely: What to do if the eurozone breaks up, what to do if you have to leave America, what to do if there is an Israeli-Iranian war, what to do if there is forced dollar devaluation, and so on.

Now, because of this open kleptocracy and cronyism being shown by the financial authorities in the wake of the MF Global bankruptcy, we’ve been obliged to put together a new Scenario, devoted exclusively to preparing for a run on the markets: What to do in order to protect your assets from regulatory malfeasance, if there is a system-wide MF Global-type breakdown and a subsequent run on the entire financial system.

And there will be such a run on the system: It’s only a matter of time. In fact, the handling of the MF Global affair has sped up the timeframe for this run on the system, because the forward-edge players—such as Demeester, myself, and my other acquaintances who understand the implications of the bankruptcy—realize that the regulators will side with the banksters, and not the ordinary investors: So we are preparing accordingly.

Once there is a full-on panic, anyone with money in the system will lose at least a big chunk of it, in one of two ways, or a combination thereof:

• One, the firms—commodities brokerage firms, equity firms, investment banks and commercial banks—will not allow people to withdraw the totality of their money, and/or they will put a withdrawal cap of some sort, enforced by the central banks and other regulatory bodies. (Like they did in Argentina.)

• Two, the central banks will “provide liquidity”—that is, print money—while simultaneously declaring a banking holiday to, quote, “calm the markets”. During that bank holiday, the currency will be devalued by double digits—which will mean that your cash holdings will essentially be taxed to save the banksters—again. (Like they did in Argentina.)

Thus apart from proving that the United States really is Argentina with nukes, the MF Global bankruptcy has proven something crucial: The central banks and government regulators have completely fallen into the trap of confusing the welfare of the “Systemically Important Financial Institutions” with the welfare of the system itself. They don’t seem to realize that the SIFI’s are actors within the system—not the system itself.

We critics of the current, corrupt state of affairs also sometimes confuse the SIFI’s with the system itself, whenever we say, “The whole system is corrupt!”

But the system is not corrupt—it’s the regulators and SIFI’s who are corrupt. If nothing else, the handling of the MF Global bankruptcy has proven that, once and for all. That’s why we’re pulling out our money now—while we still can.

Because once the general public catches on to what we already know . . . oh boy.

Read the entire article HERE.

by Tyler Durden
11/05/2011 22:49 -0500
ZeroHedge

Going back to the annals of brokeback Europe, we learn that gold after all is money, after the G-20 demanded that EFSF (of €1 trillion “stability fund” yet can’t raise €3 billion fame) be backstopped by none other than German gold. Per Reuters, “The Frankfurter Allgemeine Sonntagszeitung (FAS) reported that Bundesbank reserves — including foreign currency and gold — would be used to increase Germany’s contribution to the crisis fund, the European Financial Stability Facility (EFSF) by more than 15 billion euros ($20 billion).” And who would be the recipient of said transfer? Why none other than the most insolvent of global hedge funds, the European Central Bank.

Also, in addition to gold, the ECB had set its eyes on that other “fake” currency that DSK had succeded in protecting throughout his tenure, all his other undoings aside, “The Welt am Sonntag newspaper, citing similar plans, said 15 billion euros would come from special drawing rights (SDR) that the Bundesbank holds.” Naturally, these discoveries prompted a prompt and furious rebuttal from the very top of German authorities: “Germany’s gold and foreign exchange reserves, which the Bundesbank administers, were not at any point up for discussion at the G20 summit in Cannes,” government spokesman Steffen Seibert said. The WSJ adds, “A plan to have the International Monetary Fund issue its special currency as a powerful weapon in Europe’s efforts to contain the widening euro-zone debt crisis was blocked by German Chancellor Angela Merkel, according to a report in a German newspaper.”

There are three observations to be made here: i) when it comes to rescuing insolvent countries, Germany is delighted to sacrifice euros at the altar of the 50-some year old PIIGS retirement age; ask for its gold however, and things get ugly; ii) the Eurozone, the ECB and the EFSF are dead broke, insolvent and/or have zero credibility in the capital markets, and they know it and iii) due to the joint and several nature of the ECB’s capital calls, while Germany may have had enough leverage to tell G-20 to shove it, the next countries in line, especially those which are already insolvent and will rely on the EFSF for their existence once the ECB’s SMP program is finished, may not be that lucky, and in exchange for remaining in the eurozone, the forfeit could well be their gold.

WSJ brings details on how German SDRs would be used as a temporary (temporary as in European financial short selling ban, and temporary reduction of initial margin to maintenance for everyone to appease MF Global clients) backstop for Europe:

The idea of using SDRs to fight financial contagion isn’t new. When the collapse of Lehman Brothers in 2008 unleashed a financial crisis, the G-20 in 2009 approved a $250 billion SDR allocation to help backstop efforts to fight the spread of the crisis.

 

The European Central Bank has been buying euro-zone bonds in an effort to keep borrowing costs of weakened members from exploding. But the ECB’s efforts are considered by some experts to be outside of its central mandate to maintain price stability. And the ECB has said that its special measures – buying euro-zone debt — should be temporary and limited in scope. That is another reason why some people are advocating the IMF play a greater role in propping up weakened euro-zone members and become the lender of last resort.

 

Speaking to reporters at the close of the Cannes summit, Merkel indicated that G-20 leaders agreed in principle that the IMF and EFSF could work together, but the summit could not agree on any specifics.

 

“We have an interesting process ahead of us and the discussion is not yet concluded,” she said.

Reuters brings more on the the logical German reaction to the EFSF and ECB’s extortion attempts:

“We know this plan and we reject it,” a Bundesbank spokesman said.

 

Seibert said several partners had raised the question in Cannes whether SDRs could be used to strengthen the EFSF but Germany had rejected this plan and discussions at Monday’s Eurogroup on Monday would not discuss this topic.

 

The newspapers had said the issue was taken off the agenda at the G20 following Bundesbank opposition but that it would be debated on Monday at a Eurogroup meeting of euro zone finance ministers.

Why will it be debated? Because when at first you don’t succeed, try, try again. Germany may be crossed off the list, but here is who is next in order of appearance. Sooner or later, Europe will stumble on that one “leader” whose gold is less valuable than their political stability, because after all, a “united”, “EMUed” Europe has the biggest MAD trump card of all.

Read the entire article HERE.

by Jason Folkmanis
Bloomberg News
Jul 22, 2011 8:47 PM PT

Vietnamese inflation accelerated for an 11th month in July after the central bank cut a key interest rate even as the nation faces the fastest price gains in Asia.

Consumer prices rose 22.16 percent from a year earlier, compared with June’s 20.82 percent pace, data released by the General Statistics Office in Hanoi showed today. Prices climbed 1.17 percent from June.

The central bank reduced its repurchase rate to 14 percent from 15 percent on July 4 after a spate of increases since November to fight inflation, leading the International Monetary Fund to say the cut may confuse investors. The benchmark VN Index of stocks is down 16 percent this year, on concern price gains will hurt the economy.

“The markets were very surprised by the easing,” Prakriti Sofat, a Singapore-based economist at Barclays Capital, said before the release. “It’s too early to go into a full-blown easing cycle given that inflation and inflation expectations remain elevated.”

Vietnam will find it “very difficult” to slow inflation to 17 percent by the end of 2011, Ha Van Hien, head of the National Assembly’s Economic Committee, told the opening of the body in Hanoi on July 21. It may peak as high as 23 percent in August before slowing to 18 percent by year-end, Sofat said.

The VN Index fell 0.9 percent yesterday to 409.2, while the dong weakened 0.1 percent, according to data compiled by Bloomberg. The currency was devalued by about 7 percent in February, the most since at least 1993, risking costlier imports.

Food, Transport Costs

Food, transport and construction-material prices have stoked consumer-price growth, according to Australia & New Zealand Banking Group Ltd. Transport prices rose 21.7 percent from a year earlier in July, today’s data showed. July’s annual inflation rate is the highest in a basket of 17 Asian economies tracked by Bloomberg.

Prime Minister Nguyen Tan Dung in February cut the credit- growth target and ordered a tighter monetary policy to try to tame inflation, revive confidence in the economy and prevent another credit-rating downgrade. This month’s rate cut wasn’t a “policy signal,” the central bank said in a July 8 statement.

“We assume policymakers are again demonstrating their low tolerance for slower growth,” Christian de Guzman, a Singapore- based assistant vice president at Moody’s Investors Service, said in a note on July 11.

The nation’s economy expanded 5.6 percent from a year earlier in the first half of 2011. Moody’s said that a “tight” monetary policy would threaten the government’s full-year target of 6 percent.

‘A Bit Concerned’

“We are a bit concerned that the cut in rates will confuse the market about the government’s commitment to sustaining the stabilization effort under Resolution 11,” Benedict Bingham, the IMF’s senior resident representative in Vietnam, said this month. Resolution 11 refers to the steps Dung took in February.

“A strong commitment to sustaining this effort is essential to re-establishing confidence in the dong and restoring macro-economic stability more generally,” Bingham said.

The State Bank of Vietnam had increased the repurchase rate for the seven-day term from 7 percent at the start of November 2010 before this month’s cut. It appears to have become the benchmark for monetary policy, according to JPMorgan Chase & Co.

Read the entire article HERE.

by Eric deCarbonnel
Market Skeptics
June 3, 2011

THE EXCHANGE STABILIZATION FUND

“The Exchange Stabilization Fund (ESF) consists of three types of assets: U.S. dollars, foreign currencies, and Special Drawing Rights (SDRs), which is an international reserve asset created by the International Monetary Fund. The financial statement of the ESF can be accessed at “Reports” or “Finances and Operations.”

The ESF can be used to purchase or sell foreign currencies, to hold U.S. foreign exchange and Special Drawing Rights (SDR) assets, and to provide financing to foreign governments. All operations of the ESF require the explicit authorization of the Secretary of the Treasury (“the Secretary”).

The Secretary is responsible for the formulation and implementation of U.S. international monetary and financial policy, including exchange market intervention policy. The ESF helps the Secretary to carry out these responsibilities. By law, the Secretary has considerable discretion in the use of ESF resources.

The legal basis of the ESF is the Gold Reserve Act of 1934. As amended in the late 1970s, the Act provides in part that “the Department of the Treasury has a stabilization fund …Consistent with the obligations of the Government in the International Monetary Fund (IMF) on orderly exchange arrangements and an orderly system of exchange rates, the Secretary …, with the approval of the President, may deal in gold, foreign exchange, and other instruments of credit and securities.”

-Treasury.gov

PART 1

PART 2

PART 3

For the entire blog and research information click the HERE.

by James Turk
FGMR.com
June 14, 2011

The solvency of the European Central Bank is being called into question by some brilliant in-depth research from OpenEurope.org.uk. This independent think tank believes “the EU must now embrace radical reform based on economic liberalisation, a looser and more flexible structure, and greater transparency and accountability” in order for the “EU’s over-loaded institutions, held in low regard by Europe’s citizens” to meet “the pressing challenges of weak economic growth, rising global competition, insecurity and a looming demographic crisis”.

The press release announcing the report, which is entitled “A HOUSE BUILT ON SAND? – The ECB and the hidden cost of saving the euro”, succinctly summarizes several key points which I quote below. My comments in italics are bracketed:

• “In parallel with the IMF’s and EU’s multi-billion euro interventions, the ECB has engaged in its own bail-out operation, providing cheap credit to insolvent banks and propping up struggling eurozone governments, despite this being against its own rules. [emphasis added] The ECB is ultimately underwritten by taxpayers, which means that there is a hidden – and potentially huge – cost of the eurozone crisis to taxpayers buried in the ECB’s books.”

• “As a result, the ECB’s balance sheet is now looking increasingly vulnerable. We estimate that the ECB has exposure to struggling eurozone economies (the so-called PIIGS) of around €444bn – an amount roughly equivalent to the GDP of Finland and Austria combined. Although not all these assets and loans are ‘bad’, many of them could result in serious losses for the ECB should the eurozone crisis continue to deteriorate. Critically, struggling banks in insolvent countries have been allowed to shift risky assets away from their own balance sheets and onto the ECB’s (all the while receiving ECB loans in return). Many of these assets are extremely difficult to value.” [But in all likelihood are worth far less than the carrying value at which they are booked on the ECB’s balance sheet.]

• “Overall, the ECB is now leveraged around 23 to 24 times, with only €82bn in capital and reserves…This means that should the ECB see its assets fall by just 4.25% in value, from booking losses on its loans or purchases of government debt, its entire capital base would be wiped out.” [The ECB is over-leveraged just like the sovereign debtors whose interests it is serving by bailing them out.]

• “Hefty losses for the ECB are no longer a remote risk, with Greece likely to default within the next few years [Open Europe is being exceptionally optimistic; “months” or even “weeks” for a formal default to occur are real possibilities, but for all practical purposes, Greece has already defaulted because it does not have the capacity – nor probably the will – to repay its debts.] – even if it gets a fresh bail-out package from the EU and IMF – which would also bring down the country’s banks. We estimate that the ECB has taken on around €190bn in Greek assets [more than twice the ECB’s capital base] by propping up the Greek state and banks. Should Greece restructure half of its debt – which is needed to bring down the country’s debt to sustainable levels – the ECB is set to face losses of between €44.5bn and €65.8bn on the government bonds it has purchased and the collateral it is holding from Greek banks. This is equal to between 2.35% and 3.47% of assets, meaning it comes close to wiping out the ECB’s capital base.” [Again, Open Europe is being overly generous by assuming only one-half of Greece’s debt is restructured. After all, both halves are equally bad.]

• “A loss of this magnitude would effectively leave the ECB insolvent and in need of recapitalisation. It would then have to either start printing money [The ECB is nothing but a money-printing organization, so in reality, it would need to print more money than it is already printing] to cover the losses or ask eurozone governments to send it more cash (via a capital call to national central banks). [This capital call could be made in terms of euros, which the national central banks would need to borrow or print, but it could also be made in terms of gold, which represents their only real capital. Whether the national central banks would be willing to transfer to the ECB some or all of their remaining gold reserves – for those banks that have any left – remains to be seen.] The first option would lead to inflation, which is unacceptable in Germany [as well of course to people throughout the EU], while the second option amounts to another fully fledged bail-out, with taxpayers facing upfront costs (rather than loan guarantees as in the government eurozone bail-outs).”

• “The ECB’s actions during the financial crisis have not only weighed heavily on its balance sheet, but also its credibility.” [Its credibility has already been largely lost. That happened last May when the ECB bent to the will of politicians ‘solving’ the then brewing Greek crisis and forced the ECB to break its own rules and buy Greek sovereign debt. The ECB has continued down this path to ruin by buying the debt of other over-leveraged sovereigns burdened by their debts.]

For all practical purposes, the ECB is insolvent. Its doors remain open simply because it is using the well-worn accounting trickery of all insolvent banks. Most people cannot recognize when a bank becomes insolvent if it doesn’t write-down its assets to their real value and reports those write-downs in its financial accounts. The bank and its directors thus operate recklessly because the impaired assets are greater than the insolvent bank’s capital. The insolvency only becomes obvious when the bank goes out of business, which is a truism made observable by the collapse of Lehman Brothers. In other words, growing in early 2008 from a few short sellers and those customers who withdrew their money from Lehman, the market increasingly recognized that Lehman was insolvent even though its balance sheet didn’t show it, sending Lehman’s share price into a death spiral as the awareness of its insolvency grew. This report from Open Europe is now causing people to look at the ECB’s balance sheet and available facts, and therefore forcing them to draw conclusions about whether the ECB is solvent. The implications for anyone holding the euro are as ominous as those for anyone who owned the shares of Lehman Brothers.

Lest you come away from reading the above by concluding that the problem is solely Europe’s, ponder the following.

An article in this week’s issue of Barron’s about the Open Europe report says: “The U.S. Federal Reserve sports leverage double the ECB’s, at more than 50 times, but its holdings of U.S. Treasuries are higher-quality than PIIGS debt.” This comment blithely ignores the fact that US Treasury debt instruments comprise only 55% of the Federal Reserve’s assets, and much of the remainder is toxic or illiquid. Further, US Treasury debt is no more likely to be repaid than that of other over-leveraged sovereigns.

Thus, there is only one logical conclusion. Given that repayment is beyond the financial capacity of over-leveraged debtors, much of the debt overhanging the globe will never be repaid. Because a large portion of this debt is the principal asset backing national currencies today, these currencies have been debased. It is debasement just like that instigated by corrupt and autocratic kings and emperors of yore that we read about in monetary history, who cheated the citizenry by mixing lead or other base metals into coins to replace their gold and silver content. But today the debasement of fiat currency arises from the unrepayable loans of over-leveraged sovereigns run by corrupt and autocratic bureaucrats and politicians and of course their hand-maiden, central bankers. This observation succinctly highlights a theme I have made repeatedly. Central banks are a barbarous relic.

Read the entire article HERE.

By Eric Martin
Bloomberg
Apr 16, 2011 4:49 PM PT

World Bank President Robert Zoellick said the global economy is “one shock away” from a crisis in food supplies and prices.

Zoellick estimated 44 million people have fallen into poverty due to rising food prices in the past year, and a 10 percent increase in the food price index would send 10 million more people into poverty. The United Nations FAO Food Price index jumped 25 percent last year, the second-steepest increase since at least 1991, and surged to a record in February.

Food price inflation is “the biggest threat today to the world’s poor,” Zoellick said at a press conference following meetings of the World Bank and the International Monetary Fund. “We are one shock away from a full-blown crisis.”

“For most commodities, stocks are relatively low,” he said. “You have one other weather event in some of these areas and you really take a danger zone and start to push people over the edge.”

Zoellick said he opposes export bans that nations use to depress local commodity prices for their citizens, lifting costs for consumers in other countries.

Farmers in Russia, once the second-biggest wheat exporter, are planting the fewest acres in four years, in part because a government export ban kept prices low, a Bloomberg survey of producers, traders and analysts showed last month. India, the largest grower after China, is mulling lifting an export ban in place since 2007 as harvests may reach a record for a fourth straight year, Agriculture Minister Sharad Pawar said this month.

Economic growth “is leveling off after a post-crisis recovery,” Zoellick said. “The question now is whether it’s strong enough to reduce unemployment, particularly in developed countries. Inflation is up in developing countries, and this could lead to overheating or asset price bubbles.”

Read the entire article HERE.

by Tyler Durden
03/20/2011 20:41 -0400
ZeroHedge

While it will not come as a major surprise to most, according to senior BOE individuals and Wikileaks, Iran, as well as Qatar and Jordan have been actively purchasing gold well over the amount reported to and by the IMF, in an accelerated attempt to diversify their holdings away from the US dollar. “Iran has bought large amounts of gold in the international market, according to a senior Bank of England official, in a sign of how growing political pressure has driven Tehran to reduce its exposure to the US dollar. Andrew Bailey, head of banking at the Bank of England, told an American official that the central bank had observed “significant moves by Iran to purchase gold”, according to a US diplomatic cable obtained by WikiLeaks and seen by the Financial Times.” The reason for Tehran’s scramble into gold: “an attempt by Iran to protect its reserves from risk of seizure”. The misrepresentation of Iran’s holdings could be so vast that Iran could possibly be one of the largest holders of goldin the world. “Market observers believe Tehran has been one of the biggest buyers of bullion over the past decade after China, Russia and India, and is among the 20 largest holders of gold reserves… with an alleged 300 tons, big enough to challenge the UK at 310 tons, and more than Spain! ” As a reminder according to the WGC, Iran is not even disclosed as an official holder of gold. Also, Iran is not the only one: “Cables obtained by WikiLeaks cite Jordan’s prime minister as saying the central bank was “instructed to increase its holdings” of gold, and a Qatar Investment Authority official as saying the QIA was interested in buying gold and silver.” Which means that there is far more marginal demand by countries supposedly friendly to the dollar, as many more than previously expected are actively dumping linen and buying bullion. What all this means for the future price of gold, especially with geopolitical tension in the region, and QE3 imminent, is rather self-evident.

From the FT:

Andrew Bailey, head of banking at the Bank of England, told an American official that the central bank had observed “significant moves by Iran to purchase gold”, according to a US diplomatic cable obtained by WikiLeaks and seen by the Financial Times.

Mr Bailey said the gold buying “was an attempt by Iran to protect its reserves from risk of seizure”.

Market observers believe Tehran has been one of the biggest buyers of bullion over the past decade after China, Russia and India, and is among the 20 largest holders of gold reserves.

They estimate it holds more than 300 tonnes of gold, up from 168.4 tonnes in 1996, the date of the most recent International Monetary Fund data.

Ummm, according to the WGC the UK (thank you Gordon Brown) has 310 tons of gold… Iran has the same amount of gold in storage as the (formerly) biggest colonial power in the history of the world. And this is not breaking news?

The cable, dated June 2006, is the first official confirmation of Tehran’s buying. Last year central banks became net buyers of bullion after 22 years of large sales, helping drive gold prices to all-time nominal highs. Trades by central banks are often kept secret.

Bankers said other Middle Eastern countries had also been quietly adding to gold holdings to diversify away from the dollar amid political tensions and volatility in currency markets.

“The totality of central bank reserves is not what is reported to the IMF,” said Philip Klapwijk, executive chairman of GFMS, a precious metals consultancy. “There’s probably another 10 per cent on top of that.”

Cables obtained by WikiLeaks cite Jordan’s prime minister as saying the central bank was “instructed to increase its holdings” of gold, and a Qatar Investment Authority official as saying the QIA was interested in buying gold and silver.

“There is no question some Middle Eastern countries are very interested in buying gold,” said George Milling-Stanley, head of government affairs at the mining industry-backed World Gold Council.

Secret undisclosed purchases of physical gold… What next: secret undisclosed selling of paper gold by such unusual suspects as JPM? Impossible.

Read the entire article HERE.

February 28, 2011
National Inflation Association (NIA)

The National Inflation Association (NIA) announced in its November 5th, 2010, food price projection report that food inflation would take over as America’s biggest crisis in calendar year 2011, surpassing the mortgage crisis and high unemployment, which were the top economic concerns of Americans in 2010. NIA’s food price projection report received worldwide media attention including being featured by Glenn Beck on the FOX News Network. NIA’s prediction about food inflation was strongly reiterated by NIA’s President Gerard Adams on November 12th when he was a guest on the FOX Business Network. NIA then included this prediction as one of its ‘Top 10 Predictions for 2011′ released on January 4th, 2011. We are less than two months into 2011 and already massive food inflation is beginning to affect American citizens in a major way, but not the way most people expected.

The Federal Reserve has held interest rates at near zero percent for over two years, which has flooded the world with trillions of dollars in excess liquidity. The world first saw our rapidly accelerating monetary inflation through rapidly rising gold prices. Gold is the best gauge of inflation and predictor of future inflation. It comes as no surprise to NIA members that gold prices were the first to see major gains as a result of massive inflation.

In late-2009 with gold prices soaring through the roof, the mainstream media wasn’t smart enough to figure out that inflation was the cause of rising gold prices. In fact, all of the economists that the mainstream media follows were forecasting deflation. On December 10th, 2009, with gold at $1,100 per ounce, Nouriel Roubini, professor of economics at New York University’s Stern School of Business said, “all the gold bugs who say gold is going to go to $1,500, $2,000, they’re just speaking nonsense”. Roubini went on to say ,”I don’t believe in gold” and “gold can go up for only two reasons.” Roubini pointed to inflation as being one of those reasons, but said, “we are in a world where there are massive amounts of deflation because of a glut of capacity, and demand is weak, and there’s slack in the labor markets with unemployment above 10 percent in all the advanced economies.”

NIA recognized from the very beginning that despite adverse signs from the bond market, gold and U.S. stock prices were rising solely due to inflation, and there was no economic recovery. In fact, in an article released on December 28th, 2009, NIA wrote, “In 2009, we saw the monetary inflation created by the Federal Reserve’s zero percent interest rates drive up the prices of U.S. stocks, without dramatically increasing the prices of U.S. consumer goods. We consider 2009 to have been a brief period of euphoria, before a rapid increase in the prices of food, energy, clothes and other necessities Americans need to live and survive.”

NIA first warned about food inflation in our October 30th, 2009, article entitled, ‘U.S. Inflation to Appear Next in Food and Agriculture’. In this article, NIA said, “Prices are rising all around us, yet agricultural commodities have for the most part been left behind and remain at historically depressed levels. Fundamentals for agriculture are improving on a daily basis. A worldwide shortage of farmers combined with food inventories falling to record lows is setting up the perfect storm for an explosion in agriculture prices.” From the release of this article on October 30th, 2009, to their highs this month, we have seen an explosion in agriculture futures with wheat gaining 52%, cotton gaining 177%, corn gaining 72%, soybeans gaining 49%, coffee gaining 86%, orange juice gaining 37%, and sugar gaining 86%.

Luckily for the U.S., because of the dollar’s status as the world’s reserve currency, the U.S. has been able to export its food inflation to the rest of the world. America’s food inflation crisis is so far manifesting itself in Arab nations. It started out early last month with citizens in Algeria marching to the capital chanting, “Bring us Sugar!” It then spread to riots in Tunisia, which saw 14 civilian deaths when protesters clashed with police. Afterwards came the Egyptian Revolution, which saw 365 civilian deaths and thousands more injured, leading up to the resignation of Egyptian President Hosni Mubarak on February 11th. In recent days, the civil revolt has reached Libya, the third largest oil producer in Africa and holder of Africa’s largest oil reserves.

Although the U.S. is largely self-sufficient when it comes to the production of food, oil is a very important commodity used in agriculture production and the U.S. needs to import most of its oil. With oil prices soaring through the roof, Arab nations are getting their revenge on the U.S. for the food inflation they are suffering from. Oil is the second largest expense that affects retail prices of food in our supermarkets after the cost of agricultural commodities. The reason a 50% increase or more in nearly all agricultural commodities hasn’t caused food prices in U.S. supermarkets to rise by 50% or more in recent months, is because Americans have been blessed with cheap oil. The surging price of oil means that America’s food inflation crisis is now imminent.

All American citizens need to be ready for nationwide civil unrest, rioting, looting, and protesting later this year, even worse than what is occurring in Arab nations. The Arab world will survive this crisis because they have oil reserves that they can export to Asian countries when the U.S. can no longer afford to import oil. However, America’s survival is dependent on the world’s confidence in a piece of paper that has no intrinsic value and is being debased as fast as humanly possible.

The Federal Reserve is 100% responsible for the world’s political turmoil and upheaval of governments. As NIA continues to educate the world about the Federal Reserve’s destructive monetary policies, we are witnessing surging anger over the Federal Reserve’s ability and willingness to steal from the incomes and savings of the American middle class by printing money and transferring this wealth through cheap and easy credit to bankers on Wall Street who produce nothing tangible for the U.S. economy. At the very least, NIA believes this anger will lead to large “End the Fed” protests later this year, which NIA first predicted would occur last year (we overestimated America’s eagerness to learn the truth about the U.S. economy and inflation). Worst case scenario, by the end of 2011, we will see the world rush to dump their U.S. dollars and an outbreak of hyperinflation.

Our good friend Gerald Celente first forecast the current North African crisis in an article he wrote in his autumn ‘Trends Journal’ entitled ‘Off With Their Heads 2.0′. In fact, Celente wrote another article just days before the riots in Tunisia entitled ‘Youth of the World Unite’, which accurately predicted with precise details the deadly riots we now are seeing in Arab nations. Celente will be a guest in NIA’s upcoming must see documentary about the U.S. college bubble that is getting ready to collapse.

As accurate as Celente was about the North African crisis, we believe even he was surprised by just how fast the upheaval took place. Absolutely nobody in the mainstream media saw this crisis coming at any time during the recent weeks and months leading up to it.

Read the entire article HERE.

By Ben Rooney, staff reporterFebruary 10, 2011: 4:37 PM ET

NEW YORK (CNNMoney) — The International Monetary Fund issued a report Thursday on a possible replacement for the dollar as the world’s reserve currency.

The IMF said Special Drawing Rights, or SDRs, could help stabilize the global financial system.

SDRs represent potential claims on the currencies of IMF members. They were created by the IMF in 1969 and can be converted into whatever currency a borrower requires at exchange rates based on a weighted basket of international currencies. The IMF typically lends countries funds denominated in SDRs

While they are not a tangible currency, some economists argue that SDRs could be used as a less volatile alternative to the U.S. dollar.

Dominique Strauss-Kahn, managing director of the IMF, acknowledged there are some “technical hurdles” involved with SDRs, but he believes they could help correct global imbalances and shore up the global financial system.

“Over time, there may also be a role for the SDR to contribute to a more stable international monetary system,” he said.

The goal is to have a reserve asset for central banks that better reflects the global economy since the dollar is vulnerable to swings in the domestic economy and changes in U.S. policy.

In addition to serving as a reserve currency, the IMF also proposed creating SDR-denominated bonds, which could reduce central banks’ dependence on U.S. Treasuries. The Fund also suggested that certain assets, such as oil and gold, which are traded in U.S. dollars, could be priced using SDRs.

Oil prices usually go up when the dollar depreciates. Supporters say using SDRs to price oil on the global market could help prevent spikes in energy prices that often occur when the dollar weakens significantly.

The Dollar Alternatives

Fred Bergsten, director of the Peterson Institute for International Economics, said at a conference in Washington that IMF member nations should agree to create $2 trillion worth of SDRs over the next few years.

SDRs, he said, “will further diversify the system.”

Dollar firms after starting 2011 weak

The dollar has been drifting lower so far this year as the global economy improves and investors regain their appetite for more risky assets such as stocks and commodities.

After rising above 81 in early January, the dollar index, which measures the U.S. currency against a basket of other international currencies, eased below 77 earlier this week.

However, the dollar was higher Thursday against the euro, pound and yen as disappointing corporate results weighed on stock prices following several days of gains on Wall Street. The rally in the commodities market also cooled, with the price of oil and metals backing off recent highs.

In addition, renewed concerns about the debt problems facing troubled European economies put pressure on the euro and supported the dollar. The yield on Portugal’s benchmark bond rose to a record high Wednesday, and borrowing costs for Ireland, Spain and Greece remain elevated.

“The market is shedding risk, with equities and commodities weakening and the U.S. dollar broadly stronger” said Camilla Sutton, currency strategist at Scotia Capital.

Traders were also digesting comments from Federal Reserve chairman Ben Bernanke, who told Congress Wednesday that despite a strengthening economic recovery, the unemployment rate remains high while inflation is “still quite low.”

Those remarks reaffirmed the view that “the Fed would be very slow to tighten policy given its dual mandate of price stability and employment,” analysts at Sucden Financial wrote in a research report.

Bernanke also urged lawmakers to come up with a “credible plan” to bring down “unsustainable” federal budget deficits.

“We expect that the outlook for the U.S. fiscal position will weigh heavily on the U.S. dollar in the quarters ahead,” said Sutton. In the near-term, however, she said “a strengthening growth profile” could help provide “a temporary period of dollar strength.”

Read the entire article HERE.

Submitted by Jim Willie on Wed, 3 Nov 2010

A love affair with silver is so natural. The fundamentals are astoundingly positive and bullish in price prospects. My basic argument has been repeated many times. Industry has countless uses for silver, significant demand. But industry has only miniscule isolated uses for gold, in trivial demand. So silver wins on the Demand side of the equation. Central banks own a huge amount of gold. They frequently sell it, even through their slippery surrogate the Intl Monetary Fund. Central banks own zero silver. So silver wins on the Supply side of the equation. My motto is that gold fights the major political and financial war, but silver will ride in on a shiny white horse and take much larger spoils. That effect has already begun. Since the significant game changing FOMC meeting on September 21st, where the telegraph message delivered to the world financial markets was made by megaphone, the impact has been clear and stark. Compared to closing prices on September 21st versus October 29th, just five weeks, the silver price had risen from $20.64 to $24.56, up 19.0%. During the same timespan, the gold price had risen from $1274.30 to $1357.60, up 6.5%. My claim, a loose forecast often repeated, has been that the silver breakout gains would be at least double and possible triple the gold gains. We have seen exactly that in recent weeks.

An extremely fuzzy factor is the CFTC attention. The Commodity Futures Trading Commission is supposedly investigating the Big Four Banks for gigantic concentrated short positions in the silver market, for naked shorting of silver, and for collusion with other banks. Commissioner Bart Chilton has made a lot of noise, but has done next to nothing. Some find encouragement, an absurd notion in my view. Let me know when court injunctions are slapped at JPMorgan. Several class action lawsuits against JPMorgan have begun, also encouraging, but unclear on substance. They crop up every couple weeks, the latest citing a RICO aspect. Let me know when the full force of the USGovt regulatory bodies order JPMorgan, Goldman Sachs, Citigroup, and Bank of America to liquidate even 10-20% of their short positions. Unless and until such action occurs, the CFTC chirping is just that, noise from the managerie of obedient pets who work on short leashes at the behest of bankers. Mail room clerks do not give orders or make demands to the executive suites, not now, not ever. The regulatory chiefs are mere squires to the bankers, and will follow orders, not give them. By the way, the Big Four positions are naked short positions in all likelihood. They are immune from posting collateral, as required by the metals exchanges. So they routinely sell a stack of silver whenever the price moves have been made, like in the wee hours this Wednesday and very early at the New York open. Good Morning New York resulted in almost a full $1.00 drop in the silver price, undoubtedly another naked short raid before the QE decision by the US Federal Reserve and its statement. The full impact of the ambush decline was reversed by afternoon. Right before important events deemed negative nasty to the USDollar, the Big Four go wild with naked shorts, called ambushes. The evidence, the trails, the fingerprints are easily seen except by blind men, official gold industry wonks, and USGovt regulators.
SUPPLY & DEMAND BASICS

Silver total demand was essentially flat in 2009 versus 2008, as the world adjusted to a mammoth meltdown late in 2008. During the extraordinary disruptions, disturbances, and sudden insolvencies, JPMorgan liquidated much of the inherited (commandeered) precious metals accounts from Bear Stearns and Lehman Brothers. In the case of Bear Stearns, a solid argument can be made that they were targeted for kill due to their long gold account. In the case of Lehman, they were targeted fro kill in order to consolidate the power structure in the twin monoliths at JPMorgan and Goldman Sachs. On silver demand, the bulk of the 11.9% decline in the 2009 fabrication demand was primarily driven by the global financial crises. The reduced drop in industrial requirements was the lowest level since 2003. Total fabrication demand totaled 729.8 million oz and industrial demand was 352.2 moz in consumption. Much of the decline in factory demand was attributed to the car industry.

Implied net silver investment increased by a staggering 184% to 136.9 million oz last year, reaching its highest level in 20 years. Overall jewelry demand fell slightly by 1.1% in 2009 to 156.6 moz, a testament to the historical norm. It falls with a bull market, not to contradict it, but to confirm it!! That is the opposite message, contrary to what the official gold industry propaganda preaches. In fact, India and China posted increases in jewelry demand last year, outside the global trend. Silverware demand rose by a decent 4.6% to 59.5 moz, largely due to a surge in Indian fabrication. Their middle class grows impressively.

As for supply, the silver mine production rose by 4.0% to 709.6 moz in 2009. Gains came both from primary silver mines and output from mining by-product. The strongest growth came from Latin America, where silver output increased by a hefty 8%, the biggest gains logged in Argentina and Bolivia. Again Peru was the world leader in silver production in 2009, followed by Mexico, China, Australia, and Bolivia. All of these countries saw increases last year except for Australia, where output was dragged down from the lead/zinc sector, with the by-product impact. Some mines are devoted solely to silver targets, called primary silver projects. Global primary silver output saw a 7% increase in 2009, accounting for 30% of total mine production last year. The cash operating costs for primary silver mines remained relatively stable, rising by less than 1% to $5.23/oz in 2009. The big story is the huge decline in net silver supply from above ground inventory stocks, which were reduced by 86% to 20.2 moz in 2009. The drawdown was driven mostly by the surge in net investment, higher de-hedging (the active reduction in forward sale contracts), lower government sales (like official mints), and a drop in scrap supply. The scrap supply came down by 6% from 2008, enough to register a 13-year low of 165.7 moz. It was the third consecutive year of losses in the scrap category. Government stocks of silver, the feeder in official coin mint programs, fell by an estimated 13.7 moz last year, to reach their lowest levels in more than a decade. Data was supplied by the Silver Institute (SEE LINK).

IMPACT OF Q.E. CANCER

The big event on the horizon has been the US Midterm Elections, just completed. Its outcome was close to poll expectations. Many decisions have been delayed. Much detail has been withheld. Unfortunate pauses have come as a result. A palpable dread can be identified and pointed to. Difficult unpopular decisions will now be made. Some of the decisions will involve continued bank sector welfare after failed fiduciary responsibility. Some of the next programs or legislation will involve devious political and legal cover for criminal bond fraud related to the mortgage industry, which is fully in the open for dissection, outcry, and acrimonious debate. Basically, the bank sector will see great maneuvers to be supported, protected, with escape routes, now that the consequences of voter backlash are out of the picture. Furthermore is the issue of political partisan gridlock. Only dim bulbs would call the gridlock constructive or a good thing in the current setting. When a nation is mired in a financial crisis, requires leadership, demands restructure, and urgently needs reform, any inaction from gridlock is like fighting over the steering wheel on a big tractor trailer truck unable to manage a winding road, certain to careen over the cliff. Some analysts use the term public serpents to describe public servants, which seems spot on. Activists should demand that private bank accounts be investigated of committee heads, or even past Secretary of State (Colin Powell), or joint chiefs of staff at the Pentagon, or past SEC and CFTC heads. While at it, check the bank accounts of past presidents too.

The most reliable and expert sources within my contacts mention a specific point, with consistency. When the US elections are over, and after the USFed gives some guidance on the QE2 Launch for monetized debt, the system will experience tremendous added strains and will gradually show signs of breakdown again, in accelerated mode. This time, unlike September 2008, efforts to stabilize will not be possible. The system will degrade, as supports, pylons, control cables, levers, guy wires, and buttresses will be removed in the coming weeks. The Midterm Elections served at the roadblock event, the beacon on the horizon, the gate factor, the delayed lit fuse. The actions taken in November will involve both the US captains and foreign entities. The US brass can act without as much concern of voter backlash. The foreign financial decision makers can act with knowledge that the USGovt, the USFed, and Wall Street will not make a single solitary move toward bank system reform, toward bank debt restructure, or toward debt liquidation on the balance sheets. Instead, the US will redouble the magnitude of what failed, their habit, their engrained failure in policy, their legacy.

The main worry by the USFed and USDept Treasury will center on foreign creditors and abandonment. US bank leaders will ramp up the monetization under the QE2 banner with added motivation. Trade war stokes the fires of hostility, angst, and rebuke. Foreign creditors are worried that their debt security paper is being diluted. Its value will be diminished, but later in time. Expect a new European Dollar Swap Facility to be announced soon, but with less delay than the last one. They must match and offset the power of the QE2 initiative. It could be urgently declared by EU in next several weeks. They must defend against a rising Euro currency. Do not be trapped into thinking a USTreasury Bond rally means a USDollar coincident rise. The USTBonds are from the Printing Pre$$, which means no source of funds to convert. The Jackass still believes 2.0% is an important 10-year USTreasury yield target. All hell breaks loose after the target is hit, as the USTBond bubble is likely to give off massive greenhouse gas afterwards.

UNWIND OF TREMENDOUS SUPPRESSION

When professional equity analysts ply their craft in examining the merits of a certain stock, they often use a simple statistical technique. They fit a model of the growth in a stock Y versus the sector X in which it trades, like BAC (Bank of America) versus the BKX (bank index). They fit a model of the growth of a major stock Y versus the X market backdrop, like IBM versus the S&P500 index. A stock Y performs well if it does better than its sector or does better than the entire market. That shows up as a BETA over 1.0 within the fitted model using data as weekly change entries in price for X and Y. Take silver as Y and the entire commodity arena as X, as measured for instance by the CRB index. Clearly silver rises and falls with the commodities, and even makes swings with more volatility than other items. That testifies to a high silver BETA. Lately, the silver move has been powerful, much bigger than other commodity items since it is being recognized as a currency hedge, a safe haven asset, with the menace of lawsuits and investigations hanging overhead. In fact, Silver is a currency, if pure money can be classified as currency at all. Like gold, silver is a super-currency.

Y  =  ?  +  ? X

The important aspect to highlight of the linear price change model is the ALPHA component. When an asset or stock has a particular advantage or unique strength, it can outperform its class. Take for instance a pharmaceutical firm with a vaccine discovery, or a computer firm like Apple with a nifty IPod winner, or a mining firm with a huge ore discovery or great process improvement. Silver and gold each share a robust ALPHA feature that is not often mentioned, even in the gold community. As the monetary system crumbles further, as the big banks topple amidst insolvency, as the sovereign debt for certain nations defaults, as the USGovt deficits spiral endlessly into the $trillions, the concept of real money is being questioned by important chambers of global finance. Money wants to escape the false monetary clutches, and find true safe haven. Sound money is sought out with increased vigor and even desperation to preserve wealth. At the same time, illicit activity from two to three decades of gigantic price suppression, extended from enormous naked short positions being revealed, has conspired to suppress the price of gold & silver. The slow healing of the market infestation reveals the manifestation of the Silver Alpha, during its release.

The monetary system works gradually to unmask the corrupt precious metals market, and to lay bare the absent bullion at the official metals exchanges. Angry depositors like the Chinese and Arabs have been demanding their bullion for return back home, no longer trusting the London and New York banksters. They have grown fully aware of illicit gold leasing as commonplace. The fraud of the USGovt balance sheets, recording deep storage gold as a ledge item, an utter absurdity, only adds to the motive to unmask the banksters at their own game. The fast rising deadly USGovt deficits has brought cries to prove the collateral for new debt added upon old debt, in an uncontrollable debt episode. The world pursues gold & silver, knowing the USGovt has none, even as it continues to suppress its price with heavy hands. Foreign creditors are angry that the gold & silver they hold has been pushed down in price by illicit USGovt devices.

The consequence is that SILVER possesses a high ALPHA. What lifts the ALPHA is many factors, each powerful. The Silver price will rise much more than price inflation. The Silver price will rise in response to money fleeing corrosive vehicles like the major currencies, whose basis is not gold but rather rapidly growing debt resting upon broken banking and economic foundations. The Silver price will rise as the USTreasury Bond bubble becomes more widely recognized. The Silver price will rise as greater volumes of freshly printed money undermine the USDollar well behind controlled activity. The Silver price will rise more than most analysts anticipate out of the sheer release from corrupted markets that hold down the price after a mountain of silver has been shorted in the market without collateral. THIS IS THE ESSENCE OF ALPHA!! The shorts are being squeezed, in clear fashion since August. The naked short quantity for Silver is well beyond a full year of annual global output from the mining industry. As the markets work toward a freely traded system that seeks a true equilibrium, the Silver price will move past $100 per ounce easily. Laughter now will be followed by sheepish quiet in three years. But first it will surpass the $40 price, maybe as soon as late 2011 or early 2012. The silver ALPHA is big, and that fact will be quite evident very soon, if not already. My forecast is for a $29 to 31 price for Silver by mid-January. Both December and January are strong seasonal months for silver, just like September. Notice how silver is outperforming the commodity group, and shows a BETA over one.

Read the entire article HERE.