-- Posted Monday, 5 September 2011 | | Disqus
September 4 - Gold $1884 - Silver $43.25
"Many men fail because they quit too soon. They lose faith when the signs are against them. They do not have the courage to hold on, to keep fighting in spite of that which seems insurmountable. If more of us would strike out and attempt the 'impossible,' we very soon would find the truth of that old saying that nothing is impossible... abolish fear and you can accomplish anything you wish." ... Dr. C. E. Welch
This goes in the You Can’t Make This Up category. First, from my Friday MIDAS commentary:
*There is increasing talk of a gold standard. But so far none of the discussion has focused on whether the central banks still have anywhere near the gold they say they have. GATA has long stated they have less than half the gold the World Gold Council claims they do.
What a fiasco when the investment world learns what GATA believes is surely the case. There is no telling what the price of gold will do as this scenario unfolds. How ironic that the Chinese and Russians have been following GATA, and continue to encourage gold ownership, while the US financial market press ignores us, not even allowing our views to be presented to the American public.
*The bit about the Russians and Chinese is not poppycock. The number two Russian central banker spoke about GATA at an LBMA conference in Russia in 2004…
10:13p ET Sunday, October 3, 2004
And then key economic consultant to Russia’s President Putin, Andrey Bykov, attended our Gold Rush 21 conference in The Yukon in 2005 and our London Gold Rush 2011 in August. Several of us in the GATA camp were part of THREE conference calls years ago with the Chinese Investment Corporation, one of the Chinese sovereign wealth funds.
Never get tired of watching the 2 minute+ trailer of Gold Rush 21 which gives some insight into what Andrey Bykov took back to President Putin and The Russian Central Bank:
THE PRICE OF GOLD EXPLODED IMMEDITATELY FOLLOWING BOTH CONFERENCES!!!
Twenty-four hours later GATA's Chris Powell sends out the following missive:
FLASH: China knows about gold price suppression, and U.S. knows China knows
Submitted by cpowell on 03:33PM ET Saturday, September 3, 2011. Section: Daily Dispatches
6:47p ET Saturday, September 3, 2011
Dear Friend of GATA and Gold:
China knows that the U.S. government and its allies in Western Europe strive to suppress the price of gold, and the U.S. government knows that China knows, according to a 2009 cable from the U.S. Embassy in Beijing to the State Department in Washington.
The cable, published in the latest batch of U.S. State Department cables obtained by Wikileaks, summarizes several commentaries in Chinese news media on April 28, 2009. One of those commentaries is attributed to the Chinese newspaper Shijie Xinwenbao (World News Journal), published by the Chinese government's foreign radio service, China Radio International. The cable's summary reads:
"According to China's National Foreign Exchanges Administration, China's gold reserves have recently increased. Currently, the majority of its gold reserves have been located in the United States and European countries. The U.S. and Europe have always suppressed the rising price of gold. They intend to weaken gold's function as an international reserve currency. They don't want to see other countries turning to gold reserves instead of the U.S. dollar or euro. Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar's role as the international reserve currency. China's increased gold reserves will thus act as a model and lead other countries toward reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the renminbi."
It's hard to believe that, two years later, China is still leaving so much of its gold with the Federal Reserve Bank of New York and the Bank of England when even little Venezuela has publicly figured out the gold price suppression component of the Western fractional reserve banking system and is attempting to repatriate its gold from the Bank of England and various Western bullion banks:
It is already a matter of record that China dissembled about its gold reserves for the six years prior to the public recalculation of its gold reserves in April 2009 that prompted the commentary in Shijie Xinwenbao. At that time China announced that its gold reserves were not the 600 tonnes it had been reporting each year for the previous six years but rather 76 percent more, 1,054 tonnes:
ZeroHedge, which seems to have broken the story of the Beijing embassy cable this evening, comments:
"Wondering why gold at $1,850 is cheap, or why gold at double that price will also be cheap, or, frankly, at any price? Because, as the following leaked cable explains, gold is, to China at least, nothing but the opportunity cost of destroying the dollar's reserve status. Putting that into dollar terms is, therefore, impractical at best and illogical at worst. We have a suspicion that the following cable from the U.S. embassy in China is about to go not viral but very much global, and prompt all those mutual fund managers who are on the golden sidelines to dip a toe in the 24-karat pool."
The ZeroHedge commentary can be found here:
In addition to fund managers throughout the world, this cable may be of special interest to the gold bears CPM Group Managing Director Jeff Christian, who says he consults with most central banks and that they hardly ever think about gold, and Kitco senior analyst Jon Nadler, who insists that central banks have no interest whatsoever in manipulating the gold price.
In fact, of course, gold remains the secret knowledge of the financial universe, and its price is actually the determinant of every other price and value in the world.
The Beijing embassy cable can be found here:
And, just in case, at GATA's Internet site here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
So much that can be covered here, but first and foremost, GATA’s credibility and proof of our understanding of the real gold market (one not reported on by the mainstream gold world, Planet Wall Street, and the financial media) just took another giant leap forward. We have been all over the Chinese buying gold story for MANY years, having reported them buying secretly via intermediaries from our STALKER source.
It is quite intriguing and represents GATA’s track record of how we have nailed what was really going on in the gold market all these years, while being disparaged by the mainstream gold world and our critics. See for yourself:
April 24, 2009 - Gold $913 up $7 - Silver $12.92 up 12 cents
GATA’s Credibility Soars On China Gold Buying News
GATA’s credibility took another leap forward this morning when China announced it has increased its gold reserves to 1,054 tonnes from 600 tonnes. For years and years and years GATA has claimed that the gold world establishment has failed to account for surreptitious gold lending operations by The Gold Cartel to suppress the price. For there to be greater gold supply hitting the market, there had to be greater demand to satisfy this undisclosed supply. As a result of Frank Veneroso’s brilliant supply/demand work in years past, we mentioned that one of the demand areas, that the likes of a GFMS was not accounting for, was China, and that someday their stealth buying would be reported. Voila…
China gold reserves apparently doubled
HONG KONG (MarketWatch) -- China has added to its gold reserves and now holds 1,054 metric tons of the yellow metal, according to a Friday report by the Xinhua News Agency, which cited comment by Hu Xiaolian, head of the State Administration of Foreign Exchange.
Hu said that China's gold reserves had risen by 454 metric tons since 2003 and that the total was being reported to the International Monetary Fund as per the organization's rules.
A Dow Jones Newswire report said the figure cited was nearly double China's reported gold reserves as of the end of last month, but noted that it wasn't clear which gold reserves Hu was referring to.
She said China's gold reserves now rank fifth in the world among nations which publicly disclose their holdings.
Analysts said China bullion buying reflects efforts to diversify their nearly $2 trillion stockpile of foreign exchange reserves.
"Chinese officials have been increasingly vocal about their concern on the U.S. dollar and the U.S. bailout policies of late, and have actively been seeking to diversify into other assets, especially commodities," said Martin Hennecke, an associate director with Tyche Group in Hong Kong…
To say that this revelation is a big deal is an understatement … for a number of reasons…
*It is more evidence that various central banks are increasing their gold holdings, in contrast to a number of western banks which have been selling for more than a decade.
*China’s move debunks Planet Wall Street and other western central bankers that gold is a barren asset and not worth owning.
*And it enhances the notion that gold is a valuable reserve which will encourage other central banks to follow China’s lead.
*It surely will spook some of the sheeple central bankers who have foolishly dumped their country’s gold reserves at bargain basement prices … especially at a time when the West is looking at one financial crisis after another and the world’s major currency reserve, the dollar, is looking very suspect. A number of them are unlikely to press for further bullion sales from their countries’ reduced reserves.
*The likelihood of China continuing to build its reserves is extremely high. They were secretly building their gold reserves BEFORE the latest financial crises. If this was the Chinese mindset then, what must it be now? As is, their percentage of gold reserves is still on the very low side.
*Because of what the US is doing with our bailouts and fiscal deficits, the US dollar is surely on a precipice, thus China must be looking to accumulate more gold. Therefore, this is not a sell the news market announcement. It is just the opposite. It is a clarion call to buy physical gold.
*That clarion call will not go unheeded by the sophisticated big money in the world.
*This is a major new headache for The Gold Cartel.
Derrick sends us some retro on China/gold which was brought to your attention years ago…
China's forex watchdog faces dilemma on expanding gold reserves
From Xinhua News Agency
Monday, December 26, 2005
SHENZHEN, China -- To buy or not buy? That's a question for Chinese foreign exchange authorities. They have been urged to expand gold reserve since the Renminbi appreciation, but the decision is hard to make since the gold prices are rocketing.
Some economists have been appealing to the State Administration of Foreign Exchange to expand China's gold reserve after the Renminbi appreciation in a bid to reduce the country's reliance on the greenback....
GATA has been all over the Chinese gold buying case and we can account for it in our understanding of the true supply/demand picture. GFMS and the World Gold Council CANNOT!
And then to shed light on the MIDAS analysis and what lies ahead…
I reproduce the following from a Financial Times article this morning declaring that China's gold reserves have officially been revised to 1,054 tons from 600. You have long held the view that China was buying gold through intermediaries and would eventually disclose part or all of these activities. It is the end quote I append that caught my eye:
"Hou Huimin, vice general secretary of the China Gold Association, said China should build its reserves to 5,000 tonnes.
"It’s not a matter of a few hundred, or 1,000 tonnes. China should hold more because of its new international status, and because of the financial crisis," he said. "The financial crisis means the US dollar’s value is changing fast, and it may retreat from being the international reserve currency. If that happens, whoever holds gold will be at an advantage." (emphasis added)
Thought you might be interested.
All my best to you and your health, Brad
And here’s a big tip o’ the hat to our STALKER source who nailed this one, beginning back in 2003, which just happens to be the year the Chinese now admit they started buying.
Doing a Café search, I have yet to find the initial presentation to The Café ... but the bottom line is our source went to Phoenix for a meeting with six others in 2003. Our source was there to act as a gold buyer in the future. The person who held the meeting spoke FROM BEHIND A SCREEN, as he did not want to disclose his identity. While speaking perfect English, our source thought at the time he might be Chinese and did not wish that to be known.
Our STALKER source called today and I could almost see the smile on his face through the phone. He reminded me of another tip, i.e. it was Chinese doing the buying, and he reported it was going through Australian banks, which have a longstanding relationship with the Chinese.
It is with great pleasure to bring MIDAS commentary to you re the Chinese/STALKER from more than half a decade ago…
September 10, 2003 - Gold $379.70 down $1.80 - Silver $5.22 unchanged
…Could any market trade more predictably than gold has the past month? Every time gold rallies sharply and early in a given day, it is capped by The Gold Cartel, sold off later in the trading session, brought down early that evening in overseas trading, and then is pressured all the next day by the same cabal. Over and over we see the same trading pattern.
You see it, I see it, and SO MUST the $4.6 billion buyer, which MIDAS characterized in general as being around some $40 ago. It seems to me this "gold buying group" is playing with The Gold Cartel. They know the cabal’s drill as well as we do and probably devised a trading plan to take them on, not fight them too hard on given days, and then overpower them.
This "gold buying group" must know what GATA knows, in that the cabal has a serious vulnerability, or Achilles Heel, when it comes to the physical gold market:…
September 11, 2003 - Gold $379.30 down 40 cents - Silver $5.30 up cents
Dramatic Gold Day / Silver On The Move / Both Have Fireworks Potential
…Today's action was very supportive of MIDAS' notion there is a Stalker ("gold buying group") out there taking on the corrupt Gold Cartel. They waited for Goldman Sachs to strike, then attacked, sending gold $7 off its lows. Dramatic it was. This is a big deal. Other traders will see how easily gold came back after filling the gap and will encourage them to get long, especially since the gap was filled. The huge open interest also suggests a significant move is coming. Gold’s startling comeback suggests that move is going to be one which takes the price MUCH higher….
September 19, 2003 - Gold $381.10 up $4.80 - Silver $5.25 up 2 cents
The Stalker Strikes With Another Huge Gold Buy Order!
…Gold came in stronger than expected on the Comex opening, which is almost always a very constructive development. It left a $1 gap and quickly shot up all morning, topping $383 at one point. Then the requisite Gold Cartel $6 price-capping rule went into play. That was all she wrote. The cabal regrouped and held gold in check the rest of the trading session and then did their requisite slam, knocking gold down a buck ON THE BELL. These no-good low-lifes are pitiful. Ah for the day when we can get our stretchers out, pick them off the mat, and then dump them in the sewer!
The big news is for Café members only. I received a call from London about The Stalker and learned a bit more about this "gold buying group." Two goodies for you:
*In addition to the $4.6 billion order, The Stalker is buying well in excess of another billion dollars worth of bullion and gold coins. The MIDAS analysis over these past months of huge new buying interests entering the gold arena looks better by the day.
*The orders are emanating out of New Zealand and Australia. My source believes it is Asian money and most likely CHINESE!
This is wonderful news as it would mean the Asian (Chinese) gold buy program is competing with Indian, Turk and Arab buying. Put them all together and it is easy to comprehend why The Gold Cartel has not been able to flush out the massively long specs. The Eastern buyers are always there on dips competing against one another for a diminishing supply of gold.
It also explains why gold has been moving up in price with a corresponding, but lagging, move in the dollar. Gold is leading the way and doing so for the reason John Brimelow and I have articulated for so long. The key to the gold price is the surging physical gold market taking on the corrupt and devious Gold Cartel…
December 23, 2003 - Gold $410.65 up 55 cents - Silver $5.71 up 2 cents
A STALKER Of A Gold/Silver Tale For Christmas Time
…As Café members have been made aware, the Eastern gold buyers have additional competition due to the enormous physical market buying by THE STALKER ("gold buying group"). Without getting into many details, I want to stress THE STALKER is real. My source’s good friend has attended a meeting with this "gold buying group," or his agent. I say "or" because THE STALKER is very secretive and does not want to be known publicly, even to the sellers from whom he is buying.
Both my source and I strongly believe the gold buying is of Chinese origin…
January 5, 2004 - Gold $423.80 up $8.60 - Silver $6.19 up 27 cents
Gold ($423.80) And Silver ($6.19) SOAR!
…*THE STALKER input has been incredible. Every time I get word this "gold buying group" is in the market, gold moves higher. Just as I was writing this, I received a phone call from "Mike," my STALKER source. He tells me THE STALKER was in the market today and they are going after $1.4 to $1.6 billion worth of gold in the near term…
January 15, 2004 - Gold $408.30 down $13.10 - Silver $6.19 down 21 cents
Ouch! Gold Cartel Wins A Battle
…Good news! Just got off the phone with my STALKER source. There was an unscheduled phone conference this afternoon with THE STALKER’S US buyers. They have a NEW order for $800 million to $1.2 billion to be completed between now and March. 72 tonnes of new gold buying is nothing to sniff at! The orders are still coming out of Australia and my source continues to believe they are for mainland China…
January 28, 2004 - Gold $414.60 up $4.90 - Silver $6.60 up 7 cents
Silver Closes At Six-Year High/Gold Charges Up $5/Gold Share Massacre Orchestrated
..In my various presentations and public commentary at the Vancouver conference I stressed the importance of what was going on in the physical gold/silver market and laid out what has been presented to Café members, including John Brimelow’s unique and extremely valuable work. There was no one else at the conference doing so. While most conference presenters stressed the weak dollar as the most important gold factor, I stressed it was the surging physical market.
In that regard, I learned this morning THE STALKER (probably China) just completed the last bit of its $6.8 billion order. NOW, THE STALKER is working on its additional 800 million to $1.2 billion dollar gold order (brought to your attention recently). I might know more on this on Friday.
To give you some idea of how significant this is, Norway just reported they sold 16 tonnes of gold in January (see below) and plan to dump another 17 tonnes of bullion, which will clean them out. The Gold Cartel and friends jump up and down about more central banks selling their gold and make a big deal how negative it is. What The Gold Cartel fails to tell the press and their clients is who is BUYING gold and to what extent. Can they all be so uninformed?…
February 24, 2004 - Gold $403.90 up $5.70 - Silver $6.59 up 13 cents
Silver and Gold Pop Very Nicely / $6 Rule AGAIN
…Some input from a bullion/coin dealer who has been in the business for 40 years. He has not seen the physical gold market this tight in two decades. The physical market is in a bit of a disconnect with the price-rigged Comex. Silver is also extremely tight according to my source and only trades in size at a PREMIUM. You cannot buy a decent amount of physical silver without paying up. Wait until next month!
Some STALKER feedback. We have confirmed the buyer is from the Far East, in all probability Chinese, and they still have $1.5 billion of gold to buy. We also know why they are buying. This is a big picture trade, not a short-term speculation. The gold they are accumulating is going into deep storage and not coming back into the market on rallies. The reason is these "Chinese" fear a complete debacle in fiat currencies in the next couple of years…
That’s enough for now. You get the picture. The GATA camp was right on the money about Chinese gold buying while there was nary a peep about it from the mainstream gold world, or from the big shot bullion dealers on Planet Wall Street.
Going to soak the latest China news re GATA for all it is worth, have some fun with it, and bring more of what we said two years ago to the front and center:
September 3, 2009 - Gold $996 up $19 - Silver $16.26 up 91 cents
Gold, Silver SOAR/Sudden Talk Of The Town/China, GATA And Gold
Ask and ye shall receive! Both gold and silver gapped up higher and then made a run for the upside as the day wore on.
What a difference a day makes. On Tuesday gold was off most everyone’s radar screens, including a number of former Café members. Despite going up NINE years in a row, tedium had set in on gold’s inability to perform up to expectations based on financial events … courtesy of you know who. The general public and pundits lost interest in the gold story. It’s fascinating, as mentioned here for months, how gold makes its boldest moves higher when investors aren’t paying attention.
Yet by yesterday afternoon gold was suddenly the talk of the town, lighting up the CNBC and Bloomberg scoreboards … and there was tons more talk all day today. Bulls came out of the woodwork and one clueless Muppet after another offered an opinion why gold was the place to be. PRICE ACTION MAKES MARKET COMMENTARY. Most of the opinions were one day thought-outs … coming up with the same reasons why gold is so bullish which have been in place all summer. And naturally, not ONE mentioned the real reason gold is on the move: The Gold Cartel is gradually losing control of their rig.
However, one solid reason given for gold’s lurch to the upside is CHINESE buying. Those pundits citing the Chinese as formidable buyers are right on the money…
In Currencies: The early chatter was all about the recent moves in metal prices (see commodity section below), particularly gold. Speculation mounted that perhaps pressure on the Chinese state-controlled organizations to dump dollars in favor of more concrete assets like gold were swirling among dealing desks. Thus the USD's tone was subdued as gold hit fresh 3-month highs towards $990/oz. The renewed chatter of Chinese reserve diversification will add to the dollar supply and also reinforce the gold tone.
In commodities: Dealer chatter circulating that recent move in metals might be attributed to Chinese Sovereign Wealth Fund diversification (complemented by selling USD) . There were numerous comments from Chinese officials made in Q4 2008 on this topic. Back on Dec 16th the Ministry of Industry & Information commented that China sought to increase reserves of strategic materials. Back on Nov 18th China's PBoC was considering raising its gold reserve by 4K tons and the prior day (Nov 13th) the HK Standard reported that China might seek to buy gold in a move to diversify its currency reserves and the article added that China currently holds about 600 tons of gold and could increase this amount to as much as 4K tons.
…BUYING THE FARM
Chinese sovereign wealth fund dumping dollars for strategic investments like gold
Reports suggest that China's main sovereign wealth fund and other state entities are under pressure to invest in strategic Western assets as the country tries to offload its dollars for firmer-based wealth including gold and oil.
Author: Lawrence Williams
Posted: Thursday , 03 Sep 2009
Several reports are coming out of China that there is pressure on state-controlled organisations - notably the country's main sovereign wealth fund, China Investment Corporation (CIC) to rapidly build investment in non-Chinese enterprises. While the CIC itself, with apparent access to some $300 billion in funds - and the possibility of more from the government - may be concentrating on hedge funds and other investment entities, there is another sector for Chinese state-owned companies looking at major investment in commodities. Indeed with the funds available as China seems to be dumping its US dollars in favour of more concrete assets, virtually no minerals sector is safe from Chinese participation.
Veteran Café members know that MIDAS has been jumping up and down about China since 2003 when their buying commenced and especially as of last April when they announced an increase in their gold reserves of 460 tonnes. You also know that GATA has had THREE conference calls with the Chinese Investment Corporation since April of 2008. While the mainstream gold world and US financial market press won’t give GATA the time of day, The Chinese and Russians (Key economic consultant to President Putin, Andrey Bykov, and the Russian Central Bank) have gobbled up our stuff. Thus, they know what the gold market is all about and they know where the price is going and WHY! But Planet Wall Street? … out to lunch.
In addition, over the past two weeks I heard from TWO reliable sources the Chinese intend to buy MANY hundreds of tonnes of gold in the years ahead. So all this Chinese gold smoke is for real. There is a fire behind the smokescreens and all the chatter about China and gold is for good reason.
Gold is the talk of the town in Hong Kong too. From a fellow Café member in Hong Kong last night…
In the Hong Kong Chinese newspapers and in the South China Morning Post, there are articles reporting that a new storage facility for gold is now open at Chek Lap Kok, at Hong Kong’s airport. According to these articles, the Hong Kong government’s gold bars stored in London will be shifted to Hong Kong’s new storage space at the airport by the end of this year. (One wonders why it should take so long to shift the gold)
The Ming Pao Newspaper, which is in Chinese, reports that the the Hong Kong officials responsible for the facility are discussing ways of cooperating with the Shanghai Gold Exchange. Because of the foreign exchange rules and restrictions in China, gold can not be as freely moved in and out of China as in Hong Kong. Therefore, Hong Kong may act as one facility for the delivery and storage of gold bars for the Shanghai Gold Exchange.
Usually I send you articles for the Standard but there in no article on this story in that journal. I do not have a subscription to the SCMP so I can not send you the full story. However, below is the link to the SCMP article that is in English.
Four days later I sent the following MIDAS commentary to all the financial media I could think of (not one responded):
9/8 GATA MEDIA SPECIAL - The Reason for Gold’s Imminent Price Moon Shot? It’s a Simple Supply/Demand Story.
Oh well, GATA is used to being ignored and abused … part of the territory. But, perhaps that is all about to change, thanks to the efforts of Chris P. After the Cambridge House investment conference in Toronto on September 14 and 15, he is off speak at the largest investment conference in Asia, one hosted by actor George Clooney. Then, it will be London in which he is the featured speaker at the Pi Capital conference … sandwiched between featured speakers former US President Jimmy Carter and the renowned George Soros. GO CP!…
Is GATA suddenly becoming almost respectable?
Submitted by cpowell on 09:51AM ET Sunday, September 4, 2011. Section: Daily Dispatches
1:02p ET Sunday, September 4, 2011
Dear Friend of GATA and Gold:
Thanks to a friend met in London just after GATA's Gold Rush 2011 conference there last month, your secretary/treasurer has been invited to affect some respectability and speak at a couple of financial conferences well outside the usual precious metals circuit.
The first is the CLSA Investor Forum in Hong Kong from September 19-23, said to be the largest investment conference in Asia. Host of this year's conference is to be the actor and human rights advocate George Clooney:
The conference is open only to CLSA clients.
Then on October 10 your secretary/treasurer has been invited to address the weekly Pi Capital conference, which, the previous week, will be hearing from former President Jimmy Carter and, a couple of weeks later, from fund manager George Soros:
Some current or present government officials with responsibility for the British end of the gold price suppression scheme may be in the audience, so it could be interesting. But this too is a members-only event.
That GATA suddenly should be welcome, if only tentatively, in such circles may be construed as evidence that the gold price suppression scheme is beginning to escape derision as mere "conspiracy theory" and starting to seem at least plausible, probable, or even fully documented to people in a position to act on the knowledge.
In any case GATA has come a long way since its incorporation 12 years ago. If you're encouraged by our progress and are inclined to help sustain our work, please consider making a donation:
We promise to try to keep making trouble with it. Remember that the World Gold Council, which presumes to speak for both the gold mining industry and gold investors, is said to have an annual budget of more than $60 million, raised from assessment against the mining companies that are its members, and most of that just goes for hanging out with beautiful young women modeling expensive jewelry. (Somebody's got to do it, we suppose.) But it's not merely envious to note that this does little for the cause of establishing free markets in the monetary metals, even as GATA, having no regular income, has no annual budget. We sustain ourselves on what our friends can provide irregularly.
On the other hand, maybe the gold price suppression scheme will blow up in advance of the Hong Kong and London conferences and we can move on to trying to prove something else -- maybe flying saucers or Bigfoot. Maybe that would get us into The Wall Street Journal or The New York Times at last.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CARTEL CAPITULATION WATCH
U.S. economic news:
Pimco's El-Erian: US Economy Is 'Grim and Scary'
Friday, 02 Sep 2011 01:00 PM
Following Friday’s report that zero jobs were generated in the month of August, Pimco investment firm CEO Mohamed El-Erian called the condition of the U.S. economy "grim and scary."
U.S. Debt Held by Public Tops $10T for 1st Time—Up 59 Percent Under Obama
Friday, September 02, 2011
By Terence P. Jeffrey
President Barack Obama and Treasury Secretary Timothy Geithner (AP photo/Evan Vucci)
(CNSNews.com) - At the close of business on Aug. 31--for the first time in the history of the country--the publicly held debt of the federal government topped $10 trillion, according to data released by the U.S. Treasury Department at 4:00 p.m. yesterday.
During Obama's presidency, debt held by the public has now increased by $3.71694 trillion--or almost 59 percent from the $6.3073 trillion in debt held by the public that the government owed to its creditors on Jan. 20, 2009, when Obama was inaugurated.
Also, according to the most recent reports available from the Treasury and the Federal Reserve, approximately $6.1 trillion of that debt—or about 61 percent of it—is owned by foreign interests (led by the Chinese and the Japanese) and by the Federal Reserve.
At the close of business on Aug. 30, as reported by the Treasury Department’s Bureau of the Public Debt, the federal government’s debt held by the public equaled $9,990,126,772,846.86. By the close of business on Aug. 31, it was $10,024,253,354,407.07.
The Treasury divides the debt of the U.S. government into two general categories: "debt held by the public" and "intragovermental" debt.
The "intragovernmental" debt is money the Treasury has borrowed out of government trust funds—including the Social Security trust fund—to use on federal expenses other than those the trust funds were set up to cover. This "intragovernmental" debt is money the government owes itself.
The ‘debt held by the public," according to the Treasury, includes "all federal debt held by individuals, corporations, state or local governments, foreign governments, and other entities outside the United States Government." Among the types of Treasury securities included in the "debt held by the public" are Treasury bills (which mature in one year or less), Treasury notes (which mature in two to 10 years), Treasury bonds (which mature in 30 years), U.S. Savings Bonds, and Treasury Inflation-Protected Securities.
At the close of business on Aug. 31, the total outstanding debt of the U.S. government—including both the debt held by the public and the intragovernmental debt--equaled $14,684,292,994,743.93.
Of that $14,684,292,994,743.93 in U.S government debt, $10,024,253,354,407.07 was debt held by the public and $4,660,039,640,336.86 was intragovernmental debt.
From Obama’s inauguration as president on Jan. 20, 2009 through Aug. 31, 2011, the total debt of the U.S. government increased $4.05742 trillion. But most of that increase—roughly 92 percent—has been from the increase in debt held by the public as opposed to an increase in intragovernmental debt.
When Obama was inaugurated, the overall federal debt was $10.6269 trillion, with about $6.3073 trillion of that in debt held by the public and $4.3196 trillion in intragovernmental debt.
By Aug. 31, 2011, the debt held by the public had increased by about $3.71694 trillion during Obama’s presidency while intragovernmental debt had increased only by $340.47 billion.
The Treasury’s most recent report of foreign holdings of U.S. debt (released on Aug. 15) shows the value of U.S. Treasury securities held by foreign interests as of the end of June. At that time, according to the report, foreign interests held $4.4992 trillion in U.S. debt. (The two leading foreign holders of U.S. debt were entities in mainland China, which owned 1.1655 trillion in U.S. debt as of the end of June, and entities in Japan, which owned $911 billion in U.S. debt as of the end of June.)
The Federal Reserve, according to the August edition of the "Federal Reserve System Monthly Report on Credit and Liquidity Programs and the Balance Sheet," owned $1.638 trillion in publicly-traded U.S. debt as of July 27.
The combined $4.4992 trillion in foreign holdings of U.S. debt and $1.638 trillion held by the Federal Reserve equaled $6.1372 trillion in U.S. debt held by foreign interests and the Federal Reserve.
That combined $6.1372 trillion in U.S. debt held by foreign interests and the Federal Reserve—as per the latest public reports—would equal approximately 61.2 percent of the $10.02425 trillion in U.S. government debt held by the public as of Aug. 31.
To all; I am writing this Sunday as I will be away until Thurs. with limited internet access until then. The upcoming week(s) are sure to be filled with fireworks from all directions, I almost hate to miss this one as I feel history is being made. No matter which direction you look, fuses to system ending neutron bombs are lit and burning, the only question remains, which one goes off first? The 2nd Greek bailout is in failure mode, many European and U.S. banks are insolvent and need to raise cash when they can least afford to do it. The global economy has turned down hard, the U.S. has already run through in only 30 days the $400 Billion debt ceiling while FHFA sues the banking system for untold $ Billions. Topping all of this off Friday was Wikileaks making public their entire stash including a cable from the U.S. Embassy in China as much admitting that Gold is and has been "SUPPRESSED"! WOW, who could have imagined this one? The proverbial "cat" is out of the bag and this leaves only one more event which I will call "the hidden fuse" of ALL the currently burning fuses. Can you guess what it is? Hint...it's the biggest financial bubble in human history... Yes, it is the U.S. Treasury debt bubble! We traded under 2% on Friday in 10 yr Treasuries. Who in their right mind would lend anyone, any capital for under 2%? Especially if it is an entity that is overleraged, undercapitalized and has the ability with the stroke of a computer to reneg on their obligations? I might add, an entity that has reneged in the past and has been doing so for the last 40 years! I will go out on a limb here and say that withing the next 30 days we will witness a VERY serious "hiccup" at one of numerous and ginourmous debt auctions. Treasury bonds and precious metals CANNOT both "go higher" in lockstep forever, one of the two markets is wrong in a horrible way! Is it the Gold and Silver markets which MSM constantly tells us is in a "bubble"? Or is it the Treasury market which has been attracting so much global fear capital and which the MSM would never dare mention in the same breath with the term "bubble"? This is so easy to see yet no one sees it. Those that have (Bill Gross of PIMCO for example), were early, got run over by the stampede and did not stick to their correct convictions. I know that the Treasury bubble mathematically will burst and take EVERYTHING paper for which it is foundation with it, the only question is "when". I believe it is now! I do want to comment about the FHFA lawsuits. How is it even possible that the government which relies so heavily upon the banking system can make the decision to sue them? These are surely not "fat times" where banks can afford to even give toasters away. The banks are insolvent and don't even need the slightest "push" to put them AND the world as we know it OVER THE EDGE! This is pure stupidity and shows perfectly the amount of desperation and panic going on behind the scenes. This is like playing "Russian roullette" with a single chamber shotgun loaded with 00 buckshot! End of story. I know that by now I must sound like a broken record but the "holiday" I have constantly warned of is but moments away. If you thought the pictures of Walmart's shelves emptying within 48 hours of a hurricane was a scary picture, just wait until the "holiday". Just the thought of this is too much for 95+% of the population to think about much less act on. The subject is distasteful to say the least but you must face the mathematical reality. NOTHING can or will "move" without a functioning banking system. Stay prepared! Regards, Bill H.
Gold May Top $6,000, Silver $600: Asset Manager
Published: Friday, 2 Sep 2011 | 1:02 PM ET
By: Katy Barnato
Assistant Editor, CNBC
Gold prices may reach $6,200 per ounce in a bull run which will "end all major bull markets," Urs Gmuer, asset manager at Dolefin, a Swiss investment advice firm, told CNBC.
Gmuer’s prediction is based on analysis of the last major gold boom of the 1970s, during which gold prices rose from $35 per ounce to $850 per ounce. Gmuer said that in the current bull run, prices would be pushed upwards by a protracted period of global economic difficulty—potentially lasting years—during which investors would continue to search for so-called safe havens.
"Gold prices have risen over the last few years, as the macroeconomic picture has become worse. The deterioration of the fundamental situation has now gone even further.
"Purchases by investors of gold will be based on fears of systemic risk or banking crashes," Gmuer said.
The investment manager said that as no "safe" currencies remain, cautious investors had no choice but to opt for precious metals.
"The ultimate currency, which has stood the test of time, which has no political support behind it, is gold. Nobody can print gold out of a machine or a PC.
"What the Swiss National Bank did two-and-a-half weeks ago, increasing the supply of the Swiss franc, means the safe currencies are all gone. That is why gold will have a revival," he said.
Gmuer said the precious metal had entered a "super-cycle," which he likened to the 1998-to-2000 boom in technology media and telecommunications.
He added, "This bull trend will end all the other major bull markets," and singled out debt capital as an asset class for which demand and prices would decline.
However, Gmuer denied that high and rising gold prices could be indicative of a bubble. "If everybody is saying a particular asset is a bubble, that reflects the fact that most people have disposed of it," he said.
Other calculations indicate that gold prices could peak at $3,500 or $4,000 per ounce. This is based on historical data regarding the long-term ratio of gold prices to the global money supply.
On Sept. 2, gold [GCCV1 1876.90 47.80 (+2.61%) ] peaked at $1884.60.
Silver Set for 20-Fold Price Rise?
In addition, Gmuer said silver is set for an even greater upward run than gold, with the market due to correct a distortion in its pricing of silver in relation to gold.
Gold and silver currently price at a ratio of around 45:1. However, Gmuer said declining silver output over the last 60 years—as a result of inventory depletion and mine closures—meant silver supplies currently outnumber gold by a ratio of less than 10:1, thus indicating a market correction is due.
Once this occurs, Gmuer said that silver prices would settle at 10 percent to 15 percent of gold. This implies that if gold reaches $6,200 per ounce, silver will peak at between $620 and $930 per ounce.
On Sept. 2, silver [SICV1 43.069 1.537 (+3.7%) ] peaked at $43.24.
Gmuer added that markets for all precious metals were benefiting from the surge in demand for commodities, food, and energy from developing countries.
"Since World War II, the world population has almost quadrupled. However, most of the increase was in countries that had closed political systems, such as the Soviet Union, China and India," he said. "When these countries started to open up in the 1990s, these people saw they could increase their level of well-being. It is pent-up demand."
© 2011 CNBC.com
From a fellow Café member…
Guy Fawkes' blog of parliamentary plots, rumours and conspiracy (Scroll down and read third article Goldbugs v FT. This is the most read UK political blog and very popular. Note the FT journalist tried to qualify the story.)
For years the FT has portrayed investing in gold as akin to flat-earthism, Alan Beattie at the FT is perhaps the most prominent, if not sole, media supporter of Gordon Brown’s sell-off of gold a decade ago. Guido has long lamented the FT’s tendency to follow the latest intellectual fashions and it is no surprise the FT approved of the Balls/Brown sell-off of gold reserves. It was the newspaper that was the biggest cheerleader for the euro and all things EU, of which it is less effusive about nowadays. The FT’s comment pages are full of wishy-washy, centrist, establishment, hand-wringing of the limousine liberal kind - no surprise given they are overseen by a former editor of Prospect, the monthly journal of wishy-washy limousine liberals. FT readers from the City who don’t simmer with self-loathing know it is best to skip the comment pages and read the market reports and the surprisingly good arts pages.
So how would you have done if you had invested in the stock market instead of gold? Take a look at the charts below, gold out performed the stock market by 17% last month, that is not relative out performance, that is gold was up 12% and the stock market was down 5%. Over the year gold is up some 40%, over 5 years and 10 years gold is more than 100% ahead of stocks.
Stocks of course pay dividends but likewise gold can be leased out to short sellers for an income. Alan Beattie insists gold is speculative, Guido would say, on the contrary, it is an insurance against a collapse of paper assets. So far Guido has been right for a decade and Beattie has been wrong. He now reckons the gold bubble is really about to pop this time. Guido reckons the West’s government debt crisis is about to take off big time and would rather own hard assets like gold and farmland than paper assets. You pays your money and you takes your choice.
UPDATE: Alan Beattie tweets to complain that he never recommended stocks as an alternative to gold, above amended accordingly. Nevertheless gold is up nearly 600% since the Balls/Brown sell-off, which he supported. Beattie is emphasising that his injunctions against gold purchases applied to central banks not investors. But not the central banks of India and China apparently…
Barron's Sept. 3rd Alan Abelson
…ALAN NEWMAN, whose CrossCurrents market commentary is unfailingly informative, has been out of action for eight weeks or so, but happily, he's back and bearish as ever. Alan leans heavily on technical stuff to analyze the increasingly flighty investment scene, but don't let that scare you. He admirably avoids most of the mumbo-jumbo that makes so much of the genre incomprehensible and gives voice to his opinion in clear and lucid declarative sentences.
Not least of the various and sundry concerns that trouble Alan is that a generation of economic growth leading up to the Great Recession was largely fueled by an enormous expansion of debt and we've yet to pay the full price of that extreme and lengthy fecklessness. That's not exactly a secret, to be sure, but the key to assessing the future of the economy and the markets is to find out what got us into this awful jam to begin with.
And one of the prime causal agents of this massive growth in borrowing, Alan relates, was the precipitous reduction in bank reserve requirements, from 12.3% in 1968 to 10.1% in 1978 and 8.5% in 1988. What that meant, he explains, was that the banks could lend 12 times their reserves, which, we might add, most of them lost no time in doing, and ultimately lived to regret it, except for those institutions that are no longer standing.
A legacy of that barely credible rush to lend that bedevils us still, Alan laments, is that reserve requirements have become something of a meaningless statistic as banks push into more-lucrative businesses like the creation and sales of sophisticated derivative instruments "that no one truly understands" or, for that matter, has even a tenuous grasp of the attendant risks.
And he points out, too, that banks now have gone whole-hog in high-frequency trading, which accounts for over 70% of turnover on the exchanges. And, we might add, is finally drawing more intense scrutiny by the often somnolent SEC. In short, increasingly, and one might say eagerly, banks have abandoned their traditional roles in favor of speculating. Crucial in enabling the banks to indulge their wayward activities was the 1999 repeal of the Glass-Steagal Act enacted in 1933 to prevent the banks from using the savings of widows, orphans and other innocent depositors as the coin to speculate with.
One mind-boggling result cited by Alan of the banks becoming prey to the casino mentality is that dollar trading volume now weighs in at four times gross domestic product -- that's right, quadruple GDP -- and up a full tenfold what it was from 1926 to 1999. We've become a nation of paper swappers.
According to Alan, it could be a long time before the bear market bottoms, and he's wise enough not to give a date or a number. Among his immediate worries is that the cash holdings of mutual funds, the tinder, as it were, to ignite a real rally, at last count was a meager 3.3% of assets, an all-time low. So, he asks, "What will fuel the next bull market? Hope?"
Lest you get the impression that he's totally disenchanted with equities, let us assure you he isn't. For he still very much likes gold shares, despite the yellow metal's recent swings, which took it from a high of $1,913.50 an ounce to below $1,800. He dismisses that as merely a price correction after a better than 20% jump in less than two months.
He acknowledges there's a lot of buzz out there about a major top in gold (although not so much Friday) and no end of prodding by strategists and smart alecks to dump gold shares pronto. "Fine," he says, "sell them to us, please."
Gold stocks, he exclaims, "have not even remotely hopped on board the same train bullion did and are still lagging far behind." But he's dead certain that before this great bull market in gold calls it quits, "there will be a fantastic speculative phase in which gold shares go totally berserk."
Just the vision of madly swarming gold bugs running wild makes us drool with delight and anticipation."
The HUI broke out of its massive base on Friday, which ought to be the first real indication that our long awaited gold/silver precious metals share mania is finally upon us, and will more clearly manifest itself in the very near future!
NOTE: One way to assist GATA, and our efforts to expose the truth about the gold market, would be to send this MIDAS commentary to all the mainstream financial market press you can think of.
GATA BE IN IT TO WIN IT!
Sept. 2, 2011
According to Nick Laird post on Midas today, he saw a CNBC video showing an LBMA vault, in which there were standard pallets that had 400 ounce gold bars stacked on them, 96 bars per pallet, and the pallets were themselves stacked 5 or 6 pallets high. As Nick correctly pointed out, the load on one pallet would weigh about 1.2 metric tons, and a stack 6 pallets high containing such loads would weigh about 7.2 metric tons.
Well, I couldn't get his video link to work, but I found his description extremely implausible. The reason is that the entire weight of a stack 6 pallets high would have to be supported by the bottom pallet in the stack. That means the bottom pallet would have
to be strong enough to support the entire 7.2 metric tons, which is 15,840 lbs. But a standard pallet (made of new wood, 48 inches on a side) can only support about 3,500 lbs. It would be reduced to splinters in an instant if a 15,840 lb load were placed on it.
Here is a link where you can verify this yourself:
As I said, I couldn't get Nick's link to work, so I cannot verify his claim that these gold bars were on standard pallets and that some of the stacks were 6 pallets high, but if that is so, I would take it as smoking gun proof that the bars were fake. The final judgment, however, will have to be left to those who can get the video to play on their machines.
Will you beat out Warren Buffet over the next ten years
Great conference at the London gold Rush.
Thanks for your indefatigable efforts. Kudos to CP as well
Just sent out this note to my list of contacts
When are you going to get with the program.
There are three major legs in a bull market
1. the stealth stage when very few realize it has started
2. people become aware but only the smart money gets aboard
3. The manic ,blow off stage where everyone gets aboard at the highest prices and most loose their shirt by paying too much .
We are in stage 2. now so there is time yet.
Stage three will arrive in due course and gold will go to unprecedented heights as it is monetized and the world adopts a gold standard. There will only be a minor fall back as the world adjusts the gold price to settle the debt accounts of the nations. The value of gold will stabilize at much higher levels
PS Silver will do even better as it too is monetized and becomes the day to day medium for exchange of services. Silver is currently in less supply than gold and the demand in dollar terms equals that of gold (As reported by Eric Sprott). The price of silver will go closer and closer to the price of gold.
Only by the use of "honest money" that prevents the accumulation of debt will we us survive the coming financial destruction of all paper fiat currencies. Only those in possession of hard currencies will be in a position of relative financial stability. Gold (and Silver ) will be the last "man" standing when this is through.
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-- Posted Monday, 5 September 2011 | Digg This Article | Source: GoldSeek.com