Monday, April 30, 2012

Gold Value Today

"2009 was the year when gold ETFs really broke into the mass consciousness...

Yet by 2011 the market had collapsed: people were buying much, much larger quantities of physical bullion and coins, but the popularity of ETFs had greatly slumped.

This is even clearer when the ETF market is expressed as a percentage of the physical market. While in 2009 ETFs looked poised to overtake the market in physical bullion and coins, by 2011 they constituted merely a tenth of the physical market:

So what does this say about gold? I think it is shouting and screaming one thing: the people are slowly and subtly waking up to gold’s true role...."

Original Source

Thursday, April 26, 2012

Gold Standard Inevitable, Gold Price 10000/oz

Check out Reuters TV's 5-min interview with John Butler (author of book, ‘The Golden Revolution : How to Prepare for the Coming Gold Standard.’ ) on the gold price as he thinks that returning to some form of Gold Standard is inevitable.   According to Butler if one of the BRICS countries be the first mover to peg their currency to gold, this could lead to a run on the US dollar and financial assets and could cause the dollar to lose 20% in 24 hours as investors pour into real assets such as oil and gold. surprising the world and the United States.  In particular, he points out that Russia may be that country to make that first move.   

Wednesday, April 25, 2012

Is it Revenue or Spending that causes Deficit?

Another succinct clip by Professor Antony Davies to breakdown the complex problem of US deficit problem in simple layman terms.  What is the real problem of the US debt and fiscal deficit problem? Is it the lack of Revenue or the over Spending?

Tuesday, April 24, 2012

Exponentially Unfixable Course

I just watch this presentation by Chris Martenson in Madrid.  It was basically a brief summary of his full course called the Crash Course.  It was an impressive presentation where he gave a very layman understanding of the current economic situation.  The most impressive segment was the parts where he explained how things are going EXPONENTIAL in nature - whether it is US debt or money supply with empirical evidence to support his thesis.  And how all these are going to implode. This is a must watch video.  The entire video is more than 1 hour in length but his presentation is only the first 35mins or so.

Monday, April 23, 2012

China Gold Imports and Gold Price

"A year ago China imported about 5 tons (t) gold a month through Hong Kong. That's been fairly consistent over time. We can track 5–15 t/month through Hong Kong. But around last June, it suddenly jumped to 25 t for the month. Then it went to 40 t. Then it went to 55 t. In November, it peaked at 100 t. If it kept up that pace, which it probably won't, that would be 1,200 t/year. That's about 45% of yearly mine supply in the world. So China is one of these wild cards because it hadn't really been out there in the market like this. 

If China does with gold what it's been doing with other commodities, it could keep that 11-year positive cycle going by looking for gold outside its borders. We're going to get a better picture of how much it truly wants to buy. The numbers could be pretty staggering and could be multiples of what we saw last year and the year before."

Tuesday, April 17, 2012

China Promoting Internationalization of RMB Backed By Gold

Image by Darren Wamboldt/Bergman Group 
China has been building the foundations for the RMB’s use internationally over the last few years. The latest milestone has the China Development Bank planning to offer loans in renminbi to the other BRIC countries, Brazil, Russia, India – as well as South Africa.  Having an international currency promotes trade, cutting the US dollar out of the equation. The ultimate goal may be to pitch the renminbi as a reserve currency to compete with – or displace – the US dollar.  To really sell the RMB as an international currency, it helps if it is backed with a significant amount of gold. China would never openly admit this, but a snippet from an embassy in China, via a wikileaks story, as good as confirmed it last month:

“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 towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the RMB.“

Read Full Article : How China is Driving Gold Price

Greek and Italy Debt running out of control

Hedge Fund CEO Mike Platt Interviewed by Bloomberg on 15-12-2011 on the Euro Crisis. 
Mike thinks that the Greek and Italy Debt is running out of control and any country in Europe could be the next Greece.  His company, Bluecrest Capital Management, now keeps their money in US and German bonds to hedge themselves from a full blow out of the crisis.   

Although I do not agree with his strategy to go into bonds but he sure sounded pessimistically serious and convinced that a big crisis (worst than 2008 scenario) is coming.

Monday, April 16, 2012

Print Our Own Money?

Since the dollar is being devalued constantly with the massive currency printing these days, should we not print our own money? An interesting idea explored by John Stossel.

Thursday, April 12, 2012

The State Bank of Vietnam is instituting a de factonationalisation of Vietnam’s gold market, in an effort to restore confidence in the country’s currency – the dong
According to government statements, these measures are necessary to stop the flight from the dong. Vietnam's current account deficit has grown in the wake of the global financial crisis, and more and more Vietnamese citizens have been buying gold in order to preserve purchasing power. Record-high inflation has encouraged the use of gold as an unofficial currency.

Read More

Tuesday, April 10, 2012

Ten Mins After the Titanic Struck the Iceberg


Hubris led many to declare it financially unsinkable even as its fundamental design was riddled with fatal flaws and the human pilots in charge ran it straight into the ice field at top speed.
We have some time left before the ultimate fate is visible to all. Ten minutes after the collision, the Titanic's passengers had 2 hours and 30 minutes before the "unsinkable" ship sank. How much time we have left is unknown, but the bow of the ship will be visibly settling into the icy water within a year or two--and perhaps much sooner. 

Saturday, April 7, 2012

What May Happen to Gold and Mining Stocks if We Enter a Recession or Depression?

By Jeff Clark, Casey Research

... Here's an updated snapshot of the gold price during each recession since 1955.

Clearly, one should not assume that gold will perform poorly during a recession. Even in the crash of 2008, gold still ended the year with a 5% gain. And with the amount of currency dilution we've undergone since that time, it seems more likely gold will rise in any economic contraction than fall. Indeed, if the response of government to a recession is more money printing, precious metals will be a critical asset to have in your possession.

Read More

US Credit Rating Cut from AA+ to AA

Rating firm Egan-Jones cuts its credit rating on the U.S. government to "AA" from "AA+" with a negative watch, citing a lack of progress in cutting the mounting federal debt.

"When debt-to-GDP  exceeds 100 percent, a country's financial flexibility becomes increasingly strained," Managing Director Sean Egan wrote in his report on the downgrade. "For the first time since World War II, U.S. debt exceeds 100 percent." 

... Read More

Wednesday, April 4, 2012

What's Wrong with Printing More Money?

Since many economies in the world (especially in US) are running in budget deficits, what's wrong with more money printing ? Prof Antony Davies brings us back to basics.

Tuesday, April 3, 2012

Fed Will Be Powerless to Stop What's Coming

By Graham Summers
From the Scott Stantis archive at the Chicago Tribune.

Over the last two years, I’ve been caught into believing a Crash was coming several times. In some ways I was right: we got sizable corrections of 15+%. 

But we never got the REAL CRASH I thought we would because the Fed stepped in.

So what makes this time different?

Several items:

1)    The Crisis coming from Europe will be far, far larger in scope than anything the Fed has dealt with before.
2)    The Fed is now politically toxic and cannot engage in aggressive monetary policy without experiencing severe political backlash (this isan election year).
3)    The Fed’s resources are spent to the point that the only thing the Fedcould do would be to announce an ENORMOUS monetary program which would cause a Crisis in of itself.

Let me walk through each of these one at a time.

Regarding #1, we have several facts that we need to remember. They are:

1)    According to the IMF, European banks as a whole are leveraged at 26 to 1 (this data point is based on reported loans… the real leverage levels are likely much, much higher.) These are a Lehman Brothers leverage levels.

2)    The European Banking system is over $46 trillion in size (nearly 3X total EU GDP).

3)    The European Central Bank’s (ECB) balance sheet is now nearly $4 trillion in size (larger than Germany’s economy and roughly 1/3 the size of the ENTIRE EU’s GDP). Aside from the inflationary and systemic risks this poses (the ECB is now leveraged at over 36 to 1).

Is The Weimar Hyperinflation Happening Today?

Weimar Debt
Weimar Debt Chart
Source :
Well below we can see startling similarities between mistakes made in the 1920's that created and strengthened the Weimar Event along with many of the same mistakes being made by the United States and many other world governments today.

US Debt
US Debt Chart
Source :
• The US Government's unwillingness to raise taxes to support its 10+ year war costs. Looking back at Weimar the same parallel can be seen, as their lack of raising taxes was a huge factor in the lack of funding for their post war re-construction and war reparation payments.

• High prolonged unemployment.
• Both the United States and 1920's Weimar Germany have operated with huge budget deficits and huge deficit spending.
• 40% of every dollar the US Government spends today is borrowed, while at the time Weimar's Government was borrowing 50% to support its costs.
• Both have kept interest rates way below the rate of inflation.
• Both creating rapidly increasing money supplies
Increasing the money supply is one of the most devastating factors in the creation of hyperinflation. Central Banks such as the US Federal Reserve are responsible for the creation and distribution of the paper currency they print. This 2-way responsibility creates an unbalanced supply and demand for printed money or fiat currency. With products and services attaining minimum growth at best, they do not match the "additional" amount of printed money, so the intrinsic value of this excessive money supply decreases.
Just as Weimar Germany had done many years ago, the Federal Reserve has been creating new money too, out of thin air. More recently during the last two "quantitative easing" bond buying schemes, operation twist and international dollar swaps programs with foreign central banks. Soon most likely, round three of the quantitative easing program will be coming out from the Fed. This money creation is done through speculative bets on the books of private banks; furthermore it produces nothing of value for the US Economy...
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Monday, April 2, 2012

Consequences & Dangers of Printing Money

What are and will be the consequences and dangers of all the money printing around the world today in US, UK, Japan and Europe? Why are the price of oil, gasoline and gold going up? Where will all these lead to? This video presentation answer these questions simply using whiteboard marker illustrations.

Sunday, April 1, 2012

Decline and Fall of the US Dollar

"Right now there are ongoing discussions between the BRICS (Brazil, Russia, India, China and South Africa) countries over ther use of the SWIFT system of international settlements as a ‘weapon’ against Iran. The full extent of the impact of this appears to have been ignored. 

With China and India as two of Iran’s clients, they found that the U.S. could hurt them considerably with this action. If they can hurt them in this way, then they can hurt them the same way on other issues. So the question that the BRIC nations are now asking is, “Must we be subject to the financial will of the U.S.?”"

... Read More