Tuesday, November 30, 2010

Why Eric Sprott sees silver as the next big investing windfall

From Tuesday's Globe and Mail
Published Monday, Nov. 29, 2010 6:30PM EST

You have been a bull on gold from the get-go. Is its price over $1,350 (U.S.) unfolding as you expected?
It’s been the investment of the decade. When I bought gold, I was buying gold to hold [as a long-term investment]. As it turned out, it quintupled. I didn’t think it would go that far because no none would have imagined that the central banks and governments would get themselves in a position where they are printing money.
The printing of money makes gold more valuable. You don’t have to be a genius to figure this out. The Johnny-come-latelies – the Paulsons, Einhorns and Soros – all figured out, when [the Fed announced the first round of quantitative easing], that they should own gold. It becomes more obvious every day as you see these financial challenges that we have in Europe.
But the real story now is silver.

Why are you more bullish on that metal?

Gold has traded at a ratio of 16-to-1 to silver in terms of price, but today it trades in the range of 50 to 1. I think the gold-to-silver ratio is going to go back to 16 to 1 given the passage of time, say three to five years. And I bet you that silver overshoots. The gold-to-silver ratio may even get down to 10 to 1. I believe that the price of silver has been suppressed.  LINK...

Sunday, November 28, 2010

Gold Fever: Pondering the Causes

The New York Times

Published: November 25, 2010

It is part religion, part politics. It is a way to voice a lack of confidence in the central banks of the world and a yearning for the world as it used to be. It is an investment that historically made sense when inflation was rampant, and yet it is soaring while the Federal Reserve frets about the threat of deflation.

It is gold.

Over the last four decades, the only ones in which gold was freely traded, gold proved to be a good buy precisely when it appeared the system was failing. In the 1970s, gold zoomed upward from artificially low levels, while stocks did not come close to keeping up with inflation. In the 1980s and 1990s, stocks rose at rates greater than 15 percent a year, and gold went down. In the first decade of this century, stocks declined while gold rose at a compound rate of almost 15 percent a year.

So far this year, both gold and stocks are up. That combination is unlikely to last out the current decade.

Betting that $1,400 gold will soon be $1,800 gold or $2,500 gold is basically a bet that the West really is in permanent decline this time, with countries facing the prospect of bankruptcy or sharp reductions in spending on everything from schools to pensions. Or perhaps all of the above.

Let’s hope the bet is wrong.  LINK...
This is the ironic thing about being successful in the Gold business. It means there is economic and social "unrest" in society. No sane person wants Gold to go ballistic but I don't think there is much sanity in the current monetary policies of the Western nations. We now have QE in Europe for Ireland and the new QE in the USA. This cannot last long and Gold will be the only sound money in the world, it is inevitable and axiomatic. The big difference between Gold bulls and Equities bulls is that Gold Bulls fundamentally do NOT want to be right because of what it means for society, it's a "protection play," but sometimes the truth hurts and unfortunately this time it will really hurt.  BK

Thursday, November 25, 2010

$500 Silver Says Max Keiser

Max Keiser explains how and why Silver can get to $500/oz. It has long been discussed in the hard money circles that manipulation of gold and silver existed and will come to an end. The recent CFTC hearings and confessions of a London trader have opened a big can of worms for the naked short sellers of gold and silver. We believe that silver will move much faster than gold on a percentage basis but they both have much higher to go in this bull market.   BK


Wednesday, November 24, 2010

A Taste of The International Forecaster: Bob Chapman

This week in the USA section of The International Forecaster

The social net has become a bit more frayed. Soon extended unemployment benefits will cease and 2 million Americans will have to dip into their savings, if they have any. This is an outgrowth of the effects of free trade, globalization, offshoring and outsourcing. We have lost 8.5 million jobs over the last ten years to this destructive process. We have seen more than 42,000 manufacturing plants leave the country as well. There are now more than 17 million Americans unemployed and the U6 official government unemployment figures 17%. If you remove the bogus birth/death ration, the real figure is 22-5/8%. Over that ten-year period we have lost about 5.5 million manufacturing jobs or about 1/3rd of that labor force. As recent as 1985, 25% of output was in manufacturing, now it is close to 11%. America’s physical infrastructure is in a shambles, so that transnational conglomerates can bring us cheap goods to suppress inflation and bring these companies mega-profits, which they keep stored offshore to bypass taxation. They presently have $1.7 trillion in such profits.

This in part has been caused by deficit spending and the creation of money and credit since August 15,1971, when the US left the gold standard. It is not surprising as a result that 81% of the US economy is considered in poor shape and that the IMF fears a social explosion. You could call this a financial death spiral.

Tuesday, November 23, 2010

More Bad News For ETF's

Bloomberg · Sunday, Nov. 21, 2010

Gold’s 24% surge this year to a record is proving no deterrent to George Soros, John Paulson and Paul Touradji, whose investments signal more gains for the longest winning streak in at least nine decades.
Securities and Exchange Commission filings this month by Soros Fund Management LLC, Paulson & Co. and Touradji Capital Management LP listed investments in gold as their biggest holdings. Exchange-traded products own 2,088 metric tons, equal to nine years of U.S. mine supply, data compiled by Bloomberg show. Precious metals will produce the best commodity returns in the next year, Goldman Sachs Group Inc. said in a Nov. 9 report.
Read more: http://www.financialpost.com/news/Soros+gold+bubble+expanding/3865903/story.html#ixzz16AGCjcW5

Eric from JSMineset also comments on the Gold ETF's

In our opinion, Gold ETF's are nothing but modern day alchemy. People must learn, there is NO substitute for real Gold in your hand. Our U-Vault Account allows clients to actually hold the Gold in their hand before it goes in the vault for storage. There are no custodians, subcustodians, derivatives or intermediaries. It's YOUR Gold, fully allocated, segregated and sealed in the vault, period.  BK

Gold, silver continue rally in uncertain times

Advisor.ca:  Vikram Barhat / November 23, 2010

"Gold is not trading on inflation expectations, it's really trading as an alternative currency to the U.S. dollar," said Paul Taylor, chief investment officer, BMO Harris Private Banking. "There's the expectation that the reflation of the U.S. economy is not good for the U.S. fiscal debts and deficit situation." 
A deepening lack of faith in paper currencies has been driving investors globally to adopt gold as an alternative currency. "If you look at currencies around the world they are all faith-based initiatives," said Herring. "They are all paper currencies backed by nothing."  LINK...
A good article that touches on many of the points we've been talking about on this website.
As we've been telling our clients for a long time now. "The rise in Gold is NOT about the rise in Gold. It's about the loss of confidence in the U.S. dollar as the world's reserve currency."    BK

Thursday, November 18, 2010

Poetic Confessions of a Banker

As seen on www.jsmineset.com

People always wonder who's controlling our money from behind the scenes. We believe this video speaks the truth that has existed for hundreds of years.

The important thing to keep in mind is history, and the real reason why the United States of America was founded and what the "Declaration of Independence" was all about?
European's fled to America to preserve their culture and escape from tyranny, and to live as FREE men.
Of course the currency of the nation was backed by GOLD back then, and there was a reason for it. Gold keeps bankers and politicians honest and disciplined and keeps "the power" in the hands of the people!
Think about it, if the "internationalists" own the media, the politicians and the Gold then they always have the power. THEY don't want to lose that POWER so they always discount Gold ownership because they want it for themselves. If you have any doubt to this fact then please refer to history and realize that Gold has been a measure of wealth for almost 5000 years and it has outlasted EVERY government, currency and stock market that has EVER existed!   BK

Wednesday, November 17, 2010

Wealthy Families Shun Gold ETF's for the Real Thing, Physical Gold is True Protection

Financial News
Tara Loader Wilkinson

15 Nov 2010

A lawsuit filed last week against global banks JP Morgan and HSBC by investors in the US, over an alleged conspiracy to manipulate the market for silver futures, was the latest news to take the shine off the gold derivatives industry, wealth managers said. JP Morgan did not return calls for comment. HSBC declined to comment.
Ned Naylor-Leyland, partner at Cheviot Asset Management, said a lack of trust in banks and the spectre of counterparty risk was a problem. “I hear Swiss banks are turning out their vaults for clients wanting to take home their gold. Trust is wearing thin.”
The suggestion of manipulation followed assertions that paper claims on gold far outweighed the physical asset. This year, Jeffrey Christian, managing director of commodities market researcher CPM Group, said a hundred times more gold and silver changes hands each year than is produced or used.
According to the World Gold Council, global demand for gold bars climbed by a third between the second quarter of 2009 and the same period this year, while demand for gold ETFs and similar products rocketed 414%.
Nicholas Brooks, head of research and strategy at ETF Securities, said concerns that many ETFs are not backed by physical assets are overblown. He said: “Our ETFs are 100% backed by physical gold in vaults in London. There are other gold investment vehicles listed globally that do not provide the same level of detail on their holdings or independent audits and this may be a factor fuelling some of the conspiracy theories.”  LINK...
We have been advising our clients to take the common sense approach to this problem. Think about the fundamental reason why people invest in Gold in the first place? For insurance against a failing financial system, a loss of confidence in government and the economy. So why would you trust your "Gold Insurance" in the hands of the creators of the problem to begin with? Maybe the ETF's really do have the gold they say they do, but their prospectus' clearly state that they can trade derivatives, so who really knows? We believe there's NO substitute for physical Gold in YOUR HAND!
As the old saying goes, "He who holds the Gold, makes the rules."   BK

Tuesday, November 16, 2010

Tim Horton's Closing 36 Stores

The Associated Press November 11, 2010, 12:49PM ET

The Tim Hortons chain of coffee shops says it's closing 36 restaurants and 18 kiosks in New England.
The Canadian company announced Wednesday it would close all its locations in Rhode Island, Massachusetts and Connecticut. It's also closing two of its stores in the Portland, Maine, area, although more than two dozen locations remain in Maine.  LINK...
In the USA they say "As goes GM so goes the USA", in Canada we might as well say "As goes Tim Horton's, so goes Canada."    BK

Monday, November 15, 2010

Food Inflation Accelerating

Farm Costs Soar

The Standard & Poor’s GSCI Agriculture Index of eight futures climbed 30 percent this year, led by corn, wheat, coffee and cotton, as floods in Canada, Pakistan and China and drought in Russia and across Europe killed crops. The economies of China and India, the biggest consumers of cooking oils, are growing at three times the speed of the U.S.   LINK...
Legendary investor and commodities guru, Jim Rogers has been telling us since 1999 that we're entering a commodities bull market that could last up to 18 years based on history. Mr. Rogers has been dead right ever since while we see ALL-TIME-HIGHS in GOLD and CRUDE OIL, followed by yearly highs in corn, soy beans, sugar, coffee, cotton etc. As we have been telling people on this website that the inflation numbers we see posted by the government do not include "FOOD & ENERGY", which are the most important prices people worry about because it's part of daily living. So, when you sit down with your financial planner and they estimate your retirement income needs based on 2-3% inflation then just ask him to use 10-15% when running his calculations and see what you get. We always say it's better to plan for the worst and hope for the best, especially if you're on a fixed income and in your retirement years.   BK 

Thursday, November 11, 2010

Dialogue About a Return to the Gold Standard Has Begun!

Breaking News:

King World News interviews Jim Rickards about solving the economic crisis with a Gold Standard! LINK...
Seems to me that a return to the "Gold Standard" will be inevitable, according to these guys and the President of the World Bank, Robert Zoellick. They even suggest storing your Gold in private vaults. HMMM, I wonder if they heard of our
U-Vault Account? BK

Taste of The International Forecaster

This week's taste of The International Forecaster
by Bob Chapman

Several years from now many will see through the fallacies of Keynes and the nostrums that caused its demise. In the case of the Fed its goal is sustainable economic growth and price stability and that long term inflation expectations remain contained. As we have seen stability has been relative and inflation has been with us for many years, particularly since August 15, 1971, when the US dollar, the world reserve currency, abandoned gold backing. The simple conclusion is you cannot have both no matter what Keynes postulated. Central banks, and particularly the Fed, have allowed inflation to always be present, because deflation strikes absolute terror into their hearts. That is why the privately owned Fed demands total control over the US money supply. The Fed contends that they can control the economy via the money supply and manipulation of interest rates. The result is that stable prices are impossible. Growth has to be accompanied by inflation under Keynesianism; there can be no other outcome.

We are a long-time subscriber.   BK

Monday, November 8, 2010

Great Set of Articles From JSMineset.com

Jim Sinclair's www.jsmineset.com does a GREAT job updating everyone on the gold market. We visit his site daily.


Saturday, November 6, 2010

Big winner at Caesars loses at the border

Fri Nov 5, 3:22 PM

By Trevor Wilhelm

WINDSOR, Ont. ­ A Caesars Windsor gambler lost $20,000 to the U.S. government after border guards called his bluff.
After a man from Birmingham, Mich., won $40,000 at Caesars Monday, he put half in deposit at the casino and tried to bring almost $20,000 back to Michigan without declaring it, according to U.S. officials.
"If he'd showed up at the border and said I've got $20,000 with me, we would have counted it, filled out the form and he would have been on his way home with his money."
Failing to declare the cash isn't a criminal offence, so the man's name hasn't been released.
For Canadian gamblers or others crossing the border with a lot of cash, the rules at the border are similar. There is no restriction on the amount of money you can bring to or take out of Canada, but you must report amounts of $10,000 or more. That includes cash, coins, bank notes and securities such as travellers cheques, stocks and bonds.  LINK...

Gold Smells Blood

By Greg Hunter’s USAWatchdog.com -5 November 2010

One day after the Federal Reserve announced a $600-$900 billion second round of Quantitative Easing (QE2), gold and silver hit fresh all-time highs.  Yesterday, the yellow metal surged more than $40 an ounce to well over $1,390 before falling back a few dollars in after hours trading.  Silver, also, had a monster move!  It was up more than a $1.50 per ounce.  It, too, retracted slightly in after hours trading.  That surge in precious metals is a debilitating rebuke of the Federal Reserve’s wild and unprecedented money printing policies.   How bad is it, really, for the Fed to feel this is a good idea?  Gold is acting like a predator that smells the blood of wounded prey.   LINK...

Friday, November 5, 2010

Marc Faber's Outlook for 2009 and Why it Echoes Today


Mr. Faber holds no punches on who's to blame for the financial crisis. His thoughts then are spot on to what is happening now. Who says no one can predict the markets? Listen to what Mr. Faber said at the end of 2008 and think about what is happening now. Especially with Gold!   BK

Thursday, November 4, 2010

Commodity Prices Rise Forcing Retailers to Raise Food Prices on the Shelf

Compliments of Dan Norcini from JSMineset
Posted: Nov 04 2010 By: Dan Norcini Post Edited: November 4, 2010 at 10:45 am

Food Sellers Grit Teeth, Raise Prices

From THE WALL STREET JOURNAL – An inflationary tide is beginning to ripple through America’s supermarkets and restaurants, threatening to end the tamest year of food pricing in nearly two decades. Prices of staples including milk, beef, coffee, cocoa and sugar have risen sharply in recent months. And food makers and retailers including McDonald’s Corp., Kellogg Co. and Kroger Co. have begun to signal that they will try to make consumers shoulder more of the higher costs for ingredients.   LINK...