The Management of Gold

The ability to follow the money, see the secular trends despite the contradictory rhetoric emanating for media outlets, is usually the difference between long-term real profit and losses. The following is highly technical but it will provide a graphical representation of how gold market is managed.

The money flows in the gold market reveal a classic footprint of price management. The use of paper to slow the advance and setup leverage profit before price acceleration phases. The footprint in 2010, as I have written about on jsmineset.com in 2008-2009, is similar to that of 2005 and 2006.

Once "connected" money had reduced their net short position as a percentage of open interest from -50% to -17.58% from August 2005 to June 2006, thereby repositioning the trading computers and gold community, gold’s rally accelerated from $647 to $1,006.75 between June 2006 and March 2008. "Connected" money is attempting a similar net short reduction in 2010. Management of gold, however, should prove far more difficult in 2010. The economic and financial backdrop is far more fragile than 2006 and global investors are becoming increasingly aware to lie and deny tactics.

Gold London P.M Fixed and the Commercial Traders COT Futures and Options Net Long As A % of Open Interest:


Commercial traders, or connected money, manage the gold market. After the May 2005 high, connected money began the process of reduction their net short position into weakness to prepare for the next rally. The bulk of this churn was completed by 6/26/07 with an extremely bullish WA reading of 100%. Gold was trading at $647. Less than nine months later gold has soared to $1,006.75. A similar churn created by fear is unfolding today. The plan is to squeeze the trading boxes and retail money into weakness as cover to reduce short positions before the next price acceleration phase.

Gold London P.M Fixed and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:


Retail money, motivated by fear generated by price weakness, was driven from net long to short position from June to October of 2006. A similar money flow setup or “play” orchestrated by connected players is being executed in 2010. Retail money is in the process of being driven from net long to short positions from April to July-August of 2010. A break of the orange downtrend, as indicated by the blue arrow in 2006, will mark an end to the paper operation and the fleecing of retail money in 2010.

Gold London P.M Fixed and the Nonreportable Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:


The fear created during the churn driven away investors. This is illustrated by shrinking opening interest. Connected money decreases the net short (increases their longs) and control a larger position of the open interest. The sheep, trading computers and retail money, are lined up for the slaughter and are happy to be there.

Gold London P.M Fixed and the COT Futures and Options Open Interest Stochastic Weighted Average


Options are one of the preferred tools of management. The heavy churn created by fear within the D-wave wave often hides the money flows within the options market. Once heavy selling ends, illustrated by a break of the orange trend line after an extreme reading, connected money begins buying aggressively into weakness (call buying). This will mark the end of the D-wave and set the stage for lighter churn that will organize into a sharp, unexpected advance.

Gold London P.M Fixed and the Commercial Traders COT Options Stochastic Weighted Average of Net Long Options As A % of Open Interest:

Incoming BP CEO: Time for 'scaleback' in cleanup

Does this really need a comment? We're going to make things right by scaling back our clean up efforts after an oil gieser in the Gulf dwarfed the Exxon Valdez spill by orders of magnitude.

BP's incoming CEO said Friday that it's time for a "scaleback" of the massive effort to clean up the Gulf of Mexico oil spill, but stressed the commitment to make things right is the same as ever.

Source: news.yahoo.com

Wall Street edges lower as investors mull slow recovery

Stocks fell on Friday, rebounding for a second day in a row from more substantial losses, as concerns about slower economic growth held trading to a tight range.

Do not associate a technical sell-off with any significant economic conclusions. The direction for stocks, sitting at or near support, will have little to do with lie and deny economic data series. Capital flows, seeking protection against further currency debasement, are driving this market.

As for the slow recovery, my response to that is what did you expect? Consumption, the main driver of US national income, is beginning to fade with the reduction of stimulus injections and America begin to defy pop culture by saving. That's right saving a portion of their incomes. In addition, the engine of future growth, domestic private investment, remains flat at best, and the structural trade deficit is beginning to reassert itself. Government consumption and investment, based largely federal spending, continues to support a weakening private sector.

In other words, the massive quantitative easing to date has done affect the economic trends that are just beginning to intensify.

Personal Consumption Expenditures (PCE) As A %GDP and Personal Consumption Expenditures As A %GDP Average from 1947:


Gross Domestic Private Investment (GDPI) As A %GDP and Gross Domestic Private Investment (GDPI) As A %GDP Average from 1947:


Net Exports (NETEX) As A %GDP and Net Exports (NETEX) As A %GDP Average from 1947:


Government Consumption Expenditures and Gross Investment (GCEI) As A %GDP Average from 1947:


Federal Consumption Expenditures and Gross Investment (FED) As A %GDP and Federal Consumption Expenditures and Gross Investment (FED) As A %GDP Average from 1947


Savings (SAV) As A %GDP and Savings (SAV) As A %GDP Average from 1947:


Source: news.yahoo.com

Time to Accumulate metals and mining stocks-UBS

Word continues to leak out, buried within the deep recesses of the Internet, despite the selling-induced fear created by the paper operation. As we have been saying for awhile, it will be today's enemy of gold - bullion banks and agents rather than the gold community that will profit most from gold's secular rise.

Positive View on Gold

"We believe that ongoing pressure on sovereign debt markets, combined with persistent concerns over private sector credit contraction will raise the spectre of debt monetization repeatedly over the next few years," the analysts advised. "We expect that this background will remain very supportive for gold prices over the period, and that informs our above consensus gold price outlook and our inclusion of two gold stocks in our top ten picks..."

Source: mineweb.co.za

Americans Buy IPads While Broke in New Abnormal Economy

Are those that pay their mortgage and live within their financial means the greater fools than those that live without constraints? In the upside-down world of free money and blind risk assessment it would appear so. Even after someone walks away from their debt obligation, a practice becoming more socially acceptable, there's no shame in further recreational consumption. People do this because there is a perception that their actions have no consequences. Strategic walk-a-ways from the mortgages and excessive consumption carries no discernable price. Stick it to the bankers, right?

Unfortunately, it does carry a hidden price tag. The burden of mortgage defaults and excessive consumption is carried by all Americans through currency debasement. Currency debasement is and will continue to be used to minimize the effects of failing debt created during the previous expansion. The bankers know it, and will be protecting themselves at the expense of the public.

The more he thought about the money he was losing, the more it stressed him out. Finally, Ronzio enlisted the help of a firm called You Walk Away and did exactly that from the remaining $319,000 on his condo mortgage. When the bank foreclosed, he says he felt a sense of relief. He also had more cash. He and his fiancée took the kids to Disneyland. Ronzio, 31, gave himself a treat as well.

Source: bloomberg.com

The basis of investment discipline is the mastery of fear

Headline: Is Gold Pointing to Lehman Mark II?

In mid-August 2007, gold stood at a "relatively modest" $650 a troy once. But, after the Federal Reserve's aggressive rate cutting later that month, it began a rally that saw it add 58 percent to its price by March 2008, he added. Gold hit its peak price of $1030 on March 17 2008, Derrick said.

"The current decline in the price is down to deterioration in sentiment about the economic outlook (and the threat of rising deflationary pressures) rather than a reflection of greater optimism about the standing of the euro," Derrick wrote.

“Only Thing We Have to Fear Is Fear Itself”, Franklin D. Roosevelt 1933.

President Roosevelt was right. Fear is contagious. Fear is destructive.

Fear works in the gold market because it blinds investors. It will turn flawed into sound comparisons. Notice how the article compares today to a possible setup of March 2008. Investors remember the pain of watching gold fall from $1,000 to sub $750 within six months. The fear of the next big decline is likely to blind investors to the fact that the money flow setup is totally different. Today’s setup is quite similar to June-July 2006. Fortunately, or depending on your perspective or trading book it could be unfortunately, the 2006 setup did not preceed a sharp decline. Gold rallied from $588 on July 2006 to $1006 on March 2008.

Gold London P.M Fixed and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:


Source: finance.yahoo.com

Gold to Silver Ratio Defines Hemorrhage and Liquidity Phases

The market will continue to cycle between hemorrhage and liquidity phases as central planners attempt to mitigate the debt burden of the previous expansion through currency debasement. The trend in the spread between gold and silver provides an excellent measure of risk aversion to risk-taking or the identification between hemorrhage and liquidity phases. Contrary to consensus expectations, the liquidity phase that started in 2008 and normally represented in two steps down has yet to complete.

Gold and Silver Ratio:

Technical Look At Tanzanian Rty Explr Co

REV(E) at new highs, an illustration of rising trend energy, suggests a break of near term resistance.

Tanzanian Rty Explr Co (TRE):


Three days or 3% close above the near-term swing high will pull in the momentum chasers.

Tanzanian Rty Explr Co (TRE):

The Dual Face of the Structural Trade Deficit

Eric,

A big ship I would hate to try to avoid on the high seas while she was doing 30 knots. There will be three of the zapping back and forth across the Pacific 5 days each way! Wow! lets hear it for Walmart!

Jack

Both pictures define the reality of structural deficits in which issuance debt at the expense of tomorrow's production, consumption, and investment.

Made in China:


Made in China also manifests itself in the Formula depicted below.

US Federal Budget (Surplus or Deficit As A % of GDP, 12 Month Moving Average) and Gold London P.M. Fixed:

Durable goods orders fall while business spending up

New orders for long-lasting manufactured goods fell unexpectedly for a second straight month in June, posting the largest drop since August in a sign economic recovery cooled in the second quarter.

Both gold- and CPI-adjusted new durable goods (ex defense and aircraft) continue to trace out a pattern of lower lows and highs. The gold-adjusted durable goods time series illustrates the extent to which currency debasement exceeds economic activity. A recovery driven by currency debasement (inflation) will not create enough jobs to maintain the standard of living afforded by the previous economic expansion.

Gold-Adjusted New Orders of Durable Goods ex. defense and aircraft (BCCSGLDR) and YOY Change:


Real Business Core Capital Spending: Real or CPI-Adjusted New Orders of Durable Goods ex. defense and aircraft (RBCCS) and YOY Change:


Source: news.yahoo.com

California governor declares state of fiscal emergency

The recovery, suggested on F-TV as the recovery with a little R, is doing little to pull cash strapped states out of their budgetary holes.

Increasing pressure on lawmakers to negotiate a state budget that closes a $19 billion shortfall, California Governor Arnold Schwarzenegger declared a state of emergency over the state's finances on Wednesday.

In the declaration, Schwarzenegger ordered three furlough days per month beginning in August for thousands of state employees to preserve the state's cash to pay the state's debt obligations and for essential services.

Source: news.yahoo.com

The Threat of Deflation Is Omnipresent But Nowhere To Be Seen

Woolworth Menu from 1950:


Check out McDonald's menu prices once. Has the quality and quantity of food increased enough compensate for the price discrepancy? If not, welcome to the world of inflation and currency debasement.

Technical Look At Gold

Eric,

I attached what I have on the chart. I think we have a week or two left and then something has to happen. I think August could be pretty good to us.

Matt

U.S. Gold


Price, thus, charts can be easily painted to elicit a computer response. What is far more difficult to paint is the force behind the trend. Any price analysis is incomplete without it. Still, it is highly likely that the "managers" maximized the technical damage to coincide with option expiration and contract roll over this week. This will be confirmed or refuted by the breakdown of contracts in the paper market released at the end of the week.

The Treasury International Capital Data Provides an Important Reminder to Gold Holders

If you cannot feel the Treasury International Capital (TIC) data nudge you in the ribs upon discussion of selling into fear, you must be wearing a flak jacket.

Draw your attention to China and Japan. These nations represent the largest two purchasers of US Treasuries and account nearly 42% of Treasuries sold in May. While this percentage may appear solid, it has quietly deteriorated since 2009. China and Japan have reduced their marginal purchases from 26.8% and 20.9% in 2009 to 21.9% and 19.8% in 2010, respectively. This subtle decay illustrates the importance of the old saying, “money talks and bullsh*t walks.” Money is shifting despite the contradicting explanations on F-TV. Gold “sees” these trends, so pay attention when it nudges you in the ribs upon discussion of selling gold into fear.

Treasury International Capital - Major Foreign Holders of U.S. Treasuries:


Source: treas.gov

Options Expiration and Contract Roll Over Week for Gold

This week is option and roll week on Comex. Gold is typically hammered around options expiration to force as many contracts to expire worthless as possible. Also, any trader not rolling their position to the next month in the futures market must be out of their long position by the close of Thursday. These events not only tend to force the price of gold down but also provide cover for connected money to reduce their short positions before the next advance.

Ahmadinejad says expects U.S. to attack MidEast soon

The oil and gold markets will be your best source of market intelligence on this claim. Perhaps signficant short covering operation in gold is more than anticipation of another liquidity blast.

Iran expects the United States to launch a military strike on "at least two countries" in the Middle East in the next three months, Iranian President Mahmoud Ahmadinejad told state-run Press TV.

Source: news.yahoo.com

Treasury to hold conference on Fannie, Freddie

The market brought fundamental change already. It said the company, along with it's loan portfolio, was worthless. The stock went to zero. What's more fundamental than that? $145 billion of taxpayer money was used to buy worthless junk. That's pretty fundamental too. If Fannie and Freddie went public again as trading houses, they could use fictional accounting to recognize huge profits.

Speaking on "Meet the Press" on Sunday on NBC, Treasury Secretary Geithner said the administration's ultimate plan is likely to bring dramatic changes to the mortgage system.

"We're not going to preserve Fannie and Freddie in anything like the current form," Geithner said. "We're going to have to bring fundamental change to that market."

Source: finance.yahoo.com

Gold often gets sacked during important bond auctions

There’s lots of paper to unload this week. Nearly $37.5 billion accepted bids today in the all important 2-year auction. Sums around $20 and 12 billion are expected in 5- and 7-year auction on Wednesday and Thursday. $70 billion worth debt issuance is a lot of paper to move. A planned sacking of gold helps to move the merchandise from the showroom floor.

Source: treasurydirect.gov

Audit: US can't account for $8.7B in Iraqi funds

When you shrink wrap piles of money and air ship them to Afghanistan what the hell do you expect. Big business is the result for all the connector airlines. Jim

The U.S. Defense Department is unable to properly account for over 95 percent of $9.1 billion in Iraqi oil money tapped by the U.S. for rebuilding the war ravaged nation, according to an audit released Tuesday.

Illustration for the lack of respect for fiat money by its issuers. Meanwhile, gold sits miles below ground in large vaults guarded by technology that could detect movement of a housefly in complete secrecy.

Source: news.yahoo.com

While the gold market will be “pressed” as long as possible, it will change direction when time is up

Housing prices are rising according to economic reports this morning. The source of this economic miracle was not identified, but has to be primarily in the minds of those so reporting. The Euro traded over $1.30 before running into selling. Consensus see this as solved problems in the EU, not a hint of greater problems in the US. FASB capitulation and creative accounting impacting banks earnings are the subject of Eric's contribution below. Calls I am getting this morning are total capitulation calls. Emails are worse. Gold will trade at $1650 and beyond.

Those that buy strength and sell weakness will lose in gold.

The three steps of paper operations

(1) Setup sentiment with bearish stories on F-TV before and during the operation.

(2) Since the shorts are few in number, well-organized and coordinated, it's easy to press the market through short-term technical triggers.

(3) Once the technical trigger is generated, the numerous and high uncoordinated computers do all the work.

As I wrote on Sunday, "while the gold market will be “pressed” as long as possible, it will change direction when time is up." Those controlling the operation understand the limitation of time. Retail money does not, so watch them closely (see chart below). They will be setup on the wrong side at the wrong time for the benefit of connected money. Who are they? They are the ones with the smirk on their face during the decline.

Gold London P.M Fixed and the Nonreportable Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:


This game will be repeated again and again in the future because the sheeple are determined to remain asleep until moments before the slaughter.

CIT Q2 profit beats Street view

Business must be great! That is, the business of creative, fictional accounting.

CIT Group (NYSE:CIT - News), the commercial lender that last year emerged from bankruptcy, on Tuesday reported a quarterly profit that dwarfed analysts' estimates.

CIT said gains from asset sales and recoveries from written-off loans boosted its second-quarter profit, offsetting costs it reported related to an employee retention program and higher credit costs.

Source: finance.yahoo.com

Outrage remains after CA council votes to cut pay

Greed and fear are not the sole domain of Wall Street.

Four of the five council members were getting paid nearly $100,000 for their part-time jobs. Other officials were getting paid far more and the city manager, who made nearly $800,000, has already resigned. Attorney General Jerry Brown on Monday revealed he had subpoenaed hundreds of city records.

The salaries exploded into public view after a Los Angeles Times investigation, based on California Public Records Act requests, showed the city payroll was bloated with six-figure salaries:

Source: yahoo.com

New home sales up, but sales remains slow

The Commerce Department says new home sales rose nearly 24 percent in June from a month earlier to a seasonally adjusted annual sales pace of 330,000. May's number was revised downward to 267,000, the slowest pace on records dating back to 1963. Sales for April and March were also revised downward.

The sales revisions illustrate not only a broken but also deteriorating trend.

New Home Sales And Change YOY, SA:


Falling real (gold adjusted) home prices will do little to support future new home sales without further stimulus programs.

Median Home Price to Gold Ratio (MHPGOLDR) And YOY Change:


Source: finance.yahoo.com

Chicago Fed National Activity Index

Index shows economic activity declined in June

Led by deterioration in production- and employment-related indicators, the
Chicago Fed National Activity Index declined to –0.63 in June, down from +0.31
in May. Three of the four broad categories of indicators that make up the index
made negative contributions in June, while the sales, orders, and inventories
category made the lone positive contribution.

Chicago Fed National Activity Index (CFNAI) is a lesser known economic series that suggest economic weakness in June. Trend inflections and divergences in the CFNAI often foreshadow trend changes in U.S. stocks. While the CFNAI trend line has yet to break, any weakness from June will met with further liquidity blasts from the Fed and public sector wishing to maintain the trend in stocks.

Chicago Fed National Activity Index (CNFAI) and S&P 500 Average:


Source: chicagofed.org

Inflation's hidden cost: forcing families to make riskier investments

Sound as a dollar, chuckle. A couple of generations ago, that phrase actually meant something.

Remember, one man's risk is another's reward. Gold being referred as commodity rather than currency by the media is no accident. The former implies risk, the latter far less.

Six decades ago, the phrase “sound as a dollar” meant something. It didn’t have the ironic ring it has today. At that time, Americans believed that the dollar was “good as gold.” Most families’ wealth consisted of savings accounts, savings bonds, life insurance policies, and money tucked away in cookie jars and shoe boxes.

Source: csmonitor.com

Strong hands tend to setup the weak

The strong hands are buying into the summer weakness.

S&P 500 and the Commercial Traders COT Futures and Options Equity Diffusion Index (DI):


The weak hands following the media driven consensus are selling weakness.

S&P 500 and and the Nonreportable Traders COT Futures and Options Equity Diffusion Index (DI):

Follow the Money Within The Gold Market

America's total debt is expected to exceed $14 trillion next year. Each American's share of that debt totals just short of $50,000. If Fedzilla was honest and put all the figures on the table, we are in debt over $100 trillion due to the unfunded financial obligations for Social Security, Medicare and Medicaid.

As Jim suggests, an excellent economic observation from Ted (The Sledge) Nuggent. Actually, if all the "debt cards" were laid on the table the real burden would be far greater than anyone would be willing to recognize at least from a public perspective.

Unfortunately, any sentence that starts enormous debt burden of the US and western world and ends with buy gold is still a first class ticket to the lunatic fringe. Nobody wants to be associated with the lunatic fringe. Thus, it's deer in headlights for most investors during the dips.

Connected money is still covering their short positions into weakness. This is not subjective opinion but rather fact. This is reflected by WA reading above 80%. In other words, the change in composition of contracts is significant (not to be ignored). While the gold market will be “pressed” as long as possible, it will change direction when time is up.

One simple rule: FOLLOW THE MONEY!

Gold London P.M Fixed and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:


Source humanevents.com

Crunch time for Europe's banks

Do you honestly believe that European currency experiment, intended to secure the blessings of peace for generations, will die quietly without intense support from its designers? Let me suggest the outcome right now - PASSED. Expect the same amount of diligence, transparency, and lack of bias (wink-wink) displayed by the U.S. stress test in 2009. The market will rally not because of the results of the stress test but rather anticipation of further currency debasement. Granted, investors will always act based on a reality that suits their interest, but it’s the understanding that allows them to complete (or time) the transaction from purchase to sale.

Europe’s attempt to restore confidence in its banks comes to a head on Friday with widespread expectation that up to 10 lenders will fail the exam and have to raise capital.

Regulators have been looking at how banks would withstand another recession in an exercise similar to one in the United States last year which helped restore bank sector confidence.

Source: theglobeandmail.com

Watch out equity Bears, Doctor Copper is talking

Copper, anticipating another liquidity blast, has already broken above its July swing high. Copper is far more sensitive to liquidity than equities, thus, leads at turns. Watch out equity Bears, Dr. copper is talking.

Copper vs S&P 500:

Moody's warns of Hungary downgrade after IMF breakdown

Everyone is in trouble but the US.

Ratings agency Moody's put Hungary on review for a possible downgrade on Friday, citing increased fiscal risks after it suspended talks with the IMF and EU on its existing $25 billion aid deal.

The new government halted the talks last weekend. Prime Minister Viktor Orban said on Thursday he would likely not renew the safety net and would row back on a commitment to cut the budget deficit to European Union-prescribed levels next year.

Source: finance.yahoo.com

Checks are coming: Obama signs unemployment bill

The pretense of fiscal discipline will be dropped quickly after the elections.

Federal checks could begin flowing again as early as next week to millions of jobless people who lost up to seven weeks of unemployment benefits in a congressional standoff.

Source: news.yahoo.com

Lying and kicking the can down the road only turns a simple can to a nuclear device

My response:

As you suggested, any deviation from the lie turns a conventional into nuclear device. In a sense, little white lies have and must go parabolic to maintain the illusion. This illusion, however, is largely sold and packaged to the general public at this point. Which begs to ask the question of why escalate it now? The public, already burdened by more than a lifetime of debt, offers scant resources to serve as the last resort fall guy.

Eric

Dear Friends:

Please read the following.

I consider this one of the most important viewpoints given you since this endeavor began seven years ago.

I am totally disgusted that the world we live in welcome, maybe cherishes lies when the benefit from those lies. It is possible that the number of broken bank in the USA and elsewhere are competitive with the number of broken banks in 1930. FASB capitulated to lobby pressure and legislative threats to cancel Fair Value Accounting.

Just read this article. Lying and kicking the can down the road only turns a simple can to a nuclear device. An industry, the financial industry, has been given the blessing of their regulators, FASB, to publish false and misleading balance sheets and income statement. God help us all.

At least Sodom and Gomorra had some fun it is last days financial Sodom and Gomorra has been invited and is being blessed by those we have put our trust in to maintain ethics. Fabrication is economic sin therefore cannot cure our problems but lead us into a form of damnation economically. If you, like yesterday, were thinking of throwing out your insurance because paper gold can be manipulated do do but do not break my chops.

What you see below is as prevalent in major banks as it is in regional banks.
How much is your bank over valuing their assets by?

Jim


Dear Jim,

Last Friday, July 16, 2010, the FDIC announced six more bank failures, making the total 96 so far this year. These were relatively small banks. Collectively, they had assets of $2.03 billion and deposits of $1.78 billion.

The FDIC’s estimated cost of closing these six banks was 334.8 million, about 19% of deposits. All six were resolved with the FDIC entering into loss share agreements covering a high percentage of the assets taken over by the successor banks. In connection with these closings, the FDIC entered into new loss-share agreements covering an additional $1.5 billion in assets.

That brings the FDIC’s total losses for 2010 up to $18.11 billion. The total face value of assets now guaranteed under FDIC loss share agreements has grown to $178.66 billion.

Each failure announcement allows us a peek into how extensively bank management have been exaggerating the value of their least liquid assets since the FASB’s roll-back last year of fair value accounting requirements. The worst offenders from the past week were as follows:

Main street Savings Bank, FSB, had stated assets of $97.4 million and deposits of $63.7 million. The FDIC estimated its closing cost $11.4 million. Based on that estimate, the bank’s assets were really only worth $52.3 million, and had been overvalued by 86%.

Turnberry Bank of Aventura, Florida, had stated assets of $263.9 million and deposits of $196.9 million. The FDIC estimated its closing cost $34.4 million. Based on that estimate, the bank’s assets were really only worth $162.5 million, and had been overvalued by 62%.

Woodlands Bank of Bluffton, South Carolina, had stated assets of $376.2 million and deposits of $355.3 million. The FDIC estimated its closing cost $115 million. Based on that estimate, the bank’s assets were really only worth $240.3 million, and had been overvalued by 57%.

Metro Bank of Dade County of Miami, Florida, had stated assets of $442.3 million and deposits of $391.3 million. The FDIC estimated its closing cost $67.6 million. Based on that estimate, the bank’s assets were really only worth $323.7 million, and had been overvalued by 37%.

Keep in mind that since the FDIC is resolving all these failures by way of granting loss share agreements, the assumed value of each failed bank’s assets is being skewed to the upside. Were the assets being sold without any future obligation on the FDIC’s part the prices realized would be much lower and the extent of overvaluation much higher.

Respectfully yours,
CIGA Richard B.

Dear Steve:
If you intend to hold your breath for ethics and fiduciary responsibility return to FASB and the financial industry you will die of asphyxiation.

Ry, Jim

Hi Jim,

Should we hold their breaths?


CIGA Steve.


Among the ripple effects of the global credit crisis is the rewrite of the controversial fair-value accounting rule once known as FAS 157. The revised standard could be in place by the end of the year.


Marie Leone, CFO.com US
July 20, 2010

The debate over one of the most controversial accounting standards in recent memory is coming to a somewhat anticlimactic end. The rule once known as FAS 157, which tells companies how to measure the fair value of assets and liabilities, has been rewritten and rechristened Topic 820. Now in final draft form, Topic 820 is open to comment until September 7.

Since the onset of the financial crisis, banks and their lobbyists have gone head-to-head with the Financial Accounting Standards Board and the International Accounting Standards Board, arguing against any rule changes that would increase the volatility of asset values — or worse, depress the book value of financial assets while the market recovered. FAS 157, which went into effect in 2009, was caught up in the debate and frequently vilified as a major cause of bank liquidity problems.

Yet in retrospect, the controversy seems misplaced. FAS 157 did not change what companies measured at fair value, or when they needed to apply fair-value accounting. Indeed, those mandates are part of other accounting standards (most notably the reworked rule on financial instruments). Instead, FAS 157 laid out a common methodology for measuring the market value of assets and liabilities.

The revised rule will affect more than just banks and other financial institutions that routinely measure the fair value of financial instruments, says Greg Forsythe, a valuation specialist at Deloitte Financial Advisory Services. All companies with accounts required to be measured at their fair value are fair game for Topic 820 — although the depth of that impact is relative to how much of a company's accounting is centered on fair value. Nonfinancial companies involved in acquisitions, for example, will have to rework some calculations and disclosures related to goodwill-impairment testing if the rule is issued in its current form, notes Forsythe.

Most experts agree that the measurement guidance contained in Topic 820 does little more than clarify existing rules. But the disclosure provisions will undergo one big change related to so-called Level 3 assets and liabilities, the most difficult kind to measure. (Unlike Level 1 holdings, which can be measured using quoted prices in active markets, and Level 2 holdings, which are valued based on "observable inputs" such as quoted prices in similar markets, Level 3 items are illiquid assets and liabilities that must be valued using internal models and "unobservable inputs.")

Topic 820 requires more disclosures around the measurement of uncertainty with respect to Level 3 assets and liabilities, says David Larsen, a managing director at Duff & Phelps, a financial advisory firm. Specifically, if the fair value of an item changes significantly when a different — but just as "reasonable" — input is used in the calculation, then the alternative fair value and input must be disclosed in the financial statements. Such modeling is often used, for instance, when it makes sense to plug in different growth rates or discount rates in discounted cash-flow calculations. FASB recommends using a table format to display alternative inputs and changes in fair value.

As the economy improves, markets will revive and there will be fewer Level 3 assets and liabilities, predicts Forsythe. "To a large extent, this whole concept of Level 3 didn't exist until the credit crisis hit, because there was always a market to mark to," he says.

The Topic 820 draft also cleans up some language in FAS 157, but the tweaks should not have an impact on the actual measurement of assets, says Forsythe. For example, the draft now states more clearly that under certain circumstances, companies will be permitted to measure financial assets and liabilities that are managed together in a portfolio on a net basis, rather than measuring the fair value of each instrument on a gross basis. The net measurement tends to be common practice among banks, but its usage parameters are not spelled out in the current rule.

Similarly, the language referring to an asset's "highest and best use" has been tidied up, making it clear that the phrase, which comes from the real estate industry, is "relevant only when measuring the fair value of nonfinancial assets." In addition, this time around, FASB is definitive about banning the use of "blockage discounts" to calculate the fair value of big chunks of stock. Instead, the draft rule clearly instructs companies to use the stated price of the stock at the time of the trade, multiplied by the number of shares, to determine the fair value.

Meanwhile, the draft of a similar fair-value rule has been released by the IASB and is scheduled to be issued in its final form at about the same time FASB releases the definitive version of Topic 820 (no later than early 2011). The IASB is in the same boat FASB was in before it released FAS 157, since previously all references to fair-value calculations were contained in other international standards. Given that the U.S. and international proposed rules are so similar, they are particularly well suited for accounting convergence, notes Larsen.

Mainstreet

Source: http://www.cfo.com/article.cfm/14511711/?f=rsspage

Jobless claims rise more than expected last week

New claims for jobless benefits climbed more steeply than anticipated last week, the latest sign that the moribund labor market is struggling to recover.

Initial claims for state unemployment benefits rose 37,000 to a seasonally adjusted 464,000 in the week ended July 17, the Labor Department said on Thursday, more than erasing a decline in the prior week.

Follow trends within the cycles and eliminate the headline need to view the world as static point deviations from consensus expectations. The employment situation today is no more important than it was in the 1930. Remember, the stock market bottomed and turned long before the labor market in the Great Depression.

Average Weekly Initial Claims State Unemployment (AWIC) And YOY Change:


Average Continuing Claims State Unemployment (AWIC) And YOY Change:


Source: yahoo.com

Gold Coin Sellers Angered by New Tax Law

The government is fully aware of gold roles as competing money. In time we'll find out what's embedded in the financial reform bill as well.

Those already outraged by the president's health care legislation now have a new bone of contention -- a scarcely noticed tack-on provision to the law that puts gold coin buyers and sellers under closer government scrutiny.

The issue is rising to the fore just as gold coin dealers are attracting attention over sales tactics.

Source: abcnews.go.com

Large China oil spill threatens sea life, water

Huge oil spills blacken the waters, destroy beaches and ecosystems throughout the world. The massive spill in the Gulf of Mexico has opened the eyes to this reality for Americans. Sea life has been taking a beating for years.

China's largest reported oil spill emptied beaches along the Yellow Sea as its size doubled Wednesday, while cleanup efforts included straw mats and frazzled workers with little more than rubber gloves.

Source: news.yahoo.com

Bernanke says Fed to act if soft recovery falters

The soft recovery, as suggested by this week's lackluster housing numbers (as well as numerous other economic statistics), is clearly faltering. Bernanke's testimony provided the green light for future quantitative easing (QE). Future liquidity blasts into the system must first be telegraphed to the market.

Federal Reserve Chairman Ben Bernanke said on Wednesday the U.S. economy faces "unusually uncertain" prospects, and that the central bank was ready to take further steps to bolster growth if needed.

Source: finance.yahoo.com

Bank of England could pump more cash into the economy: MPC minutes

Rates will stay low as long as the market says its ok to do so. The central planners' agendas will matter little when confidence breaks. Policy choices must be aligned with the trends of the market in order to maintain the perception of control.

Discussion turned to increasing the Bank’s £200bn of gilt purchases to stimulate the economy on concerns that the outlook for growth had “deteriorated a little”, the minutes showed. Policymakers voted 7-1 in favour of leaving rates unchanged at 0.5pc and quantitative easing on hold in the July meeting, suggesting rates will stay lower for longer.

Source: telegraph.co.uk

Three-Card Monte Solution

Dear Jim:
If the TARP funds are the source of the large bonuses then how did
some of the financials pay back the TARP?

RY. Arlen

Dear Arlen:

The banks did not pay back the TARP, the public did. That was a product of the issuance of new shares or guaranteed borrowings in many cases. If you follow the money, the financials have more shares outstanding WITHOUT off setting increase in cash or other assets. This is why I said the financials kill everything they touch. Now they have cannibalized their own company for personal gain. The cash was exhausted in backing worthless OTC derivatives and bonuses. Yet in the recent bear market rally they were the darlings of the market place.

RY.
Jim

It all reminds me of three-card monte scam on a blind man called public and retail private money.

Public money was quickly used to pay the OTC winners. Then, FASB's critical decision to look the other way allowed worthless, illiquid assets to be valued at cost. This simple accounting entry converted losses into trading profits, which in turn, provided the necessary earnings for the stock market bounce. In addition, and probably more important, the earnings not only supported one last dip into the well of bonus distribution but also the issuance of stock in which the proceeds were used to repay TARP ahead of schedule. Don’t you remember those surprise announcements on F-TV?

Now the market stands around waiting for the cards to be reshuffled on the table for the next game. When the cards are turned over they will reveal currency debasement as the historically consistent solution to an excessive debt burden by a sovereign nation.

Housing starts fall, permits offer ray of hope

Housing starts hit their lowest level in eight months in June, further evidence the economy lost momentum in the second quarter, but a rise in permits offered hope of a pick up in homebuilding.

Neither housing starts nor building permits offer much in terms of optimism. The up trends in velocity have been broken to the downside in both time series. A time series, just like economic activity, is either rising or falling at an increasing rate. Housing start and building permits are now falling at an increasing rate. This suggests further stimulus within the real estate sector upon general recognition and acceptance of these trends.

Building Permits And Change YOY:


Housing Starts And Change YOY:


Source: news.yahoo.com

Mailbox

Are you bullish even with all of the deflation talk?

Mark

Mark,

The deflation argument is little more than a fear tactic used to provide the necessary churn to unwind connected money’s leveraged short positions. This tactic has been used numerous times since 2001.

Deflation is the propensity to hoard cash. The same cash central planners are debasing through debt issuance and monetization. The message of the markets is clear - look at the U.S. dollar index trend. It's rolling over, but no one notices because of the fear.

Cash is king in deflation, but not all cash is created equal. It must be good cash without liability. This is why the founding fathers tied money issuance with gold and silver. They understood the social consequences of rampant currency debasement within Europe.

Anyone fearful of deflation as a bad environment for gold, I recommend holding wads of U.S. dollars, likely in the numerous failing banks within America. Gold is the still the world’s premiere currency despite the rehash of deflation argument in 2010. Preservation of purchasing power will be maintained not by holding U.S. dollars but rather gold by 2016.

It's tough, because the media makes these arguments sound real.

RY,
Eric

The New Doom

Complacency can manifest itself in the expectation that others are looking out for our best interests - in effect ready to take care of us on a moment's notice when things go bad.

Awhile back I wrote the following in the commentary Money - The Subjective Value of Money:

Money is a game of perception and confidence. This is the main reason why everything can look so normal, right before the wall of confidence come tumbling down and all hell breaks loose. Martin Armstrong alludes to this rapid progression in his commentary “How all systems can collapse overnight.”

An articled submitted by Bob entitled The New Doom further illustrates the dangers in the assumption that everything can be controlled.

HUMANS HAVE THIS poignant desire to feel that we're in control," the hedge fund manager said. "I know there will be abrupt change."

"We have Ben Bernanke, who has figured it all out; but you and I know he's just guessing," said Mr. Shiller, the Yale professor.

The rising trend in fiat gold challenges this assumption of control and should not be ignored.

Source: observer.com

Democrats to give jobless benefits another vote

Rest assured that further stimulus will be constructed and extended as millions cry out "save me." Right or wrong, the consequences of these decisions will manifest themselves in the capital markets. Gold, silver, and to a lesser extend stocks and other tangible asset markets will soon discount the inevitable decision to maintain the status quo through the protection an ailing financial and economic system.

Millions of people stuck on the jobless rolls would receive an extension of unemployment benefits averaging $309 a week under a Senate bill that appears set to break free of a Republican filibuster.

Democrats have stripped the unemployment insurance measure down to the bare essentials for Tuesday's vote, which is a do-over of a tally taken late last month.

Source: finance.yahoo.com

Living Large in Bankruptcy

Bankruptcy, normally financial death for most, can be nothing more than a financial game for those that know how to maneuver within the system. Notice how 10,000 silver coins, not bundles of hundred dollar bills, were found hidden behind a wall.

James Rigby, the trustee for the bankruptcy, says Mr. Mastro is hiding assets and wealth from creditors. As part of the bankruptcy case, he is going after Mr. Mastro and his assets to try to recover money for Mr. Mastro’s investors.

Mr. Rigby has had some success: Agents found 10,000 one-ounce silver coins in the home of Mr. Mastro’s son. The coins were in a basement wall behind a furnace vent in the son’s home.

Source: blogs.wsj.com

China Passes U.S. as World's Biggest Energy Consumer, IEA Says

As goes production, so goes wealth creation. Energy consumption is a function of production and consumption. China is world's biggest energy user last year.

China overtook the U.S. as the world’s biggest energy user last year, emphasizing that developing nations are driving global growth, according to the International Energy Agency.

Source: bloomberg.com

Mailbox

Subject: Small Banks Over the Cliff


Jim,

CIGA Eric has been writing about the small bank failures for quite some time, but now this subject is starting to get more attention from the media.

Many of the 690 small banks that received bailouts are now facing a take-over risk.

As you said, the so-called recovery is taking the form of a Ski Jump.

Best regards,
CIGA Black Swan

Mailbox

Hi Eric, I believe that, its just that with the recent attacks its hard to believe that Gold can climb 475 points in 6 months.

This experience can become very unnerving.

Again I appreciate your response and excuse my ignorance in this matter.

Aurelio

Exact timing matters only to leveraged option traders. Do not underestimate gold to the upside- ever. It can and will do more than you expect. $1650 on January 2011 remains within reach, but that price target and date will matter little when gold pushes beyond $2000.

What should unnerve all investors are the decisions being made to protect an ailing financial system. But, that my friend, matters little today. So the sheep sleep determined to awaken only minutes before before the slaughter.

Eric

Technical Review of Gold (GLD)

Headlines citing the usual suspects are once again suggesting that gold has sustained serious technical damage. Unfortunately, the glitz and glamour of their high-profile soapboxes, though lacking consistent vision of the secular trend, is enough to break the battle lines of investment discipline for most within the community. It's simply amazing that the deflation argument, despite market observations discrediting it, remains effective. From my perspective, other than a loss of investment discipline induced by fear, I certain don’t see much technical damage to the secular trend.

The current decline, largely a paper operation (an effective one at that) to cover leveraged short positions, is nothing more than a retest of the 5/6 breakout gap. The 5/6 gap has been tested on 5/20 and 7/19 on 28 million and 15 million shares, respectively. These are big contractions in volume from the 50 million shares traded during its formation. This relative decline in volume suggests weakening downside force. Any test of this gap (or support in general) on contracting force is a bullish setup.

Paper Gold ETF (GLD):


As Dan Norcini (Trader Dan) has recently suggested, and I have rephrased it a bit for speed,

“If you tire of this horseshit do not complain, simply stand for delivery.”

Once the warehouses are drained of gold and silver, the paper illusion that redirects demand from physical to paper will be impossible to maintain.

This choice always reminds me of the famous quote by Bruce Lee in Enter the Dragon.

The enemy has only images and illusions behind which he hides his true motives. Destroy the image and you will break the enemy. - Teacher to Lee (Bruce Lee), Enter the Dragon, 1973.

Either accept what is, or do something about it.

China should cut U.S. Treasury holdings: economist

One minute they don't need gold, the next it's a key acquisition. The endless flip-flopping keeps investors guessing while the Chinese quietly do what they need to do (acquire gold).

Zhang Monan, a researcher with the State Information Center, a think tank under the powerful National Development and Reform Commission, told the paper that China should invest more of its $2.5 trillion of foreign exchange reserves, the world's largest stockpile, in hard assets such as gold.

Source: reuters.com

A hidden world, growing beyond control

There is only one constant and that is the greater the size of government, the lower the production of nation wealth. Martin Armstrong, Can the Euro Survive a Sovereign Debt Crisis.

So much for openness and transparency. The American public remains on a need to know basis as the Government grows with impunity.

The top-secret world the government created in response to the terrorist attacks of Sept. 11, 2001, has become so large, so unwieldy and so secretive that no one knows how much money it costs, how many people it employs, how many programs exist within it or exactly how many agencies do the same work.

Source: projects.washingtonpost.com

Well cap kept shut despite possible seeping nearby

If the well head has been damaged, it will not be able to take the pressure. This will limit the effectiveness of any capping operation.

The federal government Monday allowed BP to keep the cap shut tight on its ruptured Gulf of Mexico oil well for another day despite the possibility something is seeping from the sea floor near the well.

Source: finance.yahoo.com

Europe freezes out Goldman Sachs

Actions speaks louder than words.

European governments are turning their backs on Goldman Sachs, the all-conquering investment bank that has suffered a series of blows to its reputation, capped by the biggest ever fine imposed on a Wall Street firm.

Source: guardian.co.uk

Reality is up for grabs

A major break in the dollar’s counter trend rally goes by without a headline whimper.

U.S. dollar ETF (UUP):


Meanwhile, gold and the gold shares decline during a paper operation that is clearly supported by strategically generated headlines. No cares to notice that the retest of May lows is occurring on a fraction of the volume created during their initial formation. This lack of participation suggests waning downside energy.

Gold Miners Index ETF (GDX):


The whole setup reminds of the dialog between Trapper and Hawkeye during Season III episode Iron Guts Kelly in which Trapper suggests that reality is up for grabs.

Trapper: I got a bad taste in my mouth. I'm gonna go gargle with a martini.
Hawkeye: There you go, hiding behind booze again, afraid to face reality.
Trapper: Reality is up for grabs. One man's reality is another man's fantasy... (he trails off, realizing the two gorgeous nurses behind them)
Hawkeye: Right. You take the reality one, I'll take the one with the big fantasy.

Reality is up for grabs. Today’s casino-style markets profit from confusion, misdirection, and degree of difficulty in reading the message of the markets.

Junior Gold Miners

REV(E) illustrates expanding trend energy into June. This is bullish. The paper operation on gold, however, has encouraged a decline based largely on fear. That’s how it works.

Junior Gold Miners:


Tanzanian Rty Explr Co (TRE) is displaying excellent relative strength to both the market and sector. This is an indication of strength. A review of TRE’s chart will explain why. Leaders during weakness tend to be superior performers when weakness turns to strength.

Tanzanian Rty Explr Co to Junior Gold Miners Ratio:

Subtle Shift in Natural Gas Money Flows

The bullish setup in Natural Gas was first identified and discussed in A contrarian makes another call – this time, natural gas on April 26th. There's been a lot of volatility in natural gas but limited upside. The fact that commercial traders aggressively cut their long position into the strength limited the advance at least for now.

The direction of money flows during the first reaction after the initial up thrust the ended in June will determine the sustainability of the natural gas rally. As I have said to others in reference to natural gas, connected money must buy into the dip to perpetuate the rally.

Commercial traders (connected money), while not statistically significant, are nibbling (buying) again while the nonreportables (retail money) are selling. A few more weeks of this type of action could produce another up leg in natural gas.

Natural Gas ETF and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:


Natural Gas ETF and the Nonreportable Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:

Connected Money Continues Aggressively Buy the Nasdaq Decline

Nasdaq Composite:


Lower highs and lower lows are a commonly recognized footprint of a bear market. COT money flows, however, are not consistent with a setup of a bear market. Connected money continues to aggressively buy the decline since early July. The money setup reflects bullish rather than bearish inflows into the Nasdaq.

Nasdaq 100 and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:


This optimism has been met with aggressive selling by retail investors. History suggests that retail investors tend to go all in at the wrong times. In other words, they are bad market timers.

Nasdaq 100 and the Nonreportable Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:


A similar technical and money flow setup is developing in the S&P 500.

Canada ponders pulling the plug on the penny

Dropping the penny has been discussed in the US as well.

While Finance Minister Jim Flaherty has openly mused about the end of the one-cent coin, documents reveal that officials from his department have been in discussions with the Royal Canadian Mint to prepare for the day when the penny finally drops.

The penny, particularly the copper ones, like gold is often spun as a barbaric relic of monetary system that forced discipline to maintain confidence. Unfortunately, the lure of easy money and the resulting devaluation that comes afterwards has turned pennies into expensive pocket change.

As the article states,

Pity the penny. When first produced at the Ottawa Mint in 1908 (earlier production was done in England), you could buy a paper for two cents and a loaf of bread for five cents. But since then, it has lost 95 per cent of its purchasing power, Pierre Duguay, the deputy governor of the Bank of Canada, told a Senate committee in May.

It's certainly not the pennies fault. Coinage in which intrinsic or value derived its composition (copper, silver, gold, nickel, etc) exceeds that of its face value to extinction. It's called Gresham's law.

Source: thestar.com

Michigan Consumer Sentiment Index Fell in July

Consumer expectations, a "feel good or bad" consumption survey, serves as a good proxy of confidence for a consumption driven economy. Confidence is an important, often dificult to measure, component of currency valuation.

The big drop in confidence, obviously ignoring today's coordinated hit, will be reflected in higher future gold prices. The correlations between consumer expectations and gold during periods of deteriorationg confidence in fiat of 1968-1980 and 2000-2015 have been -0.67 and -0.73, respectively. Perfect inverse correlation is -1. Correlations of -0.67 and -0.73, therefore, are strong inverse correlations. That is, as consumer expectations declines, the price of gold tends to rise.

University of Michigan Consumer Expectations (CE) and Gold: A Correlation Study:

Confidence among U.S. consumers slumped in July to the lowest level in a year, signaling the biggest part of the economy is losing momentum.

The Thomson Reuters/University of Michigan preliminary sentiment index decreased to 66.5, the lowest since August 2009, from 76 in June. The reading was lower than the most pessimistic forecast of economists in a Bloomberg News survey with a median projection of 74.

Source: bloomberg.com

Moody's Downgrades Arizona Rating On Liquidity Worries

Be certain that liquidity concerns are not limited to Arizona.

Moody's Investors Service downgraded Arizona on worries about the state's tightening liquidity.

The rating agency pointed out that Arizona, one of the states hardest-hit by the housing bust, has had sizable budget deficits, depleted reserves and relied on nonrecurring budget solutions in recent years.

Source: tradesignalonline.com

Policymakers see no "catastrophes" in euro bank tests

Like the Goldman settlement, this is orchestrated news. Did you expect them to fail?

Stress tests on European banks should not reveal any major problems among the big names, top officials said on Friday, saying the financial health check will be transparent and ease worries among investors.

Source: finance.yahoo.com

Fed's volte face sends the dollar tumbling

The panic to drive down gold despite the dollar’s decline suggests that “connected” players understand the hints embedded in the Fed’s communiqué. The deflation argument often mention in various media forms is nothing more than headline explanation which real intention is to create as much panic or technical sell triggers as possible over a short period of time. Technical sell triggers, recognized by trading algorithms, create heavy churn in which the controlling shorts cover their positions. Welcome to today’s casino markets. When next week's COT data shows massive short covering by the "connected" players, it will reveal the illusion and illustrate the footprint of control. By that time, most players, disgusted with the decline, will have turned their back on gold and retrospective gold analysis. The fact is that these paper operations have and will continue to be employed as a delaying tactic until the secular bull has run its course. Best advice is to ignore, better yet, buy these operations.

The Fed minutes warned of "significant downside risks" and a possible slide into deflation, an admission that zero interest rates, $1.75 trillion of QE, and a fiscal deficit above 10pc of GDP have so far failed to lift the economy out of a structural slump.

"The Committee would need to consider whether further policy stimulus might become appropriate if the outlook were to worsen appreciably," it said. The economy might not regain its "longer-run path" until 2016.

Source: telegraph.co.uk

Grant Discusses Potential New Federal Reserve Governors

Key points from Jim Grant:

* Print more money

* U.S. dollar is a faith based currency

Goldman set to settle SEC fraud case soon: report

Settle out of court and admit no guilt closes the door to future civil lawsuits.

Goldman Sachs may soon settle its fraud case with the U.S. regulator, the New York Post reported on Thursday, opting to end a legal fight rather than endure a repeat of the public flogging it received this week.

Source: reuters.com

The Guise of Deflation

The Fed is "worried" about deflation that doesn't seem to manifest its anywhere. This worry is comparable to a gambler “worried” about winning too much money. It’s a ruse.

Spot Commodity Prices: CRB Spot Index (1947 - Present);
16-Raw Industrial Spot Price (1935-1947);
Great Britain Wholesale Price of All Commodities (1885-1935):

When Time Is Right Price Will Follow

Common arguments against gold -

1. Gold looks technically weak.

2. July-August is a seasonally weak period.

3. The media says China no longer wants gold, etc, etc.

My unbiased, market-driven response to the above arguments is as follows:

"When Time Is Right Price Will Follow."

Risk Free Total Returns 1926-2010 & Second Year of the 4-Year Cycle Risk Free Total Returns 1926-2010: