Opinions Vary On Silver

The old World War II slogan "Loose lips might sinks ships" implied that unguarded talk might give useful information to the enemy. Loose lips are suggesting everything from a mania on the verge of collapse to $100 silver by the end of 2011.

The range of opinion leads inevitably to the famous Dirty Harry's quote:
(Link) View more Dirty Harry Sound Clips and Clint Eastwood Sound Clips

The message of the market (opinion) is the only one that matters. It continues to reflect a market in transition from control to chaos. Connected money continues to cover the short positions into strength rather than weakness. Furthermore, retail money despite all the cries of pressing silver to break the big silver short is surprisingly absent on the long side. In addition, the futures chain continues to display strong backwardation. These setups are undeniably bullish.

Silver London P.M Fixed and the Commercial (C) & Nonreportables (NR) Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest


Silver London P.M Fixed and the Commercial Traders COT Futures and Options ZScore Weighted Average of Long & Short As A % of Open Interest

Does A Rising Trend Suggest Real Estate Is Prospering?

No.

A rising nominal trend does not necessary suggest prosperity during periods of aggressive currency devaluation. Dow Jones Equity REIT to Gold ratio, the true message of the market, suggests replacing prospering with struggling. Smart money never shorts an asset denominated in devaluing currency without a hedge. In other words, short the weak asset and buy the strong. There’s no better hedge for currency devaluation than gold.

DJ Equity REIT to Gold Ratio:

This is what "Smart Money" is doing, who would have thought anything Real estate could be prospering? another question for how long ?

another question is "how smart am I", I would have shorted this a long time ago and lost the jewels, another question "how smart is smart money?

Bob

Real Estate iShares (IYR)

Chart: stockcharts.com

'Escape Hatch' Solution

Hello Bob,

Those with ‘vision’ follow human behavior and the movement of capital, i.e. historical lessons, to anticipate future events. Unfortunately, these lessons also suggest that history rhymes rather more than it repeats.

What do we know? History has shown us that control, while cyclical in nature, has always been defended tooth and nail. If debt is the basis of control, it will be defended in ways that seem outlandish, even comical, right now.

Capital as a whole anticipates without opinion. In other words, it ‘anticipates’ based on the premise that anything is possible. If an escape hatch as described is part of the solution, capital will anticipate through concentration of funds ex ante. The movement of money will transform the any ‘escape hatch’ policy from a long- to short-term solution.

Regards,

Eric

Eric: It is not My idea that Congress potentially passing a Bill making the purchase of U.S Treasury's (bonds) mandatory, requiring I.R.A's and Funds (all funds) to purchase U.S Debt, My thoughts are this, any such law would allow the Federal Reserve to dump tremendous amounts of old and recently purchased Bonds (u.s debt) along with other unknown exotic financial time bombs into all of these funds, thus allowing the F.E.D the "escape hatch", They know will be there for Them with a little help from their friends in The Congress. Any of Your thoughts would be appreciated.

Thanks for Insights

Bob

Increasing Austerity Programs Will Extend QE

The trend towards smaller government, i.e. austerity programs, is not limited to the European Union. While the media may downplay similar problems in the US union, they have not gone unnoticed by capital. As goes austerity, so goes the size of quantitative easing needed to minimize its effects.

Headlines: Philly Plans To Lay Off Nearly 4,000 Teachers And School Workers

State budget cuts will force Philadelphia's schools to lay off 3,820 employees - including 12% of the district's teacher - to close a gaping budget shortfall next year, the Philadelphia Inquirer reports.

The Philadelphia School District - which has about 155,000 students - faces a $292 million loss in state aid next year, the result of Pennsylvania Gov. Tom Corbett's proposed $1.1 billion cut in the state's education budget.

Source: businessinsider.com

Don't Blame the Weather

Liqudity-driven recovery pushes nominal economic data and equities higher.

For example,

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


The real economy, however, paints a picture of a struggling expansion.

For example,

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


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


The labor market continues to ebb and flow within the cycle. Gold already 'knows' a change is coming.

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


Headline: Stocks waver on weak reports on GDP, jobs

Stocks were narrowly mixed Thursday after the government said the U.S. economy slowed in the first three months of this year.

The economy grew at a 1.8 percent annual rate in the January-March period. That's the weakest showing since last spring when the European debt crisis reduced growth to 1.7 percent. Higher prices for oil and gas have constrained consumer spending.

The government also reported that more people applied for unemployment benefits for the first time last week. The increase, the second in three weeks, suggests that the job market remains sluggish.

Source: news.yahoo.com

Wal-Mart: Our shoppers are 'running out of money'

Welcome to the liquidity-driven, debt-laden economic recovery. The demographic of workforce/population reads as follows: (1) the select few prosper, (2) a lot simply try to hang in as long as possible, and (3) the vast majority are squeezed to the bone by the consequences of policies enacted to combat the largest debt crisis in recorded history.

Wal-Mart's core shoppers are running out of money much faster than a year ago due to rising gasoline prices, and the retail giant is worried, CEO Mike Duke said Wednesday.

"We're seeing core consumers under a lot of pressure," Duke said at an event in New York. "There's no doubt that rising fuel prices are having an impact."

Wal-Mart shoppers, many of whom live paycheck to paycheck, typically shop in bulk at the beginning of the month when their paychecks come in.

Source: money.cnn.com

What's To Decide?

Below is classic retrospective analysis that tends to favor indecision. Liquidity, provided by currency devaluation, is driving stocks as well as many other assets higher. This continues until the next hemorrhage phase. Hemorrhage phases, or contractions in liquidity and confidence, tend to be ‘anticipated’ by an increasing number of divergences of price relative to the trend, market participation, and money flows.

Headline: Decision Time for Stocks

In normal times, when a market stalls at a price level and finally punches through, it is known as a technical "breakout." Demand is able to absorb all supply thrown at it, and then some; simple economic theory tells us prices should move higher.

The problem is that this sort of textbook analysis has not been working for months and arguably since the financial crisis blew up in 2008. Now with the Standard & Poor's 500 index poking its head above recent highs, we have to wonder if we are about to be faked out once the market digests Federal Reserve Chairman Ben Bernanke's press conference comments Wednesday.

Last month — just before the Japanese disaster — the S&P 500 made a classic move below the rising trendline that supported it for six months. Four trading days after the Japanese tsunami, the market reversed to the upside. A breakdown was negated.

Source: finance.yahoo.com

The Game Is Changing As The Waterfall Decline Intensifies

Ex post analysis (after the fact) is always easier than ex ante. Unfortunately, often cited retrospective analysis doesn’t help investors anticipate the big and profitable events. Investors with vision anticipate and survive; those without react and perish.

Fractal analysis reveals multiple waterfall declines in the dollar since 1970. Today’s acceleration of the decline, in particular, has the potential to instill ‘the fear of God’ for those unprotected.

Purchasing Power of the USD


U.S. Dollar Major Currencies Index


Do not underestimated what people like Jim Sinclair, Dan Norcini, and James Turk (see below) are saying. The backwardation in silver remains persistent and pronounced despite the recent rally. This suggests heavy demand for physical silver. In addition, connected money continues to cover their shorts into the teeth of the rally. These two events are highly unusual and suggest growing strain in the silver market. If gold begins to display a similar setup, the unfolding waterfall decline will intensify quickly.

Silver London P.M Fixed and the Commercial Traders COT Futures and Options ZScore Weighted Average of Long & Short As A % of Open Interest


Headline: James Turk - The Waterfall Decline in the US Dollar Has Begun

With gold and silver taking off after the Fed statement, today King World News interviewed James Turk out of Spain. When asked about the action Turk stated, “I've just finished reading the Federal Reserve's announcement of its meeting concluded earlier today. I've also scanned some of the excerpts from Bernanke's press conference and Eric, I am struck by the inconsistencies. The precious metals markets must be seeing it the same way I am given the strength in gold and silver after the announcement's release.”

The Dollar Index has broken below all of its previous lows except for the last one at roughly 71 on the index. When that gives way you could see incredible panic selling ensue.

The bottom line is the market is calling the Fed's bluff. Investors don't believe the Fed will stop its purchases of US government debt on June 30th and for what it is worth, I don't either.”

Source: kingworldnews.com

From Bob

QE(N) Does Not End Here!

QE(N) will not end in June. It simply morphs into something less obvious. Why initiate another “shock and awe” bond buying program when maturing debt reinvested into Treasuries can do the heavy lifting without unnecessary political attention in the future?

Headline: Fed signals $600B bond program to end in June

The economy and job creation have strengthened enough for the Federal Reserve to end its $600 billion Treasury bond-buying program in June as planned, the Fed signaled Wednesday.

Ending a two-day meeting, the Fed made no changes to the program. The decision was unanimous. The bond purchases were intended to lower loan rates, encouraging spending and boost stock prices. But critics worried that the purchases would feed inflation.

The Fed downplayed inflation risks. It acknowledged a spike in oil prices, but concluded that the pickup in inflation will be temporary.

Source: news.yahoo.com

A Balanced Budget Policy Will Have Consequences

Balancing the budget within an economic contraction (depression), a popular idea today, is hardly a new. A policy of balancing the budget was adopted by Hoover Administration during the Great Depression in the early 30's. Capital's response to it helped Roosevelt beat Hoover in the 1932 election.

Headline: Congress Should Enact a Balanced-Budget Policy: Investment Manager Matthews

Liquidity Lifts All Boats

Liquidity lifts all boats. Some boats rise faster than others. At times I wonder if anyone other than Jim and Dan can recognize a parabolic trend? “Bubbly”, a term often used to describe the action in gold and silver by the media, has a distinct feel and a unique mathematical footprint.

Gold, London P.M. Fixed (Gold) and Z Scores from Primary Trend


Silver, London P.M. Fixed (Silver) and Z Scores from Primary Trend


Headline: Silver Rush Spreads to Stock Market

The mania for silver has spread to the stock market as day traders pile into the buying.

Trading got so heated during the past two days that shares traded in the iShares Silver Trust, the biggest exchange-traded fund tracking the price of silver, topped that of the SPDR S&P 500 ETF, usually one of the most actively traded securities in the world.

Day traders "are going crazy," says Joseph Saluzzi, co-head of trading at brokerage firm Themis Trading. "It's typical of the bubbly speculation that's been going on in silver."

On Monday, trading in the silver ETF was especially heavy, as silver prices soared to new 31-year highs and approached $50 an ounce. Silver is up 46% this year, part of a nine-month rally. The heavy ETF trading continued on Tuesday, as silver prices retreated.

Source: finance.yahoo.com

Case Says U.S. Housing Already Experienced `Double Dip'

The trends illustrated below support Karl Case's growing concern about real estate.

U.S. Median Home Price (MHP) And MHP to Gold Ratio:


S&P Homebuilders Index (HB) AND HB to Gold Ratio:


S&P Homebuilders Index (HB) AND HB to U.S. Median Home Price (HBMHPR):


Bottom line, QE will continue either direct or indirect despite the talk of withdrawal.

Economist Karl Case:

'In a sense, We've already had a double-dip [in housing].'

'We've always been able to count on new households coming into the market; they're not coming.'

'There's going to be a lot of dislocation when Fannie and Freddie evolve into something new.'

'Housing starts are at sixty-year lows, and they've been there for 33 months.'

From Bob

State pension crisis balloons

This ensures no early, easy, and/or practical exit from liquidity.

States are $1.26 trillion in the hole when it comes to their pension and retiree health obligations, according to a report released Tuesday.

And taxpayers are ultimately on the hook for this shortfall, which soared 26% in one year.

The Great Recession has wreaked havoc on states' pension and retiree health systems, the Pew Center on the States found. The report covers fiscal year 2009, which began July 1, 2008 in most states.

States are largely responsible for this predicament. As tax revenues plummeted, many skipped part or all of their annual retiree benefits contributions as they struggled to pay for education, Medicaid and other services.

Source: finance.yahoo.com

Inflation Genie Has Left The Bottle, Not Going Back Easily

Babies and possibly PM investors/traders in response to increased volatility are beginning to feel the pinch of rising cost of diapers. The inflation ball is rolling. The talk of containment well after the fact may be good headline fodder, but practical economic reality suggests it has no legs.

Headline: Whoa Baby, Prices Are Jumping for Diapers, Other Family Basics

As commodity costs rise, babies are feeling the pinch.

Betting that parents are less stingy when it comes to junior's needs, two of the country's biggest makers of diapers and wipes are pushing through price increases. Kimberly-Clark Corp. plans to raise prices on its Huggies diapers and wipes by 3% to 7% while Procter & Gamble Co. announced a 7% rise in prices for its Pampers diapers and 3% increase on wipes.

Shoppers are less likely to switch to a cheaper brand on a baby product than many other items on the shopping list, according to a recent survey by Sanford Bernstein analyst Ali Dibadj. Just 10% of consumers said they switched to a cheaper diaper brand because "it's not worth paying more in this category," and no consumers reported switching baby food. By comparison, nearly a third of consumers said they switched brands of bleach, bottled water and liquid soap.

Silver coin demand outstripping supply

The public is just beginning to realize undeniable change has occurred in the silver market.

Following yesterday’s spike up to nearly $50 per ounce, the silver price has declined and is currently trading around $46, though at one point earlier today the price was below $45. As with gold, increased volatility is to be expected around technically-significant even numbers, especially at $50 – the previous nominal peak from silver’s last epic price spike in 1979-80.

The Chicago Mercantile Exchange Group (CME Group) also announced last night that it is raising the margin requirements on silver futures. As of the end of trading today, speculators will need to pay $12,825 to buy or sell a single full-sized silver contract, up from $11,745. The maintenance margin has been raised from $8,700 to $9,500.

Source: uk.ibtimes.com

Constant Currency Dow Transportation Better Represents the 'Real' Economy

Higher stock prices, driven by liquidity (currency devaluation), support the premise of a solid economic recovery. The transportation stocks (transports), like small cap stocks, have always been more sensitive to liquidity. The computer buy programs will chase even harder when the transports push to new highs in the near future. New nominal highs, however, means little in a world driven by currency devaluation. The downward trend in the constant currency transport index provides a better assessment of the 'real', clearly struggling economy.

Dow Jones Transportation Average (DJTA) AND DJTA to Gold Ratio (DJTAGOLDR):

The Rules Are Changing In Gold And Silver

Possibly title rewrite to the headline below could be "Silver surges to All-Time high on Inflation Hedge, Industry Use, Then Gets Bombed Ahead of Two Day Fed Meeting." The disruption of (paper) control has turned silver into a highly-charged and explosive market. Expect investors to be slow to recognize this subtle change in control. As a result, many will be fleeced by adherence to old trading paradigms (rules and understanding) and general lack of discipline in an increasingly explosive and volatile market.

Headline: Silver Surges to All-Time High on Inflation Hedge, Industry Use

Precious metals have rallied on investor concern that central-bank programs to revive economic growth with record-low interest rates and increased supply of money will reignite inflation and hurt currencies including the dollar. Silver has more than doubled over the past year.

“It’s driven mainly by speculative buying, with investors eyeing the record for a while now,” Yang Shandan, a trader at Cinda Futures Co., said from Zhejiang, China. “We might get a bout of profit-taking now that we’ve pushed passed the high.”

Source: finance.yahoo.com

IMF bombshell: Age of America nears end

We have been talking about this for years. One person's bombshell is another's writing on the wall.

The International Monetary Fund has just dropped a bombshell, and nobody noticed.

For the first time, the international organization has set a date for the moment when the “Age of America” will end and the U.S. economy will be overtaken by that of China.

And it’s a lot closer than you may think.

According to the latest IMF official forecasts, China’s economy will surpass that of America in real terms in 2016 — just five years from now.

Put that in your calendar.

Source: marketwatch.com

USDA Says Meat Prices to Soar

Source: finance.yahoo.com

Capital Buying Equity Dips

Capital understands that currency devaluation (unlimited liquidity) drives up the nominal share prices. Accumulation during the dips illustrates this point.

SP 500 And Equity Diffusion Index (DI):

Copper Market

Someone is accumulating copper into weakness despite calls that a top has formed. The movement of money, while not concentrated yet, suggests otherwise.

Copper (JJC) And Copper Diffusion Index (DI)

Silver and US Long Bonds Markets

Silver, despite the hype generated by price action, is not the market of all markets. It is simply a market under ‘control’ strain. There is only one phrase that characterizes this market – sh*t is a changing. The old setup of shorting strength to control the advance has been disrupted. This is why silver has become an explosive market.

Silver (SLV) and the Commercial (C) Less Nonreportable (NR) Traders COT Futures And Options Stochastic Weighted Average of Net Long As A % of Open Interest:



All markets are interconnected/interrelated to some degree. Variances in timing may give the impression that one market is more important than another. It’s this difference in timing (phase of the debt crisis) that makes the bond market extremely interesting right now. Building a position (long or emphasis on short) through patience and timing is a critical part of investment discipline.

US Treasury Bond 20YR+ (TLT) And Bond Diffusion Index (DI):

What's Driving Equities?

Liquidity!

The bullish divergence in internal trend energy suggests new nominal highs in stocks in the near future.

NYSE Internals:


New nominal highs in stocks, however, illustrate neither a bull market nor economic recovery. The real (constant currency) turns illusion into reality. The real trend reveals the role of liquidity (currency devaluation) in fostering the perception of a bullish outcome.

U.S. Large Cap Stocks Capital Appreciation Index (LCSCAI); S&P 500 to Gold Ratio and Z Scores from Primary Trend

China should cap forex reserves at 1.3 trillion U.S. dollars: China banker

Subtle hints while the public and bulk of the trading world focuses on alternate 'realities.' Remember, China will be unable to sell US Treasuries without destroying price. This, however, does not mean they are exposed. China has been and will continue to create hedges until the risks outweigh the benefits.

Headline: China should cap forex reserves at 1.3 trillion U.S. dollars: China banker

China should reduce its excessive foreign exchange reserves and further diversify its holdings, Tang Shuangning, chairman of China Everbright Group, said on Saturday.

The amount of foreign exchange reserves should be restricted to between 800 billion to 1.3 trillion U.S. dollars, Tang told a forum in Beijing, saying that the current reserve amount is too high.

China's foreign exchange reserves increased by 197.4 billion U.S. dollars in the first three months of this year to 3.04 trillion U.S. dollars by the end of March.

Source: news.xinhuanet.com

From Bob

A Comparison of 1931-1936 and 2008-2013

Real (constant currency) federal total receipts continue to contract as the federal budget (Jim's Formula) rolls over. This vicious cycle is characteristic of a Great Depression (or Recession). Vicious cycles are highly dependent on liquidity (quantitative easing) to maintain economic activity and support an ongoing debt collapse. Another downward leg of the Great Recession will resume when TIME is right.

Real or Gold Adjusted Federal Total Receipts 12-Month Moving Average (TR12MA) AND Federal Total Receipts 12-Month Moving Average Year-over-Year Change (TW12MA12LN):


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


Headline: U.S. households getting more from Uncle Sam than they pay in

With President Obama’s deficit-reduction plan now on the table, the political left, right and center are ready to rumble over how to assure long-term fiscal stability. The big questions are where to slash and by how much. But over the next year or two, the most important question for the economy might well be how quickly the cutting should begin. Households have become unusually dependent on the government for income support and removing that prop too fast could put the recovery at risk.

For the first time since the Great Depression, households are receiving more income from the government than they are paying the government in taxes. The combination of more cash from various programs, called transfer payments, and lower taxes has been a double-barreled boost to consumers’ buying power, while also blowing a hole in the deficit. The 1930s offer a cautionary tale: The only other time government income support exceeded taxes paid was from 1931 to 1936. That trend reversed in 1936, after a recovery was underway, and the economy fell back into a second leg of recession during 1937 and 1938.

Source: money.msn.com

From Bob

China’s Sinopec cuts off oil exports: state media

The developments in the Middle East are best described as from "Order to Disorder" has accelerated the concept of "Peak Oil" into "Present Time."

Gold will in this situation hold a huge percentage of its Hyperbolic Gain now taking full foundation as it will re-enter the monetary system in the way I have explained at least 100 times including yesterday in interview.

Jim

Headline: China’s Sinopec cuts off oil exports: state media

by Staff Writers
Beijing (AFP) April 20, 2011

Chinese oil giant Sinopec has stopped exporting oil products to maintain domestic supplies amid disruption concerns caused by Middle East unrest and Japan's earthquake, a report said Wednesday.

The state-run Xinhua news agency did not say how long the suspension would last but it reported that the firm had said it also would take steps to step up output "to maintain domestic market supplies of refined oil products".

Sinopec would ensure supplies met the "basic needs" of the southern Chinese special regions of Hong Kong and Macao, but they also should expect an unspecified drop in supply, Xinhua quoted an unnamed company official as saying.

AFP was not immediately able to reach a Sinopec spokesman by phone for comment.
The report said Sinopec has raised output of refined oil products this year, with its first-quarter production reaching 31.55 million tonnes, an increase of 6.2 percent from the same period last year. Sinopec last month said its 2010 net profit rose nearly 14 percent on higher oil prices and strong domestic demand for refined oil and chemical products.
It reported a net profit of 71.8 billion yuan ($11 billion). The Beijing-based company attributed the result to China's rapid economic growth, robust oil demand and "the increase in the price of crude oil, oil products and petrochemical products."

It had said at the time that it would continue to "expand markets" in China and overseas this year, while intensifying its exploration efforts in the country's western regions.

Oil prices have surged on supply concerns as governments in the oil-rich Middle East and North Africa are hit by popular uprisings, while the Japan quake and resulting nuclear crisis led the country to seek other forms of energy other than atomic.

Source: energy-daily.com

McDonald's warns of higher food inflation

McDonald's has warned of higher prices in the future. This is following a similar warning from Wal-Mart. Prices are rising faster than wages and salaries. In other words, the general standard of living is contracting.

McDonald's Corp (NYSE:MCD - News) forecast higher prices for beef, dairy and other items and said it would cautiously raise prices to keep attracting diners, who are grappling with higher grocery and gas bills.

Shares fell 1.5 percent after the world's biggest hamburger chain said it planned to offset some, but not all, of its higher food costs, with small price increases throughout the year.

Source: finance.yahoo.com

Early Stage Trend Acceleration in Gold, Silver, and Gold Shares

While the recent moves in gold and silvers have been impressive, they remain well within historical norms of an accelerating trend.

Silver, London P.M. Fixed (Silver) and Z Scores from Primary Trend


Gold, London P.M. Fixed (Gold) and Z Scores from Primary Trend


When coffee houses are filled with discussions of gold, silver, hidden gold mine “gems” that Mark Twain would characterize as liars standing next to hole in the ground, the parabolic move will be near exhaustion. The general under performance or lack of interest in the gold shares in the face of gold and silver strength suggests early stage trend acceleration.

S&P Gold (Formerly Precious Metals Mining)*
*S&P Gold from 1945, Barron's Gold Stock Index from 1939-1945, 1922-1939 Homestake Mining


Headline: Jim Rogers Says All Parabolic Moves End Badly, Gold and Silver Not Yet in a Bubble

Legendary global investor and chairman of Singapore-based Rogers Holdings, Jim Rogers warned that if silver continues to go up like it has been over the past 2 or 3 weeks and reaches triple digits in 2011, he will probably start to think about selling because then 'you've got a bubble'.

Speaking to Financial Survival Radio, Rogers said: " My hope is, silver and gold and all commodities will continue to go up in an orderly way for another ten years or so, and eventually the prices will be very, very high".

"I hope something stops it going up in the foreseeable future and we have a correction," he added.

Source: lewrockwell.com

Quiet Acumulation of Gold Shares Since 2009

Yesterday I discussed Goldcorp's (GG) building trend energy as representative of the setups within the gold mining space. The gold miners index ETF, a composite of many of the high-quality names in the sector, illustrates the depth of this setup within the sector.

The positive divergence of trend energy with price (new highs while price lags) reveals accumulation. In other words, Capital has been quietly accumulating into weakness, likely at the expense of retail money, since 2009. This positive divergence is as pervasive in juniors as it is the majors.

MV Gold Miners Index ETF (GDX):

Happy Easter To All

Follow The Money

The zombie logic provided by the mainstream headlines obscures an understanding of reality provided by following the money. Follow the money is probably the most important and discussed concept on Insights.

Markets At A Glance: Follow The Money

What the so-called silver ‘experts’ neglect to account for in their models and projections is that the fiat money experiment has failed. And in this context, we believe the Market has assigned world reserve currency status to gold - not USD, not EUR, and not JPY. In our opinion, gold’s continued appreciation vis-à-vis every currency is assured because the great flight from fiat has only just begun. Like gold, silver also has a long monetary history, and as such, investors are now also buying silver as protection from the ravages of fiat currency debasement. Yet, when compared to gold, it is silver that offers the most attractive value proposition by virtue of the gross mispricing of its scarcity, which, we might add, has existed for many years. Thus, in our opinion, as this new bimetallic standard takes root, silver investors will continue to be justly rewarded with marked outperformance. We truly believe that this is the investment opportunity of a lifetime, and increasingly so, others are taking heed. What is clear to us is that with equal investment dollars now flowing into silver and gold, the current 35-to-one ratio is unsustainable and has only one direction to go: lower.

Eric Sprott clearly understands the message of the markets.

Gold to Silver Ratio (GSR):


Source: sprott.com

Perfect Setup In Quality Gold Shares

Gold shares are unloved, maybe even hated. This is a perfect setup those that act based on discpline rather than emotion.

Take for example, Goldcorp (GG). GG's trend energy and price reflects what is taking placing across many quality names within this sector. REV(E) or trend energy established new highs in the summer of 2010. Many investors, motivated by fear and/or disgust, sold or reduced their position into weakness in early 2011 despite this subtle sign of strength.

This is why discipline is so important. Discipline allows investors to recognize strength and weakness despite fear and greed, respectively.

Goldcorp (GG)

Currency-Induced Inflation Driving Asset Prices

Currency-induced push inflation has been the dominant driver of price since 2008. Nothing really changes. The vast majority (99%) of the public lives in the economic paradigm of the previous expansion or the world they have come to understand. By the time they realize their standard of livings (i.e. lives) have changed and cannot be easily restored, disinformation, MOPE, and reality-scripted headlines will have hindered actions necessary to preserve wealth.

West Texas Intermediate Crude Oil (OIL) AND Oil to Gold Ratio (OILGLDR):


Headline: Oil up above $109 on signs of strong US demand

Oil prices rose above $109 a barrel Wednesday after a report showed U.S. gasoline supplies fell for a second week, suggesting higher fuel costs haven't yet curbed demand.

A weaker dollar -- which makes oil cheaper for investors holding other currencies -- and rising equity markets in Asia and Europe also helped boost oil markets.

Source: finance.yahoo.com

Geithner says "no risk" U.S. will lose AAA rating

Rating agencies can see the obvious but will be limited by the phrase "critical to national interests." Does a for sale sign on a car saying NEW make the obvious dents and rust disappear? No. Capital is not swayed by shallow observations.

Headline: Geithner says "no risk" U.S. will lose AAA rating

U.S. Treasury Secretary Timothy Geithner, going on the offensive one day after Standard & Poor's threatened to lower its top-tier rating on U.S. government debt, said on Tuesday there was "no risk" of a downgrade.

Prospects for a deficit-reduction deal were improving, Geithner said on Tuesday as he appeared in a morning blitz of television shows. He said in one appearance that he did not have to reassure foreign buyers of U.S. debt in the wake of S&P's warning.

Geithner said Democrats and Republicans now agree on the need to put in place "enforceable" targets to slash deficits by some $4 trillion over the next decade or so.

Source: finance.yahoo.com

Greece facing electricity strikes over austerity

The world continues to deal with the ongoing debt crisis. The currency devaluation and austerity programs can lead to disruptions in services once considered birth rights by many.

Greece's powerful electricity workers' union says it is considering rolling strikes in May to protest plans to sell off a key stake in the state-run Public Power Corporation as part of a major privatization drive in the crisis-hit country.

The General Federation of PPC Personnel said in a statement posted on its website Wednesday that it is considering successive 48-hour strikes "aimed at changing the wrong decision taken by the government."

The union did not say when it will announce a decision, but has scheduled a news conference for next week.

The Socialist government plans to reduce its stake in PPC from 51 to 34 percent, under a euro50 billion ($71.5 billion) 2011-2015 privatization program.

In response, unions have already called a general strike for May 11.

Source: finance.yahoo.com

The Price of Gold Will Acelerate As Public Recognition Increases

The weak dollar drives earnings and stock prices higher.

IBM


Unfortunately, rising earnings and stock prices are an illusion of currency devaluation. Ounces per share defines the real trend and impact of currency devaluation.

IBM to Gold Ratio (Ounces Gold/Share)


Headline: IBM earnings up 10 percent, helped by weak dollar

IBM Corp. on Tuesday reported stronger-than-expected net income and revenue for the first quarter, helped by the weak dollar and strong performance from its hardware division.

The computer and consulting-services company also raised its full-year forecast for operating earnings by 1 percent. However, the stock retreated, possibly in reaction to a decline in new contract signings in the outsourcing business.

Net income rose 10 percent to $2.86 billion, or $2.31 per share. In the year-ago period, IBM earned $2.6 billion, or $1.97 per share.

Source: finance.yahoo.com

QE to Infinity

Who needs another QE program with a perpetual motion machine?

Headline: Bernanke May Reinvest Maturing Debt to Avoid ‘Cold Turkey’ End to Stimulus

Federal Reserve Chairman Ben S. Bernanke may keep reinvesting maturing debt into Treasuries to maintain record stimulus even after making good on a pledge to complete $600 billion in bond purchases by the end of June.

The Fed chief’s top two lieutenants said this month the economy and inflation are too weak to warrant the start of a monetary-policy reversal. Investors and economists including David Kelly at JPMorgan Funds see that as a signal the Fed will keep its balance sheet at current levels by replacing about $17 billion a month in maturing mortgage debt with Treasuries.

Source: bloomberg.com

Cash Assets of Commercial Banks Are Soaring

The following table continues to reflect continued weakness in commercial bank lending. Particularly alarming is the sharp rise in cash assets as a percent of total bank credit (Cash%TBC). The blue arrow reveals that CASH%TBC is approaching 16%. This is the highest level since the onset (acceleration) of the debt crisis in 2008. This is an immediate attention grabber. Commercial banks are hoarding cash assets. $1495 golden question is why and why now? Gold and silver, often inaccurately portrayed as relics of past monetary systems, are in response to reality and rational decision making.

Joe Walsh once wrote in the song Good Man Down, "Well it’s hard to keep a good man down." Gold is today's good man.

Total Bank Credit of Commercial Banks in the United States:


Source: federalreserve.gov

BRICS make move to shove dollar aside

This will become a market directed decision.

China and four other leading high-growth economies have taken landmark steps toward lowering the importance of the dollar in international financial transactions — part of a seminal shift in the move towards a multicurrency reserve and trading system.

Mind you, you wouldn’t get an idea of anything dramatic from reading the official Chinese press on the conclusion of a summit meeting of the so-called BRICS economies (Brazil, Russia, India, China and South Africa) in the southern resort twin of Sanya in southern China last week.

“Leaders call for peace and prosperity” was the front-page headline in the China Daily. Stirring stiff. Even more striking was the prominent story the previous day that China’s President Hu Jintao and visiting Brazilian President Dilma Rousseff had agreed to quicken trade procedures for “gelatin, corn, tobacco leaf, bovine embryos and semen.” At least we know there’s no holding back the Chinese rhetorical flourishes on these issues.

Source: marketwatch.com

Inflation Watch

Another perspective on inflation -

U.S. Companies Shrink Packages as Food Prices Rise.

Reader Bryan E. wrote to mention: "Over the weekend we had visitors who are in the wholesale food distribution business. They were relating that they had experienced a 14% increase in wholesale food prices during just the month of March. Here are some examples:

Item Size March 1st Price April 1st Price
Sugar 55 lb. $33 $37
Flour 50 lb. $11 $16
Butter 30 lb. $74 $91
Margarine 30 lb. $17 $24
Catfish 15 lb. $54 $89
Cheese 42 lb. $2.55/lb $2.91/lb

Restaurateurs are greatly concerned about how they are going to adjust for these major monthly price increases during a period of already slow business. Many imported food products now have limited availability because the home countries are retaining them for domestic use."

Source: survivalblog.com

Not Done With The Yen Yet

(1) Money positions
(2) Ex post headline analysis provides the "reasons" for the public.

Smart money is not done with the Yen yet. A rollover in the Yen will likely mark the next phase in the debt crisis.

Yen (FXY) and the Commercial (C) Less Nonreportable (NR) Traders COT Futures And Options Stochastic Weighted Average of Net Long As A % of Open Interest:


Headline: Safe Haven Yen Jumps, Nears Post-Intervention Levels

The Japanese yen traded sharply higher across the board Monday to within striking distance of levels that immediately followed the coordinated Group of Seven intervention on Mar. 18.

The selloff was prompted by Standard and Poor's, which revised its outlook on the U.S. to negative, prompting traders to scramble for perceived safe havens such as the yen. With U.S. markets under pressure, traders preferred the yen to the dollar.

Source: online.wsj.com

Invisible Hand Pushing Bonds Up At Support

The 'invisible hand' is pushing hard to hold support. The bond bears are right, but getting TIME right will not be easy as point, click, and forget.

US Treasury Bond 20YR+ (TLT) And Bond Diffusion Index (DI):


Headline: Treasury's Oldest Bonds Show Covert Demand With End in Sight for Fed's QE2

Investors are paying the smallest discounts for Treasuries other than the newest, most-traded bonds since the start of the financial crisis, a sign of growing demand even as the Federal Reserve’s $600 billion buying program approaches its conclusion.

Yields on older notes with 10 years left to maturity have fallen to within 11.4 basis points, or 0.114 percentage point, of those on the newest securities of the same maturity, down from the peak of 66.1 in January 2009, according to data from Barclays Plc. The gap for so-called off-the-run notes narrowed to as little as 6.6 basis points in February, the least since May 2007.

Source: bloomberg.com

S&P cuts long-term outlook for US debt to negative

The officially recognized, read as not actual, debt burden remains near record levels. Devaluation, or ongoing default, is and always has been the tool used to manage excessive debt and deficits. The secular up trend in gold during Great Depression and today’s Great Recession confirms it. The issuance of debt is so “critical to national interests” that proactive downgrades will be limited in scope and timing despite evolution and intensification of the debt crisis.

Total Credit Market Debt As A% GDP


Headline: S&P cuts long-term outlook for US debt to negative

Standard & Poor's Ratings Service downgraded its outlook Monday on the United States' sovereign debt, expressing unprecedented doubts over the ability of Washington to bring the massive federal budget deficits under control in the next three years.

The agency lowered the long-term outlook to "Negative" from "Stable," saying there is a one in three chance it will downgrade the rating on the debt in the next two years.

Source: news.yahoo.com

Gold Stocks Have A Secret Weapon Called Dividends

Gold stocks might be trading at similar capital appreciation valuations to that of 2009, 1982, 1979, 1960, 1945, and 1933, but let's not forget the power of dividends on total returns over time. Every secular bull sees a surge in dividends that will boosts total return that few capital return indices recognize. Do not underestimate the compounding power of dividends in whatever form, because they are coming. The increases are often hidden in plain sight for most investors to see.

S&P Gold (Formerly Precious Metals Mining)* to Gold Ratio:
* S&P Gold from 1945, Barron's Gold Stock Index from 1939-1945, 1922-1939 Homestake Mining:

Texas University Endowment Storing About $1 Billion in Gold Bars

Demand for physical gold is soaring.

The University of Texas Investment Management Co., the second-largest U.S. academic endowment, took delivery of almost $1 billion in gold bullion and is storing the bars in a New York vault, according to the fund’s board.

The fund, whose $19.9 billion in assets ranked it behind Harvard University’s endowment as of August, according to the National Association of College and University Business Officers, added about $500 million in gold investments to an existing stake last year, said Bruce Zimmerman, the endowment’s chief executive officer. The holdings are worth about $987 million, based on yesterday’s closing price of $1,486 an ounce for Comex futures.

Source: bloomberg.com

From Bob and Richard

Follow the Money In Silver

If smart money was turning bearish as suggested below, money flows would be accelerating towards the red rather green line. That is, unless commercial traders are no longer considered ‘smart money’. Don’t count on that. Silver remains a market in transition from order to disorder. Markets in transition tend to do unexpected things.

Silver (SLV) and the Commercial (C) Less Nonreportable (NR) Traders COT Futures And Options Stochastic Weighted Average of Net Long As A % of Open Interest:


Headline: Silver: The Smart Money Gets Bearish

"It's actually a very well-timed, very inexpensive wager on the price of silver falling," says Wilkinson. "Plenty of smart money [read: the cool kids] is betting on the commodity rally ending." How is a million buck bet inexpensive? For one thing, a million bucks isn't what it used to be. For another, as Wilkinson notes, it was a "low Delta trade." In English, that means you can buy a whole stack of option paper for a relatively low price. The unknown silver bear only paid 10 cents a contract at a relatively low volatility. As a result, the trader doesn't actually need to fall 37% by July to make money. Instead the put buyer just needs other traders to think silver might drop that steeply. Wilkinson observes that the put buyer's contracts were trading for 20 cents the day after the million-dollar trade, giving the bear a double on paper.

Source: finance.yahoo.com

Food and gas costs push consumer prices higher

Food and gas prices pushing consumer prices higher. So, what's pushing food and gas? The answer is not pixie dust.

Americans are paying more for food and gas, a trend that could slow economic growth in the months ahead. The Consumer Price Index rose 0.5 percent in March, the Labor Department said Friday. That matched February's increase, the largest since the recession ended in June 2009. In the past 12 months, the index has increased 2.7 percent, the biggest rise since December 2009. Excluding the volatile food and gas categories, the so-called core index rose 0.1 percent and it is up only 1.2 percent in the past year. Consumers are spending more, but the steep rise in food and gas prices could limit their ability to purchase discretionary goods and services. Consumer spending makes up 70 percent of economic activity.

Source: news.yahoo.com

Silver - Hot versus Too Hot

A thermometer and the discipline to act, helps a traveler of the desert. A trend thermometer, a measure of trend "heat", and the discipline to act when the time is right, helps the traveler of the trend. The natural ebb and flow between silver and gold has not been erased by silver recent out performance. A traveler of the trend knows the difference between hot and “too hot.”

Gold to Silver Ratio (GSR):

Retail Sales And Quantitative Easing

While the ninth straight month of rising retail sales numbers ‘plays’ well for the headlines, it does little to influence capital that knows the difference between nominal and real trends. Nominal prices are rising. Real or currency adjusted prices remain in a sharp down trend since 1998. In addition, year over year growth is beginning weaken in 2011. This pattern of injection and collapse (hemorrhage) can be seen in 2000, 2005, 2008, 2009, and 2010. Keep this reality in mind as the Fed and talking heads discuss withdrawal from quantitative easing by June. No chance.

Gold-Adjusted Retail Sales (RSGLDR) and YOY Change:


Headline: Dollar Edges Up After US Retail Sales Data

The dollar edged up against the euro and the Japanese yen on Wednesday after data showing that U.S. retail sales rose for the the ninth straight month in March.

The euro slipped slightly against the dollar to $1.4486, though recently had pared back most of those losses. Against the yen, the dollar rose to Y84.22 immediately after the retail sales data.

Source: online.wsj.com

"Don't hold your money, go ahead, spend it!"

"Don't hold your money, go ahead, spend it!" This classic line from the video below epitomizes not only American (pop) culture but also its lack of understanding of money. Gresham's law that is often worded as "bad money drives out the good". Storing wealth or investing in bad money is always bad investment, but Americans do it everyday. The real kicker of this message is that the driver of wealth destruction is not the form but rather velocity of money. Who can fight that logic?

Don’t Call It a Stimulus: 2012 Election Spending Likely To Top $8B

The 2008 election was all about change.

The stakes to maintain control have certainly changed (increased).

760M/872 Avg POG = 0.87 2008
8000M/2500 Avg POG = 3.20 2012

The road to the White House is paved with dollar bills... billions of them. The work begins tonight as President Obama kicks off his fund-raising efforts in his hometown of Chicago. First, Obama speaks at a $5,000 to $15,000-per-plate fundraiser. Then before sitting down for dinner he'll head over to a $35,800-per-person event where he might actually sit and grab a bite. (See what's on the menu.)

The President alone is expected to eclipse the billion dollar barrier in his re-election bid. That goal is a roughly 25% increase over the record $760 million he raised as a candidate in the 2008 race. "[Obama] believes he has to in order to offset what he believes to be an onslaught of outside spending especially by corporate interests," says Bill Holman, government affairs lobbyist with Public Citizen.

Source: finance.yahoo.com

Indian Investors Switch to Silver From Gold

Increasing marginal demand for physical silver is straining paper control. Paper shuffling can 'handle' only so much demand before a well-defined, two-tiered market (one for physical and another for paper) emerges. Investor confidence that the paper price close approximates that of physical is the basis of control. If that confidence is broken in either silver or gold, all hell breaks loose.

Higher returns are tempting many small Indian investors to buy silver and sell some of their gold jewelry as the price of the white metal has more than doubled over the past year, traders said.

Spot silver prices rose to an all-time high of 60,125 rupees ($1364) a kilogram Friday in India's main bullion hub, Mumbai, from 28,535 rupees on April 12 last year, driven by firm global cues as concerns over unrest in the Middle East and North Africa have improved its safe-haven appeal. Gold prices too rose, but at a much slower pace of about 21% to 21,500 rupees per 10 grams.

Source: online.wsj.com

In A Word - Close

Why have Jim Sinclair, Pimco's Bill Gross, and other smart money begun to position against US long bonds?

If there's one chart the provides a glimpse into their mind, it might be this one.

30-Year US TBd Yield and Gold London PM Fixed


If there's a word that best describes this chart, it would be "close".

Small Cap Stocks Reveal The Evolution of Hyperinflation

Hyperinflation continues to drive small cap stocks. Prevailing wisdom often suggests other outcomes, which in turn, creates uncertainty paralysis for most investors. Who’s right, the market or prevailing market wisdom? The market is always right, but the trick is figuring out its complex message across multiple cycles.

The message from the markets is clear. We are witnessing the evolution of hyperinflation.

Small Cap Total Return Index (SCSTRI) and Z Scores from Primary Trend (48 Month)


Small Cap Total Return Index (SCSTRI) AND SCSTRI to Gold Ratio


U.S. Large Cap Stocks Total Return Index (LCSTRI) to U.S. Small Cap Total Return Index (SCSTRI) Ratio

Inflation Actually Near 10% Using Older Measure

The public is slowly recognizing the hidden inflation that capital markets and shadowstats.com already recognize. The conclusion that standard of livings will continue to drop in the years to come as a result of the debt crisis will gain increasing acceptance within the private and possibly public sector. Don't count on quick recognition from the latter.

After former Federal Reserve Chairman Paul Volcker was appointed in 1979, the consumer price index surged into the double digits, causing the now revered Fed Chief to double the benchmark interest rate in order to break the back of inflation. Using the methodology in place at that time puts the CPI back near those levels.

Inflation, using the reporting methodologies in place before 1980, hit an annual rate of 9.6 percent in February, according to the Shadow Government Statistics newsletter.

Source: cnbc.com

IMF says sluggish U.S. growth requires easy money policy

Has it ever occurred to anyone that printing money (on going default) might be the strategy to get its debt under control? A closer review of the proposed spending cuts reveals how $38 billion is more like $353 million.

The U.S. economic recovery is so sluggish that the Federal Reserve needs to keep easy money policies in place while the government comes to grip with its debts, the International Monetary Fund said on Monday.

"A credible strategy to stabilise public debt in the medium term and a down payment on fiscal consolidation in 2011 are urgently needed," the IMF said in its World Economic Outlook.

The issue of how to ratchet down the U.S. debt is at near fever-pitch politically, with opposition Republicans in Congress trying to compel the Obama administration to deeper spending cuts.

Source: uk.mobile.reuters.com

Central banks turn net gold buyers, cut euro zone debt: survey

This should not surprise anyone here.

Central banks turned net buyers of gold last year and cut exposure to debt issued by euro zone members Greece, Ireland and Portugal, an annual survey of the world's reserve managers showed.

Source: reuters.com

Silver Doesn't Follow Headline Logic

The buy signal of early 2011 has passed for silver. Today's money flow setup is probably best characterized as neutral (statistical unrevealing). Neutral, however, can easily translate into "Silver will Tarnish" to affect a response from computerized trading. It doesn't take much fear-based technical selling to turn neutral into buy. Don’t ignore the possibility that neutral transforms to sell as prices rise even further. As always, the point being follow the money and ignore the rest.

Silver London P.M Fixed and the Silver Diffusion Index (DI)


Headline: Why Silver Will Tarnish

Silver hit a major milestone on Friday, breaking through $40 an ounce for the first time since 1980. But the metal's powerful rally may soon be coming to an end.

It's been leaving gold in the dust. Silver prices have doubled since August, while gold is up 20% in the same span. Over just the past three months, silver has shot up 50% compared with 11% for gold.

Both metals are attractive to investors because they're known to be "safe havens"—assets that historically have retained their value in tumultuous times. Investors so covet safe havens right now that they've been more than willing to try silver, long considered gold's poorer cousin. Result: Silver prices have seemed headed toward the all-time highs achieved in January 1980, when the larger-than-life Hunt brothers of Texas tried to corner the market.

DON'T BET ON NEW HIGH. While the Hunts put the squeeze on supplies, it's demand that's driving the metal higher this time around. But demand for silver is more fickle than demand for gold in a couple of ways, and that is what makes further strides in price a tenuous bet, at best.

Source: online.barrons.com

Second Fukushima if Iranian Bushehr activated in May

Natural disasters and human error aren't the only means to cripple an nuclear plant.

Saudi and Kuwait officials have warned the US that if Iran activates its first nuclear reactor at Bushehr in May as planned, there is a good chance it will blow up and the entire Gulf region suffer a nuclear disaster on the scale of the misfortune at Japan's Fukushima and expose millions to radiation contamination.

This issue was urgently raised in recent Saudi-US talks – first on April 4 with US Defense Secretary Robert Gates and again Monday, April 11, with the National Security Adviser to the US President Tom Donilon.

The two high-level US official visits to Riyadh in six days attest to the fierce discord between Saudi King Abdullah and the administration - not just over Iran and its nuclear activity but the entire gamut of US Middle East policy.

Source: debka.com

Singapore's SMX launching copper, gold, silver trade

Cash settled contracts redirect demand away from physical markets. The weak hands get redirected while the strong hands accumulate.

Headline: CORRECTED-Singapore's SMX launching copper, gold, silver trade

The Singapore Mercantile Exchange will launch cash-settled gold, silver and copper futures contracts on April 15, the exchange said in a press release, which may carve out a new market for speculators seeking arbitrage opportunities.

"(The) exchange will begin trading cash-settled gold, silver and copper futures contracts from April 15, 2011, in contract sizes of 100 troy ounces, 5,000 troy ounces and 5 metric tons (MT) respectively," the exchange said in the note.

Source: reuters.com

Bullish Internal Setup in Equities

Stock market tops usually occur when no one expect them. Investors/traders tend to turn bearish (and bullish) at the wrong times.

Nominal bull markets tend to show signs of age before they peak. Negative divergences of market breadth and tape relative to price and excessive investor optimism are clear signs of aging market rally. These signs of age often precede market peaks by many months.

ADN(E), a measure of market participation, has been leading price to new highs. This positive divergence in the face of ebbing investor confidence reflects what is known as climbing the wall of worry. These positive divergences illustrate vitality rather than a sign of age.

NYSE Composite and Breadth


Headline: Bearish Stock Bets on the Climb

Short selling rose at the New York Stock Exchange and at the Nasdaq Stock Market during the second half of March.

In the exchanges' latest twice-a-month statistics, for the period ended March 31, the number of short-selling positions at the NYSE not yet closed out, known as short interest, increased 0.85%. The positions stood at 12,643,943,208 shares from a revised 12,537,409,289 shares in the period ended March 15.

On Nasdaq, short interest increased 1.60% to 6,668,223,829 shares from 6,563,218,369 shares over the same period.

Source: online.wsj.com

Soldiers die in ambush as Syria protests spread to coast

The collapse of paper carries great consequences.

Nine Syrian soldiers were killed in an ambush near the port city of Banias, state TV reported, and witnesses reported four protesters being shot dead in the city by security forces and pro-government gunmen.

The Syrian army sealed off the city where anti-government protesters, undaunted by the regime's use of force to quell more than three weeks of unrest, appeared on the streets.

Details were sketchy as phone lines, internet access and electricity were cut in the area. But one witness, reached by telephone, said hundreds of protesters had gathered near the al-Rahman mosque when security forces and armed men in civilian clothes opened fire on them. The names of the dead were read out on mosque loudspeakers. Tanks and soldiers circled the city, preventing people from entering.

Source: independent.co.uk

Spending Cuts Are A Game of Perception

Political posturing over crumbs of much larger deficit pie is nothing more than a game of perception. The Formula below illustrates the depth of the problem in which the solution fools only the fools. Meanwhile, few have noticed a roll over in the Formula in 2011. This debate will go silent once the motivation to do something passes.

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


Headline: Spending cuts not expected to dent $1.5T deficit

The $38 billion in spending cuts agreed to last week won't prevent this year's budget deficit from setting another record high, estimated at $1.5 trillion.

Most of the agreed-to spending cuts either affect future budgets or amount to accounting gimmicks that won't reduce actual spending.

The Treasury Department reported Tuesday that the deficit already totals $829.4 billion through the first six months of the budget year -- a figure that until 2009 would have been the biggest ever for an entire year. For March alone, the government ran a deficit of $188 billion.

Source: finance.yahoo.com