Tuesday, September 27, 2011

Whew! We Avoided A Government Shutdown...

ain't that a shame?  Congress reached an agreement yesterday to extending Government spending until November 18th.  Breathe easy now, as the massive transfer of wealth from the middle class taxpaying public to the big corporate and financial elite can continue for another 11 weeks.  Oh, and Obama can continue to borrow money on our behalf and give it to his wealthy campaign contributors under the veil of "green" energy investments. 

And our joke of a Treasury Secretary continues to take brutal verbal beatings from various European leaders, who somewhat bluntly have expressed that he should keep his mouth shut about the EU and their finances as long as the U.S. financial situation goes unaddressed and continues looking even more catastrophic than that of Europe.  These are the days when I really wish we had someone like Charles Dickens or Oscar Wilde writing daily commentary on this absurdity in order to at least help us stay amused...BUT, if you want to see how the public feels about our Government, take a look at the latest Gallup poll:  "Americans Express Historic Negativity U.S. Government"  LINK

If democracy were alive and well, and if our Government was actually "by the people and for the people," then Congress would have actually allowed the Government to shut down and stay shut down until something was done to address the rapidly deteriorating financial and political condition of this country: 
49% of Americans believe the federal government has become so large and powerful that it poses an immediate threat to the rights and freedoms of ordinary citizens
But alas, the citizens of this country peacefully allowed democracy to be taken away from them - and gave up their civil rights - starting several years ago and through the course of several Presidential administrations.

One thing that HAS changed, rather interestingly, is the response by the gold/silver buying portion of the public - which is still well less than 5% of the investing public - to massive, gut-wrenching sell-offs in the precious metals like we are currently experiencing.  For the first 8 or so years of this bull market, whenever the metals would have a wrecking ball taken to their prices, the metals-buyer would scatter like cockroaches in a NYC kitchen when the lights come on? (Ever see that? I had cockroaches in my first couple of apartments when I moved to NYC back in the mid 1980's).

The perfect example of this was in 2008.  When the gold/silver sell off started in March, there was a little dip buying, but the buyers had pretty much gone completely into hiding for several months after the second takedown in July of that year.  Contrast that with the behavior of these buyers the last couple of times around.  In both April and this week, I've had several somewhat newbies ask me if they should be buying this hit.  My answer:  I am, gratefully.  But don't take it from just me, check out these accounts of the buying frenzy that went on around the globe yesterday, which I borrowed from Ed Steers Gold and Silver Daily:
 It was no surprise to me to see a big sales report from the U.S. Mint yesterday. They sold 15,500 ounces of gold eagles...2,500 one-ounce 24K gold buffaloes...and a very chunky 1,025,000 silver eagles. Month-to-date sales are as follows...65,000 ounces of gold eagles...10,000 one-ounce 24K gold buffaloes...and a whopping 3,325,500 silver eagles. Based on retail bullion sales that I know about in various parts of North America, September will be another strong month for the mint...but it certainly didn't start out that way.
The Perth Mint has been very busy this Monday morning with a lot of buying [but also some selling], however buying is outweighing selling by a fair margin [pun intended]...and the decrease in the AUD/USD has taken some sting out of the drop for Aussie investors. 
I see this sell-off driven by leveraged “weak hand” money. In contrast, average investors [the real smart money] are looking at this as an opportunity to buy in or top up at cheaper prices. These buyers are “strong hands” and have been the ones who have been driving the trend all these years.

My bullion dealer here in Edmonton had another record day in bullion sales on Monday...even larger than the record day he had on Friday. It was wall-to-wall buyers all day...and the phone was ringing off the hook. Nobody sold an ounce of anything.
One way I do my own due diligence is to monitor the Denver craigslist, which happens to be a very active marketplace for gold and silver buyers.  A week ago silver sellers were abundant.  Last night when I checked, there were a few silver eagle sellers, but several posts from people looking to buy gold and silver.  That may sound arbitrary, but I've been trading on and monitoring craigslist for about 7 years now.  It's a good indicator of what the plebeians are doing in gold and silver (me being one of them).

The bottom line is that the percentage of people - albeit still small - that understand the need to move their phony fiat currencies into gold and silver is growing.  And even more interesting is that the level of market sophistication among this group of the population is increasing, as is their understanding of the "game" being played by the Federal Reserve and the Government.


  1. There seems to be a nice business in borrowing money and never paying it back....???

    Tuesday, September 27, 2011
    Another big month at Geithner’s whorehouse bank

    At the top of the list is a modest $3mm to our pals at Solyndra. Note that this was done on 7/15; just six-weeks before the lights went out at SOL. How about the % rate? 0.89%. We will never see a dime of the interest or principal on this advance. Nothing short of a joke; a bad one at that.

    There was a total of $89,500,000 of other new loans to solar related projects. The DOE guaranteed loans now total a tidy $6 billion. That number will surely rise next month.

    Ford gets another $163 million. Just what is it we are doing with Ford that requires this much money?


    If there going to borrow money at .o1 for mortgage refi's why don't they just give them to consumers so the principal gets paid down?????


  3. Where do we live???

    A Representative Republic?

    That's So Last Century"So what to do? To solve the serious problems facing our
    country, we need to minimize the harm from legislative inertia by
    relying more on automatic policies and depoliticized commissions for
    certain policy decisions. In other words, radical as it sounds,
    we need to counter the gridlock of our political institutions by making
    them a bit less democratic." - Peter Orszag
    Who is Peter Orszag? Vice Chairman of Global Banking at Citigroup, Bloomberg "view" columnist, an adjunct senior fellow at the Council on Foreign Relations and....... most importantly.... The former director of the Office of Management and Budget for President Obama.
    What time is it again?