Friday, February 10, 2012

Some Friday Humor

The significant problems of our time cannot be solved by the same level of thinking that created them  - Albert Einstein
Clearly Einstein did not consider the element of Governmental and banking system fraud and corruption in implying that significant problems can actually be solved. 

Someone sent me a news link which reported that the Greek deputy foreign minister resigned in protest over the "tough" austerity measures being demanded before Germany and the IMF will sign off on bailing Greece out with German and U.S. taxpayer money.  This is hilarious.  What the hell do these politicians want?

With Greece you have a big portion of the population living off of Government handouts and the labor force getting subsidized pay.  Those transfer payments have to be paid for in some way.  Unless Greece can figure out how to suddenly generate a massive amount of economic growth, then either the Government handouts have to be cut back drastically, forcing people either to work or become more impoverished, OR they can print money.  What's it gonna be, Greece?  Italy, Portugal and Spain are barrelling toward the same brick wall and the scope of the same problem in each of those countries is even bigger. 

Funny thing is, the dilemma as I just described it in Greece is identical to the same dilemma facing the United States.  Only the problem here is bigger than the entire EU combined.  The only difference between Greece et al, individually, and the United States is that none of those EU Governments can unilaterally crank up the printing press and monetize their debt.

Ironically, Obama just announced that the budget deficit forecast will be even bigger in 2013 than for 2012, which is bigger than 2011.  Obama is thus telling us that the debt limit ceiling will have to raised several more times during his next term.  At some point the rest of the world is going to stop recycling their U.S. dollars back into Treasury bonds and that's when the real fun begins in this country.  At that point in time, the Government can cut back drastically on welfare/entitlements and defense spending - and thereby throwing a massive number of people into destitution - or print trillions.  I would be on the latter and you can do that by moving as much of your fiat paper dollars into physical gold and silver - not GLD, SLV, CEF or GTU.

And now for the ultimate Friday comedy:  Bernanke gave a speech LINK to the National Association of Home Builders today and made this statement:
Hmmmm...Bernanke is a real Einstein there with that statement.  I wonder if Bernanke thinks of himself as having figured out something there along the same lines as figuring out how split the atom...Enjoy your weekend.


  1. "budget deficit forecast"? There is no freaking budget!

    1. LOL. That's true. Most Americans have no idea about that.

  2. Bernanke is wrong about I'm going to have to reconsider investing in real estate.

  3. Andover Voters to Decide on Silver Dollars as Pay Alternative for Town Employees

    But Shapiro was not in Mexico representing the United States. In fact, as a math teacher in Methuen at the time, he wasn’t representing anyone officially.

    “I went on my own,’’ said the Andover resident, on what he called his two-month stint as a consultant economist. “I sent them a letter with this outlandish proposal and one senator sent me a reply… . I like to think outside the box.’’

    Shapiro’s idea may not have taken hold in Mexico, but he hopes it does in Andover, where he will ask Town Meeting voters in April to authorize the town to give its employees and contractors the option of receiving part of their pay in $1 American Eagle Silver coins.

    “It’s a roughly 4 to 5 percent boost in purchasing dollars,’’ Shapiro said. “The town of Andover stands to save about $1 million if roughly 250 employees participate.’’

    In his petition, which received the minimum 10 signatures from registered voters to make it onto the Town Meeting warrant, Shapiro states that as of last month, the exchange rate for a $1 silver coin is $35. Employees who choose to receive part of their earnings in silver coins would realize savings by way of paying less taxes, he said.

  4. Einstien also said "there are two things that are limitless, the universe and human stupidity, and I'm not so sure about the universe."
    Einstein is two for two in the quotes department.

  5. Dave,
    Bernanke has been hoping for a soft landing for real estate! LMAO

  6. Heck

    It could be "Silver is no longer viewed as a secure investment" - they getting it right.

    The increase in shorts is huge. It's like coming up for air when you drowning and a hand keeps you just below the surface until there is no movement. Its clear now that the CME lowered margins for skinning some more.

    Ted Butler is become the bud joke of the silver community, what with being wrong about shorts, CFTC and showing his flaws in the silver physical research. Glad I don't subscribe to him.

    Then Sprott - he should first be able to answer his own question ... Where is all that Silver coming from?

    Silver isn't anymore about prudent investment - its about using the media hype to skin shorts and longs to make money!

  7. Pink elephants, unicorns, and debt ceilings.

  8. Really appreciate your analysis, as always!

    Quick question: do you advocate holding serious sums of money in physical in a person's own home, as opposed to buying share certificates in an investment vehicle where the gold is fully allocated?

    I understand the reason why you said "not GLD, SLV", but not why you included CEF and GTU?

    In other words, are there any precious metals certificates/mutual funds that you trust? I also noticed that you didn't include Sprott in the names to avoid. Was that intentional? Also, what about the Royal Canadian Mint's new allocated gold shares?

    Your expert opinion in this is appreciated! The toughest thing about gold investing is that a person buys it to avoid counterparty risk, yet the more I read, the more I get to thinking there is enormous counterparty risk in the gold market worldwide. Who can an amateur investor trust?

    Curtis from Canada

    1. CEF and GTU are not real gold because you can't take delivery of the gold and silver in exchange for your shares. When you sell CEF or GTU you end back up with cash again. And who's to say those trusts are fully allocated and don't lease the metal? That I'm aware of, the prospectus does not facilitate an independent audit or inspection. If you read the Sprott prospectuses and compare them to GLD, you'll see what I mean. Finally, your holding in CEF or GTU is dependent on your stock account custodian and its trustworthiness. What happened with MF Global can happen at any brokerage firm now.

    2. Permanent Gold Backwardation

      The meaning of gold backwardation is that trust in future delivery is scarce.

      In an ordinary commodity, scarcity of the physical good available for delivery today is resolved by higher prices. At a high enough price, demand for wheat falls until existing stocks are sufficient to meet the reduced demand.

      But how is scarcity of trust resolved?

      Thus far, the answer has been: via higher prices.

      But when backwardation becomes permanent, then trust in the gold futures market will have collapsed. Unlike with wheat, millions of people and many institutions have plenty of gold they can sell in the physical market and buy back via futures contracts. When they choose not to, that is the beginning of the end of the current financial system.

      Think about the similarities between the following three statements:

      "My paper gold future contract will be honored by delivery of gold."
      "If I trade my gold for paper now, I will be able to get gold back in the future."
      "I will be able to exchange paper money for gold in the future."

      The reason why there was a significant backwardation (smaller backwardations have occurred intermittently since then) is that people did not believe the first statement. They did not trust that the gold future would be honored in gold.


      Permanent gold backwardation leading to the withdrawal of the gold bid on the dollar is the inevitable result of the debt collapse. Governments and other borrowers have long since passed the point where they can amortize their debts. Now they merely "roll" the debt and the interest as they come due. This leaves them vulnerable to the market demand for their bonds. When they have an auction that fails to attract bids, the game will be over. Whether they formally default or whether they just print the currency to pay, it won't matter.

      Gold owners, like everyone else, will watch this happen. If government bond holders sell their securities in response to this crisis, they will only receive paper backed by that same government and its bonds. But the gold owner has the power to withdraw his bid on paper altogether. When that happens, there will be an irreconcilable schism between gold and paper, with real goods and services taking the side of gold. And in a process that should play out within a few months once it gets started, paper money will no longer have any value.

    3. PLEASE PLEASE PLEASE stay away from the Royal Canadian Mint's Exchange Traded Receipts (ETRs) program!!

      In order to redeem your ETRs for physical gold bullion, you need to own atleast 10,000 ETRs.


      -Sicilian Gold

  9. Anon at 12:42 - good to see someone else hasn't bought in to the fake story - butler started his research publicly years ago and assumed naked shorting - yet very few ponder the question: what if they aren't naked shorts? How does change the analysis?

    Still hold Physical silver but definitely am aware of the hype.

    1. There's no question there's a lot of naked shorting. By definition, any short shares in SLV or GLD are "naked" because gold/silver are not delivered to the trust to back the short interest. That is a fact.

      In terms of non-ETF securities (bonds, stocks) there's plenty of naked shorting that goes on. Any time there's a failure to deliver it's a naked short. Huge failure to deliver is endemic to the Treasury market. Naked shorting is rampant in bulletin board shares and Canadian shares. The clearing houses never hold the non-deliveries accountable. Hell even the NASD and SEC have acknowledged the naked shorting problem - Congress has held hearings on it - but just like everything else, the people in charge of enforcing the rules just look the other way. All that is factual and clearly documented.

  10. A hangover is easier on your stomach than following the greek debt ball..

    The Cost Of The Combined Greek Bailout Just Rose To €320 Billion In Secured Debt, Or 136% Of Greek GDP

    Finally ask yourselves this: what would have happened if Greece had been allowed to default in May 2010 and all debts wiped out, and instead of feeding its creditors, the funding sources had provided the country with €320 billion in new debt (as they are anyway, only it is to make its creditors whole). It would mean that, assuming a dollar for dollar equivalency between GDP and debt, Greece would have grown by about 36% more in the past two years compared to where it is now, even with the occasional German submarine purchase. Something tells us the Greek people should have the right to know this.€320-billion-secured-debt-or-136-greek-gdp?

  11. Look who's back...I wonder if he had more gold in his portfolio's if he would have needed a govt bailout?

    Warren Buffett Trashes Gold, But What About Silver?

    In a recent Fortune article, Warren Buffett provided a glimpse into his upcoming annual shareholder letter. Buffett used this opportunity to once again remind everyone how much he dislikes gold. He cites gold’s limited industrial demand and places the precious metal in a category of assets that “will remain lifeless forever.”

    1. Buffet should just shut the fuck up. He's one of the biggest hypocrites and disingenuous characters in modern history. How come we never had to hear from Bill Gates? Most of the really really wealthy guys in this country you never hear from. I wish Buffet were like that.

      Either Buffet is jawboning and has a lot of his wealth in gold stuffed in secret accounts in Zurich and Luxembourg OR he's going to suffer a big decline in his wealth when the dollar collapses.

    2. In trashing gold, Warren Buffett makes the case for gold

      Wrong. What motivates us is that the mountains of Fed-printed money and Treasury-borrowed debt will grow, and that we like to hold a store of value that the Fed and Treasury can't debase. All fiat currencies everywhere throughout history, including the U.S. dollar, have declined asymptotically toward zero, while gold has always held its value. Who the F is Warren Buffett to dismiss millenia of history?

  12. MF Global: Francine McKenna of re: The Auditors Gives a Plausible Explanation

  13. Anything But Normal
    "If Mr. Bernanke's explanations are correct, that would suggest a key part of the U.S. financial system remains broken, putting paid to the notion set forth by Treasury Secretary Timothy Geithner (and others) that things are returning to normal.

    Then again, there could be another explanation. Since interest rates represent the price of money and mortgage rates are near all-time lows, wouldn't that indicate that the supply of loanable funds, including mortgages, far exceeds the demand? Based on the laws of economics -- which I'm sure Mr. Bernanke is well aware of -- wouldn't that imply that qualified borrowers should have no problem getting a loan?

    Unless, of course, you have a situation akin to that which exists in dysfunctional third world countries, where the "official" rates tend to be far different than those found in the shadow, or "black," economy. That, too, would indicate that current conditions are anything but normal (if history is any guide). It also suggests that that those who are relying on official statistics to assess the health of the economy may be making a serious mistake.

    Either way, it's hard to see how the current situation could be seen in anything other than a negative light, no matter how hard you spin it."

  14. Einstein would be puzzled....

    Lanny Breuer’s Theory of Chatting Accountability for CEOs

    As you read that, think about what has happened with Lloyd Blankfein. He bullshitted Carl Levin’s investigatory committee back in April 2010. Levin released a report last year stating he had lied, and referred his investigation to DOJ.

    And Lloyd Blankfein, who almost two years ago didn’t take Congress sufficiently seriously to tell the truth, is still running around free profiting off of European countries’ debts.

    Does Breuer really think seeing Blankfein treat Congress and regulators with utter disdain served as a deterrent to anyone? On the contrary, what appears to have been Lanny’s Chatting Accountability for CEOs only serves to show that these MOTUs are above the law.


    Friday, February 10, 2012
    Sprott Market Insights - Eric Sprott (Pt.1)
    In the first part of a three-part interview, John Budden speaks with Eric Sprott, Chief Investment Officer at Sprott Asset Management about the world at large and the propensity of all governments to print and devalue their currencies. (Part 1)
    mp3 (click here to download)

    Friday, February 10, 2012
    Sprott Market Insights - Eric Sprott (Pt.2)
    In the second part of the interview, John Budden along with Eric Sprott, Chief Investment Officer at Sprott Asset Management, discuss the reasons that Eric Sprott is so bullish on Silver as the investment for the next 10 years. (Part 2)
    mp3 (click here to download)

    Friday, February 10, 2012
    Sprott Market Insights - Eric Sprott (Pt.3)
    In the final segment of the three-part discussion, John Budden and Eric Sprott talk about the investment equipment required to survive in the period that lies ahead and Eric Sprott's own portfolio.
    mp3 (click here to download)

  16. It's worthwhile to read once in a while!

    from it......

    ---New York Times, January 4, 1932, page 30
    The New York Times, March 6, 1933, page 2, reported---
    REISNER, pastor of the Broadway Temple Methodist Episcopal Church,
    174th Street and Broadway, ARE TRAITORS AND SHOULD BE
    DEPRIVED OF CITIZENSHIP.”---NYT, March 6, 1933, page 2 (This
    minister received $250,000 in 1929 from Pilgrims Society member John D.
    Rockefeller Sr.) ---

    and another gem......

    OF SEQUESTERED MONEY.”---New York Times, March 9, 1933, page 2

    Doesn't that start to sound very the same as today!!!!! The saying goes - history repeats itself. - because its for real

  17. Chris Moore interviews Warren Pollock - KDKA - CBS Radio

    Chris Moore of 1020 KDA Pittsburg have a wide ranging discussion on current economic events and trends. We talk about the breakdown of the rule of law and the monetary structure. The six pillars of the economy are six trajectories including money, law, technology, transportation, human capital, and the physical world. The Corporate system is based on incorrect accounting and the selective application of the rule of law.

  18. The Lonely Road We Take Together

    "How is it possible for the Euro wizards of words to punish Greek debt severely but not hammer others equally now under assault both by mainstream media as well as the undertakers of bond ratings in the USA?

    The argument takes a position that the International Swaps and Derivative Association, which is made up of the manufacturers of these devices, will not self immolate by declaring credit events to be credit defaults. This is the ultimate irreversible can kick directly into the dead end sign at the end of the road of postponement to perdition.

    Financial currency inflated hell by global debt monetization is the condition from which there is no escape, except though burning down the old system and making a new one. This is the dead end sign at the end of the road for can kicking. It is the condition of financial perdition. It is not something coming in a distant future. It is here and now, clear and present, if you have the eyes to see.

    The means to this end is the combination of sick sovereign debt, risk insurance issued against the default of debt without sufficient liquid capital to do so, and the fact that those entities who issued this insurance are themselves and in truth illiquid under strain thanks to the capitulation of FASB on true market value of their legacy and other assets. This is the construction of the house of financial cards that will not survive intact during the period of 2012 to 2015. This is what gold at $1700 is indicating to those unfortunate enough to understand the practical workings of a system whose life force has been stolen to a degree that can only be deemed epic."

  19. Felix Zulauf: Why You Need to Own Physical Gold

  20. I'm not sure about your post on two counts. Firstly, Greece is being given worse terms than Germany was in 1953 by the UK, US and France. The UK at the time was under rationing and begging money from the US. The Greek claim at that time was on 600 tons or more of gold the Germans had taken from the Central Bank of Greece by walking in and stealing it with tanks. The Greeks had to entirely write this off because Germany had financial problems????. They got nothing. Nobody held a gun to the heads of the German and French banks like the Germans did when they took the Greek gold. So why are the Greeks suddenly bad and the Germans good????

    Secondly you allege that the Europeans can't print money??? What is the ECB doing may I ask??? I don't follow the fine print but round numbers the ECB lent $500 b under it's 3 year LTRO facilities at 1% pa, the European banks then lent round numbers $530 b back to the ECB at 0.25% pa. I assume the extra round numbers is the capitalisation of the lending margin as cash security. The banks are now claiming the loans to the ECB are tier one capital for their ratios and I assume the ECB has a right of offset so they have created nearly half a trillion of counterfeit tier one capital for 0.75% pa the cheapest tier one in history???? Not only that but buoyed up by the success in this market the ECB are proposing to step up the facility by another half trillion. Counterfeiting tier one bank capital is a lot cheaper than printing notes and has the benefit of providing massive further gearing. So I think the ECB is heads up on the Fed.

    1. First, as an English major in college, I really really hate it when people use "firstly" and "secondly." And actually it was my high school English teacher who pointed out that "firstly" and "secondly" are stylistically poor ways in which writers try to intellectualize the "voice" behind their writing style. It's more annoying and fatuous than "irregardless." Econonomy of style, please.

      Now, who cares what happened to Greece at the hands of the Germans in WW2? "Ain't war hell?"

      Second, I didn't "allege" that the Europeans can not print money. I said that none of the EU Governments unilaterally can print money. I should have phrased it, "none of the individual EU Governments..." I can see where my sentence could be confusing. Of course the ECB is printing money. But that's not the same as the United States printing money because Greece by itself can not print money to monetize its debt.

    2. Does it really matter in the scheme of things?

      Gold Heading Back Towards A Monetary System, Not Away

      The Gold Aficionado’s greatest fear is totally without basis. The price of gold will not fall significantly from its points of true standard valuation and the introduction of a new currency system.

      Gold is heading back towards a monetary system and not away from it. The producing gold company of the future is the new utility as it dividends a majority of its profits to its shareholders.

      The fact that gold is money and not a commodity is the safety latch that opens on its own when all other forms of money close. Gresham’s Law is human nature seeking a standard when all other forms of exchange have mutated to casino chips with national flags on them. Increasing world liquidity multiplies itself in increasing volatility of all things traded until an epic moment when over the top volatility convinces even the most economically ignorant that only a standard that cannot be multiplied by an instant Bernanke helicopter unlimited electronic monetary liquidity system is honest money. It is the flight from the burning values in terms of purchasing power of the casino chips called fiat currency towards a standard that proves Professor Gresham’s Law. It is a study of history that repeatedly shows his thesis that good money, honest money, forces out bad money.

  21. The Germans were given 50% on face value and maturity extensions that equated to a 70% haircut on all their debt not just the private sector in 1953. In addition all war reparations were written off and claims like Greece on physical gold received nothing. Everyone in Europe knows Greece is getting the bums rush with the terms on offer particularly with the refusal to write off the public sector debt a lot which has been bought at a discount. In addition the refusal to allow Greece to default on their submarine, tank and other horrendous militiary expenditures is outrageous given the private sector haircuts.

    By the way I can't wait for the US to go the way of the Soviet Union and be forced to write off militiary so I can short uranium. The US army would be forced to release at least 15 years civilian supply from their weapons progam like the Soviets did and will flood the market.

  22. A note on the Comex.

    I see what's going on there. For long already - but even more so after MFG - the commercial shorts and longs and the spec shorts and longs are the same crowed. They merely selling and buying to/amongst themselves! So infact the net short position relative to the spec long increase isn't actually alarming. Because it's one entity owning all. There only two computers - one sells one buys and slots it into the category which suits them in order to send a message to the market.

    Of course there are still some others in the market and thus a few more "commercial" shorts to get rid of and this is how it's done.

    If we can't believe any information that comes out of the financial industry - they are all liers - then why on earth does the COT still have "reliable information?

    Absolutely all information has been infiltrated / bastardized / changed because we had the saying always that information is power. It used to be until the internet came along and information had to be infiltrated and rendered useless. Now we sit there having to make decisions not based on information! What would be the next thing?

  23. I like your blog and consistently read it.

    Since you brought up the intellect(uals) - just a note - I think the precious metal community is doing themselves a disfavor as they are "fighting" two fronts - the controllers and the so called condescending word sheeple. Wouldn't it be best to fight a united front and not look at themselves as on a pedestal. One can see it with the 99% movement vs Schiff etc.

    This is much the same during the communist time where the intellectuals started a movement but in order for it to be successful the couldn't alienate the masses. This is a similar problem the fighters of Apartheid have now in south Africa - the elite group got the benefits in the short run but not the long run..

    1. I think a lot of the community that sees with clarity what is happening with our system get frustrated with the fact that about 90% of the country seemingly does not get it or care. I think based on my conversations over the past 10 years that the number is more like 70% and a big part of the 30% that do get it have decided there's nothing they can do. They are probably right. I've stopped fighting on both fronts that you mention a few years ago. It all is what it is. My goal was to put out this blog and hope that I can contribute to the commnunity out there that wants to see more than what is published by the mainstream media, hopefully help some people connect the dots that they know are out there and, foremost, have an outlet for my own agitation over the whole mess.

    2. For your agita....

      Chris Whalen: JPM and the Banks Have the MF Global Money And the Status Quo Is Protecting Them

      "But please, to our friends in the Big Media, could we stop saying that we don't know the location of the missing $1.6 billion of client funds from MF Global? The money is safe and sound at JPM and other counterparties. As with Goldman Sachs et al and American International Group, the banks have been bailed out at the cost of somebody else. And the various agencies of the federal government are complicit in the fraud."

      Chris Whalen, Institutional Risk Analyst

  24. Ahh about earlier - the COMEX smoke screen - the motivation of the message sent by the COT is to get the SLV shorts out with the least amount of price run up!!! SLV shorts have reduced dramatically.

  25. Being a sheeple or not - I don't care. Miners aren't worth the reward to the risk. The miners always need something to go well for them - either the main markets up or a mean jump in the metal - but on their own.

    That is why there are other "non-sheeple" who are only in the metals.

    When gold is up 10% above their low and GDX the same then I say what's the point.

    And the main precious metal investor are moving from majors to the little one and who is replacing them. with the share prices so "low" for the majors don't count your chicken for the little guys to be taken out.

    Risks of miners
    Company specific, Management idiocy, financial backing, the shareholder base, the Exchanges and their thievery. Then 5% of the miners will make it big the rest will be rubbish.

    Then the big thing - country specific. Government specific - if Gold Standard advocates are "baddies" then you sure know that the governments everywhere will do everything not to let them go.

    Then the market - the price setting.

    With a 5% success rate the odds are stacked against you.

    What is the reward?

    So having to choose only between two metals makes things easiest.

    The miners will never be allowed to uncouple.

    1. Where would they get the ounces for this?...never say never

      Jim Grant On Gold-Backed Bonds And 'The Hope Leeches'

      Grant agrees with the odd premise that they do not but then goes on to what would be sounder policy. "Why not issue bonds backed by gold bullion? Gold is a better money and is grounded in something besides the power of the people that print the dollar bills."

    2. Jim Grant is consistently the most overrated market analyst out there. I've been unimpressed with his gold commentary for 10 years. Anyone who thinks that U.S. really has 8100 tonnes of gold is either insanely naive or hopelessly ignorant of the facts.

  26. Hi Curtis, Diamond State Depository out of Delaware, US is in the process of opening a facility in Toronto. You may want to store some physical at your home, at the depository, or both. I also know of a "physical" fund that takes delivery to help eliminate counterparty risk. Accredited investors only with $100k minimums.

    Feel free to drop me a line if you'd like. Dean 303-289-4653