Friday, August 26, 2011

Russia Moves Closer To A Gold Standard And A Quick Comment On Bernanke

Kudos to "Ranting Andy" for sourcing this story.  Russia's Central Bank has announced a program to offer short term, gold-backed loans LINK  It's not clear to me if this facility will will be available only to Russian banks or if non-Russian banks will have access to the program.  What IS clear to me is that the Russian Central Bank, which has been an aggressive monthly accumulator of physical gold, has decided to include gold, along with high-quality bonds, as part of its acceptable collateral policy.  It would not surprise me to see more eastern Central Banks offer gold-backed loans.  And eventually I suspect that these Central Banks will no longer accept sovereign-issued bonds, like Treasuries, as loan collateral.

As for Bernanke's speech at Jackson Hole today, I thought it was a pathetic attempt to vindicate himself and place the failure of his monetary policies squarely on the shoulders of Congress and the White House.  To blame the current economic weakness on the debt-limit debacle is utterly absurd.  And in the epitome of hypocrisy and disingenuousness, he lectured that Congress needed to be more "transparent" with and accountable for its legislative procedures and objectives.  I really can't believe he made a statement like that considering the fact that the Fed spent millions lobbying Congress to kill Ron Paul's audit the Fed bill.   Quite frankly, and quite alarmingly I find Bernanke to be one of the more deceitful and spineless public figures in my lifetime.  Nixon would be embarrassed by Bernanke's antics.

Looks like BP's oil well in the Gulf of Mexico is leaking again:  LINK   We can only hope, contrary to what is likely the case, that Obama did not negotiate a "fence" around BP's liability and that the corrupt oil company will be held financially accountable for its crimes.  Of course, given that the Teleprompter's track record has been to alleviate corporate accountability, I'm sure he gave BP a get-out-of-full-liability card last time around the monopoly board.

On a final note, I hope anyone reading this who owns/owned Bank of America stock took yesterday's price action as an opportunity to unload their shares or any mutual funds that have a big holding in BAC.   BAC is desperate for liquidity and I would bet a 1 oz. gold eagle that Buffet's deal with the 5% takeout premium was structured as a short term "bridge" deal to keep BAC liquid until a bigger bailout can be put in place, at a time that makes it politically feasible, and takes Buffet out at that 5% premium plus accrued information.  God bless crony-capitalistic insider trading!


  1. Talking about corruption ...did you see this?

    Chicago Union Leaders Grab Millions in Pension Loophole
    Take Tim Foley, who's the head of International Brotherhood of Electrical Workers (IBEW) Local 134. Under a little-known provision of the state pension code, union officials like Foley who worked for a brief time as City of Chicago employees are entitled to purchase credits in the city's pension fund equal to their service time and salary at the union.

    So in 2008, Foley paid $347,000 out of his own pocket to purchase pension credits from the City. That's a lot of money, but by doing so, Foley ballooned his pension from just a little over $20,000/year to $105,000/year.

    That increase of $85,000/year is enough money to pay off his initial investment in just four years. So in essence, Foley bought himself an annuity guaranteed to return 25-percent a year for as long as he lives -- potentially millions of dollars.

    And you're going to pay for it.

    "This is not fair to the taxpayers," said State Rep. Karen May, who has been working with other lawmakers to close many of the state's most expensive pension loopholes.

  2. Dave,
    While I can't recall the details, I do distinctly remember BAC getting a liability limit of around $10B to $20B, with the government picking up the tab over that for either the Countrywide or Merrill deal back in 2008. Yet I never hear that mentioned in any current discussions. Can you shed any light on this and would it affect your analysis?

  3. Hey Dave, I'm looking to do some good research on gold/silver juniors and I'm curious to know whose site has excellent research, is affordable, has good value and will help me better understand the sector before investment. If you have any suggestions, I'd be grateful. Thanks

  4. (Dave)

    Anonymous: I'm assuming you want to find junior mining stocks, because the mining stocks in the HUI and XAU are all large cap producers and they will go a lot higher regardless as gold moves higer, some more than others.

    I'm not on my computer right now but google "mining stock websites" and start going thru some of the ones that come up and then google "jay taylor mining stocks" and you should be able to come up with some stocks that he recommends.

    HOWEVER, once you read about several that look interesting, make sure you DO YOUR OWN DUE DILI by going to each company's website and looking at their financials, their resource reports and if they don't have a 43-101 filed, their drilling results. Then scan at least the last year's news postings. If it's a junior that is fairly "raw," read thru their latest earnings report and see what the management says about liquidity and what their strategy is for funding the next year's capital needs.

    DO NOT TRUST analyst reports in and of themselves.

    Let me know if you find anything that looks interesting. I'm always looking for new ideas.

  5. Regarding juniors etc the best analyst I have found so far is Jeb Handwerger - there's a free 30 day subs to his premium service and it's only $25 a month after that.