Wednesday, November 23, 2011

Have A Great Thanksgiving Holiday

I wanted to post an excerpted commentary from Richard Russell, which I sourced from Ed Steer's Gold and Silver Daily.  Richard Russell has been "doing" the markets for longer than most of us have even been alive.  An expert in the Dow Theory theory and stocks in general, in the last few years he's been shifting his investible assets into physical gold.  He understands as well as any of us the degree to which fiat currencies globally are being destroyed by greedy bankers, disasterous Government fiscal policies and - foremost - accelerating corruption and fraud.  Here's Russell's comments: 
My advice: We are moving closer and closer to what I call "survival period" -- the period where the magic of compounding turns into what will be the poison of compounding. This isn't a time for timing. This is a time for action. Reduce your exposure to bonds and all items that provide fixed interest rates. Similarly, reduce your exposure to stocks except the gold miners. Look to expand your positions in inflation-protected assets, especially gold.

Those who are holding stocks in the hopes of the usual rebound are going to be terribly disappointed in the years ahead. This bear market is going to be unlike anything we've ever seen before. In the end my survival vehicle will be gold. I say again, timing is hopeless. Gold will have purchasing power and true wealth as almost everything else is destroyed by this unprecedented bear market. The US Government is now so loaded with ever-growing debt that it has become a mathematical freak. We return to different times, when rising interest rates will eat up the US government. With $55 trillion in assorted debts, the US is in no shape to deal with rising interest rates. We are in a state of reverse compounding, leading to inevitable bankruptcy on a massive scale.
There you have it.   Happy Thanksgiving and remember:  enjoy what you can, as much as  you can, while can.


  1. Dave,
    You're on my daily read list. Always good info. Thanks for taking the time to keep the rest of us informed. Happy Thanksgiving to you as well.

  2. Talking about turkeys....

    Cash crunch at CNBC
    “Squawk on the Street” was slated to go on a road trip but it’s been scrapped. And correspondent Michelle Caruso Cabrera had her wings clipped because she spent too much covering the Greek crisis and has been told to travel less.

    Read more:

  3. Dave,

    I don't know about the wisdom anymore of being in gold/silver mining stocks, as Russell suggests, if one is to be in stocks at all. My unrealized losses this year in the mining shares are totally horrendous. This is where I have to doubt the soundness of Russell's advice. It seems the mining sector is moving in the same direction as the broader markets, and totally disconnected with any upside action in the PM's.

    Which is wiser? Sell all my holdings in the miners during the tax-loss selling season in December, and convert the remaining cash into physical gold? Or hold the shares positions in hopes of an upleg in 2012?

    I know your thoughts are that the action in the mining shares will eventually dwarf what we saw in the internet stocks, but when will that happen? When the HUI is at 100? Is there any use in holding one's positions in the mining shares at all anymore?

  4. Thank you anonymous for your comment. It makes me realize we are very close to the anticipated explosion of the mining stocks. When the long time faithful have abandoned ship, the time to sail has arrived!!!

  5. "Similarly, reduce your exposure to stocks except the gold miners. Look to expand your positions in inflation-protected assets, especially gold"

    Russell is not negative on gold miners. Ounces in the ground = call options on gold with no expiry.

  6. Go ahead and buy call options on gold. You'll take it up the ass when the futures market seize up and CME absconds with all the loot.

    When the derivatives on gold and silver are netted out, everyone will find out that the physical supply falls far short of the amounts pledged for delivery.

    The only use for those paper call options on gold will be to wipe your ass.

  7. Avery Happy Thanksgiving Dave


  8. When they raid the house- they get everyone. I've been keeping my powder dry. I have a list of five non hedged miners that I will pull the trigger on. Extend and pretend time is still not over yet.

    Giving it until at least Jan. unless some crazy ass thing like a miner's rally begins.

  9. Germany's bond auction failed. The reason is nobody knows if printing is going to destroy the euro or if Germany will leave the euro. Purchasing German bonds as a substitute to for the Deutschmark is fraught with political risk. A risk that has no or little gain at these rates except as an arbitrage bet. German euro rates are scheduled to rise on the back of political instability in Europe. Arbitrage does not make this better it makes it worse as Germany needs to sell bonds to holders to avoid their auctions failing and arbitrage is covered in the options market. Bond yields fall and liquidity drops as a result. Germany is at risk of having a failed currency.

    In these circumstances Ben Davies says he can not be short risk assets as printing is the only alternative either through Germany leaving the euro or the ECB debasing the german euro.

    I agree.

  10. People that had accounts with MF Global had "cash in their account" and they were taken to the cleaners. If you bet on miners you are assuming someone will uphold the law and abide by the current rules to cash in. No way! When this house falls you will be barred from cashing in, either through nationalization of the mines or from closing of the markets. Very risky bet in my opinion.

  11. If anyone has any doubts about Ted Butler I recommend listening to him commenting on Gary Gensler and the CTFC on:

    h ttp://

    Then contrast this with anything Gerald Celente has to say about Gary Gensler and the CTFC.

    Celente talks like someone who has lost money on MF Global, Butler talks like someone who has made it.

    I remember Marguelies telling everyone at the Tin Council to be calm and pointing out that he had lost money as well as everyone else. Marguelies then burst into tears at the money he had supposedly lost. Of course everyone knew Margulies had made a bundle if he could get the ring out through and his tears were tears of joy.

    Butler sounds like this. Any thoughts?

  12. the REAL Story of Thanksgiving

    Following an especially successful raid against the Pequot in what is now Stamford, Connecticut, the churches announced a second day of "thanksgiving" to celebrate victory over the heathen savages. During the feasting, the hacked off heads of Natives were kicked through the streets like soccer balls. Even the friendly Wampanoag did not escape the madness. Their chief was beheaded, and his head impaled on a pole in Plymouth, Massachusetts -- where it remained on display for 24 years.

    The killings became more and more frenzied, with days of thanksgiving feasts being held after each successful massacre. George Washington finally suggested that only one day of Thanksgiving per year be set aside instead of celebrating each and every massacre. Later Abraham Lincoln decreed Thanksgiving Day to be a legal national holiday during the Civil War -- on the same day he ordered troops to march against the starving Sioux in Minnesota.

    This story doesn't have quite the same fuzzy feelings associated with it as the one where the Indians and Pilgrims are all sitting down together at the big feast. But we need to learn our true history so it won't ever be repeated. Next Thanksgiving, when you gather with your loved ones to Thank God for all your blessings, think about those people who only wanted to live their lives and raise their families. They, also took time out to say "thank you" to Creator for all their blessings.


    Another excellent exposure of the bullsh1t that is taught in school.
    In Canada the government in the late 1890's to early 1900's decided they should teach the Natives to farm, they were taught to grow grain and raise cattle. A Native man in northern Saskatchewan slaughtered a beef to feed his starving family during the winter, for this act, he was HUNG.

    Apartheid of South Africa. - The de Boers family came to Canada and were tutored by the Indian Affairs Department regarding how to set up Apartheid. The Apartheid of South Africa was modeled after the Canadian Indian Affairs Act ...

    ...end quote

  13. If there was a bank in the West which was going this route - it would get many clients, however we do know what the objective is with the Western Banks and that is to led us to slaughter.

    Isn't it amazing how this change isn't embraced and how resistive to change the system is but as mentioned earlier there are two reasons - perhaps stupidity or worse purposefully going to the abatoire.

  14. Hinde Capital CEO Ben Davies' presentation to this month's Gold Symposium in Sydney, Australia, titled "Singularity -- Transcendent Money," contains many graphics suggesting that central bank-style money is on thin ice and gold's return as money is only beginning.

  15. Then we hear from a veteran financial reporter and Wall Street insider William Cohan, the author of the new book “Money and Power; How Goldman Sachs Came to Rule the World”. We discuss how corporate America is sitting on piles of cash that, rather than investing it in plant and equipment or on R&D, the top executives are using their idle billions to buy back company stock in order to reward themselves at the expense of the workers they are laying off.

  16. Take a look at the chart on page 44 of that Hinde capital report,

    Global financial assets have risen 17-fold over the last 3 decades from $12.3 trillion
    to nearly $210 trillion.
    Gold has not kept up with this rate of growth, and this doesn’t account for the quadrillion
    dollars in worldwide derivatives."

    How gold goes down is beyond me...?

  17. Don't know how anyone listening to Ted Butler on the latest TFMR Podcast could conclude he is soft on Gensler or the CFTC needs his head examined.

    Read his bit on Financial Terrorism. The concluding 2 paragraphs:

    "This is a crooked, rotten racket that has been going on for decades in silver. The only difference is that it is not al Qaeda or some militant terrorist group at work, but a consortium of leading banks and firms financially terrorizing that segment of the public that has chosen to invest in silver. Instead of being organized by bin Laden, the silver terrorists are organized and protected by the CME Group. Instead of being fought by the organized might of the US Government and other world governments, the silver terrorists are coddled by the CFTC which can see nothing wrong with the investing public being terrorized. Maybe we need to petition Homeland Security to end the silver manipulation and terrorism."

    "I don’t think I’m exaggerating to label what takes place on the COMEX as financial terrorism. Yes, I’m talking about money, not human life and physical violence, but it is terrorism nonetheless. And I, for one, am sick of it, as I am the non-response from the regulators. One thing I’m not sick of is what I think this means to the future investment performance for silver. For the commercial crooks on the COMEX to have to resort to this silver financial terrorism tells me that they are trying everything possible to scare folks away from silver by any means possible. By having to resort to such deplorable and illegal tactics, this should tell you how badly they want to buy silver and scare you from doing so. Don’t let these bastards intimidate you."

  18. Ifound comments just as inlighting as article, started buying gold at the bottom ten years ago looks like it is going to pay off more and more as time goes buy.

  19. NY Fed Issues Mea Culpa That Nobody Saw at 6PM on Black Friday

    The New York Fed staff forecast at that time was for growth of 2.6 percent in 2008. Based on the forecast of 2.6 percent and the size of forecast errors over the Great Moderation period, one would have expected that 70 percent of the time, actual growth would be within the 1.3 to 3.9 percent range. The current estimate of actual growth in 2008 is -3.3 percent, indicating that our forecast was off by 5.9 percentage points.

    Using a similar approach to Reifschneider and Tulip but including forecast errors for 2007, one would have expected that 70 percent of the time the unemployment rate in the fourth quarter of 2009 should have been within 0.7 percentage point of a forecast made in April 2008. The actual forecast error was 4.4 percentage points, equivalent to an unexpected increase of over 6 million in the number of unemployed workers. Under the erroneous assumption that the 70 percent projection error band was based on a normal distribution, this would have been a 6 standard deviation error, a very unlikely occurrence indeed.

    He then added that perhaps the biggest reason for the failure was "complacency," with which I heartily concur, but to which I would also add hubris and stupidity.

    The excuse that most other professional forecasters didn't foresee it is just that, an excuse. Some professional forecasters did see it. They were derided as Cassandras and dismissed by Wall Street and Fed insiders, who are only beholden to each other, and to their own delusions.

    Millions of amateur economic forecasters who frequented the financial message boards and blogs saw what was happening and what was coming. They had one important advantage. They live in the real world, not inside the Beltway, not within the marble halls and equally hardened thought processes of the Fed, and not in the ivory towers of academia, a word which sounds like a disease, because it is a disease. Not only do these environments cause delusional thinking, they attract delusional people. The same is true of policy makers.

    I call it elitist personality disorder. It leads to delusions of grandeur, delusions of omniscience and omnipotence, and the unwillingness to take responsibility for failure and incompetence, instead engaging in blame shifting.

  20. (Dave)

    re Butler: it's taken about 8 years for him to finally make public remarks like that. He still thinks SLV and GLD are bona fide and legit.

  21. Talking about legit....NOT!

    Are MF Global Customer Funds Being Looted to This Day Through the Same
    Risky Trading That Sunk the Firm?

    As MF Global customers approach the one month anniversary of the
    cluster-circus that has become the liquidation proceedings, replete
    with unnecessary delays, half-measures, and outright deceptive
    statements by Trustee James W. Giddens (that will only ensure the
    proliferation of hours billable at $890 each), we wish to highlight an
    order entered just days after the bankruptcy that gave MF Global
    Holdings and its affiliates carte blanche to continue the very risky
    and suspicious trading that led to its demise. A hearing is set for
    Wednesday, November 30, 2011 at 3:00 pm on this and other germane
    matters, including the super priority status of JP Morgan Chase (the
    conflicted first-lien holder) afforded to it ahead of the customers
    whose segregated accounts were putatively to have been held

    While it might be desirable under a "normal" financial company
    bankruptcy to seek maximization of benefits to the Debtors such that
    creditors be paid as much as possible during recovery, MF Global Inc
    customers (who are NOT creditors) can currently expect at best a 60%
    recovery going into mid-December and should be placed first in line
    until 100% recovery is obtained. Further, from the numerous
    conflations and generalizations in the paragraphs above that allow,
    for among other things, payments to non-US affiliates, it is possible
    that the looting of MF Global customer funds continues to this day. We
    wonder if this is why the MF Global trustee continually revises
    upwards the estimated maximum loss of customer funds.

  22. MF’s Missing Money Makes You Wonder About Goldman: Jonathan Weil

    Six months ago the accounting firm PricewaterhouseCoopers LLP said MF Global Holdings Ltd. and its units “maintained, in all material respects, effective internal control over financial reporting as of March 31, 2011.” A lot of people who relied on that opinion lost a ton of money.

    When an auditor certifies that a client’s internal controls are effective, that’s supposed to mean the company can do basic functions like maintain accurate financial records, detect unauthorized transactions and keep track of its receipts and expenditures. We know MF couldn’t do these things during the final days before its bankruptcy filing, when former New Jersey Governor Jon Corzine was still its chief executive officer.

    The newspaper also quoted Thomas Peterffy, CEO of Interactive Brokers Group Inc., saying: “I always knew the records were in shambles, but I didn’t know to what extent.”

    Although we shouldn’t rule out anything, this scenario seems implausible. One lesson from the 1980s savings-and-loan crisis is that whenever a financial institution fails, it’s almost always true that its internal controls were poor -- and had been that way for a long time. Otherwise it wouldn’t have failed.

    There’s more at stake here than the missing $1.2 billion. Besides MF, other companies that use Pricewaterhouse’s New York office as their auditor include Goldman Sachs Group Inc. and JPMorgan Chase & Co. Both banks presumably are too big to fail, meaning taxpayers would be on the hook if they ever blew up. A Pricewaterhouse spokesman, Caroline Nolan, declined to comment on the firm’s work for MF.

  23. In Fiery Protest Against Fractional Reserve Lending, Disgruntled Ex-Employee of Chairman of Rural Bank of New Zealand Sets Car on Fire in Mall
    The man said in a video posted on Facebook that he was an ex-employee of the chairman of the Rural Bank of New Zealand.

    "I've learnt a lot of stuff since then, and I've had enough. I'm gonna make this car disappear," he said.

    He claimed that "fractional reserve lending is the root of all our problems" before walking to the boot of the car, which was filled with rubbish, with what appeared to be a lighter.

  24. Deep freeze the leftovers...

    Richard Russell: Crumbling Debt to Crush Everything in its Path

    Richard Russell continues:

    “As of now, both the Dow and the S&P are down for the year. I call this Stage One. Stage Two will occur if the Dow sinks into the 10,000 (level). Stage Two Point Five will occur if the Dow starts trading below 10,000. I think if the Dow trades under 10,000, consumer sentiment will change from hope to fear and anxiety.

    The big, smart money is choosing diversity. Their problem, diversify into what? The answer may be to diversify into something that is life sustaining...Sustaining may be a matter of food, water, and shelter.

    I know much of the above sounds outrageous, but in 1980 the Dow at 10,000 sounded outrageous. We're moving into a world that today's generations will be dealing with matters that they've never had to deal with before.

    Continue to accumulate gold and 10 ounce silver bars. I'm sorry for young people now, their biggest move has been to move back in to their parents homes, back into the nest is the fated move today. As far as the economy is concerned, the phrase is ‘Don't be a pest, go back into the nest.’

    This is what occurred during the 1930s, and it's in full bloom today. My best advice if your kid moved back in with you, make them pay some rent. They must realize that there is no free lunch, and there are no free living quarters. Next week I will go into detail as to why a giant storm is brewing.”

  25. JP

    Butler blames the CME group not the CTFC. The CTFC is responsible for ensuring the market is fairly run (for the advantage of the indiviual sm all investors). The CTFC is wholly responsible for what is happening. The CME is not responsible for this, it is responsible to it's members who in the main are JPM. The CME is doing it's job, God's work.

    Blaming the CME group is like blaming the buffer stock manager, not the Tin Council itself. They were also legally seperated, by the way, with different conferences. A legal device the Tin Council. It's a tried and true diversionary tactic if you don't get that you don't get anything.

    It's all about suing Uncle Sam for it's vicarios liability of the CTFC. When the SHTF the CTFC and Uncle Sam will be left standing. Not spelling out what they are doing now weakens the legal case at this point. Don't tell me Butler doesn't know this.

    For Gods sake Rodgers is shorting JPM, just look at the CME groups survival chances.