Friday, April 19, 2013

The U.S. Economy Is In Trouble

As a follow-up to yesterday's post about the massive spike in the demand for physical gold and silver since the price hit, I wanted post some more evidence.  This is from an Arab newspaper about the spike in demand over in Saudi Arabia:
The crash in the prices of the yellow metal has sparked off a gold rush across Saudi Arabia.  In the last three days, gold souks in the Kingdom have come alive with buyers flocking to cash in on the sharp drop in gold prices. Most of the shop owners in the gold souk in Kandra said that their businesses have increased 50 percent in the last three days, whereas those in Balad said sales of 22-carat had gone up by more than 75 per cent and were expected to rise further.  LINK
Here's the headline from a Reuters article:   Slump in gold price releases years of pent-up retail demand  LINK   And here's an accounting from a colleague of mine who operates a cash-for-gold business in Florida and deals with one of the biggest coin dealers in Florida:
He's got nada.  A guy came in who had ordered and fixed the price on 300 silver eagles last week before the crash and my dealer couldn't tell him when he might get them.  My partner ordered three monster boxes last week and paid for them.  This week he was told delivery is at least 60 days out - and this dealer is a "hitter."
As I've told people who have asked me how long before the next move higher begins, no one can say for sure.  But if you run into people who tell you the bull market in gold/silver is over, ask them to sell you some 1 oz. gold/silver eagles.  And if they don't have any, ask them to go find some let you know where they can offer them to you.  Talk is cheap.  Talk does not make markets. 

Markets define "price" when a buyer and seller agree on a price and then make the exchange.  Paper markets like the Comex do not define price except in the short run.  All a paper futures contract and all an ETF represents is a "promise" to deliver something down the road if you put up the money now.  The market is not defined until the promised commodity paid for up front is physically delivered.  Given what we know about how corrupt banks are and the Government's unwillingness to prosecute this corruption (see Eric Holder's statement to Congress about a month ago), I would not trust the Comex banks or any of the ETF custodians (except Sprott) to make good on that "promise."

As for the economy, I wrote a piece yesterday for Seeking Alpha about more evidence I was seeing that the economy is headed quickly in the wrong direction:
About a week ago I wrote an article in which I postulated that, based on some recent company and economic reports, the economy is in worse condition than is being reported by the mainstream media and Wall Street.
You can read the entire article which includes hard data here:  The Economy Is In Trouble

After my article was written, the Philadelphia Fed released its manufacturing/index and it came in much lower than expected.  The employment sub-index went negative. In addition the leading indicators index was published by The Conference Board (formerly published by the Commerce Department) and it was -.1 vs the +.2% expected.   Also, the Fed's Balance sheet was released and it showed a $67 billion jump in size vs $12 billion the week before.  What's the Fed worried about if it needs to print money like this?

And today it looks like the Dell leveraged buyout deal may be falling through, as one of the big sponsors is worried about PC sales.  All the above tells me the U.S. economy is in trouble.  There's just no way the Government can cut back on spending, which means the debt ceiling debate that pops up in May will likely entail another round of kicking the can down the road, which means even more Treasury debt issuance to finance the deficit spending and even more money printing by the Fed.


  1. Price is truth, Dave. And the price we've seen happen this past week is a shocking truth. Yes, there is clearly strong physical demand, but obviously that's been the case for weeks and months prior to (and since) last week. The truth is that the physical market doesn't dictate price anymore. It's the paper market, and especially GLD, that is affecting the dollar price of gold.

    What you've missed, with all due respect, is the lack of religious belief in the metal by the masses of holders in GLD. They liked the ETF when it was rising from $40's when it IPO'd, to the $170+ level. That rise also gave rise to physical price of gold. But I submit it wasn't due to central bank buying, but more akin to the internet bubble of the late 1990's when stock went up because they went up, and also because of a good story.

    Think about it. Gold is a GREAT story. It's like the "eyeballs" that had people gaga about the dotcoms. As long as the price went up and the story is intact, momentum investors in GLD stayed in or piled in even more. Now that game is over, and you are seeing the flipside.

    Sorry, Dave, like at the craps table, when the roller rolls a "7-out", all chips are taken off the table at once. That what has happened to the craps game known as the precious metals market this past week. Seven friggin OUT.

    I'm out.

    1. Buy high and sell low is a bad trading philosophy-- sorry about your bad luck and judgement.
      Justin from Canada

  2. Dave,

    I'm holding of a significant number of PHS.U shares currently in what's left of my self-directed retirement savings plan because I don't want to realize the loss.

    I don't even trust Sprott or anyone at Sprott at this point and all (given all the entities under the Sprott umbrella, two major sales of PSLV shares, etc.) the silver "held" in the trust is just one step away from being confiscated as it's held at a government mint.

    Even Rick Rule sounded like some greedy, parasitic aristocrat in one of his latest interviews congratulating himself on being rich essentially. That's sure how it sounded to me anyway...

    These guys are all businessmen and in it for their profit, they don't give a flying f*** about "investors" from my perspective.

    I have psychologically written-off my entire investment in PSLV for my own good personally. Hoping I'm altogether wrong...

    1. First, why do you still have an IRA? Liquidate it, cash out, pay the penalty and income tax and buy as much gold/silver as you can with everything left and keep the bullion under your own safekeeping. This metals smash is the perfect time to do that. W/in 2 years your gains on the bullion will MORE than make-up for the tax hit PLUS you'll have your money out of the system.

      A good friend - wealth management guy - told me today that he has come to the realization that I am right and the Government is going loot retirement accounts. What does this mean? It means that they will convert your IRA into Treasuries as a means to fund Government spending. Your retirement income will interest on the Treasuries.

      Second. Rick Rule is a douche. Sprott and Embry are good guys.

    2. Oh come on. Every dealer makes money by getting onto the deal flow it's how it works. NatWest is the most profitable f/x dealer in London because they see the deal flow first, likewise Bank of Tokyo in Tokyo and Citibank in New York (the old Seligman f/x business). That's how it works.

      Sprott does the same thing in precious metals. He's the largest player, when the redemptions come he knows in advance and sells in front of the herd.

      I love Rick Rule he so disgusting that his vileness is pure honesty. The last interview he gave, when he said that the partners accounts had to filled first before he could buy, was a ripper. Great, like a dog at his dinner bowl being held back by pure honesty, I split my sides. They emptied all the funds through redemptions now they know all the redemptions have stopped the private funds are buying the same vomit. As Rick said I don't try to buy at the bottom (at least not for partners accounts he doesn't).

      Meanwhile back in the real world the commercials increased their silver shorts by 23 m oz's last week so we can expect a final dip down. After the partners have had their fill Rick will be able to neatly catch the bottom for his little bit of rump steak. Great isn't it.

      Meanwhile back in the real world Sprott said he didn't know where the shorts were getting their silver from as all the silver had been sold out. After this statement he promptly sells his silver probably to JPM as part of the lubricant for the smash. This is the wash rinse repeat cycle in PM's.

      At least Rick shoves it in your face, Sprott does the crying in front of you and Embry does a Bart Chilton impersonation. There you go.

  3. CBC Documentary: The Secret World of Gold

    Here is the CBC Documentary from this week, presented in three parts.

    In Part Three they present Andrew Maguire and his activities in calling attention to manipulation in the silver market.

    I could be surprised, but I expect nothing to be done for all the same reasons that Jeff Sachs cites in his screed about the pathological climate on Wall Street, and how a docile President, Congress and regulators will say or do nothing about it.

    I think they will, but only after something blows up so badly that they cannot keep hiding it and kicking it down the road.

  4. Same old smell day after day. Is this getting any
    closer to resolution, or are we going to muddle through for the next couple of generations?



  7. Come on Dave, you know lower PC sales have almost nothing to do with how the economy is performing.

    1. Really? People and companies are holding on to their PC's and tablets longer because times are so good???
      Justin from Canada

    2. The statistic only relates to PC sales, not tablets. PC sales are falling almost exclusively because people are transitioning to tablets. They're not holding onto them longer because "times are so good". I really had to explain that?

  8. WASHINGTON (MarketWatch) - The Federal Reserve will be watching price data closely for further signs of falling prices, two central bank officials indicated on Thursday Richmond Fed President Jeffrey Lacker and Minneapolis Fed President Narayana Kocherlakota said that that the Fed must be on its guard against falling prices. "If inflation looked like it was going to sag further on a persistent basis, I would certainly consider stimulus for the purpose of bringing inflation up to target," Lacker told reporters, according to Bloomberg. In a separate speech, Kocherlakota said that cooling price pressures were "definitely a cause for concern." The comments echo remarks made Wednesday by St. Louis Fed President James Bullard, who said he was concerned that the Fed's preferred measure of inflation, the personal consumption expenditures price index, increased at a 1.3% rate in February, well below the Fed's 2% target. Economists said the implication of the concern is that the Fed may maintain its $85 billion-per-month asset-purchase program for longer than expected and perhaps augment it with other easing steps.

  9. The IMF's downgrade of global growth projections for this year and next was the latest negative for the metal, which has been weakened by the downward spiral in gold and other commodities. Weaker-than-expected GDP from China earlier this week and a revision by Moody's on the outlook for China to stable from positive was also a negative, since the country accounts for about 40 percent of global copper consumption. A decline in European auto sales was also a factor.

    "When I look at copper, it reminds me a lot of gold before that big breakdown," said Richard Ross, global technical analyst at Auerbach Grayson. "When we look at levels like $3.20 in copper, that's the low level of the trading range that has held since the summer and fall of 2011. We tested that level in 2012, but really this is the first significant break in two years.This would be akin to and displays some technical symmetry to gold below $1,540. … As we saw when you broke below that level, it opened the floodgates to an extremely fast move down. I think copper is setting itself up for precisely that type of move."

    Traders saw another move as a warning earlier this month, when the 50-day moving average crossed the 200-day—another negative sell signal.

    "The world economy looks like it's slowing down," said Art Cashin, UBS director of floor operations. "You can talk all about the whipsaw of gold, but all these commodities are telling us that China and the rest of the world is slowing down. You want to be cautious about it" when it comes to the stock market, he said.


    OTTAWA - Mark Carney says policy-makers are working diligently to devise an international "bail-in" regime to prevent big bank failures, but he offered no guarantee that individual deposits would be protected.

    The Canadian central banker, who is a few months away from heading the Bank of England, says banks must have a set of buffers in place to draw on in an emergency.

    Speaking during a televised interview in Washington, Carney appeared to disagree with the approach taken in Cyprus last month that involved taxing deposits, but would not state his personal position because he said it might be misinterpreted.

  11. Plenty of Gold and silver coins at and many other UK and European internet sites.
    What's the problem?

    1. Not sure how firm those offers are. From the language on the website:

      "Each of the listed items in our shop is available or available shortly."

      "Our quotations are subject to change and are non-binding."

      Plus the prices suck and you have to add on the cost of delivery. Not sure that website is what you think it is.

    2. I've done a great deal of business with this company and delivery is usually within a few days by UPS.
      Their prices are also competitive including delivery. When you click on the price that is what you get.

      You should try to broaden your horizons and stop thinking the USA is the centre of the Universe. Just because you have a shortage doesn't mean everyone else has.

      Still I presume like the mainstream media why let the facts get in the way of a good story.

    3. Oh I'm not USA-centric and I'm pretty confident I do quite a bit more research than do you, especially in this sector. I have 3 articles for reuters, Economic Times in India and an Arab newspaper that describe shortages in China, India and Dubai. I also have an email sent to Paul Craig Roberts from someone IN Dubai who described how depleted the gold souk is there.

      I'm not saying that website doesn't have metal. I can find metal here from Apmex. But they are out of most silver SKU's and the silver eagles they do have in stock are being offered at +$7 over spot.

      There is not a shortage at all, in fact, anywhere. What there is, is a shortage of anything offered at the paper price on the Comex.

      Matter of fact, if we get some money into our fund, I know a wholesaler I can call who had silver eagles last week for +$4.50 but you have to buy quantity. And that was last week. As of Friday they may have been wiped out.

      Broaden YOUR horizons and understand that one particular website that may or may not have supply - and the language from THEIR website clearly stated that just because they show product, it doesn't guarantee they'll have it - has nothing to do with true supply/demand at these levels.

      In fact, the article I have about the situation in China stated that they are waiting for bars to delivered from Switzerland because no one is willing sell bars in China at these prices.

  12. Dave, any thoughts on the new COT report. The COT reports have been more and more confusing recently. In the past, such bloody raid should have flushed out non-commercial/ managed money longs. But this time, they simply added more longs, especially for silver...And the bullion banks seemed to have added more shorts. Does it mean one more raid is coming? However, if the bullion banks try to drive the paper price too low, that will attract industrial users to take delivery at the Comex. The current physical market is already quite tight. Making delivery will be a big problem for bullion banks.

    1. I don't necessarily trust the COT reports. The numbers are published by the CFTC which looks the other way at corruption on the Comex and the Comex is owned by the banks that control the paper bullion market.

      If the earth is flattened out by what I think eventually will be a global war like implied in "The Road," when the history books are written about the post 1971 period in the U.S., the corporate/Government corruption identified will make the U.S. look like a 3rd world banana republic

  13. Why Recovery Plan Has Faltered

  14. Companies Substitute Tangibles, Like Cheese, for Investments

    When it’s in a pension fund, of course.

    As companies struggle to close the gaps between what they owe to their pension funds and what they think they can pay, they are in some cases turning to unusual assets that they hope will make up part of the difference.

    For example, Dairy Crest, one of Britain’s biggest producers of dairy products, said Friday that it would add £60 million, or $92 million, worth of Cheddar cheese to its pension fund. That is about 20,000 tons of cheese, or 40 percent of its current maturing cheese inventory, the company said. (It will be constantly replaced as it ages.)

    Diageo, the maker of Johnnie Walker whisky, moved two million barrels of maturing whisky at its distilleries in Scotland to its pension fund in 2010.

    In the United States, the Pension Benefit Guaranty Corporation, which takes over both the assets and the liabilities of failing pension plans, encounters all kinds of peculiar assets. It has taken possession of water rights in the Mojave Desert, diamonds, oil wells, a hog-slaughtering facility, a restaurant, a hyperbaric chamber, a brewery in Philadelphia, a lien on a terminal at Kennedy International Airport and a stake in a nuclear fuel-reconditioning partnership.

    Moving physical assets into pension plans allows companies to avoid having to come up with the cash they would otherwise need to keep their plans flush.

    Hard-to-value assets could hold a certain appeal: a plan actuary could assert that diamonds, for example, will pay higher returns than bonds.

    Gold was not mentioned

  15. Teachers' Union Watch List Includes AQR, Elliott, SAC, Tudor

    Apr 19 2013 | 1:22pm ET

    Having harried Third Point's Daniel Loeb from a scheduled appearance at an institutional investors conference, the American Federation of Teachers is broadening its focus.

    The teachers' union yesterday released a list of 33 investment managers with directors, managers, advisers or executives linked to three organizations the AFT says seeks to end defined-benefit pension plans for teachers and other public employees.

    In addition to Third Point, the watch list includes such heavy hitters as Appaloosa Management, AQR Capital Management, Elliott Management, Icahn Enterprises, Kohlberg Kravis Roberts, SAC Capital Advisors, Tiger Global Management and Tudor Investment Corp.

    The three organizations cited as opposed to defined-benefit plans are the Manhattan Institute, the Show-Me Institute and StudentsFirst.

    "The retirement security of working families is under attack as never before," the AFT wrote. "Public sector defined benefit plans have repeatedly been attacked by right-wing think tanks and political committees. While much of the money flowing to these organizations remains unreported, many of the organizations attacking defined benefit plans are funded by hedge fund and private equity managers, some of whom solicit investments from public sector pension plans. These fund managers are all too eager to seek investments from the deferred wages of teachers, firefighters and other public servants, while simultaneously attacking their economic interests."
    Houston we have a problem....where are we going to get the next bag holder to keep this thing of ours going?

  16. How To Get Filthy Rich in Obamaworld
    The growing list of folks getting a juicy return on their association with the President.

    It has become depressingly normal to hear of senior Administration officials going immediately for the golden ring when they leave public service. But for every Mary Shapiro joining Promontory and Lanny Breuer returning to Covington & Burling for $4 million a year, there are even more operatives at similar or lower levels who make a very juicy return on their association with Obama but don’t get the same level of attention in the mainstream media.

    Norm Scheiber, in a must-read article in The New Republic, “Get Rich or Deny Trying:
    How to make millions off Obama,” chronicles how this process works. It’s even uglier than you might imagine.

    While Scheiber discusses some of the places that offer a lucrative landing for former Obama team members, like SKDKnickerbocker, he makes clear how easy it is to profit if you’ve acquired the right connections:

    But it turns out the highest-profile White House grads don’t so much join consulting firms these days; they found them. A boldfaced Obama name can rake in upward of $25,000 per month from a client just by dialing into a conference call and drafting a memo from time to time. Four clients means more than a million dollars a year with virtually no overhead. “You can run a business like that on an iPad and a cell phone,” says the former administration official. The godfather of this approach is ex-Clinton strategist Doug Sosnik, famous for conducting his business meetings in jeans from coffee shops and hotel lobbies. David Plouffe and Stephanie Cutter have both adopted the Sosnik model.

    The alternative is to rent out office space and staff up, in hopes of one day growing into a consulting powerhouse. This is the Glover Park Group model, based on the firm a group of former Clinton and Gore hands opened in 2001 and nurtured into a 160-person juggernaut. Jim Messina appears to have ambitions in this vein, having procured office space and hired support staff. Former Obama press secretary Robert Gibbs, who briefly flirted with trying to return to the White House, is in the process of launching a similar firm with Ben LaBolt, the 2012 campaign press secretary

    This story makes the outrage over the Clintons’ selling the Lincoln bedroom seem so…quaint. For every anecdote Scheiber presents, it’s certain there are a dozen more like it. No wonder people like Gene Sperling, director of the National Economic Council, use the phrase “middle class” as if it was an alien phenomenon. The people in the Beltway money bubble don’t need to care about ordinary Americans, and so they don’t.

    Look these guys think the economy is fine....


  17. we lost another 9.3 tonnes gold at the GLD Friday following 22 tonnes last Friday, 4.2 tonnes on Monday over 8 tonnes on Tuesday, and 11.13 tonnes of gold on Wednesday, and 1.8 tonnes on Thursday.

    Ladies and Gentlemen, this is no gold liquidation..this is gold that China is demanding over in London. If any of our readers happen to be GLD shareholders, I urge you to depart from this vehicle and buy Sprott or Central Fund of Canada.
    This is the last bastion of physical left and the crooks are bleeding this source to satisfy the appetite of China and Russia and other eastern nations.
    I would guess that when the real physical is depleted here, the game will end.

    As a reminder the total comex gold had inventories of around 11 million oz in 2011. Friday it broke well below 9 million oz. (8.917 million oz)


  18. What most of you guys miss is the obvious. The derivatives stood at $1.4 quadrillion, silver represented at the best 5% at the worst 12%. $23 is a mouth watering opportunity to force majeure these contracts. If they turn up their noses at this opportunity then you have to know they are not anticipating a soft landing.

    Let me explain it again. When they wrote the rainbow through hard assets there are only two ways to deal with the contract the obligations. Buy another hedge or default a hedging party.

    Andrew McGuire called the hedging model the Black and Scholes model after the economists who came up with the derivative pricing model. When they recruited the physicists to run it we called it the Black Holes model because that is what it is. You have to understand when he talks about fuel above $1620 on gold he does not include derivative dynamite. To default gold gold you need a war (coming shortly) to default silver you need a crisis in supply, RTZ has given this.

    Now if they don't default silver at this price then we know that they have decided to default the banks and run a controlled competitive collapse model. This is not guess work it is fact and the other professionals (retired) should explain how this works.

  19. Just wanted to add a little personal anecdote about the demand for physical gold in India. I am in regular touch with friends and family in India. On the Monday/Tuesday after the gold price slump, my brother, who lives in a small town in North India, said that the gold shops were more crowded than even the vegetable markets! He went to buy gold but could not even enter a shop - the crowds had completely blocked off most shop entrances. Another friend in Mumbai said that everyone he knew was buying as much gold as they could afford! And his is the low season - the real festival season comes in Q3 and Q4. The huge spike in physical demand is real, at least in India.

  20. Dave, I know you're all for free speech and I commend you for that, but these anonymous postings of an endless stream of articles are idiotic and take away a lot from your blog. Comments, IMO, should be a debate on what you've written, not someone's outlet so they can be noticed. I mean, really, who comes to your blog's comment section to find articles to one. I think a lot of us would appreciate you deleting any comments that don't relate to your post, that way we can find the interesting back-and-forth more easily.

  21. Has Your Fortune Been Stolen?

    Has your fortune been stolen? Did it ever exist in the first place? Gold storage today is the greatest temptation in the history of the world!

    There are shocking signs that gold held "in storage," "in the system," has in fact been stolen from you just as it was stolen from the Jewish survivors after the end of the Second World War. We know that there is a history of this in Europe and elsewhere that when the surviving Jewish depositors demanded their gold from banks, their request was denied because of the need to fulfill banking regulations concerning proof of ownership. Time has revealed that the truth was many of the grand mansions on the great lakes of Europe were built with the gold that was denied to the lawful relatives of those Jewish people that had died during the war.

    What makes you think the modern, generally despised, considered ignorant and less than worthy as an investor Gold Bugs are looked on with different eyes by bankers in the system than the Gold Bugs of Germany, France, Poland and Austria were?

    The sign that your gold does not exist and may never have existed is the same evidence that has been gathered from the rape of the surviving Jewish families of the last world war. The "in system" storage companies of banks will inform you that banking regulations first limit, then prevent you from obtaining your gold bullion held even in an allocated form. It will start as a limitation on gold withdrawal as a tool to prevent "money laundering" due to directives from their central bank concerning anti terrorism measures. If you hear that you are royally screwed. Was that not a form of what the surviving Jews were told? A bank regulation prevented them from getting their gold. It was not common shares or German marks they stored in the European banking system. It was primarily gold bullion.

    A shocking trend is starting right now.

    ;ile Johnson says"they're filling their lifeboats"

    fareed zakaria says gold down because economy improving....if that isn't a warning, nothing is...........

  22. Cops caught pepper-spraying, punching Occupy Wall Street protesters will not be prosecuted: DA
    NYPD Deputy Inspectors Anthony Bologna and Johnny Cardona came under fire after videos of their alleged misconduct surfaced in late 2011.

    Bologna was seen firing the crowd-control spray liberally at a seemingly calm group of people near Union Square on Sept. 24, and protester Felix Rivera-Pitre was slugged in the face by Cardona on Oct. 14 during a demonstration in the financial district.

    “After a thorough investigation ... we cannot prove these allegations criminally beyond a reasonable doubt,” said the DA’s chief spokeswoman, Erin Duggan.

  23. Fancy talk about how the market runs. That's all we seem to go with in order to understand the markets up til now. BULLSHIT !!! If you don't hold the physical gold and silver , you don't own it!
    When the hell will enough Sprott like physical holders stop cowering to these huge paper bullshitters? When will an association of physical gold and silver officials organize an association that will have initials to knock the likes of CME & Comex on their asses?!
    What will it take to simply make the statement " Physical and Nothing Else" be the mantra which helps physical find it's true level !?

    Seceding and complete disassociation from the phony paper markets will have to occur. Otherwise everything is for naught.

  24. About your use of Seeking Alpha... I used to follow you closely, but have given up on clicking thru to Seeking Alpha because its just too onerous setting up an account with them.

    If you get some real benefit from my enduring their account setup I'll put up with as part of giving value to you for the value you provide, but...

    How about simply posting the same material here?

    Warm regards,


    1. Unfortunately, I can't post entire articles from Seeking Alpha on here. I can publish passages. Didn't realize you have to set up an account to access articles on SA.

      But I'll see what I can do

  25. Lies, Damned Lies & Sadistics: The IMF’s Role as Bankster Enforcer

    “We make or break human life every day of every year as probably no other force on earth has ever done in the past or will ever do again.”

    The above rather dramatic quote comes courtesy of one Davison L Budhoo, a former International Monetary Fund economist who in 1988 broke ranks with the Fund, publishing a scathing 150-page resignation letter. In it he accused the organization of corruption, self-interest, and deceit.

    Not that the Fund, then headed by Frenchman Michel Camdessus, was particularly fazed by the allegations. In those days there was no Internet, so the story didn’t exactly go “viral”; in fact, it barely got a mention in the mainstream or financial press. As such, following a spattering of articles in a few specialist newspapers and magazines, Buddhoo’s accusations were quickly forgotten.

    The only difference of note (apart from the fact that, in the ballsy, perma-tanned Christine Lagarde, it has its first ever female managing director) is that instead of preying primarily on the world’s poorest, weakest and most defenseless nations — many of which have since become big creditors — the IMF, now a protagonist in Europe’s dreaded Troika, has its sights set on much bigger trophies.

    The chicken, it seems, has finally come home to roost. Now it is Europe’s turn to feel the sharp taste of the Fund’s medicine. Slowly but surely the hapless inhabitants of struggling eurozone countries such as Greece, Portugal and Ireland are beginning to realize what many Africans, Asians, Latin Americans and Eastern Europeans learnt through bitter painful experience in the seventies, eighties and nineties — namely that when the IMF, armed with its balance sheets and a calculator, comes calling, you’d better hope you’re out.

    For the IMF is, in plain speaking terms, the global banksters’ number one enforcer — a role it has executed (pun intended) with fervor and aplomb ever since the Bretton Woods agreement (though it wasn’t until Nixon’s launch of the floating exchange regime in 1971 that the organization began forcefully dictating economic policy to supposedly sovereign nations).
    The Fund’s program in Trinidad and Tobago in the late seventies and early eighties, in which Budhoo, the IMF whistle-blower, participated, is a perfect case in point. In his resignation letter Budhoo asserted:

    We manipulated, blatantly and systematically, certain key statistical indices so as to put ourselves in a position where we could make very false pronouncements about (the) economic and financial performance of that country… Quite frankly, our ‘program’ is nothing but a hotchpotch of irreconcilable and conflicting elements and objectives; it reduces economics to a farce.

    Even when the inaccuracy of the IMF’s statistics was exposed by the Fund’s own statisticians, the IMF neither owned up, nor apologized to the Trinidad and Tobagan government. Nor did it publicly correct its misinformation despite the implications of its judgment for foreign investment.

  26. Here's a guy who does his own technical programmimg code writing; I recall he has 3 degrees.

    Anyway, assuming he's truly an independent person, I suppose he can't be any more wrong or useless than the constant parade of so-called gurus whose bottom calls have been blown out of the water within 24 hours so many times these past months.

    Yet does that stop them from showing up to embarrass themselves and reveal their useless ignorance time and again?
    Not yet.
    It turns out that last Monday April 15th, of every single day gold has traded for the past 20 years, broke every record possible for compression below the 10, 20, 50 and 200 day exponential moving averages. Wow!

    October 23, 2008 clearly took second place, also in every moving average category. That was the day before gold reached its 2008 low of $681 and then put in a green reversal candle, closing at $730.3 Also known as the D-wave bottom following the 2008 parabolic.

  27. Goldman Backs Mullen in Rentals After Subprime Short

    Donald R. Mullen Jr., who helped Goldman Sachs Group Inc. (GS) profit from the U.S. housing crash, is giving the firm and its clients a way to gain from the recovery.

    Mullen, 54, has raised almost $1 billion to buy single- family houses to rent since leaving Goldman Sachs last year as head of global credit and mortgages, five years after overseeing the bank’s bet against the imploding subprime home-loan market. His Fundamental REO LLC has already purchased or is close to acquiring almost 2,500 properties through foreclosure auctions, government agencies and even an Arizona non-profit that promotes affordable-home ownership, property records show.

    “This is the biggest trade in the real estate space,” said Justin Berman, a former Goldman Sachs banker who runs Atlanta-based Berman Capital Advisors, a private wealth firm with about $550 million under management. “They can’t get their hands on enough homes.”

    In his latest endeavor, Mullen and former Bear Stearns colleague Curt Schade are purchasing homes in Arizona, California, Florida, Georgia and Nevada for between $70,000 and $190,000, planning to rent them for $900 to $1,950 a month, according to a Goldman Sachs presentation obtained by Bloomberg.
    Affordable Housing
    In Clark County, Nevada, and Maricopa County, Arizona, records show at least three deeds bought by Fundamental REO and Empire, from Affordable Housing Partners LLC, a non profit “dedicated to providing affordable housing to individuals and families, educating homeowners, and expanding homeownership to those in need,” according to its website

    Retail Prices

    “If those guys bought from us, we sold at retail,” Norris said in a telephone interview. “They aren’t finding deals. They’re just finding inventory.”

    The fallout from the housing crisis that Goldman Sachs navigated so successfully is now the biggest driver of investments in single-family rentals. Homes lost to foreclosure are bought by investors at discounts and the owners who defaulted on their mortgages are potential renters.

    More on so called housing recovery....wait til we figure out the real tax advantages and subsidies we find out are really driving this...

  28. Fault lines gape

    Basically, highly inflated and correlated securities markets worsen global economic and financial fragility. In this regard, I would contend the confluence of Draghi's ''bazooka'', incredible quantitative easing from the US Federal Reserve and Bank of Japan, general global monetary largess, and the Chinese accommodating a runaway credit expansion has actually only further destabilized global markets and economies. Global policy efforts have further weakened key global fault lines.

    During the Great Depression, contemporary economic thinkers debated whether it was previous over-investment or mal-investment that was most responsible for deflation. Others pinpointed boom-time speculative shenanigans as a leading culprit that set the stage for bursting bubbles, price collapses and financial ruin. The ''Austrians'' distinguished themselves for their keen understanding of how boom-time credit excess had distorted patterns in both spending and investment - ensuring inevitable economic adjustment and hardship.

    Over the years, I've highlighted the thinking of the old codgers (including Andrew Mellon) in the late-1920s that had witnessed enough boom and bust cycles during their lifetimes to confidently warn of impending collapse. They were convinced that attempts by our central bank to sustain a protracted inflationary boom (that commenced with the ''Great War'') would risk destroying both the economy and the credit system. These are Fed chairman Ben Bernanke's disdained ''bubble poppers''.

    Well, we've been witnessing similar dynamics in real time. The more ''money'' central banks inject into the global system, the more this liquidity inflates and distorts securities markets. The greater the stimulus employed to combat deflation risk, the more the over- and mal-investment, especially in China and Asia.

    The more aggressively activist central banks work to inflate liquidity and market levels, the more encompassing the pool of global speculative finance working to profit from desperate policy measures. The more intensively policymakers in the US, Europe, Japan, China and elsewhere work to sustain (''terminal'') late-cycle global credit excess, the more prominent the inequitable redistribution of wealth to a relatively small group of beneficiaries. We're deeply into the phase where massive liquidity injections receive little real economy bang for the buck.

  29. Kathy Derbes CFA, and CEO of KDerbes Precious Metals LLC

    Starts at 29 minutes.

    Also, Kathy Derbes CFA, and CEO of KDerbes Precious Metals LLC, joins Jim in this segment. She notes the current record buying of physical precious metals, last seen during the Lehman crisis, and says her firm is “completely out” of Silver Eagles.

    Kathy is not even taking orders for more Eagles, as it may take six to eight weeks or more to acquire them.

  30. McGuire "Arranging to actually have the audacity to back up a Brinks truck to the COMEX warehouse door, it just incurred every defensive tactic you can imagine. There were unreturned phone calls. There were questions as to, ‘Why do you want this physical?’

    That was a few years ago, so just imagine how many more obstacles there are now. And obviously we are at the point of a critical default unfolding, so I would think think it’s going to be difficult to get your physical out now.”

    When a London dealer says that it is going to happen it is really going to happen soon. They all have the memory and time span of gold fish with a world view of a 5 minute bar. Notice how in the interview he says he has been aware of this for months and now he is saying it going to happen. Maybe McGuire has looser lips that most but the dealers I knew said this this sort of thing on the night before the exchange having denied and not mentioned it for months.

    Also what makes you laugh is that the exchange is going to get cash settled or rung out in his own words, but McGuire is still trying to take your money in his service for a defaulting commodity i.e. your money is going to get tied up with the receiver for two years while they sort out the paper work and deduct the costs. This is exactly the measure of these people. As trust worth as a rattlesnake and rather more slippery.

  31. One has to remember always that the fundamental world of money and trade revolves around real people and real circumstances.

    too big to fail