Wednesday, April 10, 2013

"Trust In Gold Not Bernanke As U.S. States Promote Bullion" - Bloomberg News

Distrust of the Federal Reserve and concern that U.S. dollars may become worthless are fueling a push in more than a dozen states to recognize gold and silver coins as legal tender. Arizona is poised to follow Utah, which authorized bullion for currency in 2011. Similar bills are advancing in Kansas, South Carolina and other states.  (Bloomberg News link)

For a barbarous relic that Ben Bernanke adamantly claimed, under oath in front of Congress, is not a currency and that Central Banks only hold out of tradition, you have to wonder why 12 States are currently processing legislation that would authorize the use of bullion as currency in those States.

I guess some legislators in those States have actually read the Constitution and decided to try and reassert some of the Constitutional authority that our Federal Government has maliciously usurped.

And if Central Banks just hold gold "out of tradition," as stated in the same testimony by Bernanke, you have to wonder why the IMF/ECB is forcing Cyprus to unload 339,000 ozs of its Central Bank gold in order to help fund the bailout of the banking system there.  Why would they sell something no one wants?  I might suggest that perhaps the U.S. wants that gold to replace the 2 million of ounces of gold that have been removed from the Comex over the last three months and have disappeared into private vaults.

Finally, in April 18th, the Canadian Broadcasting Company is going to air a documentary called "The Secret World of Gold:"
Some claim that much of the gold held by the Bank of Canada, the Bank of England, the Federal Reserve and Fort Knox is gone — that for every 100 ounces of gold traded, there exists only one ounce of real, physical gold. So, where is the gold — and who really owns it?
Here's a link to the announcement:  The Secret World of Gold

Maybe the fact that wars are started over the possession of large quantities of gold throughout history going back to the Roman Empire is really why Keynes referred to it pejoratively as a "barbarous relic."  And maybe we should all be asking ourselves why use and possession of gold creates such controversy.

If gold is nothing more than Central Banking tradition, why is the Fed refusing to comply with a Freedom of Information Act request to supply information regarding the Fed's gold trading activities?  The Fed is so adamant on this, in fact, that it is taking the lawsuit over this issue to the Supreme Court.   Kinda makes you wonder...


  1. Gold prices hit by Goldman forecast cut, Fed

    (That's a near record high spec short position for gold futures, at least for as long as the Commodity Futures Trading Commssion (CFTC) has been reporting disaggregated commitments of traders (DCOT) positions, which we have data for since 2006.)
    If Goldman is "initiating" a short gold position we will eat our hats here at GGR. Much more likely is that Goldman is already nearly maxed out on their (own) short position for the yellow metal and, following the news from the Bank of Japan of massive new money printing; following gold fetching up above its important $1,525 technical support; and needing new "blood" on the short side, the Goldman gang felt the need to call in some public negative reinforcement.

  2. Gold scares the sh*t out of T.P.T.B. The fractional lending system would fall apart if gold were ever used for daily transactions. This entire ponzi scam is used to make the average person a debt slave. By the way Dave, how about that early release of the Fed minutes? There is no truth or justice anymore. We are watching the Soviet state circa 1986.

  3. Food service workers at a record high in US economy

    One of biggest contributors to jobs over the last few years has come from the low-wage food service sector. A record 7.6 percent of Americans now work in food services and drinking places. Given that we have 47+ million Americans on food stamps and this figure has boomed in the last decade, it should come as no surprise that as Abraham Maslow would have it, people are reverting to the basic necessities of life. Yet there is a larger story of our economic recovery. There was a McDonald’s hiring a cashier but looking for someone with a college degree. Welcome to the low wage recovery. A large part of America is simply trying to get by and this population is growing. Those that frequent financial sites on the net are probably a very small part of the overall population. So I know it comes as a surprise to some readers when they realize the per capita wage in the US is $26,000. I’m sure this record percent of Americans in the food services industry must come as a shock as well.

    Freedom fries for all....

  4. If Gold aint money why is Cyprus having to sell it?
    Sounds like money to me.

  5. If gold aint money, why is the European Union making Cyprus give up 75% of theirs? It is an asset that can pay for debts..sounds like money to me!!

  6. I am at the point where I ask myself "what's the point? can't fight the big forces that have a plan... so why fight it? they can do it longer than I can stay solvent or sane..."

    Is that thought the spelling of capitulation or is it commmon sense?

  7. At some point, we might have to consider the logic that the bullish-Gold logic is wrong inspite of the strong bullish case, isn't it? If it was truly that strong, why would years and years of manipulation not run out? How can the free market not win?

    That's when I consider the idea that perhaps our analysis might be wrong (and I am merely playing Devils Advocate). That's all.

    But its worth a thought. Thanks for all you do on your blog. Huge fan.

  8. this was a good post and I am as paranoid as you about the primrose path the sonsofbitches are leading this once great nation down; however, I still think the 16-1 gold/silver argument is wrong; your pussy in sparks, nv

  9. I wouldn't trust Bernanke or any of the thieves on his send list...

    Fed Releases Names Of Early FOMC Minutes Recipients: Include Employees Of Goldman, Barclays, JPM, Law And PE Firms

    In other words: absolutely everyone who trades risk assets for a living!

    the only thing you can believe is the system is stacked against you!

  10. The only tradition surrounding the Fed is obfuscation.

  11. lol. Bank fo Canada holds 100k ounces, having sold off the once large remainder long ago. Not much of a difference if it's 1k or 100k actually held; either way, the horse has already fled the barn.

  12. "The stock market's upward march is starting to look like the housing market before it crashed, real estate investor Sam Zell told CNBC's "Closing Bell" on Wednesday.

    "This feels like the housing market of 2006," he said. "Everybody feels they can't afford to miss it."

    Though he wouldn't predict where equities will go, Zell sees a strong resemblance to housing, telling CNBC, "We are suffering through another irrational exuberance." While daily headlines now trumpet new highs for the stock market, he said, seven years ago they were about the rise in home prices.

    Zell also said that the Federal Reserve's money-printing is debasing the currency and will reduce its buying power, eventually leading to inflation.

    "The Federal Reserve is manipulating the system," he said. "The question is how long can they get away with it.'

    1. I was just telling someone that this stock market bubble reminds me of late 1999.

      Global PC sales were down 14% in Q1

  13. A Probe on Data Releases Is Revived

    WASHINGTON—Federal law-enforcement authorities have reversed course and revived an insider-trading probe into how media companies transmit government data to investors, according to people familiar with the matter.

    The decision came after The Wall Street Journal in January disclosed the probe and reported that the Federal Bureau of Investigation was planning to wind down the investigation because it was having trouble proving wrongdoing. The FBI, which was conducting the probe with the Securities and Exchange Commission, was also frustrated that another agency, the Commodity Futures Trading Commission, hadn't provided data sought by investigators. The CFTC has since agreed to provide both trading data and analysis to further the investigation, according to officials familiar with the probe.

    At issue is the release of sensitive economic data that is supposed to be kept private—or "locked up"—so that no one can trade on the information before it is public.

    Among the media companies under scrutiny are Bloomberg LP, Thomson Reuters Corp. TRI.T +1.37% and the Dow Jones & Co. unit of News Corp NWSA +0.11% ., the leading electronic providers of federal economic data to traders. A number of smaller media operations that cover such data releases have also come under scrutiny. Among the major media firms, the people said, Bloomberg has received the most attention in the probe.

    Lawmakers and regulators are growing increasingly concerned about the flow of information between Washington and Wall Street, of which the release of economic data is a key part. In the most recent example, the Federal Reserve Tuesday sent details of the central bank's minutes one day early to congressional staff members, trade groups and officials at several major banks. There were no early indications that any traders made big bets based on that information, market participants said.

    Another reason was a breakdown between the FBI and CFTC. FBI agents made multiple requests to the markets regulator in 2012 for data that would help them understand which traders were behind the transactions, according to people familiar with the case. An official close to the criminal probe said the CFTC didn't provide the data requested. An official close to the regulatory agency blamed the impasse on misunderstandings and confusion.

    The probe has focused much of its attention on activities at the Commerce, Labor, and Treasury departments, said people familiar with the matter, though it also more broadly looked at similar data releases at the Federal Reserve, and the departments of energy and agriculture, they said.

    The probe is technically and legally complex, examining whether a tradition that goes back decades could be manipulated via computerized trading programs. Adding to the complications, media firms whose businesses rely on speedy transmission of data have long asserted First Amendment rights to work relatively unimpeded by government officials and rules.

    In recent years, sophisticated investors have created software programs that automatically execute trades once fed market-moving data. Media firms, meantime, have earned new revenue by zapping the data from the government directly to clients.

  14. Of bubbles and Bitcoins
    Hugo Salinas Price

    In the exchange of any given merchandise for gold (or silver), neither of the parties to the interchange ends up owing the other party. There has been “settlement”.

    The Bitcoin may serve as a medium of exchange, as do the world’s currencies, but neither the Bitcoin nor any of the currencies of the world can achieve settlement, because the Bitcoin is not a commodity, and neither are the dollar, the euro, the yen, the yuan, etc.

    Since there can be no settlement with Bitcoins, at some point many people are going to be more or less seriously burnt when this Bitcoin game goes out of fashion, depending on how much they are holding when the game ends.

    So you won playing that great game, “Monopoly”? It’s a great satisfaction to win playing “Monopoly” – you have all those bills, and your game partners are busted! In truth, all the high and mighty fellows running the world’s Central Banks are keeping us amused and busy as we attempt to gather as much as we can of the “Monopoly” money they print up for us. But when you have a lot of their “Monopoly” money, or of Bitcoins, what do you really have when the game ends? You have papers or worthless digits, period.

    The only thing that the holder of Bitcoins can do – like any holder of currencies – is to get rid of them by buying things, while there is someone willing to receive them in “payment”. I use quotes around the word “payment”, because since August 1971 there is in this world no real payment at all. Real payment involves settlement, and neither Bitcoins nor currencies can achieve settlement. The proof lies in the $11 Trillion of International Reserves that have built up around the world, because there has been no settlement of international trade imbalances since August 1971. If the Bitcoin mania continues to grow, expect digital quantities of Bitcoins to show up in Chinese Central Bank reserves. Then the creators of the Bitcoins will have to proceed to issuing Bitbonds, so that the Chinese can trade there Bitcoins for Bitbonds which pay interest . It’s all a huge game, dollars, euros, pounds, yen, yuan and now Bitcoins – all the same garbage.

    Bitcoins cannot be accumulated safely as savings, because they are not a commodity, nor redeemable into any commodity. We are seeing how unsuspecting depositors of sums of currency in banks are in danger of seeing their deposits cancelled by government decree. Tangible commodities such as gold and silver cannot evaporate because they are not created artificially.

  15. I am not invested in SLW and I don't research it. I don't like structured leases as they have no potential for organic growth and have much greater risk than most people realise or are willing to admitt. I previously invested in SLW but got out over Pascua Lama. Everybody said SLW was fire proof over their streaming deal with Barrick but I couldn't see the optimistic case. I notice the price went down yesterday 5% and I wonder if the true nature of SLW's risk is going to come out soon. Does anyone have the facts about the exposure now the mine has closed?

    1. As usual we have some-one claiming to know something about this on Seeking Alpha.

      "Barrick has provided Silver Wheaton with a completion guarantee, requiring Barrick to complete Pascua-Lama to at least 75% of design capacity by December 31, 2015.

      Silver Wheaton also acquired all silver mined at the Barrick mines at Lagunas Norte, Pierina and Veladero until 2013. During 2014 and 2015, Silver Wheaton will be entitled to the silver production from the Lagunas Norte, Pierina and Veladero mines to the extent of any production shortfall at Pascua-Lama, until Barrick satisfies the completion guarantee."

      In certain circumstances, including failure to achieve project completion and customary events of default, the agreement may be terminated. In such an event, Barrick may be required to return to Silver Wheaton the upfront cash deposit of $625 million less a credit for silver delivered up to the date of that event, which is determined using the difference between the market price and $3.90 per ounce for silver deliveries where the prevailing market price exceeded $3.90 per ounce.

      In conclusion "Unfortunate, but not a major drama would be our verdict in this case."

      Where in the world do they find these idiots to write this stuff? Let us review the facts. The mine has closed because it is under a Court Order and it's licenses have been pulled. This is a force majeure, which can be and often is a repudiation of the contract such that it never existed. It is void ab initio, no words, no clauses, naf all. Claiming specific contract performance on a non existent contract is impossible. The performance guarantee is toilet paper. To cover a force majeure you need an indemnity get the difference in words. Guarantee positive covenant, indemnity negative covenant. Best of all you need a financial indemnity. You don't have this on this type of contract. Why don't you have an indemnity because a belt and braces, boiler plate, hell and high water indemnity goes on Barrick's balance sheet and therefore there is no point in doing the deal. These contracts are commercial paper with wiggle room, real world stuff, in other words risk.

      What we have is a silly superficial analysis of a disaster with a throw away sweep up clause about Barrick may return the capital outlay. You can bet your bottom dollar this clause covers the situation when the political risk insurance kicks in which it doesn't in this case.

      So as I say does anyone have any facts on this case because as I see it the outcome could be anything.

    2. Essentially people who believe in SLW believe in the tooth fairy and the Federal Reserve. Barrick Gold could have leased the silver at 2-3% to finance Pascua Lama. SLW boast their internal rate of return on a silver lease without assuming a rising silver price is 15%.

      In present value terms Barrick Gold have paid over 100% of the cost of the silver they sold to SLW ($625 m) for the pleasure of doing business with them. Barrick Gold has rooms full of MBA's and SLW employs 12+ people and yet they manage to deal a risk-less deal on financial terms with some of the sharpest brains in the business.

      You have to be stupid to believe that.

  16. Bill Gross Is Angry

    No Bill, we are bothered too: we have been looking for the past 24 hours on the Fed's site for ways to subscribe to said early release distribution list and still can't find it. We even offered Kevin Henry $29.95 a month to add us to Fed's frontrunning newsletter and so far, nothing.

    How are we to make 100% returns in the otherwise risk free market, if we too can't have market moving information days in advance of everyone else?

    Mr. Bernanke, are you listening - it hinders the "wealth effect" by denying everyone material, market-moving information early!

    Get to work Mr. Chairman.

    got to love MSM....Martha Stewart got tried on TV 24/7 but not a peep over this. They should all choke.

  17. EMU plot curdles as creditors seize Cyprus gold reserves

    Cypriots are learning what it means to be a member of monetary union when things go badly wrong. The crisis costs have suddenly jumped from €17bn to €23bn, and the burden of finding an extra €6bn will fall on Cyprus alone.

    The government expects the economy to contract 13pc this year as full austerity bites. Megan Greene from Maverick Intelligence fears it could be a lot worse.

    She says the crisis has reached the point where it would be “less painful” for Cyprus to seek an “amicable divorce” from the eurozone and break free.

    Quite so, and while we’re at it, lets seek an amicable divorce for everybody, for Portugal, for Ireland, for Spain, for Italy, and above all for Germany, since they are all being damaged in different ways by the infernal Project. All are victims of their elites.

    It should be clear by now that the solemn pledges of EMU leaders are expendable. They change their mind whenever its suits them, and whenever the internal politics of their own countries demands.

    We now learn that one of those lengths is to seize gold reserves. So what will happen as Portugal’s economy slides deeper into its contractionary vortex, and its deficits remain stubbornly stuck near 6pc of GDP despite the fiscal cuts, and its public debt hits 124pc of GDP this year?

    Portugal holds 382 tonnes of gold, the 14th largest holding in the world, and more than either Britain or Spain

  18. "Every normal man must be tempted at times to spit upon his hands, hoist the black flag, and begin slitting throats."

    ~ H.L. Mencken

  19. Obama's Cat Food Social Security Budget Strategy and Stealth Tax Increases
    What some of the 'conservatives' have figured out is that 'chained CPI' is also a threat to those who rely on incomes.

    The chained CPI would also apply to the income tax brackets, to adjust for 'inflation creep.'

    It's a win-win for the crony capitalists. Less money for the elderly, and more income taxes from their working children. And the government can mask their inflation while continuing to deliver wheelbarrows of money to the Wall Street banks and their friends, while providing a blind eye to their tax loopholes and havens.

    The oligarchs maintain a tight control on any investment opportunities and returns, driving savings where they like using the power of their exchanges and the Federal Reserve. And it is easy to game when you are included in a stream of privileged information and dark pools of trading.

    You will kneel before them.....

  20. Lot of gaming...

    Two Firms Amass Much of World's Copper Supply

    Commodities Traders Pay to Divert Shipments From Other Warehouses; Manufacturers Worry About Access. Two major commodities-trading firms have amassed much of the world's copper supplies in their warehouses, partly by paying to divert shipments away from other storage hubs, traders and analysts say. This concentration of copper supplies has sparked concerns among industrial consumers of the metal.

    This concentration of copper supplies has sparked concerns among industrial consumers of the metal. Some manufacturers and builders say they are worried that those stockpiles of copper—which is used in goods including automobiles, circuit boards and plumbing fixtures—could prove tough to procure if demand were to pick up sharply or output from mines were disrupted.

    The London Metal Exchange, the world's main venue for trading of industrial metals, certifies a global network of warehouses that store metal that can be delivered against the exchange's futures contracts. The wait time to receive aluminum and zinc at warehouses at some locations has surged in recent years as those metals have piled up.

    "The current situation, where LME warehouse owners are paying huge incentives to attract copper, and then have those units subject to long load-out queues, is effectively making that copper unavailable for immediate delivery to serve industrial consumers," a spokesman for Southwire Co., the largest U.S. copper-wire maker, said in an emailed statement.

    Copper prices have fallen since February amid expectations of a supply glut, but buyers say they are starting to pay hefty fees to get metal when they need it—on top of the actual price of copper—because so much is being diverted into warehouses.

    The fees have blunted some of the benefit industrial consumers have seen from falling copper costs.

  21. The only increase in housing demand is coming from investors

    When most people think about a bull market in any asset class, it begins with an increase in demand for the product. In housing, this demand has historically been from owner occupants taking jobs and competing for the available housing stock with their new income. All sustainable housing market rallies in the past have been built on strong job growth and increasing wages. Not so with our current housing recovery. This has many questioning whether or not this recovery is real. The engineers of this house price rally at the federal reserve hope to drive up prices to create momentum which will stimulate the economy and cause the job growth and increasing wages needed to keep the momentum going. Only time will tell if their gambit pays off.
    The increase in demand we are seeing in Orange County is entirely investor driven. DataQuick reported that absentee buyers set a new record of 31.4% of all sales. The monthly average since 2000, when the absentee data begin, is 17.9 percent. The NAr reports a similar trend on a national level.

    remember everything is engineered, today.

  22. You, Norcini, Zulauf, Faber, Bass have a clue; The donkeys on KWN are being laughed off the Net; I suggest you do the same; BUT, oh, I forgot, there are now shortages of gold and silver; first time I heard that one on the way down? have a good wknd, your pussy in sparks, nv

  23. The US treasury cannot use gold as a backing reserve as the ECB does, because the BIS (Bank of International Settlements) would claim it at $41 to settle trade imbalances. They have that authority and as such it leaves the US the only option of outright gold sales.

    However, with the dollar as "the" reserve currency, we can expect many nations to bid "aggressively" for any US gold. China, among others comes to mind! That is what America found when they tried to auction it's gold in 1978.

    (Friend of Another, May 8, 1999)

  24. 60/1 now, so where do you throw in the towel? your pussy in sparks, nv

  25. This is a real good question that where is all the gold and who really owns it, since the gold price chart always shows the arrow rising with the price and never coming down.