Friday, May 31, 2013

Must-Read Essay On Gold

This country has become so corrupt, it makes Mexico look like the Boy Scouts.  The U.S. has become the most corrupt country in the world.  - "Don" in Denver - May 31, 2013
I wanted to post this essay by Alasdair Macleod.  After over 12 years of researching, trading and investing in the precious metals sector, there are only a few writers to whom I pay credence.  Macleod is one of them.   He references the Shanhai Cooperation Organization (SCO).  Most of you probably have not heard of it.  I first read about it in Bill Buckler's "Privateer" about 5 years ago.  Led by Russia and China, it's comprised largely of eastern hemisphere countries.  I view it as the eastern "blocs" counterpart to NATO and IMF rolled into one organization.  The countries all have one thing in common:  they are aggressively accumulating physical gold and they are systematically working towards eliminating the use of the U.S. dollar in trade.   This is a must-read essay by Macleod:

The Geopolitics of Gold  LINK

Western central banks have got themselves horribly wrong-footed as a result of not adjusting their anti-gold policies to allow for the realities of Asian gold demand. Though their dealings are shrouded in secrecy, there is compelling evidence that much – if not most – of Western central bank gold has been quietly sold over the last three decades.

More recently all members of the Shanghai Cooperation Organisation, a common security and trading bloc led by Russia and China and incorporating the bulk of Asia’s land mass, have been accumulating gold. Between current SCO and future members (India, Iran, Afghanistan, Mongolia, Belarus and Sri Lanka), with their citizens numbering over 3 billion people, they have together cornered the global market for physical supply, without even taking account of demand from the rest of South East Asia’s gold-hungry population.

The result is that gold markets are now failing to clear. The outcome is a choice: the West will either have to stop intervening and allow gold to find a level where physical and derivative markets interact properly with each other, or capital markets in the West will face a growing crisis likely to spill over into other markets. While these outcomes were always going to be a choice to be made at some time in the future, the disconnection between physical gold and derivatives has become so great that it is now an immediate concern.

At the government level it is a geopolitical clash of the titans. Russia and China are almost certainly aware of the lack of gold in Western central bank vaults: they are fully capable of thorough due-diligence in this respect. They have so far been careful not to disrupt capital markets because it has not been in their interests to do so; however, the current hiatus in gold markets is almost certain to modify their view.

Fundamental to all this is their attitude to Western currencies: the yen is now collapsing, the euro area is in deep trouble and the US economy is at very best stagnating. Until now, payment for Russian energy and Chinese goods in foreign currencies has been welcomed, because it has allowed the Russian and Chinese elites and middle classes to accumulate wealth. This balance of interests can only be maintained for so long as Russian and Chinese governments and their citizens can hedge foreign currency risks through an offsetting accumulation of foreign-owned gold.

This is no longer the case, because to all intents and purposes western capital markets are cleaned out of physical supplies, and the ability of the Western central banks to supress gold prices appears to be ending. And with the West’s financial system no longer able to deliver their most prized commodity, hitherto passive attitudes in Asia to Western currencies are likely to be reassessed.

The gold question has become central to east-west trade. The sensible approach for Western central banks is to defuse the problems arising by taking positive steps to ensure that gold markets operate properly. This is conceptually difficult, because the most likely result, a higher gold price, would risk undermining confidence in the major currencies and most probably damage the bullion banks in London.

Despite these difficulties, realities have to be faced.

Wednesday, May 29, 2013

"Look Ma - No Hands!" - So Much For The Housing Recovery

Lumber is tanking hard.  Yes, there is a slight seasonal component to the price of lumber, but based on all the media reports blaring from all directions, one would think that homebuilders can't build enough new homes to satisfy demand and thus the demand for lumber should be insatiable.  But if that's the case, then why is the price of lumber falling like a rock? 

Someone is lying to us, and I doubt it's the market price of lumber:

There's no question that smart money understands fact from fiction.  I've been watching a quiet exodus of smart money from the housing market for several weeks now:  The Housing Recovery Is A Myth   This article is catching up to the dynamic I observed in February:  Big Investors Selling Housing.

Dear America...

Eric Arthur Blair aka "George Orwell" - best known for "1984" and "Animal Farm."  Must-reads for anyone who cares about this country
   (sourced from

Tuesday, May 28, 2013

Some Interesting Facts Not Being Reported By The Media

There are forces developing over the next few months that may push the BOJ and the Fed to take some extraordinary actions. That these two big CBs are facing the same potential outcome, at the same time, is troubling for me. I see this evolving story as a possible turning point. The key CB's will have gone from Offense to Defense.  For five-years the CBs have enjoyed being on the offense. They have successfully controlled things so far. But I can't imagine how they can continue to be "successful" when they are forced to defend (versus lead) the bond markets.  - A quote from a Zerohedge source who trades bonds for a big bank, in reference to the fact that professional bond traders are expecting a possible severe sell-off in the bond market.  LINK
Having been an institutional bond trader for nine years, I know what it's like to be sitting on big positions ahead of seeing a big sell-off coming and before the entire market sees it coming.  You can't to protect yourself from what you see by the time the market sees because by then it then it's too late to do anything about it.  When I read the first couple of sentences of the quote above, I knew exactly what that person was talking about.  I can guarantee you that the smart "inside" money sees something really ugly coming and that's why bond yields have been moving higher quickly over the last month, despite the fact that the Fed has been buying over 50% of all new issuance and now owns 30% of the entire Treasury bond market.

Speaking of the bond market, today the Treasury auctioned 2-yr Notes.  The only problem is that it wasn't really an "auction" in the true sense of the word because the Fed-backed primary dealers of Wall Street were forced to buy 65.4% of the bonds issued, otherwise it would have taken substantially higher rates to induce outside buyers.  Make no mistake about it, there will be severe "collateral" damage that will occur systemically as a result of the unprecedented Fed intervention in the bond market via QE - that is exactly what the last sentence in the quote above alludes to...

On Friday, the Government reported durable goods orders for April.  They were reported to be up 3.3% vs. March.  Please note that this is a "seasonally adjusted, annualized" rate that is calculated using some computer model voo doo not open to public inspection.  The decline from Feb to Mar was revised higher from -5.7% to -5.9%.

The reason I bring this up is that if you go through the individual categories that comprise the Government's durable goods report under the "not seasonally adjusted" category, you'll see that nearly every single line item in both new orders and shipments declined, some substantially, from March to April:  LINK  Clearly I'm not making any of this up because the truth is right there in black and white - in the Government's own report.

The point here is that what gets reported in the headlines in the mainstream media is often completely different from the actual facts.  I don't care about "perception" and "expectations management" and all that other nonsense, because eventually over time markets become self-correcting based on facts and truth.  History as spoken many times - and many times loudly - on this matter.  Unfortunately, history is likely on the verge of giving our country a "lesson" in facts vs. fiction that will be extraordinarily painful for most people.  Again, I defer to the quote at the top.

Meanwhile, I thought I would greet everyone to summer with another lesson in truth with one chart - there's really not anything that can be said about this chart that is not conveyed by the chart by the chart itself (I think I sourced this from Zerohedge):

Again, if you need any commentary on this chart, re-read the opening quote at the top...

Thursday, May 23, 2013

What's Fueling The Stock Market?

(Hint: It isn't fundamentals)

The run-up in the stock market (the SPX for purposes of this article) has been nothing short of stunning. Since hitting a sell-off bottom on October 4, 2011, the SPX has run-up a nearly non-stop 47.8%. In just the last month, the SPX has run up 7.5%. This is in the face of deteriorating economic indicators and declining corporate revenues. The stock market has for sure taken most observers and professionals by surprise, except for maybe the most passionate "perma-bulls."

Given this incredible move higher in stocks, I wanted to investigate a couple of possibilities for what is fueling this near-parabolic stock rally. Based on what I've been able to come up with, it's pretty clear that stocks are rocketing higher on Fed fuel and not fundamentals. But don't take it from me, it seems that some high profile billionaire investors are unloading their big positions, especially anything related to consumption:  Billionaires Are Dumping Stocks.  Let's take a look "under the hood" of the economic and financial system and see if we can figure out why.

While Bernanke was giving his report on the economy and monetary policy to the Joint Economic Committee of Congress today, in which he pretty much laid to rest any fears that the Fed would "taper" its monetary policy and bond purchase program anytime soon, I decided to look into some of the Fed's monetary data as reported on the  St. Louis Fed website.  Specifically I wanted to look at the Adjusted Monetary Base, which is the sum of the currency in circulation plus the commercial bank reserves held at the Fed, because this monetary account is the one directly affected by the QE program.

Here's the most current snap-shot of the Monetary Base going to back to 1984, when the data-series began:
 (click to enlarge)

Close to $2.8 trillion in money has been printed and used to purchase assets from the banking system, ranging from highly distressed toxic waste to short-term Treasury notes.

Next I decided to "blow up" the chart above and look at just the last twelve months and compare it to the same time period for a chart of the S&P 500:

(click to enlarge)
(click to enlarge)

As you can see, there is nearly a 1:1 correlation between the near-parabolic growth in the Monetary Base since the end of November 2012 and the near-parabolic trajectory of the SPX since mid-November (marked by the vertical red lines). I don't have time to run the data, but my University of Chicago B-School training visually tells me that the correlation is probably around .8, if not higher, meaning 80% of the move in stocks since November can be attributed to the increase in the Fed's Monetary Base.

Without doing a data dump of recent corporate earnings reports, we know that regardless of the net income being reported (net income being potentially subjected to many forms of GAAP accounting manipulations), that the revenues being reported by the largest of the SPX companies are flat to down. This is not the sign of an economy that is capable of growth and true earnings expansion. To give one example, Caterpillar (CAT) recently reported its April revenues. Globally sales were down 9% from March, but they were down a shocking 18% in North America:  CAT April revenues.  This is primarily heavy machinery related to construction and homebuilding. If CAT's sales are plunging like this, it means that construction and homebuilding are likely getting ready to drop pretty hard.

My point here is that economic and corporate fundamentals are not supporting the rapid move higher in the stock market and the concomitant rapid expansion in the market values of individual companies. To reinforce this point, I wanted to show a chart that I sourced from Zerohedge, which maps out the accelerating decline in the per share operating income of the S&P 500 over the last 12 months:
(click to enlarge)

In other words, based on economic and corporate earnings reports which are suggestive of a slow down in the economy, combined with the fact that corporate operating income is plunging, there can be no doubt that the run-up in the stock market is unequivocally not supported by fundamental factors.

That leaves only the money being printed by the Fed. Wall Street analysts can crow all they want about how the economy is improving and corporate earnings will improve, but the proof so far is in the numbers, which show that just the opposite is occurring.

Moreover, Fed officials can talk all they want about tapering QE, but if you look at their actions based on the recent move in the trailing twelve month Monetary Base above, not only are they not tapering, they are actually increasing the rate at which they are injecting liquidity into the banking system. In my mind, at least, there can be no doubt that the money being printed by the Fed is what is fueling the stock market.

Now we can debate whether or not the Fed is serious about "tapering" its printing. But I have no doubt based on the evidence I presented today that if the Fed were indeed to "taper," the stock market suffer a serious and rapid decline.

The real question now is for how long can this stock market "melt up" last?  No one can possibly know that answer for certain, but at this point buying stocks right now is not about analyzing fundamentals and value, but more akin to playing stock market roulette. Anyone who has been fortunate enough to take advantage of being long the stock market should seriously consider hedging or taking a significant portion of their investment off the table.

Tuesday, May 21, 2013

Need I Say More...

Lois "I'm Not Good At Math" Lerner - the IRS official who was in charge of the IRS' Tax-Exempt Division - will plead the 5th tomorrow at her Congressional investigative hearing tomorrow (not that this investigation will amount to anything of substance anyway, other than to provide a forum for the Republicans to  grandstand boisterously for the benefit of voters).  Here's the report:  LINK

Good luck to you if you think this country can be saved...

Plausible Deniability

From Wikipedia:  "Plausible deniability is a term coined by the CIA during the Kennedy administration to describe the withholding of information from senior officials in order to protect them from repercussions in the event that illegal or unpopular activities by the CIA became public knowledge."

Now, as it applies to Obama, also from Wikipedia:  "The term most often refers to the denial of blame in (formal or informal) chains of command, where senior figures assign responsibility to the lower ranks, and records of instructions given do not exist or are inaccessible, meaning independent confirmation of responsibility for the action is nearly impossible. In the case that illegal or otherwise disreputable and unpopular activities become public, high-ranking officials may deny any awareness of such act or any connection to the agents used to carry out such acts. The lack of evidence to the contrary ostensibly makes the denial plausible, that is, credible. The term typically implies forethought, such as intentionally setting up the conditions to plausibly avoid responsibility for one's (future) actions or knowledge."   LINK

I work everyday with some very bright people.  Many of them have a higher IQ than me and most of them are more "book smart."  But sometimes it seems like I'm the only person out there who truly understands and sees just how thoroughly and irreparably corrupt this whole system is.

The people running this country in DC and NYC have made a complete mockery of freedom, free markets, Rule of Law and justice. There is no such thing as those principles as they apply to the United States. None. Gone. For anyone to have even a sliver of hope that I'm wrong is just sheer stupidity. There is no hope for this country. Period. It's in 5,000 years of history.  It's not my idea or original view. It's just a fact. All you have to do is think about how you would operate if you were in their shoes and you could basically do whatever you wanted without fear of being arrested or prosecuted. That's it.  I would do exactly what they are doing.

I can understand why people who have kids need to have some denial/hope, but it's just that. Nothing more. They are going to let Obama skate away from these scandals using the good old "plausible deniability." "They" refers to Congress and the public.  And then he'll have to endure a week or two of intense criticism for being "too detached."   And then it will be back to corruption as usual.

And I'm not just bashing Obama.  There are plenty of instances during W's term and during Bubba's term that the same concept applies.  It's not about Democrats vs. Republicans.  There's really not much difference between the two parties in terms of the degree of corruption allowed, enabled and committed.  It is "US" vs. "THEM" - with "THEM" being the people running DC and Wall Street. But then again, I guess it  depends upon what the meaning of the word "is," is.

Monday, May 20, 2013

Ultimate Contrarian Indicator: Gold Is Most-Hated Asset Class

By now everyone who follows the metals pretty closely is aware of the stunning reversal the metals made today after the blatant smash in the silver market at yesterday evening's commencement of global electronic paper futures trading.  A massive number of silver contracts were sold into the Globex electronic trading system, taking the entire market by surprise and wiping out a whole series of stop-loss orders there set below the market.  The silver market was driven down $2.10 (9.5%) in less than 4 minutes.  It was without a doubt  the motivated, premeditated operation of someone who was trying to completely disrupt the silver market.  It was someone who was operating without any fear of being investigated by the market regulatory branch of the Government.

But a funny thing happened.  Once the initial shock had quickly worn off.  The market slowly moved higher the rest of the night.  By 10:00 a.m. Denver time, about 18 hours later, the price of silver was even with its Friday close.  Once that occurred, the market started to quickly run higher in frenzied short-covering.  As I write this, silver is up 2.4% from Friday's close and gold is up 2%.

So what happened?  To begin with, the enormous appetite for physical gold and silver was fueled even more by last night's lower prices.  Large premiums for gold bars, something rarely seen, are now being paid in Asia and India.  We are getting reports of up to 3-week delays for delivery.  But don't take that from me, if you go the Shanghai Gold Exchange website, you'll see for  yourself that no deliveries of gold have been reported for at least 2 weeks.  Unprecedented.  The deliveries are not being reported because the gold is not available to be delivered. Therefore there's nothing to report. This is going to end badly for anyone riding the coat tails of the manipulating banks by shorting this market, because I can guarantee you that they are covering their tracks and likely have shifted to the long side of the trade by getting long physical metal.  Certainly the net short position of the banks on the Comex is as low as its been in many years.

At any rate, I wanted to link an article written by the proprietor of the Acting-Man blog.  This guy lays out the contrarian indicator case for gold and explains why the western Central Banks are so desperate to try and discredit gold and discourage anyone from converting their fiat paper money into gold and silver: 
It is a good bet that if gold had continued to rise in the face of money printing being accelerated all over the world, the inevitable loss of faith in central banks would have happened sooner rather than later. That it will eventually happen is unavoidable – the modern monetary system was fated to self-destruct the moment it was conceived. This is so because central planning and price controls cannot work in the long run, even though central banks are socialistic institutions adrift in a capitalist sea, so to speak.
Here's the LINK.  I highly recommend taking the time to read this short, well-written and documented commentary, as it will shine a bright light on the truth for anyone who was equivocating about fact vs. fiction.

Friday, May 17, 2013

The Sell-Off In The Precious Metals and Mining Stocks Is Just Plain Silly Now

Currently, I don't think it's possible for the media reporting and investor sentiment to get any more negative toward gold. But quite frankly, given the extreme negative sentiment, in addition to the numerous other contrarian indicators I've outlined in previous articles, I have never in my life seen a market set up technically for a big bull move as gold/silver and the mining stocks are now.  - Dave Kranzler, Seeking Alpha:  LINK
Let's be clear here, if I thought the fundamentals of the global financial system were improving in a way that was negative for gold, I would go short gold and load up on stocks and junk bonds.  No question about that.  When I came out of business school in 1991, I was one of two top-10 b-school grads who went into junk bonds. That's 2 people out of about 5000 grads.  No one was interested in junk bonds in 1991.  But I had examined the fundamentals and determined that it was still a valid form of corporate finance.  Recall, Drexel had just collapsed and everyone was screaming that junk bonds were dead.  In fact, 1992 marked the start of a new bull market in junk bonds.

The key to understanding relative value is not found in charts, "technical" indicators, CNBC, Bloomberg News, any Wall Street research, Barron's, chat board, etc.  Realistic and honest assessment and study of fundamentals is nowhere to be found in any of those sources.  None.  Zero.

The key to understanding value is doing your own research, which includes knowing where to look to find the best possible information available.  Since 2002, when I first really understood just how corrupted and doomed the U.S. financial and political system is, I have yet to run into anyone, and I mean anyone, who can answer this simple proposition:
Please tell me - I'm all ears and open mind - how the U.S. Government can possibly start reducing and eventually balance the amount of money of that it takes in vs. the amount of money that it spends - not just on a cash-in/cash-out basis but include the rapidly growing future liability payments connected with Federal pensions, social security and all the legacy entitlement programs.  Then tell me how it can accomplish this feat plus start to reduce the enormous load of Government debt.
Remember, back in 2002 the U.S. Treasury debt outstanding was only about $6 trillion, about 60% of GDP.   Now, it's close to $17 trillion now - about 108% of GDP -  and the economy, inflation-adjusted, has not grown at all since then, especially in relation to the amount of growth in overall debt in system and in relation to the trillions in wealth being consumed by the Government.  Furthermore, the spending deficits were measured in the low $100's of billions.  Every year since and including 2009 the deficit has been over one trillion dollars.  See any trend here?  And notwithstanding the deceptive headlines recently proclaiming that the deficit will smaller this year, the truth is - the cold hard fact - that the Treasury has issued $100 billion of new debt for the first 7 months of this fiscal year - $700 billion.  The trend is still the friend of my fundamental analysis.

Every single time I've presented anyone with that proposition, I get nothing but blank stares.  No can map a solution.  Not only that, but since 2002, the systemic predicament in the U.S. has gotten inexorably worse every single year, especially when you peel away all the deceitful reporting designed to hide the interminably growing problem.   When someone can tell me how the above proposition will not only be accomplished but will be put into definitive action, then I will sell all my gold, silver and mining stocks, go short gold and load up on real estate, stocks and risky bonds.

For this reason - the reason that the fundamentals supporting a significantly higher price of gold than the current manipulated price - gold remains not only the best store of wealth but also, because it is tremendously undervalued in relation to the fundamentals, but the best possible investment.

Have a great weekend and remember:  sit tight and be right.

Thursday, May 16, 2013

Obama Is Destroying What's Left Of The First Amendment

No need for commentary - in reference to Obama's response to the illegal Press taps that it's his job to "balance" national security and the 1st Amendment:

"That's what every president says. Every president, whether it's Nixon with the Pentagon Papers or George W. Bush with the NSA wiretapping story, every president exerts, 'I'm doing this to keep you safe.' A lot of people in the public, they say that's enough, and they believe it, but the truth of the matter is that it's not enough of an answer in and of itself. That's why there is Congressional oversight of the executive branch. It's not enough just to say we're doing it to keep you safe, because the moment the American people cede that territory, then presidents can do whatever they want."

Here's the CNN video:  LINK
"Give me liberty or give me death"  - Patrick Henry, a Founding Father
   and signor of the Declaration of Independence

Wednesday, May 15, 2013

Top Constitutional Law Experts: Obama Makes Nixon Look Like An Amateur

For all you die-hard Obama defenders, please note the experts cited in this article are primarily liberally oriented in their views.  Here's some golden truth:  Obama Considered Worse Than Nixon


IRS Director of Tax-Exempt Organizations: "Like, Sorry Dude"

 Thank you.  I'm not good at math
- Lois Lerner, IRS Director of Tax-Exempt Organizations  LINK

Hmmm.  Sorry?  I'm not good at math.  It would seem that at least one of the qualifications for working at the IRS in a managerial position would be simple math skills.  Her comment was in response to an inquiry that included a basic 5th grade math calculation.

I know knee-jerk liberal Democrats are saying "serves the bastards right."  But then what do these same people say when the Government illegally raids the private information of the media - the same media that has protected and defended Obama?  Look people, the fact that Bush essentially lifted his leg on the Bill of Rights and let the Government trample all over our rights was bad enough.  But wasn't the guy that's in there now supposed fix all the damage Bush inflicted on our Constitution and Civil Rights?  I know he made those promises because I watched one of his speeches in person in 2008 in which he promised to clean up Capitol Hill and Wall Street.  How's his scorecard there?

Not only has Obama NOT even attempted to fix things, he's taken the baton handed to him by Bush and run laps around the crimes committed by the Bush Administration.  How can any person who voted for Obama POSSIBLY defend this guy?  And it's beyond laughable that Eric Holder has recused himself from the AP scandal - his dirty fingerprints are all over it.  He should be held accountable in a court of law.  But then again, it appears as if Obama skipped the class that covered Rule of Law at Harvard  - that is, assuming Harvard Law even bothers to teach that subject matter...

From the liberally-oriented Huffington Post today:
Tuesday also saw James Goodale, who was the lawyer for the New York Times in the Pentagon Papers case, flatly say that Obama was worse than Nixon in his dealings with the press..."Obama has all these things that he's done to the press on national security matters that Nixon never did," Goodale told the New York Observer  LINK

The golden truth of the matter is that our Government has become excessively large and omnipotent.  No wonder the Government-directed public education system no longer teaches the history of the Constitution and the Bill of Rights - it would be too dangerous to the livelihood of politicians and Governmental lifers for kids these days to learn why Thomas Jefferson and  his colleagues expressly put in the mechanisms required to prevent the kind of Government we have now.   These days Jefferson might be subjected to oppressive tactics by the IRS and the Justice Department.  And if that didn't stop Jefferson, under the guise provided by the Bush-legislated - and Obama-strengthened - Detainee Bill, Jefferson could be arrested and detained without the right to a hearing in front of a judge to determine if the detainment was warranted.

Back in 2003, I was having a conversation with a colleague and we both agreed that eventually we were going to see things happen in this country with corruption and fraud and unchecked Government oppression that would "blow our minds."  What's happened during the Bush era was bad enough.  But the fact that guy who was supposed to rescue the system from all of the above has actually enabled the problems to get worse truly blows my mind.

Monday, May 13, 2013

The B.S. Is Flying At Us Everyday Now

Two more Government propaganda agencies released extremely misleading data this morning.

First, the Census Bureau released its estimate for April retail sales.  The headlines flashed in big bright lights that retail sales increased a "seasonally adjusted" .1% over March.  The March number was originally reported at -.4% but was revised lower to -.5% - or down from February.

Now here's the interesting part:  if you go by the not seasonally adjusted estimated number, sales for April actually declined from March by 2.5%.  That's quite a bit different from the fabled headlines everyone will see or hear today.  Here's the data:  LINK  And a negative reading is more consistent with the wholesale sales number released last Thursday by the Commerce Department, which showed that wholesale sales posted their biggest drop in four years:  LINK

You would at least think that if the Government was going to paint a big lie, they could at least get their various statistical departments to cooperate with each other so that the lies are consistent across the data.

An even bigger joke is that Bloomberg News reported today that Wall Street dealers are now forecasting that the U.S. Treasury will reduce the size of upcoming Government Treasury auctions due to "soaring revenue" and based on the CBO's recent estimate that the Government will run only an $845 billion deficit for fiscal 2013. 

Now, part of the problem with this idea is that for the first 7 months of FY 2013, the Federal debt load has gone up by $700 billion.  The only reason the debt goes up is because revenues are not covering spending - i.e. a true $700 billion cash spending deficit.  In terms of the timing of cash flows, we know that the Treasury received a big balloon payment in December as wealthy people sold down taxable assets and paid the gains on them ahead of the Jan 1 tax increases.  Moreover, the first few months of the year thru April account for a disproportionate amount of tax revenues for obvious reasons.  So, is tax revenue really "soaring?"  LOL

The bigger part of this CBO joke is the incredibly poor track record that the CBO has in forecasting debt levels and spending levels.  As Zerohedge pointed out back in February, in 2001 the CBO projected that by 2011 the Treasury would have a balance sheet surplus of $2.4 trillion - i.e. no debt.   Instead, the actual number was a debt load of $10.4 trillion.  Just a slight miss there.  And a year ago, the CBO was forecasting that this year's deficit would be $585 billion.  Zerohedge Link

Obviously, going by the monthly run-rate already experienced in 2013 for the first 7 months, the Government is running roughly a $100 billion per month deficit.  Unless the Government can figure out a way to recreate the one-time surge in revenues that occurred in December and maintain income tax revenues at the same run-rate as they were thru April 15, I would expect that the Government, short of using some accounting tricks, will continue to run about $100 billion per month deficit thru the September FY-end, for a total spending deficit of $1.2 trillion.

The point of all this is that the garbage coming of out of DC and NYC on a daily basis keeps getting bigger, more rotten and more foul-smelling.  And I'm sure most of you don't care - I do or I wouldn't have brought this up - but the immigration reform bill going through Congress right now contains language buried in it that mandates the establishment of a database that records and keeps biometric data on every single citizen of the U.S.:  LINK  All I can say to that is that anyone who doesn't think George Orwell's vision was accurate is an idiot.

If they wanted to eliminate illegal immigration, they should just cut back on welfare and social security disability by about 50%, because it would force people who are otherwise capable of working to do the jobs that illegal immigrants are willing to do. 

Saturday, May 11, 2013

And Yet, Another Big Joke: Fed QE Tapering? Riiiiight

The Fed is thinking about cutting back on QE like I think about becoming a scratch golfer.  I do think about it.  - FACOD - Friend and colleague of Dave, who plays a lot of golf but has no hope of ever becoming even close to a scratch golfer
The Fed is now serving up rainbows, unicorns and fairy tales.  And that mindless, moronic mouthpiece of Federal Reserve intentional deceit, Jon Hilsenrath,  is more than happy to put it all in print. Our system, especially as it operates in NYC and DC has become analogous to one big New City street shell game.  Keep your eye on the ball, NOT where they want you to think the ball is so that they can fleece you of your money.

So the rumor of the Hilsenrath article about Fed QE "tapering," curiously released 20 minutes after the Comex close Thursday in order to enable the paper gold market manipulators dump a lot of paper in one of the most illiquid trading periods for paper gold in any given 24 hour period, finally hit the tape Friday afternoon.

The timing of a late day Friday release, after the stock and bond markets had closed for the weekend, is curious as well.  I'll let the readers decide why.

Having said that, I know for a fact that the Fed will not be "tapering" anytime soon.  I know a bank executive who recently met with Fed staff in DC.  To a man they admitted to this person that no one - as in "nobody" - at the Fed has any clue whatsoever how Bernanke and the Fed can possibly even begin to extract itself from QE, let alone start unloading it's massive $3 trillion portfolio of Treasuries, mortgages and insidiously toxic assets.

But why do we need inside word on that?  Play the tape forward.  Think about what happens if the Fed tries to stop, or even reduce, its rate of bond buying.  In the first 7 months of its fiscal year, the Government ran up  a deficit of $700 billion, or $100 billion per month. This includes a tax revenue windfall in December from asset selling ahead of the new tax laws that kicked in Jan 1 and it includes the big jump in tax revenues associated with the timing of tax deadline filings.  And the economy was not quite in decline, like it is now.

So with all the stars aligned, the Government was still running a $100 billion a month deficit, requiring about $80-$90 billion per month in new Treasury issuance.  The Fed was buying more than $45 billion - or more than half of this new issuance - because it is also rolling cash flow from interest into more purchases.  I'll leave it to your imaginations to decide what happens if the Fed pulls back on its Treasury purchases, but keep in mind that the economy is tanking and corporate taxable income and worker wages are in decline - all of which means lower tax revenues than planned.

How about mortgages?  See previous posts this week for my view on that.  But keep in mind that the housing market is starting to soften in most areas and the "organic," buy a home and live in it purchasers, are having to resort to using - more often than not now - subprime quality FHA financing.  That paper, my friends, is being bought by the Fed and is guaranteed by you and me.

One more point:  how quickly we all forget that just last week the FOMC issued a statement which implied that it stands ready to lower interest rates if necessary.  I guess that moron Hilsenrath doesn't get that particular information feed from his Fed source.  

Sure the Fed can start "tapering" QE, but it would also have to be willing to live with the consequences.  We know Bernanke isn't willing to live with the consequences of what he's done, which is why he's leaving in January.  And there isn't a politician alive - except may Ron Paul - who is willing to live with consequences of the Fed reducing QE.  Even more catastrophic, the Fed itself has no clue how it will unwind QE.  Keep your eye on that little red ball - not the criminal hands moving the shells around in a manner designed to rob you of your money.

Friday, May 10, 2013

"They" Are Throwing Jokes At Us Daily Now

I'm not worried about this price action because it is occurring only in the paper gold markets of London and New York.  Soon as Japan and China closed up for the weekend last night, the London paper pimps went to work on the price.  The real currency war going on behind the scenes is the "war" over physical gold.  Everything else is a distraction.  More than 400 tonnes of gold has disappeared from visible, above-ground vault stocks since Jan 1.  Where the hell is all of it going?   -  Me in response to someone who asked me about today's price action on the Comex.
I mentioned yesterday that our entire system has become a complete farce.  Ben Bernanke and Barack Obama, directly and through their media whores, tell us the economy is getting better.  Yet, how come a new record amount of people jump on the food stamp and Social Security Disability Insurance gravy train every month?   Every month.  Close to 16% of our population receives food stamps now.  That's a fact.  It was reported the other day that Michigan had to specifically pass a State law that forbids the use of food stamp debit cards in strip clubs and liquor stores.  That's not a joke?

And then I see the Treasury's new Padrino, Jack Lew - the guy who used his position at Citibank to fleece the student loan system - was on CNBC early this morning exclaiming that "U.S. growth is not sufficient."  This was in the context of urging Japan and Europe to do more to stimulate their economies.  Well Jack, if our economy is so strong, how come the Fed needs to keep pumping $85 billion per month - at a rate of over $1 trillion in a year - into the system?  Jack Lew is a complete joke.

How about the housing market.  More on this in coming days.  If you look at the real data below the hedge fund and flipper buying in the hot "bubble" markets - the same hot markets that crashed hard in 2007 - the housing market is actually turning south.  If this were not the case, then how come Bernanke feels compelled to pump $40 billion per month into the mortgage market?   Seriously?  The housing market needs this?  It's a joke.  Bernanke is a joke.  $40 billion per month equates to roughly 145,000 homes per month if you use the median price according to the Census Bureau.  What happens if Bernanke pulls that $40 billion away?  You tell me...

Now of course, most of that $40 billion is being injected into the big banks so they can keep bad mortgages on their books from collapsing and issue new, future bad mortgages to new suckers who think the housing market has bottomed.  And Freddie Mac announced today that it was going to start issuing new bonds that are not backed by the Government?  Huh?  Is this some kind of joke?  According to Freddie Mac, the bond market is strong enough for it to issue this type of paper.   Hmmm.  Okay fine.  Let's see how strong that bond market is if the Fed stops printing up $85 billion per month to support both Treasuries and home mortgages?   See what I mean?  It's a complete joke.

And if you want to see the biggest joke of them all - the reason the U.S. stock markets are starting to move up bubblicious parabolic fashion, just look at what has happened to Japan's stock market since the Government started printing trillions of yen:

(click to enlarge)

See what I mean?   Our system has become nothing but one big joke.  And the joke's on us because while we watch the farcical tragedy unfold, the producers, directors and actors are stealing everything we own...

For everyone who is holding onto real, physical gold and silver, keep holding on tight.  It might be a roller coaster ride for a bit but patience will be amply rewarded.  The main mining stock indices jumped up over 5% two days ago.  It was reported again yesterday that insiders are piling into the smaller mining stocks at record rates.  I chat with many of these insiders all the time.  They get the joke and they also understand that it's a joke how undervalued their shares are.  They are putting their money where their mouths are.  Given that NYSE insiders are dumping their company's shares in droves, we know they get it also.   How about you, Ben, Barack and Jack?  Et tu, si brutti corrotti?

Which one do you trust?

Thursday, May 9, 2013

Something Ain't Right

Since the beginning of the year and through last night, there has been 300 tonnes of gold removed from GLD and 90 tonnes of gold from the Comex removed.  In the 12 years that I've been doing the precious metals sector, there has never been such an extraordinary, visible movement and disappearance of gold like this.  Hugo Chavez, on his death bed, repatriated 200 tonnes of gold back to Venezuela from Europe in about four months, but we know where it went.  It didn't disappear.  The German Bundesbank requested the repatriation of some part of the German gold held by the NY Fed in NY and, after several days of negotiations, Bernanke agreed to send 300 of the 1800 tonnes back - over the next 7 years.

My prediction:  That gold will never see inside of a ship hull.

Something ugly is going on and, at least for me, it explains why the western bullion banks are making a concerted and aggressive effort to hold down the price of gold using printed paper Comex futures contracts. (about 80% of all downward price movement in gold/silver since Jan 1 has occurred during Comex floor trading hours).

I received my colleague "Jesse's" latest post in my email about the same time that Jim Sinclair posted this comment:
It is much more than gold that simply is not there. The system is getting ready to close on you. The longer you think about it, the less probability you will escape the great train robbery of deposit accounts.  I might tell you the real economic story, but I do not think you can handle it. I do not believe there is any other writer out there that knows the real story. It is much more than gold that simply is not there.  LINK
Those comments were Sinclair's prelude to posting the same Reuters article about a surprise G7 meeting that was called for this Saturday to discuss global banking reform:  LINK  Apparently it is rare for the G7 to focus on financial regulation.

As the title to Jesse's post explains, apparently the BRICS are indeed getting restless with the ongoing financial fraud and market manipulation being orchestrated out of NY, DC, Tokyo and London  LINK

The rumor I wrote about earlier was yet another clear cut attempt to create selling in the paper gold and silver market on the Comex - specifically since the rumor was released about 20 minutes after the Comex floor had closed, leaving only the low volume, illiquid electronic market left to deal with the flood of paper selling that rumor created.

I have an uneasy feeling that we are soon going to understand why close to 400 tonnes has been removed from GLD/Comex and why the financial system insiders have been in aggressive gold/silver price management mode since early October 2012.  I also have a feeling that people in this country who still have faith in fiat paper money will not like the reasons once they become known...

Let's Get Real: The U.S. Has Become A Complete Joke

An "unsubstantiated" rumor spread through the markets around noon Denver time today that the Wall Street Journal's mindless mouthpiece for the Fed, Jon Hilsenrath, was going to print an article reporting that the Fed was considering tapering down QE soon.  For those of you who don't know, the Fed was using Hilsrenrath - at least for awhile - to telegraph impending policy decisions.

When this rumor hit, the dollar jumped a lot higher and every other market tanked hard.  Let's think about the implications of the Fed slowing down its purchases of $85 billion in Treasuries and housing mortgages each month.  First, the housing market would absolutely collapse.  That there is a real housing bounce is an absolute joke.  That the Fed has engineered a speculative frenzy in certain markets by injecting $40 billion per month into the housing market is true.  But what if the Fed were to stop that?  Think it about it everyone.  I have a neighbor who has decided to buy and flip a house.  I would love the opportunity to see what happens if the Fed pulls QE before this guy can get the house renovated and back on the market.  Please Ben, make my day.

How about if the Fed stopped buying $45 billion per month in Treasuries?  Anyone care to think about what that would do to the Government's cost of funding all of its welfare programs and imperialistic military activities?  $45 billion per month means that the Fed is buying more than 50% of all of the new Government debt that is being issued every month.  If the Fed takes that bid away, the cost required to induce outside buyers to replace the Fed would drive interest rates up significantly.   It would likely throw our system into a depression.  If that weren't the case, the Fed wouldn't need to buy Treasuries at all.

Go ahead Ben, stop all QE.  Let's see what happens.  You have been making the claim that the economy is improving and inflation is low, as reflected in Treasury rates.  So let's see the Fed stop its QE so we can observe how real all this is.  The truth is Bernanke is making a complete mockery of our system by making the claims he's making about the economy, housing, and the employment level and anyone who thinks about it for less than 3 minutes understands that if the Fed slows down or stops QE, our financial system will collapse.   Ben knows it and that's why he's leaving the Fed at the end of his 2nd term in January.

The other big joke of the day is the Government's Social Security Disability Insurance program.  SSDI hit a new record of recipients in April, at 10,962,532 beneficiaries.  This is more people than the entire population of Greece.  The number of beneficiaries has increased every month since December 1996.  There's 13 full-time workers for every SSDI recipient.  In 1968, that ratio was 51.  You can read all about this de facto welfare program here:  SSDI

The truth is that the SSDI is just another tool the Government uses to hide the true rate of unemployment.  After all, once someone bruises their arm and can't look for a job and therefore qualifies for SSDI, they are removed from the Government's measure of the Labor Force.  In other words, it artificially lowers the reported rate of unemployment.  There's an excellent chart in that link above that shows the high correlation between the unemployment rate and the number of people on SSDI.  It's nearly a 1:1 to correlation.  Hey man, can't find a job?  Go tell a doctor you can't sleep because of uncontrollable nightmares and therefore are unable to find a job.  Based on the number of late night TV ads I've been seeing by law firms who specialize in getting people qualified for SSDI (the one I saw the other night claimed a 92% success rate), it's a better business for lawyers than chasing ambulances.

Even if there are some legitimate SSDI recipients, the truth is that this country can not afford to fund their welfare.  We are borrowing roughly 45 cents of every dollar that is being spent.  And this number goes up every year.  SSDI is unaffordable.  The fact of the matter is that our system has become a complete joke.  And the fraud and deceit going at all levels of business and Government is making a complete mockery of anyone who is trying to live by doing the right thing.

Wednesday, May 8, 2013

The Truth About The Gold Being Drained From GLD

In over 30 years of studying, researching, trading and investing in the financial markets, I have never seen the contrarian signals flashing as bullishly as they are for gold right now.  -  Link: Update On Gold: Is This The Bottom?

It's really quite astonishing.  Especially the degree to which the negative media reports - especially from Bloomberg News and CNBC - are piling up like dead bodies in the aftermath of the Mt. Vesuvius eruption.

I want to "connect some dots" for everyone who has been worried about the rather large liquidation of gold from GLD.  In fact, media citations of this gold drain have proliferated like the odor of burning marijuana in the streets of Denver now that pot has been legalized (trust me, it's everywhere).

But what is really going on?  Let's look "under the hood" at some relevant information that is being left out of a lot of the financial reporting in the U.S.  To begin with, the way gold is put into or taken out of GLD is via the Authorized Participants.  These are the primary market makers in GLD shares.  When they collect a basket of 100,000 shares from buyers or sellers, they take the cash proceeds and either buy gold to move into GLD or buy gold from GLD to remove the gold from the trust.  The current list of AP's, at least according to GLD's latest 10-K filing are:  Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sach, HSBC, JP Morgan, Merrill Lynch, Morgan Stanley, Newedge (a online hedge fund oriented futures bookie), RBC, UBS, and Virtu Financial (another online hedge fund bookmaker).

If the price of gold - for whatever reason, legitimate or not - gets crushed, it will tend to generate a lot of selling in the shares of GLD.  In turn, that will generate the ability of the AP's to collect 100,000 share baskets and convert those baskets into gold that is removed from the GLD vault and into the "custody" of the specific AP who is turning in the shares.  At today's price of gold, 100,000 shares represents about $14.2 million - 9,627 ozs of gold, or roughly .29 tonnes.  Since the beginning of the year, roughly 293 tonnes of gold has been drained from GLD, which had 1350 tonnes in it - allegedly - on 12/31/12.  Nearly 30% of the total amount of gold that has been drained from GLD occurred in the 3 weeks since the April 16-17 price massacre.

So where, you might ask, is all this gold going?  It's not just vaporizing into thin air.  Using today's price of gold, 293 tonnes is worth about $14.5 billion.  If you look at that AP list above, all of them except the two hedge fund bookies are LBMA "bullion bank" market makers.  Unless these bullion banks are keeping the gold for themselves - and if any of them were, it would have to show up in the footnotes of their next 10-Q - that gold is being delivered to buyers of it on the other side.

So, who would be buying this gold?  Based on numerous news service reports, which often seem to never make their way into the U.S. financial media reporting, India and China combined through the end of April have imported somewhere around 700 tonnes of gold, plus or minus 100 tonnes.  What's 100 tonnes among bullion bank friends when GLD still has 1,057 tonnes left?  Here's one news report - actually from Bloomberg - which is calculating that China purchased around 223 tonnes of gold in March alone:  LINK  That is a staggering amount of gold (mostly 400 oz bars - the type of bar in GLD's vaults) when you consider that the global annual mined production of gold is around 2500 tonnes, and declining. 

And here's an account out of India about the massive gold demand there in April and May:
 “The biggest slump in gold prices in more than three decades on April 15 spurred banks, traders and jewelers to import more than 100 tons last month, said Rajesh Khosla, managing director of MMTC-PAMP India Pvt. Purchases this month will match April’s imports, he said”
And here's a refreshingly honest assessment of the situation from an Indian newspaper:
The jump in Chinese physical demand also prompted some banks to ship in more supplies from London and Swiss vaults, traders said  LINK
If you read that entire article, you'll see that in 2012, India/China imported more than 1/3 of the global  gold production and will likely account for close to 50% this year.  This is the unintended consequences for the Central Banks who are spear-heading the manipulation of the price of gold for the purposes of defending the dollar and fiat currencies.

This rabid demand for 400 oz. gold bars from China/India (not to mention Russia, Turkey, Viet Nam, pretty much all of southeast Asia) goes a long way toward explaining the rumors that were circulating during February and intensified in March that the LBMA was in danger of facing a big delivery default.

Layer on top of this the fact that many wealthy families in Europe are now demanding delivery of the gold bars that JPM and other bullion banks are holding custody of.  The report on this from my friend was confirmed independently by a source of Bill Murphy's over in Europe.  This is exactly why ABN/Amro announced a week before the $200 hit on gold that they would no longer deliver physical gold from their gold investment account product and would instead only settle redemptions in cash.  That product catered to high net worth investors over there.  ABN didn't have the gold that would be required to satisfy delivery claims.  It was a fractional bullion investment account, just like all the other big bank "bullion" investment products.  Morgan Stanley settled a lawsuit several years ago for this type of scheme using silver.  But they never admitted guilt.

So in connecting all the dots, there is no question in my mind that the big price smashing of gold in mid-April was an operation designed to shake loose enough 400 oz. gold bars out of GLD in order to satisfy the enormous delivery demands coming from Asia, India and even within Europe.  GLD is the only possible source of above-ground 400 oz. gold bars that could be used to satisfy this enormous demand for physically deliverable bars.

At some point, and probably sooner than most people are willing to believe, this physical demand is going to force an upward "explosion" of the paper derivatives being used to hold down the spot price right now.  In 30 years of studying and trading the financial markets, I have never seen contrarian indicators for any market sector flashing as bullishly as they are for gold and silver, which further confirms my view that the metals have bottomed and are getting ready to give those of us who held on the ride of a lifetime.

Friday, May 3, 2013

Plenty Of 400 oz. Gold Bars Available?

A reader alerted me to the fact that Bron Suchecki, one of the proprietors  of the Perth Mint - the notoriously untrustworthy and fractional bullion account seller - made the claim that there's plenty of 400 oz. gold bullion bars to be had on the world market.  This is contrary to every news report and first-hand accounting of shortages that have been presented over the last week.

So I have this question for Bron:   If there's plenty of 400 oz. gold bullion LBMA-standard bars available, how come it's taking the United States Government SEVEN YEARS to send just 300 tonnes of the said 400 oz. gold bars that it owes back to the German Government and its citizens?  Tell me Bron, if you can find an ample supply of bars, how come the Federal Reserve and the U.S. Treasury can not?  How come the Chinese Gold and Silver Exchange Society is now forced to back-order bars from Switzerland?  LINK

I rest my case.

The Government's Non-Farm Payroll Report Has Taken The Term "Farce" To A Whole New Level

I'm not even sure where to start to with today's April employment report.  It was so out of line with all the other economic indicators and with what we know about big banks, big retailers and big manufacturing companies and their numerous announcements of big job-count reductions this year.

Let me give just one example.  The Government and Wall Street has been telling us that there a big recovery going on the housing market.  And yet, if you go to Table B1 in this report from the BLS - LINK - you see that the construction sector was said to have lost 6,000 jobs in April.  That makes no sense.   The Birth/Death model (see below) shows construction adding 29,000 jobs.  This is completely inconsistent with the story line that housing is improving.  Bernanke said so himself on Wednesday.

And on the heels of this rather "robust" employment report, the Commerce Dept releases the factory orders report for March which shows a big decline of 4%, vs an expected decline of -2.8%.  Not only that, but prior report of +3% for February was revised to lower to +1.9%.  And then the ISM - Institute of Supply Management (formerly the Nat'l Assoc. of Purchasing Managers) releases its "services" report, which shows a decline from March to April and the index level was lower than expected.  Someone is lying.  I don't think the factories and private businesses reporting data that affects their bottom line are the ones.

I could go on all day boring you with the line by line analysis of today's jobs report.  But you can peruse through the report linked above if you like.  Trust me, there's better things to do with your time.  What I will mention, however, is that according the Government - from their nefarious "Birth/Death" model - new business formations by small businesses theoretically added 193,000 thousand jobs to the number that the Government then "seasonally adjusts."  I don't really know of anyone who believes that the Birth/Death model has an credibility whatsoever.

The thinking is that people who leave their job for whatever cause - i.e. get "headcount reduced" for cost cutting purposes - decide to all of a sudden take all of the money they haven't saved and start a new business. The theory is that these "businesses" add jobs or subtract, depending on what the BLS's "voo doo black box" decides was the likely number of businesses started vs. closed.  Sound credible?

Anyway, when I went through my initial glance at the non-farm payroll report, I noticed a big bulge in the number of "business and professional" jobs that the BLS said were added in April.  In fact, it was 73,000 of the 165,000, or nearly 50%.  Then I noticed that according to the birth/death model, new businesses in this sector created 63,000 new jobs.  Know anyone who started a business consulting business last month?  Certainly IBM - probably the largest "professional services" employer in the country was hiring consulting employees, because they just significantly cut hours for that segment of their workforce:  LINK 

In addition, the Government, despite what we know about the fact that most of the big box retailers are closing something like 10% - 20% of their stores this year, added another 29,300 jobs.  No way.  Sorry.  That number is a complete fabrication. Here's a link this "Alice In Wonderland" fairy tale called "the birth/death model:"  LINK

The sad part is that there's 89 million people "not in the labor force," most of whom would probably like to have a job if they could get one.  I wonder how what's going through their mind - at the least ones not getting disability, student loans, food stamps, etc - as they see a completely fictitious jobs number and then the stock market rocketing up 155 points (the Dow) on the heels of that fictitious jobs report.

I have a feeling it's going to get very ugly in this country in the second half of this year.  That's why there's a record number of people buying up a record amount of gold and silver coins minted by the U.S. mint.  In fact, now there's shortages of gold and silver eagles.  The mint has not reported any silver eagle sales so far for May, but it's because they don't have the silver required to produce them.  I also have a feeling it's why Ben Bernanke is going to leave the Federal Reserve in January.  He doesn't want to be left holding the empty bag he inherited from Greenspan and then proceeded to blow up himself with even more helium.  Have a good weekend.

Thursday, May 2, 2013

Gresham's Law Proves Gold And Silver Are Remarkably Undervalued

Gresham's law is an economic principle that states, "when a government overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation." It is commonly stated as: "Bad money drives out good"Gresham's Law
There's a lot of ways to back into an implied value for the current "intrinsic" price of gold and silver in relation to their fiat currency counterparts - and the relative supply, or oversupply - of those fiat paper-contras.

Similarly, if we accept the eventual reality that the U.S. and rest of the western Governments will never be able to repay their debt obligations to their eastern hemisphere financiers, we know that there will be a "grand" currency system "reset," which will involve the massive devaluation of the dollar, euro and yen and the massive re-valuation higher of gold/silver.  It's either that or war.  Sorry, history has spoken.

At any rate, for those who are brave enough to pull their head out of the sand and think about "what's next," I wrote an article for Seeking Alpha in which I apply recent events as a means of validating Gresham's Law and why gold and silver are undervalued, given that Gresham's Law is in fact a "law."

You can read the entire article here:  LINK

In the meantime, I don't think it will be much longer before the market understands that a lot more Fed printing will be required to keep the economy from completely collapsing.  This realization should get a boost shortly when both Congress and the President fail to adequately address the sequester/budget/debt ceiling issue.  At that point I think more people will understand why Bernanke is pushing the "seat eject" button in January when his current Fed term expires.