Although Chinese GDP is lower when measured in yuan and converted to dollars, Arends and others claim that this isn’t right. Goods and services are cheaper in China. So they don’t think we should convert yuan to dollars using the market exchange rate. They use a concept called Purchasing Power Parity (PPP). PPP is used to determine a different exchange rate for the yuan than the market rate. This is how they arrive at a “real” Chinese GDP of $17.6T. Full Story
In recent years, a number of Asian companies have been betting that Canada will be able to export cheap liquefied natural gas (LNG) from its west coast. These big international players include PetroChina, Mitsubishi, CNOOC, and, until December 3, Malaysian state-owned Petronas. Full Story
By: Adam Hamilton, Zeal Intelligence - 5 December, 2014
Gold’s been on an incredible roller-coaster ride over the past couple months, whipsawing like crazy. And contrary to popular rationalizations, these swings had absolutely nothing to do with fundamentals. Their sole driver has been American speculators’ extreme shorting of gold futures, which has battered gold’s price around in the absence of investment demand. But this epic gold shorting looks exhausted. Full Story
By: John Browne, Senior Economic Consultant at Euro Pacific Capital - 5 December, 2014
Despite falling oil prices, the Organization of Petroleum Exporting Countries (OPEC) voted on November 27th not to cut production in order to boost prices. The key to this decision appears to have been the attitude of Saudi Arabia, which has long been the first among equals in the coalition. Not surprisingly, the decision led to further oil price declines, and led many observers to conclude that OPEC has largely lost the ability to upwardly influence the price of petroleum. But this determination ignores the wider geopolitical considerations that may be convincing Saudi Arabia to be perfectly content, for now, with lower prices. Full Story
By: John Mauldin and James Montier - 5 December, 2014
In today’s Outside the Box the redoubtable James Montier of GMO lifts his lance to prick the underbelly of the Mighty SVM. (That’s Shareholder Value Maximization, for you newbies.) “The world’s dumbest idea” (among many candidates in the world of finance), says James, citing none other than “Neutron Jack” Welch in support. Full Story
Each commodity market has its own story to tell: oil prices are falling because OPEC can't agree production cuts, steel faces a glut from overcapacity, and even the price of maize has fallen, presumably because of good harvests. Full Story
Today’s central banking world kind of feels like Woodstock to me. Lots of long hair, tie-dye, and perhaps a generous helping of body odor. Certainly hallucinogenics are involved. Think about it. In the old days, as long as we could remember, the job of a central bank was to prevent inflation. Also, to promote economic growth and keep people in jobs, but they weren’t really serious about that. The only thing they were really serious about was preventing inflation—and sometimes they did a bad job anyway. Full Story
Investors are getting mixed Messages about whether we are facing an Inflationary or Deflationary Future. Answering that question correctly is important both to profitability and protecting wealth. Major Bankers and some Government Officials Claim they are worried about Deflation. But rising costs for Health Care, Food and, until recently, Energy, indicate we face an inflationary, and perhaps even a hyperinflationary, future. Full Story
By: Rick Ackerman, Rick's Picks - 5 December, 2014
Junior mining companies tracked by this ETF look a little shakier at the moment than gold itself, but we can still try bottom-fishing if conditions are right. The pattern shown suggests we would enjoy appealing odds with a bid down around 23.54, a Hidden Pivot support that roughly coincides with the 23.65 target of a smaller pattern. Accordingly, I’ll recommend buying eight Dec 26 25-strike calls if GDXJ gets within 0.03 of the target by Tuesday. Full Story
During a time in which downward volatility of the junior resource sector has resumed in force, Rick Rule, Chairman of Sprott U.S. Holdings was kind enough to share a few comments. When asked if we’ve seen the ultimate capitulation in junior resource markets yet, Rick noted that, “We haven’t had a capitulation yet… we’re beginning to see the types of market volatility, rabid moves up and down on no volume, that are normally the “rattle” of the rattlesnake of capitulation. But the market hasn’t followed through yet, and I think that’s a consequence of the recent strength in the gold price.” Full Story
Consumers are most likely elated about the recent drop in oil prices that has quickly translated into a drop in gasoline prices. It could also help the economy. The IMF has calculated that a 30% drop in oil prices could boost GDP by 0.8%. The drop is estimated to have transferred $1.5 trillion from producers to consumers. The drop in oil prices so far since June 2014 has been roughly 39% Full Story
In ancient Greek mythology, the Titan Atlas was charged with holding up the world. Today, that task largely falls on the shoulders of American businesses. For the month of November, the Manufacturing Institute for Supply Management (ISM) reading was 58.7, marking the 18th consecutive month of manufacturing expansion in the U.S. Anything above 50.0 denotes growth, anything below, contraction. Among the areas that showed particularly strong growth were new orders and exports. Full Story
While wondering what to write about today I remembered seeing something that was shocking even though I was aware of it. I have not paid much attention recently to 10 yr. yields in the Eurozone. The non logical yields had just slipped through the cracks of my cognitive memory. The story I read pointed out the various countries in Europe where their 10 yr. yields were trading below U.S. rates, in some cases, WELL below. I knew many Eurozone countries were below U.S. rates but the vast majority? Full Story
Of course, tomorrow is ‘jobs’ day and it could well be strong because even if the Semi’s do go on to project a coming easing in manufacturing, these things do not filter down in real time, especially in what is still a heavily consumer driven economy. But articles like the above are little more than rationalizations for the current trend. Perfect for mainstream media, and nearly useless for anyone looking ahead (CBO projections aside). To be sure, the trend is Howard’s friend right now and writers like him use the power of that trend to full effect while it’s at their back. Full Story
In summary, as we look ahead, this may well be the time to be cautious. Investors continue to be scared that they might miss another rally. Indeed, late phases in a bull market can lead to spectacular gains. The temptations are certainly there. As John Hussman has said: you can either be a fool before or after a bubble bursts. To us, this means only put money at risk you can afford to lose. Except, of course, that there is no place to hide when real interest rates are negative, as cash is at risk of losing its purchasing power. Full Story
For all the talk of gold sinking remorselessly to $1,000 an ounce, the metal has risen to $1,200 per ounce and has held its ground. Have we seen the bottom? Money managers Doug Loud and Jeff Mosseri of Greystone Asset Management say that if we haven't seen the bottom, we will soon. In this interview with The Gold Report, they predict that the next bull market will result in patient investors realizing gains in the multiples. Full Story
By: Chris Powell, Secretary/Treasurer, GATA - 3 December, 2014
The man who has blown the whistle on the secret and comprehensive U.S. futures market trading by central banks, Eric Scott Hunsader, founder of the market data company Nanex in Winnetka, Illinois, reports via Twitter today that CME Group, operator of the major U.S. futures exchanges, has extended by a year, to the end of 2015, the discount trading rates it offers to central banks... Full Story
Do you have forebodings about the future? I do, which is why I’ve been looking closer at the transformations technology promises to bring us. First, a brief review. I’ve previously written about the rapid pace of technological development (here and here) and Ray Kurzweil’s point that though technology is growing exponentially, we experience it linearly, and we tend to base our expectations on our linear experience. Full Story
There is one absolutely crucial feature that distinguishes the Cayman Islands from other low-tax jurisdictions: a culture and history that is vehemently opposed to direct taxation—which has never existed in Cayman. Over the years, every proposal that has had even a whiff of a possibility that it might lead to direct taxation has been driven out of town, along with the foolish politicians who sponsored it. It’s proven to be a great deterrent. Full Story
By: Chris Powell, Secretary/Treasurer, GATA - 3 December, 2014
Many European central banks have begun issuing public reports distinguishing their gold in the vault from "unallocated" gold or gold receivables and they now claim very little unallocated gold, Bullion Star market analyst and GATA consultant Koos Jansen reports today. Jansen adds that the distinguishing has been done only for this year and that such data has not been made available for previous years. Full Story
Much to the chagrin of the financial elite, gold and silver are reentering the American consciousness and starting to shake the wing nutty image of their recent past. But it’s taken a global financial crisis to get the public’s attention – one that could wipe out our nation at almost any moment. Full Story
Gold and silver have now had three "outside reversal" days to the upside within the last three weeks. Those who follow the precious metals were absolutely shocked (after being shell shocked) to see this type of action the first time in many a moon...not to mention a "three'fer"! For those of you who don't know what an "outside reversal day" is, let me briefly explain. It is the "outside" part which is important and without it, the "reversal" part is much less meaningful. Full Story
In December’s Gold Videocast, Peter Schiff responds to the Swiss voters’ rejection of the “Save Our Swiss Gold” initiative. He explains why the results of the referendum spell the end of a stable Swiss franc, but also the long-term success of gold. With no truly sound, safe-haven currencies left in the world, both Swiss and international investors will inevitably return to gold to protect their savings. Peter stresses that the Swiss vote is a wake-up call to the world: you can’t rely on central banks to protect the purchasing power of your currency. However, you can start your own, personal gold standard today. Full Story
Yesterday was an extraordinary day in the Precious Metals markets, with a good chance that it signals the reversal from the brutal 3-year plus bearmarket that so many have waited so long to see. The day started with gold and silver plunging on the news that the Swiss voted against backing their currency with gold, but later in the day they rallied strongly on heavy turnover to close with giant reversal candlesticks on their charts. Regardless of the reasons for this bizarre behavior, technically this action looks very positive, and this is written with the awareness that gold has reacted back this morning on dollar strength. Full Story
Are you a long-term investor? Convinced that all you have to do is wait long enough to be guaranteed huge stock market profits? Take a look at the chart below of rolling 30-year returns of the S&P 500 and tell me if it affects your enthusiasm. The reality is that stock market results vary widely depending on what your starting point is. For example, any investor who put $100,000 into the stock market 1954 was rewarded with roughly the same $100,000 30 years later in 1984. Full Story
In the midst of the global economic crisis of 2008-2009, I posted a musing entitled “Dollars and Gold” (Mercenary Musing, March 23, 2009). At that juncture, gold was priced at less than $1000 per ounce in US dollars. The Federal Reserve was only six months into what turned out to be a five-year campaign of massive inflation of the US money supply backstopped by zero interest rates. Full Story
It has been a long, tough road for most in the metals world, as we find ourselves approaching the lows yet again. Many are hoping upon hope that those lows will finally hold. Unfortunately, if “hope” has been your investing methodology of choice for the last 3+ years in the metals world, my heart goes out to you. It truly has been quite painful for those that have viewed each rally as the start of the next bullish trend, only to have those “hopes” dashed with further lows being struck. When will it all end? Full Story
Gold enthusiasts around the world are trying to figure out what just happened in the gold market. The price action has been dramatic, and I think I can shed some fairly bright light on the situation. The general consensus is that the price of gold fell on Friday, due to anticipation of a Swiss citizen rejection of the “Save Our Gold” campaign. The Swiss vote went as anticipated, but by Monday morning, gold had soared $80, and silver had surged $2. Full Story
I'd like to address the outright crash of the oil market this past week. The hope was the Saudis would cut back on production to stabilize prices somewhere in the $80+ range. This was not to be as Saudi Arabia announced no cutback whatsoever ...oil then fell over 10% in one day on Friday and actually traded to a $65 handle. First and most importantly, oil is THE biggest and most widely used commodity on the planet. For a market of this importance to outright crash or rise over 10% in one day, unintended consequences not seen or anticipated can be expected at some point. Full Story
The Australian gold sector index (XGD) topped during the week of 15th April 2011 at 8498.9. The first fact to consider from this article is that this occurred nearly 5 months ahead of the peak in gold when the king of metals had just reached the high US$1400. As you well know gold went on to rise to US$1920.8 approximately $430 higher than when the gold stocks peaked. Full Story
So it finally happened. The Federal Reserve ended its Quantitative Easing program on October 29, 2014 due to concerns that keeping QE for so long could fuel excessive risk-taking by investors. The U.S. dollar continued to conquer new heights, while gold did not welcome this central bank action. Its price fell in November to $1,142, a four-year low. This is not surprising given the fact that as we wrote (in the last Market Overview), the condition of the U.S. dollar is one of the most important drivers of gold prices. Full Story
By: Rick Ackerman, Rick's Picks - 2 December, 2014
It’s encouraging that DaBoyz exploited a news headline yesterday — in this case, the results of Switzerland’s negative vote on gold — to drive bullion down to bargain levels. We’d become so used to distributive rallies that when accumulation on weakness occurs, as it clearly did yesterday, it comes as a pleasant surprise. It’s true that the steepness of the rally was due in part to the running of stops beneath some key lows made in mid-November before the futures took off. But that would have accounted for perhaps only $20-$30 of a move that went $80 before showing signs of fatigue. Full Story
Our office recently had the pleasure of welcoming Dr. Kaye E. Wilkins, who practices pediatric orthopedic surgery here in San Antonio. The recipient of the 2008 American Academy of Orthopedic Surgeons (AAOS) Humanitarian Award, Dr. Wilkins has made it his mission to bring life-changing treatments to underprivileged parts of the world. He established the Haiti Clubfoot Project, which trains nonphysician technicians to correct this debilitating deformity and give Haitian children a second chance at life. We were humbled to see and hear of Dr. Wilkins’s lifelong altruism and passion for helping others, no matter their background. Full Story
Sadly, the 2015 shale oil collapse is essentially set in stone; and as it unfolds, could quite possibly prove to be the “black swan” that finally destroys TPTB’s best laid market manipulations. Pretty soon, even the most died in the wool perma-bulls will throw in the white propaganda flag; and when they do, the first they’ll do is short everything remotely related to shale oil drilling, production and service. In my view, the only industries have ever as egregiously hyper-promoted and recklessly financed as 2012-14 shale oil were to 1997-99 internet start-ups and 2005-07 subprime mortgage originators. Full Story
Follow the yellow brick road; follow the yellow brick road; follow follow follow follow the yellow brick road to your dreams (riches and wealth) has always been man’s obsession, a sentiment beautifully captured all those year ago in Baum’s classic, The Wizard of Oz. Back then, the merits of following a Gold Standard were better understood, well seated within the movie’s imagery, not just ‘the yellow brick road’, but the silver slippers as well, both sending the message that by following the natural path, the path laid out by God (nature), one can have dreams come true. Full Story
Louis Navellier thinks negative yields in Europe presents cheap cash for US companies to buyback their own shares, reducing stock float and increasing demand. Gold is more backward dated than at any time in decades, indicating extreme tightness in supply, making a forceful advance imminent. The gold source of last resort is central bank vaults, which continue to shift stockpiles from the West to the East, along with economic strength. Full Story
Well here we go again. In my last month's publication of this newsletter, I was convinced that the bull market in stocks was over. I ended that publication by writing, "The Powers That Be will do everything that they can to hold back the impending stock deluge, because they know that once stock prices collapse they will take everything, but gold and silver, down with them....So to answer the question that is the title of this piece, Is This It? Yes, this is it; there is overwhelming evidence to support the notion that the stock bull market is finished." Well I was wrong again. Full Story
By: John Mauldin and Worth Wray - 1 December, 2014
Bitcoin is a topic of discussion almost everywhere I go. My introduction to Bitcoin came when I was speaking at a gold conference in Palm Springs and three bright-eyed, bushy-tailed college students approached me with a video camera and asked for my thoughts on Bitcoin. Noting my confusion, they began to evangelistically espouse the virtues of Bitcoin and tell me how it would save us from the evils of the Federal Reserve. Full Story
It looks as if another COMEX expiration has come and gone without any "fireworks". I must say, I in no way expected what has occurred, the longs evaporated unlike any time past AND with the knowledge that physical supplies are very tight. Were this any other market, a short squeeze for the ages would have been forced. With less than one week to go, silver had almost 300 million ounces contracted for and gold 16 million. These bled down to almost 20 million silver ounces and just over 1.1 million gold ounces as of Friday. Full Story
Stocks today are overvalued by any reasonable valuation metric. If you look at the CAPE (cyclical adjusted price to earnings) the market is registering a reading of 27(anything over 15 is overvalued). We’re now as overvalued as we were in 2007. The only times in history that the market has been more overvalued was during the 1929 bubble and the Tech bubble. Full Story
India imported 102 tonnes of gold between November 1 and November 15, just 48 tonnes shy of its total imports for the entire month of October. This data reveals a robust physical demand for gold in the country. Furthermore, India is looking to remove its 80/20 rule this week in order to free up gold flows into the country while eliminating distortions in the flows. Full Story
Swiss voters yesterday resoundingly rejected a referendum to boost the role of gold in central bank reserves and ban exports. The price of gold headed back to $1,150 and silver fell below $15 an ounce. Traders said the rejection was expected and largely priced into the market. The proposal stipulating the SNB raise the portion of its assets held in gold from eight per cent now was voted down by 77 per cent to 23 per cent. The initiative would have also prohibited the Swiss National Bank from ever selling any of its bullion and required the 30 per cent currently stored in Canada and the UK to be repatriated. Full Story
By: Gary Savage, SmartMoneyTracker - 1 December, 2014
It’s time to do a follow-up to my last Golden Bottom article. We are coming down to the wire and the action on Monday after the Swiss referendum should tell us whether gold has already formed a final bear market low, or whether we have one more drop in this intermediate cycle to the $1050 level before the final bottom. Full Story
Before we look at the bigger picture I want to show you a short term daily chart that had an interesting day. There are several things I like to look at when I see a stock that looks like it’s breaking out. First, it’s nice to see an increase in volume but sometimes it happens a day or to later. Secondly, it’s always nice to see a gap where you were expecting a breakout. Full Story
While the Shakespearean reference, from “As You Like It,” compares the world to the seven ages of man, it can also be applied to the way in which the Rothschild formula for gaining control of a nation’s money supply ultimately leads to that nation’s total subjugation to the elites. It is the elite rent seeking who control the world, and that will not change in the lifetime of anyone reading this, perhaps even for several successive generations to follow. Full Story
It’s always great to have a few days off and I hope you enjoyed yours with family and close friends. We do have so much to be thankful for, even while gold was hit in quiet trading while many people were looking the other way, or passed out on the couch in a turkey coma. A solid week for markets even though it was quiet, although Fridays lack of volume allowed some stocks to be pushed around a bit, but that should not last once traders and volume return Monday. Full Story
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