Analysis: As gold prices surge, cash-for-gold frenzy fades

http://www.reuters.com/article/2011/08/11/us-gold-bugs-idUSTRE77A3CT20110811

By Jan Harvey

LONDON | Thu Aug 11, 2011 10:22am EDT

LONDON (Reuters) - Gold, and only gold, will be our salvation when the value of companies, banks, countries and even money itself melts away. Gold, not shifting currencies, is the foundation of wealth and security. Gold is back, for good.

This is the song of the "gold bugs" - the fervent fans of the precious metal who have clung to its investment value for three generations and now glow in the reflected luster of a record price approaching $2,000 for just one ounce.

Monday will mark the 40th anniversary of the United States' abandonment of the gold standard. But gold bugs kept the faith -- even when prices stayed under $500 for nearly 25 years after their 1981 peak.

Their passion derided, dismissed as hopelessly out dated doomsayers, their love for the metal seemed irrational.

The gold bug label itself goes back to master of the supernatural Edgar Allen Poe and his story of that name, a tale of golden beetle whose bite sends the hero to a chest of gold and jewels.

It reappeared as one of the first campaign buttons -- a brass bug sported by supporters of William McKinley in the bitter U.S. presidential election of 1896.

McKinley, the first presidential candidate to barnstorm across the nation, backed the gold standard against his Democratic opponent's proposal that it should be joined by silver in a fixed ratio. Loser William Bryan slipped into history but bimetallism lived on for a little in the think tanks of the day.

Fast forward and the financial crisis of 2008 has made gold the darling of investors from hedge funds to taxi drivers, and sparked a near-doubling of prices.

"Gold has been rising against all national currencies, and that's significant," James Turk, founder of bullion dealer Goldmoney, said.

"When there are problems with a national currency... people begin to worry about the value of their money, whether they're going to lose purchasing power because of inflation or other problems. As a consequence, they look for safe havens."

He was speaking as a true gold bug -- not in the dark days after Lehman Brothers' demise in 2008, nor in the depths of last year's euro zone debt crisis, nor after Standard & Poor's recent downgrade of the United States' top-notch credit rating.

Turk's view came in a BusinessWeek interview he gave in 2005, well in advance of the current financial crisis.

"My long-standing forecast, made in a Barron's interview in October 2003, is that $8,000 per ounce will be reached sometime between 2013-2015," he told Reuters this week.

"I've stayed with that forecast over the years and see no reason to change it."

The world's current financial woes are only going to get worse if current policies continue, he believes, meaning the rally in gold prices is unlikely to stop here.

"Politicians and central bankers are making decisions that debase national currencies, and the resulting bad monetary policies they are following are causing the gold price to rise," he said.

Gold's latest push to record highs has gone hand-in-hand with a plunge in Wall Street stocks to their lowest in nearly a year, while the dollar is languishing near multi-year lows.

Long-term gold bull David Beahm, vice president of marketing and economic research at New Orleans bullion dealer Blanchard and Co., says worries over the stability of the stock markets will be a key driver of higher gold prices.

"The best investment right now is gold," he said. "By diversifying one's portfolio with a negatively-correlated gold, investors can protect themselves from deep plunges in the equity market."

"There is no news in the market today or over the coming few months that is likely to stop the current gold bull market, as the fundamentals are firmly in place for gold to continue its rise," he says.

Traditional investment commentators have dismissed gold -- which, with no "intrinsic" value of its own, is only really as valuable as a buyer thinks it is -- as a classic bubble.

But those who have predicted its crash since it rose above $700 an ounce in 2006, on a simple "what goes up, must come down" analysis, have consistently been proved short-sighted.

Gold prices traded in a relatively narrow range from $250-420 an ounce for the whole of the 1990s. They have since more than quadrupled from that high, peaking at a record just below $1,800 an ounce earlier this week.

Their rise accelerated sharply from 2005 onwards, breaking through $1,000 an ounce in 2008 as the weaker dollar fueled demand for alternative stores of value.

Now gold bulls are predicting that prices, now around $1,750 an ounce, but still short of an inflation-adjusted high of nearly $2,500 in 1980, could climb even higher.

"I believe the price of gold will rise irregularly over the next several years, possibly reaching $1,850 an ounce by the end of this year, breaking above $2,000 in 2012, and possibly $3,000, $4,000, and even $5,000 in years to come," says Jeffrey Nichols, managing director of American Precious Metals Advisors and senior economic advisor to Rosland Capital.

"At the heart of this forecast is my observation (or belief) that the United States and, to a lesser but still significant extent, Europe have been living beyond our means for decades."

Back in 1896, losing presidential candidate Bryan's Cross of Gold speech turned the watching crowd into "a wild, raging irresistible mob," the New York Times reported.

Gold bugs, often accused of sensationalism, are finding their passion is becoming mainstream. "Raging" is probably no longer a suitable description of them. "Irresistible" is increasingly nearer the mark.

(Reporting by Jan Harvey, editing by William Hardy and Richard Mably)

The Third Phase In This Gold Bull Market

August 4, 2011, at 7:15 pm
by Jim Sinclair

Dear Extended Family,

I am in London this evening in my room posting as much serious material as possible to help you understand the new nature of gold; a nature fraught with unprecedented volatility. I will deliver my presentation tomorrow. Right now we have to talk.

Gold from $248 to $524.90 was an arithmetic uptrend based on a re-birthing of gold’s currency roll.

When gold broke out above $524.90 I asked you to please cease trading as gold had moved from phase 1 into a runaway price phase 2. It is this phase which has given you prices in excess of $1650.

$1764 has the same significance as $524.90 because it represents phase 3, the point when a runaway price market for gold would gain exponential properties.

Because $1764 is such significant a number you can expect one of the more serious price battles before the price departs to Alf Fields’ and Armstrong’s higher potentials.

To sum up the situation you haven’t seen anything yet.

As strange as it sounds right now, soon you will begin to see the bearish cabal on mining shares looking for cover where gold will be sold for correct precious metals shares.

Keep the faith. $1650 has been the minimum upside since $248, not the most likely top.

Respectfully,
Jim

Copied from : http://www.jsmineset.com/

Jim Sinclair – Gold Milestone at $1,764 Paves Way to $12,000

July 15, 2011, at 7:20 am
by Eric King

With gold hitting new all-time highs yesterday in dollars, euros and pounds, today King World News interviewed legendary trader Jim Sinclair and Dan Norcini to get their take on where things stand in the gold market. When Sinclair was asked about the action in gold he stated, “Gold at $1,764 is as important as gold at $524.90, and above $524.90 the gold market went into a runaway. It’s the exact same setup at $1,764, but having said that $1,764 should bring in some significant supply.

However, a move above $1,764 would be the equivalent of $524.90 in the sense that you would go from the runaway that was born at $524.90, into a hyperbolic market. The key to all of this is $1,764 and you will go above that level, but what that does is lock in four figures on the price of gold. A move above $1,764 brings into focus prices as high as $12,000, so we are are approaching the most critical milestone in the entire gold bull market…

Source: http://www.jsmineset.com/2011/07/15/jim-sinclair-gold-milestone-at-1764-paves-way-to-12000/

UK unveils first ATM for gold at Westfield Shopping Centre

Investors can now buy the precious metal with the same convenience as withdrawing cash from an ATM.

http://www.telegraph.co.uk/finance/personalfinance/investing/gold/8609976/UK-unveils-first-ATM-for-gold-at-Westfield-Shopping-Centre.html

By Richard Evans

10:00PM BST 30 Jun 2011

The Gold to Go machine, which sells gold at constantly updated prices, is unveiled at the Westfield shopping centre in London on Friday.

The German company behind the machines, Ex Oriente Lux, is capitalising on gold's traditional status as a safe haven investment in times of economic turmoil.

Westfield's gold ATM will sell bars and coins in various sizes, including a special 2.5g bar with the London skyline engraved on its reverse.

Ex Oriente Lux said its products were sold in "top quality" boxes and were "a great gift idea". The 1g gold bar, costing about £41, was "about as cheap as a bouquet of flowers but sure not to wither".

It added: "Gold to Go provides private investors with easy, convenient access to physical gold at fair, real-time prices. The ATMs are always online and update their prices every 10 minutes."

41% Of Belgian Central Bank Gold Has Been Lent Out

Submitted by Tyler Durden on 06/20/2011 16:10 -0400

(http://www.zerohedge.com/article/41-belgian-central-bank-gold-has-been-lent-out)

Some very disturbing revelations from CLSA's Chris Wood who in his latest Greed and Fear note discusses an event that may be all to prevalent within the central banking community: the less than overt lending out of central bank gold to "other entities" in return for picking up nickels in front of a steamroller. In this case, the central bank of governmentless Belgium, which had 41% of its gold out at the end of 2010 on loan. Naturally, the lent out gold is being used by some other key entity, potentially to mask its own inventory deficit, in exchange for the paltry sum of 0.3% on the total loan. Wood's conclusion: "This is a reminder that the paper gold market is significantly larger than the physical market. Just like a run on a bank in a fractional banking system, GREED & fear suspects it will be very hard to settle all the paper claims to gold physically in a real scramble for the metal. This is why in a parabolic spike physical gold is likely to trade at a significant premium to paper claims." We couldn't have said it better ourselves.

From CLSA's Greed and Fear:

Belgian central bank Vice Governor Francoise Masai reportedly told shareholders that about 41% of the central bank’s 216 metric tons of gold was on loan at the end of last year, and that the central bank earned a 0.3% return on its loans of physical gold to commercial banks last year. There are two points to note about this. The first is the puny annualised return earned on the gold leasing market. The second is the significant percentage of the central bank’s gold lent out. This is a reminder that the paper gold market is significantly larger than the physical market. Just like a run on a bank in a fractional banking system, GREED & fear suspects it will be very hard to settle all the paper claims to gold physically in a real scramble for the metal. This is why in a parabolic spike physical gold is likely to trade at a significant premium to paper claims. On this point GREED & fear should make it clear that the 25% of the global portfolio for a US dollar-denominated pension fund allocated to gold bullion is in physical gold.

Meanwhile, it is an interesting note that more than a dozen state legislators in America have now seen bills introduced that would make gold and silver coins legal tender in the respective states. Thus, gold and silver coins minted by the US government are now considered legal tender in Utah. Much of this activism is coming from Tea Party supporters. Financial sophisticates will scoff. But to GREED & fear it is a healthy sign that some people in America are thinking. For more on this popular movement to return to the monetary role of gold read an article published last week by the Los Angeles Times (“Pushing for a return to the gold standard”, 3 June 2011 by Nathaniel Popper).

Fed Lawyer Alvarez: “The Federal Reserve Does NOT Own Any Gold at All”

http://goldnews.com/2011/06/02/fed-lawyer-alvarez-the-federal-reserve-does-not-own-any-gold-at-all/

Author: goldnews | Filed under: Central Bank News, Precious Metals News

Thats right. The Fed owns NO gold. Zero, zip, ziltch.

For those of you who did not watch yesterday’s monetary policy hearing in the house of representatives, you most likely missed this bombshell exchange between Federal Reserve lawyer Scott Alvarez and committee chairman Dr. Ron Paul. My jaw literally dropped when I heard the Fed’s general counsel declare that the Federal Reserve owns no gold. After 1934, Alvarez explains that the Fed handed its gold over to the Treasury in exchange for gold certificates. When pressed further, Alvarez noted that the gold certificates do not represent any interest whatsoever in the gold itself. He explained the gold certificate listings on the Fed balance sheet, not as a claim to gold, but at most a claim to dollars from the Treasury. See the quotes here (and watch the videos at the bottom of the post):

Scott Alvarez: “The Federal Reserve does not own any gold at all… we have not owned gold since 1934, um, so we have not engaged in any gold swap. Before 1934 the Federal Reserve did, we did own gold. We turned that over by law to the Treasury and received in return for that gold certificates.”

Ron Paul: “…You have the securities for essentially all the gold?”

Scott Alvarez: “No. No we have no interest in the gold that is owned by the Treasury. We have simply an accounting document that is called gold certificates that represents the value at a statutory rate that we gave to the Treasury in 1934″

This issue is even more complicated than may appear and after doing some research we seem to have settled some of the quirks in this odd Treasury-Fed scheme. Bare with us when reading through this.

What appears to have happened under the Gold Reserve Act of 1934 is the Treasury seized the Fed’s gold, taking full ownership and claim to its proceeds. The Treasury as an aside transferred a sum of special 1934 series gold certificates to the Fed amounting to the statutory value of gold ($20.67 per ounce) times the quantity of gold transfered from the Fed to the Treasury. The official gold price was later revalued to $35 an ounce, an effective devaluation of the currency, but the quantity of gold certificates issued to the Fed was not amended to reflect revaluation until the passing of the Par Value Modification Act of 1972. Under this act, gold was revalued again, this time to $38 an oz, and the Fed’s gold certificate account was credited upwards by $822 million worth of certificates to reflect the change in the gold price from $35 to $38. The gold was revalued one last time in 1973 to $42.22 and again the Federal Reserve was credited with more gold certificates, $1.157 billion to be exact, to account for this. After everything, the Federal Reserve was left with $11.16 billion dollars worth of gold certificates.

So what exactly are the gold certificates the Fed holds? For one, the Fed’s gold certificates are unlike previous gold certificate issues, and are not publicly trade-able. They are also not direct claims to gold, but rather reflect claims only to US issued currency or coin held by the Treasury. The Fed can take claim to this currency on demand, and their certificates are an accounted for liability of the Treasury as listed in Note 19. Treasury’s “Other Liabilities”. In addition, if the Treasury is unable to satisfy a demand by the Fed for the funds, the Fed is able to gain access to the gold, since the gold stands as collateral for the gold certificates issued by the Treasury. This fact is taken from this statement in Note 2, from the Treasury’s balance sheet:

“Gold totaling $11.1 billion as of September 30, 2010, and 2009, was pledged as collateral for gold certificates issued and authorized to the FRBs by the Secretary of the Treasury.“

Given that the Fed has an indirect claim to the Treasury’s gold, it is questionable what line of reasoning the Fed’s general counsel was using when stating so broadly that the Fed has “no interest in the gold that is owned by the treasury”.

In any case, we can analyze the implications of the basic facts and come to a couple of conclusions:

1) The widespread notion that the Fed owns gold is false. The corollary to this is the mistaken belief that the Fed understates its gold holdings on its balance sheet by only reporting certificates based on the $42.22 statutory gold value. The Fed does not in fact own the US gold stock multiplied by the market price of gold, unless the Treasury defaults and even then its not clear. The Fed does, however, own a claim to currency totaling $11.1 billion and this value has a remote chance of going up significantly if the Treasury revalues its gold and maintains the practice initiated in the Par Value Modification Act.

2) The fact that the Fed owns no gold, nor claims to any gold, means the fundamental value of the dollar lacks any backing besides dollars themselves, not including Fed building and equipment. Dollars are in essence worth a lot less than many people thought, and the Fed is much more impotent in using the prowess of their assets, and conducting monetary policy in general, than many believed. In all, Alvarez’s clarification strengthens the case for gold’s high dollar value immensely.

A gold tsunami coming, according to Richard Russell

“We’re moving nearer and nearer to the edge of the hurricane. I can feel it in my bones. Every newspaper now carries an ad for gold. The ironic clincher was this ad below that I clipped from a weekly newspaper.

“Is there a gold bubble? Are you kidding me? Here’s an ad that somebody paid for suggesting that people should turn in their gold (!!) for Federal Reserve Notes. They’re not telling you to buy gold during one of the greatest bull markets in history – hardly, they’re asking you to throw parties in which the object is to get ignorant people to SELL their gold.

“I can feel them caressing my face – the early breezes. They are blowing gently and hinting of the forthcoming gold hurricane that will sweep across the US and the planet with all the force and power that was seen when gold was first discovered at Sutter’s Creek during the California gold rush of 1849. The gold rush of the 2000s is in the wings. The old phrase is ringing in my ears again (I haven’t heard it since the late ’70s): ‘There’s no fever like gold fever’.

“If the temperature of full gold fever is a hot 106, we’re only at 99 now, but I can feel it, I can tell you that the temperature is rising, rising.

“The panic to buy gold will override everything else. It will be one of the greatest financial phenomena that most of today’s investors will ever see. It will blot out everything else like a cloud blotting out the sun.

“After the calm, comes the storm. We’ve been watching ten years of gold climbing amid an atmosphere of calm. The great gold tsunami lies ahead. It will be historic.

“… BEFORE the great gold tsunami we might have a frightening gold correction that would clean out all the gold sceptics. This ‘clean out’ may be necessary prior to the big gold tsunami, and it’s a reason to hold some cash and not put ALL your money into gold at this time. Remember the old adage – ‘The market always does what it’s supposed to — BUT NEVER WHEN’.”

Source: Dow Theory Letters, April 21, 2011.

美元泡沫2000早結束了( 泡沫崩潰後的結局)

來自 證券說 黑 著 (http://ckfstock.blogspot.com/2011/05/2000_31.htmlc)

貨幣的歷史中清楚告訴我們，這世界上沒有一個無商品支持的紙幣可以長命，過去沒有，現在沒有，未來也不會有。所以美元崩潰其實是預料的事，實不應該大驚小怪，視為異端邪說。

無商品支持的貨幣，本質上並沒有問題，但現實中我們不可能找到有智慧的人長期管理它，所以最後一定會走上歷史上紙幣滅亡的相同道路──濫印和貶值。

「美元紙幣泡沫」其實和以前法國的「密西西比泡沫」是一樣貨色。就是以無真實價值的紙張替代金銀成為貨幣，然後通過大量發行造成紙幣貶值，推高資產價格，鼓動低息借貸，壓低儲蓄率，讓人民背負超高的未來債務來獲得眼前的物質滿足，給人一種富裕的美好感覺。

可當人民無法繼續再支持債務和消費的增長的時候，雖然美國葛林斯潘將利率降至1%，讓美國人民更進一步，竟然可以抵押債務（房貸）來支持消費，也只是夠苟延殘喘多幾年而已。

美國人民的透支消費，所形成的貿易赤字流入外國手中，外國又擔心自己貨幣匯率升值，所以被迫將自己賺取的美元用來購買美國資產，如債券、股票之類…達到美元循環的回流。

可根本還是在於美國承受債務的極限能力，尤其民間已經達到極點，所以至今美國貿易赤字無法回到高峰時期的6000億美元，外國央行借給美國的錢也無法恢復到高峰時期的11000億美元。

在資金不足以維持「美元紙幣泡沫」下，美聯儲才走向最後一招，自己開動印鈔機，將「債務貨幣化」，一個國家如果走到「債務貨幣化」，局勢都是非常嚴重的，只是被金融寡頭控制的媒體故意淡化它的嚴重性而已。

正常情況下的貨幣數據方面，M1大於M0，M2大於M1，M3大於M2。可目前M0竟然比M1還多上1/3，這已經不是正常的貨幣政策了，而是亂印鈔票了！

美 國國債市場的運轉基礎依然是美元將永遠保持全球基準貨幣這一假設。例如﹐商學院教給學生的仍是說﹐10年期美國國債利率是「無風險利率」﹐過去一百多年的 確如此﹐但這一切是建立在「美國時代」的基礎上。可實際上「美國時代」早就已經週身病痛了！美國問題其實比希臘還糟糕，只是因為它的美元目前還是國際貨 幣，使它能可以靠這「江湖地位」暫時維持多一段時間而已。

觀察歷史的法國「密西西比泡沫」，當其發行的Banque Royale Notes紙幣所造成的虛假繁榮破裂後，結果是什麼？

Banque Royale Notes回歸它本來的初始價值──「零」。除無法大量生產的自然資源的商品外，其餘依附紙幣上漲的東西全部貶值。

美元創造的紙幣泡沫早在1999/2000年已經破裂了，現在仍處於裂痕擴大中，可為何很多人察覺不到？

那是因為我們習慣看以美元角度作為衡量價格標準的表面資產價格，若我們轉為黃金這真正的貨幣，或者通膨的角度看，就會像照妖鏡一樣，將這泡沫破裂趨勢照得一清二楚，原形畢露。

因為這40年來，世界經濟的表面數字增長很大部分來自印鈔票的緣故，尤其美國這40年來，GDP增長13倍，股市增長15倍，債務卻增長34倍，這全拜增發40餘倍鈔票的結果。

當「美元紙幣泡沫」完全崩潰後，會發生以下情形：


1. 貨幣危機
隨著美國聯邦政府的債務像「龐氏騙局」那樣，越來越難維持，美元價值會不斷下跌，爆發「貨幣危機」。唯一解救之道就是進行超大型的財政改革和債務重組，讓美元兌黃金貶值並恢復金本位，才可穩定市場對美元的信心。

1930 年代美國大蕭條的時候，之所以沒有爆發「貨幣危機」，那是因為美國走的是金本位，美元背後都有黃金作支持的緣故。但是現在的美元完全只是靠政府信用支持， 現在的美國政府越來越沒有信用，你認為未來美元還值多少錢？換成是你，你會收這一直貶值的貨幣嗎？聰明人早就將它換成金銀或外國貨幣了！

如果任由美元崩潰，美國這個國家就完了！所以比較起痛苦的債務重組，老老實實的還錢，都好過自己國家的貨幣崩潰吧！



2.債市崩潰
孳息率暴漲，只有業務強穩，債務不多的公司債可以活下來。



3.股市崩盤
美 國股市多年來其實是靠通貨膨脹推高的，當泡沫破裂，此基礎就不在，因為債市和經濟的崩潰，股市也難于倖免。不過同樣的，業務穩健，特別擁有不少海外業務， 又債務不高，具備強大競爭力的公司可以挨過來，只是過程不輕鬆而已，尤其是面臨股價暴跌。股市中傷害最大的是金融股，可以逆勢而上的可能只有資源股。



4. 600兆衍生產品的風險
唯一難以預測的就是美國銀行業創造的600兆衍生產品，會引發怎樣的危機，美國銀行業會有不少面臨債務重組，過去作為世界金融中心的紐約會陷入長期低迷。



5. 人口老化危機
「美 元紙幣泡沫」崩潰會使美國經濟虛假的繁榮破裂，加上人口老化的加劇，7600萬「嬰兒潮」的退休，而過去美國制造大量的通貨膨脹和財政缺口，已經侵蝕這些 「嬰兒潮」的退休收入，美國會因為應付這些人的「社保系統」和「醫療保障」等問題而焦頭燗額，沒有20年經濟都難以恢復過去的活力。



6.外國被迫痛苦轉型
過去依賴美國市場的外國會受到嚴重的經濟打擊，其貨幣兌美元會出現升值，但兌黃金貶值。唯經濟結構健全者，可以擺脫對美國的依賴，被迫痛苦轉型，重新建立一個比現在更好的經濟模式。



7.國際貨幣體系瓦解
「美 元紙幣泡沫」崩潰也就是美元本位的國際貨幣體系瓦解。世界會陷入群雄割據的狀態，眼下最有可能的就是建立一個有金銀支持的聯合國貨幣，或者幾個區域的聯合 貨幣。因為「美元紙幣泡沫」崩潰也意味著信用紙幣的失敗，所以世界不可能會回到信用紙幣體系。加上崩潰所帶來的嚴重通貨膨脹，會促使世界各國以穩定物價為 第一要務，而非經濟成長，黃金就是最好的遏制通膨的工具。

雖然目前世界各國在探討未來國際貨幣體系的時候，說多作少，說回歸金本位也不 多，那是因為美元現在還沒崩潰的緣故。可當美元不斷貶值下，世界各國總有一天會被「逼上梁山」。而且它們也會發現建立一個無金銀的紙幣體系根本就是天方夜 譚。即使使用SDR，以各國的貨幣的若干權重集合起來的一種貨幣，也會面臨難以協調各國的貨幣政策的問題，最直接簡單的就是以金銀這些真正的國際貨幣作為 控制SDR發行量的閘門。



如果美國不大幅削減支出的話，很可能出現債務違約；而這違約將不是傳統的方式，而是通過通脹、貨幣貶值和負實際利率來違約。

美元作為全球的儲備貨幣已經接近70年了，這時間幾乎等於一生人，所以造成某些人覺得美元「萬能」的原因之一。當其他國家政府需要持有某種貨幣作為準備時，他們大多會選擇持有美元。因此，有些人說美國把世界「美元化」了。

當局勢動盪的時候，很多人不假思索就說美元會成為其避風港，可當美國發生動盪的時候呢？什麼東西可以成為避風港？你們仔細想過這問題沒有？

紙幣創造的榮景結束，這也就是為何我投資黃金白銀的原因。

1149年出版的一本名為《鑄幣論》的書中，提到中國的歷史學家馬端臨說：「紙幣絕對不是貨幣，而僅能充當存在於金屬或者產品中之價值的代表符號，政府期望將紙幣作為真正的錢幣，這種奇思妙想就是錯誤的。」

莫里斯探究了過去1/4世纪的貸款狂潮，“若錢是免费的，借錢也就没有成本了……于是，聰明的貸款人就會不斷地把錢借出去，直到無人再借為止”。 無人再借其實也就表示經濟因為背負高債務，被壓垮了！

可是債務形成的繁榮泡沫在崩潰前，很少人可以發現到，這是因為泡沫几乎总能和經濟增长挂上边。

除非奇蹟發生，美國經濟忽然恢復活力，一切回到2000年前的水平，不然美聯儲會一直印鈔票，至到通貨膨脹失控為止。

The European Gold Confiscation Scheme Unfolds: European Parliament Approves Use Of Gold As Collateral

Submitted by Tyler Durden on 05/25/2011 07:04 -0400

Wonder why Europe is pressing so hard for Greece (and soon the other PIIGS) to collateralize its pre-petition loans on a Debtor in Possession basis? Here is your answer: "Yesterday’s unanimous agreement by the European Parliament’s Committee on Economic and Monetary Affairs (ECON) to allow central counterparties to accept gold as collateral, under the European Market Infrastructure Regulation (EMIR), is further recognition of gold’s growing relevance as a high quality liquid asset. This vote reinforces market demand for a greater choice of assets that can be used as collateral to meet margin liabilities." Luckily for Greece, it has 111.5 tons of gold in storage (somewhere at the New York Fed most likely). Looking down the road, Portugal has 382.5 tons, Spain 281.6, and Italy leads the pack with 2,451.8 tons.

Complete press release:

The Economic and Monetary Affairs Committee of the European Parliament has approved gold to be used as collateral confirming its status as a high-quality liquid asset

Yesterday’s unanimous agreement by the European Parliament’s Committee on Economic and Monetary Affairs (ECON) to allow central counterparties to accept gold as collateral, under the European Market Infrastructure Regulation (EMIR), is further recognition of gold’s growing relevance as a high quality liquid asset.

This vote reinforces market demand for a greater choice of assets that can be used as collateral to meet margin liabilities.

Natalie Dempster, Director of Government Affairs at the World Gold Council said:

“It is very significant that the European Parliament is putting its weight behind the argument that the unique characteristics of gold make it an ideal form of high quality liquid collateral.

“We now look forward to the European Parliament and Council of the European Union upholding the inclusion of gold in the next stage of negotiations around EMIR which will now take place after the July plenary vote. The ratification would mark a significant step forward in redefining what constitutes a highly liquid asset under the Capital Requirements IV Directive, due in the coming month, from the European Commission.”

Market demand for gold to be used as a high quality liquid asset and as collateral has been building for some time. In late 2010, ICE Clear Europe, a leading European derivatives clearing house, became the first clearing house in Europe to accept gold as collateral. In February 2011, JP Morgan became the first bank to accept gold bullion as collateral via its tri-party collateral management arm. Exchanges across the world, such as Chicago Mercantile Exchange, are now accepting gold as collateral for certain trades and London-based clearing house LCH Clearnet has said that it also plans to start accepting gold as collateral later this year, subject to regulatory approval.

The World Gold Council has examined this trend and has defined the characteristics that make gold an excellent form of collateral in its study “Gold as a source of collateral”. The report includes a case study on ICE Clear Europe, explaining why the central counterparty clearing house has started to accept gold as collateral and how this operates in practice.

“As regulators, from G20 countries, demand that more OTC trading is cleared on exchanges and with the ongoing world economic difficulties further eroding the credit worthiness of other forms of collateral, we expect to see increasing demand by clearing houses, exchanges and investment banks to use gold as collateral,” says Natalie Dempster.

(http://www.zerohedge.com/article/european-gold-confiscation-sceme-unfolds-european-parliament-approves-use-gold-collateral)

James Turk - Gold to Have a Staggering Up-Move This Summer

Turk: “This year it is not Mexico in the headlines, but rather Greece that is ready to default. Of course the other big news item coming up this summer is the Federal Reserve’s announced intention to end QE2. It’s amazing that so many market participants are taking the Federal Reserve at their word.

All one has to do is look at how much money the US government is borrowing and what they intend to borrow in the future to meet their spending needs to clearly understand that the Federal Reserve is going to keep buying the US government’s paper. This is the point that John Williams made clear in his KWN interview.

I think we have to be prepared for tremendous volatility and the possibility that this summer could be a repeat of 1982 where gold took off to the upside in a major way. Gold became the go to asset in the summer of ’82 that everyone wanted to own.

The extraordinary rally in the summer of 1982 began in the second week of June and by the first week of September gold has risen 50%. That’s a 50% move in less than three months!”

When asked about silver specifically Turk replied, “The gold/silver ratio has climbed back into the 40’s, and from a technical point of view is very close to achieving my mid-40’s target. That suggests to me that silver’s low is in place. My only concern here Eric is that this is options expiry week. We know from past experience that the shorts try to keep precious metals prices from rising to have as many possible calls expire out of the money.

Full article at:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/5/23_James_Turk_-_Gold_to_Have_a_Staggering_Up-Move_This_Summer.html

黃金 vs 鉑金 (article copied from a forum)

首先講一點，其實大部份在金行買到所謂白金首飾，只是將黃金混合其他金屬製成，寫出來是「白金」，而不是「鉑金」，真正在「鉑金首飾」會刻上「PT」字樣，這點大家要留意啊！老美曾因鉑金有很重要的軍事用途而嚴謹以鉑金做首飾，首飾商才推出「白金」。

言歸正傳，點解黃金的貨幣性會比鉑金強呢？我之前都講過了，作為貨幣，最重要是匯率要穩定，好方便買賣雙方計算成本。

鉑金的藏量遠遠不及黃金，照計應更稀有更珍貴，更適合做貨幣才對，差別就在匯率的穩定上，鉑金的蘊藏主要集中俄羅斯及南非，兩地已佔去全球90%以上。若果兩國有甚麼事，如戰爭、天災、礦場意外等，一停產，價格就會很波動。

而 更重輸給黃金的原因是其用途更多，鉑金的熔點是攝氐1768度，黃金只有1065度，所以鉑金的工業用途比黃金強許多，特別是汽車觸媒轉換器的需求為最 大，約佔總需求量的43%，黃金根本難以相比。但多用途亦代表其匯率會非常受到供求的影響。匯率波動及不可預測成為鉑金作為貨幣的致命傷！

黃 金真是一樣很奇怪的東西，藏量有限得來又唔會太多，又很多國家都有蘊藏，供應相對穩定，但又無咩特別用途喎，硬唔夠人硬，受熱力又唔夠人高，簡值係廢中之 廢，偏偏因為咁，千百年來，產量及匯率都相當穩定，天生就注定要做貨幣(馬克斯說的)，其他更稀有的金屬只能望塵莫及了！

這是很多人不懂分析黃金的原因，因為難以用實際用途的供求去分析價格走勢，而更再乎人們對貨幣信任程度，對前境及政府的信心，對通賬及物價走勢的看法等等，而這些東西都是難以用數字量化的。

那些財演最鍾意用甚麼工業需求下降，嫁娶淡季等去看淡黃金，而乏略了「即使沒有金本位，黃金仍然在人類心目中有貨幣地位這一重要原因」，結果全部錯晒，實在比黃金還要廢！

Interview: Jim Sinclair on Gold and the World Financial System

By Ron Hera04/20/2011

The Hera Research Newsletter (HRN) is pleased to present an in-depth interview with Jim Sinclair, Chairman and CEO of Tanzanian Royalty Exploration and founder of Jim Sinclair’s MineSet, which hosts his gold commentary as a free service to the gold investment community.

Jim Sinclair is primarily a precious metals specialist and a commodities and foreign currency trader. He founded the Sinclair Group of Companies in 1977, which offered full brokerage services in stocks, bonds, and other investment vehicles. The companies, which operated branches in New York, Kansas City, Toronto, Chicago, London and Geneva, were sold in 1983.

From 1981 to 1984, Mr. Sinclair served as a Precious Metals Advisor to Hunt Oil and the Hunt family for the liquidation of their silver position as a prerequisite for the $1 billion loan arranged by the Chairman of the Federal Reserve, Paul Volcker.

He was also a General Partner and Member of the Executive Committee of two New York Stock Exchange firms and President of Sinclair Global Clearing Corporation (a commodity clearing firm) and Global Arbitrage (a derivative dealer in metals and currencies).

In April 2002, shareholders of Tanzanian Royalty Exploration (formerly Tan Range Exploration) approved the acquisition of a Sinclair managed private company, Tanzania American International, and its exploration assets in Tanzania. Subsequently, Mr. Sinclair became Chairman of Tanzanian Royalty and now leads its efforts to become a gold royalty and development company.

He has authored three books and numerous magazine articles dealing with a variety of investment subjects, including precious metals, trading strategies and geopolitical events and their relationship to world economics and the markets. He is a frequent and popular commentator on financial and market related issues in various news publications and has been profiled in the New York Times.

In January 2003 Mr. Sinclair launched, Jim Sinclair’s MineSet, which now hosts his gold commentary and is intended as a free service to the gold community.

Hera Research Newsletter (HRN): Thank you for speaking with us today. You are one of very few people who have tried to warn investors about OTC derivatives. Why are OTC derivatives a problem in your opinion?

Jim Sinclair: Over the counter (OTC) derivatives are the reason we are going through what we are going through now. An OTC derivative is a kind of wager on what something will do. Up until 2009, most of these wagers had very little, if any, money behind them and, if the direction you bet on didn’t come to fruition, the amount of leverage resulted in extraordinary losses. There was a major rollover in derivatives tied to real estate in 2008, as well as in other types, such as those tied to sub-prime auto loans.

HRN: Did OTC derivatives destabilize the financial system in 2008?

Jim Sinclair: Absolutely.

HRN: Don’t financial institutions use risk cancellation models to hedge risks using OTC derivatives?

Jim Sinclair: Before the failure of Lehman Brothers, OTC derivatives losses would have almost netted out to zero. You can consider derivatives like a string in a circle with various knots representing all the derivatives transactions. When Lehman went broke, the string broke. When Lehman couldn’t meet its obligations on derivatives, they could no longer be netted out to zero. That’s why the banks went down, and that’s why you had the government bailouts and quantitative easing (QE).

HRN: OTC derivatives are the real reason for the bank bailouts?

Jim Sinclair: That is a fact which can in no way be argued away.

HRN: Hasn’t the problem been cleaned up by the Dodd–Frank Wall Street Reform and Consumer Protection Act?

Jim Sinclair: The pile of OTC derivatives is over $1 quadrillion. After 2008, the International Monetary Fund (IMF) adopted a new method of valuing them called value to maturity. Value to maturity assumes all of them will function, which is a cartoon. The derivatives pile hasn’t contracted. Basically, it has expanded, but value to maturity reduced the notional value from over $1 quadrillion to under $700 trillion. The amount outstanding is the same as it was in the first place.

The flavor of the present moment is credit default swaps against the solvency, or lack thereof, of sovereign nations. New derivatives have some margin behind them, but they only work if they are not called upon. If a nation’s debt was in fact to default, it would happen very quickly without a great deal of run up before. Most people would expect a rescue to be coming. Let’s say a rescue didn’t come, those credit default swaps would simply not be able to function and down again would come the banking system.

HRN: Are you saying that the financial system is less stable today than it was in 2008?

Jim Sinclair: It appears more stable but that’s only an appearance. The entire equity rally took place almost to the day from when the Financial Accounting Standards Board (FASB) relaxed the mark to market rule. It allowed financial institutions to make up whatever value they wanted for their worthless pieces of paper. If they used the real values, the banks would have come down.

HRN: Wasn’t the FASB change a temporary measure to halt the decline in mortgage-backed securities?

Jim Sinclair: It wasn’t just mortgage-backed securities. It was all the paper on bank balance sheets. The balance sheets of banks appear to be in good shape but they’re not. In fact, they will need a lot more funds.

HRN: Then the financial system is still vulnerable?

Jim Sinclair: They’ve kicked the can down the road. The purpose of QE, in other words the printing of money, is to maintain some degree of integrity in the financial system. Bear in mind that the grease for the wheels of equity markets is liquidity, meaning that if you create a lot of money, it goes into the hands of banking institutions and international investment houses. So, the equity out of thin air market has been sustained by QE.

HRN: What can the government do to prevent another crisis?

Jim Sinclair: You can assume that what’s been done already will be done again. There are no other tools in a practical sense. The idea that there won’t be a continuation of QE is nonsense.

HRN: Can the government bail out the banks again?

Jim Sinclair: The central banks will buy the government debt. That’s called quantitative easing.

HRN: Doesn’t QE undermine the dollar?

Jim Sinclair: The dollar is an exercise in psychology. It’s a piece of paper with a promise to pay but there’s nothing in which it can be paid. It’s legal settlement for debt but there’s nothing that it’s convertible into. To maintain confidence, it’s necessary to maintain the stature of a currency. In an arithmetic sense, if you go into a market to sell a supply of apples, and if you’re the only seller, you can get a nice price. If more sellers, meaning more apples, come into the market, there goes the price of apples. QE creates more dollars, which increases the supply.

HRN: If the dollar is loosing value because of QE, what about the Euro?

Jim Sinclair: If you look at the dollar or the Euro or the Yen, or even the Swiss franc, it’s a race to the bottom amongst all currencies. All countries everywhere are creating more paper every day. It’s a relative valuation, rather than a valuation based on an objective reference. What happens in the European Union immediately affects the dollar.

HRN: You mean the sovereign debt crisis?

Jim Sinclair: There’s too much focus on the Euro countries. There’s no difference between the economic union of Europe and the union of the states in the United States. The states of Europe have been revealed to be insolvent. How about the states of the United States? Out of New York, Illinois, California, etc., how many are solvent? The focus of the media has been on the Euro. The U.S. should stand in front of a mirror. The states of the economic union of America are in no better shape.

HRN: The news media is ignoring the U.S. sovereign debt crisis?

Jim Sinclair: In George Orwell’s Nineteen Eighty-Four, there were loud speakers constantly teaching the people what Big Brother wanted. The loudspeakers today are financial television. How much attention has financial TV put on the insolvency of U.S. states? It’s been mentioned, but not like the solvency problems of Portugal, Greece, Spain and Ireland, which have gotten hours, days, weeks and months of constant coverage. The solvency of New York, Illinois and California has been brought up but fleetingly at best.

HRN: So, the solvency problems of U.S. states are like an elephant in the room that no one is talking about?

Jim Sinclair: How can you say that the Euro is a disaster based on the financial condition of the states of the economic union of Europe, when the states of the economic union of the United States are in equally bad shape and in some cases worse? There’s no difference. If you want to analyze the Euro based on the weakness of its member states, how can the dollar be strong when the states of the United States are as weak or weaker?

HRN: So, the Euro could rise against the U.S. dollar, despite the European sovereign debt crisis?

Jim Sinclair: Sure it can. The question is, can the dollar go lower? The Euro could go to $1.50 or higher.

HRN: But the U.S. dollar is the world reserve currency. Doesn’t that guarantee its value?

Jim Sinclair: Only by default. It remains so because central banks own dollars. If central banks could exchange them for gold or other currencies without a major dislocation, they would.

HRN: Then, as a practical matter, central banks can’t get out of the dollar?

Jim Sinclair: The only one that’s gotten out of it is China. They’ve made deals all around the world for metals, materials, energy and manufacturing. If you add it all up, China is no more stuck in the dollar than the man in the moon.

HRN: Doesn’t the U.S. maintain a strong dollar policy?

Jim Sinclair: The strong dollar policy has only been a moderate, long-term downtrend that continues lower.

HRN: Don’t central banks manage currency exchange rates to prevent disruptive changes, like the recent Japanese Yen intervention?

Jim Sinclair: In the Japanese yen intervention, the central banks intervened but how long can they intervene? They have to create money to intervene, which comes back to QE.

HRN: Do you mean the overall affect of currency interventions is to create new money?

Jim Sinclair: Anything that happens around the world, for instance, the Bank of Japan’s response to the horrible disaster in Japan, was to go straight to QE. Money is being created everywhere without any discipline but the problems of financial institutions remain because they have make-believe balance sheets with improper values for their OTC derivatives.

HRN: Doesn’t the suspension of the FASB mark to market rule buy time for banks to repair their balance sheets?

Jim Sinclair: There are five million homes for sale in the United States if you include the off-market shadow inventory, which is a real inventory. There’s no repair coming in the real estate market, therefore, there’s no repair coming in the OTC derivatives based on that. That means there’s no repair coming in the underlying paper that the banks now value at much higher levels than they could possibly sell them for, if they could sell them at all.

HRN: Will bank balance sheets eventually get better?

Jim Sinclair: As long as confidence remains in place, which depends on the equity market and that comes back to QE.

HRN: Are you saying that the U.S. stock market rally is driven by QE?

Jim Sinclair: There’s an inability to stop QE without the whole house of cards coming down on itself. There’s no other choice. It’s the only tool left. The Federal Reserve can’t take a hawkish position on monetary policy and interest rates without this whole thing rolling over. They can talk about it constantly and might have more back door QE than front door QE.

HRN: If QE doesn’t stop soon, what will happen?

Jim Sinclair: The end game is a virtual reserve currency linked to gold. It will be based on an average of major currencies, which will slow down the movement in the index. The International Monetary Fund (IMF) is moving in that direction with Special Drawing Rights (SDRs). The dollar will be just another currency. The dollar’s not going to zero. It could loose a significant part of its buying power, which it already has and could again.

HRN: How would a virtual currency work?

Jim Sinclair: There would have to be a broad measure of the money supply, such as M3 used to be for the U.S. dollar, but on an international basis. The price of gold would be related to that measure. Central banks would have to value their gold according to their contribution to or extraction of international liquidity, so the price of gold would rise or fall on its own.

HRN: Wouldn’t that be a gold standard?

Jim Sinclair: There’ll never be a return to a gold standard in my opinion. The end of all hyperinflations has been a commodity currency. That’s exactly what happened in Germany, for example. Gold has the capacity to give confidence to people if there’s some relationship between the currency and gold. The virtual currency will be linked to gold but not convertible into gold.

HRN: So, a gold component will restore confidence?

Jim Sinclair: The answer is a commodity currency. That’s what happened every time there was this type of situation in monetary history. The rentenmark, which ended the German hyperinflation in 1923, was supposedly backed by all the real estate in Germany, but the government didn’t own that real estate. The point is that it wasn’t true. There was no great commodity backing for the rentenmark, but it was enough. It was a period when people were searching for anything to restore confidence in the currency.

HRN: Do you expect high inflation in U.S. dollar terms?

Jim Sinclair: The deed is done. Inflation is a pregnancy. The conception has already taken place. There’s a delayed effect but if you do the crime, you do the time. The Federal Reserve could stop QE tomorrow and it wouldn’t stop what’s going to happen because of what they’ve already done.

HRN: Won’t inflation reduce the real value of debt and help to repair bank balance sheets?

Jim Sinclair: Inflation is the way debt will be taken care of. The value of the currency will be so reduced as to reduce the debt load. It will also change the political scene. Whoever has power going into this will not have power coming out of it.

HRN: In other words, inflation is politically destabilizing?

Jim Sinclair: People really haven’t seen the big picture. Currency induced cost push inflation is already here. Look at what’s going on right now in the Middle East. We are moving from order to lack of order.

HRN: Would you say that inflation in food prices is indirectly driving oil prices higher?

Jim Sinclair: Oil goes right through from fertilizers to farm equipment to transportation and to food prices. The price of food is going to go even higher than we are seeing this year. The price of oil is headed decidedly higher. Peak Oil was a concept of the future. Now it’s a concept of now. A car getting 25 miles per gallon will probably be too expensive for the average person to drive.

HRN: How will high oil prices affect the prices of other things?

Jim Sinclair: There will be dislocation in the means of delivery of products. There may be shortages of goods, not because there are no available goods but because the means of distribution breaks down. It’s not that there won’t be corn or wheat, but the fuel needed to deliver it will be too expensive and people who work in transportation will demand higher pay so they can live. That’s where hyperinflation comes in.

HRN: And money to maintain the distribution of goods will be printed out of thin air?

Jim Sinclair: Every nation that has ever done this has turned into a banana republic. People can live in banana republics but there will be few wealthy people. There will be a few super wealthy people and an enormous amount of poverty. You can see it across the border in Nogales, Mexico, where people continue to live in extreme poverty.

HRN: America is becoming like Mexico?

Jim Sinclair: The standard of living is going much lower. People have to realize that the damage is already done. It’s not a question of whether the U.S. can be pushed over the edge. We are over the edge. We are watching the consequences play out now.

HRN: What can people do to protect their wealth from inflation?

Jim Sinclair: People have to try to maintain their buying power. Each person can become their own central bank and, to the best of their abilities, focus on the assets that benefit from the disorder that’s taking place and that will continue to take place.

HRN: Do you mean buying precious metals or commodities?

Jim Sinclair: I’ve spoken to people who, over the last ten years, have had this perspective. They have done very well. Even doing it now could protect your wealth.

HRN: What about gold? Do you see gold as a currency that can’t be debased?

Jim Sinclair: What is real money? Gold is a currency that has no liability attached to it. It’s a measure of value and a store of wealth that’s universally acceptable.

HRN: So, gold is an alternative to dollars or Euros?

Jim Sinclair: Physical gold is the answer. An individual who holds gold will have more time and ability to function.

HRN: How much higher do you think the price of gold could go?

Jim Sinclair: What’s the exchange rate of a currency with no liability attached to it? Gold is going much higher. We could see shocking gold prices, maybe Alf Fields’ target of $10,000 per ounce or Martin Armstrong’s target of $12,000 per ounce. I think that my price target of $1,650 per ounce gold is going to be so low it will be considered silly.

HRN: Thank you for your time today.

Jim Sinclair: It was my pleasure.

(http://www.financialsense.com/contributors/ron-hera/interview-jim-sinclair-on-gold-and-the-world-financial-system)

Gold Investments Market Update (2011/05/12)

Thu, May 12 2011, 13:48 GMT by Mark O'Byrne - GoldCore

Gold and silver’s recovery in recent days proved to be temporary and further falls were seen yesterday (sharply in silver) prior to a tentative recovery overnight and then more falls again this morning. The euro has stabilized after recent sharp falls and euro gold at €1,050/oz remains comfortably above €1,000/oz after a period of correction and consolidation. Euro gold looks like it is set to break above record highs of €1,072/oz (12/28/10) and target €1,100/oz as the European debt crisis deepens.

Cross Currency Rates at 1030 (London AM Fix)

The massive disconnect between the COMEX spot and futures prices and the physical market continues with leveraged, powerful players on Wall Street (primarily hedge funds and Wall Street banks) able to effect short term sell offs in the paper market despite the very strong supply, demand fundamentals in the physical bullion market.

Euro Gold – 1 Year (Daily)

Simplistic assertions that gold and silver are asset bubbles and that silver’s bubble has burst continue.

Those who have been wrongly calling gold and silver bubbles in recent years fail to realize that gold and silver are no ordinary assets, indeed many contend that they are not assets at all, rather they are money. The precious metals were demonetized in the second half of the 20th century as unbacked paper currencies (fiat money) became accepted globally.

USD Gold – 1 Year (Daily)

Those continuing to call gold a bubble do not understand monetary economics and the growing trend towards the gradual remonetisation of gold. This is due to the unstable nature of the global financial system and markets and growing concerns about all fiat currencies including the international reserve currency, the U.S. dollar and major reserve currencies such as the British pound, the Japanese yen and the euro.

Ultra loose monetary policies and global currency debasement renders confident assertions of gold and silver being bubbles simplistic and naïve.

Indeed, with growing calls for a return to the Gold Standard, the latest from billionaire media magnate Steve Forbes (see news), gold looks set to at least rise to its 1980 adjusted high of $2,400/oz.

Forbes said in an interview that “people know that something is wrong with the dollar."

“What seems astonishing today could become conventional wisdom in a short period of time,” Forbes said. He concluded that "you cannot trash your money without repercussions.”

He thus echoes long term gold standard advocate Representative Ron Paul and the recent advocation of a return to some form of Gold Standard by World Bank President Robert Zoellick.

A return to a Gold Standard would likely see gold revalued to thousands of dollars per ounce.

(http://www.fxstreet.com/fundamental/analysis-reports/gold-investments-market-update/2011/05/12/)

Are Silver Prices Collapsing?

Silver Price Sees Biggest Drop in Three Decades

By Greg McCoach
Friday, May 13th, 2011

The price of silver has really taken a haircut over the past several days.

Silver prices have fallen some 27% since the beginning of the month, and is now leading commodities to the downside.

The sell-off has been dramatic, to say the least. Gold has been hit as well, but not anywhere near as badly as silver has...

Word on the street is that several large hedge funds have been liquidating commodity positions across the board over the past few weeks.

The Wall Street Journal reported last Tuesday:

George Soros's big hedge fund, a firm operated by high-profile investor John Burbank and some other leading firms have been selling gold and silver, according to people close to the matter, after furiously accumulating precious metals for much of the past two years.

I suspect Soros was holding more silver than gold, considering its price volatility...

Last week, silver prices suffered their worst one-day drop in dollar terms in three decades. And with such a stir in the market, the iShares Silver Trust (NYSE: SLV) was one of the most actively traded investments on the U.S. market on several days last week.

This extreme volatility is setting us up for the ever-increasing moves to the upside in precious metals — and in commodities in general.

And this is really a short-term pullback and buying opportunity.

I expect precious metal prices to settle down in the next few days and begin to form a new base. From there, we'll launch to the next set of new highs in gold and silver.

Expect for this to occur. Plan your buys and sells accordingly as we head into the next rally.

The big boys like Soros will continue to sell into the short-term rallies with their paper profits, just as they have this past week or so. But the rallies will continue to higher and higher levels.

We should just start factoring this type of market behavior into our thinking from here on out. It's going to get extremely volatile, which will push our markets into parabolic levels. I suspect money flow to pour back in at some point.

But the question now becomes How long does the exodus last, and how long will the big boys who have left the trade sit on the sidelines?

Jim Sinclair said the other day, “The drop at this time will in retrospect be seen as the foundation for gold trading not at $1,650, but rather at $5,000 an ounce.”

Central banks around the world have become net buyers of gold after two decades of heavy selling pressure. There is not a week that goes by anymore without news of major physical buying of gold or silver by "this country" or "that group".

These are the signs that gold is once again considered the ultimate form of money.

The physical silver market is still extremely tight despite the heavy selling on the paper side, which has severely impacted our market in the short term. But I don’t think this will last long...

Gold and silver are not in a bubble; the U.S. dollar and United States bonds are in a bubble!

For now, precious metal prices have taken it on the chin. But the fight is far from over...

In the end, it will be gold and silver as the last men standing.

So watch carefully as things once again go our way. I don’t think we will have to wait too long.

Good Investing,

Greg McCoach
Analyst, Wealth Daily
Investment Director, Mining Speculator

(http://www.wealthdaily.com/articles/are-silver-prices-collapsing/3083)

Forbes Predicts U.S. Gold Standard Within 5 Years

by Paul Dykewicz

05/11/2011

A return to the gold standard by the United States within the next five years (i.e. 2016!) now seems likely, because that move would help the nation solve a variety of economic, fiscal, and monetary ills, Steve Forbes predicted during an exclusive interview this week with HUMAN EVENTS.

“What seems astonishing today could become conventional wisdom in a short period of time,” Forbes said.

Such a move would help to stabilize the value of the dollar, restore confidence among foreign investors in U.S. government bonds, and discourage reckless federal spending, the media mogul and former presidential candidate said. The United States used gold as the basis for valuing the U.S. dollar successfully for roughly 180 years before President Richard Nixon embarked upon an experiment to end the practice in the 1970s that has contributed to a number of woes that the country is suffering from now, Forbes added.

If the gold standard had been in place in recent years, the value of the U.S. dollar would not have weakened as it has and excessive federal spending would have been curbed, Forbes told HUMAN EVENTS. The constantly changing value of the U.S. dollar leads to marketplace uncertainty and consequently spurs speculation in commodity investing as a hedge against inflation.

The only probable 2012 U.S. presidential candidate who has championed a return to the gold standard so far is Rep. Ron Paul (R.-Tex.). But the idea “makes too much sense” not to gain popularity as the U.S. economy struggles to create jobs, recover from a housing bubble induced by the Federal Reserve’s easy-money policies, stop rising gasoline prices, and restore fiscal responsibility to U.S. government’s budget, Forbes insisted.

With a stable currency, it is “much harder” for governments to borrow excessively, Forbes said. Without lax Federal Reserve System monetary policies that led to the printing of too much money, the housing bubble would not have been nearly as severe, he added.

“When it comes to exchange rates and monetary policy, people often don’t grasp” what is at stake for the economy, Forbes said. By restoring the gold standard, the United States would shift away from “less responsible policies” and toward a stronger dollar and a stronger America, he said. “If the dollar was as good as gold, other countries would want to buy it.”

An encouraging sign for Forbes is that key lawmakers besides Rep. Paul are recognizing that the Fed is straying well beyond its intended role of promoting stable prices and full employment with its monetary policies.

Forbes cited Rep. Paul Ryan (R.-Wis.), who, he believes, understands monetary policy better than most lawmakers and has shown a willingness to ask tough but necessary questions. For example, when Federal Reserve Chairman Ben Bernanke appeared before the House Budget Committee in February, Ryan, who chairs the panel, asked Bernanke bluntly how many jobs the Fed’s quantitative-easing program had helped to create.

Politicians need to “get over” the notion that the Fed can guide the economy with monetary policy. The Fed is like a “bull in a China shop," Forbes said. “It can’t help but knock things down.”

“People know that something is wrong with the dollar," Forbes concluded. "You cannot trash your money without repercussions.”

(http://www.humanevents.com/article.php?id=43439)