Tuesday, December 16, 2008

Death of Deflation and US Dollar. Fed has cut to Zero. GDX, SSRI, SLW, AUY, MGN, SST.v OK.v, BVG.v, MAI.to, TNR.v CZX.v, SBB.v

Deflation is done and US dollar is collapsing, watch the Gold on the move signalling Inflation. Basically now is the time to buy everything what you can just with the name Gold in it. Will COMEX fraud be exposed next after Madoff scam? Short squeeze will be very helpful now to show who was suppressing Gold for years.
Fed Cuts Rate to Zero-0.25%, Will Use All Tools (Update 1)

"By Scott Lanman and Craig Torres
Dec. 16 (Bloomberg) -- The Federal Reserve cut the main U.S. interest rate to “a target range” of between zero and 0.25 percent and said it will do whatever is needed to end the longest recession in a quarter-century and revive credit.
The Fed “will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability,” the Federal Open Market Committee said today in a statement in Washington. “Weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.”

Monday, December 15, 2008

US Dollar Collapse - Downtrend Resumed as positions are taken. GDX, SLW, SSRI, AUY

You can tell it when the people are talking their books: short term rally is over in USD - what is important - the size of their positions. "This time it is different" - the most dangerous words in investing. Back to fundamentals when panic is over, Treasury Bubble is next.
Dec. 15 (Bloomberg) -- The biggest foreign-exchange strategists and investors say the best may be over for the dollar after a four-month, 24 percent rally. ..
...U.S. policy makers are flooding the world with an extra $8.5 trillion through 23 different plans designed to bail out the financial system and pump up the economy. The decline shows that the increased supply of money may be overwhelming investors just as the government steps up debt sales, the trade and budget deficits grow and de-leveraging by investors slows.
“The dollar will go to new lows as the U.S. attacks its currency,” said John Taylor, chairman of New York-based FX Concepts Inc., which manages about $14.5 billion of currencies. ..
...‘Turning Point’
Speculation that the dollar has peaked gained steam last week as the currency plunged 4.9 percent against the euro to $1.3369, its biggest drop since Europe’s common currency was created in 1999. It weakened 1.75 percent versus the yen.
“We’re at a turning point in terms of dollar dynamics,” said Jens Nordvig, a New York-based strategist at Goldman Sachs, the biggest U.S. securities firm to convert to a bank. “The dollar shortage has been addressed and we’ll see people start to focus on other things and those are all dollar negative.” ...
...A survey last month by New York-based Sanford C. Bernstein & Co. found that 63 percent of hedge-fund managers said they are about half done selling securities to reduce their use of borrowed money after financial companies cut back on credit following almost $1 trillion in writedowns and losses since the start of 2007. Twenty-three percent said they were three-quarters finished. ...
...Budget Deficit
Spending to shore up the financial system caused the U.S. government’s budget deficit for the first two months of fiscal 2009 that started in October to balloon to $401.6 billion, the Treasury Department said Dec. 10.
“It’s absolutely going to get worse before it gets better,” said Michael Englund, chief economist at Action Economics LLC in Boulder, Colorado. “We’re looking at a $1 trillion deficit, and that’s before the next stimulus package. If Treasury spends all of TARP, it could be $1.2 trillion to $1.3 trillion.” ...

Sunday, December 14, 2008

Yamana Gold AUY - low cost, Gold, copper and South America.

Silver Standard Resources SSRI - silver is still there and production is close.

Silver Standard Resources SSRI - silver is still there and production is close.

Silver Wheaton SLW - punished for being Silver and Leveraged.

Mines Management MGN - forgotten Treasure.

Bravo Venture Group BVG.v - shine of new discovery.

Orko Silver OK.v - fast to fall, will be fast to come back?

SilverStone Resources SST.V - small brother of Silver Wheaton SLW, Panic Forced Selling is over.

Gold Miners GDX are leading the Rally in Gold and Silver. SSRI, SLW, AUY, ABX

Gold Miners are leading the rally in Gold and Silver. Definite move down in US Dollar is signalling that general Bernanke could stage victory on Deflation and Inflation will be back onto Bubble Vision reports sooner then a lot of people think. Collapse of Treasury Bubble will put sector of Gold Miners on fire with double leverage of rising gold prises and positive equities rebalancing from Fixed Income.

Silver Breaks Up and is staging its come back. SLV, SSRI, SLW, SST.v, OK.v, MGN, SBB.v

Silver is waiting for Gold to make its definite move above MA 200 before breaking Up resistance at 11 and 12. It is the place where Rock-n-Roll will be back.

Gold Cup and Handle Bullish formation indicates potential short squeeze. GDL, AUY, ABX, GDX, BVG.v, RMK.v

Gold Cup and Handle Bullish formation indicates potential short squeeze. With VIX Fear index going down all 8.5 trillion commitments made by FED and Treasury are weighting heavily on US Dollar, once gravity brings waterfall back Gold will fly indicating Victory of general Bernanke on Dark Force of Deflation and US Dollar - not by accident, but as an instrument of last resort.

General market Dow DIA rally is waiting Auto Bailout Acceleration. FXI, EWZ, GDX

General market Dow DIA rally is waiting Auto Bailout Acceleration. Bad news are not working for a while now. Fear is fading, US Dollar is going down signaling Inflation, FED cut and auto bailout will ignite rally for a couple of months. We expect Gold, Silver and Commodities to decouple from financials finally by the end of this move Up.

US Dollar collapse is back into waterfall mode with 8.5 trillion liquidity commitments. GDX, HUI, XAU, SLW, SSRI, AUY, ABX, SST.v, OK.v, TNR.v, BVG.v

Double Top reversal in short term counter trend rally is confirmed now, US Dollar will resume its trending down into Inflation scenario with big help of FED and its Devaluation Quantitative Easing policy. time is to make money again in Gold, Silver and Commodities.

VIX Fear Index: panic is fading, Greed is coming back. DIA, FXI, EWZ, GDX, USD, DXY

Auto bailout will bring Fear index VIX under 50 when fundamentals will start to be in relevance again. first victim will be US Dollar and its "safe heaven" play.

US Dollar "Safe Heaven" is on Fire and Gold Short Squeeze is around the coner? GDX, AUY, SSRi, SLW

"Comex said warning brokers about December gold squeeze
Submitted by cpowell on Sat, 2008-12-13 04:11. Section:
From "Midas" Commentaryby Bill MurphyLeMetropoleCafe.comFriday, December 12, 2008
I received a call this morning from a commodities broker who told me that the Comex is alerting various futures firms about the potential of a squeeze on the December contract and is advising the $840 December shorts to exit their positions. That is the remaining open position.
There have been 12,636 notices of delivery. The shorts have until December 31 to make delivery. Normally they deliver early to take in cash and earn the interest. They must be delaying. As I understand the situation, that represents about 40 percent of the gold available at the Comex, and of course someone could enter the scene late, buy February gold, and then spread into December, which would stun the shorts.
My broker friend said his back office said this sort of alert is highly unusual and that the concern is real, not only for gold, but for other commodities too, like copper and palladium, as there is a good deal of talk of taking deliveries there too. But gold is the one for which the advice to cover went out.
This is an extremely productive development and could spur the price of gold up quickly as word spreads. As we all know, buying Comex gold and silver (the cheapest way to buy precious metals) makes all the sense in the world in this financial environment."

US Dollar - Jim Rogers using rally to exit dollar assets GDX, HUI, XAU, GDL, SVL, SSRI, AUY, SLW, MGN

Jim Rogers using rally to exit dollar assets

By Vivianne Rodrigues
NEW YORK (Reuters) - Investor Jim Rogers said on Thursday he has been using the sharp rally in the U.S. dollar as an opportunity to exit assets denominated in the U.S. currency.
Rogers told the Reuters Investment Outlook Summit 2009 in New York that the rally -- which has pushed the greenback up about 20 percent since July -- is a reversal of a "gigantic short position" accumulated over several years and not a result of a fundamental bet. He added the U.S. currency is likely to weaken sharply again.
"I plan to get out of all of my U.S. dollars at some time throughout this rally," he said. "The dollar is a terribly flawed currency, and perhaps a doomed currency."

Saturday, December 13, 2008

US Dollar and Gold: Goldman raises gold and silver forecasts on anticipated dollar weakening GS, TLT, GDX, AUY, SSRI, SLW

Goldman is not as aggressive in Gold price expectations as JP Morgan or Citi (with its potential 2000 USD level), but it is very important for two reasons:
1. Their guy is running the show.
2. Their bearish stance on the oil.
US Dollar finally broken down from Deflation Threat into Inflation down trend again:

Goldman raises gold and silver forecasts on anticipated dollar weakening
Goldman Sachs is raising its gold and silver price forecasts in line with its economists' expectations on weaker dollar outlook and as havens from risk.Posted: Friday , 12 Dec 2008
LONDON (Reuters) -
Goldman Sachs (GS.N) said it is raising its near-term gold and silver forecasts on expectations for a weaker dollar, and as interest in the precious metal as a haven from risk continues to underpin prices.
The bank said it has raised its three-month gold forecast to $700 an ounce from $690, its six-month price view to $785 from $730 and its 12-month forecast to $795 from $710.
It sees silver at $10.04 an ounce in three months, up from a previous forecast of $9.90, at $11.08 an ounce in six months, against $10.30, and at $10.30 in 12 months, against $9.20.
"We are raising our gold price forecasts in line with Goldman Sachs economists' currency revisions toward a weaker U.S. dollar outlook," the bank said in a research note.
"We have long held that gold trades inversely with the U.S. dollar, which historically has explained over 90 percent of gold price movements," it said.
Gold, which is often bought as a currency hedge, often benefits from weakness in the dollar.
The current turmoil in the financial markets and worries over the outlook for the global economy are also likely to boost the precious metals' appeal as a haven from risk, Goldmans added.
"We believe that the pervasive negative sentiment surrounding most financial assets may continue to support gold prices at the margin," it said.
Spot gold was quoted at $817.20/819.20 an ounce at 0925 GMT, while silver was at $10.19/10.27 an ounce. (Reporting by Jan Harvey; Editing by James Jukwey)

Wednesday, December 10, 2008

Treasury Bubble Monitor - Pimco’s Bill Gross Says Treasury Market Is Overvalued TLT, TYX, TNX, FVX, GDX,

Is there any free press any more? after half an hour Title and article has been changed to "Pimco’s Bill Gross Regrets Not Buying Treasuries Amid Rally". How long can they fool around with US Dollar and last Bubble to burst?
"By Kathleen Hays and Michael J. Moore
Dec. 10 (Bloomberg) -- Bill Gross, manager of the world’s biggest bond fund, says he regrets not buying Treasuries in what is shaping up to be the best year for U.S. government debt since 2000.
“If we had our druthers, if we went back 12 months and we had known then what we know now, it would have been all invested in Treasuries,” Pacific Investment Management Co.’s Gross said in a Bloomberg Television interview from Newport Beach, California. “The question going forward is ‘Is it the winner over the next 12 to 24 months?’ We don’t think so.”
Gross’ $129.5 billion Total Return Fund lost 2.1 percent in the three months through Sept. 30, compared with a 0.49 percent slump by the benchmark it uses to measure performance, according to Pimco’s Web site. Mortgage securities and investment-grade corporate debt accounted for 93 percent of its holdings. The Total Return Fund has not held Treasuries since last December.
Treasuries of all maturities have returned 11.9 percent this year, according to Merrill Lynch & Co.’s U.S. Treasury Master Index, the best performance since the securities gained 13 percent in 2000.
Gross said he continues to invest in corporate debt that is backed by the U.S. government, including the debt of American Express Co. and Sallie Mae Inc. The 64-year-old money manager also said Treasury Inflation Protected Securities represent “one of the best values” for investors seeking high-quality debt “once this delevering process winds down.”
‘Bubble Characteristics’
“Treasuries have some bubble characteristics, certainly the Treasury bill does,” Gross said. “A Treasury bill at zero percent is overvalued. Who could argue with that in terms of the return relative to the risk? There is no return.”
The Treasury sold $30 billion of four-week bills yesterday through an auction at zero percent, while three-month bill rates turned negative for the first time since the U.S. began selling the debt in 1929.
Gross expects the Federal Reserve to cut its target rate to 0.5 percent when policy makers meet next week and will likely signal that interest rates will remain low for a “considerable” period of time.
“There’s some risk” for the dollar to weaken, said Gross. “Certainly the government and the Fed cannot continue to talk about trillions of dollars of expansion of the Fed’s balance sheet without the risk of the dollar going south. It is fair to say other economies are doing much the same thing. The dollar doesn’t have to go south if all the economies reflate at the same time.”
Pimco, a unit of Munich-based Allianz SE, has about $790 billion in assets under management. The Total Return fund has gained 4.63 percent over the last five years, ranking it among the top one percent of all comparable funds, according to Bloomberg data.
To contact the reporters on this story: Kathleen Hays in New York at khays4@bloomberg.net; Michael J. Moore in New York at mmoore55@bloomberg.net. Last Updated: December 10, 2008 15:50 EST"

Sunday, December 07, 2008

The manipulation of Gold Prices. GDX, GDL



Could anyone be better for Gold and Commodities then Mr Obama? GDX, TNR.v, CZX.v

Obama to focus on stimulus not deficit

"By Daniel Dombey in Washington
Published: December 7 2008 15:54 Last updated: December 7 2008 18:47
Barack Obama on Sunday spelled out his plans for the biggest infrastructure investment in the US for half a century. The president-elect argued that with the economy reeling, his incoming administration could not afford to worry about a spiralling budget deficit.
Mr Obama’s proposals for government works on roads, bridges, internet broadband and school buildings, together with energy efficiency measures and health spending, are far more detailed than the normal announcements during a time of transition."

Gold Miners GDX is ready for a break Up. GDX, ABX, SSRI, SLW, MGN, TNR.v, SST.v, OK.v, BVG.v

Fear VIX down, Market DOW Up, US Dollar Down, Gold Up. Gold Miners double up on rising Gold and Market. Very important move should overtake MA50 again.

Treasury Bubble TLT first signs of getting out of fashion. GDX, SSRI, SLW, ABX, AUY

The best assets allocators - Bond players are getting nervous with recent parabolic rise. QE has brought some fire trying to sell at lowest price all those IOU in Treasuries to lemmings which will be spared by coming Inflation.

US Dollar DXY is close to Break down. GDX, AUY, SSRI, SLW, MGN

US Dollar is a hostage of General Bernanke, fighting the sacred war against Deflation. Something has to give and poor fellow will lose its "safe heaven" glamour now with back up from 8.5 trillion bailouts commitments. Fear VIX is going down, market DOW DIA is ready for a party, who will buy Treasuries below 2.5% for 10 years apart from the FED in QE? After BOE and ECB done with rates cut for a while US Dollar is on its own in the cold. Gold's eratic moves are tired of manipulation and you can not get any physical on a normal human being level in coins. General Bernanke is busy to devalue the dollar and Gold will be his friend from now, showing signs of life in so welcome inflation.

Dow DIA is at the Break Out point short term. DIA, SPY, QQQQ, GDX.

Market is ready for a short term rally. H&S reversal is forming up and Dow has managed to close above the downtrend line. Strong move up above 50 MA will bring more buying. Bailout of auto could be the next catalyst.

Fear and Panic VIX is going Down. FXI, EWZ, GDX, AUY, SSRI, SLW

Have you noticed recently that all news are awful, but market is turning around on the worst news and closing Up? Shorts are afraid to keep positions over the weekend. Before they waited for a bad news, now another QE programme could blow them up in a new found Bull in worthless currency in the end. Rally is in the making for a short term in markets.

Wednesday, December 03, 2008

China to Buy raw Commodities. FXI, EWZ, GDX, AUY, TNR.v, CZX.v

More and more talk on Buying into hard assets, when will they materialise? Does Chinese smell treasury Bubble and busy to get out before it will go Bust? Clever way of thinking we can be assured that World Growth in a good hands. Secure Raw Commodities Supply for its Growth by buying companies in the sector and outright commodities at these levels will be very profitable in next Inflation phase of "recovery".
"SANYA - The Chinese government is considering buying all types of base metals as reserves to help boost domestic demand, Wen Xianjun, vice chairperson of state-funded China Nonferrous Metals Industry Association, said on Wednesday.
Previously Wen had told Reuters that China could buy up stocks of aluminium to help struggling smelters. But the central government may cast the net much wider.
"All base metals are being considered," he told reporters on the sidelines of a conference in Sanya on China's Hainan Island.
China's metals sector has been hit hard by a slump in demand, which has caused stocks to build up and prices to plummet, forcing many to suspend part of their production.
The government, keen to offset the impact of a residential housing crisis and the global financial turmoil, has announced a $586-billion stimulus package to revive the economy.
Officials have said they plan to buy up stocks of resources and materials to shore up prices and the government has already begun buying up grains and soybean to support farmers, but it has yet to reveal its ambitions to build state metals reserves.
Earlier this week, Yunnan province, a major base metals production region in southwestern China, broke ranks by saying it planned to buy up 1 million tonnes of metals, ores and semi-finished products to support local industry.
Neighbouring Guangxi may follow suit.
But one China economist sounded a sceptical note about the idea of the government hoovering up metals stocks.
"It's hard to believe why the government would want to buy up all that stock. The question I have to ask is for what purposes? To help enterprises?" said Wensheng Peng, economist at Barclays Capital in Hong Kong.
"There are better ways to do that, by giving those firms money for example. Given the current low prices, it makes sense to build strategic stocks. There is a lot of confusion about the potential stockpile builds. More clarity and details are needed."
Zhang Liqun, director of Financial Research Institute of the Development Research Center at the State Council, the cabinet, said buying metals reserves would ease pressure on smelters that were struggling with weak domestic demand and low prices.
"Considering its impact on jobs, buying reserves can be considered," Zhang told the conference in Sanya.
Weak demand has driven up aluminium stocks in China. About 1,1-million tons of aluminium are estimated to be sitting at warehouses and smelters' yards versus about 1-million tons in late November, industry sources at the conference said.
The key Shanghai aluminium futures contract hit a new 15-year low on Wednesday, after state-owned research group Antaike predicted domestic demand growth for aluminium would slow to 3% next year from 8,5% this year.
Wen said Chinese banks should buy aluminium as an investment due to the low price, adding that he believed production costs would be higher than current metal prices within three to five years.
"If I was a banker and I had money, I would buy aluminium now," Wen said."

Treasury Bubble Collapse Monitor. GDX, AUY, ABX, SSRI, SLW, HUI, XAU

This chart of TLT 20+ year Treasury Bond Fund is telling a lot about state of the Next Mother of Bubbles to burst. Until November 17, 2008 prices were making lower highs in normal market conditions when initial panic was diminishing and people reallocated to equity on the dips. Something powerful happen on November 17th, 2008 and price went parabolic breaking out Upside. That something is Quantitative Easing when FED start to buy Treasuries and expending monetary base (printing money) to fight deflation. Nobody knows for sure when this Bubble will burst, but with this magnitude of parabolic rise this time is closer then a lot of people would like to think. Bubble Media spin is that money is piling now into Treasuries "anticipating" QE, we dare to claim that this rise was manipulated by QE and all those piling in are lemmings to be crashed off the cliff. What will be the pivotal point of explosion? We are monitoring price of Gold for guidance.

Stocks to Rise in ’09, UBS Says; S&P 500 May Gain 53% FXI, EWZ, GDX

I will not take it without the grain of salt, 33 year old analysts could be very wise, but what has he seen in this life? I will not touch financials, but they could lead the rally in Commodities and hard assets. Treasury Bubble could be apparent very soon with this kind of parabolic advance expecting quantitative Easing to bring yield further down. This is The Mother of Musical Chairs Game!
Dec. 3 (Bloomberg) -- Global stocks will withstand a “full-blown” recession and surge in 2009 as cheap valuations and efforts by governments to restore confidence in the financial system lure investors back to equities, UBS AG said.
The Standard & Poor’s 500 Index, which tumbled 42 percent to 848.81 this year, may rally 53 percent to 1,300 by the end of 2009, David Bianco wrote in a note dated yesterday. The New York-based strategist, who a year ago predicted a 2008 advance of 16 percent for the S&P 500, is now forecasting a gain that would exceed the index’s best annual performance on record.
The U.K.’s FTSE 100 Index may increase 41 percent from yesterday’s close to 5,800 in 2009, while the FTSEurofirst 300 Index may climb 25 percent from current levels, Zurich-based UBS said in separate notes.
“The consensus outlook for 2009 is a full year of gloom,” Bianco, 33, wrote in his 2009 market outlook. “We believe 2009 will bring signs of a dawn in confidence with the first faint light appearing earlier than most investors expect.”
The S&P 500 climbed 13 percent from an 11-year low on Nov. 20 as the government agreed to protect New York-based Citigroup Inc. from further losses and the Federal Reserve stepped up efforts to unfreeze credit markets. This year’s slump gives investors a chance to buy the biggest “growth” stocks in the S&P 500 at “deep discounts to intrinsic value,” according to Bianco, who recommends energy, technology and industrial shares.
Cheaper Valuations
The benchmark for U.S. equities is valued at 11.3 times the estimated earnings of its 500 companies, data compiled by Bloomberg show. The S&P 500 on average over the past five years has traded at 19.5 times the reported profit of its companies.
The U.K.’s FTSE 100, which is currently valued at 7.4 times profit, may climb to 5,800 next year, based on a price-earnings multiple of 13, strategist Gareth Evans wrote in a separate note. Price-earnings valuations may climb to lift the FTSEurofirst 300 Index 25 percent from current levels, a team of London-based strategists led by Nick Nelson forecast.
European per-share earnings will still tumble 25 percent as the euro-zone economy contracts 0.9 percent, they said.
“The macroeconomic and corporate profit outlook for 2009 is horrible,” Nelson’s team wrote. “But share prices have moved well ahead of this and are now pricing in a multi-year recession/depression.”
The brokerage also forecast gains for Latin American markets and recommended Brazilian equities.
To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net.

Monday, December 01, 2008

US dollar faces hard landing risk in 2009 -UN report GDX, GDL, SVL, AUY, SSRI, SLW

NEW YORK, Dec 1 (Reuters) - The recent strength of the U.S. dollar is expected to be temporary and the greenback remains at risk of a hard landing, which could drag down the U.S. economy and pull the global economy deeper into recession, a U.N. report said.
Extreme risk aversion, a tumble in oil and other commodity prices, combined with the spread of the financial crisis caused a "massive" move of financial assets worldwide into U.S. Treasury bills, driving yields closer to zero and pushing the dollar sharply higher, the U.N. said in its World Economic Situation and Prospects 2009 report.
An advance copy of the report was released at a development conference in Doha on Monday.
U.N. economists warned, however, that the current situation is pushing the external indebtedness of the United States to new heights, which could precipitate a renewed slide of the dollar once the deceleration process ends.
"Consequently, the disorderly adjustment of the global imbalances and a hard landing of the dollar remain major downside risks to the global economy, as an accelerated fall of the dollar could cause renewed turmoil in financial markets," the report said.
"Investors might renew their flight to safety, though this time away from dollar-denominated assets, thereby forcing the United States economy into a hard landing and pulling the global economy into a deeper recession," the report added.
Since the deepening of the financial crisis in mid-September, the U.S. dollar rose more than 12 percent against a basket of six major currencies .DXY. At the same time, the euro weakened about 14 percent to trade around $1.26 in New York on Monday.
In the report, U.N. economists also said world economic growth will slow to 1 percent in 2009 from 2.5 percent this year. Global economy may even contract if stimulus packages prove too little too late, the report said. (Reporting by Vivianne Rodrigues; Editing by Leslie Adler)

USA is in Recession from 2007.

We were talking about recession for a while here from last year. It does not mean much, just maybe we have a chance to be right one more time on US Dollar and Gold. Another thing could be that Reinflated recovery in worthless dollar term could be closer then a lot of people think and Market bottom could very well already happen.
"It's official: Recession since Dec. '07
The National Bureau of Economic Research declares what most Americans already knew: the downturn has been going on for some time.
NEW YORK (CNNMoney.com) -- The National Bureau of Economic Research said Monday that the U.S. has been in a recession since December 2007, making official what most Americans have already believed about the state of the economy .
The NBER is a private group of leading economists charged with dating the start and end of economic downturns. It typically takes a long time after the start of a recession to declare its start because of the need to look at final readings of various economic measures.
The NBER said that the deterioration in the labor market throughout 2008 was one key reason why it decided to state that the recession began last year."

Conundrum of Rising US Dollar, Falling Treasury Yields and rising Prise for protection from US Default. GDX, HUI, XAU

Last time Sir Greenspan used the word "conundrum" all Hell broke lose within couple of months. We have very interesting development today: US Dollar is up testing recent Break Down line, Treasury Yields are down with sell off in the market, But insurance price on US Defaults is at all time high! Quantitative easing at its best: FED is buying Treasuries like there is no tomorrow, but commercials in the market are well aware about the consequences.
"LONDON, Sept 24 (Reuters) - The cost of insuring 10-year U.S. government debt against default rose to a record high on Wednesday as investors fretted over the feasibility of the government's $700 billion plan to contain the financial crisis.
Credit default swaps on 10-year Treasury debt expanded to 29.2 basis points -- its widest ever -- from 26.5 basis points on Tuesday, according to CMA, a specialised data provider.
CMA said CDS on five-year widened to 22.0 basis points from 20.5 basis points. (Reporting by Emelia Sithole-Matarise"

JP Morgan is bullish on Gold and Copper. GDX, AUY, TNR.v

We better listen to these guys, known for their Gold selling, hedging and Derivative positions.


Sunday, November 30, 2008

General Bernanke, Deflation, Choppers and US Dollar Falling from the sky. GDX, GDL, SVL, AUY, SSRI, ABX, SLW, MGN

General Bernanke has declared The War and this war is not against Terror to distract the subjects and profit from it, but against the Almighty US Dollar. Fight will be brutal and no prisoners will be taken. We Commonsense soldiers at this blog, our Gold and Silver positions are strongly supporting him and warning everybody not to fight the FED!
If you were following our analyses about Quatitative Ease phase we have entered now, in order to understand philosophy behind it and what it means to US Dollar value listen to The Guy himself:
Remarks by Governor Ben S. BernankeBefore the National Economists Club, Washington, D.C.November 21, 2002
Deflation: Making Sure "It" Doesn't Happen Here
Since World War II, inflation--the apparently inexorable rise in the prices of goods and services--has been the bane of central bankers. Economists of various stripes have argued that inflation is the inevitable result of (pick your favorite) the abandonment of metallic monetary standards, a lack of fiscal discipline, shocks to the price of oil and other commodities, struggles over the distribution of income, excessive money creation, self-confirming inflation expectations, an "inflation bias" in the policies of central banks, and still others. Despite widespread "inflation pessimism," however, during the 1980s and 1990s most industrial-country central banks were able to cage, if not entirely tame, the inflation dragon. Although a number of factors converged to make this happy outcome possible, an essential element was the heightened understanding by central bankers and, equally as important, by political leaders and the public at large of the very high costs of allowing the economy to stray too far from price stability...
...Curing Deflation.
Let me start with some general observations about monetary policy at the zero bound, sweeping under the rug for the moment some technical and operational issues.
As I have mentioned, some observers have concluded that when the central bank's policy rate falls to zero--its practical minimum--monetary policy loses its ability to further stimulate aggregate demand and the economy. At a broad conceptual level, and in my view in practice as well, this conclusion is clearly mistaken. Indeed, under a fiat (that is, paper) money system, a government (in practice, the central bank in cooperation with other agencies) should always be able to generate increased nominal spending and inflation, even when the short-term nominal interest rate is at zero.
The conclusion that deflation is always reversible under a fiat money system follows from basic economic reasoning. A little parable may prove useful: Today an ounce of gold sells for $300, more or less. Now suppose that a modern alchemist solves his subject's oldest problem by finding a way to produce unlimited amounts of new gold at essentially no cost. Moreover, his invention is widely publicized and scientifically verified, and he announces his intention to begin massive production of gold within days. What would happen to the price of gold? Presumably, the potentially unlimited supply of cheap gold would cause the market price of gold to plummet. Indeed, if the market for gold is to any degree efficient, the price of gold would collapse immediately after the announcement of the invention, before the alchemist had produced and marketed a single ounce of yellow metal.
What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation...

Russia and Venezuela ditch US Dollar, is it The Begining of the End of Reserve currency of choice.? GDX, ABX, AUY, SSRI, SLW, MGN

So far run from the US dollar was marginal, but everybody should understand that in places like Russia or China intention means order if told by the right person. Now we have Venezuela and Russia, before Russia and China were discussing to put trade beween them in local currencies. Small scale for sure before China will confirm it, but what about all those move out of US Dollar reserves? What will happen if Russia will switch to Euro in its Gas trade with Europe?
"Russia and Venezuela agreed upon using their national currencies - Russian rubles and Venezuelan bolivars - as the main currencies for businesses between the two countries. During last meetings of the officials, it was also discussed the creation of financial reserves in national currencies. This was communicated by the President of Russian Federation Dmitri Medvedev on a press-conference in Caracas, after a meeting with the President of Venezuela, Ugo Chavez.Medvedev also stated that military and technical partnership between the two countries is not to be treated as a potential threat to other countries.The Russian President said that if it would be beneficial to the development of Latin American countries and if it would not be in conflict with the concept of world's multipolarity there were chances that Russia would participate at the Bolivarian Alternative for the Americas (ALBA) as an associative member or in any other possible way.In addition Medvedev said that Chavez' idea that the OPEC countries should try to achieve the goal of setting the prices for oil to $80-$100/barrel. Medvedev expressed his concern about the low oil prices, though he stated that he would like oil prices to be 'neither too low, nor too high'.It should be mentioned that on 25 November, Chavez stated that low oil prices 'are not tragic for Venezuela'. On the other hand the experts' prognosis was that low oil prices could dramatically impact the economy of this country, as about 50% of Venezuela's revenue comes from oil exports. //11.29.08

China is all Doom and Gloom, decoupling is dead, time is to Buy! CZX.v, TNR.v, GDX, AUY, SSRI, SLW, MGN

Now we have all commodities priced to perfection - End the World perfection, but what will happen if decoupling is not dead and China will make it? Anything in expansion above 8 percent will be total surprise to the Wall Street Doom Sayers. All trillions pumped into the system will find its way out into the Supply/Demand situation for resources. With continued Demand, Supply side will be not able to deliver if commodities will stay at this level: it is self correcting situation. Production is cut, mines are closing, nobody drilling any more. Where China will take the goods? In emerging markets like south America and in old Canada and Australia as well. Just check the news on China building influence over South America and Africa. reaction in Gold, Silver and Base metals will be very interesting this week after recent announcements from China.
"Nov. 30 (Bloomberg) -- China’s economy may grow 10 percent next year as the “huge” potential of domestic consumption and investments counters the impact of a global slowdown, a State Council researcher said.
The “vast development potential” of the world’s most- populous nation will ensure a fast rate of expansion in 2009, said Zhang Liqun, a researcher with the Cabinet’s Development Research Center, according to the official Xinhua News Agency. “Domestic enterprises need to accelerate the pace in upgrading their business structures to better cope with a severe world economic situation.”

Saturday, November 29, 2008

Price of Bailouts - US Dollar collapse. Jim Sinclair has nailed it.

Rignt on the money on bouth counts: US Dollar and Naked Short Selling:

"Dear CIGAs,
$8.5 trillion is unthinkable in terms of paying back the depreciated value of financial and non financial business entity portfolios. Assume someone came to your door and asked you how your investments were going. When you explain to that person that a bad man in Toronto organized a group of really nasty people named hedge funds to naked short your shares and as a result you have lost 90% of your retirement fund, that person hands you a check to cover your loss.
Would you then characterize the money from that check as neutralized funds only filling a black hole in your balance sheet having no real economic impact on you?
That opinion, held by many, is so academic. The idea that $8.5 means nothing because it fills some black hole of losses is "form" over "substance" and simply too academic to believe. This is $8.5 trillion!
Now with that thought in mind contemplate $8.5 trillion dollars (for starters) before President Elect Obama’s fiscal stimulation for the creation of 2.5 million jobs, then a condition called, "Out of Control."

Gold Miners GDX are confirming Gold move to the Upside. GDX, HUI, XAU, AUY, ABX, SSRI, SLW

It is very important that recent break out to the upside in Gold price is confirmed by move Up in Gold Miners GDX, HUI, XAU. Chart is looking very strong: MA50 was overtaken on one breath. Rising appetite for equities is multiplied here with rising Gold price. Sector is so small, all miners GDX cap being around One Hundred Billion dollars, that money inflow could quickly bring it back above MA 200 when Technicals will confirm Bull is alive in this market.

Silver is following Gold into Break out to the upside. SSRI, SLW, MGN, SST.v, OK.v, SBB.v, RVM.v, FVI.v

Silver was thrown in the towel in recent markets collapse, ratio Gold to Silver is at multi year High, you can not buy any physical in meaningful amount at spot price. Planes from London are literally flying Silver into India. Gold is a Call on Inflation and debasing US Dollar in QE, Silver is a Call on rising Gold. Coming move in Silver will be explosive if Gold will close above MA200.

Gold is in Break out above MA50. GDX, AUY, ABX

Should US Dollar confirm its breakdown as we discussed before, Gold will have a rally above MA200 which will bring new confirmation that this Bull is very much alive. Auto bailout, Obama's stimulus plan and any confirmation about Chinese buying gold will send it to new highs.

US Dollar is breaking down by Quantitative Easing. GDX, AUY, SSRI, SLW

US Dollar is name of the game now. Inflation is the most desired outcome for the FED. Deflation death spiral with self reinforcing margin calls selling and US Dollar going higher is the lost decade Japan style. We have near Zero rate policy, more then 7 trillion dollars allocated to bailouts, coming auto bailout and Obama's stimulus plan. Slogan of the day is Reinflate and save economy and we will deal with Budget at later stage. On US Dollar Supply side we have almost 2 trillion deficit next year to be financed by Debt sales, ballooning FED balance sheet with low quality assets nobody wants and Quantitative Easing when FED is issuing new money by way of buying Treasuries and other Debt instruments. Expending monetary base is Inflation. QE in recession when products and services GDP are going down in value means more money are chasing less goods - money US Dollar is losing its value. Weaker dollar is stimulating export, inflating out debts. QE is reducing rates for mortgages supporting consumer and its ability to spend.
On Demand side for US Dollars we have a bleak picture: with diminishing panic "safe heaven" status is losing its appeal. With fall in Oil and other commodities prices Middle East, Brasil and Russia do not have spare dollars to spend on treasuries any more. Slow growth of export in China is putting breaks on its ability to increase its holdings of US Debt. But the most important are recently announced three developments which are indicating about tectonic shift in China's desire to Held US Dollars instruments as reserves:
1. Chinese stimulus plan which means that reserves which are held so far mostly in US Dollars will be spend on Infrastructure developments and creating Internal Demand for goods and services. It means buying less or even selling treasuries.
2. Diversification of reserves into Gold to buy almost one year worth of world Gold production. It means selling treasuries. Please note important coincedence: China rumored about Buying Gold and QE started to be apparent with CitiGroup bailout. Treasury is desperate to bring yields as low as possible to be able to sell treasuries to finance this year deficit before Chinese structural shifts will be apparent to the market and put pressure on dollar and bring rising Yields in bursting Treasury Bubble.
3. Very important recent development when China announces about possibility to buy base metals as state reserves. This is what we need to bring inflation back - put a solid floor under commodities prices. Chinese do realise that QE is in a full play now and what it means in the medium term 3-5 years: much higher prices for commodities. They need to secure Supply of commodities to make its stimulus plan work. They need to prevent further supply distraction with falling prices when mines are shut and projects are put on the shelves which means even higher prices for China in the future. It means selling treasuries again and investing in Hard Assets.
You can read on QE and Gold relationship during Japan reinflation efforts here.

Fear VIX is going down, Panic is out of picture for a while. DIA, SPY, QQQQ, TSE, CDNX, USD, GDX

Fear Index VIX is making definite break down from recent highs, panic is subsiding and Greed and chasing performance is coming back. Distorted picture of Value with Panic and Forced liquidation is changing to fundamentals and value in solid assets with clear Demand and Supply economics.

Dow DIA stages agressive rally after recent collapse. SPY, QQQQ

After CitiGroup C bailout Fear VIX has diminished and is on track to subside and be taken over by Greed and chasing performance. Bubble in treasuries is reinforced by Quantitative Easing when money are printed and FED is buying Treasuries and other debt instruments. Rebalancing is pushing funds to sell low Yielding Treasuries and buy Equities after recent collapse. Bailout of autos GM and F in any form will bring more fuel to this rally. Like we have discussed shorts were served Fried this week.

Canada stocks - money are coming back into commodities. GDX, FXI, EWZ

Rising gold, China stimulus and risk appetite are moving Canada into Rally from recent low. Record low yield on Treasuries are pushing money into chasing performance again. Recent announcement about China stockpiling commodities on Friday coincide with 5.9% in index and move above 50 MA.

Friday, November 28, 2008

Gold rises; monthly gain biggest since 1999 GDX, AUY

With all this volatility and Gloom and Doom everywhere so easy to forget the big picture: Gold is up during the November 61 dollars or 8.1% to 816.3 and what is more important up year on year 2%. Has Gold overcome finally spell of Forced Selling - we will check the charts later.

NEW YORK (MarketWatch) -- Gold futures edged higher Friday in light trading following the Thanksgiving Day holiday, rising for a fourth straight week and ending the month with their biggest monthly gain in nine years.
Gold for December delivery rose $7.70, or 1%, to close at $816.20 an ounce on the Comex division of the New York Mercantile Exchange. It rose 3.1% this week. In the month, gold advanced 14%, the biggest percentage gain since September 1999.
November's gain followed gold's slump in the previous month. The metal fell 18% in October, the biggest monthly loss since February, 1983.
Gold rose "on safe-haven demand and on the likelihood of further dollar declines with further reductions in U.S. and international interest rates," said Mark O'Byrne, executive director at Gold and Silver Investments.
In gold spot trading, the London gold-fixing price -- used as a benchmark for gold for immediate delivery -- stood at $814.50 an ounce Friday afternoon, up 50 cents from Thursday afternoon.
Holdings in the SPDR Gold Trust, the largest gold exchange-traded fund, stood at 755.06 tons on Tuesday, unchanged for a third day, according to the latest data from the fund. The SPDR Gold GLD 80.31, -0.07, -0.1%) rose 0.3% to $80.61."

China looks at buying metals for reserves-sources FXI, EWZ, GDX, AUY, SSRI, SLW, TNR.v, CZX.v

Clever, clever guys are buying Gold and now Base metals for reserves. All those Trillions from bailout are going to spill over into the world making US Dollar worthless and igniting new chase for Value and Resources for sustained growth.
HONG KONG, Nov 28 (Reuters) - China is looking at buying base metals as state or commercial reserves to take advantage of the lowest prices for years and bolster weak demand, industry sources said on Friday. They said Beijing may be considering at least two proposals -- one for all base metals and another just for copper and aluminium. The metals could be purchased by the State Reserve Bureau (SRB) or commercial entities controlled by the government."The proposal was for all base metals," an analyst at a state research unit said, without giving details.But a senior executive at a large aluminium smelter said the Ministry of Industry and Information Technology had proposed the government increase state copper and aluminium reserves. He did not provide proposed tonnages or timing.A sales manager at an aluminium smelter said he had heard that the proposal advocated the government use 20-30 billion yuan ($2.93 billion-$4.39 billion) to buy up base metals for its reserves.If it goes ahead with purchases, the world's top consumer of copper and aluminium could end up importing more refined copper and nickel and cutting into domestic stocks of aluminium, lead, zinc and tin.Prices of base metals have slumped since July on weakening demand, with the losses accelerating over the past few weeks due to the global economic crisis and China's own slowdown, forcing metals smelters to slow production and cut jobs.Beijing, keen to help strengthen smelters as it looks to bolster the economy, is changing a long-established policy of restricting expansion in the resource-intensive metals industry.China's cabinet, the State Council, is planning to step up purchases of important materials and resources for its state and commercial reserves, the government said in a statement this week, without specifying."I think there is a good chance that the SRB will buy copper, given the current price ratios between the LME and Shanghai, and low domestic stocks," said Liang Zhigang, analyst at Minmetals StarFutures in Shenzhen.He said the SRB might buy at least 400,000 tonnes, about one month's consumption in China, as the first step, if the government approved the stock-building plan.That amount of copper would cost China $1.464 billion at Friday's prices.Industry sources said they had not seen signs of SRB buying copper in the domestic market, while aluminium reserve purchases could come soon.The buying of aluminium reserves may have been approved by the government, which would benefit Chinalco, the parent of Aluminum Corp of China Ltd, China's top producer, industry sources said on Friday.The government might ask state-owned investment arms to buy up to 1 million tonnes of aluminium from state-owned smelters between December and June next year in stages, a smelter source said.Analysts and industry sources said purchases could push up copper prices, while aluminium prices could have a short-lived rise, given the huge stocks in the domestic market and China's persistent surplus.China's merchants and smelters, including state-owned Chinalco, held a total of more than 1 million tonnes of aluminium at warehouses and smelters' yards, about one month's output.Last week, Wen Xianjun, head of the aluminium division at the state-funded China Nonferrous Metals Industry Association, also told Reuters the industry body had suggested the government buy aluminium for the state reserves.

Thursday, November 27, 2008

US Dollar is a chosen victim of bailouts. GDX, AUY, SSRI, SLW

You do not need any enemies with such friends as Hank and Ben. Quantitative Easing is the name of the game now and US Dollar will suffer like a Yen during the same medicine in Japan. But it is the only medicine to by some time and get out of Deflation spiral, Inflation is the answer to all debts to be fading away with value of money.

"U.S. Details $800 Billion Loan Plans

"WASHINGTON — The Federal Reserve and the Treasury announced $800 billion in new lending programs on Tuesday, sending a message that they would print as much money as needed to revive the nation’s crippled banking system...

...In the last year, the government has assumed about $7.8 trillion in direct and indirect financial obligations. That is equal to about half the size of the nation’s entire economy and far eclipses the $700 billion that Congress authorized for the Treasury’s financial rescue plan. ...

...The long-term risks are enormous but difficult to estimate. They begin with the danger of a new surge of inflation, at least after the economy comes out of its current downturn. Beyond that, taxpayers will have to pick up the losses from loans that default or guarantees that have to be made good.
But the most troublesome unknowns are how the maze of protections for investors and consumers will change economic and political behavior in the future...

...The new actions are unlikely to be the last. Until the economy begins to turn around, Fed officials have made it clear they are prepared to print as much money as needed to jump-start lending, consumer spending, home buying and investment...

...To bolster the general economy, it relied on its traditional tool: reducing the overnight Federal funds rate, the interest rate that banks charge for lending their reserves to one another. Normally, a lower Federal funds rates leads to lower long-term rates, like those for mortgages.
But the central bank has already lowered the rate to 1 percent, and it cannot reduce it below zero. Instead, policy makers are buying up other kinds of debt securities, which has the effect of driving down the rates in those parts of the market.
The move amounts to what economists refer to as “quantitative easing,” which means having the Fed pump staggering amounts of money into the economy by buying up a wide range of debt instruments..."

Wednesday, November 26, 2008

Citigroup says gold could rise above $2,000 next year as world unravels. GDX, SSRI, SLW, AUY, TNR.v, OK.v, BVG.v, SST.v

"Gold is poised for a dramatic surge and could blast through $2,000 an ounce by the end of next year as central banks flood the world's monetary system with liquidity, according to an internal client note from the US bank Citigroup. The bank said the damage caused by the financial excesses of the last quarter century was forcing the world's authorities to take steps that had never been tried before.
This gamble was likely to end in one of two extreme ways: with either a resurgence of inflation; or a downward spiral into depression, civil disorder, and possibly wars. Both outcomes will cause a rush for gold.
"They are throwing the kitchen sink at this," said Tom Fitzpatrick, the bank's chief technical strategist.
"The world is not going back to normal after the magnitude of what they have done. When the dust settles this will either work, and the money they have pushed into the system will feed though into an inflation shock...
...Gold traders are playing close attention to reports from Beijing that the China is thinking of boosting its gold reserves from 600 tonnes to nearer 4,000 tonnes to diversify away from paper currencies. "If true, this is a very material change," he said."

Tuesday, November 25, 2008

Jim Rogers Says Dollar to Be `Devalued,' Buys Commodities GDX, FXI, EWZ

Nov. 25 (Bloomberg) -- The U.S. dollar will be ``devalued'' as policy makers seek to weaken it, undermining the greenback's role as an international reserve currency, said Jim Rogers, chairman of Rogers Holdings in Singapore.
``They think that if you drive down the value of your money, it makes you more competitive, now that has never worked in history in the long term,'' said Rogers. The ICE's Dollar Index has gained 19 percent since Rogers said in an interview on April 27 he expected a dollar rally ``about now.''
The dollar advanced against 15 of the 16 most-traded currencies since the end of June, losing out only to the yen, as a global financial crisis drove investors to the perceived safety of Treasuries. U.S. politicians want to reverse those gains to revive growth, Rogers said.
The dollar is ``going to lose its status as the world's reserve currency,'' Rogers said yesterday in a televised interview with Bloomberg News. ``It will be devalued and it will go down a lot. These guys in Washington, they want to debase the currency.''
Rogers said that he is buying the Japanese yen. All of the 16 most-active currencies have weakened against the yen since June, led by a 39 percent drop in the Australian dollar.
The ICE's Dollar Index, which tracks the greenback against the currencies of six major trading partners, traded at 86.147 as of 7:30 a.m. in London from 86.081 late in New York yesterday. It reached 88.463 on Nov. 21, the highest level since April 2006.
Plan to Exit Dollars
Rogers predicts the U.S. currency's rally ``will probably go into next year'' and said he plans to cut the remainder of his dollar holdings during this period.
``If I were doing it today, and what I have done today, is buy the yen,'' Rogers said. ``But, it is also an artificial move that's going on. It's a difficult problem to find out what is a sound currency.''
Democratic lawmakers including Senator Charles Schumer of New York said this weekend they plan to put an economic stimulus package as large as $700 billion before President-elect Barack Obama on his first day in office. Obama has called for a sizeable enough plan to jolt the economy, saying the U.S. faces the loss of ``millions of jobs'' unless immediate steps are taken to stimulate growth and rescue the nation's automakers.
Buying Commodities
Rogers also is buying commodities, saying their ``fundamentals have not been impaired and, in fact, are improved.'' He correctly forecast in April 2006 that the oil price would reach $100 a barrel and gold $1,000 an ounce.
``In mid-October, I started buying commodities, I started buying China and I started buying Taiwan,'' he said. ``I bought them all, but I've been focusing more on agriculture. I mean sugar is 80 percent below its all-time high. It's astonishing how low some of these prices are.''
The Rogers International Commodity Index Total Return has plummeted 52 percent from a record in July, including an 11 percent slide this month. The index has risen 124 percent over the past seven years.
Sugar surged the most in two weeks yesterday amid speculation that higher crude-oil prices will boost demand for alternative fuels, including ethanol made from cane.
Raw-sugar futures for March delivery rose 0.44 cent, or 3.9 percent, to 11.72 cents a pound on ICE Futures U.S. in New York yesterday. The gain was the biggest for a most-active contract since Nov. 4. Sugar has declined in each of the past three weeks.
To contact the reporters on this story: Ron Harui in Singapore at rharui@bloomberg.netMike Schneider in New York at mschneider12@bloomberg.net Last Updated: November 25, 2008 02:59 EST

Silver makes a breakout of downtrend line. SSRI,SLW, MGN, SST.v, OK.v

Silver needs to confirm its breakout from downtrend line with overtaken 50 MA. Silver stocks were thrown away in this Deflation Fear and once Greed will brighten the day they will show dramatic rise again.

Gold screams about debasing of US Dollar and Treasury Bubble Trap. GDX, AUY, TNR.v, BVG.v

Gold made its signal last Friday with a second day rally. Quantitative Easing was already in the cards and today we are witnessing it: printing money and buying Treasuries all across maturities, hope is that:
1. Low yield will bring more lemmings into the Bear Trap of Treasury Bubble and US Corp will sell debt to third parties to finance bailouts.
2. Low yield will push money into other assets to finish Deflation death circle with forced selling and collapsing prices.
3. Results will be lower US Dollar and Inflation most desired outcome.
Hold onto your Gold and Silver pennies left.

Fear is getting killed by Quantitative Easing. GDX, MAI.v, TNR.v, SST.v, OK.v, CZX.v, BVG.v

Saving the CITI Group has put last nail into Deflation camp: banks will not be allowed to fail any more. VIX has made a Double Top stronger reversal pattern confirmed yesterday's action. Please see our comments on US Dollar and Dow about recent new weapon employed by FED - Quantitative Easing by way of issuing new money and buying Treasuries or other securities in the open market. US dollar is screaming please let me go down and save you all from Depression. Most benefit will come to emerging markets and Canada's venture stocks which were devastated by Fear and forced selling. Greed is coming back and money guys will start to chase performance again.

DOW DIA general markets are in break out mode. FXI, EWZ, GDX

Debasing dollar, falling Treasuries yields are pushing money into the markets. This is the only cure to break the death spiral of falling assets prices in depression. Welcome Inflation. If markets will be able to make third day in a row into positive close technical break out will be very significant.

US Dollar has Broken Down from Rising Wedge. GDX, TYX, SSRI, SLW, AUY, ABX

US Dollar needs to break down below 85 for a definite move confirmation. This morning with new 800 billion bailouts plan US Dollar is slipping down and Treasuries are rising all across the maturity: FED has started Quantitative Easing? Watch the Gold, its move last week was footprints of those in the know about coming bold moves on debasing US currency. Now finally everything is coming into place: Mr Obama's lets fight Depression and Total collapse and worry about deficit later if we succeed.

Monday, November 24, 2008

TNR Gold TNR.v El Salto results

TNR Gold Corp ("TNR") is pleased to provide assay results from 7 diamond drill holes of the 2008 exploration program on its 100% owned El Salto project in Argentina. TNR drilled 12 exploratory drill holes, totalling 6446.45 metres, to evaluate a copper-molybdenum-gold porphyry system on this underexplored property.Of the 12 drill holes (ES07-01 and ES08-02 to ES-08-12), 8 holes were drilled in the north-western (ES07-01, ES08-02, 03, 04, 07, 10, 11 and 12), and two holes each in the central (ES08-05 and 06) and south-eastern (ES08-08 and 09) parts of the property. These holes targeted a large (4.8 km long and up to 1.3 km wide) IP chargeability anomaly extending from the northwest to southeast end of the property. This anomaly corresponds very well with a distinctive alteration system (largely phyllic with local potassic and silica alteration), and is also partially coincident with geochemical anomalies (copper and molybdenum) delineated during the reconnaissance program in the 2006 and 2007 field season.Of the 8 drill holes (3,690.55m) that tested the north-western property, 6 holes were located in a stockwork-breccia area. Assay results currently available show copper values exceeding 500ppm (0.05%) in samples from all 6 holes, anomalous molybdenum and, in some instances, gold associated with copper mineralization.The two drill holes (ES08-08 and 09) in the south-eastern part of the property intersected anomalous copper and molybdenum throughout but yielded no intercepts of economic significance."

Copper to Rebound as Demand Grows, Output Drops, Freeport Says FCX, AUY, TNR.v

Nov. 24 (Bloomberg) -- Copper, headed for its biggest annual price drop in at least two decades, will rebound as demand grows and mine output drops, Freeport-McMoRan Copper & Gold Inc. Chief Executive Officer Richard Adkerson said.
“There is going to be a need for copper as China, the rest of Asia, Eastern Europe and Latin America’s standard of living rises,” Adkerson said Nov. 21 while attending the 21-member Asia-Pacific Economic Cooperation forum in Lima. “Mines are aging, so the industry is challenged from a supply standpoint.”

Price of Bailouts 7 Trillion and counting, US Dollar is under siege. GDX, TYX

I did not notice any Reserves of this magnitude in FED's balance sheet recently for this kind of shopping spree. So the money will come from issuing new debt by selling treasuries and plain vanilla printing money. In "normal economy" if corporation is taking more debt to buy assets which nobody wants in the market, issuing new shares in order to buy the same low quality assets, losing its revenues in the form of taxes because of recessions its shares will go down. US Corp. manage from July to prove otherwise, its shares US Dollar was going up in value against almost all other currencies and its Debt was selling like hot potatoes in a cold day.
I will say just five the most dangerous words in investment: "This time it is different". It was "different" before with Google GOOG, Subprime, All banks and markets DIA, SPY, QQQQ, but only for a little while and then reality has stricken deadly.
It will be the same this time with US Dollar and Treasuries Bubble, the higher they go the faster they will fall back to reality.
"Nov. 24 (Bloomberg) -- The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago.
The unprecedented pledge of funds includes $2.8 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the only plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.
Most of the spending programs are run out of the New York Fed, whose president, Timothy Geithner, is said to be President- elect Barack Obama’s choice to be Treasury Secretary."
We know what the "New" guy is going to do: Reinflate, money, garantees...everything...Gold will give an answer.

Sunday, November 23, 2008

Gold Miners GDX are in a Break Out.

After months of suppression with all broader equities Gold Miners GDX suddenly remembered on Friday that they have been waiting all these years for Disaster to come and to be a protection, store of value and even new wealth creation in times of Debasing of Empire and its currency US Dollar. GDX has rallied 27% on Friday. What happened? We have discussed already that Gold is screaming on its charts. Gold Miners have rallied Friday even with US Dollar flirting with new highs. Downtrend line is broken to the upside and potential overtake of MA50 is in the picture. Largest Gold producer Barrick Gold ABX has rallied more then 30% in one day. We are closer to a point when direction of US market will be irrelivant for Gold miners or even better: its dimise will fuel rise in Gold, Silver and Miniers. Because of artificial US Dollar rally and pending collapse of Treasury Bubble Gold is positioned to overtake recent highs in a very bold action and fuel new rally in its Miners. Watch further developments in Royal Gold RGLD early warning Gold indicator of future move. Total value of all mining companies represented by HUI Gold Bugs Index is still below 100 billion dollars, one Google GOOG was much bigger then total sector in its Happy days. We need just 1% of total value in equities to ignite the sector to the new highs. Recent Deflation Fear and following Deleveraging have damaged the sector, Supply side is struggling and Gap will be huge with rising Demand driving the prices Up. Situation with a small brother Silver will be even more explosive, with recent cuts in production in Zinc and Copper mines and hundreds of projects put on shelves Supply will never come at this price level as a majority of Silver is mined as a By Product of Zinc and Copper mines.

Treasury Bubble Collapse Monitor TYX, TNX, FVX, GDX

U.S. Treasuries, the Final Asset Bubble

Economic Deflation in Gold Terms and the U.S. Dollar Collapse

Mark Faber on Gold GDX, Equities and US Dollar.

'I still like gold,' says Marc Faber

INTERNATIONAL. Speaking on CNBC Squawk Box Europe, Marc Faber the Swiss fund manager and Gloom Boom & Doom editor and publisher said on Fiday that asset markets are "terribly oversold" now, while investors are going overboard into the US dollar and US Treasuries.
"What you could see in the next three months is a very strong rebound in asset markets, in equities, followed by a selloff in bonds and eventually a selloff in the dollar," he said.
"I still like gold," Faber said, because it is cash and not the liability of someone else.
He however warned the assets that held up very well in the current crisis may not perform well near term. "If we get a rebound in equities, it is conceivable that people will sell assets that held up well and try to put their money in distressed assets,' he said.
“Gold price could easily drop to US$700 per ounce before it enters into a rise but one will see much higher gold prices eventually because paper money is over time losing its purchasing powers in the world. It’s very clear that every currency is losing its purchasing power in the world", Faber told India's CNBC-TV18 last month.
Faber also believes that the gold mining exploration sector is extremely at depressed levels and even if gold falls, gold mining exploration companies will go up.
Governments and central banks around the world are providing liquidity and that will eventually have an impact, Faber said.
And once the buying starts the rally is likely to be "stronger than people expect" given that financial institutions are sitting on so much cash, he added.
"I think the intervention by the government in the past and at the present time has created more volatility, not less, and so right now we have deflation, we have colossal deflation in asset prices," he told , noting that equities alone have lost US$30 trillion globally.
The Gloom Boom & Doom editor warned that if markets remained down for a longer perid, the current crisis may end up being worst than the 1929 depression.
Statistically a rebound should happen, but if it doesn't "the air is out" and the world faces an economy "worse than the depression of '29 to '32," he said.

Saturday, November 22, 2008

Gold chart is screaming that US Dollar is Toast with all those Treasuries bought. GDX, SSRI, SLW, TNR.v, CZX.v, OK.v, SST.v, BVG.v

Gold can not keep it quiet any more. On Friday it screamed loud and clear that Deflation, US Dollar and Treasury Bubble are jokes all along with implied Zero rate returns on maturities up to One Year. With all automakers on the wedge of collapse GM F, with second biggest bank CitiCorp C at near life support machine who is buying all this crap? Answer could be even more close to you then you think. One of the monetary tools of the Fed at near Zero rate policy is Debt Monetisation when FED is buying Treasuries all across the maturity and bringing more lemmings into the game of momentum play.
It was always a mystery for me how could you finance all those bailouts without US Dollar total collapse? Before China will produce Goods, get dollars for it and happily buys Treasuries to finance US Corp. With import plummeting (including with payments for Oil to Middle East and others) foreign buyers do not have any more dollars and hunger to buy more and more debt. Even worse for Mr Paulson and Co - China started to talk about buying Gold and investing in its own country Infrastracture, Russia is struggling with falling oil, selling USA Agencies Debt and is buying Russian Equites. Saudis are still trying to figure out why they pushed the oil down with only to have the wrong guy in the office and are buying gold as well.
Saudi Arabia buys $3.5bn of gold in two weeks I guess they know thing or two about how much Oil is really left in their ground.
All those deleveraging is a valid idea up to the point and that point is: if your bank is stable you do not have to buy Treasuries at Zero rate. I will not be surprised that all that Quantitative Easing is already happening and FED is printing money and buying Treasuries all across maturity. It is a very fine balance game: if you can increase sales of treasuries to other buyers you can try to fill liquidity gap at low rates before market will figure it out and demand higher yield for debasing currency. Two weeks ago one of the auctions of 30 years Treasuries failed because of low yield. Last week we had those fireworks with all yield collapsing. Gold has kissed MA50. If Gold market is telling us that these ideas are valid it will play levels 800, 820, 840 and 860 before breaking out of MA200 which will be bullish confirmation on weekly chart.