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Financial institution mind set shift.
Jul 16, 2014 05:51:29   #
Patty
 
Dear CIGAs,

Gold found a bottom a year ago at $1180 on June 30 at precisely 10:00 AM EST, the final London fix of the quarter. This price was tested again on the last day of 2013, clearly being driven by predatory speculators.

Since then, the gold market has changed markedly. During the two-and-a-half year decline, price tended to fall during Western hours, as speculators sold and shorted, and to rise in Eastern hours as Asia exploited soft prices to buy physical metal. That pattern has reversed, with gold tending to be strong in the West, as speculators re-enter the market, and soft in the East, as credit troubles in China and elsewhere slow purchases.

Bank analysts, such as at Societe Generale, have seized on weak physical markets – meaning the flow of gold to Asia has slowed marginally – to repeat bearish prognostications. But the story is once again Western speculators and the fact that the massive t***sfers of gold to the East over the past two years have left a lot less gold in the West to speculate on.

Western speculators have re-entered the market in part because, as argued in the attached report, there has been a shift in perception such that inflation has become the primary risk to the debt markets, not deflation.

Myrmikan’s investment thesis (Click here to view the report…) is based on the premise that interest rates have been artificially low, debt levels too high, and that gold is the antithesis of debt. Debt bubbles burst either through inflation or deflation, and either way benefits gold as against all other financial assets – investing in gold and unlevered gold mining stocks permits agnosticism as to the method of debt default.

Looking back some time hence, it may well be that the shift from a deflationary to inflationary mindset helped cause gold’s huge correction. But, whereas gold does well in real terms in a deflationary debt default, it really flies in nominal terms during inflationary defaults. This is the prospect before us.

Regarding yesterday’s $30 decline in gold prices, it is worthy of note that 10% of yesterday’s volume occurred in the span of just 11 trading minutes. As the chart below shows, it produced little damage to the chart of the gold miners.

CIGA Bill Holter
For www.MilesFranklin.com

Reply
Jul 16, 2014 08:00:25   #
lpnmajor Loc: Arkansas
 
Patty wrote:
Dear CIGAs,

Gold found a bottom a year ago at $1180 on June 30 at precisely 10:00 AM EST, the final London fix of the quarter. This price was tested again on the last day of 2013, clearly being driven by predatory speculators.

Since then, the gold market has changed markedly. During the two-and-a-half year decline, price tended to fall during Western hours, as speculators sold and shorted, and to rise in Eastern hours as Asia exploited soft prices to buy physical metal. That pattern has reversed, with gold tending to be strong in the West, as speculators re-enter the market, and soft in the East, as credit troubles in China and elsewhere slow purchases.

Bank analysts, such as at Societe Generale, have seized on weak physical markets – meaning the flow of gold to Asia has slowed marginally – to repeat bearish prognostications. But the story is once again Western speculators and the fact that the massive t***sfers of gold to the East over the past two years have left a lot less gold in the West to speculate on.

Western speculators have re-entered the market in part because, as argued in the attached report, there has been a shift in perception such that inflation has become the primary risk to the debt markets, not deflation.

Myrmikan’s investment thesis (Click here to view the report…) is based on the premise that interest rates have been artificially low, debt levels too high, and that gold is the antithesis of debt. Debt bubbles burst either through inflation or deflation, and either way benefits gold as against all other financial assets – investing in gold and unlevered gold mining stocks permits agnosticism as to the method of debt default.

Looking back some time hence, it may well be that the shift from a deflationary to inflationary mindset helped cause gold’s huge correction. But, whereas gold does well in real terms in a deflationary debt default, it really flies in nominal terms during inflationary defaults. This is the prospect before us.

Regarding yesterday’s $30 decline in gold prices, it is worthy of note that 10% of yesterday’s volume occurred in the span of just 11 trading minutes. As the chart below shows, it produced little damage to the chart of the gold miners.

CIGA Bill Holter
For www.MilesFranklin.com
Dear CIGAs, br br Gold found a bottom a year ago ... (show quote)


It might also be interesting to note that, should all the gold purchasers be required to physically take possession of the gold, there would be numerous purchasers left with - nothing. The practice of giving certificates and keeping the gold in the same physical location, has allowed vendors to sell more certificates than gold on hand.

This is very similar to our own economy. The buying and selling of FUTURE productivity, meaning that an arbitrary value is placed on the POTENTIAL of future production value. Should the actual value of the production, as valued at the time of sale of the actual products, fall below predicted value, the investor loses the difference. The good news is, the brokers have already made THEIR money and it is not affected by poor performance.

The buying and selling of stocks is based on this formula. The value of a stock is driven by the PERCEPTION of the intrinsic value. Enormous amounts of money change hands everyday, for the purchase and sale of - nothing. Such an artificial value based economy CANNOT sustain itself. Eventually, the actual value and quantity of production comes no where near the predicted value and the system collapses, due to investors trying to salvage cash.

Reply
Jul 16, 2014 08:44:50   #
Patty
 
lpnmajor wrote:
It might also be interesting to note that, should all the gold purchasers be required to physically take possession of the gold, there would be numerous purchasers left with - nothing. The practice of giving certificates and keeping the gold in the same physical location, has allowed vendors to sell more certificates than gold on hand.

This is very similar to our own economy. The buying and selling of FUTURE productivity, meaning that an arbitrary value is placed on the POTENTIAL of future production value. Should the actual value of the production, as valued at the time of sale of the actual products, fall below predicted value, the investor loses the difference. The good news is, the brokers have already made THEIR money and it is not affected by poor performance.

The buying and selling of stocks is based on this formula. The value of a stock is driven by the PERCEPTION of the intrinsic value. Enormous amounts of money change hands everyday, for the purchase and sale of - nothing. Such an artificial value based economy CANNOT sustain itself. Eventually, the actual value and quantity of production comes no where near the predicted value and the system collapses, due to investors trying to salvage cash.
It might also be interesting to note that, should ... (show quote)


The COMEX is leveraged 98X;s. There are going to be 97 very disappointed ETF owners when China cashes out of the game and they start defaulting on these contracts.



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Jul 17, 2014 06:04:19   #
lpnmajor Loc: Arkansas
 
Patty wrote:
The COMEX is leveraged 98X;s. There are going to be 97 very disappointed ETF owners when China cashes out of the game and they start defaulting on these contracts.


Yep. All those poor people, trying to make a buck off of someone ELSE'S hard work. Makes me want to cry.

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Jul 17, 2014 06:09:41   #
Patty
 
Got this also this morning. Seems the World Gold Council wants to start changing the rules of the game in mid game. To me the change isn't clear and rather ambiguous. The author seems clear on the change but I am not.
http://goldchat.blogspot.com/2014/07/gld-amendent-refers-to-unforeseen.html

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Jul 17, 2014 06:32:04   #
lpnmajor Loc: Arkansas
 
Patty wrote:
Got this also this morning. Seems the World Gold Council wants to start changing the rules of the game in mid game. To me the change isn't clear and rather ambiguous. The author seems clear on the change but I am not.
http://goldchat.blogspot.com/2014/07/gld-amendent-refers-to-unforeseen.html


This is referring to what I mentioned earlier. They have become aware of the disaster unfolding, by the vendors selling gold they do not possess. This amendment is an attempt to force vendors to reign in their gold Ponzi schemes. Currently, they are allowed to sell allotments of gold, that they have yet to purchase.

Should there be a "run" on taking physical possession of purchased gold, the deficit would be noticed immediately and with dire consequences for the "host" countries. There are also programs where people purchase "shares" of one troy ounce of gold, some for as little as $100, or 10%. Since the purchased gold is held "in trust" and no provisions for physical t***sfer, the temptation to "over sell" is strong.

A note: Precious metals become worthless - when no one is willing to trade for it. Should gold lose it's investment potential, commercial use needs would determine price, which I predict would be 1/5 of it's current value.

Reply
Jul 17, 2014 06:40:21   #
Patty
 
Gold has been considered money for 5000 years and is set to back the next reserve currency so I don't see it ever losing purchasing power.
JP Morgan: "Gold is money currency is credit."
lpnmajor wrote:
This is referring to what I mentioned earlier. They have become aware of the disaster unfolding, by the vendors selling gold they do not possess. This amendment is an attempt to force vendors to reign in their gold Ponzi schemes. Currently, they are allowed to sell allotments of gold, that they have yet to purchase.

Should there be a "run" on taking physical possession of purchased gold, the deficit would be noticed immediately and with dire consequences for the "host" countries. There are also programs where people purchase "shares" of one troy ounce of gold, some for as little as $100, or 10%. Since the purchased gold is held "in trust" and no provisions for physical t***sfer, the temptation to "over sell" is strong.

A note: Precious metals become worthless - when no one is willing to trade for it. Should gold lose it's investment potential, commercial use needs would determine price, which I predict would be 1/5 of it's current value.
This is referring to what I mentioned earlier. The... (show quote)

Reply
 
 
Jul 17, 2014 06:50:17   #
lpnmajor Loc: Arkansas
 
Patty wrote:
Gold has been considered money for 5000 years and is set to back the next reserve currency so I don't see it ever losing purchasing power.
JP Morgan: "Gold is money currency is credit."


Precious metals were considered necessary for it's portability. You sell wheat for gold, then trade the gold for other items you needed. When there is a food shortage, wheat is more valuable then gold. You can't eat gold. In ages past, many a person rich in gold, starved to death. Those strong enough to have armies, got what they wanted, fed their troops and survived.

When there is no food, only a fool would sell what little they had for a kings ransom worth of gold. The time is coming, when rice and wheat will out value gold. Trying to buy food with paper currency, which is based on nothing, would result in laughter. Trying to do the same with metal, would get similar results.

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Jul 17, 2014 07:07:03   #
Patty
 
That might be true in the city but not out here. There is food everywhere and more land to grow and hunt what you need if you know what to look for. Pennsylvania is almost 70% State Game Lands. You might get tired of eating what is in season at the time and game in the winter but starving in this country that has been blessed with the greatest resources in the world would never be an option. Gold will always hold value whether the next system is through SDR's or a basket based on the Yuan.
http://thebricspost.com/brics-south-america-toast-to-new-financial-architecture/#.U8eunzbD_IU
lpnmajor wrote:
Precious metals were considered necessary for it's portability. You sell wheat for gold, then trade the gold for other items you needed. When there is a food shortage, wheat is more valuable then gold. You can't eat gold. In ages past, many a person rich in gold, starved to death. Those strong enough to have armies, got what they wanted, fed their troops and survived.

When there is no food, only a fool would sell what little they had for a kings ransom worth of gold. The time is coming, when rice and wheat will out value gold. Trying to buy food with paper currency, which is based on nothing, would result in laughter. Trying to do the same with metal, would get similar results.
Precious metals were considered necessary for it's... (show quote)

Reply
Jul 17, 2014 07:17:12   #
Patty
 
This out this morning. I agree with this author.
"When You See This Happen, You Know It's Game Over For The Dollar
Tyler Durden's pictureSubmitted by Tyler Durden on 07/16/2014 18:31 -0400

BondBrazilCentral BanksChinaFranceGreeceIndiaMcDonaldsNonePortugalRenminbiReserve CurrencyRude AwakeningWorld Bank

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inShare.24
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Submitted by Simon Black of Sovereign Man blog,

Exactly 70 years ago to the day, hundreds of delegates from 44 nations were busy at work in Bretton Woods, New Hampshire creating a brand new financial system.

World War II had just ended. Europe was in ruin.

And since the US was simultaneously the largest economy in the world, the primary victor in the war, and the only major power with its productive capacity intact, it was easy to dictate terms: the dollar would dominate the new system.

Every nation would hold dollars as the primary reserve currency, and the dollar would be redeemable for gold at $35/ounce.

Also, global commerce would be conducted and settled in dollars, and these settlements would clear through the US banking system.

Naturally this created substantial demand from foreign governments who needed to begin accumulating dollars for trade and reserves.

So through a variety of programs, from the Marshall Plan to the IMF and World Bank, the US began flooding the world with dollars.

Initially everything went according to plan.

But soon the US government realized something important– foreign demand for the dollar was so strong that they could get away with printing more dollars than they had gold.

This allowed them to run all sorts of deficits and spending initiatives– more war, more welfare, more waste… all with minimal accountability.

Initially the consequences were insignificant.

Sure, the price of gold in London was a few dollars higher than in the US (they called this the ‘gold window’).

But demand for the dollar was still strong. So why bother changing?

By 1971, the situation had gotten far worse. Another decade of war, excessive spending, trade deficits, and money printing had pushed many foreign nations to their breaking points.

Foreign nations’ dollar reserves far exceeded the US government’s gold holdings. And with confidence waning, many began redeeming their dollars for gold.

Only days later, Richard Nixon put a stop to this and unilaterally terminated the US dollar’s convertibility to gold.

Think about the magnitude of this decision: Nixon was effectively defaulting on US obligations to the rest of the world– a complete betrayal of their trust.

Yet despite this massive shock that reset the global financial system, the dollar somehow managed to remain the world’s #1 reserve currency.

You’d think they would have been grateful, thanking their lucky stars that the rest of the world gave them a second chance. But no.

Over the past 43 years, the US has continued to print, devalue, and mismanage the dollar.

•Along the way, they’ve created epic bubbles and financial shocks.
•They’ve run up the biggest deficits and debt levels ever seen in the history of the world.
•They’ve bickered internally to the point of shutting down government.
•They’ve passed arrogant, painful regulations and commanded the rest of the world to comply under threats tantamount to financial homicide.
•They’ve unleashed their tax and securities authorities to terrorize anyone doing business with the US.
•They’ve totally ignored foreign pleas to restructure the IMF and World Bank.
•They’ve slammed foreign banks with record fines simply for doing business with nations that the US doesn’t like.
•They’ve waged pointless wars. They’ve spied on their allies. They’ve meddled in other nations’ affairs.
•And they’ve demonstrated absolutely no willingness or ability to improve.
Simply put, other nations are done. Fed up, really. And it’s not just words.

Consider that in a matter of months, the US will be overtaken by China as the world’s largest economy.

Not to mention, the total combined GDPs of China, India, Russia, and Brazil are roughly the same as the US and EU combined.

Just as the US was the biggest player back in 1944, China is the biggest player today. So it seems clear that the renminbi will become a critical component of a new financial system.

The renminbi already has experienced rapid growth as a dollar alternative for trade; in May, cross-border settlement surged 52% from the year prior.

Renminbi settlement banks are being set up from London to Canada, and the central banks of both France and Luxembourg have signed agreements for renminbi clearing.

There have already been numerous Western companies (like McDonalds) that have issued renminbi-denominated bonds.

And even the provincial government of British Columbia issued a renminbi bond earlier this year. It was a whopping five times oversubscribed.

I’d expect within the next 2-3 years we’ll start seeing trade settlement in renminbi, even when none of the parties are in China.

Today, for example, a t***saction between a Paraguayan merchant and a company in Angola will likely settle in US dollars.

Soon, I think we’ll start seeing that t***saction done in renminbi. And once that happens, you’ll know it’s game over for the dollar.

Shortly after, national governments in western countries will issue renminbi bonds (perhaps Greece or Portugal will be first). And eventually, even the US government itself.

Today, 70 years after Bretton Woods, leaders from China, Russia, India, Brazil, South Africa, and several other nations are hard at work in Fortaleza, Brazil creating a new development bank that will compete against the US-controlled World Bank.

This is a major step in an obvious trend towards a new financial system. Every shred of objective data is SCREAMING for this to happen.

It’s a different world. Everyone realizes it except for the US government, which is still living in the past where they’re #1 and get to call all the shots.

The consequences of missing this boat are enormous, and it’s going to be a rude awakening for anyone not paying attention."

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