Official Pharmacy Investing (Stocks/Funds) Thread!

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Dow is going up despite rising dollar. Why? Global Weimar, that's why.
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Exiting QE could 'undermine the recovery', IMF warns

http://www.telegraph.co.uk/finance/economics/10061800/Exiting-QE-could-undermine-the-recovery-IMF-warns.html

There is no exit from QE without hitting the reset button. That's why Central banks are front-running the inevitable...

The World's Central Banks Added To Their Gold Stockpiles Even As Prices Tumbled

http://www.telegraph.co.uk/finance/economics/10061800/Exiting-QE-could-undermine-the-recovery-IMF-warns.html

I wrote the following on another blog which professes that gold will undergo a 30-fold revaluation and the peoples of the world will thereafter hold their savings in gold as opposed to the bond markets or CD's. I do not support this theory. Gold will be revalued, probably not as much as 30fold, but the value in gold will taper off in relation to other assets over time.

"GrumpsLabastard said...

Think of the price of gold as a thermostat for the financial system and the value of gold as a transverse dimension to this system like the imaginary axis in mathematics.

During most of the life cycle of the system a real positive interest rate is possible, the POG is stable or even dropping and the value of gold is stable or dropping. Much of the savings/capital is in real financial space.

As the system reaches debt saturation, that is a real positive interest rate cannot be tolerated, the thermostat function of gold reflects this state. The SoV function of gold is activated as savings/capital flee real space to imaginary space. System implodes.

A new system is put in place with a new thermostat(higher POG). Savings can re-enter real financial space again as a real positive interest rate can exist.

I think this is what Blondie stumbled upon. The function of SoV flows with time. The Flow of Value."

http://fofoa.blogspot.com/2013/05/the-dukes-of-wetton-bedtime-story.html?commentPage=3
 
Let these charts speak for themselves.


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fbig_valcambi_gold_shadowstats_gold_historical_avg.jpg
 
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Why interest rates can't rise:

" A 100bp interest rate shock in the JGB yield curve, would cause a loss of ¥10tr for Japan's banks."

You see, bonds serve as reserves for the banking system. If rates rise, the value of existing bonds drops. That's why we have QE. To keep the day of bank insolvency at bay.
 
There only so many gold miners. The sector is tiny. You don't have to worry about which ones to hold if you do it through a mutual fund. All the gold funds own the same companies in varying proportions. Notice FOA didn't say they would go to zero, just near zero and not staying there.

Let's do the math and weigh risk vs. benefit. A = a mutual fund's portfolio. The 30X revaluation in gold is a 2900% gain. The formula

(percentage of A not expropiated)X(2900%)X(leverage factor)= gain in portfolio A

First let's assume there is no leverage in the shares in that they merely match bullion's appreciation so leverage factor is one.

If half of portfolio is lost then
(0.5)(2900%)(1.0)= 1450% still a 15 bagger, not as good as bullion but you will be getting mofo dividends.

If 90% of A is lost, a worst case scenario then
(0.1)(2900%)(1.0)=290% even if 9/10 of portfolio is nuked you still have a 4 bagger.

Now set the leverage factor to a weak 1.5, barely any leverage.

(0.5)(2900%)(1.5)= 2175% nearly a 23 bagger very close to bullion, but you have a dividend stream possibly in gold. Hercules, Hercules, Hercules!

The above are pessimistic projections. Now for the realistic ones. The leverage factor is normally between 2-3 to be conservative. Let's use 2.5 and crunch the numbers.

If A is 90% nuked (0.1)(2900%)(2.5)=725% an 8 bagger.
If A is 50% nuked (0.5)(2900%)(2.5)=3625% outperforms bullion & get sweet dividends so the precious can be left alone in savings.
If A is only 10% nuked ( this is really the worst case scenario) then (0.9)(2900)(2.5)=6525% a friggin 66 bagger bitchez.

If you have enough bullion where a 30 fold reval will be life-changing, why not put a small wager on the miners for the chance of ending up with more money than God. What if gold is only set to 5-12K intially by the BRICS and the full reval is put off by a decade? You'll be stuck with non-yielding bullion in the meantime. Currency wars can last awhile.
 
pull up a one year chart of the Nikkei...what on god's green earth would make the Nikkei double in 6 months? Economic recovery? No. It's the incipient stage of a global debt for equity swap....global Weimar.
 
[YOUTUBE]http://www.youtube.com/watch?v=LSjpbWdZzYQ&feature=player_detailpage[/YOUTUBE]
 
QE to Infinity, followed by Gold balancing the balance sheets of the sovereign balance sheet disasters. Just as there is no tool other than QE to feign financial solvency, there is no tool to balance the balance sheet of the offending entities other than Gold. It is just that simple.
–Jim Sinclair
 
this thread should be renamed as "the gold thread"
 
Look at the Nikkei. Hyperinflation is not just straight up. It is chaotic price action in all asset classes.

The youth of Europe are leaving for better opportunity. Soon it will be the case here.
 
Very important from the Thunder Road Report:

"Encore - Inflationary Deflation: end-game update

Brief summary: Excessive monetary stimulus and low interest rates create financial bubbles. This is the biggest debt bubble in history. It is a potent deflationary force and central banks are forced into deploying increasingly aggressive (offsetting) inflationary forces. The avoidance of a typical deflationary resolution to this economic long (Kondratieff) wave is pushing the existing monetary system beyond the point of no return. The purchasing power of the developed world’s currencies will have to bear the brunt of the “adjustment”. Preparations for this by the BRICS nations, led by China, are advancing rapidly. The end-game is an inflationary/currency crisis, dislocation across credit and derivative markets, and the transition to a new monetary system. A new “basket” currency is likely to replace the dollar as the world’s reserve currency. The “Inflationary Deflation” paradox refers to the coming rise in the price of almost everything in conventional money and simultaneous fall in terms of gold.

* * *

I think that we have crossed an important threshold in the “Gold War”. Rather than scaring investors out of gold and silver, the price collapse and the circumstances surrounding it has led to a well-publicised rush to purchase gold by investors across the globe.

Two things came together causing the perfect storm for bullion demand in both the East and West – the fall in prices in conjunction with excessive monetary stimulus AND the Cyprus “bail-in” of depositors’ money (and the realisation that other countries were formulating similar plans in the event of bank failures).

We’ve seen rising premiums against spot for bullion products and extended delivery times. There have been occasional examples of this before, notably late 2008, but never on a sustained basis, which would have dramatic ramifications.

The recognition in the gold market of the profound difference between physical gold versus and mere “paper claims” has been on the horizon for years. My sense is that there’s been a dramatic step forward in the understanding of the fractional reserve nature of these markets.

I’ve been told that a high-profile hedge fund manager and gold advocate had a similar realisation a while back. While arranging to move his gold out of the banking system, he (apparently) asked what would happen when more people realised the true situation. The reply:

”Price discovery.”

It’s a great irony that the monetary metals in the form of physical gold and silver are the only financial assets which have no counterparty risk in the midst of the world’s biggest debt crisis...and so few people see the investment case.
 
12/27/12....2,950,688 million

05/23/13....3,440,615 million
__________________

490 billion

on pace for 1.176 T
 
Mainstream Financial UberNerd Jim Grant of the Interest Rate Observer:“The price of gold has been going up for what, a dozen years now with pullbacks? Which is to say the value of the currencies against which gold is measured has been depreciating for that long. And I know that the Wall Street Journal, defining as it does a bear market in a certain way, now proclaims that gold is in a bear market. It seems to me that that remains to be seen.
To me, the financial belief in which I have the greatest confidence is that our current monetary system, which we at Grants call the ‘PhD Standard,’ that this system of guesswork, of improvisation, of seat-of-the-pants central planning, this system is not for the ages.
It will not last. Common sense will get the upper hand and a new monetary system will come into being. And that new monetary system will very likely use gold and gold will be an important part of that system. So, believing that devoutly, as I do, I am inclined to believe that the bull market in gold is long-term and that it is way too soon to pronounce it over.”
 
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Great article on ZH about the need for collateral as I mentioned on the other thread.

http://www.zerohedge.com/news/2013-05-27/peak-collateral

Key quotes:

"Where is this regulatory capital trade putting the risk really? As far as I can trace it, it is being bought by hedge funds. And who owns those hedge funds (owns their shares)? Pension funds. Ooops!"

"At the same time as risk is once again accumulating out of sight and mind, collateral too is once again becoming a problem. The problem is no one is creating new assets which really are safe and solid. They aren't because everyone is labouring under such an overhang of debt and bad debt that the organic growth of wealth producing activity (researching and developing and then making and selling stuff) is too slow."

"Everyone wants yield now, if not sooner."

"Everyone wants collateral."

"Collateral is getting scarce. What truly is safe, has long ago been pledged mainly to the central banks. The rest has been ring-fenced into covered bonds and other super-safe investments. None of it also pledged elsewhere or re-hypothecated onwards to prop up other loans – honest! Even the central banks have had to relax and further relax their rules about what they will accept as safe enough to act as collateral for a central bank loan. Once it was genuinely AAA rated assets. Now if you have a beach towel from a Club Med holiday you once took, it'll do."

"Why do you think China is buying more and more gold? I wonder if China isn't preparing for a contingency of a currency implosion and is making sure it has the necessary gold reserves to market the Yuan as the only ‘gold' backed global currency. Just a thought."

"...recent murmurings about the Fed tailing off its bond buying will prove to be hollow. The Fed will quickly find it cannot exit QE without precipitating precisely the disorderly collapse, to which it was supposed to be the solution."
 
Erik Townsend has a background to which yuppies can relate. He was a tech wunderkid who took a break to enjoy his nasdaq booty. ( He cashed out before the crash.) After a few years he grew bored of the lite life and wanted to start his own business. But upon doing his homework at what place in the credit cycle we are in, he decided not such a good idea.


[YOUTUBE]http://www.youtube.com/watch?v=e97T0Bfex5A[/YOUTUBE]
 
You guys really have to read this blog. I'm on the 2nd post http://twoshortplanksunplugged.blogspot.com/2013/05/gold-nwo-elitesthe-gamethe-ambush.html

It's spot on as for how the world is contructed.

"Let's say that;
A = Are the countries of the world
B = Are the major financial infrastructures of the world
C = Are the banking entities of the world

The next layer is where just two of the major players overlap;
A/B = Military Industrial Complex and Major Corporations
B/C = Central Banks
C/A = Major Banks

You can now see how every entity is affected by every other entity, to varying degrees!

There is also another sector, right at the centre. This is the Superrich entities who own most of the real assets on the planet, such as a vast majority of Military Industrial Complex, the Major Corporations and the Major Banks, as well as most of the natural resources. Since the Major Banks own the Central Banks, then the Superrich own the Central Banks as well.

Now here is where it starts to get a little grey…

Who is at the centre?

Well, there are at least three types of Superrich entities, they are;
1. The ultra-wealthy families who have had money since at least the 1700s'. These families are well known historically but they are very well hidden today, so too is their money (Gold and something else).
2. The Oil wealthy such as the Arab states. These are newcomers to the centre and their future is tied-up with the prosperity of their countries; if the country falls, so do they.
3. The Oligarchical wealthy. More newcomers who have recently emerged from the end of the Cold War. These include most of the families which prospered from the Military Industrial Complex, like the [George] Bushs', and Mafia type Oligarchs like Putin and his KGB mates.

Ok, so that paints a picture of how all the visible entities fit together…..but there's another layer. This is a very, very well hidden layer.

Imagine that the Venn Diagram (the whole world) is drawn on a single piece of paper, well, who owns that piece of paper?

I believe that the next and final layer doesn't really have a name…but I'll call them the Custodians! The Custodians essentially won 80% of the world between the 1300's and 1700's. They comprise of many or most of the Ultra-Wealthy entities dating back as far as the Black Venetian Nobility, the Templars, the Teutonic Templars, the Vatican, and later entities such as the Rothschild family.

On the Venn Diagram these Custodians own most of the paper as well as the entire centre sector of the Venn Diagram.

These Custodians own vast, vast sums of wealth, accumulated over centuries. I believe the sums would be in excess of $700 Trillion. HOWEVER, this figure is not a Dollar figure, or a Yuan figure, or even a Euro figure and this is why…

When Rothschild created the Central Banking System he also created a layering of the system where, the Major Banks in each country owned the Central Banks from whom they borrowed the money. BUT, as with all systems it is built upon a network, and in the case of the Banking System and the entire Global Financial System it is built upon a framework (network) which is 100% owned by these Ultra-Wealthy elite families. It has been this way since the end of the Napoleonic War, where, Napoleon threatened the entire European Banking System as he believed in a Bank of France which lent money at 0% interest…he hated Banks, and Banks hated him!

So the real question is, what is the framework, what is the network?

The Custodial Framework
Bank for International Settlements - Global Banking Computer Network for the movement and transfer of Global Currencies (the Back Bone)
London Bullion Market Association - Physical distribution and controlling agency of Gold (real wealth)
Central banking Network - Physical distribution and controlling agency of Global Currencies (medium of exchange for services, goods and labour)
Organization of the Petroleum Exporting Countries – Global distributor and controlling agency of Global Oil (consumable real wealth)

United Nations - Global Police
World Bank - Global Lender
International Monetary Fund - Global Debt Collector
Intelligence - Custodial Eyes & Ears (Mi6, Mi5, CIA, MSS, Mossad, FSB {KGB}, SIS, CSIS, ASIS, DCRI, BND etc)
Power & Control Centres - US Council on Foreign Relations, European Council on Foreign Relations, Club of Rome, Bilderberg Group, Royal Institute for International Affairs, Trilateral Commission etc.
Main Stream Media - Global Propaganda
Hollywood - Global Propaganda and epicentre for Alternative/Pagan/Kabbalic/Ancient Mystery Religious interests....."

Excellent stuff and it resonates with what I've been saying as to the true function of gold.

"By the very nature of both the framework, we can have a complete and total collapse of the Global Financial System and the Custodians don't lose a single penny as they can simple create a brand new system at the click of a finger…new Currencies, new Bonds, new Banks, new Political systems….new everything….a brand new farm! This is because they own the machinery to make farms as well as the technology to do so.

People talk about a coming New World Order. If you believe what I have written you will see that it's not coming at all, it's already here, and has been here for perhaps 300 years. What they are talking about is merely the next cycle within the existing NWO…nothing more!

If you believe this, then for you the truth is revealed; that the threat of a coming NWO is a False Flag event. It is a deliberate misdirection to distract you from the truth hidden in plain view. If you believe that a NWO may be coming, then by definition, you believe that a NWO cannot currently exist. This is precisely what they want you to believe. They do not want you to realize that the NWO has already been implemented incrementally over the past 300 years and especially since the propagation of the Global Central Banking Cartel whose greatest achievements were the Bank of England, the United States Federal Reserve System, and the Eurozone (including European Central Bank).

There is of course one thing which they cannot create at the click of a finger…Gold!

When financial systems collapse the wealth transfer goes into Gold, which then becomes the store of wealth until a new system is put in place, then, the wealth transfer goes back into the new financial system. So, owning Gold is owning a piece of the next financial system, not the current financial system…get it? This [post-transition period] is when Gold is most potent.
http://politicalmetals.files.wordpress.com/2011/09/global-reserve-currencies1.png?w=595

For this reason, every time the financial system becomes fragile, every entity always runs to Gold. Often they don't really understand as to why, but they do nonetheless.

The real reason as to importance of Gold is very, very simple. Gold doesn't sit within the Global Financial System itself, it sits outside the system (outside the Venn Circles), resting on the blank white paper which is mostly owned by the Ultra-Wealthy. In visible terms it is like the ‘Construct' in the movie the Matrix, something which underpins the false reality which is created upon it.

To own Gold is to own both a commodity which is assigned a Currency value as well as a piece of the next framework, a piece of the next financial system. Everything else is which is going on is just noise and distractions to the masses….'Bread and Circuses'."
 
I really can't support the allopathic model anymore. It's blood money. Naturopathic that's another story.

After the monetary reset, I'll have another occupation--managing my massive wealth and using it for good.
 
June 2013 Quarterly Review: Markets under the spell of monetary easing


http://www.bis.org/press/p130603.htm

"Paul Melaschenko and Noel Reynolds (BIS) propose a creditor-funded resolution mechanism to recapitalise too-big-to-fail banks at the point of failure. The mechanism ensures that the shareholders and uninsured private sector creditors of banks, rather than taxpayers, bear the cost of resolution. The template fully respects the existing creditor hierarchy and can be applied to any failing entity within a banking group. The mechanism partially writes off creditors to recapitalise the bank over a weekend, providing them with immediate certainty on their maximum loss. The bank is subsequently sold in a manner that enables the market to determine the ultimate losses to creditors. "
 
http://silverdoctors.com/jim-willie-ustbond-return-to-sender/#more-27468


Key quotes:

"The USFed balance sheet will expand, not contract, or else they will face a catastrophe in a USTBond explosion and Interest Rate Swap derivative nuclear event....


The first quote is from an esteemed colleague and mentor to a trusted source for the Hat Trick Letter. Dr Dieter Spethmann is honorary Chairman of PEL-EX Trading Ltd and former Chief Executive Officer of Thyssen AG. The man is also a current Hat Trick Letter subscriber. He wrote, "Barter and Gold are identical. People who understand this also understand what barter is. Both Barter and Gold allow for free re-valuation of currencies that are blocked by central banks." Brilliant, simple, succinct, deep. Unfortunately, the concept is way over the heads of 95% of dull Americans still swimming in their devoted toxic paper pools....

The second quote is from Antal Fekete, who has decided to put aside his vapid Gold Basis theme, and now backs up my barter theme. Remember that gold settlement is the manifestation of barter, if conducted with true valid pricing. Fekete wrote, "The price of Gold is headed for extinction. I for one do not believe that the price of Gold is headed for five digits. Long before that might happen, permanent backwardation would shut down the gold futures markets. Gold could no longer be purchased at any price. Gold would only be available through barter. World trade is facing an avalanche-like transformation, flattening out monetary economy into a barter economy. Practically all economists, financial writers, and market analysts have missed this possible scenario. That will pull the rug from underneath the international monetary system. Barter is the ultimate in deflation, and that is what the world economy is getting...

My source has informed that the BRICS Development Fund will serve as a vast trading house to convert USTreasury Bonds into Gold bullion....

Gold will find its way in discontinuous jumps to the $7000 per ounce price. The Gold Trade Settlement platforms assure the higher price, already agreed upon in the grand reset. All is aligned, including the secretive imprisonment of 6000 bankers. Justice might not come, but they will be removed."
 
http://qz.com/90865/what-amazons-push-into-online-groceries-is-really-about/

If grocery chains have to compete against amazon, what does that portend for the pharmacies in these stores? Will a loss leader be tolerated anymore? Will amazon get into rx delivery? Google? I like to see these guys drop the bomb announcing an initiative about how they'll show Wags and CVS how technology can be leveraged into conducting pharmacy, drop the mike and walk away.
 
How The New Billionaires and Trillionaires Will Preserve Their Capital
Posted June 4th, 2013 at 1:52 PM (CST) by Jim Sinclair & filed under General Editorial.

Dear Extended Family,

This is how our new billionaires and trillionaires will preserve their capital for ten generations to come.

This letter might as well be to you. The question is not if Bail-In will occur in North America, it is a question of how big it will be. The answer to that is simple.

The size of the Bail-In or "Major Wealth Tax on Unsecured bank lenders (deposits), will be the size of the entire OTC derivative loss less what occurs when Legacy OTC Derivatives are marked to market less the capital of the financial institutions.

Any idea that losses end at the capital position of a financial institution is total nonsense. The size of the loss might well be the final resolve process of the setting up a "Resolution Bad Derivative Trust" for the bankruptcy of the huge amount of legacy OTC derivatives still floating like a mine field financially in cyberspace. This will occurs in the following order.

The Great Flushing = Lehman Brother
The Great Leveling = Bail-In plus even more massive stimulation program
The Great Reset = The new monetary system made up of:

1. A virtual reserve currency.
2. Only traded by central banks.
3. Tied voluntarily to the value of central banks gold, valued at market.
4. By voluntary arrangement tied to a M3 of the Western world M3.
5. Gold will have traded for 2 to 5 years emancipated from no-gold paper as the price discovery mechanism.

This is how our new billionaires and trilionaires will preserve their capital for ten generations to come because they have all the above ground physical gold, all of it, by hook or crook.

Are you preparing for this transaction or are you going to be an accident of the Great Leveling of 2015-2016?
 
http://www.economicpolicyjournal.com/2013/06/major-insider-time-to-buy-gold-chinese.html

Tuesday, June 4, 2013Major Insider: Time to Buy Gold; The Chinese Want to Make the Yuan Gold Backed
I have mentioned Philippa Malmgren before
Philippa Malmgren is an insider's insider. She was Special Assistant to the President for Economic Policy on the National Economic Council. She was also a member of the President's Working Group on Financial Markets, aka, the Plunge Protection Team. Her client list includes every elite corporate firm in the world (Take a minute to look at the list, its mind boggling, the list is here.). You don't get much more insider than this.
She is out with a new comment on gold. In it she seems to hint that there might have been a conspiracy to push gold down (Remember this is coming from a major insider, who travels in the circles she is talking about):


Why Won't Gold Go Up? After all, gold should be rising given that every major central bank is expanding the monetary base by historic magnitudes. Japan is doubling the monetary base. The UK is about to print until they reach what the new Governor calls "escape velocity" which is as yet undefined. The US has open-ended Quantitative Easing that will last at least until nearly full employment is reached at 6.5% to 5.5%. The ECB has not even started to monetize the debt but hopes to as soon as the Germans give in. So, why did the gold crash of 2013 happen on April 12th? Gold lost an almost unprecedented 84 USD an ounce that day.
Conspiracy theories abound. It seems the Japanese bond market and gold are highly correlated. As the JGB market sells off, due to their effort to create inflation, every bank starts hitting it's VAR driven risk limits and has to raise cash.
Maybe the Fed did it? Like all central bankers who are pursuing QE, Chairman Bernanke, is bound to hate it if the market puts more trust and faith in gold than in government. Some observers are now going crazy with the possibility that the Federal Reserve and other central banks might somehow have encouraged the sudden sell pressure. Central banks are either selling or exchanging gold for credit. Cyprus sold 75% of it's gold, though that does not begin to provide enough cash for them. The IMF is selling too. Euro zone banks are all pledging their gold as collateral against the generous and probably repayable loans the ECB is extending to them.
Is it materially important that JP Morgan and other investment banks are net beneficiaries of money printing but also maintain massive short positions? Why did several banks all issue "sell gold" notes just before or in the months before the record price drop? Were they prescient or forcing a desired outcome?
Note her comment on who has been buying gold during the recent selloff and what it means (my bold):


The most interesting piece of the puzzle is that the Chinese have emerged as the biggest buyer of gold, mainly in large off market. They want the Yuan to emerge as a hard, gold-backed currency in a world where everyone else has chosen to inflate and devalue. The recent bilateral currency deals with Australia, France Russia and Singapore, and many others, reflect this desire to displace the USD as the world's reserve currency. It may be an interesting and long race between the Chinese reaching for convertibility and the Western central banks straining credibility.
So what is her advice to investors:

Gold bulls have a rare chance to double up now. Gold bears will have a hard time doubling down from a record profit. Meanwhile, apparently the Indians and everybody else in the emerging markets recognizes a good deal when they see it. As inflation pain continues to make headlines from high tomato prices in Brazil to the same for onions in India, no emerging market investors have any illusions. Inflation for them is here for the duration. A gold backed Yuan is increasingly sounding like a sensible idea.
 
Fund Managers Are Now Buying Gold With Their Own Money


"As I continue to speak with fund managers, more and more of them are telling me they are buying physical gold, not GLD. These people are taking their own money, buying gold and literally storing it themselves or in a private vault outside of the banking system. This is with their own personal money. What does that tell you?"

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/6/6_Fund_Managers_Are_Now_Buying_Gold_With_Their_Own_Money.html
 
Is the Gold Bull Market Over?

http://www.longwavegroup.com/blog/is-the-gold-bull-market-over/

"Agnico Eagle (AEM/T) doesn’t think so. In the past two months, Agnico, which incidentally is one of my favourite gold mining companies, has shelled out $54 billion to buy somewhere between ten and fifteen percent of four junior precious metals companies-Sulliden Gold Corp(SUE/T), Kooteny Silver Inc. (KTN/V), Probe Mines (PRB/V), Atac Resources (ATC/V), and to buy outright a fifth company, Urastar Gold Corp (URS/V) ."


Agnico is the bellweather stock of the sector. In fact the bullion banks wrote a special OTC product that went long bullion and short AEM and the hedgies have huge naked short positions against the stock. The strategy is if they could suppress AEM then the sector would follow. It was scuttlebutt recently that the banks were begging clients to unload AEM so they could cover shorts. The recent price action indicates professional accumulation.
 
From Red Ice Radio:

"Top Priority: The Terror Within" is a documentary film by Fleur De Lis Film Studios. It features an incredible true story of Julia Davis, a national security whistleblower who was falsely declared a "Domestic Terrorist" and subjected to retaliation of unprecedented proportions by the Department of Homeland Security. She joins us to discuss what happened when she discovered and reported a breach of national security at the largest and busiest land border crossing in the U.S. on 4th of July, 2004. The DHS failed to act on her reports but instead of correcting the shortcomings exposed by Julia's report, they opened investigations against her. Her husband BJ, a film producer who documented these events with a camera, also joins in to talk about the detailed events of this major story, never reported on by mainstream media, although Julia took her case to court and won. They'll detail unprecedented retaliation and abuses of the Patriot Act in Julia's case and talk about how the DHS spent American taxpayer's money on warrantless surveillance, including aerial surveillance with a Blackhawk helicopter and a fixed-wing airplane, wiretaps, sneak and peek burglaries, Internet monitoring and On-Star tracking of the Davis family. They'll explain why this story was never reported on by mainstream media and who was involved. In the second hour, we hear about several deaths connected to this story including Julia's father, her neighbor who filmed the footage of the Blackhawk and the actress Brittany Murphy as well as her husband. Julia and BJ talk about the diminishing of our American rights amongst "terror theatre 101." Don't miss this astonishing story of the real terror, within the US government.

http://www.redicecreations.com/radio/2013/05/RIR-130526.php
 
Does anyone here invest in municipal bonds? Can someone tell me how high is the risk? I talked to a financial advisor who advised me to invest some money in municipal bonds and she told me the rate of return is about 6% annually and it is very low risk...Can an investment with such high rate of return have low risk at the same time?
 
The financial industry is desperate for a bagholder for this muni crap. Never, ever reach for yield. Any type of bond right now is very dangerous due to threat of devaluation. That's why you are seeing a worldwide debt for equity swap. The market is finally figuring out that rates can't stay this low or that bond prices can't stay this high. Just think the bond is probably at least 10 years, more likely 30 years in term. You would be buying at the very top of a 3 decade long bond bull market that is about to turn into a 3 decade bear market that will encompass a global currency reset. Even if you don't hold it to maturity you are guaranteed to sell it for a loss once rates rise.
 
From TwoShortPlanksUnplugged:

http://twoshortplanksunplugged.blogspot.com/2013/06/chinas-goldreserves-how-big-is-elephant.html

Friday, 7 June 2013

China's Gold Reserves: How big is the Elephant in the room?

This is of course a subject where almost everyone's opinion - other than the Intelligence agencies of the world (Mi6, Mi5, CIA, MSS, Mossad, FSB {KGB}, SIS, CSIS, ASIS, DCRI, BND etc) - is based upon both seemingly factual data, and varying degrees of artistic licence when attempting to fill the gaps.

What I would like to do in this post is address what I believe the level of China's Gold Reserves will be by the end of 2013.

First of all, let's look at the World Gold Council's data set for World Gold Holdings from February 2012.


According to the World Gold Council, China's Gold Reserves as of publishing was at 1,054.1 tonnes, but China updates its' data (tells the world) once every 18 months, and what they have and what they choose to tell may be two completely different things, so there's a giant hole in our understanding right from the start.

Assuming that the World Gold Council isn't telling Porky Pies - and I very much doubt they are – we must look toward the possibility and indeed probability, that China themselves are not disclosing true and accurate information of their Gold Holdings and/or Gold accumulation habits. Given their past and present distortions of data, infrequent, sudden and retrospective announcements (most notably that they had already acquired over 400 tonnes back in 2008, and then 1,054.1 back in late 2009) I would need to conclude that China more than likely hides much of their position. In a previous post I wrote: "Personally, I believe they are very close, but that they will always claim to be in an Under-Dog position when in fact they're building an overshoot position. You can blame Sun Tzu for that crap, "Appear weak when you are strong, and strong when you are weak".

So let's see if we can get a rough picture, starting with a 2008-9 Gold Reserve figure of 1.054.1 tonnes.

If we look at China's importation of Gold from Hong Kong, we can identify a trend of increased purchase sizes with a few, possibly opportunistic, larger purchases along the way, as you can see in the graph from Zero Hedge below.

The graph shows an average purchase of 83.31 tonnes per month over a 16 month period. If we use some approximate figures and assume a sliding scale from 30 tonnes per month back in 2009 to 85 tonnes per month in 2013, we can then place a figure of 3,360 tonnes being imported from Hong Kong and into China since 2009.
(2009/360t, 2010/480t, 2011/660t, 2012/840t, 2013/1020t).

We are able to attain seemingly reliable figures of Gold imports to China out of Hong Kong, but what of other sources? For instance, does China produce 400 tonnes of Gold each year? Does China accrue Gold through foreign swaps (Aid, Arms, Oil, Food) of some sort?

In regards to mining, let's assume China's Gold production has been steadily growing, on average, at say 64% every 10 years (as the graph below illustrates). That means China's annual production from mining should be around 355 tonnes per year as of 2013. So, if we use a sliding scale of China's production from 280 tonnes per year in 2009, to 355 tonnes per year in 2013, we get a figure of 1,590 tonnes since 2009.
(2009/280t, 2010/300t, 2011/320t, 2012/340t, 2013/360t).

In regards to foreign swaps, and for argument sake, let's assume China does indeed do a reasonable amount of back-door Gold importing with and through its northern and north eastern neighbours, as part of commodity and goods swaps. Let's assume a sliding scale figure of just 20 tonnes per year back in 2009 to 100 tonnes per year in 2013, that's 300 tonnes from unknown foreign dealings since 2009.
(2009/20t, 2010/40t, 2011/60t, 2012/80t, 2013/100t).

let's just add-up what we have so far;

World Gold Council (2009).....1,054.1 tonnes
Imports from Hong Kong (2009-13).....3,360 tonnes
China's Gold production (2009-13).....1,590 tonnes
Foreign Gold swaps (2009-13).....300 tonnes
Total (estimates) Gold Reserves.....6,304.1 tonnes @ End 2013


In a previous post, I discussed the need for China to attain a specific level of Gold Reserves:

"Knowing the Chinese, they're more than likely acquiring physical at a rate beyond most people's estimates, and, knowing their philosophy in business, they'll overshoot whatever notional tonnage figure was assigned to them, or for which they themselves may have ascribed in order to be on par with US Gold Reserves to GDP.

US GDP is $14.99 T, Gold Res is 8,133.5 tonnes….that's 542.6 tonnes per trillion dollars.
China GDP is $7.32 T, Gold Res is 1,054.1 tonnes….that's 144.0 tonnes per trillion dollars.
China needs 3,971.8 tonnes to be at the same Gold Reserves to GDP ratio as the US."

So, has China surpassed the 6,000 tonne mark already…has China reached their "Overshoot" position?

If China has amassed 6,300 tonnes already, then it has hit 860 tonnes per trillion dollars GDP and increased it's position just shy of 600%.

When we look for possible answers to this question, I cannot help it that the first thing which hits me is the recent history of both the past and present Chinese Presidents (Hu Jintao and Xi Jinping) have been touring much like a US President tours with their First ladies. The mind of the Chinese is different usually; head down and work hard until you have made it, then, once you have made it, hold your head up like the Emperor.

Has China already made it...ie, has China surpassed the United States Gold Reserves to GDP figure of "542.6 tonnes per trillion dollars" ?
 
I'm mistaken for a goldbug, but I'm not. I am a longwaver. There is a time to be overweight gold and a time to be underweight. I just posted this over at FOFOA, the hardcore goldbug blog though they don't consider themselves to be. They call me a Keynesian over there. Yeah, that's right. The gold crowd hates me.

"18.92 (1 oz of Au) invested in 10 year treasury w/ coupons sent to zero certificate until maturity of bond, so compounding rate is 10 years.


Date of Annual Total Total at Avg Au
Bond Yield yield Maturity Price@Maturity
1/1/1913 4.45% 44.5% 27.33 21.32

1/1/1923 4.31% 43.1% 39.11 26.33

1/1/1933 3.31% 33.1% 52.05 33.85

1/1/1943 2.47% 24.7% 64.91 34.84

1/1/1953 2.83% 28.3% 83.28 35.09

1/1/1963 3.83% 38.3% 115.18 97.39

1/1/1973 6.74% 67.4% 192.81 424

1/1/1983 10.46% 104.6% 394.49 360

1/1/1993 6.60% 66.0% 654.86 363

1/1/2003 4.05% 40.5% 920.08 1650


So $18.92 in 1913 would be $920 in 2013 even if you just let the coupons rot at zero interest for 10 year intervals. In fact by 2003 the dollar had beat gold nearly 2:1, $650 vs. $363.

I wish the hard money community would stop trotting out that graph that shows dollar debasement since 1913. It's intellectually dishonest. It doesn't account for interest. "

http://fofoa.blogspot.com/2013/05/what-is-freegold.html?commentPage=3
 
For those that think the economy is growing....

http://market-ticker.org/post=221575

From Denninger: "That's the "big picture." Consumer debt has gone exactly nowhere. The so-called "recovery" has been carried by business debt that has grown at a rate roughly double that of economic expansion, and the government is growing debt at a rate more than triple that rate."

akcs-www
 
This from the comments over at FOFOA:

Grumps LaBastard said...
Maybe somebody can help me with what I feel is an existential issue for Freegold in the hereafter.

If real interest rates are positive then why would a shrimp who does not have enough savings on which to retire want to be overweight gold? Holding all savings in gold for this shrimp would be like settling for a lump sum payout instead of an annuity. If this shrimp doesn't have the critical mass in savings to withstand a zero yield then he needs a yield to at least mitigate the burn rate of his nest egg. It's a good guess that a big demographic fits this profile.

Or is it that real rates will be negative in perpetuity? Gold will always deflate, increasing in purchasing power? How are savings coaxed out into investment if money has a real negative rate? If gold is always deflating then why invest any savings? This makes no sense. There would have to be an interest rate at which an equilibrium would be reached between savings and investment.

June 8, 2013 at 7:54 PM
gary said...
@GrandLampBartender

You continue to flog this dead horse.

You are exporting the idea of a black and white scenario where logic will dictate where ALL investors will go post FG. It smells like you are attempting to discredit FG with a strawman imbalance in the investment sphere.

Does logic indicate where ALL investors will go today? Some buy Bonds (how logical is that?), some save cash, CDs, GICs - there is even one guy in this forum touting mining shares (believe it or not). Most in this Forum would probably keep their excess in Gold. This is despite the MTM leanings. See, everyone is different regardless of the, perception of your logic - everyone has their own logic (even with obvious interest rate enticement or rejection) - everyone sees different shadows in Plato's Cave. There are many options - YOU may not find merit in them but that is why they have horse races - people disagree. I doubt this will change post FG. If there is an investment opportunity imbalance - the marketplace has a great way of fixing that.... works every time.
Regards,

June 8, 2013 at 8:24 PM
M said...
@grumps LaBastard

A 30 year old shrimp, who is making good money wants to save so that he has an income generator when he is 65. Under freegold, he would accumulate gold(unencumbered,tax free,inflation free,commission free, floating raw capital gains) slowly over time until he needs to sell it and invest in an income generator. Or he could divest himself of the gold as needed.

FOFOA even said in his hit piece on Warren Buffet that some of us freegolders could very well be holders of Berkshire Hathaway stock in the future.



June 8, 2013 at 10:33 PM
Grumps LaBastard said...

But you guys miss the point about positive real rates and what that means for gold. Think of Le Chatelier's principle in chemistry. If real rates are positive this pushes the SoV equilibrium point away from gold and into whatever serves as money.

For a Giant it does not matter. His gold goes down in value , but he is compensated by a bump up in his financial assets. When the sytem goes pear-shaped his wealth pie stays the same size, but now gold represents a big chunk. The shrimp doesn't have the excess wealth that can absorb a decline in value. That shrimp has to get the megatrend right for the 30-40 years of his investing career to have a nest egg. If rates are positive then it makes no sense to be overweight ( more than 5-10%) gold.


June 9, 2013 at 4:31 AM
Jeff said...
Your debt paradigm conspiracy theory can't be reconciled with Freegold. You chose...unwisely.

June 9, 2013 at 4:47 AM
Grumps LaBastard said...
Interest rates are a conspiracy? Come to think of it, I can't recall any kind of treatment amongst FOFOA's posts about how interest rates would interact with gold after the transition. Just that gold would be in an isolated circuit away from the monetary plane. Wouldn't there be any potential field between this circuit and the monetary plane? This is Grump's Conundrum.
 
Just looking at Pretium's econometrics for the Brucejack field. Compare how the payback number decreases with the price of gold moving from 1350 to a measly 1415. Now imagine 3000 gold...4000...5000...7000 and with a strengthening loonie to boot. I would wait to accumulate more. Usually after a 43-101 the street shorts these projects that will have to raise capital.
 
The monetary base is future inflation. Falling velocity is a prelude to hyperinflation. Notice as higher monetary aggregates wither the lower ones grow. This is long term debt investors refusing to sign on to the long end of the yield curve. Too much duration risk. Velocity drops, but money of zero maturity grows.

Consumer price inflation lags monetary inflation.

Hyperinflation is misunderstood by most, especially economists. It is not inflation on steroids. It is the bond market undergoing a phase transition from a solid state where money is tied down in time deposits to a gasesous state of money of zero maturity, MZM, or cash. This cash will flee the debt markets and go to equities, collectibles, real estate, commodities, and gold. Hyperinflation is a debt for equity swap. Normal inflation is what we experience as credit expands. Our banking system uses debt instruments as reserves, so that the value of that debt on an aggregate level must never go down. when Ben talks about a 2% inflation target, he's not talking about the price of eggs, he's talking about credit expanding by 2%. It really is inflate the credit market or die for the banking system. If credit doesn't eventually expand in the private sector then the system will be reset to save the banks. A gold revaluation devalues the assets as well as the liablities of the banks, leaving them still on top. Savers who are bonds or currency will be screwed. The nice thing about a gold revaluation is that it will mitigate a hyperinflation. The value in the bond market would decant into gold.
 
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"One final thought: It is fascinating to see that in a context of quantitative easing, we see shortage of collateral for leverage. This rightfully reminds me of the times of hyperinflation in Argentina, when there was no liquidity, not even for working capital."------Martin Sibileau
 
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