Bail out or illusion?

Posted on February 22, 2012 by Wayne Peterson

After seven weeks of negotiations, European leaders appear to have engineered a rescue for Greece.  The €130 billion aid package is contingent on the country reducing its overall debt load from 160% (after the new loan)  to 120% of GDP by 2020.  The restructuring will mean private-sector holders of Greek bonds take a hit of more than 70%.

Knowledgeable observers are still predicting a Greek default, with the European Union simply trying to buy time so that banks can download their Greek paper on the ECB.  This will socialize the losses which have occurred as a result of bank stupidity.  It is a bank bailout.

UK MEP Nigel Farage told King World News that despite the bailout, risks in the banking system are still enormous and that a modern-day catastrophe is about to occur.  “We have 50% unemployment amongst young people in Greece.  25% of commercial companies have gone bankrupt in Greece in the last four years.  We have now thousands of people in Athens literally sleeping in cardboard boxes in the streets.  We have families giving up their kids for adoption because they feel it would be better off if someone else looked after them because they simply can’t feed them.  All they are doing is kicking the can down the road and delaying the inevitable bankruptcy that Greece faces.”  This is being done to save the banks.  What a shame.

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Another reason to expect 5-digit gold

Posted on February 21, 2012 by Wayne Peterson

In a recent article, Jim Sinclair reiterated an opinion that “Gold’s job is – and always will attempt to be during periods of monetary stress – to balance the INTERNATIONAL Balance Sheet of the USA.”

Federal Debt held by Foreign Investors equaled $3,125,000,000,000 as of 12/31/08, according to the St. Louis Federal Reserve.  Official US Gold holdings are reputed to be 8133.5 tons, or 260,272,000 ounces.

$3,125,000,000,000 / 260,272,000 = $12,006.67 per ounce of gold.  This number is consistent with potential peak gold figures arrived at by other industry professionals, including Alf Field and Robin Griffiths.

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Market Highlights for the week ending 2-17-2012

Posted on February 20, 2012 by Wayne Peterson

Shadowstats.com’s John Williams, in a periodic update of his “Hyperinflation Watch” report warned about the risk of a sharp sell-off in the US dollar and dumping of dollar-denominated paper assets.  Williams sees “no change in the underlying fundamentals. There is nothing that would support a sustainable turnaround in retail sales, personal consumption or in general economic activity. There is no recovery, just general bottom-bouncing.”

UK member of Parliament Nigel Farage commented that “Greece is descending into total chaos and violence. There is no democracy in Greece. The country that invented democracy has now had it stripped away. Is it any wonder that people take to the streets and things turned violent?” A former “distinguished Greek Ambassador” told Farage that he and his friends were buying Kalashnikovs (rifles).

Iran is being dropped out of the SWIFT (Society for Worldwide Interbank Financial Telecommunication) system in Belgium, meaning that it can neither send nor receive bank money wires.  Jim Sinclair: “Exclude all banks operating in Iran from Swift and business falls back to the 17th century in an instant. This will slam Iran’s economy. This is an economic war at the highest level of conflict… and as serious as it gets in nuclear and economic terms. Hold tight to your insurance investment positions.”

In a quiet week, gold moved up a buck to $1726.20/oz, while silver gave back 31 cents to $33.29/oz. Trading remained slow, in the absence of any excitement. Dan Norcini indicated that the “quiet accumulation” that is going on could be “the calm before the storm.” The fact that there has been little retracement after a 200-point advance is significant. Hedge fund manager John Paulson told investors it’s “time to buy gold as protection against inflation caused by government spending.”

Mining stocks (XAU Index) fell 1.0% to 193. Commodities (CCI Index) gained 1.1% to 592, with crude jumping $5 to $104.20/barrel – and on the verge of an upside breakout (which would also be bullish for gold).

Large stocks rose 1.2%. The Dow closed at 12950 and the S&P overcame resistance at 1350 to settle at 1361. Richard Russell (who is recovering from a hip replacement) apologized to his readers for not alerting them to the ongoing market advance, but commented that he would not buy now. A number of informed analysts believe that the market is rising in anticipation of renewed monetary stimulus.

The dollar (USD Index) inched up 0.2% to 79.33. Bonds fell, with 10-year and 30-year Treasury yields up 5 basis points to 2.01% and 3.16%. Rick Rule, in a King World News interview, pointed out that the Fed’s recent declaration that it will keep short interest rates at zero for the next three years, while simultaneously shooting for 3% annual inflation, equates to returning a dollar-investors money in three years – less 10% in purchasing power.

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What will replace the dollar?

Posted on February 14, 2012 by Wayne Peterson

James Rickards, Senior Managing Director at Tangent Capital Partners and author of the best-selling “Currency Wars,” summarized his view on what will eventually replace the dollar as the world’s reserve currency. “I lay out four scenarios, which I call ‘The Four Horsemen of the Dollar Apocalypse.’

“The first case is a world of multiple reserve currencies with the dollar being just one among several. This is the preferred solution of academics. I call it the ‘Kumbaya Solution’ because it assumes all of the currencies will get along fine with each other. In fact, however, instead of one central bank behaving badly, we will have many.

“The second case is world money in the form of Special Drawing Rights (SDRs). This is the preferred solution of global elites. The foundation for this has already been laid and the plumbing is already in place. The International Monetary Fund (IMF) would have its own printing press under the unaccountable control of the G20. This would reduce the dollar to the role of a local currency, as all important international transfers would be denominated in SDRs.

“The third case is a return to the gold standard. This would have to be done at a much higher price to avoid the deflationary blunder of the 1920s, when nations returned to gold at an old parity that could not be sustained without massive deflation due to all of the money-printing in the meantime. I suggest a price of $7,000 per ounce for the new parity.

“My final case is chaos and a resort to emergency economic powers. I consider this the most likely because of a combination of denial, delay, and wishful thinking on the part of the monetary elites.”

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Market Highlights for the week ending 2-10-2012

Posted on February 13, 2012 by Wayne Peterson

In what the US called the largest federal-state civil settlement in the nations history, five banks including Bank of America and JPMorgan Chase committed $20 billion in various forms of mortgage relief plus payments of $5 billion to state and federal governments. Rolling Stone’s Matt Taibbi commented: “So they settled the case in a way that reads in headlines like it’s a bite out of the banks, but in fact is barely even that. There will be little in the way of real compensation for struggling homeowners, and there are serious issues in the area of the deal’s enforceability. In fact, about the only part of the deal we can be absolutely sure will be honored in full is the liability waiver for the robo-signing offenses.”

The Greek parliament, under pressure from its unelected banker leader, approved a deeply unpopular austerity bill (again) to secure a second EU/IMF bailout and avoid national bankruptcy. Chaos ensued outside; buildings burned across Athens and violence spread around the country, showing how tough it will be to implement the measure. Zero Hedge noted that “all Greece has done is promise to do something it won’t do in hope it can get another bailout package.”

Gold failed once more to best $1750 and closed the week at $1725.30/oz, down $5, while silver gave back 10 cents to $33.60/oz. Trading has slowed, as traders perception of the global market (Europe in particular) shifts from day-to-day. The Japanese central bank appears to be joining China, India and Russia at the bullion-buying table.

Mining stocks (XAU Index) fell 2.8% to 195. Commodities (CCI Index) dropped 1.4% to 586, while crude gained $1.40 to $99.09/barrel. Large stocks slipped 0.3%, while the NASDAQ was flat. The Dow closed at 12801 and the S&P, which is up against strong resistance at 1350, settled at 1343.

The dollar (USD Index) gained 0.2% to 79.11. Currencies are in turmoil. Bonds were essentially unchanged: the 10-year Treasury yield is at 1.96% and the 30-year at 3.11%.

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Impending ruin for the dollar and America

Posted on February 10, 2012 by Wayne Peterson

Greg Hunter at USAWatchdog.com relayed here his observation that an increasing number of responsible pieces of journalism are “warning of impending doom and financial horror.”

Jim Quinn of theBurningPlatform.com expands on the late Ludwig von Mises definition of a “crackup boom” – writing that ”There is no avoiding the final collapse of a boom created solely by credit expansion. Those in power will never voluntarily relinquish their grand game of pillaging the wealth of the nation, so economic collapse will be the ultimate result. They will continue to use propaganda, printing presses, and half-truths to further their agenda. But those who examine the facts will come to a logical conclusion that we are being sold a great lie.”

Hunter’s article links to reports which cite that “49 percent of all Americans live in a home that gets direct monetary benefits from the federal government;” “US commercial banks sit atop $248 trillion in derivatives,” “The US Federal Reserve is now buying 91% of all long-term new US debt issuance,” and many others.

Evidence for a financial collapse, including a collapse of the dollar, is overwhelming. In fact, it is already underway. “The biggest problem America has is crushing debt that it will never pay back. Dollars are loaned into existence, and many have been created to prop up the banks and the economy. You cannot fight a debt crisis with never-ending bailouts and currency creation.  That’s like fighting fire with gasoline.  A monumental change is coming, and for most Americans, it will be painful—especially for the unprepared.”

The pickle that we are in is not due to mismanagement or accident – it has been carefully planned. Watch the movie “Thrive” (get it at www.thrivemovement.com) and/or watch “The Money Masters” here and you’ll understand why.

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Strange Noises – around the world

Posted on February 7, 2012 by Wayne Peterson

From many different parts of the globe, reports are being filed of unusual sounds apparently generated by the earth. Differing explanations are being given for the origin, including the effect of drilling activity, particularly fracking.

Another interesting hypothesis, “Expando Planet” theory, states that even as the sun turns matter into energy, when that same energy enters the Earth it is turned back into matter. So the Earth is constantly growing from within. Hence, a possible groaning, growing sound.

Courtesy of www.futureedition.org (which publishes a fascinating free newsletter) here is a list of reports on this phenomenon – a number of which are home-made video clips, with poor sound quality. But look at the coverage!

Windsor, Canada Shaken and Stirred by Rumbling – (CBC News – August 19, 2011)
The Earth is Groaning: Unknown Sound Phenomena Occurring 2011
Strange sounds heard worldwide
Lovely sound vibration heard over Western PA
Strange noise in the sky August 27, 2011 St. Pete, Florida
Strange sound in Poland
Strange sound in Lublino, Poland
Strange sound in Kiev (Ukraine):
Strange sound in the sky, Curitiba, Brasil
Strange sound in Montreal
Strange sounds in Czech Republic
Booming Trumpet of the Apocalypse in Costa Rica
Strange noise in Germany sets off car alarms
Strange sounds in Los Angeles
Strange sounds in Edmonton, Alberta
Strange sounds in Conklin, Alberta
Strange sounds in Thunder Bay
Strange sounds in Spain
Loud humming vibration from the earth

 

These noises are in my opinion just one more piece of evidence that the Earth is changing beneath our feet, quite possibly because we are transiting the plane of the Milky Way Galaxy.

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Sea water on the parade

Posted on February 3, 2012 by Wayne Peterson

Strong unemployment figures for January, released this morning, will likely have green-shooters planning a celebration. The report contained quite a few encouraging numbers and we all hope the broad-based gains are real. But since it’s our government doing the reporting, we may have to wait a month to see whether January’s data is revised downwards (as is often the case).

One immediate straw in the wind is that an unprecedented record 1.2 million people may have dropped out of the labor force in January, bringing the percentage of the civilian labor force that is employed to a new 30-year low of 63.7%. So the real story may be a bad one. We’ll have Shadowstats’ John Williams take on this development in Monday’s ezine.

Another indicator is giving a clear signal that all is not well. The Baltic Dry Index has plunged to a 20-year low. The BDI is issued daily by the London-based Baltic Exchange. It tracks worldwide international shipping prices for various dry bulk cargoes (mostly commodities). When shipping demand falls, the BDI drops – and vice versa when demand is strong. It’s a widely-watched harbinger of global economic conditions which often precedes the movement of commodity and stock markets, as shown below.

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$158 silver?

Posted on February 1, 2012 by Wayne Peterson

Gold technical forecaster Alf Field has added a footnote to his recent $4500 gold forecast. Field, who years ago successfully applied Elliot Wave Theory analysis to predict gold prices, has applied EWT to recent silver movements and found a convincing fit.

Field is 75% confident that the bottom for gold is in and, as he stated at the recent Australian Gold Conference, it will now advance to $4500/oz, with two corrections of 13% or less.

He is now stating that as long as silver remains above $26, it should advance to $158.34/oz while gold is making its move to $4500. Here is his analysis, as relayed by Egon von Greyerz.

Since Alf owns silver bullion, as well as gold, his predictions could be regarded as self-serving. However, Field is held in high regard by the gold community, and his prediction in Australia broke a 6-year silence – self-imposed out of concern that individuals trading based on his forecasts could get caught out of the ongoing massive bull market.

I’m sure Alf would agree that no one knows with any degree of certainty how high any asset will rise in price. Nevertheless, the observations of this skilled technician add some clarity to the magnitude of the advances that may lie ahead for precious metals investors (and the numbers he cites are for intermediate waves, with even higher numbers to come later).

Alf adds an important footnote: that silver is much more volatile than gold and “it is easy to get shaken out of one’s position near the bottom of a large correction.” Which is why we recommend holding at least twice as much gold as silver in an individual portfolio.

For more information, please see our website: www.familybusinessoffice.net.

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Market Highlights for the week ending 1-27-2012

Posted on January 30, 2012 by Wayne Peterson

The Fed announced that it intends to continue its war on savers — and the middle class — by keeping short rates near zero through at least late 2014. Savers will be forced out of fixed income and into speculative investments. At the same time, the Fed will be fattening up the big banks by giving them access to low-cost funds. It also appears that the Fed will soon be back in the counterfeiting business, running its digital printing presses in an attempt to keep mortgage rates down and stimulate the housing industry.

Gold blew through strong resistance at $1680 and climbed $68 to $1734/oz,  while silver soared $1.86 to $33.89/oz. Gold has support at $1710 and will now try to overcome $1750. Silver has support at 32.50 and is up against resistance at $34, then $35. Jim Sinclair predicted that institutions  such as pension funds and life insurance companies, seeking an alternative to normal cash and debt instruments, will now start to enter the markets. Wall street will follow, then main street.

Mining stocks (XAU Index) soared 8.4% to 203. Commodities (CCI Index) rose 3.0% to 596, and crude added $1.25 to $99.76/barrel. Large stocks were flat, while the NASDAQ gained 1%. The Dow closed at 12660 and the S&P at 1316.

The dollar (USD Index) plunged 1.6% to 78.90. Bonds strengthened, with the 10-year Treasury yield diving 12 basis points to 1.93% and the 30-year yield down 3 bp to 3.07%.

A couple of recent Earth-striking CME’s were not strong enough to show up over Texas, but here’s a consolation prize: a breathtaking aurora borealis over Fairbanks, Alaska.

Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote. – Benjamin Franklin

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