Is It Time To Sell Your Gold?

by Bill Bonner



Dear readers ask about gold. Is it time to sell? To buy? To forget about it?
Gold fell $25 yesterday; it now stands at $1,575 per ounce. The gold price could break all the way down to $1,000. But we don't expect it. Gold is not in a bubble.
As you have seen, gold is neither overpriced nor underpriced. It buys about what it should buy. Maybe a little less. Maybe a little more.
How do we know what gold "should" buy?
We don't, really. But gold is a natural thing. It is pulled from the earth by people, using the technology and resources available to them. As their productivity in other areas goes up, so does – generally – their ability to extract gold from the ground.

Short Covering Squeeze In Precious Metals and Miners?

by Jeb Handwerger - Gold Stock Trades

A week ago I wrote about a potential rebound after capitulation and panic selling in precious metals and the miners. It now appears Goldman Sachs (GS) is covering its short on gold as it rebounds above $1400.
Meanwhile, many banks have helped confuse and misdirect the investment community out of gold (GLD) and silver (SLV). This was a classic shakeout and bear trap which may start a major short covering rally.
Be ready to see increased short covering combined with record physical demand. These are the two elements to spark a price spike and breakout higher in both gold and silver.
These markets are ready to start moving higher after basing for 2 years and having a major short attack by the big banks too big to fail and the media.

Right when gold and silver were about to gain some momentum after bouncing off key support for most of 2012, simultaneously Goldman Sachs came out with a bearish prognostication on precious metals, old Fed minutes are brought up and Cyprus says they will sell gold.
This resulted in a shakeout below $1535 and a massive bear trap for momentum traders who may have been stopped out. The markets will do whatever it must to confuse, misdirect and obfuscate the long term trend investor.

The US is moving to a gold standard

by Jan Skoyles

Following the news that last week Arizona lawmakers passed a bill that will see precious metals become legal tender we thought this would be the perfect time to bring you a fourth installment of The Real Asset Report. Here we look at the moves several US states are making to move to sound money. Look out for the great infographic below.

 ‘No State Shall make any Thing but Gold and Silver Coin a Tender in Payment of Debts’ 1787 US Constitution: Article I, Section 8.

When President Nixon closed the gold window in 1971, ending Bretton Woods, it signalled the final disregard for the Founding Fathers’ US Constitution.
Whilst many have long campaigned for a return to the gold standard, including Dr Ron Paul, a former Congressman and GOP presidential candidate, moves to use gold and silver as legal tender have hit the big time since the financial crisis.
There are now 20 US states that either have successfully passed bills to allow gold and silver to be used as legal tender, or have been exploring it as an option.

Ron Paul On Bitcoin: "If I Can't Put It In My Pocket, I Have Reservations"

by Tyler Durden

"You will not see economic growth until you liquidate the debt and liquidate the malinvestment out there," is the hard truth that former Congressman Ron Paul lays on Bloomberg TV in this wide-ranging interview. Paul is concerned at "the erraticness of the dollar... and its devaluation," explaining that, "people think the gold price up and down is a reflection of something wrong with gold; no, I say it is something wrong with the dollar." The topic gravitates to inflation, which Paul explains is far from missing as, "Bond prices go up. Stocks are going up. Housing prices are starting to go back up again. Education costs are going up," adding that, "CPI is not reliable." Paul is buying gold, believes "we are in as much trouble as Greece," and while fascinated by the free market nature of Bitcoin, he notes that while he doesn't fully understand it, "if I can't put it in my pocket, I have some reservations about that."

Paul on whether he's concerned about the drop in gold:

"I am concerned about the erraticness of the dollar. The dollar is up, the dollar is down. We print a lot of dollars. The dollar gets devalued. That is really the concern. If people think the gold price up and down is a reflection of something wrong with gold, no, I say it is something wrong with the dollar. People have been expressing concerns over the past couple of months about gold, but compared to what?

Aureus, Argentum Atque Oleum

by Richard Daughty

  












***Paranoia Alert: Enemies Everywhere, With Precious Metals Our Only Friends***

Okay, I admit I was, you know, kind of "over the edge" a little bit the other morning, but my wife interrupted me just as my raging madness was peaking, almost out of control, I mean really cranking loud and long that "Anyone NOT buying gold, silver and oil, Right Freaking Now (RFN), especially at these bargain-basement prices when the evil Federal Reserve is creating So Freaking Much (SFM) currency and credit that inflation in prices will rage out of control, is a complete and utter butthole who ought to be dragged in here, kicking and screaming, so that I can yell in their faces that they are, as previously stipulated earlier in this very same sentence, buttholes!"
That – that! – was when she gently tapped me on the arm and asked "Dear, did you take your pills this morning?"
Well, that’s the pivotal moment when I really lost it. Suddenly, in a kind of weird, out-of-body experience, I could see myself saying "No, I didn’t take my damned pills this morning! Why else would I be acting like this, you moron?"
Now, there are a couple of things that my wife doesn’t like, and one of them is me calling her a moron. Although I liked it when the kids snickered and tried not to laugh, so it wasn’t ALL bad, because usually they laugh when my wife is reminding me, with overwhelming embarrassing evidence, how I have, personally, been a moron.

Why central planning fails

 by Bill Bonner 

The Dow is still rising. It rose another 125 points yesterday… hitting a new record high.
Gold is dawdling.
We’re still thinking about how so many smart people came to believe things that aren’t true. Krugman, Stiglitz, Friedman, Bernanke — all seem to have a simpleton’s view of how the world works. They believe they can manipulate the future and make it better. Not just for themselves, but for everyone. Where did such a silly idea come from?
Aristotelian logic came to dominate Western thought after the Renaissance. It was essentially a forerunner of positivism — which is supposedly based on objective conditions and scientific reasoning. “Give me the facts,” says the positivist, confidently. “Let me apply my rational brain to them. I will come up with a solution!”
This is fine, if you are building the Eiffel Tower or organizing the next church supper. But positivism falls apart when it is applied to schemes that go beyond the reach of the “herald’s cry.”
That’s what Aristotle said. He thought only a small community could work at all. Because only in a small community would all the people share more or less the same information and interests. In a large community, you can’t know things in the same direct, personal way. So it’s hard for people to work together in the same way.
In a large community, you have no idea who made your sausage or what they put in it. You have to rely on “facts” that are no longer verifiable by direct observation or personal acquaintance.
Instead, the central planners’ facts usually are nothing more than statistical mush, wishful thinking or theoretical claptrap — like Weapons of Mass Destruction, the unemployment rate and the Übermensch.
Large-scale planning fails because the facts upon which it is built are unreliable, frequently completely bogus.
And it fails because people don’t really want it.

Hidden Agenda

In a small community the planners and the people they are planning for are close enough to share the same goals. In a large community the planners are a small minority.

Forget Cyprus, Japan Is The Real Crisis

Forget Cyprus. A much bigger story in the coming weeks and months will be in Japan, where one of the greatest economic experiments in the modern era is about to begin. A country where government debt even dwarfs those of Europe’s crisis-ridden nations, Japan will attempt to inflate its way out of a 23-year deflationary spiral.

The overwhelming consensus among the world’s economists is that quantitative easing (QE) has saved the day in the U.S. and that Japan needs to follow suit, on a larger scale. I beg to differ and suggest this policy will almost certainly lead to a hyperinflationary disaster in Japan. If that’s right, it will have serious ramifications for other countries, dragged down by an acceleration of the so-called currency wars. More broadly though, it is likely to destroy the myth pushed by today’s economists that QE is a cure-all for downtrodden economies. It isn’t and Japan will become the template to prove it.

Monster stimulus on the way
The new Bank of Japan (BoJ) Governor, Haruhiko Kuroda, started work on Thursday and his first day on the job disappointed investors.

A Retort to SocGen’s Latest Gold Report

by David Franklin and David Baker

Société Générale (“SocGen”) recently published a special report entitled “The end of the gold era” that garnered far more attention than we think it deserved. The majority of the report focused on SocGen’s “crash scenario” for gold wherein they suggest that gold could fall well below their 2013 target of US$1,375/oz. It also included a classic criticism that we’ve heard so many times before: that the gold price is in “bubble territory”. We have problems with both suggestions.

To begin, the report’s authors appear to view gold as a commodity, rather than as a currency. This is a common misconception that continues to plague most gold market analysis. Gold doesn’t really work as a commodity because it doesn’t get consumed like one. The vast majority of gold mined throughout history remains in existence today, and the total global gold stockpile grows in small increments every year through additional mine supply. 

Banking and the State

by Thorsten Polleit

“It had come to be accepted that the pigs, who were manifestly cleverer than the other animals, should decide all questions of farm policy, though their decisions had to be ratified by a majority vote.”
Orwell, G. (1989 [1945]), Animal Farm, S. 34.

The Starting Point: Civilization Begins

The founder of the Medici banking dynasty, Giovanni di Bicci de' Medici (1360–1429), said to his children on his death bed: “Stay out of the public eye.”[1] His words raise the question, "How much do bankers know about the truth of modern money and banking?"
To develop a meaningful answer to this question in the tradition of the Austrian School of economics, one has to start right at the beginning, and that is with the process of civilization.
Civilization denotes the development through which man substitutes the state of the division of labor and specialization (that is, peaceful and productive cooperation) for the state of subsistence (that is, a violent hand-to-mouth existence).
In his magnum opus Human Action (1949), Ludwig von Mises (1881–1973) put forward a praxeological explanation of the process of civilization, which helps us understand the course of its evolution.[2]
To Mises, two factors are at the heart of the process of civilization: (1) There must be an inequality of wants and skills among people. This is a necessary condition for people to want to seek cooperation.

The Biggest Bubble in Human History?

by lewrockwell.com

Dow up 125 points yesterday, to a new all-time record.

Why? What's behind it? The economy is not so hot. Why the red-hot stock market?

China is back in the news. A new report from CBS's "60 Minutes" documents the extent of the ghost cities in China – miles and miles of empty highway, office towers, apartments and malls. Analysts are talking about the biggest real estate bubble in history!


Is China a bubble? We don't know.

Does it matter? Well... yes... maybe. If China melts down or blows up the demand for oil and other resources goes down. The Chinese have pumped vast sums of money into development projects. That money helped to keep people on the job... and also kept the ships full of stuff, going back and forth across the world's oceans.

The Money-ness of Bitcoins

by Nikolay Gertchev

Bitcoins have been much in the news lately. Against the background of renewed concerns about the integrity of the euro zone and the imposition of capital controls in Cyprus, the price of a bitcoin has tripled over the last month and reached more than $141 for 1 BTC. Are we witnessing the spontaneous emergence of an alternative virtual medium of exchange, as some would put it? This article offers an answer to this question by considering three aspects of the economy of bitcoins: their production process, their demand factors, and their capacity to compete with physical media of exchange.

The Production of Bitcoins

A bitcoin is a unit of a nonmaterial virtual currency, also called crypto-currency, by the same name. They are stored in anonymous “electronic wallets,” described by a series of about 33 letters and numbers.

Jim Rogers: The Yen will be the First to Collapse in the Currency Wars

by Jimrogers1.blogspot.it



Jim Rogers is an author, financial commentator and successful international investor. He has been frequently featured in Time, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times and is a regular guest on Bloomberg and CNBC.
Wall St for Main St interviewed legendary investor and the author of Street Smarts, Jim Rogers. In this podcast, we discussed the global currency wars and why the Yen will be the first to collapse. Jim will discuss why the situation in Cyprus is a big deal and why Americans should be concerned about it! Also, we discussed gold,silver,copper and the agriculture market. Plus much more!
Jim Rogers started trading the stock market with $600 in 1968.In 1973 he formed the Quantum Fund with the legendary investor George Soros before retiring, a multi millionaire at the age of 37. Rogers and Soros helped steer the fund to a miraculous 4,200% return over the 10 year span of the fund while the S&P 500 returned just 47%.

The Chess Game of Capital Controls

by Jeff Clark

 

The best indicator of a chess player's form is his ability to sense the climax of the game.

–Boris Spassky, World Chess Champion, 1969-1972

You've likely heard that the German central bank announced it will begin withdrawing part of its massive gold holdings from the United States as well as all its holdings from France. By 2020, Bundesbank says it wants half its gold reserves stored in its own vault in Germany.
Why would it want to physically move the metal from New York? It's not as if US vaults are not secure, and since Germany already owns the gold, does it really matter where it sits?
You may recall that Hugo Chávez did the same thing in late 2011, repatriating much of his country's gold reserves from London. However, this isn't a third-world dictatorship; Germany is a major ally of the US. So what's going on?

Why Cyprus Matters (And The ECB Knows It)

by zerohedge.com

WHEN THE RED QUEEN IS AFTER YOUR HEAD
When Zig turns to Zag and the Red Queen is after your head then extraordinary care is necessitated. To quote Holmes, "The game is afoot" on the Continent.

I have been asked, with some frequency, why the bondholders have not been tagged in the Cyprus fiasco. That answer is simple. Most of Cyprus's bonds are pledged as collateral at the ECB or in the Target2 financing program. Then one may also ask why the bonds of the two large Cypriot banks are not being hit. The answer is the same; most are held as collateral at the ECB or Target2. In both cases, remember uncounted liabilities, the government of Cyprus has guaranteed the debt. Consequently if the two Cyprus banks default it is of small matter as the sovereign has guaranteed the debt. However if the country defaults and leaves the European Union then it will matter and matter significantly as the tiny country of Cyprus would wipe out the entire equity capital of the European Central Bank. While it is not a matter of public record it is estimated that Cyprus has guaranteed about $11.6 billion of collateral at the ECB.

Preparing for Inflationary Times

by Jeff Clark
 

"All this money printing, massive debt, and reckless deficit spending – and we have 2% inflation? I'm beginning to believe that either the deflationists are right, or the Fed's interventions are working." – Anonymous Casey Research reader
The CPI, in our view, does not accurately measure inflation, which accounts for some of the discrepancy our reader is pointing out. However, the proper definition of inflation is "an increase in the quantity of money," which we've had in spades. We've not experienced the concomitant increase in prices, which is what we're addressing in this article.
It's logical to assume that when you create more of something, you dilute the value of what's already in existence. That's exactly what has happened to the US dollar since the 2008 financial crisis hit. Economics 101 says this should lead to higher inflation – yet official Consumer Price Index (CPI) levels remain benign.
It's this unexpected development that led a reader to pen the above quote. Is the inflation argument dead? If so, does that mean gold's big run is over? It's a timely question since the current selloff in gold is largely attributed to low inflation expectations.

‘BRICS Development Bank would shift the tectonic plates of geopolitics and geo-economics’

by rt.com
 

The BRICS Development Bank is the beginning of the end of the existing monetary management system, Asia Times correspondent Pepe Escobar told RT.

RT: There’s no doubt about it, these countries that form the BRICS, they haven’t got a lot in common have they? They’ve all got different styles of government indeed some of them are economic rivals. Are they really a group to be taken seriously?

Pepe Escobar: From now on yes, let’s say until this summit in Durban, there was a lot of political talk of course and the BRICS are basically an economic group in the making. Now it’s different, now they have clear sound, actual policies to be implemented.

Want To Understand Money?

by 24hgold.com24hgold.com This was published on January 2, 2013, in Ron Paul’s Monetary Policy Anthology: Materials From the Chairmanship of the Subcommittee on Domestic Monetary Policy and Technology, US House of Representatives, 112th Congress. The scholarly contributions of Murray N. Rothbard span numerous disciplines, and may be found in dozens of books and thousands of articles. But even if we confine ourselves to the topic of money, the subject of this volume, we still find his contributions copious and significant. As an American monetary historian Rothbard traced the party politics, the pressure groups, and the academic apologists behind the various national banking schemes throughout American history. As a popularizer of monetary theory and history he showed the public what government was really up to as it took greater and greater control over money. As a business cycle expert he wrote scholarly books on the Panic of 1819 and the Great Depression, finding the roots of both in artificial credit expansion. And while the locus classicus of monetary theory in the tradition of the Austrian School is Ludwig von Mises’ 1912 work The Theory of Money and Credit, the most thorough shorter overview of Austrian monetary theory is surely chapter 10 of Rothbard’s treatise Man, Economy and State.

Cyprus and the Unraveling of Fractional-Reserve Banking

by Joseph T. Salerno

[Originally posted on Circle Bastiat, the faculty blog of the Mises Institute. Read Circle Bastiat for Austrian analysis of current economic events from today’s top Misesian and Rothbardian economists.]

The “Cyprus deal” as it has been widely referred to in the media may mark the next to last act in the the slow motion collapse of fractional-reserve banking that began with the implosion of the savings-and-loan industry in the U.S. in the late 1980s.
This trend continued with the currency crises in Russia, Mexico, East Asia, and Argentina in the 1990s in which fractional-reserve banking played a decisive role. The unraveling of fractional-reserve banking became visible even to the average depositor during the financial meltdown of 2008 that ignited bank runs on some of the largest and most venerable financial institutions in the world. The final collapse was only averted by the multi-trillion dollar bailout of U.S. and foreign banks by the Federal Reserve.

Jim Rogers Says No Paper Currency Will Be Worth Much Of Anything In 2014/5

JIM ROGERS - All FIAT CURRENCY will be WORTHLESS in 2014. Dont SELL GOLD or SILVER
Legendary investor Jim Rogers sees now as a great time to load up on gold and silver coins - and he's not alone.

A record 7.5 million ounces of silver coins were sold in January as investors hunted for a safe haven investment.

"You can't get [silver coins]. They sell out," Rogers, who owns a rare 2013 silver coin, said on Yahoo! Finance's "The Daily Ticker." "Several mints have run out of coins because everybody's worried about the future of the world."

And 150,000 ounces of American Eagle gold coins were sold in January, the highest monthly total since July 2010.

Anatomy of the Bank Run

by mises.org

It was a scene familiar to any nostalgia buff: all-night lines waiting for the banks (first in Ohio, then in Maryland) to open; pompous but mendacious assurances by the bankers that all is well and that the people should go home; a stubborn insistence by depositors to get their money out; and the consequent closing of the banks by government, while at the same time the banks were permitted to stay in existence and collect the debts due them by their borrowers.
In other words, instead of government protecting private property and enforcing voluntary contracts, it deliberately violated the property of the depositors by barring them from retrieving their own money from the banks.

Tenured Austrian Economists vs. Murray Rothbard

by Gary North

 
















The Austrian School of economics in the twentieth century was dominated by Ludwig von Mises. He died in 1973. His followers have divided into two main camps: the Rothbardians and the Lachmannites. They have adopted rival philosophies and rival strategies.
The main strategy of the Lachmannites is to get tenure at a university. The main strategy of the Rothbardians is to persuade the general public of the truth of economic liberty.
A college teacher who is granted tenure need not publish anything ever again. He will be paid for merely showing up to class. The number of classes that he teaches declines. He is immune from dismissal. This is the bureaucrat's dream come true.

Jim Rogers: Never In History Has This Been Seen

by jimrogers1.blogspot.it




"I don't trust the data from any government, including the U.S., Jim Rogers said. "We know that governments lie to us. Everybody's printing money, but it cannot go on. This is all artificial." Rogers, who for years has been an outspoken critic of the Feds policies of "Quantitative Easing" says all the money printing is creating false hope that we are in the middle of some kind of super bull market. But in reality, he says, "we're living in a fool's paradise."

What's Supposed to Happen, and What Might Happen: 3 Baseline Scenarios

 by charleshughsmith.blogspot.it

What might happen: printing money and issuing propaganda lose their effectiveness.

We all know what's supposed to happen in the global economy: we get more of everything: more stuff manufactured, more coal dug up and burned, more "aggregate demand" i.e. insatiable desire for more of everything, more innovation, more wealth, more money printed, more debt taken on to buy more stuff and more education, more tourists occupying more beaches sipping more drinks, more strip malls built, more airports expanded, more jobs created, more taxes collected-- more "growth" of everything, in every way and every day.

Beneath this expansive more-of-everything splendor, the power structure is supposed to remain unchanged: a small political-financial Elite holds all the reins of power, a manufacturing-consent propaganda machine (a.k.a. mainstream media) persuades the masses all is well, wealth continues to accumulate in the top 1/10th of 1%, money is printed/created and distributed to the State-financial partnership's fiefdoms and cartels, moderate inflation eats away at the value of wages but makes debt cheaper to service, and the Upper Caste of technocrats continue their well-paid enabling of the Aristocracy's dominance.

After Cyprus, Who Is Next?

 by zerohedge.com

Short answer: we don't know.
We do, however, know something we have been pointing out since early 2012 - when it comes to the funding structure of European banks, there is a dramatic difference between the US and Europe. In the US, as we showed most recently two months ago, the Big Three depositor banks (JPM, Wells and Bank of America, excluding the still pseudo-nationalized Citi), have a record $858 billion in excess deposits over loans.

Should Bernanke Park the Helicopter?

by Frank Shostak

According to Ben Bernanke, pulling back on aggressive policy measures too soon would pose a real risk of damaging a still-fragile recovery.
The Fed chief is of the view that, for the purposes of financial stability, a continuation of the central bank’s aggressive stimulus, conducted through purchases of Treasury and mortgage securities, remains the optimal approach.
In response to the financial crisis and the deep recession of 2007–09, the Fed not only lowered official rates effectively to zero, but also bought more than $2.5 trillion in assets in an effort to keep long-term rates low.

The Deeper Meanings of Cyprus

by oftwominds.com

The deposit-confiscation "bailout" of Cyprus reveals much about the Eurozone's fundamental neocolonial, neofeudal structure.

At long last, Europe's flimsy facades of State sovereignty, democracy and free-market capitalism have collapsed, and we see the real machinery laid bare: the Eurozone's political-financial Aristocracy will stripmine every nation's citizenry to preserve their power and protect the banks and bondholders from absorbing losses.

The deposit-confiscation "bailout" of Cyprus confirms the Eurozone's fundamental neocolonial, neofeudal structure and the region's political surrender to financialization.

The E.U., Neofeudalism and the Neocolonial-Financialization Model (May 24, 2012)

Let's list what Cyprus reveals about the true state of financial-political power in Europe:

1. The Core-Periphery terminology masks the real structure: the E.U. operates on a neocolonial model. In the old Colonialism 1.0 model, the colonizing power conquered or co-opted the Power Elites of the periphery regions, and proceeded to exploit the new colonies' resources and labor to enrich the Imperial core.

For Everyone Shocked By What Just Happened... And Why This Is Just The Beginning

Today, lots of people woke up in shock and horror to what happened in Cyprus: a forced capital reallocation mandated by political elites under the guise of an "equity investment" in insolvent banks, which is really code for a "coercive, mandatory wealth tax." If less concerned about political correctness, one could say that what just happened was daylight robbery from savers to banks and the status quo. These same people may be even more shocked to learn that today's Cypriot "resolution" is merely the first of many such coercive interventions into personal wealth, first in Europe, and then everywhere else.

Germany And IMF's Initial Deposit Haircut Demand: 40% Of Total

by Tyler Durden

 












As the President of Cyprus proclaims  to his people that "we' should all take responsibility as his historic decision will "lead to the permanent rescue of the economy," it appears that the settled-upon 9.9% haircut is a 'good deal' compared to the stunning 40% of total deposits that Germany's FinMin Schaeuble and the IMF demanded. This action, his statement notes, enables the rescue of 8,000 banking sector jobs and ensuring the liquidity of the banks, "allowing the economy to proceed decisively to a new beginning." Ekathimerini reports," this is the first time in the eurozone that a levy has been imposed not on the interest of bank accounts but on the capital itself," and was the only way to bridge most of the the gap between the EUR17bn Nicosia needed and the EUR10bn the ESM was offering, though tax on interest in Cypriot banks will also rise to 20-25%. It is the 40% haircut requirement that concerns us the most as clearly going forward that means other nations, starting Monday (or Tuesday given national holidays) see deposit outflows surge, as the willingness to take such steps is now painfully clear.

German Commerzbank Suggests Wealth Tax In Italy Next

by Tyler Durden

While some argue that Cyprus was "one of the biggest money-washing machines for Russian criminals," and others that Cyprus ex-Pat community and energy resources brough deposits (not to say their high deposit interest rates), it seems the European Union (IMF et al.) have decided that the route to crisis stabilization, just as we outlined here over a year ago and updated here, is through a wealth tax.
However, as Handelsblatt reports, the gross distortions of wealth distribution among both core and peripheral nations (evident in the chasm between 'mean' and 'median' net assets - or wealth) makes some nations more 'capable' of 'giving' and as Commerzbank's chief economist notes, median wealth in Italy is EUR164,000 (as opposed to Austria's median of around EUR76,000 and mean of around EUR265,000) meaning that in theory Italy has no debt crisis (with net assets at 173% of GDP) - significantly more than the Germans at 124% - "so it would make sense, in Italy a one-time property tax levy," he suggested.
"A tax rate of 15% on financial assets would probably be enough to push the Italian government debt to below the critical level of 100% of gross domestic product." So there you have it, the 'new deal' in Europe, as we warned, is 'wealth taxes' and testing the "capacity of Cypriots" appears to be the strawman on what the public will take before social unrest becomes intolerable.

The Petro Business Cycle

By James J Puplava CFP

 

 

 

 

 

Oil is the lifeblood of modern society, powering over 90% of our transportation fleet on land, sea, and air. Oil is also responsible for 95% of the production of all goods we buy and ultimately drives the natural rhythms of recession and recovery. We define this as the "Petro Business Cycle".

The post-crash world we have inhabited since the credit crisis of 2008 has been defined as "The New Normal"—a phrase used to describe an economic and market environment much different than the three decades that preceded it. In contrast to the past, the "New Normal" will mean a lower living standard for most Americans. It will be a world of lower economic growth, higher unemployment, stagnant corporate profits, and the heavy hand of government intervention in all aspects in the economy. For investors it will be an environment marked by volatility, zero interest rates, and disappointing equity returns.
The age of leverage is coming to an end as consumers, businesses, and governments are forced to rein in their balance sheets. For consumers it will mean less discretionary spending as higher taxes and inflation erode the purchasing power of wages. Businesses will have fewer profit opportunities and find it more difficult to replicate the growth rates of the booming '80s and '90s. Governments will struggle with the illusion that their fiscal and monetary stimulus will produce long lasting effects on the economy. Eventually profligate government spending will give way to an age of austerity now beginning to spread across Europe. It will either be done voluntarily or involuntarily by the heavy hand of the market.

Italian Election: Awakening Consciousness?

By John Perkins

Who would have predicted that a comedian-turned-political activist, Beppe Grillo, and the anti-austerity Five Star Movement would win the Italian election? What caused this massive rejection of Prime Minister Mario Monti's austerity policies?

U.S President Obama, German chancellor Merkel, and other European leaders who backed Mario Monti must be puzzling over these questions. The recent Italian elections support a trend I have been describing for several years: a global awakening in consciousness. Voters in Italy resoundingly rejected the two parties that had dominated, both of which advocated austerity and other measures that favor the 1% at the expense of the 99%. The electorate propelled to power the practically unheard of the Five Star Party.

Fed Injects Record $100 Billion Cash Into Foreign Banks Operating In The US In Past Week

Source: H.8

Those who have been following our exclusive series of the Fed's direct bailout of European banks (here, here, here and here), and, indirectly of Europe, will not be surprised at all to learn that in the week ended February 27, or the week in which Europe went into a however brief tailspin following the shocking defeat of Bersani in the Italian elections, and an even more shocking victory by Berlusconi and Grillo, leading to a political vacuum and a hung parliament, the Fed injected a record $99 billion of excess reserves into foreign banks. As the most recent H.8 statement makes very clear, soared from $836 billion to a near-record $936 billion, or a $99.3 billion reserve "reallocation" in the form of cash - very, very fungible cash - into foreign (read European) banks in one week.

Gold manipulation, Part 2: How they do it (and a suggestion to hedge it)

by Martin sibileau

This is the second of three articles I am posting on the suppression of gold. In the first article I showed that, under mainstream economic theory, the suppression of the gold market is not a conspiracy theory, but a logical necessity, a logical outcome. This second article will show how that suppression takes place. Those familiar with the gold market will likely find nothing new. The third article will examine the implications of this suppression and support the claim of the gold bugs, namely that physical gold will trade at a premium over fiat gold or gold paper is also not a conspiracy theory, but the logical outcome of the current paradigm.

How they do it: The concept

The popular notion, which central bankers would love to destroy, is that gold is a good hedge against inflation. In its simplest form, gold cannot be printed and, as its supply remains anchored, its price should spike if the supply of fiat money increases. The implicit math behind can be represented as follows:

Given a constant demand for money…

Did These Hidden Forces 'Elect' the President?

by Bill Bonner

 
Today, on the Ides of February, we hold our hat in our hand... we bow our head... and let our mouth fall open in amazement. Our Lenten program of fasting, prayer and meditation is producing results. We are lightheaded from near-starvation and alcohol deprivation. But our thoughts are clear. Or else, we are hallucinating.
In the last two days, we've taken a look at what promises to be the biggest bust-up of all time.
It began in stealth when a small group of big bankers boarded an unlisted train in the middle of the night. They all knew each other. All were from powerful New York banking families. But they didn't even use their own names when talking to one another... so afraid were they that word of their meeting would leak out.
Then the strange little group traveled in complete secrecy to a small island compound off the coast of Georgia. There they could talk freely. But the conversation wasn't about hunting or sports... or politics... or religion.

The Stateless Equilibrium

by Predrag Rajsic

The stateless market society—a peaceful social arrangement based on voluntary relations among individuals in which the state is not present—is not a popular idea. Many people believe that this society would lack the capacity to define and enforce property rights, and that this would result in chaos, tyranny of the rich or in a reversal to a state. This belief has led to a widespread dismissal of the stateless society paradigm.
Murray Rothbard is by many considered the champion of the stateless society doctrine. However, even Rothbard conceded that “there can be no absolute guarantee that a purely market society would not fall prey to organized criminality.” 
While it is true that absolute guarantees for any social outcome are generally inappropriate, I argue that there are good reasons to believe that outcomes like chaos, tyranny of the rich, or even “organized criminality” in the absence of a state are unlikely.

China Preparing To Impose Bretton Woods II Gold Standard

by King world News

The flow of power and gold is going from West to East.  China may have accumulated a staggering 1,500 tons of gold last year alone.  China’s growth is now picking up steam as well.  What is really stunning is how much the yuan has increased in terms of international transactions.”

“The usage of the yuan in international transactions has been increasing at an unbelievable 170% per year.  That’s how fast the yuan has been increasing in terms of international transactions.  So goes the gold, so goes the power, and you can see it in the prominence the yuan is gaining.

The Chinese definitely have a plan here and that is to get control of gold....

“We are headed for another Bretton Woods.  It is unsustainable for currencies to continue to lose their purchasing power while median incomes, especially in the US, continue to go down in the West.

Reversal of Fortune: Why the Power Elite Will Lose Power

by Gary North

Remnant Review

The best description of the reversal of fortune is Mary's Magnificat, recorded in the Gospel of Luke, chapter 1, verses 46-55. "He hath put down the mighty from their seats, and exalted them of low degree" (v. 52).
This was a fundamental theme in the Old Testament. We are told that those who hold their position by means of political power and corruption always lose their position. They are always overthrown. They look unbeatable. They are always defeated. The prophets of Israel came before kings and commoners with this message. Isaiah 1 is a good example. Isaiah even identified a major technique of the power elite: inflation. "Thy silver has become dross, thy wine mixed with water" (Isa 1:22).
The more things change, the more they stay the same.

THE POWER ELITE

What do I mean by the power elite? The phrase was coined by Leftist sociologist C. Wright Mills in 1956. His book remains a classic. Its main chapter is here. Liberal columnist Richard Rovere in 1956 called it the American Establishment. Conservatives refer to it as the Insiders or the Conspiracy. David Rothkopf, writing from inside, calls them the superclass. Sometimes they are called the PTB: the Powers that Be. I think conservative journalist and historian Otto Scott said it best: the behind-the-scenes fellows who are too clever by half.

Bubble trouble: Is there an end to endless quantitative easing?

By Detlev Schlichter

The publication, earlier this week, of the Federal Reserve’s Federal Open Market Committee minutes of January 29-30 seemed to have a similar effect on equity markets as a call from room service to a Las Vegas hotel suite, informing the partying high-rollers that the hotel might be running out of Cristal Champagne.  Around the world, stocks sold off, and so did gold.

Here is the sentence that caused such consternation:

“However, many participants also expressed some concerns about potential costs and risks arising from further asset purchases (the Fed’s open-ended, $85 billion-a-month debt monetization program called ‘quantitative easing’, DS). Several participants discussed the possible complications that additional purchases could cause for the eventual withdrawal of policy accommodation, a few mentioned the prospect of inflationary risks, and some noted that further asset purchases could foster market behaviour that could undermine financial stability.”

The End of Honest Money

by Bill Bonner

You shall not crucify mankind upon a cross of gold.

~ William Jennings Bryan

The season of fasting is upon us. No more high living. It's time to cinch up our belts... to put on a gaunt face and a smug look. Alone among friends and associates, we will keep Lent.
So neglected is Lent that even Google has forgotten about it. When we searched for it, it proposed "lentil soup."
Lent is meant to rehearse the 40 days and nights that Jesus spent fasting in the desert before going public. We remember the lean days with prayer, meditation and self-denial. No alcohol will cross our lips from Ash Wednesday till Easter Sunday. (Except on Sundays. And saints' days. And national holidays. And days that begin the letter "T" or have a date that is a prime number.)
Yes, dear reader, we will be true to the church calendar, with a few emendations of our own.

The Errors of Keynes's Critics

 by Steven Kates

I was intrigued by the review that Philipp Bagus wrote of The Errors of Keynes (Los Errores de la Vieja Economía), a book written in Spanish by Juan Ramón Rallo, part of which deals with Say’s Law.
An important understanding is taking hold, that the road to unwind Keynesian economics travels through Say’s Law. Keynes himself could not have been clearer about the significance of Say’s Law to the entire structure of his argument. Keynes emphasized, over and over again, in The General Theory (TGT) that he was reversing the conclusions of those who believed Say’s Law to be true. Thus, there are two things that need to be done if you are going to refute Keynes. First, you have to know what Say’s Law is. Then you have to show it is valid.

The Core of American Liberty

by Bill Bonner

I've been at the beck and call of rich men all my life. But I'll be damned if I'll be at the beck and call of every son-of-a-bitch with a 3¢ stamp.
~ William Faulkner on losing his job at the Oxford, Miss., post office
One of the rarely cited advantages of having money is that you're less beholden to others who have it too. The more you have, at least in theory, the more you can ignore the other fellow with it, and go about your business. Nor need you drink the same cocktail or rush to the same mall so you can outfit yourself in the same duds.
In short, with a little capital of your own you can do what you want.

Jim Rogers On Why He Moved To Asia

by hudsonunionsociety.com

The Hudson Union Society www.hudsonunionsociety.com is where today's leaders come to discuss tomorrow's ideas. If you live not to far from New York, please join us in person. 

n 1973, Jim Rogers co-founded the The Quantum Fund. During the following 10 years, the portfolio gained 4200% while the S&P advanced about 47%. The Quantum Fund was one of the first truly international funds. From 1990 to 1992, Rogers traveled around the world world on motorcycle, over 100,000 miles across six continents, which was picked up in the Guinness Book of World Records. Between January 1, 1999 and January 5, 2002, Rogers did another Guinness World Record journey through 116 countries, covering 245,000 kilometers with his wife, Paige Parker, in a custom-made Mercedes. The trip began in Iceland, which was about to celebrate the 1000th anniversary of Leif Eriksson's first trip to America. In December 2007, Rogers sold his mansion in New York City for about 16 million USD and moved to Singapore.

The Myth of Fed Independence

by Murray N. Rothbard
 

By far the most secret and least accountable operation of the federal government is not, as one might expect, the CIA, DIA, or some other super-secret intelligence agency. The CIA and other intelligence operations are under control of the Congress. They are accountable: a Congressional committee supervises these operations, controls their budgets, and is informed of their covert activities. It is true that the committee hearings and activities are closed to the public; but at least the people’s representatives in Congress insure some accountability for these secret agencies.

The Serf Society

By Bill Bonner

Stocks, bonds, gold – all bounced around last week.

And as we mentioned on Friday, Americans continue to turn into "neo-serfs."

"Wall Street is running a new profit game," writes Shabnam Bashiri at Salon.com, "by buying foreclosed houses and renting them back to their former owners."

Yes... nice business. Even better than it looks. It's why the rich get richer... and the 1% are way ahead of the other 99%. Writes Bashiri:

Every day, it seems a new report comes out praising the ongoing housing recovery. In Georgia, home prices are up 5% over last year, a year in which we also had one of the highest foreclosure rates in the country. Seems a little odd, doesn't it? Don't foreclosures usually drive down the market?

Failure of Leadership

By Bill Bonner

 

Poor Chuck Hagel. Every day, The Wall Street Journal wallops the fellow. He is whacked for not knowing what he is doing…smacked for not appreciating the threat of a nuclear Iran…and slapped hard for not bending over quickly enough to kiss neo-con butts.

John McCain and Lindsay Graham went to work on him in the Senate. They went at it clumsily and disgracefully — like a pair of goons with lead pipes. And then, in the WSJ, Dorothy Rabinowitz hammered him last Monday; she was so hysterical we couldn’t follow what she was talking about. Then, on Tuesday, Brett Stephens took over…and began pounding away in a more usual, ham-fisted way.

Gold manipulation: The logical outcome of mainstream Economics

This is the first of three articles I will post on the suppression of gold. What drives me to write about the topic? I am tired of seeing endless proof of suppression (i.e. the typical take downs in the price at either 8:20am ET or at 10am-11am ET, with impressive predictability) and at the same time, it is unfair that anyone who voices this suppression be called a conspiracy theorist. Therefore, these three letters will give a rigorous theoretical support to the claim.

The first letter will show that, under mainstream economic theory, the suppression of the gold market is not a conspiracy theory, but a logical necessity, a logical outcome.From the publication of this letter onwards, the onus to prove the contrary will fall upon mainstream economists. The conspiracy theory will actually be the opposite: To claim that suppressing gold is not necessary.

The second letter will show how that suppression takes place. For those familiar with the gold market, this letter will offer nothing new and perhaps, it will even be incomplete. But at the macro level, I will seek to offer an insight.

The third letter will examine the consequences of this suppression and rigorously, prove that the claim of the gold bugs, namely that physical gold will trade at a premium over fiat gold or gold paper is also not a conspiracy theory, but the logical outcome of the current paradigm.

Before I begin, I would like to say that I think proving the logical implication from mainstream economics that gold needs to be suppressed is perhaps comparable to Von Mises demonstration of the impossibility of economic calculation under socialism. Both are very intuitive, of consequence, and a necessary intellectual step. Without further ado, let’s start with the first thesis: The suppression of gold is a logical necessity, under mainstream economics.