More Currency Hurt Coming says Gartman—Get Real Money—BUY GOLD

The fiat is in the process of total transformation... but it needs a place to land and Gold is the only unfettered option! So buy gold or a gold company.

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Gartman: EU Debt Plan to Hurt Currencies - Buy Gold in USD, GBP and EUR as “Is a Currency”

Gold has edged higher in all major currencies again today as concerns about the European debt crisis and the risk of contagion is leading to demand for gold for wealth preservation purposes.

The likelihood of the Eurozone sorting out their intractable problems has come into question again as bankers in Europe’s largest banks have clashed with politicians about the size of losses they will have to take on their Greek debt.

Another bullish factor is more dovish sounds from the Federal Reserve regarding driving down mortgage rates to support the housing sector and another round of quantitative easing which was suggested by William Dudley, president of the New York Federal Reserve Bank.

Gold in USD – 30 Days (Tick)

Physical demand out of Asia remains robust as seen in healthy premiums with gold premiums in Vietnam gold at a $28.07 premium over world gold of $1,642.65 and Shanghai gold closed at a premium of $12.89 to world gold of $1,652.25 (see LeMetropolecafe.com for Asian premiums).

Diwali is tomorrow and Indian demand has fallen somewhat but remains robust despite very significant demand in recent days and weeks.

Newsletter writer Dennis Gartman has done a swift about turn and is now adding to his gold position by buying the metal priced in dollars, pounds and euros, he wrote today in his daily Gartman Letter.

Only last Tuesday, Gartman wrote that the gold market is suffering "very real damage." His comments were picked up very widely making headlines in the financial media internationally. Gartman warned that he feared that the rally from September's lows is "now under assault."

Today, Gartman said in his newsletter that he was certain gold prices would break upwards sooner rather than later.

Gartman said that the EU debt plan would hurt currencies. Therefore, gold will rally as currencies fall.

"The authorities have no choice but to inflate their way out of the morass that they’ve found themselves falling into and that shall mean the diminution of currencies generally and the advancement of gold as the only currency not diminished", he said.

Gold in EUR – 30 Days (Tick)

"Gold is a currency; it has been for years and it shall be for years going forward. A move upward through EUR 1,200 for gold today or tomorrow or this week or next shall be impressive and important," he said in the newsletter.

...

Read more here

Gold Majors are Starting to Act on Their Need for Gold Assets

With Iamgold's taking a 20% piece of Columbia Crest Gold the move to acquire assets has started IMO.

The search for good Juniors has started!

My favorite is New Carolin Gold Corp. - a new old mine which closed soon after opening just after the 1982 peak in gold because they were too late to the party. Now t.hat is not the case—timing is everything. (PSSSST this is the time =])

Here is the news:

Iamgold investing $3.42M in Colombia Crest Gold

Iamgold Corp., a Toronto-based gold mining company, will pay $3.42 million for a nearly 20 percent stake in Colombia Crest Gold Corp.

Hans Rasmussen, CEO of Colombia Crest Gold, said the investment by Iamgold underscores "the potential for a near-term exploration success once we drill the recently discovered Arabia porphyry target."

Read more here

AngloGold Ashanti CEO: Gold could "easily" hit $2,200 in 2 years

We are beginning to see the leadership of precious metals producers frame their view of the markets... talking it down a bit—in this case saying the price is driven by costs—shading it with a slightly negative tone. Still he is calling for a higher price for bullion.

What I am looking for are indications that the majors are preparing to buy up some juniors and I do see in this CEO's comment that they are focusing on what their profits will look like. So, in my opinion, we are getting closer.

=]

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Increasing mining costs and financial concerns to drive bullion, he says

Gold could "easily" rise to $2,200 an ounce in the next two years as costs increase and global financial concerns persist, said the chief executive officer of AngloGold Ashanti Ltd., the third-largest producer of the metal.

"It costs almost $1,200 to produce an ounce of gold," Mark Cutifani said at a conference in Perth. "The gold price probably reflects the fundamentals of the industry."

Read more here

Another believer in Gold Junior Miners—Edward Karr Interview

This is an article from Edward Karr, CEO of RAMPartners is based in Geneva, Switzerland—a country with gold reserves that rank eighth in the world. From his perspective the swissie (Swiss Franc) just made a huge error pegging itself to the Euro. He sees the best chances for capital growth in both physical gold and junior mining stocks.

Truly after my own heart
=]

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excerpts reposted from The Gold Report interview:

The Gold Report: RAMPartners is based in Geneva, Switzerland, a country that made economic news a month ago when the Swiss National Bank capped the Swiss franc at 1.20 francs per euro, slashed interest rates and flooded the market with Swiss francs. Did you agree with those moves and what impact do you think they had on the gold price?

Edward Karr: I emphatically disagree with the move by the Swiss National Bank. To me it makes no sense to peg the Swiss franc at 1.20 to the euro. Switzerland is, in effect, backstopping Greece and all of the other indebted countries in Europe. This is lunacy. Greece or anyone can just hit the Swiss National Bank's bid at 1.20 and convert into Swiss francs, which it would probably rather have than its euro position.

Since this policy, we've seen a psychological shift in markets. People have been rethinking the Swiss franc as a safe-haven currency. The Norwegian kroner looks more like a safe-haven currency now than the Swiss franc. I'm just happy Switzerland is not part of the European Union and not part of the euro. I hope it will understand the foolishness of the 1.20 peg and get rid of it soon.

As to the current effect on the gold price, right around when this happened gold topped and started to sell off. I don't think they are directly related, but I think it is psychological. If the Swiss franc holds at 1.20 to the euro, if a hedge fund or a corporation hits the Swiss National Bank with a billion euros, it is no big deal. But what about 10 billion, 100 billion, even a trillion? Then it starts becoming a big deal. At some point does Switzerland have to start selling its gold reserves to continue this lunacy? Switzerland now has 1,146 tons of gold. Maybe people are worried that if that gold starts to come out it could put downward pressure on the bullion price; hence, we have seen a little sell off in the overall market.

...

TRG: Gold has fallen steadily since reaching about $1,900/ounce (oz.) in August. It now sits at about $1,670/oz. Why has it fallen recently?

EK: I think the logical explanation for falling prices is that gold is a relatively liquid asset. Governments, hedge fund managers, bankers and individuals are all facing a severe cash crisis. In that environment you have forced liquidations. Governments are doing all they can to put a positive spin on a terrible environment. But, if you're a global macro hedge fund manager who has heavy redemptions, you have to sell your liquid assets to raise cash.

Man Investments is one of the biggest hedge fund groups. Last month it announced record redemptions of $7 billion. The firm has to raise cash, so what is it going to do? There are no bids out there for Greek debt, no bids for mortgage-backed securities, no bids for countless other OTC financial derivatives. Gold is liquid; it is easily tradable and has been part of the massive global scramble to cash that we've seen in the last two to three months.

TRG: How low could gold go?

EK: That's a great question. The only credible answer is that gold can go a lot lower than anyone expects. A lot of Johnny-come-latelies have bought into gold in the last few years. A big downdraft will shake out a lot of loose hands.

Europe is on the edge of a cliff. Dexia Bank might fall any day. UniCredit in Italy is right behind. I think we will see a severe domino effect that will make 2008 seem like a walk in the park. If Dexia or UniCredit or the European Central Bank itself had a big major gold position and it had forced liquidation, it will have to sell and the price could go down pretty dramatically.

...This party is just getting started. You can see the house, you can hear the music and see people, but you have not even walked in the front door. Wait for the party; don't leave before it even begins!

TRG: What are some rules of thumb for investing in junior resource companies during uncertain times?

EK: I like to own good companies with solid management teams and great assets. And then, it all comes down to the timing. The current markets are fantastic for finding attractive entry points. As a general rule, when it feels the worst is usually the best time to buy.

When people get scared, markets and stock prices get way out of line. That is when you need to have the courage to really step in and accumulate. Worst case, if the banks collapse and the ATMs actually do stop working, those who own physical gold will be better off than 99% of the other people out there. But it is more likely that the markets will rebound quickly as QE3 comes in and the ECB and the Fed turbo charge the printing presses. Then, the junior mining stocks and bullion will be off to the races.

TRG: What are some names you have positions in?

EK: I'm quite bullish on Sagebrush Gold Ltd. (SAGE:OTCBB), which trades on over the counter in the U.S. I like the company because it recently acquired a former producing gold mine and mill in Nevada. Nevada is a great jurisdiction; it has rule of law, most of the mines are easily accessible and it has the geology. It is the second most prolific gold zone in the world after the Witwatersrand of South Africa. Sagebrush bought the Relief Canyon mine and its brand-new $30 million (M), state-of-the art facility. It should start production by mid-2012. Relief Canyon currently has a 155 thousand ounce (Koz.) resource and it has an aggressive exploration program on the property right now.

...

TRG: Is Sagebrush looking to get listed on the TSX Venture or the TSX main board?

EK: I believe so. It is exploring both the TSX and the AMEX in the U.S. I would like to see the company listed on a more major exchange, where it will get increased visibility and liquidity, probably more research and publishing.

There is a further arbitrage opportunity here. Recently, Sagebrush acquired all of the assets of Continental Resources Group Inc. (CRGC:OTCBB). The deal was 0.8 shares of Sagebrush for every share of Continental. I believe the acquisition is still being worked out and the share swap will happen in the next few weeks. So the big opportunity is to buy the shares of Continental. Effectively, you are getting Sagebrush shares at around $0.31 with the current Continental price of $0.25. Sagebrush is in the $0.50 range, so this is like grabbing dollars for $0.60. Warren Buffet recently said he would buy Berkshire all day long for $0.90 on the dollar. By buying Continental, you get Sagebrush for $0.60 on the dollar. Plus Sagebrush acquired Continental’s portfolio of uranium exploration assets. Uranium is currently really beaten up post-Fukushima, but it is not going away longer term. I believe uranium prices will rally back when the cycle turns and patient investors will be well rewarded on this unique play.

Read full interview here

$10,000-$12,500 Gold—Caused by Fast Rising Money Supply?

The future of the gold price rises as the real world (people like you and me—not the politicians, media or 'business leaders') recognizes the emerging shape and cost of the future in our badly financially damaged present.

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US Money Supply Surges Surges 33% in 4 Months – Global Money Supply to Lead to Gold $10,000/oz?

excerpts:


U.S. M2 Money Supply: Accelerating Sharply in 2011



Demand from Asia is due primarily to concerns about fiat currencies – both domestic or local currencies but also the current reserve currencies of the euro and of course the global reserve currency, the dollar.


China M2 Money Supply: M2 Growth is Decelerating, Yet Still Rising

While all the focus has been on the Eurozone debt crisis recently, the US is suffering a stealth debt crisis of its own which is being ignored - for the moment. As is the burgeoning debt crisis in China.
The US fiscal position is appalling with a $1.6 trillion deficit projected for fiscal 2012 alone. For those who have lost count, the US national debt has risen to over $14.8 trillion. The latest updated projections reveal that the US will reach a 100 percent debt to GDP ratio by Halloween – in 10 days time.
Gold’s recent weakness has coincided with a period of dollar strength but with trade and budget account deficits as far as the eye can see, this dollar strength is likely to be brief.
Indeed, the dollar’s recent strength is due to the fact that while the dollar’s fundamentals are very poor – its competing fiat currencies such as sterling and the euro have similar if not worse outlooks due to imprudent monetary policies.
The possibility that gold could surge to as high as $10,000/oz is gaining traction amongst some respected market participants.
Paul Brodsky, co-founder of QB Asset Management Company has again warned regarding the risks posed to US Treasuries and the possibility of a sharp revaluation of gold that could see gold reach $10,000/oz.
A twenty-year veteran of the bond market in his own right, Brodsky told King World News that the US may return to some form of Gold Standard in order to restore faith in the US dollar.
Proponents, including Steve Forbes and Ron Paul, argue a gold standard would prevent what they see as irresponsible money creation and force the US to live within its means by limiting the amount of money monetary authorities can create.
The idea that the US could revalue gold and devalue the dollar (as was done by Roosevelt in the Great Depression) is gaining increasing currency.
Gold prices would hit $10,000 an ounce or even more should current calls for a return to the gold standard become reality, according to Brodsky.
In conversation with King World News, money manager, Stephen Leeb, said that gold is remarkably undervalued and “is going to add another digit over the next five to ten years there is very little doubt about that.”

Global Money Supply Chart
Leeb recently said that gold could rise to $12,500/oz...

Read more here...

"...personally I have sold gold to buy gold stocks and silver stocks..." Eric Sprott

This is a must view for anyone trying to understand what is happening. Eric has great depth of understanding of what the market is doing why it got there and what to watch for—Eric should be on everyone who is concerned with the how the idiots who got us into this situation and where their 'leadership is taking us.

From the video:
"... precious metals stocks are getting so cheap that they should out perform the metals here...we haven't see the earnings power of these companies...personally I have sold gold to buy gold stocks and silver stocks..."

Talks also about how silver is the real 'hidden' elephant of value.

It's your money (if you still have any)—Invest for the real and away from the unreal world manufactured by the banksters and sold like a ponzi-scheme to the rest of us while they take all the benefit. It's time stop buying the BS fr0m GS and 'friends'—LOL

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Gold Breaks Wedge Pattern—Good News!

Well our gold buying / accumulation opportunity continues — That's Good News!

The Buyers of Junior Gold Companies are Cashed Up and Ready to Buy

Here's a clear indication that we need to be alert now or even start acquiring junior gold producers with solid assets in good jurisdictions.

We are forming the fuel for a continuation of the gold bull market now. The next rise in Gold will be seen in the juniors IMO.

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Repost from Barron's:

Gold Miners With Mother Lodes of Cash

Dundee Capital Markets offers up a list of gold-mining stocks that are generating lots of free cash flow.

One of the golden rules of mining is to generate lots of cash and spend it wisely.

With volatility as the current theme in stock markets, we suspect investors are interested in seeking out stability in defensive names such as existing producers. This stability, we'd argue, can be achieved through established mines, which are already producing with little additional required capital expenditure to sustain or grow this rate of production.

Most would equate immediate safety with cash on hand today. But gold producers seem to always find a way to spend those hard-earned dollars on the latest exploration idea, recurring capital expenditures, not to mention those one-time acquisitions that CEOs can never seem to resist. So we've taken a look at each of the producers in our universe and estimated the free cash flow to have a look at who is generating the most, relative to their current market capitalization.

For an easy comparison across the space, we calculated the free cash flow yield, which takes 2012 estimated free cash flow per share divided by the current share price. Free cash flow yield demonstrates the cash generating abilities of the company relative to its share price.

While we recognize that this metric inherently disadvantages companies that are reinvesting cash flows to fund future growth (building and expanding mines), we also note that companies without major expenditures in the coming year are less likely to be exposed to significant financing risk.

Additionally, the analysis does not adjust for qualitative aspects of the individual companies including political, operational or currency risk which could impact these estimates.

From a defensive perspective, we believe relative safety lies in names with stabilized operations as opposed to those who expect to spend the next 12 months under construction or in commissioning.

Buy-rated companies we'd like to highlight include: Great Panther Silver (ticker: GPL), Osisko Mining, Aurizon Mines, and Kirkland Lake Gold [of Canada].

We would also highlight Aura Minerals [also of Canada], which despite its less defensive nature, offers significant torque on the upside should the company's plans materialize as expected.

Great Panther's strong free cash flow yield of 18% is largely due to recent share-price underperformance (as we have noted previously, the company's shares are strongly levered to the price of silver, not an overly advantageous situation of late), and our forecast of increased production from 1.6 million ounces of silver in 2011 to upward of 2.3 million ounces in 2012.

While declining silver prices have recently been the main driver of the share price, we note that recent financial results have been impacted by a temporary increase in onsite metal inventory.

With Osisko Mining's flagship Canadian Malartic mine commencing production in the second-quarter of 2011 and the only remaining major capital expenditure at Canadian Malartic being the additional pregrinding circuit (estimated at $32 million), we estimate that the company will generate free cash flows in the order of about $510 million dollars in 2012.

One could make the argument that Aurizon Mines is a victim of a market overreaction to some less-than-positive news. While the delay of the Joanna feasibility study does impact our valuation of the company, we consider the 22% decline (over the last three weeks) to be overdone -- in our opinion, more has come out of the stock than Joanna ever put in.

Read full article here

See List here

Gold/Silver Ratio—1975 to the Present

courtesy of Bespoke Investment Group

"The Truly Remarkable Run of Silver"

Silver Price Rise in Context

Silver's rise in context. From Bespoke, This Silver chart really needs no explanation.

The Truly Remarkable Run of Silver

Thursday, April 21, 2011 at 03:23PM
As gold continues to receive all the headlines, silver continues to look at the yellow metal in the rearview mirror.
Below we highlight a few charts and tables that show just how remarkable the run for silver has been. Had you invested $100 in silver ten years ago today, your investment would now be worth $1,037. A $100 investment in gold would be worth about half that at $569, and a $100 investment in the stock market (S&P 500) would be worth -- wait for it -- $107.48.

The two main silver ETFs (SLV and DBS) have gone absolutely parabolic over the past few weeks. Both are currently trading more than two standard deviations above their 50-day moving averages, and just when they seem about as overbought as they can possibly get, they get even more overbought.


From Bespoke Investment Group
Read full article here.

Gold to Top $2,000 on Central Bank Buying

This article points out who the prime bull drivers for gold prices for the near term. Interesting to note that the potential for another gold-price correction may be driven but institutions rather than retail buyers as they try and plan their position in the new economy—whatever that may be.

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Gold to Top $2,000 on Central Bank Buying: Chart of the Day

Published in Market Updates Precious Metals Update on 14 October 2011

Gold is trading at USD 1,675.30, EUR 1,214.20, GBP 1,062.30, JPY 129,036.00, AUD 1,634.90 and CHF 1,503.70 per ounce.

Gold’s London AM fix this morning was USD 1,676.00, GBP 1,062.31 and EUR 1,214.31 per ounce.

Yesterday’s AM fix was USD 1,673.00, GBP 1,065.74 and EUR 1,218.05 per ounce.

Cross Currency Table

Gold is marginally higher in most currencies today and continues to consolidate at the upper end of the range between $1,600 and $1,700/oz. Physical demand for coins and bars remains very strong with GoldCore experiencing a notable increase in demand this week.

Gold in USD – 30 Day (Tick)

Gold is up nearly 3% on the week and looks set to post its biggest weekly gain in more than a month. Markets remain nervous about the risk of contagion ahead of a G20 meeting whose agenda will be dominated by the euro zone debt crisis and steps to tackle the contagion.

Gold should be supported by global inflation data this morning which remains stubbornly high particularly in emerging markets.

Inflation in China and India remains very high. In India, inflation exceeded 9% for the 10th month in a row and in China inflation is at 6.1% but the key food component of inflation rose 13.4% year-on-year in September.

European inflation accelerated the fastest in almost three years in September on soaring energy costs, complicating the European Central Bank’s task as it combats the region’s sovereign-debt crisis. The euro-area inflation rate jumped to 3 percent last month from 2.5 percent in August. Inflation in Germany also surprised to the upside this week.

The Bloomberg ‘Chart of the Day’ shows the proportion of gold in the international reserves of India, Russia, China and Mexico is significantly lower than the rates in the U.S., Germany and France, based on data compiled from the World Gold Council. The lower panel tracks central bank holdings in metric tons and the bullion price since March 2008.

Central banks last year were net gold purchasers for the first time in two decades.

“I certainly expect international central bank gold buying to continue, especially in emerging economies where foreign reserves are growing,” said Gavin Wendt, founder and senior analyst at Sydney-based Mine Life, which publishes reports on the metals industry. “It’s the safest option for them.”

...read full article here...

Return to Gold Standard—Gold Would Hit $10,000!

Good Article - reposted from WakingTheBull.com


Return to Gold Standard? Why Price Would hit $10,000

Source:CNBC
By: John Melloy
Executive Producer, Fast Money & Strategy Session

All the major countries in the world are in a race to debase their currencies in order to restart their economies. Either economic growth returns or—as some doomsayers predict—the 40-year run of fiat currencies ends.

And if under this worst case scenario the solution was to return to the gold standard of the Nixon years, the price of bullion would be worth $10,000-plus, six-times the current price, according to Paul Brodsky, co-managing member of QB Asset Management company and a self-professed ‘Gold Bug.’

...Read more here...

Central banks are buying gold now—should you?

Gold doesn't look like it's going much lower—there still maybe a down draft or two coming but this gold and silver bull market is very very very far from over. After all: Have the banks fixed their issues? Is the economy humming along? Has the great deal of fiat-based wealth destroyed in the derivatives and mortgage-backed securities been 'fixed'? Do you feel safe investing in the raging growth of our world?

The central banks (CB) are now "swapping Dollars for Gold"... I wonder why. Perhaps they are also afraid that they cannot 'invent' a new financial market in time?

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CB’s Buying Here, Swapping Dollars For Gold

by Richard Russell

“The signs are growing. I can see the signs in the number of vagrants in La Jolla and south in Pacific Beach (California). As I drive by I see little clusters of men and women (mostly men) huddled in doorways or sitting in the bushes beside the roads. These are vagrants, always a sign of a severe recession. Men holding cardboard signs stand by the side of the road. The signs read, ‘Vet needs work’ or ‘Single mom needs food for her three children.’”

“Where do these people live? I wonder, where do they sleep? How do they have the energy to stand in the blaring sun all day with their cardboard signs? But they are the signs of hard times. I've seen them before -- in the 1930s. Today they are pushing shopping carts around the city, carts filled with junk -- old blankets, tin cans, old toys, anything, it seems to fill up their carts.

These are the remnants of society, the ‘leftovers.’ How do they survive? I keep wondering and it scares me. These are people who have lost everything and it is spreading. On Wall Street they're ‘taking it to the streets.’ But these people are being shoved into the streets and the alleys and the bushes of every town in the US.

And I think, ‘But why La Jolla?’ And the answer is that nobody ever froze to death in La Jolla. I've seen them weather the nights in NYC. Some sleep on top of the subway grills where warm air is pushed up from below. Some sleep on the steps of churches where the chances of being robbed are slim. Others sleep under slabs of cardboard, which are fashioned into little huts.

The signs of hard times are all about, but will it get harder? It all brings back bad memories of the 1930s. And to tell you the truth I'm scared.

...Read full article here

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/10/13_Richard_Russell_-_CBs_Buying_Here,_Swapping_Dollars_For_Gold.html

Physical silver running out because it's too cheap

This is a clear and simple reasoning for actually why the price of silver will rise—the return of the un-manipulated rule of 'supply and demand'.  Back to basics!

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Physical silver running out because its spot price does not reflect true investment demand

By: Peter Cooper, Arabian Money

Several readers of ArabianMoney have written to us over the past two weeks to express their astonishment at the current price of silver because demand where they live is so high that stocks have run out.

Consider this comment: ‘I used to buy silver from a shop in Kobar in Saudi. From the last four weeks they said they ran out of silver. I cannot find anyone who sells silver in Saudi now. I asked them from where do they get their silver. They said the UAE. The problem is they only have 1kg bars…and I still cannot find any supplier.’

No stock

Well don’t bother coming to the UAE. Our information is that the 1kg bars mentioned here and featured in a video on the website last month (click here) are all sold out too. We’ve also had feedback about low or no stock in Texas and Australia from big private bullion dealers there.

Now what would normally happen when a commodity is in short supply is that the price would go up to encourage sellers to put some more into the market. That is presently not happening because the silver price is being artificially suppressed in the Comex futures market by the bullion banks acting on instructions from the Fed presumably, so why would you sell that silver cheaply if you happened to own some?

But something has to give and it is the price of physical silver rather than the Comex price of the shiniest of metals. If you can find any silver these days you will pay quite a substantial premium over the spot price. But pay it because that is probably still a bargain compared to where silver prices are going.

The truth is that silver is a rare metal, more rare than gold. Silver reserves have been estimated at one-hundredth of gold reserves. Silver is after all consumed by industrial processes and reserves have dwindled over the years because the price has been kept so low for so long by market manipulation. Why is that? ...

Continued here

Prediction: Silver $150 in 18 months—George Maniere

We should start to see a number of predictions come streaming now that the silver-shorts cartel has closed out approximately 50% of their position in the recent price 'downdraft'.

George adds a bit of history in his article so make sure you click the link to read the whole article

Silver prices may rise to $150 in 18 months

By George Maniere

As I write, Silver prices are back above $40 an ounce and that may be giving you the urge to sell.  I would advise that you don’t. This recovery is for real, and it has much further to go.

While I have a price target of $50.00 by years end, I anticipate silver prices will peak at $150 an ounce in 18 months.

Central banks around the world are pushing lax monetary policies and this leads me to conclude that prices for all commodities (gold and silver in particular) will rise.

We've already seen this happen with Gold hitting a record high $1,923.70 an ounce on Sept. 7 and when gold goes higher; its baby brother silver quickly follows.

That's reflected in something called the gold to silver ratio, which shows how many ounces of silver it takes to buy one ounce of gold. Traditionally, this ratio acts as a price barometer for the two precious metals. And if you look at it right now, it's easy to see that $150 silver isn't far off...

Read full article here

Silver Shorts Cut Their Positions 50% In One Week

 We all knew that the silver short-consortium—we know who they are—would have to extract themselves.  That's one reason silver was driven down so hard.  But now with this action the 'catel' is in a position to allow silver prices to rise (without resulting in their destruction). 

On another related personal note: now is the time to shop for gold and silver miners but more on that in another post.

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Source: seekingalpha.com
By Chris Mack
October 3, 2011

As we anticipated earlier this year, commercial shorts including JPM are finally within grasping reach of covering their positions and transitioning to net long. For more than a decade, the large commercial trading banks have been trapped with an enormous short position in silver as the price has risen from its lows near $3 to its May high of nearly $50. Most analysts expected the commercial shorts to be broken in a short squeeze, likely launching silver above $100. However, this short squeeze will not occur.

In September 2010 these traders began to aggressively cover their short positions. Since then, commercial net short positions in silver have been reduced from over 65,000 contracts to 24,262 as of September 27, 2011 - and falling from 40,708 just one week earlier.

The large September take down from the $40 price level to the $30 price level has completely wiped out the small leveraged speculators, which saw their net long positions crash from 18,170 the previous week to 8,837. Meanwhile, open interest is threatening to break below the 100,000 level - indicating that speculative money has abandoned silver and sentiment is extremely low amongst investors. The combinational one-two punch of the May takedown and September takedown served to transition contracts from speculators to the commercial shorts at a much lower average price than most analysts ever expected.

Read more here

How the recent gold-smackdown happened & 5 Gold Stock Targets

The recent correction technically a necessary thing and healthy and normal for the longer term trend is interesting from the perspective of the event's market mechanics.  Here is a nice and clear view of its prime catalysts.
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reposted from: thestreet.com

5 Ways to Play the Gold Miner Spread

BALTIMORE (Stockpickr) -- The old saying goes that "all that glitters isn't gold" -- but lately all that's gold hasn't glittered much either.

Gold prices have made a reasonably strong run in 2011, spurred on by a combination of gold's attractive status as an "alternative currency" and investors' flight to quality from stocks. More recently, however, fear of equities has been the primary driver of appreciation in gold prices. That's something that's been evident from the lock-in-step ascent of both gold and treasuries -- two fundamentally disparate asset classes.

The Fed's Operation Twist smacked down gold prices by making treasuries the comparatively more attractive anti-stock trade, drying up demand for the metal. Now the big question is whether gold has run its course -- or whether investors have a major buying opportunity for the yellow stuff.

With equities still under pressure and the favorability of treasuries a temporary phenomenon, I think that the latter is more likely. Already, gold prices have been basing at a technical support level. A retest of highs is certainly plausible right now.

But that's only half of the story.

The other half is in the gold miners. Traditionally, gold miners have been the best way for stock investors to get exposure to gold price movement. Because gold miners earn more when gold prices are higher, it's a logical way to profit from gold price appreciation. But that relationship has broken down a bit lately.

As stocks got shellacked since the beginning of the summer, the market dragged down miners while gold prices rallied. The spread between those miners and spot gold prices is a major trading opportunity right now.

Read more here

Click here for 5 Gold Stock Targets

Choices choices: Invest in “Toxic Waste Treasuries” or Gold and Silver?

Time to step back as an investor still may have a few dollars available and think very hard about not what the return-on-capital might be but rather focus on the return of capital and whether the fiat currency system(s) is a safe place for its encapsulated wealth at all!
Let's weigh today's basics with Bob Chapman..
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Bob Chapman

October 5, 2011

Why would, almost non-yielding Treasuries, be a safe haven, when the government is broke? We would guess that, when a US dollar collapse comes, that owners of such bonds, notes and bills would like to lose equally what everyone else holding these debt instruments loses. We call it a commitment to stupidity. Those that see the folly in such action switch their cash flow to commodities, gold and silver. From a rational point of view such a switch is logical. Needless to say, central bankers, government bureaucrats and politicians get upset when investors engage in such alternatives and proceed to manipulate markets to their own satisfaction to the detriment of the people. We have to wonder what is so attractive about owning debt that pays little or no interest? In order to avoid such a dilemma one must step out of the box and separate themselves from the investment sheeple.

Over the past three years the Federal Reserve has purchased $2.25 trillion of Treasuries, Agencies and mortgage bonds known as toxic waste. We have no idea what the cost of this debt was and what its current value is marked to market. All we know is the Fed has debt on its books of some $3 trillion that they admit to. The Fed operates in secret and when asked difficult questions about its operations it says it is a state secret. Fortunately the court system and Dodd-Frank have uncovered some of these secrets, like a few trillion here they forget to tell us about and $16.1 trillion there that they covered up. These monies, that the Fed created out of thin air, went to transnational conglomerates and the banking and financial sectors in the US, England and Europe. A tight elitist connected group, that for some reason the Fed didn’t want to tell us about. The Fed bailed out temporarily banking in the western world and is still brazenly doing so. The latest caper was a $500 billion swap to again bailout European banks. Of course, three other central banks were supposedly partners in this bailout. If you believe that we have a bridge you’d really be interested in for sale. These people in the Fed and within government are incapable of telling the truth. Yes, the Fed creates reserves, totally without collateralization by buying Treasuries and other securities. No, they are not printing paper money, but what they are doing is tantamount to that.
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Market shows a recession coming. Is this just a false signal?

Knowing that these complex trading patterns must play out cycles within cycles the recent swings of sentiment present in the dough-doe-minded mass-media should be taken with a note of caution: the stock market has correctly foretold 9 of the last 5 recessions.

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Stock market signals on recession may be wrong: UBS

Reuters – Thu, 1 Sep, 2011

NEW YORK (Reuters) - The stock market has a poor record of predicting U.S. recessions and is likely sending false signals again, according UBS strategists, who expect the S&P 500 index to post double-digit gains by the end of 2011.

Excluding the current downturn, the S&P 500 has shed more than 17 percent 14 times since the end of World War Two, but the economy only fell into recession on nine of those occasions, equity strategists of the Swiss bank wrote in a research note published Thursday.

"Put differently, the market predicted roughly a third more recessions than actually occurred," they wrote in the report, entitled "14 of the last 9."

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Read full article here...

Smart Money Remains in Gold and Silver

The shakeout we've all been 'worried' will happen has happened.  This is not the time to believe or trade with the herd.  Here's an article that points out the obvious the those who will gather wealth in the next upward movement of the gold price.

I am looking for this move to be foretold by a rise in gold and silver producers.

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The article:

Gold and Silver Speculators Exit Market as Smart Money Remains
By Jordan Roy-Byrne Oct 04, 2011 8:00 am

The recent carnage in equities and in Europe precipitated the selloff in precious metals which has caused all the remaining speculators to exit the market.

My firm uses a combination of sentiment analysis and technical analysis in market timing which often gets a bad name in the retail crowd, which tries to time the market. Meanwhile the smart money utilizes market timing to weigh risk and reward. It’s rather simple when you acquire the skills, and it helps you understand markets. Recently my firm had been quite bullish on precious metals but thought we were in a small corrective period. We were wrong, as the sector has suffered from Europe’s version of 2008. The good news is our market timing work leads us to believe that the worst is soon to be over and this is an opportunity on the long side for those who have a twelve month time horizon.

Below is the Commitment of Traders (COT) for gold (data is as of last Tuesday). The commercial short position has dropped nearly 50% in the last few months. The commercials (the smart money, the end users and producers) are positioned more bullish than any other time in the past two years. This is another way of saying the speculative long position is at a two year low. Meanwhile, open interest is 28% off its high and close to a two year low.

In silver, we see that the commercials are net short only 24K contracts. This is the lowest since December 2008. Open interest is 35% off its high and at its lowest point since the end of Summer 2009.

Read full article here...

Weekly Stock Market Report

Here is a look at how the major Indices fared this week:
DOW ($INDU)The closed up 141.90 @10913.38 below it's MA(200) @11984.95
S&P500 ($SPX)The S&P 500 closed down 5.01 @1131.42 under it's MA(200) @ 1280.12
Volatility Index ($VIX)The Volatility Index closed up 1.71 @42.96 over it's MA(200)@21.99
Baltic Dry Index ($BDI)The Baltic Dry Index, an index that measures shipping spot freight rates of various dry bulk cargoes closed down 21 @1899.00 over it's MA(200) @1466.94
Gold ($GOLD)Gold closed down 35.50 @1626.50 for the week above it's MA(200) @1528.51
Silver ($SILVER)Silver closed down 1.10 @29.98 below it's MA(200) @36.06
U.S. Dollar ($USD)The U.S. Dollar closed up 0.05 @78.55 over it's MA(200) @76.37
Euro/U.S ($XEU) The Index closed down 1.03 @133.88 below it's MA(200) @ 140.27
Oil ($WTIC) OIL Light Crude closed down 0.95 @78.90 under it's MA(200) @ 95.26


From WakingTheBull.com's Weekly Report: Earnings, Economic Calendar

Marc Faber: "Bigger Financial Crisis on the Way!

Marc Faber - as always a bracing listen and a hardening agent for Goldbagger chemistry!