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  • Fed Chair Impact On USD: Summers Up, Yellen Down  [View article]
    There is no impact on USD. They are virtually identical and will be more dovish than Bernanke. Both will warm up the printing presses until they are red hot. Also, they will do exactly what they are told by the political establishment.
    I read recently that the FED spends its time like this:
    10% on policy.
    90% on communication (basically propaganda).
    I do feel that this is not correct and the policy part is about 5% at most.
    So, given what is important and what takes most of the FED's time, Obama will choose the one that would be better at communicating some very dovish policies. I suspect that Yellen is better that way due to her current job - continuity. Also Summers has said some negative things about QE. He would happily reverse his opinion of course but the damage has already been done and he may appear untrustworthy if one day he calls QE black and the very next day white. So, it is likely to be Yellen.
    Needless to say, Obama will make them jump around a little bit like monkeys in a circus to entertain everybody. Then he will choose Yellen.
    Jul 29, 2013. 07:04 PM | Likes Like |Link to Comment
  • I Am Sticking With Gold: A Critique Of 'The Golden Dilemma'  [View article]
    Gold has dropped and lost some of its strong correlation with money printing, aka QE by the FED to obscure its real meaning. This is of course why the huge intervention in the gold market engineered by the FED was initiated and is still going on. They want to prove that there is no inflation and that there will be no inflation. Hmmm ... guess what, this year the FED will print ~ $ 1 trillion or more and up to 2008 the total amount of money printed in the history of the USA was $800 billion. You draw the conclusions yourself, they are pretty simple.
    Jul 29, 2013. 11:12 AM | 3 Likes Like |Link to Comment
  • COMEX Gold Inventories: Every Top-200 Hedge Fund Can Buy All The Registered Gold At The COMEX  [View article]
    I see from the charts showing that the Comex inventories of registered gold are down to what they were in 2004 or so. This can be interpreted as a sign that things are ok but I don't think so. The issue is that too many people in Asia want the actual physical stuff and not even ETF's, forget derivatives. Still, would be interesting to see what was the daily volume and average open interest at that time to compare. This would tell us how much more leveraged the Comex has become.
    Jul 28, 2013. 01:55 PM | 2 Likes Like |Link to Comment
  • Gold To Rally? 'No' Says India  [View article]
    Why? Simply because gold imports in India used to be illegal and still a lot of gold was imported in the country somehow. This is why.
    Jul 28, 2013. 04:35 AM | 1 Like Like |Link to Comment
  • Gold To Rally? 'No' Says India  [View article]
    It will not work for me ... this is a job for a well connected local politician, policeman or a joint venture between them. India is a very corrupt place so the smuggling operations will work just like a normal paying to the right people in power who will still charge less than the taxes that the government tries to impose but is unlikely to collect.
    Jul 28, 2013. 04:34 AM | Likes Like |Link to Comment
  • Despite Declining Deficit, Foreigners Aren't Bailing Us Out, So The Fed Will Keep QE Going  [View article]
    The signs are not good. The FED has been buying most treasuries issued this year thanks to QE infinity and rates of the 10 yr bonds are still up by more than 100 b.p. - not a good sign. The FED wants lower rates and instead rates have gone up. People can say that this is due to equities and the recovery but I don't see it that way. Q2 growth is likely to come below 1% YOY and the quality of most new jobs is low - restaurants and cheap services dominate. I bet the FED is worried about that and it definitely makes it hard for them to taper QE and about ending it - you can forget it.
    Jul 27, 2013. 03:00 PM | Likes Like |Link to Comment
  • Gold To Rally? 'No' Says India  [View article]
    I cat tell that you have never traded in your life ... you should try. If you are so convinced, short it.
    Jul 27, 2013. 02:47 PM | Likes Like |Link to Comment
  • Consistent Silver Demand Clears All Doubts On The Future Price Winner  [View article]
    The silver market is totally out of control due to manipulation by J.P. Morgan. It is simply crazy that this is allowed to go on and on. My guess is that by the end of it silver miners will be really screwed, supplies will vanish as recycling is totally uneconomical and silver used in industry just ends up in the trash. Since silver is actually amazingly useful in areas like medicine, electronics, car industry, weapons, solar and more, the shortages will really push the price up. Can this happen many years from now? I doubt it as the current squeeze on miners cannot last more than 1 year and much higher prices will be out there in the next 2 years, just my honest view.
    The mathematics of silver is really crazy. US will produce ~ 30 million ounces of silver from all mines in the country in all of 2013. As the articles notes, already 28.5 million ounces of silver have been sold as coins. Remember that people buy bars as well. It is just Ecomonics 101 here the lower the price, the bigger the demand.
    Jul 26, 2013. 04:02 PM | 5 Likes Like |Link to Comment
  • Gold To Rally? 'No' Says India  [View article]
    Of course it will filter. Somebody has to buy it after all. They can't just create it out of thin air like the FED will create $1 trillion this year. By the way, there is a big article on Indian gold smuggling this year. I suspect that already more than 50% of the imports happen through the unofficial channels. Expect by 2014 virtually all gold in India to be imported like that, just like it used to be before the government liberalized gold trading. Of course, the forbidden fruits are tastier so I expect that Indian demand for gold will actually go up and is met by ample amounts of gold smuggled in the country trading at lower prices than where the legally imported gold trades. The good thing about gold is that it is all the same, smuggled or not.
    Jul 26, 2013. 03:55 PM | Likes Like |Link to Comment
  • Gold: Picking Up Pennies In Front Of A Steamroller  [View article]
    It is very simple. China mines ~ 400 tons of gold per year. They also import an average of 100 tons per month from Hong Kong (maybe more as they likely import from other places that we don't know of). So, total demand for the year is ~1600 tons.
    India will officially import ~ 900 tons this year (they imported 150 tons in one month alone) but the actual number will be bigger because of smuggling that is off the books but is actually huge. So, total demand maybe ~ 1100 tons. So, the two big buyers will buy 2700 tons this year. Wait, this is the total amount that will be mined in 2013. Where will the following countries get gold:
    Iraq (bought 50 tons in the first 6 months)
    Japan (demand has really picked up)
    UK (also big demand due to very high inflation)
    Russia and the other Central Banks buying
    South Korea
    and many others
    There is simply not enough gold with jewelry demand through the roof, including in the US, and supply from scrap collapsing (as reported by the World Gold Council).
    I guess the FED will have to sell more of the German gold in New York to meet that demand, if there is anything left to sell that is.
    Jul 25, 2013. 05:38 PM | 3 Likes Like |Link to Comment
  • Gold: Picking Up Pennies In Front Of A Steamroller  [View article]
    The question in the Japan case is when not if, unfortunately. They are toast and the yen will go from hero to zero. Their number are totally crazy. I've never seen a banana republic with such bad debt / credit / spending problems. The whole thing is totally insane and they have money printers in charge that can only accelerate the collapse of their economy.
    Jul 25, 2013. 05:26 PM | 1 Like Like |Link to Comment
  • Gold: Picking Up Pennies In Front Of A Steamroller  [View article]
    This is a pretty good summary of the situation. The manipulation of the gold market on the Comex is like the band playing music on the deck of the Titanic to cheer up everybody.
    Jul 25, 2013. 03:43 PM | 1 Like Like |Link to Comment
  • Gold: Picking Up Pennies In Front Of A Steamroller  [View article]
    And the third article should be ''US Treasuries, picking up pennies in front of two steamrollers''. The fact is that the FED is the market in Treasuries. Banks like JP and GS buy only to frontrun the FED and then just sell their bonds to the FED. With the FED buying $85 billion of govies and agency bonds every month, the 10 yr bond yields are 120 b.p. higher. How much higher would those yields be if the FED stopped buying? Better taper the tapering talk.
    Jul 25, 2013. 01:16 PM | 9 Likes Like |Link to Comment
  • Gold: Picking Up Pennies In Front Of A Steamroller  [View article]
    The author is mistaken. Gold is cheap and is actually below the actual cost or production for a lot of gold miners. The gold companies started reporting today and the earnings are dismal and negative: Goldcorp and AgnicoEagle reported terrible results. Keep in mind that these are very good companies. It is just that the gold price is too low while they face huge inflation in their production costs.
    The reason why the price of gold is down is that the FED has been intervening in the market, mostly through J.P. Morgan, BAC and GS + a couple of hedge funds that they control to push the futures market down. The result is that they are going to cause a physical gold squeeze due to lower production but especially lower recycling. I expect total gold supply for the year to be down 10% to 15% compared to 2012. With the Chinese and Indians, as well as some other countries, buying gold like there is no tomorrow the price is going much higher. That may take some time but the bull market in gold has only just started really.
    Jul 25, 2013. 01:08 PM | 8 Likes Like |Link to Comment
  • Gold To Rally? 'No' Says India  [View article]
    Reports say that the Indian gold ban is not working. Smuggling is taking over from official channels, while the demand for gold from the population is very strong. During the Prohibition in the US, people drank just as much but profits went to the organized crime. The same is happening in India with gold. By the way, it used to be illegal to import gold in India and the country still consumed a lot then. It will be the same this time. Keep in mind that India is very corrupt and for a portion of the profits, the police, politicians and border patrols will cooperate to make sure that gold is available just as much as before. Only the finance minister will be left out begging the population not to buy, while his wife shops for gold.
    Jul 24, 2013. 09:23 AM | 11 Likes Like |Link to Comment