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I foolishly published a prediction three weeks ago in a comment titled My 2¢ on gold, etc. on Robert Oak's brief review of a Bloomberg story about record gold hoarding. (See, Saturday Reads Around the Internet, 26 November 2011).



    

I knew at the time that I would regret making a prediction, but that's the nature of the slippery slope that you find yourself on when you "talk gold." Here's my 2¢ as of November 27 (before the November 30 rally on what was interpreted as good news from the Fed and other trilateral central banks) --



    IMO, what goldbugs are waxing enthusiastic about is possibility of runs on French banks due to collapse of Italian bonds due to a default by Greece. [See, FMN featuring videos of professors' analyses of Euro zone crisis.]

    And of course, gold may well be a good bet for professional PM speculators right now, but for people who are looking to hedge against a future USD collapse, this may not be a particularly great time to buy. [However, the market now in mid-December might present some opportunities.] ... it's entirely possible that gold will finally hit it's long-anticipated 2011 highs above $2000. (A couple of months back, a JPMorganChase economist predicted $2100 before end of 2011, after that bank's depository reported increased holding of physical gold.)






    My opinion back in August or so (published in a comment here at EP) that the gold bull was a bubble, and that gold would likely decline although not below $1500 was good enough that I should have let that stand. Oh well. As of the last days of November, although not quite climbing on the gold bandwagon, I clearly did not foresee gold dropping substantially before the end of 2011!

    So what's happening, other than the new normal of 'the unthinkable'?

    In particular, who are the gold sellers?

    At times like this, goldbugs generally resort to CT about an arch-conspiracy of central bankers, while reassuring themselves that in the long run they will outlast the anti-gold forces of evil.

    

My approach to this is that I should have paid more attention to my own remark on November 25, just two days before I made my unfortunate prediction. In comment titled Solution to Germany's dilemma?, here's what I noted (at FMN blog featuring videos of professors' analyses of Euro zone crisis) --

    




Another factor that is regularly overlooked, in the news about Europe's prospective demise, is that Italy's central bank (Banca d'Itaglia) is still functional (as a part of the European system of central banks) and is said to retain very large holdings of gold bullion.






    So, what may be happening currently with gold is that central banks like the Banca d'Itaglia are transitioning into a more rigorously regulated Euro-world where gold held by national central banks will be irrelevant. These banks may be selling off their gold, driving the price of gold down.

    If true, is that a conspiracy of central bankers, setting out to rule the world? Hmmm. I guess it is, if that's how you like to look at it.

    Reply to: Latest On The European Fiscal Adventureland Ride   12 years 10 months ago
  • "Unthinkable Poised to Happen..." ("Prophetic Economist Issues Warning") -- that's from a banner ad seen recently and yesterday (14 October 2011) at the top of the KITCO Gold Index web page.

    But the unthinkable had already happened! Indeed, it seems like the unthinkable happens regularly these days!

    In particular, one of yesterday's unthinkables concerned the price of gold. KITCO asked "Did gold really go down $56.90?" (BTW: the figure could have been higher based on yesterday's London close ... and gold continued falling in Asian markets after the NY close, although gold appears to have found a floor today around $1575.)

    KITCO is the leading authority on what PM prices really are, after factoring out for value of currency in which prices are quoted. And the KITCO answer is ... 

    "YES! The stronger US Dollar was responsible for $5.20 of that drop."

    According to KITCO, $51.70 of the $56.90 drop (14 December 2011) was due to predominance of sellers. (KITCO Gold Index web page, 14 December 2011)

    Unthinkable!

    Robert Oak recently replied to miasmo's question -- "does it make any sense to have any money in the stock market right now?"

    "It [the stock market] is extremely volatile, but if you get caught with your pants down, let it ride. Although I'd put auto triggers if you're buying GLD since Gold is extremely confusing to predict." -- reply by Robert Oak (at 00:27, 13 December 2011).
     

    Reply to: Latest On The European Fiscal Adventureland Ride   12 years 10 months ago
  • When you're not around adding comments with often a lot of more details which add to the post, highly informative, the site really suffers. Glad to see your comments!

    Reply to: Saturday Reads Around the Internets - Financial Sector Grows   12 years 10 months ago
    EPer:
  • My understanding is the reserve currency status enables countries to run much high GDP to debt ratios.

    I have another one, CEO pay, which I cannot seem to get to their actual report, so I'll deal with this when I can get some solid aggregate data.

    The Guardian is reporting pure highway robbery in CEO pay, no surprise.

    This year's survey shows CEO pay packages have boomed: the top 10 earners took home more than $770m between them in 2010. As stock prices began to recover last year, the increase in CEO pay outstripped the rise in share value. The Russell 3000 measure of US stock prices was up by 16.93% in 2010, but CEO pay went up by 27.19% overall. For S&P 500 CEOs, the largest companies in the sample, total realised compensation – including perks and pensions and stock awards – increased by a median of 36.47%. Total pay at midcap companies, which are slightly smaller than the top firms, rose 40.2%.

    Reply to: Saturday Reads Around the Internets - Financial Sector Grows   12 years 10 months ago
    EPer:
  • ...I am linking you with a shout-out Thursday.

    Reply to: Job JOLTS - There are 4.25 Official Unemployed Per Job Opening in October 2011   12 years 10 months ago
  • These swaps have been ongoing for years. What's new is the demand for transparency. Also, there was the recent (30 November 2011) announcement that the Fed and others would be lowering the interest rate by one-half percent.

    From Bloomberg --

    As part of a currency-swap plan active from 2007 to 2010 and revived to fight the European debt crisis, the Fed lends dollars to other central banks, which auction them to local commercial banks. Lending peaked at $586 billion in December 2008.

    The swaps are separate from Fed emergency loans to banks and other businesses that peaked at $1.2 trillion in December 2008, including about $538 billion that European financial companies borrowed directly, according to a Bloomberg News examination of available data.  ....

    Biggest Foreign Borrower

    The U.K.’s Royal Bank of Scotland Group Plc (RBS) was the biggest foreign borrower, drawing $84.5 billion in October 2008. UBS, based in Zurich, got $77.2 billion, while Frankfurt-based Deutsche Bank AG (DBK) took $66 billion and London-based Barclays Plc (BARC) borrowed $64.9 billion, according to the Bloomberg data.

    That the UK has opted out of EU deliberations on monetary policy isn't necessarily detrimental to the rest of the EU, but may be a sign of problems ahead for the USA. Here's a summary of why that is, using data drawn from a graph published recently at Jesse's Café Américain (graph borrowed from Haver Analytics, Morgan Stanley Research).

    The graph shows all debt (public and private) as percentage of GDP for each of the G10. The UK towers above all others, due to a financial sector debt some six times the UK's GDP.

    IMO, the bad news for us (U.S.) is that we are probably still in our traditional "special relationship" with the UK, especially when it comes to our bloated deregulated and corrupted financial sector. It probably won't be Europe where we will catch the plague -- it will probably be the UK, or what is generally termed the 'City of London' financial colossus.

    See, taxjustice.blogspot.com article on UK-US special relationship.

    Nothing against our historic special relationship. I admire much about modern Great Britain and, of course, Winston Churchill and the British people during World War II. But ... could London Bridge be falling down?

    Reply to: Saturday Reads Around the Internets - Financial Sector Grows   12 years 10 months ago
  • Here's the live link, but I don't exactly recommend that anyone click on it who hasn't already heard the tragic Grimmer story. I was one of those, thanks to my deliberate policy to avoid most corporate news sources ... but now I've caught up and wondering if ignorance wasn't bliss.

    Anyway, here's the live link to a well-written but very depressing story --

    http://financeaddict.com/2011/12/suffer-the-little-children/
     

    Finance addict tells both the tragic Grimmer story and the big picture. I wonder how many Americans know the big picture of the millions of homeless children in the USA in 2011?

     

    (You get to do live links and lots more if you register at this site!)

    Reply to: Homeless Kids In America   12 years 10 months ago
  • Did imply this and is located here.

    I do not know what is true, but that's why I included the information on CME. I suspect both are true.

    Reply to: The Big Bomb on Jon Corzine   12 years 10 months ago
    EPer:
  • Thanks for citing the Homelessness study. I used this in a post that tied the tragic Grimmer story in Texas to shocking statistics like this. We need to convey what's really going on.
    http://financeaddict.com/2011/12/suffer-the-little-children/

    Reply to: Homeless Kids In America   12 years 10 months ago
  • Is CME covering its back-side with Corzine bomb and 550 million to farmers and ranchers?

    According to Numerian in a brilliant blog 11/19/11:

    1) The CME says it did audit MF Global but was deliberately misled by the firm... CME further states that as of its most recent audit of the firm, all customer monies were accounted for, but immediately after the audit MF Global quietly maneuvered over $600 million out of the customer accounts without the CME being able to detect the deception...

    2) What happened at this point, however, has outraged other members of the CME. The exchange, in dealing with the shortfall, froze all MF Global individual customer accounts at the exchange. Nor would it allow these customers to at least trade against their accounts in order to protect themselves from further market moves. These actions essentially violated the basic premise of dealing on a registered exchange. Because all accounts are collateralized against both existing and potential adverse market rate changes, the exchange provides a nearly fool-proof guaranty that a customer bankruptcy will not impact the other members or any individuals who trade through these other members

    Two issues: 1) did they in fact audit correctly and 2) why are they late in covering SOME customer accounts... albeit indirectly through the Trustee (i.e. ranchers and farmers still don't have money and won't until trustee finishes its audit)?

    Tom

    Reply to: The Big Bomb on Jon Corzine   12 years 10 months ago
    EPer:
  • get an account so you don't have to go through the moderation queue and can use links and such.

    Well, it sounds like Mish is quoting wholesale, i.e. GM is the supplier. This report is retail and since GM doesn't sell directly to the consumer, unless they own the dealerships directly, but I believe those dealerships are franchises, 3rd party, then their corporate quarterlies I think go to wholesale. Also, GM is #2 (?) globally, 3 U.S.? i.e. not the entire auto industry.

    Downward trends in auto sales through are one of those thumb in the airs indicators not all is well in consumer land. That's about the only time they pay attention to the average American...when we stop shoppin'.

    Reply to: Retail Sales for November 2011 - 0.2%   12 years 10 months ago
    EPer:
  • Thank you for that prompt and detailed response. It got me to thinking where I read about auto sales and i came up with Mish 11/9/11 where he writes:

    "Sales down and dealer inventory up 15% at GM.
    "The key takeaway from last months "good" GM sales report is it was largely based on channel stuffing. "Sales" get reported when cars are shipped to the dealer and cars are stacking up at GM dealers."

    Mish is always a mixed bag. At times he has excellent statistics and others, like the auto sale comment, no elaboration.

    Tom

    Reply to: Retail Sales for November 2011 - 0.2%   12 years 10 months ago
    EPer:
  • a few things on the hype coming out of Black Friday, Cyber Monday, if any recalls the MSM headlines and news casts blasted and blazed on and on about record sales.

    First, this report is aggregate and includes food, restaurants, bars, groceries, gas. Then, this report is seasonally adjusted as noted.

    Then, revisions are bound to appear. Finally, the report is in raw dollars, not volume. If retailers sold at steep discounts, sales volume won't translate into sales.

    We'll see, but I think the media reports on black friday are hype machine, and why I didn't write up anything about it. I also find it all sick to have a 2 month long consumer fest and call that a holiday. People are broke, broke, broke here and the very best gift anyone can give is hiring people. Give people a job for Christmas, or buy a made in America product to directly give someone one.

    Reply to: Retail Sales for November 2011 - 0.2%   12 years 10 months ago
    EPer:
  • You know, you can literally call up our friendly neighborhood government statisticians if all else fails, which is pretty dog gone cool. Can't say that much about most of our tax dollars.

    From the actual survey are the instructions to Automotive Dealers on what to report:

    • In e-commerce the sales of cars where a binding sales
    price is established online through the dealer’s or a third
    party’s web site
    • Charges for dealer preparation, warranty charges,
    and delivery costs
    • Combined sales for all new and used car locations
    and service facilities within the immediate vicinity of the
    new car showroom when such locations are considered
    integral parts of the "new car" business and separate
    books are not maintained for their operations
    • EXCLUDE receipts from customers for tag and title fees,
    licenses, etc., forwarded to State or local licensing agencies.

    So, I'd take that they should not be counting as sales only cars delivered but not actually sold, but ya know, maybe they are cheating or I'm missing something from their survey instructions.

    I put the link to the "magic special place" of the government statistic agency web space on all of these overviews, first link for the current release to more data and FAQs. Not that most read all of those details or even these overviews or get past some buzz headline from Bloomberg which claims "retail sales below analysts' estimates" or whatever. ;)

    I'm tell ya where I think things are extremely funky is the import/export price deflators.

    Inventories were released, some and I didn't get to overviewing recent, but we can take a look see on retail inventories for autos, dealers, potentially too.

    Reply to: Retail Sales for November 2011 - 0.2%   12 years 10 months ago
    EPer:
  • I'll try to do an update post with some video. Question is, if they can verify this, will charges be brought? I doubt it! Bloggo gets 14 years but anyone connected with Wall Street at best gets a tisk, tisk. Thanks for letting us know.

    Reply to: When Even the Clearing Houses Start to Malfunction   12 years 10 months ago
    EPer:
  • I've read that auto sales numbers represent cars sent to dealers not actual cash sales to customers and dealer inventories are very high. if so then the auto sales statistics are misrepresent actual sales.

    Anyone know if this is true?

    Tom

    Reply to: Retail Sales for November 2011 - 0.2%   12 years 10 months ago
    EPer:
  • Today (12/13) in the Senate Agriculture Comm. a Mr. Duffy of CME testified that CME had allocated 550 million dollars to the Global MF trustee to cover loses to "Farmers and Ranchers" only.
    Also, he contradicted Corzine and said CME auditors have been told that, contrary to Corzine's testimony, that Corzine knew about the transfer of customer funds into company accounts.
    Senator Roberts told Duffy "you just dropped a bomb."

    Tom

    Reply to: When Even the Clearing Houses Start to Malfunction   12 years 10 months ago
    EPer:
  • Please comment or ask me to crank another number. Myself, beyond the fact job openings decreased in October, not a good sign, thought anyone who believes the new low labor participation rates are normal or magically all young people entered college due to not eating lead paint anymore are smoking crack. I'm sorry and hopefully I can do a break down there and find show, no, they did not win the lottery or go to college.

    Reply to: Job JOLTS - There are 4.25 Official Unemployed Per Job Opening in October 2011   12 years 10 months ago
    EPer:
  • No kidding. We have obesity problems, diabetes problems and they put high fructose corn syrup in everything. This is an economics site and I don't know what "studies say", but I sure do know it drives me crazy to go to the grocery and not be able to buy salad dressing without it or bread, you name it. The stuff makes the product taste terrible too! How much high fructose corn syrup is in McDonalds and even KFC? Empty calorie nation at minimum.

    Goes to show you what advertising, marketing and shelf space competition does to people. Kind of like our politics today, labeling "quality" via cable noise babbling heads, our fast food politicians, Primarily flavored beef fat, smothered in plastic cheese and coated with fake sugar. ;)

    Reply to: Corporations Pay No State Taxes Either   12 years 10 months ago
    EPer:
  • Not flavored sugar water. Flavored high-fructose corn syrup water. The reason why it's not sugar water is import restrictions on sugar (which benefits Big Sugar) and subsidies to Big Corn.

    Needless to say the fact that the rise in type II diabetes that goes along with the increase in the use of high fructose corn syrup is just a coincidence.

    Reply to: Corporations Pay No State Taxes Either   12 years 10 months ago
    EPer:

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