On May 5, 2004, I wrote an article entitled Mexican Stand-off. In it, I outlined the likelihood
that foreign governments and institutional investors everywhere would reach a point of fleeing the US dollar. We may be looking
at this situation quite soon. The way it would happen would be that, many holders of large USD positions would be facing each
other, waiting to see who pulls the trigger on the USD. Then all would fire at once, blasting each other with their USD asset
sales, trying to salvage what remained of the real value of their US treasuries, US stocks, US bonds.
Ultimately, the gold price is a measurement of trust in the currency and the politicians
who run the country. It’s been that way for a long time, and is not about to change.
If we care about the financial system, the tax system, and the monumental debt we’re accumulating,
we must start talking about the benefits and discipline that come only with a commodity standard of money – money the government
and central banks absolutely cannot create out of thin air.
Congress first mandated the production of 4 billion gallons of ethanol this year (increasing
to 7.5 billion in 2012). This arbitrary number is to help wean America from its "oil addiction," as President Bush puts it.
In reality, it is a sop to the powerful farm lobby that makes corn-based ethanol.
Or, much more excitingly, perhaps this is actually the Chinese equivalent of a new gold
Exchange-Traded Fund! If so, wow! The impact of gold ETFs on the price of gold has been, so they say, significant in producing
the stellar performance of gold. And if it is, and here is another one, a potentially enormous one, to add to the impact!
The simple fact and dirty truth that they wish kept hidden is that Politicians have made
insane promises over the years to the Baby Boomers this is the real cause of the major problem now faced. They have been trying
to inflate this massive problem away, the side effects are huge and unsustainable bubbles in the Stock market, Real Estate
market, Bond Market and eventually commodities. Make no mistake; The President of the United States of America has 3 very
simple choices.
One factor that has been boosting silver for a few months now is anticipation of an exchange-traded
fund from Barclays Global Investors. On March 21, the SEC issued an order that allowed the listing and trading of shares of
Barclays' iShares Silver Trust on the American Stock Exchange. As silver was closing Wednesday, however, an SEC representative
reported that the other main regulatory hurdle, a registration statement, is still pending and does not have an effective
date.
While I intend to comment primarily on the COMEX silver short position, which is the largest
verifiable short position ever witnessed in financial history, please remember that this is only one component of the total
silver short position. In addition to the gargantuan COMEX short position, there exists separate short positions in bank silver
certificates and forward selling/leasing arrangements, including leveraged and pool accounts. All told, the real combined
short position in silver runs into the billions of ounces in my estimation. Therefore, the open liabilities to the shorts
are nothing less than staggering, and threaten to become even more nightmarish.
How is your company run? For the convenience of the CEO or the employees? If it’s run
for the convenience of the CEO and his immediate cronies, then your future is in danger. They will suck the capital out of
the company. The most important capital is brainpower.
A wise CEO looks at the company’s ability to hire better talent cheaper. Today, the country’s
eyes are focused on India. This is an optical illusion. The significant outsourcing is domestic.
Lastly, we agree with Michael Bolser - this is a Gold War. They have once confiscated
all personal gold holdings, and at another time reneged on paying their contractual obligations to foreign nations to settle
their account balances with gold bullion as they had pledged. This was Nixon's contribution to world betterment.
In 2005, the US current account deficit reached 805 billion US dollars or about 7% of
the US gross domestic product. For some analysts, this figure is way beyond the standard critical threshold, while other observers
see no risk at all and rather contend that this number indicates the strength and the attractiveness of the United States
economy.
E-12 EU Commission GDP Forecasts. 8:30 CAN Merchandise Trade Balance (exp C$6.2 bln, prev
C$6.3 bln), 8:30 am US Feb Trade Balance (exp -$66.0 bln, prev -$68.5 bln)
DATA ALERT: US February trade gap could undershoot forecasts -- a positive for the US
dollar.
We expect the US trade gap to have stabilized by more than 3.0% to $66.0 bln in February
from January's $67.8 bln, well below consensus forecast of $67.8 bln due to:
A question I'm often asked is, "What would happen to gold shares if the broad stock market
sinks into a bear market?
My answer is that a bear market in stocks would be basically deflationary. The Fed is
mortally afraid of deflation, Therefore, in the face of deflationary action, the Fed would open the monetary spigots wide
and bring rates down to 1% or even 0.5%. In other words, the Fed would move to the edge of destroying the dollar rather than
deal with the forces of deflation. Under these conditions, I would expect gold to resist or outperform almost everything else,
since the Fed's counter-deflationary action would place the viability of the dollar in doubt.
A quick check through US national economic and financial accounts shows the vast need
to maintain confidence in paper dollars. In normal logic the US dollar should be completely worthless, but the same also applies
to the Euro, the Yen or most any other money you care to name. Oil exporters have to accept these paper moneys, like you and
me. Every so often, and Kondratiev claimed that 'every so often' is cyclic and relatively predictable, and is not purely stochastic,
confidence melts down and paper money, along with even more papery share actions and derived financial instruments has a very
rough ride. This is what happened in 1979-1981. No amount of gold selling by national banks, today, will or can halt the upward
rush of gold prices - or oil prices.
In the Peak Oil Series, Dr. Duarte has explored numerous aspects of the concept that the
world’s oil reserves are dwindling. One common theme in the series, and in Dr. Duarte’s weekly discussions with Jim Puplava
on the Financial Sense Newshour, is how little oil companies and politicians are doing to increase oil supplies and/or diversify
the world’s energy sources. In this installment, Dr. Duarte looks at a new “Black Gold Rush” in the Upper Plains of the United
States and Canada and the impact of this new dynamic on the oil markets and consumers. Other installments of this highly timely
and “must see” series include:
No one wants GM to end up in Chapter 11, which, at the very least, would involve huge
legal costs. Mr Miller pointed out this week that America's steel industry emerged from Chapter 11 in much better shape. But
it is hard to argue that the same is true of the airline industry (see article). Moreover, bankruptcy would probably further
reduce GM's falling market share (down from 35% in America in 1992 to 25% today), as potential customers would fear that the
firm might not be around to deal with any faults in their new cars.
Would the Fed continue to raise rates in the short term to curb soaring commodity prices
that defy the expectations of those traditional Wall-Street analysts? Regardless we expect the dollar to retest its all time
low of 81 this year. Gold has overcome the $570/oz resistance on its way to $650/oz this year. Gold producers present a great
entry point.
Exxon's power now echoes that of John D. Rockefeller's Standard Oil, the trust whose breakup
by the government nearly a century ago spawned not only Exxon and Mobil but also Chevron, Conoco, and Amoco, and marked the
beginning of a new era in Washington's regulation of business. This time the stakes are just as high. As its profits multiply,
Exxon is drawing increased criticism for its stance on global warming and its support of drilling in the Arctic National Wildlife
Refuge. Schumer may not have been able to interrupt Tillerson, but he clearly would like to remind him that Exxon's power
isn't unlimited.
Looking further ahead, then depending on how long the U.S. allows the trade war, if it
materialises, to persist and on how well the Europe and East Asia can pick up the slack left by the slump in U.S. demand for
imports, the world economy might be tipped into a downturn. A nasty period of economic weakness in the U.S. in response to
a further decline in the dollar remains a possibility, and some spill over to the rest of the world is likely.
I believe that interest rates are going higher than 5%. The Fed will keep raising them as long
as the economy is growing more than 3% a year, and that could be at least through the summer. That would take us to 5.5%,
which is still below the historical mean. There are meetings in May, June, and August, thus the potential for three more hikes.
The Fed will only stop raising rates when it is clear the economy, the drive for increased leverage, and the housing market
have all slowed. And not a meeting before that.
If you ask me to name the proudest distinction
of Americans, I would choose- because it contains all the others . . . the fact that they were the people who created
the phrase "to make money." No other language or nation had ever used these words before; men had always thought of
wealth as a static quantity . . . to be seized, begged, inherited, shared, looted or obtained as a favor. Americans were
the first to understand that wealth has to be created.
