David P. Goldman: Gold gives you extremely important signals
Submitted by cpowell on Sun, 2013-02-17 22:00. Section: Daily Dispatches
5p ET Sunday, February 17, 2013
Dear Friend of GATA and Gold:
In an interview with financial writer Lars Schall, market analyst David P. Goldman joins those who lately have noted that gold mine production is of little consequence to the gold price because at any particular moment 25 or 30 times amount of gold produced annually is hoarded and available for trade. "So a change in desire to hold gold as an investment," Goldman says, "is a much more important determinant of the gold price than changes in current mining supply or changes in current consumption of jewelry or industrial applications." That’s why, Goldman adds, the gold price is the crucial indicator of inflationary expectations — and why, GATA might add, it is so much the target of central bank manipulation. Goldman’s interview is headlined "Gold Gives You Extremely Important Signals" and it’s posted at Schall’s Internet site here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
“Gold Gives You Extremely Important Signals”
Februar 17th, 2013 9 Comments
David P. Goldman / Spengler, “the world’s most brilliant intelligence service,” discusses in this exclusive interview some of his thoughts on various aspects related to gold. Inter alia, he explains why he supports a commodity price rule for monetary policy that is connected to the yellow metal.
By Lars Schall
David P. Goldman, in our view one of the most outstanding and relevant essayists of this time and age, has been in the past the global head of the fixed income research department at Bank of America (2002-2005) and global head of credit strategy at Credit Suisse (1998-2002). In addition, he worked in senior positions at Bear Stearns, Cantor Fitzgerald, and Asteri Capital. Today he runs the consulting service Macrostrategy.
During the 1980s, he served Norman A. Bailey, then Director of Plans of the National Security Council of the United States. From 1994 to 2001, Goldman was a columnist of Forbes magazine.
At Asia Times Online he regularly publishes since 2000 his “Spengler” essays (named after Oswald Spengler, the German historian and philosopher). An overall index of those columns can be found here.
“Ask anyone in the intelligence business to name the world’s most brilliant intelligence service, and we’ll all give the same answer: Spengler. David P. Goldman’s ‘Spengler’ columns provide more insight than the CIA, MI6, and the Mossad combined.” — Herbert E. Meyer, Special Assistant to the CIA Director and as Vice Chairman of the CIA’s National Intelligence Council, Reagan Administration.
In addition, Goldman writes for the monthly magazine First Things essays that also address a wide range of topics – from Jewish theology and economics to literature, mathematics, and foreign policy. Moreover, he is a columnist at PJ Media, while at Tablet he contributes music reviews. Goldman is the author of the book “How Civilizations Die (and why Islam is Dying, Too)”, published by Regnery Press. A collection of his essays, “It’s Not the End of the World – It’s Just the End of You,” was published by Van Praag Press.
He has spoken at many important business conferences, such as the annual meetings of the World Bank. His chapter on market failure in the “Bloomberg Book of Master Market Economists” (2006) is one of the examination scripts for the Certified Financial Analyst exam. He received a B.A. from Columbia University and entered a doctoral program at the London School of Economics. At the City University of New York he studied music theory. He taught music appreciation at Queens College of New York. At Mannes College of Music he taught music theory. He currently serves there on the Board of Governors. He also sits on the Board of Directors of the America-Israel Cultural Foundation and is a Fellow of the Jewish Institute for National Security Affairs. David P. Goldman lives in New York City, U.S.A.
Lars Schall: Mr. Goldman, what are your thoughts in general on the re-emergence of gold in international finance?
David P. Goldman: Gold is essentially a political issue. As long as you have positive real interest rates on relatively safe debt either of governments or private issuers, there is in my opinion no real reason to hold gold at all except as an emergency fallback. Gold is costly to store, you have to put it in a vault, you have to hire guards, and it’s inconvenient to transfer (if you want to pay somebody in gold you have to physically load it on some means of conveyance). As long as the governments of major countries can be trusted to manage their public debt in a sound way there is really no particular reason to hold gold. That’s of course a very big caveat, because governments can’t be trusted to manage their finances properly, and the reason that the gold price has risen from a few hundred dollars to nearly 2000 dollars an ounce over the last ten years is because of the markets’ lack of confidence in the debt management of major governments.
L.S.: But then also private banks are now interested in gold these days as a more or less zero-risk asset.
D.P.G.: Yes, but I consider that a marginal development at this point. One of the most important issues in the banking industry right now is the availability of sound collateral. The value of very high quality government securities is that you can use them to borrow against it at very low interest rates very flexibly. So the financing value of high quality government securities is an extremely important component of their desirability as an asset. There is now a global shortage of high quality collateral, and the reason is that government debt of many major countries has become compromised by extremely poor economic and financial management. So because there is a shortage of high quality collateral, banks are experimenting with gold as an asset because you can borrow against gold collateral at extremely low interest rates. So it’s beginning to filter into the banking system because of this collateral shortage.
This not just driven by the market, but it’s also driven in part by the regulators. You may be aware that the Bank for International Settlements’ supervisory committees have insisted that banks maintain a much higher degree of liquidity, in other words that a larger portion of their portfolio than in the past should be invested in highly liquid assets. That is from a supervisory standpoint a very reasonable suggestion. Remember that one of the big problems the banks had in 2008 was that they had levered enormous amounts of supposedly high quality assets, which turned out to be completely illiquid in the event of the crisis such as collateralized mortgage obligations with Triple A rating. As you are aware, the rating agencies are being sued by the government of the United States for billions of dollars for allegedly falsifying such ratings.
So with the demand from the regulators that banks maintain essentially a higher liquidity profile, it is physically difficult for them to do so because of the lack of high quality collateral. That’s why banks at the margin are interested in gold. And again, emphasizing the point that to the extent that governments mismanage their finances and the quality and the liquidity of government debt is compromised, gold will be seen as an important alternative. However, I think we are a very long way from a proper restoration of gold in the monetary system.
L.S.: China is buying gold big time.
D.P.G.: Yes, China is buying gold, but from a very low base. China has $ 3 trillion of foreign exchange reserves. If China were buying gold seriously, the gold price wouldn’t be at $ 1.600 / 1.700 an ounce, it would be at $ 5000 an ounce. As far as I can determine – remember it’s a state secret, the Chinese do not tell you what they own – and infer from partial data, the Chinese are buying everything – they are buying raw materials, they are buying technology, they are buying machine factories in Germany (last year, Chinese direct investment in Germany was three times the level of German direct investment in China, which is quite a difference from the past, and there had be some very high-profile acquisitions). From the Chinese standpoint, yes they want to increase their gold reserves, but they also want to increase their portfolio of technologies, they want to increase their access to raw materials, they want to do many different things. Their interest goes far beyond the monetary.
They have been very modest net-sellers of US treasury securities, I think they were down a bit less than $ 200 billion in holding US treasury securities last year, if I remember the numbers correctly. It’s a small but significant amount. I don’t see China engaging in a massive gold buying campaign. Instead I see it as a steady increase, but from an extremely low base. A couple of years ago Chinas gold reserves were only 2 or 3 percent of their total reserves, which is extremely small. So it makes sense for them to increase from that little base.
There is another reason for the US dollar to remain an important reserve instrument for some time, and that is Japan. Here is where the politics come in: there has been a great deal of discussion, and I am sure that you are aware of it, about the possible development of an Asian reserve currency, which would perhaps involve a gold anchor. I think that’s idle speculation for a very simple reason: the Asians don’t get along with each other politically. The Japanese and the Chinese are at odds with each other, and as we have just seen today (referring to the Russian fighter incursion into Japanese airspace on February 7) the Japanese and the Russians are at odds with each other as well. If you look at the major economic powers outside of the United States – China, Japan, India, Russia, and after that you have to go to places such as Brazil, which really don’t count for much –, there is no possibility for any significant agreement among them, let alone a monetary agreement.
The Japanese according to reports that we have seen over the last months are expected to increase their reserve holdings of US treasuries by between $ 400 and $ 500 billion per year, as they intervene in the market to weaken the yen. Now, there are other ways to weaken the yen, and so the buying of that much US treasuries suggests to me that the Japanese still consider themselves pretty much as part of the American sphere in a monetary as well as in a military sense. Japans Prime Minister Abe has called for an alliance between the United States, Japan and India to contain China. This is a very popular theme among some American strategists as well – you read about it everywhere. So the idea that Japan would shift its reserve position – which is huge – away from the United States and towards some kind of Asian bloc is politically impossible. It’s completely unforeseeable in the existing constellation of world forces. That’s why I say that the emergence of gold as a reserve instrument or actually a gold standard of any kind is extremely unlikely for the foreseeable future – the politics simply aren’t there.
L.S.: However, you support a commodity price rule for monetary policy connected to gold.
D.P.G.: Yes, sure.
L.S.: Could you explain the concept behind that and why you support it, please?
D.P.G.: This is an idea that was advanced by Robert Mundell, but actually it goes all the way back to David Ricardo’s idea of the gold standard. Robert Mundell, of course, is the father of the euro and the father of supply-side economics, he’s a Nobel Prize winner, and he has been the most prominent economist advancing this idea; he has talked about it for roughly the last thirty to forty years. The idea is pretty simple: to create some kind of objective market-based rule which would limit the ability of central banks to create money and to debase their currencies, or on the other hand to act as a break against deflation. In other words: to use market observations of auction prices that reflect expectations of the overall price level in order to correct central bank errors.
There has been an enormous amount of debate for centuries now about what the criterias should be for central bank money creation and how important that is. Mundell’s argument is that the quantity of money is much less important than the way the market responds to central bank increases in high-powered money or in bank reserves and how that affects expectations of the price levels. So central banks should listen much more to the market.
And gold among all the commodities probably gives you the purest signal about future price expectations. There is a very simple reason for that: the amount of gold in stockpiles is many times – 25 to 30 times – annual consumption. So a change in desire to hold gold as an investment is a much more important determinant of the gold price than changes in current mining supply or changes in current consumption of jewelry or industrial applications. If you use copper or platinum or bauxite or other commodities, the stockpiles are extremely low relative to current use. And you also might have a technological change or an economic slump or a big increase of demand which would drastically affect the prices. So it’s much more difficult to interpret price signals from industrial commodities as an indication of expectations about the future price level. Gold gives you much better information. So it certainly has pride of place among all commodities as an indicator of expectations about the price level and as a guide to central bank activity.
That idea of a commodity-based standard which is to create confidence in the market place and to correct for central bank errors is the core of Mundell’s concept. I think it is an extremely good idea and I firmly believe monetary management in general would have done much better if we would have followed Mundell’s view and not the guess work of central bankers.
Certainly errors committed by the Federal Reserve in monetary policy contributed to the development of the financial bubble during the 2000s. During 2003, as you recall, the Federal Reserve eased because they were afraid of deflation – there was a big drop in the bond yield and they saw it as a deflationary signal. At the time my department at Bank of America produced a large body of research, arguing that this was not a deflationary signal, that the Federal Reserve was in error, and the Federal Reserve’s ease was mistaken. Therefore, I can think of a number of instances where the Federal Reserve would have been much better off to watch the gold price rather than bond yields or consumer price indexes or other things that they were watching.
L.S.: Do you consider it worthwhile to follow the gold market?
D.P.G.: Oh, absolutely! Gold gives you extremely important signals. The question that financial analysts should ask is not simply what the market expects, but what is the range of possibilities that the market expects and what probabilities are assigned. In other words, expectations should not be thought of as a point in the future – I think that the stock market is going up by 7.38 percent next year, that’s my expectation. Instead the expectation should be thought as a probability distribution. For example, if you are going off to rob a bank, you have a very screwed distribution – on the one hand you come away with 50.000 euros, on the other hand you get shot dead. If you invest in government bonds there you got a much narrower distribution.
So the willingness of the market to pay for hedges against extreme outcomes – and gold at this point is a hedge against extreme outcomes – is a very important indication of the market’s thinking. One interesting comparison is between gold and inflation tracking securities, like TIPS (Treasury Inflation-Protected Securities) in the United States. There is a very close relationship in the last five years between the gold price and inflation trackers as I have pointed out numerous times in the past in my research for clients. Both of them are hedges against extreme outcome. Right now when you buy into an inflation tracker in the United States, or in fact any of the better quality countries, you have a negative interest rate – that is, you invest a hundred euros at principle, and if nothing unexpected happens in ten years you get 99 euros back. Why would you accept a negative yield? Because if you have other extreme inflation or extreme deflation, TIPS will outperform other bonds and probably other stocks as well. So the fact that gold and TIPS track each other extremely closely is an indication that both of these instruments are hedges against extreme outcomes.
So the gold market is an extremely important signal, but it needs to interpreted carefully. Gold is not a good forecaster of inflation in any reasonable time horizon, say five to ten year time horizon. At this point gold is not a hedge against inflation, but a hedge against a very big change in unexpected inflation, a very big inflation surprise. So again, the gold market is extremely important analytically. I personally own gold as a hedge against extreme outcomes. It’s not really a great deal in my portfolio, but I have a substantial amount of gold as insurance.
L.S.: So I would guess that you don’t think the gold price is a bubble?
D.P.G.: No, absolutely not. The proof that gold is not a bubble is that gold and TIPS track each other so well. If that were true, one would have to say that TIPS is in a bubble, but that would make no sense. I’ve never heard anyone say the TIPS market is a bubble.
L.S.: Since you were once Bank of America’s global head of bond research: is the bond market mispriced?
D.P.G.: I think the Spanish bond market is mispriced. I wouldn’t own Spanish bonds at these levels because I think the Spanish government is covering up the real extent of their banking problems. I think the European Community made a decision to let the Spanish underestimate substantially how severe the problems are, because they want to dampen the perspective of the crisis. But as far as the United States is concerned, I think as long as growth is in the 1 to 2 percent range and you have a very substantial increase in government debt and the prospect of serious increase in inflation due to the American budget problems, the bond market is not necessarily in a bubble at all.
I like to look at American bond yields broken down to two components: TIPS, that is the inflation protected yield, versus the ordinary coupon yield. The difference between the TIPS yields and ordinary coupon treasury yields is typically called “break-even inflation”. The difference between those two yields is the inflation rate that will be required for TIPS and coupons to produce the same total returns. And in the last few weeks as bond yields have gone up, in fact TIPS yields have gone down, they have become more negative, which shows that people are willing to pay more for protection against an extreme outcome, but break-even inflation has gone up, it has gone up more.
So the fact that TIPS have such an enormous support, because yields have gone even more negative, tells me that bonds are still an important portfolio hedge against certain kinds of extreme outcomes. I also see a lot of international demand for US treasuries, particularly by the Japanese. So I don’t think we are going to see huge moves in bond yields. I do think that a large part of the credit market is much too optimistic. I think that the Federal Reserve’s purchases of mortgage backed securities have distorted the market, and so I think the price of risk in the credit market is much too low, I think there is some mispricing there.
L.S.: One final question: usually, debt crises end ultimately in a write-down of the debt. Do you think that we will see in the next few years an international summit where exactly this will happen because it needs to happen?
D.P.G.: Well, the write-down of government debt – that’s conceivable more in some of the European countries, but it is very unlikely. The reason why I think it is unlikely is because if you look at the amount of private wealth available in most European countries compared to government debt, private wealth vastly exceeds government debt. What governments do when they are in trouble to pay back their debt, as in Argentina, is to expropriate private wealth. So what I believe will happen in the extreme case well before you have any default on government debt, say in places like Italy or Spain, you will have some substantial wealth taxes.
In the case of the United States, we will add a lot of inflation. Inflation is a partial default on government debt. For example, let’s say that I lend you a hundred euros for a month, and a month later you come back and give me a hundred dollars. So I say: Well, Lars, what’s that – I gave you a hundred euros and you give me a hundred dollars? And you say: Look, a hundred is a hundred, take it or leave it. This is what governments do to bond holders when they devalue their currencies. A dollar worth euro 1.35 is not the same thing as a dollar worth euro 1.70. But if the United States were to continue a reckless fiscal policy and it lead to the devaluation of the dollar, then in effect you’ll be giving bond holders a different devalued debt repayment. The typical way governments default on their debt is through inflation. And I think that’s a very significant probability, that’s exactly why TIPS are considered so valuable and why people accept negative interest rates, because people are afraid that the government will do precisely that. But a global rescheduling of debt, I just don’t see it as very likely at all.
L.S.: Thank you very much for taking your time, Mr. Goldman!
Statistics: Posted by DIGGER DAN — Mon Feb 18, 2013 3:54 pm
View full post on opinions.caduceusx.com
Based on a Review of Studies Looking at the Impact of Taxes on Growth, Academic Research Gives Obama a Record of 0-23-3
Daniel J. Mitchell
How do you define a terrible team? No, this isn’t going to be a joke about Notre Dame foolishly thinking it could match up against a team from the Southeastern Conference in college football’s national title game (though the Irish win the contest for prettiest make-believe girlfriends). I’m asking the question because a winless record is usually a good indication of a team that doesn’t know what it’s doing and is in over its head. With that in mind, and given the White House’s position that class warfare taxation is good fiscal policy, how should we interpret a recent publication from the Tax Foundation, which reviews the academic research on taxes and growth and doesn’t find a single study supporting the notion that higher tax rates are good for prosperity. None. Zero. Nada. Zilch. Twenty-three studies found a negative relationship between taxes and growth, by contrast, while three studies didn’t find any relationship. For those keeping score at home, that’s a score of 0-23-3 for the view espoused by the Obama Administration. This new Tax Foundation report is also useful if you want more information to debunk the absurd study from the Congressional Research Service that claimed no relationship between tax policy and growth. Indeed, the TF report even explains that serious methodological flaws made “the CRS study unpublishable in any peer-reviewed academic journal.”
So what do we find in the Tax Foundation report?
…what does the academic literature say about the empirical relationship between taxes and economic growth? While there are a variety of methods and data sources, the results consistently point to significant negative effects of taxes on economic growth even after controlling for various other factors such as government spending, business cycle conditions, and monetary policy. In this review of the literature, I find twenty-six such studies going back to 1983, and all but three of those studies, and every study in the last fifteen years, find a negative effect of taxes on growth.
And what does this mean?
…results support the Neo-classical view that income and wealth must first be produced and then consumed, meaning that taxes on the factors of production, i.e., capital and labor, are particularly disruptive of wealth creation. Corporate and shareholder taxes reduce the incentive to invest and to build capital. Less investment means fewer productive workers and correspondingly lower wages. Taxes on income and wages reduce the incentive to work. Progressive income taxes, where higher income is taxed at higher rates, reduce the returns to education, since high incomes are associated with high levels of education, and so reduce the incentive to build human capital. Progressive taxation also reduces investment, risk taking, and entrepreneurial activity since a disproportionately large share of these activities is done by high income earners.
To be blunt, the report’s findings suggest the Obama White House is clueless about tax policy.
…there are not a lot of dissenting opinions coming from peer-reviewed academic journals. More and more, the consensus among experts is that taxes on corporate and personal income are particularly harmful to economic growth… This is because economic growth ultimately comes from production, innovation, and risk-taking.
In sum, the U.S. tax system is a drag on the economy. Pro-growth tax reform that reduces the burden of corporate and personal income taxes would generate a more robust economic recovery and put the U.S. on a higher growth trajectory, with more investment, more employment, higher wages, and a higher standard of living.
In other words, America would be more prosperous with a simple and fair system such as the flat tax. Too bad the political elite is more focused on maintaining (or even exacerbating) a corrupt status quo, even if it means less prosperity for the nation.
View full post on Cato @ Liberty
By Neal McCluskey
Last week, American Public Media’s Marketplace posted an interactive map—attached to a much-appreciated interview with me—enabling users to see how much states spent per public-college student in 2011, and how that had changed over the the last twenty-five years. It cites as its sources the State Higher Education Executive Officers and me. Unfortunately, it gives only half of the story I was trying to relate with my crunching of SHEEO’s data: per-pupil state and local spending has generally been on a downward trend, but that does not come close to fully explaining rising prices.
To get the full breakdown of the data you can access my calculations here. Note, though—as I wrote in the blog post to which my crunching was originally attached—I didn’t put the spreadsheet together for widespread dissemination, at least not to appear authoritative. I think it’s on target, but I didn’t triple-check it as I would have a more formal data analysis. More importantly, the key point is that while most states have seen decreasing per-pupil allocation trends—primarily because of very large enrollment spurts—they have much more than made up for those losses through tuition increases, bringing in roughly two dollars for every dollar lost. Taxpayers aren’t cheap— colleges are greedy.
View full post on Cato @ Liberty
Silver gives you more – at least potentially
Silver analyst Ted Butler remains convinced that silver’s multiplier effect will continue to make it one of the best investment assets as it has been overall for the past 10 years – manipulation or no.
Author: Lawrence Williams
Posted: Monday , 03 Sep 2012
LONDON (Mineweb) –
One thing about writing for a site like Mineweb Is that it gives you the opportunity to review all kinds of commentaries and analyses on various aspects of the industry, some of which are well worth the read, although others are remarkably uninformed and/or have the tendency to be over promotional for the writer’s own business, or investment ideas.
On silver, Ted Butler’s views are always of interest, particularly his take on the shenanigans of the market place in terms of the huge short positions held by some major banks and traders. His conclusions regarding what he, and a number of others, see as subsequent price manipulation with trading volumes many, many times higher than the amount of silver actually available – a pattern also prevalent in the gold market – leads to the viewpoint that these markets are indeed rigged, but that ultimately market forces will prevail regardless.
In his latest commentary he notes that for the past 10 years or more he has been convinced that silver, in particular, would outperform most assets, including gold and points out that overall this has largely been shown to be true. Even after what he describes as a number of unprecedented and deliberate price smashes over the past year, he reckons silver has still recorded superior outperformance over the longer term than just about any other asset and that you would thus have made more money (or at least protected your wealth better against the ravages of inflation)by investing in silver than in anything else. He is also convinced that silver will likely continue to generate better overall returns, while any further price smash downs by the big short position holders will just provide some great buying opportunities to enter the market at bargain prices.
Indeed it is a truism that there is a strong pricing correlation between silver and gold – and that when gold is on the up silver rises faster, although the reverse seems to be true on a downturn. Butler describes silver’s outperformance as a ‘multiplier effect’ and is convinced that the current broad gold:silver price ratio of around 50:1 (46:1 at the time of writing) which has now mostly been in place for a number of years, will not continue, with the ratio coming back down – in part because the amount of silver available for investment is far far smaller than the amount of gold. Add into that silver’s big industrial usage element, where much is completely consumed and not recycled, and he feels there is a recipe for further considerable advances in gold’s less costly sibling.
Butler goes further in pointing out that silver, in terms of supply availability, is actually much rarer than gold, although perhaps some of gold’s unique properties do not apply. Silver has also lost its principal monetary usage over the years which perhaps accounts for some of the price differences noted in Butler’s analysis. Nevertheless, Butler notes: "silver has always been the cheapest of all the precious metals and because of that it is easier for silver to climb higher in percentage terms than its pricier sister metals, like gold, platinum or palladium to less well-known precious metals like rhodium and iridium. In terms of relative investment performance, the only thing that matters is percentage returns; every investor always wishes to hold the best percentage performer. Because silver is so much cheaper than any other precious metal that means that for the same amount of dollars, one can control many more ounces of silver than the others."
Whether Butler is correct in his analysis of silver, or not, and the factors leading to what he feels is the metal’s inherent power to outperform its peers obviously remains to be seen, but on balance it appears to be a reasonable prediction. . But, as with all commodities, perception is key. What worries investors about silver is its apparent volatility – due to what Butler feels is the huge manipulation of the market by the big short position holders and which has led to the big price crashes seen in the past year or so.
But, assuming Butler is correct on silver manipulation – and there is a lot of evidence to support the premise, why will silver rise at all given the huge short positions? Well huge short positions were in place when silver was $5 and lower and it was then also felt that silver was being manipulated. Silver is now over $30. The manipulators can make money with big price movements either way, so the return to $50, or perhaps higher, is still possible even with the big banks exerting controls on pricing through manipulation. Butler would probably say silver price rises are inevitable.
Butler also makes the case for silver vis-a-vis gold in that the small investor in particular sees the ever rising gold price as pushing it out of his/her reach – at least inasmuch as holding any significant quantity. Whereas you can buy 50 times as much silver (well 46x at present, but 50 is a nice round number) for the same price you really can feel like you are building a reasonably substantial holding.
The big investors though seem to have steered clear of silver so far – unless they have big holdings buried in silver ETF holdings which have held up really well of late.
Butler concludes his analysis as follows: "If you are considering the purchase of precious metals at this time, silver is the one to buy. It is rarer than gold in investment quantities yet priced as if it were more than 50 times as plentiful. Considering the massive quantity of silver that can be bought for the same dollar amount as compared to gold, the biggest potential multiplier effect silver can have may be on one’s financial health and wealth."
A very positive viewpoint and one that Butler has held for a long time. Over the years, if one smoothes out the peaks and troughs, it’s been pretty good advice for the silver investor – and the feeling is that it still has much further to run.
Statistics: Posted by DIGGER DAN — Mon Sep 03, 2012 8:08 am
View full post on opinions.caduceusx.com
Murray Rothbard was a prolific author, an Austrian economist, and a promoter of free market anarchism, which he called “anarcho-capitalism.”
In this video, Rothbard gives a tribute to his mentor in Austrian economics, Ludwig von Mises, at a Libertarian Party convention in Pennsylvania in 1984. Rothbard discusses Mises’s work and life, and the growing popularization of his ideas in the United States.
View full post on Libertarianism.org
Ted Butler gives up on the CFTC and wants all commissioners out
Submitted by cpowell on Sat, 2012-05-26 00:16. Section: Daily Dispatches
8:12p ET Friday, May 25, 2012
Dear Friend of GATA and Gold:
Writing today at GoldSeek’s companion site, SilverSeek, silver market analyst Ted Butler, who exposed the silver price suppression scheme so many years ago and has kept at it ceaselessly since then, gives up on the U.S. Commodity Futures Trading Commission, which, he says, lied in its previous investigation of the silver market and is lying now as its current supposed investigation nears its fourth year of nothing. Butler calls for the resignation of all CFTC members.
We’re not quite as disappointed in the CFTC as Butler is, as the commission’s inability to produce anything honest or intelligent about silver after nearly four years is as good as confirmation that the silver price suppression scheme is essentially a U.S. government operation, like the gold price suppression scheme. Those with eyes to see and ears to hear can figure this out pretty easily now.
Butler’s commentary is headlined "Illegalities" and it’s posted at SilverSeek here:
May 25, 2012 – 4:22pm
The Commodity Futures Trading Commission (CFTC) has been negligent in failing to terminate the obvious manipulation ongoing in silver. Furthermore, the agency may be complicit in this manipulation. Worse, it has lied to the public and elected officials. This all goes back to the time when Bear Stearns was taken over by JPMorgan in March of 2008. It is well known that Bear Stearns went under as a result of a sudden loss of liquidity amidst a run by creditors and customers. What is not well known is that those problems were greatly exacerbated by a $2 billion margin call on silver and gold short positions from the end of December 2007 to March 2008. I believe the silver and gold margin calls were at the heart of Bear Stearns’ failure.
We know now (from CFTC correspondence to lawmakers in 2008) that JPMorgan took over Bear Stearns’ giant silver and gold short positions on the COMEX. Up until that time, we did not know that Bear Stearns was the concentrated silver and gold short. Using Commitment of Traders Report (COT) data, Bear Stearns had a COMEX silver short position of no less than 35,000 net contracts and a COMEX gold short position of no less than 60,000 net contracts from the end of December 2007 to their takeover by JPMorgan two and a half months later. From December 31, 2007 to mid-March 2008, the price of silver rose by $6 (from $15 to $21) and the price of gold rose from $850 to over $1000. Based upon the number of contracts held short by Bear Stearns and the price movement at that time, that resulted in margin calls of $2 billion. I would contend that was the real reason for Bear Stearns’ demise.
So where do I get off claiming that the CFTC is complicit in the silver manipulation and lied about it to the public and to lawmakers? This is easy to prove. On May 13, 2008, the CFTC published a 16 page public response to my allegations of an ongoing manipulation in silver by means of a concentrated short position. The response was based upon silver market activity through the end of 2007, thereby conveniently sidestepping the drama that occurred through March 2008 when the biggest silver short in the market, Bear Stearns, failed and needed to be rescued with taxpayer assistance (Federal guarantees given to JPMorgan). The May 13, 2008 report from the CFTC went into great lengths in explaining there was nothing amiss on the short side of silver, even though the Commission knew that two months before the report was issued, the biggest concentrated short had failed and needed to be rescued by taxpayers. A lie by omission is no less of a lie.
Why am I bringing this up now? Because I’ve had enough of the CFTC’s lies and its refusal to do its job. As a result of the transfer of Bear Stearns’ concentrated short position becoming visible in the August 2008 Bank Participation Report the Commission initiated another formal investigation of the silver market, this time by the Enforcement Division. This investigation is now 3 years and 9 months old, the longest-running investigation in U.S. Government history. It has lasted longer than most wars. Just as with the two prior investigations by the Division of Market Oversight, the current investigation is a phony investigation. I say this because there has been no attempt by the Enforcement Division to contact me or anyone claiming that silver has been manipulated. It’s clear that the agency does not want to get to the truth. The agency keeps initiating investigations which involve time and taxpayer money, but they never check with the person who has caused them to investigate in the first place.
Only two of the five commissioners currently serving at the agency were at the Commission when JPMorgan took over Bear Stearns or when the Enforcement Division began its current investigation. But all have received vastly more public complaints about silver than for any other commodity. None of them can claim ignorance of the issue. Chairman Gensler preaches about the need for transparency in our markets. How about some transparency for the Commission? The Commission lied in its May 13, 2008 report (by omission) and is lying now when it claims to be conscientiously investigating silver. See my article from 2009.
The stalled investigation has only served as cover for the crooks at JPMorgan and the CME to manipulate the price of silver more egregiously than ever before. I think it’s time to press for the removal of all current commissioners, including Gensler and Commissioner Chilton. Who wants to hear platitudes when a serious crime is in progress? Clearly, the Division of Market Oversight lied in its 2008 letter and the Enforcement Division is lying now. Who needs public servants like these?
Please send this article to your Congressman or Senator and ask them to investigate. Also please e-mail the Commodity Futures Trading Commission with your comments.
email@example.com Chairman Gensler
firstname.lastname@example.org Commissioner Chilton
email@example.com Commissioner Sommers
Somalia@cftc.gov Commissioner O’Malia
firstname.lastname@example.org Commissioner Wetjen
Statistics: Posted by DIGGER DAN — Sat May 26, 2012 2:13 am
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Goldman gives up on Canadian stock market
Globe and Mail Blog
Posted on Friday, April 27
Goldman Sachs Group Inc. (GS-N114.41-0.15-0.13%)’s foray into the business of running a Canadian stock market has ended in failure, as the firm is shutting down a venture started last year after it attracted barely any trading.
A notice on the web site of the Investment Industry Regulatory Organization of Canada said that Goldman’s Sigma X Canada market would cease operations as of the close of trading Friday.
Goldman unveiled the market in August of last year, setting it up as a so-called dark pool in which traders could transact anonymously. The idea of dark pools is to enable buyers and sellers to put up orders in secret, which are then matched by computer systems, as opposed to so-called lit markets like the TSX where orders are posted for all to see.
Dark pools have historically struggled to attract big trading volumes in Canada. Goldman took that to a new level: Sigma X got next to no business. In the fourth quarter, IIROC said that Sigma accounted for only 0.004 per cent of all stock traded in Canada.
Combine that rough start with a tough new set of rules recently put out by regulators on dark pools, and it’s probably no surprise that Goldman has called it quits.
Statistics: Posted by yoda — Fri Apr 27, 2012 11:57 pm
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James Turk gives his timeline on the Dollar’s Collapse and Gold’s role as the messenger!
Welcome to Capital Account. With Italian and Spanish bond yields back on the rise, we’ve recently seen the Dutch government collapse under the weight of austerity talks and French president Nicolas Sarkozy defeated after the first-round of elections. As price discovery is guarded against in the financial markets, are we seeing its emergence reflected in the delicacy of eurozone governments as discontent is being "priced into" the democratic process?
Central banks may not be waiting to find out if major currencies — the euro or the US dollar — will collapse or be devalued. They are stocking up on gold. IMF data shows Mexico added close to 17 tons of gold to its reserves in March. Turkey, Russia and Kazakhstan are buying gore too. We speak with GoldMoney founder James Turk about why he thinks central banks could be guarding themselves from the confetti cannon currency being shot around the globe.
And in the US, we’ve seen oil prices become a political football in an election year. We’ll look at what the onion market can teach us about oil speculation. What is really to blame for higher oil prices?
FOR THE JAMES TURK INTERVIEW GO TO:
Statistics: Posted by DIGGER DAN — Wed Apr 25, 2012 1:24 pm
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Tentative deal gives Alberta doctors 2.5% fee increase each year for next two years worth $18
Days before an expected election call, the Tory government has ripped up its imposed salary deal with the province’s 7,200 doctors and negotiated a sweeter $181-million compensation agreement with the Alberta Medical Association.
The more expensive deal for doctors includes a 2.5 per cent fee increase each year for two years, retroactive to April 2011. The province’s primary care networks will see per patient funding up $12 to $62.
The parties will continue working on a master agreement. If a long term deal can’t be reached by March 31, 2013, the proposal gives physicians a cost of living increase in the third year.
The new proposal comes just weeks after the government imposed a controversial one-year $93-million salary deal, including a two per cent fee increase, on doctors without negotiating.
Wednesday’s tentative deal, which must be ratified by the AMA and the government, supersedes those terms.
Health Minister Fred Horne said Wednesday’s proposal delivers on the government’s commitment to provide stability in the health-care system.
“It provides additional support for physicians in key areas such as primary health care that will translate into improved access for Albertans,” he said in a news release.
AMA president Dr. Linda Slocombe said the compensation proposal will help build the relationship between physicians and government.
“This new proposed arrangement does that by demonstrating consensus among all the parties on relationships, rates and processes,” she said, noting it also allows provisions for working through issues together.
The proposal includes a process for the AMA and Alberta Health Services to “provide input into policy direction in the health system,” according to a news release. It also provides a limited arbitration process on fees for insured services and some physician benefit programs.
The AMA, AHS and Alberta Health have been trying to work out a doctor compensation deal since the former eight-year master agreement expired March 31, 2011.
The proposed deal comes as the medical association has blasted the Tory government in recent weeks for refusing to hold a public inquiry into doctor intimidation and bullying.
The AMA will hold a special meeting of the representative forum on March 31 to provide a progress report on the deal.
Statistics: Posted by yoda — Wed Mar 21, 2012 12:38 pm
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