WOW! Curious Catalyst Pays 280% in 14 Days

Can you guess what trading catalyst caused these stocks to jump…
* 280% in 14 days in 2011?
* 642% in 42 days in 2011?
* 828% in 22 days in 2011 (enough to turn every $1,000 you invested into $9,280 in a week…

Gold will win out and rocket up in price by 2015. There is no other possibility

given the realities.

Jim Sinclair had an interview with King World News today which a number of friends  of Lorimer Wilson,  editor of www.munKNEE.com (Your Key to Making Money!) and www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) discussed at length with one of them, Arnold Bock, putting together this synopsis of what Sinclair was conveying.

Hi guys,

My take is that Sinclair is making a big issue of sovereign debt and financial institutional debt. He knows that all the derivative ‘insurance’ on these debts are basically useless in that there is no liquidity and financial ability for anyone to make good on their obligations.

Everyone and everything is a matter of buying time kicking the can down the road and hoping something useful might happen in the interval. If nothing else, the implosions will occur on someone else’s watch.

He says the price of gold isn’t the real issue, but rather the gradual and measured way at which it rises. If there is too much volatility it draws very unfavorable attention to the deficiencies in the paper money system. Not only that, the countries and the financial institutions are mostly bankrupt. The goal currently is to extend and pretend that all is in hand and will go more or less ok into the future.

The absence of real liquidity in the financial institutions is one of the reasons for printing money/QE to Infinity. He says this in terms of amounts printed, not the time involved.

His conclusions? Gold will win out and rocket up in price by 2015. There is no other possibility given the realities.

Arnold

Again, the above is a summary of what Sinclair had to say but to hear his every word and all the nuances you are encouraged to visit KNW and hear his actual comments.

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By David Galland, Casey Research

It seems that the mainstream investment community only takes a break from ignoring gold to berate it: one of gold’s most outspoken critics, uber-investor Warren Buffett, did so recently in his latest shareholder letter. The indictments were familiar; gold is an inanimate object “incapable of producing anything,” so any investor holding it instead of stocks is acting out of irrational fear.

How can it be that Buffett, perhaps the most successful (and definitely the most well-known) investor of our time, believes that gold has no place in an intelligently allocated investment portfolio?

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It’s clear from this next chart that gold was exactly that alternative, a powerful counter-trend investment for periods when both stocks and bonds were overvalued. Yet gold is conspicuously absent from Graham‘s allocation model.

But this missing asset class is entirely understandable: for most of Graham‘s adult life and the most important years of his career, ownership of more than a small

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In retaliation, over the weekend, Iran announced that it halted oil exports to France and the United Kingdom and warned European companies that it would halt their supplies unless they sign long-term contracts.  However, France and UK do not import a significant portion of crude oil from Iran, and Europe could most likely still get alternative crude supplies from other sources like Saudi, or Russia.

Despite Iran oil ministry spokesman Alireza Nikzad’s statement that “we will sell our oil to new customers,” according to Financial Times, Tehran is “struggling” to find a new buyer for the estimated 500,000 barrels of oil per day left as surplus from its decision to halt sales to France and the UK.  And another Reuters report quoted commodities traders that

    “Iran is turning to barter – offering gold bullion in overseas vaults or tankerloads of oil – in return for food as new financial sanctions have hurt its ability to import basic staples for its 74 million people….Difficulty paying for urgent import needs has contributed to sharp rises in the prices of basic foodstuffs, causing hardship for Iranians.”

Chart Source: CNN

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Dell reported a profit of 43 cents a share, for the fourth quarter ended Feb. 3, which was down 48 cents, from the prior year.

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To listen to the interview click here.

Core CPI [continues to rise, remaining] above the Fed’s inflation target of 2%. [That being said,] how inflation is impacting our personal expenses depends on our relative exposure to the individual components. [Let's take a look at the specifics.]

So says Doug Short (www.advisorperspectives.com) in edited excerpts from his original article* which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has further edited below for length and clarity - see Editor’s Note below.

Short goes on to say, in part:

The table below shows the annualized change in Headline and Core CPI for each of the past five months. I’ve also included each of the eight components of Headline CPI and a separate entry for Energy, which is a collection of sub-indexes in Housing and Transportation.

The Trends in Headline and Core CPI

The chart below shows Headline and Core CPI for urban consumers since 2007. Core CPI excludes the two most volatile components, food and energy.

Core CPI has been on the rise and has now risen above the Fed’s inflation target of 2%. However, the more attention-grabbing headline CPI has moderated in recent months after hitting an interim high in September 2011, a decline that was primarily driven by lower energy costs, especially as reflected in the transportation category. This trend, however, appears to be reversing. Gasoline prices have been steadily rising since mid-December…

For a longer-term perspective, here is a column-style breakdown of the inflation categories showing the change since 2000.

Note: For additional information on the component composition of the Consumer Price Index, see: 

Slicing & Dicing Consumer Price Index Data of the Past 11 Years

The Fed justified the previous round of quantitative easing “to promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate”. In effect, the Fed has been trying to increase inflation at the macro level, but what does an increase in inflation mean at the micro level — specifically to your household? [Let's take a look and see.] Words: 957

* http://advisorperspectives.com/dshort/updates/Inflation-X-Ray-View.php

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BullionVault 

Was the People’s Bank of China really buying gold at the rate of 1 ounce in every 8 sold worldwide last quarter…? 

SO THOSE MILITANT crazies known to the mainstream media as “gold bugs” – and to the FBI as subversives – got the headline they’ve been longing for, apparently, last week.

“China central bank in gold-buying push,” declared the Financial Times. “It does appear the People’s Bank of China has been a significant buyer,” agreed a Reuters columnist.

At last, rapture is upon us! Beijing is buying gold in the open market! The FT picks up the story…

“China’s imports from Hong Kong, which account for the majority of its overseas buying, soared to 227 tonnes in the last three months of 2011, according to data published by Hong Kong. Mine production in the country, the largest gold producer, stood at about 100 tonnes in the quarter, implying total supply of at least 330 tonnes.

“That compares to demand of 191 tonnes for gold jewellery, bars and coins – which account for the vast majority of Chinese demand – reported by the World Gold Council on Thursday.”

With gold exports banned, you can see the gap right there…all 139 tonnes of it. The FT‘s conclusion? Courtesy of an “inference” and a “could be” from two leading analysts, that excess of supply over demand must have gone to the People’s Bank of China. Must have, right?

Well…

•  The data came from 3 different sources, one of which is an official agency, another is the mining industry, and the third is trying to cover end-user sales in the world’s second-heaviest gold market and most populous nation;
•  Those demand figures in particular are likely to be revised – upwards – by Thomson Reuters GFMS (who supply the WGC). The best data available, they were certainly revised –  upwards – quarter-on-quarter over recent years. And even on first release, China’s retail jewelry and investment sales show average compound growth of 36% per year since 2001. That’s one hell of a trend to keep count of in real time;
•  No, a revision to end-demand of 139 tonnes will not happen. But would a 75% hike be any less likely than the People’s Bank of China growing its stated reserves (officially 1054 tonnes) by more than 13% inside 3 months? And inside 3 months that saw the gold price average $1684 per ounce, its highest level in history outside the $1702 record of July-Oct. last year?

Somehow, we doubt that China’s central bank snapped up 1 ounce in every 8 sold worldwide between October and Christmas. Most especially because, if Beijing’s policymakers were the “mystery” buyer, why would they then go and make importing gold a little bit harder for China’s bullion brokers?

Starting this month, China’s wholesalers now need to seek permission, reports our friend Bruce Ikemizu at Standard Bank in Tokyo, for each inbound shipment of gold from not only the People’s Bank  of China, but also from the bureaucrats of the State Administration of Foreign Exchange (SAFE). “So it takes longer to import gold,” notes Bruce.

Weirdly, SAFE was the agency which hoarded the 600-tonne addition of 2003-2009, officially switched to and reported by the PBoC three years ago in its last public update. So again, why would anyone buying gold – and already paying very nearly the highest prices in history – want to temper supply?

“In the medium term we do know the Chinese central bank and other Asian central banks with large foreign exchange reserves have been increasing their holdings of gold,” as Marcus Grubb of the World Gold Council told the Financial Times. Plugging some of last quarter’s gap “is consistent with that.” But plugging the whole 139 tonnes as the FT‘s headline suggests?

Both the WGC and GFMS’s Phillip Klapwijk – also quoted in the FT‘s report – in fact added that bullion banks and other stock-pilers would be likely candidates, too. And that would make sense after the scramble to secure supplies in early 2011. Because gold imports through Hong Kong – well ahead of last month’s 2012 Lunar New Year holidays – actually peaked in November. They then fell hard in December as the festivities drew closer.

Indeed, as the London gold price dropped late last September, the Hong Kong premium tripled to jump above $3 per ounce. So calling your UK supplier and booking new shipments would have been a natural response. Cheap prices, plus a fat mark-up if the metal arrives in good time? What trader wouldn’t try to book that? October and November then saw record imports of gold through Hong Kong to China. But the premium had fallen quickly however (according to Reuters data), already back down to $1 per ounce in October.

That’s the trouble with a physical market – delivery needs brokers and shipping, and wholesalers need stockpiles to draw on. Not much of a headline though, is it?

Stock-piling is common in base metals and oil. Standard Bank’s commodities team now reckon silver stockpiles in China are equal to 15 months of fabrication demand. And if Beijing were really on the bid for imported metal, then why, immediately after January’s Chinese New Year celebrations – the single biggest event on China’s gold buying calendar – did it set China’s gold importers a new hurdle?

Our guess? No doubt China is buying gold direct from its miners. That metal is then lacking for retail consumption. So to ensure lots of supply for what proved another strong Chinese New Year, importers booked early and often. But following that trebling of gold imports in 2011, the timing of SAFE’s move, immediately after New Year – and only two weeks after India doubled its gold and silver import duties – suggests Beijing is live to the trade-balance risks posed by Chinese households’ soaring demand.

“IMF slashes forecast for China current account surplus,” announced the Wall Street Journal last week.

“China’s current account surplus for 2011 shrank to $201.1 billion ($187.37bn), from $305.4bn in 2010. More important, as a ratio of gross domestic product, the surplus fell to about 2.7%…close to a decade-low.”

Now, “as China’s trade surplus declines dramatically,” reports University of Peking professor Michael Pettis, “more and more people within the country are calling for interventionist steps to halt the decline, including depreciating the [Yuan], or at least halting its appreciation.”

Pettis’ comment should remind us that Beijing is a big bureaucracy, with lots of divergent views and voices. Devaluing the Yuan would look a highly aggressive decision to its would-be friends in Washington, especially those US politicians talking up China’s “violations” of international law. But trying to stem – or rather slow – the pace of import growth wouldn’t look quite so rude.

This new rule is already frustrating those banks importing gold, but it’s likely only to delay, rather than deter, the flow of bullion. Still, it’s a hat-tip to the potential drain on China’s foreign currency holdings which gold has become for India – still the world’s No.1 consumer, and importing twice as much as bullion as China in 2011 because it has no domestic mine output to help feed its consumption, whether central-bank or private.

India’s hunger for a metal it does not produce is plain to see in its trade balance. The only current-account deficit in the region as Morgan Stanley notes, this gold-heavy outflow of cash also weighed on the Rupee’s exchange rate in 2011, down 15% versus the Dollar as the currency markets tried to force an adjustment. 

Because even then, and with Rupee gold prices pushed to fresh record highs despite a 20% drop for US investors after September’s top, India’s full-year 2011 gold demand still rose from 2010 in Dollar terms, setting a fresh record of $46 billion on the World Gold Council’s data, and equal to more than three-quarters of the country’s current account deficit.

“[We hope to] discourage imports so that the Rupee steadies against the Dollar,” admitted a senior, unnamed official quoted by India Today after New Delhi raised import duties and handed a tax advantage to the domestic recycling lobby in January. Beijing’s policy wonks are being equally coy about trying to dampen gold bullion imports just ever so slightly. But China’s feint should remind precious-metals bulls that Asia’s massive demand growth can pose a risk to itself.

First, high prices could dissuade new buyers, as shown all too clearly by Western jewelry demand since 2005. A slow-down in GDP growth, worsened by a shrinking trade surplus, would make that risk worse. But for Asia’s ravenous gold buying, state interference is perhaps the present threat, especially in a market averaging 36% compound growth by value each year since China began deregulating gold a decade ago.

China’s gold buyers have needed no help from over-excitable headlines. But they have needed Beijing’s blessing to date.

Adrian Ash

BullionVault

Gold price chart, no delay   |   Buy gold online at live prices

Adrian Ash is head of research at BullionVault – the secure, low-cost gold and silver market for private investors online, where you can buy physical gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2012

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

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History has shown us time and again that out of control money supply expansion creates inflation. In light of the trillions of synthetic dollars that have been injected into the economy by the Federal Reserve over the past five years, most observers (this one included) had expected prices to spiral upward. But in making these determinations, many of us forgot to factor in the supply side of the supply/demand equation. Inflation remains low now because of game changing events that have reduced the demand for money.

As far as the Federal Reserve and the President’s Council of Economic Advisors are concerned, inflation is currently holding at around 1.4 percent. However, these authorities choose to focus only on the most generous measurement tools, like the core PCE index. Other common indices, such as the CPI burn much hotter. Current CPI is at 2.9 percent, the highest year-over-year increase since 2008 and more than twice the rate of the core PCE. However, it is widely recognized that even these figures have been manipulated downwards to benefit the Government.

Many more skeptical observers suspect that the real rate of inflation is far north of 6 percent, perhaps closer to 10 percent. But even this figure is far below the rate of expansion that our money supply has undergone over recent years. As of November 17, 2011 the Federal Reserve reported that the U.S. dollar monetary base has increased by 28 percent in just 2 years. Logically we should expect to see a direct correlation between the money supply and the rate of inflation. What explains the breakdown of this relationship?

The dramatic collapse in the real estate market, and the resulting recession and deleveraging, have created a very different dynamic among many consumers, businesses and banks. The fragile economy and lagging global uncertainties have inspired dramatic removal of risk, thereby slowing the circulation of money. The dimming of animal spirits should act as a weight on the general price structure. Put simply, a recession should push prices down.

The savings, retirement accounts, and real assets of consumers suffered massively in the recession of 2008/9. Cash flow shortages drove many companies into liquidation. Banks that had speculated in real estate or had made irresponsible so-called covenant-light loans had to be rescued by the taxpayer or by other more conservative banks. Therefore, corporations and

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