Gold hits record high

[gtalum]

I'm just teasing you, Lurker. I understand your logic too, I just happen to disagree.

[Lurker]

I'm just teasing you, Lurker. I understand your logic too, I just happen to disagree.

I hear you. It does seem strange that you'd invest in an asset that cost you money in storage fees and pays no interest or dividends to own. Warren Buffett had a classic quote when he said people from Mars would think we're pretty strange that we'd pay all this money to pull gold up then pay all this money to bury it again in vaults. But gold and silver are protection against an out of control government. They help maintain wealth and purchasing power.

[Lurker]

Gtalum:

I thought deflation's the problem Peter Schiff has a great analogy for "credit easing" or "quantitative easing". It's like turning your hot water knob on your shower all the way to "hot" when you first step in and nothing happens, nothing happens, nothing happens, then BOOM it is scalding hot. Also the Fidelity "investment clock" just went into the overheated zone for the first time since 2007. This is a strong indicator for commodity prices and inflation. I can tell you that personally I am very fearful of the effects of the global stimulus and the massive liquidity injections that were led by the US. This has never been done before on this grand a scale and I fear we will soon be seeing shortages much worse than 2008. It didn't get much press but large retail chains like Costco, BJ's, Sams Club were placing limits on how much rice you could buy in 2008. When people get worried about food they start hoarding.

http://www.ifaonline.co.uk/ifaonline/ne ... erheats-07

http://www.reuters.com/article/usDollar ... 2720090917

Indian inflation returns as food prices surge

* India returns to annual inflation faster than forecast

* Food price index up 15.4 pct yr/yr

* Wholesale price index up 0.12 pct yr/yr on Sept 5

* Cabinet extends anti-hoarding steps to check food prices

By Rajkumar Ray

NEW DELHI, Sept 17 (Reuters) - Surging food prices have driven India into inflation faster than expected, adding pressure on the central bank to speed an exit from easy monetary policy and prompting further government steps to curb price rises.

India's wholesale price index (WPI) INWPI=ECI rose by 0.12 percent in the year to Sept. 5, compared with the previous week's 0.12 percent fall and analysts' forecast of a 0.08 percent decline, a weekly data release on Thursday showed. [ID:nDEL26507]

The food articles sub-index rose an annual 15.4 percent, up from the previous week's 14.8 percent rise, as a dry spell parched nearly half of India's districts, hurting summer crops.

In its latest move to check soaring food costs, India's cabinet on Thursday approved an extension of limits on stocks that can be held by traders of sugar, vegetable oil, lentils and rice until September 2010. [ID:nBMB008550]

"Inflation is already positive again and the Reserve Bank of India faces a real tough task. The governor has said he wants to keep interest rates low till the economy recovers fully, but inflation is galloping and being responsible for inflation, it can't ignore it," said Amol Agarwal, economist at IDBI Gilts.

High food prices pose a dilemma for the RBI, which can do little about price pressures caused by supply-side bottlenecks.

Also, the effect of soaring fuel and commodities prices a year ago is poised to recede in coming weeks, as the WPI peaked in the first two weeks of September 2008. If prices held steady between now and the end of October, inflation would still reach 3 percent.

Prices of industrial raw materials and fuels, meanwhile, have been rising in recent weeks.

"Much of the increase in inflation is clearly indicative of input cost pressures picking up, and with demand set to recover we should see output prices also picking up with a lag," said Sonal Varma, economist with Nomura in Mumbai.

"This will clearly mean that the RBI's concern on inflation is likely to continue and the exit from the current loose policy will depend on how soon growth picks up from here," she said.

India has taken steps to manage the impact of a poor monsoon, including increasing imports, limiting exports, and clamping down on hoarding.

[Lurker]

Debt to GDP chart. How can we dig out? Print, print, print some more. The last video is from Ben Bernanke from 2005 onward. How on Earth can we trust that this guy can stop inflation?




[youtube]http://www.youtube.com/watch?v=hStCUIJ8374[/youtube] [youtube]http://www.youtube.com/watch?v=3u2qRXb4xCU[/youtube] [youtube]http://www.youtube.com/watch?v=HQ79Pt2GNJo[/youtube]

[Lurker]

The bailouts never stop. Fire up those printing presses. More lines of credit please. Each week about 3-4 banks are shut down when in fact there are 100's that probably need to go. Why are they dragging their feet? Rumors have been flying that FDIC is out of cash and are hoping things turn around so they're not closing down insolvent banks. The FDIC now needs a bailout so they can keep operating. Wow.

http://finance.yahoo.com/tech-ticker/ar ... -a-Bailout

Now the FDIC Needs a Bailout

From The Business Insider, Sept. 18, 2009:

The Federal Deposit Insurance Corp may need to borrow from the US Treasury to replenish its deposit insurance fund, Chairman Sheila Bair said after a speech in Washington DC today.

The FDIC is supposed to be able to "pay for itself" through assessments on insured banks. But with 92 banks having failed so far this year, the fund is in need of its own capital injection. As it turns out, the FDIC was also undercapitalized and dependent on good times to remain flush.

The proper thing to do would probably have been to increase bank assessments during good times to build up a healthy fund. But as with bank reserve requirements, no one thought of adopting a counter-cyclical policy until it was too late.

Now the FDIC is threatening to increase assessments, or even force banks to prepay future assessments. But this is difficult to do while bank lending remains anemic and banks face serious capital constrains.

"Ms. Bair appeared cautious about resorting to the Treasury credit line, saying there are different views on when it should be used. She said some believe it should be reserved for emergencies only, rather than for covering losses that are already known," the Wall Street Journal reports.

[Lurker]

And the news from China just keeps coming. First they demand all their gold out of London vaults. Next they warn US banks of their intent to let their state owned companies default on their derivative contracts. Now they're talking about banning gold and silver exports. I think the song WAKE UP from rage against the machine should start playing about now!! The days of living on other people's dime are coming to end.

http://ftalphaville.ft.com/blog/2009/09 ... s-for-you/

[Lurker]

Dollar taking another plunge this morning. Former Goldcorp CEO Rob McEwen sees gold much much higher too. This is not going to end well for the average person. I keep hearing jobless recovery thrown around. Who believes this stuff?

http://www.tradingmarkets.com/.site/new ... s/2539460/

Sep 22, 2009 (M2 PRESSWIRE via COMTEX) -- BHCXF | Quote | Chart | News | PowerRating -- By Marc Davis, BNW News
Record high gold prices are here to stay, according to several of the world's most prominent gold mining industry executives. They include Aaron Regent, CEO of the world's top producer, Barrick Gold (NYSE: ABX | Quote | Chart | News | PowerRating) (TSX: ABX).

This was their emphatic proclamation at the Denver Gold Group's prestigious annual conference at the Grand Hyatt Hotel in Denver. And as if on cue, gold's performance offered plenty of credence to their bullish remarks. Having easily breached the psychologically all-important $1,000 an ounce mark the week prior to the conference, gold's spot price continued to gather momentum. Which, of course, delighted attendees at the world's most important annual congregation of gold mining and investment industry movers and shakers.

Among the industry power players who spoke enthusiastically about gold's future was Barrick Gold's Regent, who runs Barrick Gold, which is on-track to produce 7.2-7.6 million ounces this year. In his popular presentation, he said the yellow metal will become increasingly attractive as a "safe haven" investment. Especially against a backdrop of a sluggish global economic recovery, a runaway money supply, and looming inflationary forces.

He also said that such developments make it unlikely that gold's spot price will stumble badly again (as it did when it briefly topped $1,000 an ounce in March, 2008 before retracing its impressive gains all the way back to a low of $709 later that year).

"There are a number of factors supporting where the gold price is today. Certainly the economic environment is part of that So, it's understandable why gold is where it is (at over $1,000 an ounce)," he reasoned.

As for gold's further upside potential, Regent was careful not to make any bold predictions but he did assert that its prospects are "very positive," especially as gold reverts back to its traditional role as an inverse proxy to the trend in the US dollar.

Charles Jeannes, the CEO of Goldcorp (NYSE: GG) (TSX: G), is like-minded in his outlook. His company is one of the world's several largest gold producers and is the fastest growing of them all. It has a projected output of 2.3 million ounces for 2009. Jeannes told a packed audience that continued inflationary fears and the prospect of an anemic US dollar "for quite some time to come" will continue to be potent drivers for gold prices.

"We're certainly in a rising price gold environment right now And there's a lot of reasons to be bullish about gold prices going forward," he said.

He later told BNW News that he was not sure that $1,000 an ounce would immediately assert itself as a new support level for gold prices. But the fact that dark economic storm clouds are continuing to amass means that this lofty price level is poised to become a springboard for the metal's next up-leg, he suggested.

Meanwhile, former Goldcorp CEO Rob McEwen was far more explicit about what he expects gold will do next during his presentation as the CEO of US Gold (NYSE.A: UXG) (TSX: UXG). His high-flying gold exploration/development company is making impressive headway in its hunt for significant gold deposits in Nevada and world-class silver discoveries in Mexico.

"Gold is going a lot higher. By the end of 2010, we will see $2,000 an ounce gold. And by the time that the gold cycle is over we'll see $5,000 an ounce," he declared.

McEwen's steadfast views may seem hyperbolic to some. But when he speaks, everyone listens. That's because he is regarded as something of a legend in both the mining industry and the investment community, alike. His claim to fame is that he developed Goldcorp from a standing start with a market capitalization of about US $50 million to around $8.5 billion in a little over a dozen years. During this time (1992-2005), the company's share price appreciated as much as 3,130%.

The US government is mismanaging its efforts to stimulate an economic recovery by way of setting the stage for hyper-inflation and debasing the US dollar in the process, according to McEwen. And that's why he believes that we are still in the early stages of an epic bull market for bullion.

Even the mid-tier to small gold producers at the conference had plenty to say about the noble metal's lustrous future. They include Joe Conway, CEO of mid-sized IAMGOLD (NYSE: IAG) (TSX: IMG), which is on target to produce around 910,000 to 920,000 ounces this year. IAMGOLD's share price has been a stellar performer since it bottomed out a year ago, reflecting the company's rising star in the gold sector.

"Absolutely $1,000 an ounce could be the new support level for gold," Conway told BNW News. "The massive financial stimulus seen in the US and globally will have to lead to inflation, setting the stage for an even higher gold price."

Among the junior gold miners in attendance was Timmins Gold Corp (TSX.V: TMM), which is scheduled to become North America's next gold producer, commencing in December of this year.

Notably, Timmins Gold is in the enviable position of likely becoming the world's first ever gold miner to command a four-figure price for its inaugural gold bar. And with its projected mining costs at only $412 an ounce, 2010 promises to be a banner year as the company quickly ramps up its output to 80,000 ounces per annum.

Company CEO Bruce Bragagnolo is something of a contrarian in the sense that he believes we are entering into an era of deflation, which he expects to benefit gold prices.

"On the one hand, we may be headed for currency inflation due to North America's governments injecting massive amounts of money in the system," he said. "On the other hand, people are starting to save money, rather than continuing to be big consumers. And this is going to put the brakes on the economies of the world, which will lead to deflation. "

"But none of this matters for gold, which will maintain its value relative to other assets. And the profit margins for producers will even improve," he added. "But if instead we have inflation, then all the inflationary arguments will hold true for the price of gold."

Bragagnolo did, however, concur with fellow captains of the gold mining industry in the belief that $1,000 an ounce will prove to be a new support level for gold.

"This will be a new base for the next major upside movement in gold's price," he said.

[Dionne]

I'm going to agree that we may be entering an era of deflation. Competition in the retail markets is increasing. When delivering material takeoffs on residential projects to various suppliers.....we have noticed significant competition between locally privately held companies. They all want to know if their bid has been beaten. They all want another chance at bid if they are to high. Competition is healthy. Imagine purchasing a 2X10X16' for $9.65.....!!!! If you have cash.....there isn't a better time to build your dream home or rehab your kitchen.

[Lurker]

I'm going to agree that we may be entering an era of deflation. Competition in the retail markets is increasing. When delivering material takeoffs on residential projects to various suppliers.....we have noticed significant competition between locally privately held companies. They all want to know if their bid has been beaten. They all want another chance at bid if they are to high. Competition is healthy. Imagine purchasing a 2X10X16' for $9.65.....!!!! If you have cash.....there isn't a better time to build your dream home or rehab your kitchen.

Agree 100% if you have cash get rid of it! Turn it into things of value because the US dollar continues to fall and will continue to fall. If you hold dollars you're going to see incredible inflation to come as your dollars buy fewer and fewer goods (when our currency falls the cost of our imports rise - have you checked the latest trade imbalance reports - we import everything). If you hold gold (real currency) then you'll see deflation (items priced in gold are going to keep falling). Did anyone see the latest TIC data? Foreigners are taking their money and RUNNING out of the US.

[Lurker]

70% of the massive spending stimulus plan ($787 billion) passed earlier this year will be spent by September 2010. In other words it is getting ready to kick in with a vengeance. The plan had a 6-9 month time lag so the brunt of the spending will occur over the next year from now. 1 trillion is the entire GDP of Australia. China is buying up resources. They are buying so much copper, gold, iron ore, oil that they are running out of storage room. They're also buying up Latin American gold miners and other foreign companies. We spend money on zombie banks so they can buy yachts, beach houses, $5000 suites. I was watching Bloomberg the other day and a group of Wall Street folks walked in and bought a $5000 bottle of wine for lunch. Highest unemployment rate since the early 1980's and our tax dollars are funding $5000 bottles of wine.

To put it in perspective how large this spending plan is:

$787 billion would buy 4.6 million homes here in the US at the most recent median price of $170,300 for January 2008.

$787 billion would send a check for $2,623 to every man, woman and child in the US.

$787 billion would fund 7.7 million four year scholarships to the average private university in the US at current tuition rates.

$787 billion would fund 30 million full four year scholarships to the nation’s public universities.

$787 billion would buy 27.7 million cars at the average price of an automobile sold last year in the US.

$787 billion would fund four full months of a tax holiday in the US.

http://mjperry.blogspot.com/2009/02/how ... ld-it.html

[Lurker]

WOW!!

Federal Reserve Admits Hiding Gold Swap Arrangements, GATA Says

MANCHESTER, Conn.--(BUSINESS WIRE)--The Federal Reserve System has disclosed to the Gold Anti-Trust Action Committee Inc. that it has gold swap arrangements with foreign banks that it does not want the public to know about.

The disclosure, GATA says, contradicts denials provided by the Fed to GATA in 2001 and suggests that the Fed is indeed very much involved in the surreptitious international central bank manipulation of the gold price particularly and the currency markets generally.

The Fed's disclosure came this week in a letter to GATA's Washington-area lawyer, William J. Olson of Vienna, Virginia (http://www.lawandfreedom.com/), denying GATA's administrative appeal of a freedom-of-information request to the Fed for information about gold swaps, transactions in which monetary gold is temporarily exchanged between central banks or between central banks and bullion banks. (See the International Monetary Fund's treatise on gold swaps here: http://www.imf.org/external/bopage/pdf/99-10.pdf.)

The letter, dated September 17 and written by Federal Reserve Board member Kevin M. Warsh (see http://www.federalreserve.gov/aboutthef ... /warsh.htm), formerly a member of the President's Working Group on Financial Markets, detailed the Fed's position that the gold swap records sought by GATA are exempt from disclosure under the U.S. Freedom of Information Act.

Warsh wrote in part: "In connection with your appeal, I have confirmed that the information withheld under Exemption 4 consists of confidential commercial or financial information relating to the operations of the Federal Reserve Banks that was obtained within the meaning of Exemption 4. This includes information relating to swap arrangements with foreign banks on behalf of the Federal Reserve System and is not the type of information that is customarily disclosed to the public. This information was properly withheld from you."

When, in 2001, GATA discovered a reference to gold swaps in the minutes of the January 31-February 1, 1995, meeting of the Federal Reserve's Federal Open Market Committee and pressed the Fed, through two U.S. senators, for an explanation, Fed Chairman Alan Greenspan denied that the Fed was involved in gold swaps in any way. Greenspan also produced a memorandum written by the Fed official who had been quoted about gold swaps in the FOMC minutes, FOMC General Counsel J. Virgil Mattingly, in which Mattingly denied making any such comments. (See http://www.gata.org/node/1181.)

The Fed's September 17 letter to GATA confirming that the Fed has gold swap arrangements can be found here:

http://www.gata.org/files/GATAFedRespon ... 7-2009.pdf

While the letter, GATA says, is far from the first official admission of central bank scheming to suppress the price of gold (for documentation of some of these admissions, see http://www.gata.org/node/6242 and http://www.gata.org/node/7096), it comes at a sensitive time in the currency and gold markets. The U.S. dollar is showing unprecedented weakness, the gold price is showing unprecedented strength, Western European central banks appear to be withdrawing from gold sales and leasing, and the International Monetary Fund is being pressed to take the lead in the gold price suppression scheme by selling gold from its own supposed reserves in the guise of providing financial support for poor nations.

GATA will seek to bring a lawsuit in federal court to appeal the Fed's denial of our freedom-of-information request. While this will require many thousands of dollars, the Fed's admission that it aims to conceal documentation of its gold swap arrangements establishes that such a lawsuit would have a distinct target and not be just a fishing expedition.

http://finance.yahoo.com/news/Federal-R ... l?x=0&.v=1

[Lurker]

The video below is from an economic genius Marc Faber who made a fortune predicting the last collapse. His time frame is a little longer than mine. I'm calling for a collapse within the next 12 months. There will be a crisis of confidence since our debt is growing at an unsustainable rate. The fed can't raise interest rates on this debt to haul in inflation (driven by a collapsing dollar) and restore the dollar. When the dollar collapses everything we buy will go up and it will lower our standard of living tremendously.

[youtube]http://www.youtube.com/watch?v=kYl_FFFGRBM[/youtube]

[Lurker]

Gold is very strong $1044 on inflation/currency fears. Australia was the first G-20 to raise interest rates which is putting more pressure on the dollar since capital is flowing over to higher yielding assets.

NEW YORK, Oct 7 (Reuters) - U.S. gold futures ended higher
on Wednesday after setting record highs for a second straight
session as mounting worries about potential inflation
encouraged investors to buy the precious metal.

http://www.reuters.com/article/usDollar ... 4920091007

[Lurker]

The gold market continues it's assault on the record books.

Gold Climbs to Record as India’s Central Bank Buys From IMF
http://www.bloomberg.com/apps/news?pid= ... 4vSk&pos=2

[streetsoldier]

Maybe now I can sell my aunt's old class rings from the 1930's...at $1180 an ounce, they won't be worth all that much, but maybe I can pick up a used car.

[Lurker]

Maybe now I can sell my aunt's old class rings from the 1930's...at $1180 an ounce, they won't be worth all that much, but maybe I can pick up a used car.

I'd try to hold it if you can. Gold = money and it looks like currencies are starting to converge back to a gold standard. If this happens you're going to want gold.

[Dionne]

Maybe now I can sell my aunt's old class rings from the 1930's...at $1180 an ounce, they won't be worth all that much, but maybe I can pick up a used car.

I'd try to hold it if you can. Gold = money and it looks like currencies are starting to converge back to a gold standard. If this happens you're going to want gold.

Nope....it will be silver in common trading. Gold will be in stockpiles.

The real money will be in water.

[Lurker]

Good point on silver as it is also money.

Central banks are moving to buy gold right now. China is looking to increase their holdings to 6,000-10,000 tons. They're doing this to back their currency in gold. My opinion is they're doing this so that they can take over as the world's reserve currency.

The fiat and gold standards look to be converging.