Iran to accept payment in gold from trading partners

http://en-maktoob.news.yahoo.com/iran-accept-payment-gold-trading-partners-174629165.html


By Tim Pearce | Reuters



Email

TEHRAN, Feb 28 (Reuters) - Iran will take payment from

its trading partners in gold instead of dollars, the Iranian

state news agency IRNA quoted the central bank governor as

saying on Tuesday.

Iranian financial institutions have been hit by sanctions

imposed by the United States and the European Union in an effort

to force Tehran to halt its nuclear programme.

Significant difficulties in making dollar payments to

Iranian banks have forced Iran's trading partners to look for

alternative ways to settle transactions, including direct barter

deals.

"In its trade transactions with other countries, Iran does

not limit itself to the U.S. dollar, and the country can pay

using its own currency," central bank governor Mahmoud Bahmani

was quoted as saying. "If a country should so choose, it can pay

in gold and we would accept that without any reservation."

The sanctions include a phased ban on importing oil from

Iran, which EU member states are to implement by July.

China and India, two of the largest consumers of Iranian

oil, have said they will continue imports, but Japan and Korea

have announced cuts to quotas following pressure from the United

States. As a result the value of Iran's rial has plummeted,

pushing the price of goods sharply higher across the country.

Western countries believe Tehran is trying to establish a

nuclear weapons capability, and the United States and Israel

have not ruled out military action against it. The Islamic

Republic says its nuclear ambitions are peaceful and that it

will hit back if targeted.

(Reporting by Hashem Kalantari; Writing by Marcus George;

Editing by Tim Pearce)

India to buy Iranian Oil with Gold Payments

Kal Gronvall gandsilver@gmail.com
9:19 AM (1 hour ago)

to bcc: me
Greetings:

In order to bypass the US and EU sanctions on Iranian oil, India intends to buy oil from Iran with gold. In addition, China, Russian and other nations will use their own currencies to buy oil from Iran, abandoning the dollar in the process. The death of the dollar as the reserve world currency is in the works.

http://www.debka.com/article/21673/

India to pay gold instead of dollars for Iranian oil. Oil and gold markets stunned

The Key to the Gold Vault

ZH Post: The Key to the Gold Vault - Publication by the Federal Reserve of NY (NY FED)

http://www.newyorkfed.org/education/addpub/goldvault.pdf

FRBNY Gold Vault

Strait Jacket: Iran to 'definitely' close Hormuz if EU bans oil

The EU (no doubt pressured by the Neocon/Israeli led US policy) has officially declares sanctions against Iran for reasons publicly stated as a means of halting Iran's alleged nuclear development program. The sanctions include the blocking of oil and GOLD trade with Iran. RT interviews James Corbett and they discuss the numbers, implications, and some possible results from this action.

Look for an Entrance, Not an Exit (Casey Research)

So why did gold, silver, and related stocks fall so hard?

So, should we buy now? Is the bottom in?

Let's take a fresh look at gold's corrections and compare them to the recent one. I've updated the following chart to include the recent selloff.

Casey Daily Dispatch

Gold is Money, Not a Relic - Perthmintbullion YT

Who Holds The Largest Gold Reserves? FORBES

http://www.forbes.com/sites/investopedia/2011/09/13/who-holds-the-largest-gold-reserves/?partner=yahootix

http://www.forbes.com/sites/investopedia/2011/09/13/who-holds-the-largest-gold-reserves/?partner=yahootix

Gold As a Hedge: A Back-of-the-Envelope Calculation

Click on title for full post.

So how much gold would a household need to hedge their paper wealth against depreciation? In Apropos of Everything, Parts II & III Paul Brodsky reckoned that gold at $10,000 an ounce would enable the U.S. to back its current money supply with the 256 million ounces of gold it holds in reserve.

That is one rough approximation of how much gold one would need to hold to hedge paper financial assets. If gold were to rise 6.6-fold from $1,500 to $10,000, then $10,000 of gold at today's price (6.6 ounces in US dollars) would hedge $66,000 in paper financial capital.

In other words, after the dollar (and other paper currencies) fell into the black hole and disappeared over the event horizon, then the 6.6 ounces would be equal in purchasing power to the $66,000 in paper assets that just vanished.

I know there are many other complicating factors, but this is a rough calculation.

50 Factors Launching Gold

50 Factors Launching Gold By Jim Willie CB Apr 19 2011 2:52PM www.GoldenJackass.com

Use the above link to subscribe to the paid research reports, which include coverage of critically important factors at work during the ongoing panicky attempt to sustain an unsustainable system burdened by numerous imbalances aggravated by global village forces. An historically unprecedented mess has been created by compromised central bankers and inept economic advisors, whose interference has irreversibly altered and damaged the world financial system, urgently pushed after the removed anchor of money to gold. Analysis features Gold, Crude Oil, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and US Federal Reserve monetary policy.

Edification is not the word that comes to mind when observing an interview with Larry Fink of Blackstone this morning on network financial news. It was inspirational if not humorous, and somewhat pathetic. Of course the interviewer treated him like royalty, when just a syndicate captain, a Made Man. As a cog within the US financial hierarchy, he was asked why Gold is approaching record price levels near $1500 per ounce. He gave his best 10-second answer, showing no depth of comprehension but an excellent grip of propaganda laced with simplistic distortion. He said, "GOLD IS RISING FROM ALL THE GLOBAL INSTABILITY, AND NOT FROM INFLATION AT ALL." Sounds good, but it lacks much reflection of the world of reality burdened by complexity and interconnectivity that the enlightened perceive. At least he did not babble about Gold being in an asset bubble. It cannot, since Gold is money. It is curious that all the analysts, bankers, fund managers, corporate chieftains who did not advise on Gold investment over the last ten years are precisely whom the financial network news appeals to for guidance in the current monster Gold bull run. They knew nothing before, and they know nothing now. The major US news networks carry the Obama water while the US Congressional members carry the US Banker robes and show respect with genuflection before the priests. But guys like Fink are their harlot squires. Poor Ben Bernanke, despite his high priest position, does not gather a fraction of respect that Alan Greenspan did even though Alan presided over the collapse. The wild card possibly later this year or 2012 will be a national movement to force mandatory wage gains, and thus avert a national economic collapse. The squeeze is on in a powerful manner to both businesses and households.

 

ANOTHER STRONG GOLD BREAKOUT


As long as Quantitative Easing programs are in place and actively pursued, Gold & Silver prices will soar. The programs are urged by exploding budget deficits and absent USTBond demand. That translates to a ruined USDollar currency. Gold & Silver respond to the debasement and ruin. Efforts will become ridiculously stretched to save the USDollar, but will fail. QE will go global and secretive, assuring tremendous additional gains in the Gold & Silver price. No effort to liquidate the big USbanks will occur, thus assuring the process will continue until systemic breakdown then failure. The more extraordinary the measures to save the embattled insolvent fraudulent USDollar, the more the Gold & Silver price will soar. It is that simple. Gold & Silver will soar as long as central banks continue to put monetary inflation machinery to work. They are attempting to provide artificial but coordinated USTreasury Bond demand. In the process their efforts will continue to push the cost structure up further. In my view, since the Japan natural disaster hit with financial fallout, the Global QE is very much in effect, but not recognized as a global phenomenon. It pushes up Gold in uniform fashion worldwide.

50 FACTORS POWERING THE GOLD BULL

1. USFed is stuck at 0% for over two years and printing $1.7 trillion in Quantitative Easing, otherwise called monetary hyper inflation. They are not finished destroying both money and capital.
2. USFed tripled its balance sheet, with over half of it bonds of exaggerated value, while it gobbled up toxic mortgage bonds as buyer of last resort. The mortgage bonds have turned worthless. The USFed waits for a housing revival to bail itself out, but it will not arrive.
3. Debt monetization has gone haywire, as over 70% of USTBond sales from the USFed printing press. The QE was urgently needed, since legitimate buyers vanished. Even the primary dealers have been reimbursed in open market operations within a few weeks.
4. PIMCO has shed its entire USTreasury Bond holdings, seeing no value. They joined many foreign creditors in an unannounced buyer boycott in disgusted reaction to QE which is essentially a compulsory unilateral debt writedown.
5. Growing USGovt deficits have run over $1.5 trillion annually, with absent cuts, obscene entitlements, endless war. The prevailing short-term 0% interest rates are out of synch with exploding debt supply and rising price inflation.
6. Unfunded USGovt liabilities total nearly $100 trillion for medicare, social security, pensions, and more. The obligations are never included in the official debt. It represents insult to injury within insolvency.
7. Standard & Poors warned that USGovt could lose AAA rating in lousy credit outlook, one chance in three within the next two years. Ironically, the announcement came on the day when the USGovt exceeded its debt limit. The network news missed it.
8. State & Municipal debt have collapsed, as 41 states have huge shortfalls, and four large states are broken. They might receive a federal bailout. It could be called QE3, maybe QE4.
9. Coordinated USTBond purchases from Japanese sales have relieved the USFed, as other major central banks act as global monetarist agents. The sales by Japan are vast and growing. Witness the last phase in unwind of Yen Carry Trade, where 0% borrowed Japanese money funded the USTreasury Bonds and US Stocks.
10. Quantitative Easing, a catch word for extreme monetary inflation and debt monetization, has become engrained into global central bank policy, soon hidden. It is so controversial and deadly to the global financial structures that it will go hidden, and attempt to avoid the furious anger in feedback by global leaders. This is the most important and powerful of all 50 factors in my view.
11. The FedFunds Rate is stuck near 0%, yet the actual CPI is near 10%, for a real rate of interest of minus 9%. Historically a negative real rate of interest has been the primary fuel for a Gold bull. This time the fuel has been applied for a longer period of time, and a bigger negative real rate than ever.
12. The USGovt claims to have 8000 tons of Gold in reserve, but it is all in Deep Storage, as in unmined ore bodies. The collateral for the USDollar and USTreasury debt is vacant. It is in raw form like in the Rocky Mountain range or Sierra Nevada range.
13. Fast rising food prices, fast rising gasoline prices, and fast rising metals, coffee, sugar, and cotton serve as testament to broad price inflation. So far it has shown up on the cost structure. Either the business sector will vanish from a cost squeeze or pass on higher costs as end product and service price increases.
14. The entire world seeks to protect wealth from the ravages of inflation & the American sponsored QE by buying Gold & Silver. The rest of the world can spot price inflation more effectively than the US population. The United States is subjected to the world's broadest and most pervasive propaganda in the industrialized world.
15. The European sovereign debt breakdown with high bond yields in PIIGS nations points out the broken debt foundation to the monetary system. The solutions like with Greece in May 2010 were a sham, nothing but a bandaid and cup of elixir. Spain is next to experience major shocks that destabilize all of Europe again, this time much bigger than Greece. The Portuguese Govt debt rises toward 10% on the 10-year yield, while the Greek Govt debt has risen to reach 20% on the 2-year yield.
16. Germany is pushing for Southern Europe bank climax in their Euro Central Bank rate hike. Europe will be pushed to crisis this year, orchestrated by the impatient and angry Germans. They have no more appetitive for $300 to $400 billion in annual welfare to the broken nations in Southern Europe.
17. Isolation of the USFed and Bank of England and Bank of Japan has come. The small rate hike by the European Central Bank separated them finally. The Anglos with their Japanese lackeys are the only central banks not raising rates. With isolation comes all the earmarks on the path to the Third World.
18. The shortage of gold is acute, as 51 million gold bars have been sold forward versus the 11 million held by the COMEX in inventory. Be sure that hundreds of millions of nonexistent fractionalized gold ounces are polluting the system. Word is getting out that the COMEX is empty of precious metals.
19. Such extreme Silver shortage has befallen the COMEX that the corrupted metals exchange routinely offers cash settlement in silver with a 25% bonus if a non-disclosure agreement is signed. The practice cannot be kept under wraps, as some hedge funds push for fat returns in under two months holding positions with delivery demanded.
20. China has begun grand initiatives to replace its precious metal stockpiles. They are pursuing the Yuan currency to become a global reserve currency. As they build collateral for the Yuan, they are also elevating Silver as reserves asset.
21. A global shortage of Gold & Silver has been realized in national mint production. From the United States to Canada to Australia to Germany, shortages exist. Many interruptions will continue amidst the shortages, which feed the publicity.
22. The Teddy Roosevelt stockpile of 6 billion Silver ounces was depleted in 2003. He saw the strategic importance of Silver for industrial and military applications. The USEconomy and USMilitary will turn into importers on the global market.
23. The betrayal of China by USGovt in Gold & Silver leases is a story coming out slowly. The deal was cut in 1999, associated with Most Favored Nation granted to China. But the Wall Street firms broke the deal, betrayed the Chinese, and angered them into highly motivated action. No longer are the Chinese big steady USTBond buyers, part of the deal also.
24. Every single US financial market has been undermined and corrupted from grotesque intervention, constant props, and fraudulent activity. The degradation has occurred under the watchful eyes of compromised regulators. Fraud like the Flash Crash and NYSE front running by Goldman Sachs is protected by the FBI henchmen.
25. The USEconomy operates on a global credit card, enabling it to live beyond its means. The USGovt exploits the compulsory foreign extension of credit in USTBonds, by virtue of the USDollar acting as global reserve currency. Foreign nations are compelled to participate but that is changing.
26. The USMilitary conducts endless war adventures for syndicate profits. They use the USTreasury Bond as a credit card. The wars cost of $1 billion per day is considered so sacred, that it is off the table in USGovt budget call negotiations, debates, and agreements.
27. Narcotics funds have proliferated under the USMilitary aegis. The vertically integrated narcotics industry is the primary plank of nation building in Afghanistan. The funds keep the big US banks alive from vast money laundering.
28. No big US bank liquidations have occurred, despite their deep insolvency. Any restructure toward recovery would have the liquidations are the first step. The USEconomy is stuck in a deteriorating swamp since the Too Big To Fail mantra prevents the urgent but missing step.
29. The unprosecuted multi-$trillion bond fraud over the last decade has harmed the US image, prestige, and leadership. The main perpetrators are the Wall Street bankers and their lieutenants appointed at Fannie Mae and elsewhere. They bankers most culpable remain in charge at the USDept Treasury and other key supporting posts like the FDIC, SEC, and CFTC.
30. The ugly daughters Fannie Mae and AIG are forever entombed in the USGovt. They operate as black hole expenses whose fraud must be contained. The costs involved are in the $trillions, all hidden from view like the fraud. Fannie Mae remains the main clearinghouse for several $trillion fraud programs still in operation.
31. The US banking system cannot serve as an effective credit engine dispenser, an important function within any modern economy. It is deeply insolvent, and growing more insolvent as the property market sinks lower in valuation. The banks lack reserves, and hide their condition by means of the FASB permission to use fraudulent accounting.
32. The big US banks are beneficiary of continuous secret slush fund support from the USGovt and USFed. Their sources and replenishments have been gradually revealed. The TARP Fund event will go down in modern history as the greatest theft the world has ever seen, easily eclipsing the biggest mortgage bond fraud in history.
33. The insolvent big US banks continue to sit at the USGovt teat. The vast umbilical cord of banker welfare has not gone away. Goldman Sachs still is in control of the funding machinery.
34. The shadow banking system based upon credit derivatives keeps interest rates near 0%. The usury cost of money is artificially low near nothing. As money costs nothing, capital is actively and rapidly destroyed.
35. A vast crime syndicate has taken control of the USGovt. A vast crime syndicate has taken control of the USMilitary. A vast crime syndicate has taken control of the USCongress. A vast crime syndicate has taken control of the US press networks.
36. A chronic decline of the US housing sector keeps the USEconomy in a grand decline with constant deterioration. With one million bank owned homes in inventory, a huge unsold overhang of supply prevents any recovery of housing prices. Home equity continues to drain, and bank balance sheets continue to erode.
37. Over 11 million US homes stand in negative equity. The sum equals to 23.1% of households. They will not participate much in the USEconomy, except when given handouts. They have become downtrodden.
38. The USEconomy will not benefit from a export surge. The US industrial base has no critical mass after 30 years of dispatch to the Pacific Rim & China. The industry must contend with rising costs in offset to the falling USDollar, which is cited as providing the mythical benefit. Then can export in droves if they do so at a loss.
39. A global revolt against the USDollar is in its third years. The global players work to avoid the US$ usage in trade settlement. Several bilateral swap facilities flourish, mostly with China. If China supplies products, then the Yuan currency will be elevated to global reserve currency.
40. Global anger and resentment over three decades has spilled over. The World Bank and IMF have been routinely used by the US bankers to safeguard the USDollar and Anglo banker hegemony. Neither financial agency commands the respect of yesteryear.
41. A middle phase has begun in a powerful Global Paradigm Shift. The transfer moves power East where the wealth engines of industry lie, far from the fraudulent banking centers. The next decade will feature the Chinese as bankers, since their war chest contains over $3 trillion.
42. The crumbling global monetary system was built on toxic sovereign debt. Legal tender has been nothing more than denominated debt posing as legitimate by legal decree. That is what word FIAT means. The system is gradually breaking in an irreversible manner.
43. The global central bank franchise system has been discredited. It is a failure, which is not recognized by the bank leaders still in charge. The stepwise process of ruin continues with a new sector falling every few months. Next might be municipal bonds.
44. Witness the final phase of a systemic cycle, as the monetary system has run its course. It is saturated with debt from faulty design. The deception cited in the mainstream media focuses upon the credit cycle which will renew. It will not. It will break of its own weight and lost confidence.
45. The recognition has grown substantially that suppression of the Gold price has been the anchor holding fiat system together. The Chinese realize that Gold, when removed, leads to the collapse of the US financial system. They realize it more than the US public. But the syndicate in control of the USGovt understands the concept very well, as they designed the system.
46. The institution of a high level global barter system might soon take root. Gold will sit at its central core, providing stability. No deadbeat nations will participate. That includes the United States and several European nations. The barter system will be as effective as elegant.
47. The movements spread like wildfire in several US states to reinstitute gold as money. In a few states, led by Utah and Virginia, progress has been made for Gold to satisfy debts, public & private. Consider the movement to be in parallel to the Tenth Amendment movements.
48. Anglo bankers have lost control in global banking politics. The phased out G-7 Meeting is evidence. China has wrested control of G-20 Meeting, and has dictated much of its agenda in the last few meetings. The US has been reduced to a diminutive Bernanke and Geithner being ignored in the corner.
49. New loud stirrings by Saudi Arabia seek a new security protector. If security is no longer provided by the USMilitary, then the entire defacto Petro-Dollar standard is put at risk. Remove the crude oil sales in USDollars exclusively, and the US sinks into the Third World with a USDollar currency that cannot stand on its own wretched wrecked fundamentals.
50. The IMF solution to use SDR basket as global reserve is a final desperate ploy. By fashioning a basket of major currencies in a basket, they attempt to enforce a price fixing regime. It is a hidden FOREX currency exchange rate price fixing gambit that will invite a Gold price advance in uniform manner across the currencies bound together. This ploy is being planned in order to prevent the USDollar from dying a horrible death at the expense of the other major currencies. By that is meant at the expense of the other major economies which would otherwise have to operate at very high exchange rates.

THE BIGGEST UPCOMING NEW FACTORS

Introduction of a New Nordic Euro currency is near its introduction. The implementation with a Gold component will send Southern European banks into the abyss, marred by default. The new currency has the support from Russia and China, even the Persian Gulf. In my view, it is a USDollar killer. The first nations to institute a new monetary system for banks and commerce will be the survivors. The rest will slide into the darkness of the Third World.

Gold & Silver seem to be the only assets rising in price, an extension of a terrific 2010 decade. The exceptions are farmland and the US Stock market. However, stock valuations are propped by constant and admitted USGovt support. Their efforts are mere attempts to keep pace with the USDollar decline, as stocks merely maintain a constant purchase power.

A hidden overarching hand seeks the global Gold Standard as the bonafide solution. Darwin is at work, but Adam Smith turns a new chapter. The crumbling monetary solution demands a solution. Further investment in the current system assures a devastating decline into the abyss of insolvency and ruin.





THE HAT TRICK LETTER PROFITS IN THE CURRENT CRISIS.

From subscribers and readers:

At least 30 recently on correct forecasts regarding the bailout parade, numerous nationalization deals such as for Fannie Mae and the grand Mortgage Rescue.

"I look forward to your newsletter more than all the rest each month as you seem to have the best grasp of what is going on."
(ScottN in Washington)

"When I initially read your writings, they provoked a wide range of emotions in me from fear and anger to outright laughter. Initially some of your predictions ranged from the ridiculous to impossible. Yet time and again, over the past five years, I have watched with incredulity as they came true. Your analysis contains cogent analysis that benefits from a solid network of private contacts coupled with your scouring of the internet for information."
(PaulM in Missouri)

"Your analysis is absolutely superior to anything available out there. Like no other publication, yours places a premium on telling the truth and provides a true macro perspective with forecasts that are uncannily accurate. I eagerly await each month's issues and spend hours reading and studying them. Many times I go back and re-read the most current issue just make sure I did not miss anything the first time!"
(DevM from Virginia)

Jim Willie CB Editor of the "HAT TRICK LETTER"
Subscribe: Hat Trick LetterApril 19, 2010

****

Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 25 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at www.GoldenJackass.com. For personal questions about subscriptions, contact him at JimWillieCB@aol.com

The Casey Report’s David Galland: Major Policy Shift Ahead

University of Texas Takes Delivery Of $1 Billion In Physical Gold

Texas University Takes Cue From Kyle Bass to Hold $1 Billion in Gold Bars

  

Bloomberg Story: Here

 

 The ZEROHEDGE spin:

A Golden Tipping Point: University of Texas Takes Delivery Of $1 Billion In Physical Gold

Submitted by Tyler Durden on 04/16/2011 19:59 -0400

Tipping points are funny: for years, decades, even centuries, the conditions for an event to occur may be ripe yet nothing happens. Then, in an instant, a shift occurs, whether its is due a change in conventional wisdom, due to an exogenous event or due to something completely inexplicable. That event, colloquially called a black swan in recent years, changes the prevalent perception of reality in a moment. This past week, we were seeing the effect of a tipping point in process, with gold prices rising to new all time highs day after day, and the price of silver literally moving in a parabolic fashion. What was missing was the cause. We now know what it is: per Bloomberg: "The University of Texas Investment Management Co., the second-largest U.S. academic endowment, took delivery of almost $1 billion in gold bullion and is storing the bars in a New York vault, according to the fund’s board." And so, the game theory of a nearly 100 year old system of monetary exchange has seen its first defector, but most certainly not last. With an entity as large as the University of Texas calling the bluff of the Comex, the Chairman, and fiat in general in roughly that order, virtually every other asset manager is now sure to follow, considering there is not nearly enough physical gold to satisfy all paper gold in existence by a factor of about 100x. The proverbial Nash equilibrium has just been broken.

From Bloomberg:

The fund, whose $19.9 billion in assets ranked it behind Harvard University’s endowment as of August, according to the National Association of College and University Business Officers, added about $500 million in gold investments to an existing stake last year, said Bruce Zimmerman, the endowment’s chief executive officer. The holdings are worth about $987 million, based on yesterday’s closing price of $1,486 an ounce for Comex futures.

Years from now, when historians attempt to define who may have started it all, one name may emerge...

The decision to turn the fund’s investment into gold bars was influenced by Kyle Bass, a Dallas hedge fund manager and member of the endowment’s board, Zimmerman said at its annual meeting on April 14. Bass made $500 million on the U.S. subprime-mortgage collapse.

“Central banks are printing more money than they ever have, so what’s the value of money in terms of purchases of goods and services,” Bass said yesterday in a telephone interview. “I look at gold as just another currency that they can’t print any more of.”

In summary - the fiat tide is now going out. And among those who will first be observed swimming naked are the very same people whose fate has been so very intrinsically linked to the perpetuation of a flawed regime (and who coined this very saying). In the meantime, hold on to your hats: should a scramble for delivery ensue, the recent parabolic move in various precious metals will seem like a dress rehearsal for what is about to transpire.

The only open question is who was the broker with enough gold to deliver to the UofT. We hope to find out soon enough. We also hope that the UofT is smart enough, and that Kyle Bass advised it, that if they are getting "delivery" in a Comex vault in New York, the gold has likely already been leased out at least several times to various entities demanding paper allocations...

http://www.zerohedge.com 


So,  is $100B in pension fund physical gold investments next?: http://aucanary.blogspot.com/2010/10/pension-funds-and-flight-to-quality.html 

Central banks turn net gold buyers, cut euro zone debt: survey

(Reuters) - Central banks turned net buyers of gold last year and cut exposure to debt issued by euro zone members Greece, Ireland and Portugal, an annual survey of the world's reserve managers showed.

A Curious Divergence - (Shorting the Fed for Sound Money)

The Daily Reckoning


Bill Bonner says: 03/05/11 Waterford, Ireland – This could be important: the dollar has NOT gained from the unrest in the Arab nations. People no longer seem to see the dollar as a haven of safety. Instead, they turn to gold…

Read more: A Curious Divergence http://dailyreckoning.com/a-curious-divergence/#ixzz1G4R4qEV1

Michael Krieger with Max, ON THE EDGE

In this edition of Press TV's On the Edge with Max Keiser, Max, as usual, highlights the bad conditions the US economy is in. He says the fall of the dollar is imminent and ties the latest events in the Middle East to the US economic policies. His guest, Michael Krieger, believes that the unrest will spill over to the US as the world economy is "co-centric." He further elaborates on the competition between the US and the giant China which is taking over the rest of the world and is expected to turn the next superpower. Enjoy the show.

"China Should Buy More Gold, Silver for Reserves" : Xia Bin -- Bloomberg

Bloomberg's Sungwoo Park reporting from Seoul: 
China should increase its gold and silver reserves, the Economic Information Daily reported today, citing an interview with central bank adviser Xia Bin.

Increasing gold reserves at the “appropriate time” is in line with the strategy of internationalizing the yuan, the report cited Xia as saying. “Related departments” should employ a “buy in the dip” strategy over a very long period of time, Xia said. ...
...

FULL STORY:
http://www.bloomberg.com/news/2011-01-31/china-should-buy-more-gold-silver-for-reserves-daily-reports.html

The American Dream. Back to Bank Debt Basics - cartoon for the rest of us.

Are you one of those folks who thinks Hayek is something you paddle down the River in, or that the Von Mises Institute is a psych ward in Austria?  Do you still believe that the bits of green linen you exchange for products is money from the US government.  Well if you are, then this cartoon is for you! 

Irregardless of the inaccuracies of some finer details and the several artistic liberties and stretches taken with historical events, it serves to entertain and get an important message across to it's viewers.


Please pass this on to entertain and educate others.

The AMERICAN DREAM is a 30 minute animated film that shows you how you've been scammed by the most basic elements of our government system. All of us Americans strive for the American Dream, and this film shows you why your dream is getting farther and farther away. Do you know how your money is created? Or how banking works? Why did housing prices skyrocket and then plunge? Do you really know what the Federal Reserve System is and how it affects you every single day? THE AMERICAN DREAM takes an entertaining but hard hitting look at how the problems we have today are nothing new, and why leaders throughout our history have warned us and fought against the current type of financial system we have in America today. You will be challenged to investigate some very entrenched and powerful institutions in this nation, and hopefully encouraged to help get our nation back on track.

PART1



PART2




Knowledge:

http://theamericandreamfilm.com/the-knowledge.php

Backup Link for the film:

http://www.metatube.com/en/videos/45389/The-American-Dream-Complete-Film-HD-Federal-Reserve-Scam/

Precious Metal ETFs: Metal vs. Miner

http://etfdb.com/2010/physical-vs-miners-precious-metal-etfs-who-wins/

Precious Metal ETFs: Physical vs. Equity Exposure
By Jared Cummans, ETF Database — 12/21/2010


ETFs in the commodity space have had an incredible run in 2010, with some funds gaining over 80% on the year and becoming some of the year's top performers. Commodities across the board have enjoyed big gains this year due to a number of factors, including a shaky dollar, strong emerging markets demand, and various supply shortages around the world. Despite the impressive returns delivered recently (and in fact for much of the decade), there are still those who are hesitant to embrace commodities as an investable asset. For the majority of natural resources, it isn't practical for investors to establish exposure to spot prices; storing crude oil in your basement of live cattle in your backyard isn't exactly a recipe for investing success. That means that futures-based strategies are the next best choice, exposing investors to the nuances associated with rolling holdings as they approach expiration (i.e., contango and backwardation). The disconnect between hypothetical spot returns and the returns to a futures-based strategy have frustrated some investors who believe they made the right call on commodity prices but failed to realize the gains they expected .



Physically-backed commodity ETFs-those whose underlying holdings consist of physical commodities-obviously aren't plagued by contango, and generally move in lock step with the spot price of the related resource. But there are still some who don't like the idea of investing in physical commodities, an objection that relates to a broader investing strategy. Gold will never make a coupon payments to those who store physical bullion, just as a silver coin or block of platinum will never may a dividend. The lack of any sort of associated cash flow means that investors will achieve all of their returns through price appreciation. And it also means that valuation is a tricky task; the market price of gold, for example, is often impacted by changes in investor sentiment. The price drivers of precious metals in particular can be nebulous; while certain of these commodities have industrial applications, their appeal to investors and use as "safe havens" makes determining a fair valuation especially challenging.

Enter another way to bet on precious metals prices: through equity-based mining funds. These ETFs gain exposure to the precious metals by investing in companies that are involved in the extraction and mining of the elusive commodities. Like any other company that sells a physical product, the profitability of mining firms depends on the current market price for the goods that it sells. Because a certain portion of mining companies' cost structure is fixed, higher prices for the commodities they extract and sell translates into higher profit margins, and declining prices translate into diminished profitability. As such, mining ETFs often trade as a leveraged play on spot prices, exhibiting increased sensitivity to commodity markets. Below we outline several physically-backed and mining ETFs linked to popular precious metals, and compare the returns to these strategies in 2010 .
Gold

Gold has long been a safe haven for investors worried about inflation, a weak dollar, or a generally dismal economic conditions. Some add gold exposure to their portfolio to hedge against equity drops, while others swear by it as a "buy-and-hold" investment, believing that its value will only increase over the long run. Anyone with exposure to the yellow metal has been handsomely rewarded this year, as gold set new all time highs several times in the latter half of 2010, thriving off of global uncertainty caused by foreign debt crises and other unfortunate events.

Predictions for where gold goes next are all across the board; some believe it to be in a bubble and poised for a plummet, yet others feel it can only go up. Despite how gold prices act, it continues to be one of the most popular commodities on the market with many options to gain exposure to the shiny metal .

SPDR Gold Trust (GLD): This ETF stores gold bullion in secure vaults, thereby offering exposure to spot gold. A share of GLD represents close to 1/10th ounce of gold, and GLD is the second largest ETF by market cap and the 18th most popular by trading volume in the exchange traded industry. In 2010, GLD has returned over 25%, while exhibiting almost no correlation to stock markets.

Market Vectors Gold Miners ETF (GDX): This equity ETF tracks the NYSE Arca Gold Miners Index, which provides exposure to publicly traded companies worldwide involved primarily in the mining for gold, representing a diversified blend of small-, mid- and large- capitalization stocks. Top holdings of this fund include Barrick Gold (16.2%), Goldcorp (11.5%), and Newmont Mining Corporation (11%). GDX holds over four fifths of its assets in international funds, with a major focus on Canada (57.4%). GDX has gained more than 30% this year, exhibiting a beta 0.62 and a very strong correlation to spot gold prices.


Silver

Silver has been used as a form of currency for over four thousand years, but has lost popularity since the majority of the world dropped silver standards over one hundred years ago. Now, silver is used as an investment similar to gold, in that it acts as an inflation hedge, and gives a portfolio security against uncertain markets. Silver is also much cheaper than gold; an ounce costs only a fraction of a similar quantity of gold. Unlike gold, demand for silver is driven by industrial uses, as the metal is used in everything from dentistry to photography.

Silver prices are currently at the highest that they have been in nearly three decades, and some believe this metal will climb further thanks to the continuation of the Bush era tax cuts . The proposed extension will add to the already massive U.S. government deficit, which could devalue the dollar and increase the appeal of all precious metals. "The currencies of all the major countries, including ours, are under severe pressure because of massive government deficits," says Joe Foster, a manager of the Van Eck International Gold Fund. "The more money that is pumped into these economies – the printing of money basically – then the less valuable the currencies become."

iShares Silver Trust (SLV): This fund holds silver bullion, allowing it to mimic changes in the spot price of silver. SLV has been one of the top performing exchange traded products this year, and total assets now top the $10 billion mark. This fund is also traded an average of 21 million times a day, making it among the most heavily-traded ETFs in the U.S. (currently ranking 11th overall by average daily volume). With 2010 returns coming in at a jaw-dropping 70%, this ETF is among the ten or so best performing ETFs for 2010 .

Silver Miners ETF (SIL): This ETF tracks the Solactive Global Silver Miners Index, which is comprised of companies that are actively engaged in some aspect of the silver mining industry such as the mining, refining or exploration of the shiny metal. Top holdings in the ETF include Silver Wheaton Corporation (14.6%), Fresnillo PLC (14.6%), and Pan American Silver Corporation (11%). SIL's assets lie primarily overseas, with international exposure straddling the 90% line. From a country perspective, this fund focuses on Canada (42%) and Mexico (40%). SIL has also turned in some huge gains in 2010, gaining about 70% since its debut in April.


Platinum

Platinum is among the rarest metals in the world, and is certainly a less popular investable asset compared to gold. An average of 5 million ounces of platinum are mined each year, compared to 82 million ounces and 547 million ounces of gold and silver, respectively. Because it is so hard to come by, platinum is more expensive than both gold and silver, and can make for a unique investment opportunity (platinum's price is currently sitting around the $1,650/ounce level)

While it may seem like just another rare commodity, platinum offers advantages that gold and silver do not. In periods of market instability, platinum will be outperformed by gold, but during periods of economic growth, platinum tends to outperform gold, making it a useful tool if acquired at the right times. The reason for this trend is because platinum has more practical uses than does gold or silver, as it is a popular metal in industrials. So while economies are growing, more platinum will be demanded and used, driving up the price, and in a weaker economy the price will drop as the expensive precious metal is overlooked .

ETFS Physical Platinum Shares (PPLT): This ETF simply measure the spot price of platinum by physically holding platinum bullion. PPLT is relatively young, as it will not celebrate its one year anniversary until January of 2011. This ETF has returned just over 6% on the year.

ISE Global Platinum Index Fund (PLTM): This fund measures the ISE Global Platinum Index, which is designed to track public companies that are active in platinum group metals (PGMs) mining based on revenue analysis of those companies. PLTM, offered by First Trust, features names like Johnson Matthey, Impala Platinum, and Northam platinum in its top holdings. Like the two previous metals, the platinum miners fund outperformed its physical competitor, as PLTM has gained close to 8% in 2010.


Verdict

When looking at the performance of these two different strategies, a clear trend emerges; the mining based-funds have outperformed the physically-backed commodity across the board in 2010-in some cases by a fairly wide margin. There are a number of reasons that could contribute the noticeable difference between these two investment methodologies. For starters, mining ETFs offer a sort of leverage; for every one percent rise in the commodity prices, mining companies tend to rise higher than one percent (the same will hold true for negative movements). Moreover, mining ETFs have benefited from relatively strong performances out of equity markets this year; while these funds exhibit strong correlations to commodities, at the end of the day they are stocks that also are impacted by the outlook for the global economy .

Disclosure: No positions at time of writing.