Monday, 12/9, Market WrapUp (Things Beginning to Percolate)

Financial Sense Online ^ | 12/9/2002 | James J. Puplava

[Texas_Jarhead]

you nearly echoed my sentiments exactly. America must wakeup to the future realty staring us in the face or else.

[Texas_Jarhead]

Gold is a store of value. I admit I've transferred some assets into physical gold this year. There is something somewhat reassuring about it.

[Texas_Jarhead]

you said it. if the price pops $360 (I've read as low as 350) I'm afraid they will collapse. For that very reason I think the fedgov will do everything in its power to keep that from happening. Could you imagine the impact of two money center banks going under? It would be unbelievable. Frankly I don't see why it is not already illegal for fed reserve banks to participate in any speculative vehicle where the potential exists for the need of the fedgov to bail 'em out less they go bankrupt. Seems absurd to me. Of course if there was no fedreserve then the Treasury dept. certainly wouldn't be shorting metals or stocks much less holding billions in derivatives.

[grania]

They were practically begging me to use their card. Offered 0% finance charges until April. Even offered to send me cash for Xmas. Hey, it is Free Money!!

Arete, don't lower your standard for Spending Season. Soon, big brother will be offering you interest if you'll charge something. Until they pay you every month to accumulate a little credit card debt, don't consider it.

[Ken H]

Snow should have kept his Augusta membership and told anyone who didn't like it to get stuffed.

Whoever gives in to the PC crowd gets eaten for breakfast.

[snopercod]

I am at a loss to see how the American economy will turn around - ever - without doing something to stop the flight of American manufacturing, and doing something to stop illegal immigration.

As you know, the job situation is dismal here in Transylvania County, and not much better over where you live.

[snopercod]

If gold builds and builds, you can look for JPMorgan-Chase to go kablooie.

Why? Are they shorting gold?

[Soren]

Re manufacturing: the dollar must and will fall. Then we will see the gradual return of the manufacturing sector as domestic production becomes more competitive with imports.

Re JPM: they are enormously short gold. They have been involved in the gold carry trade whereby they lease gold from the Fed, sell it short into the market, and invest the proceeds in Treasuries. In the past, the lease rate paid to the Fed was roughly 1% and the return on Treasuries was close to 5%, yielding a nice spread. Now the spread is gone. The problem is that this is a great game as long as the price of gold does not rise. The companies involved in this kind a trade all use risk management software that tells them to buy gold (if they are short gold)if the value of their positions reach a certain level. That level is widely rumored to be $330 and we have seen $330 act as a price barrier which leads one to believe that someone, namely the shorts, is defending that level.

There was a paper that came out last week by Howe/Bolser that shows that the CB's have leased out 16,000 tons. That is a huge number, equal to about 7 years of global production. This paper was based on a recent report by the BIS. Howe is associated with GATA, and although this paper is really saying the same thing they have been saying for years, it is apparently getting some attention, perhaps because it is backed by BIS numbers. The speculation is that hedge funds are licking their chops to take on the shorts and we have seen some significant price pressure over the last few sessions. Personally, I don't think JPM will go down over gold. The exchange will simply change the rules. My guess is these contracts will be settled in cash, rather than forcing delivery of physical gold. Of course, that means the CB's are out their gold and it also means the price suppression will cease.

[Semaphore Heathcliffe]

Happy Bday, rohry. thanks as always for the posts.

[Semaphore Heathcliffe]

Bingo. If one steps back from the trees to take good long look at the forest, the forest looks suspiciously like a country being intentionally ground away to mediocrity. Can't have those uppity Americans getting in the way of globalization, what with their high standard of living and quaint notions of freedom.

[dtel]

Happy birthday rohry.
Thanks for all the hard work you do everyday, it is appreciated.

[eastsider]

Happy Birthday, rohry, and many more.

[Gritty]

I am at a loss to see how the American economy will turn around - ever - without doing something to stop the flight of American manufacturing, and doing something to stop illegal immigration.

I completely agree. These are two of the largest problems we face.

The first might be helped somewhat by a weaker dollar. The Clinton Crime Syndicate (under Capo Rubin) increased the value of the dollar 50%, thereby making foreign manufactured goods cheaper, creating a stock bubble, and ensuring a "good" - although only temporary - economy to make sure the Mob got elected. Unfortunately, it is a disaster for those manufacturing in this country. But, that's OK, It got him re-elected, and that was what was really important, right? Additionally, horrendous environmental laws and labor laws have taken their long term toll and driven a lot of viable business overseas (I know first hand as I was in an industry destroyed by them).

Illegal immigration is still the elephant on the room nobody wants to address because of the politics. It is a dagger pointed straight at our collective hearts. Almost nobody in politics has the courage to confront it, so it will get a lot worse.

Lots of other reasons, too, including a generations-long socialistic related slowdown, the wholesale destruction of American education, moral degeneration of our electorate and business producers, appalling political corrution,... and the list goes on, each the fitting subject of entire books.

On the "bright" side, most of the rest of the world is in the same going-to-hell-in-a-handbasket so in a relative sense we are not sinking as fast as we could be. We are all going down together.

But, we are not the America we should be or could be!

[rohry]

Pretty funny!

[rohry]

"Have you noticed (with some exceptions) how many brilliant people are born around this time of year?"

Ann Coulter's is December 8...

[snopercod]

Good analysis. I agree with all of it.

BTW, the going rate for the illegals in Cashiers is $10 per hour...paid in cash. I know, I talked to some of them while we were digging a ditch together. After taxes, they were making more than I was.