Category Archives: Gold

08.04.13
by

Forbes: Bernanke Tells Congress: I Don’t Really Understand Gold

While Ron Paul is no longer part of  the Congressional committees that grill Ben Bernanke twice a year, the Fed Chairman was forced to answer questions about gold on Thursday again.  Asked about the falling price of gold, which is down nearly 25% this year, Bernanke admitted he doesn’t understand the yellow metal.

“No one really understands gold prices,” Bernanke told the Senate Banking Committee, adding he doesn’t get it either.

Gold prices, which have been under intense pressure since at least last September, were actually up on the day, gaining 0.5% to $1,284.20 an ounce by 12:47 PM in New York.

—–

Click below for the full article.

http://www.forbes.com/sites/afontevecchia/2013/07/18/bernanke-tells-congress-i-dont-understand-gold/

07.29.13
by

The Daily Beast: Paul Krugman’s Nasty and Inane Attack on ‘Libertarian Populism’

130718-krugman-gillespie-tease

It’s got to be a pretty good gig to be Paul Krugman. He’s rich enough to bitch to The New Yorker about not being able to afford a home in St. John so, sigh, St. Croix has to do. He’s got tenure at the second-best college in New Jersey, an equally secure gig at the second-best newspaper in New York, and he’s even copped a Nobel Prize (economics, but still). He’s asked for his opinion on pop bands in a way that I’m pretty sure Milton Friedman or John Kenneth Galbraith never experienced (thank god for small favors). “The New Pornographers are probably technically better than Arcade Fire,” he’s solemnly sworn to Playboy. “But what the hell? It’s all good.”

The man also known as Krugtron the Invincible is able to utter such fallacious conventional deep thoughts as “the Great Depression ended largely thanks to a guy named Adolf Hitler” and that the 9/11 attacks were just the ticket to goose the soft early-’00s economy in lower Manhattan (“All of a sudden, we need some new office buildings,” he actually wrote in the Times on September 14, 2001) and still be taken seriously. He’s repeatedly called for a a bogus alien invasion that occasions even more super-stimulative spending than we’ve seen already in this awful 21st century—an idea presumably lifted, unacknowledged, from the Watchmen comic books.

 

Best of all, Krugman has attained that rare level of eminence where he doesn’t even have to engage the very opponents he dismisses as beneath contempt. Like Kurtz in Heart of Darkness and Apocalypse Now, he just needs to wave his hand, mumble vague abjurations, and rest assured his devoted minions will finish his work for him.

 

Krugman’s latest target is “libertarian populism,” which he summarizes thus: “The idea here is that there exists a pool of disaffected working-class white voters who failed to turn out last year but can be mobilized again with the right kind of conservative economic program—and that this remobilization can restore the Republican Party’s electoral fortunes.”

 

This ain’t gonna happen, chuffs Krugman, because … because … because … Rep. Paul Ryan (R-Wis.)! Despite the fact that the former Republican vice-presidential nominee and marathon-time amnesiac is nobody’s idea of a libertarian or a populist, Krugman insists that libertarian populism is doomed precisely because  to “the extent that there was any substance to the Ryan [budget] plan, it mainly involved savage cuts in aid to the poor. And while many nonwhite Americans depend on these safety-net programs, so do many less-well-off whites—the very voters libertarian populism is supposed to reach.”

 

Had Colonel Krugman ventured outside his ideological compound, he might have happened upon the writings of Tim Carney of The Washington Examiner. To the extent that libertarian populism has a policy agenda, it’s mostly thanks to Carney, who likes to write books attacking right- and left-wing crony capitalists. He’s libertarian in that he consistently believes that freer markets function more fairly and more efficiently, and he generally thinks people should be left alone when it comes to economic and personal freedom (he’s not an absolutist on most things). He’s populist in that he is basically obsessed with what he sees as concentrations of power and wealth among elites who rig markets, status, and more against the little guy.

 

Unsurprisingly, Carney’s libertarian-populist policy agenda has precious little to do with starving poor people to death or stoking white working-class resentment against dusky hordes (Carney is pro-immigration). Unless by dusky hordes, you mean Wall Street banksters and well-tanned pols such as Speaker John Boehner.

 

For better or for worse, it’s filled with prescriptions such as “cut or eliminate the payroll tax” (that’s the one that hurts low-wage earners the most); “break up the big banks and/or place stricter safety and soundness rules on them” (hmm, how does that help the Rothschilds again?); and “end corporate welfare” (Carney specifically name-checks the awful Export-Import Bank and subsidies to Big Sugar, which both receive bipartisan congressional support).

—-

Click below for the full article.

http://www.thedailybeast.com/articles/2013/07/19/paul-krugman-s-nasty-and-inane-attack-on-libertarian-populism.html

07.25.13
by

Motley Fool: Bernanke’s QE Magic Trick

In May of this year, Federal Reserve Chairman Ben Bernanke suggested to a congressional panel that the Fed could taper its policy of Quantitative Easing (QE). The obvious happened — the stock market took a quick hit, and interest rates spiked.

So Bernanke pulled a quick change, saying the Federal Reserve will continue an open-ended policy of QE, which artificially suppresses interest rates but immeasurably helps the housing, bond and stock markets. This was a calculated act to test the reaction of the markets.Their negative response validated what Bernanke already knew to be true, that the Fed is trapped in its magic policy of Quantitative Easing, and it’s going to be much harder to make it disappear than anticipated.

Bernanke will be exiting the Federal Reserve stage at the end of his term in January 2014, and returning to academia. I imagine he is glad to do so, leaving the possible tapering of QE to his successor. And, with only months left in his tenure as chairman of the Fed, it’s understandable that he would not want to show his hand and risk rocking the stock market.

—–

Click below for the full article.

http://beta.fool.com/oglove/2013/07/25/bernankes-qe-magic-trick/41523/?source=eogyholnk0000001

05.06.13
by

Business 2 Community: U.S. Dollar to Become the Next Yen?

In its latest meeting minutes, the Federal Reserve said it will continue with quantitative easing, creating $85.0 billion in new money monthly, in order to bring economic growth to the U.S. economy. (Source: Federal Reserve, May 1, 2013.)

The Federal Reserve, once again, didn’t provide any clear indication as to when it will end the quantitative easing; rather, the central bank stated it will continue to do the same “until the outlook for the labor market has improved substantially in context of price stability.” (Source: Ibid.)

The Federal Reserve has already increased its balance sheet to over $3.0 trillion, and if it continues its quantitative easing at this pace, its balance sheet will balloon even more, possibly even reaching $4.0 trillion—or even $5.0 trillion—in a very short period of time.

This is troublesome news, dear reader. The more money created out of thin air via quantitative easing, the more the fundamentals of the reserve currency, the U.S. dollar, deteriorate.

As I have mentioned in these pages before, we only need to look at the Japanese economy to see quantitative easing is not a viable option for us.

The Japanese currency has plummeted since the Bank of Japan revved up its quantitative easing. Just look at the chart below of the Japanese yen compared to other major currencies in the global economy; it seems as if the currency has fallen off a cliff. If we keep up with all this money printing, the U.S. dollar may eventually look the same!

U.S. Dollar to Become the Next Yen? image xjy japanese yen philadelphia index1

Chart courtesy of www.StockCharts.com

A falling U.S. dollar will drag down the buying power of Americans even further, as they are already struggling to keep up with their expenses. What we could purchase for $1.00 in the year 2000 now costs us $1.35. (Source: Bureau of Labor Statistics, last accessed May 3, 2013.)

I have yet to see any real economic growth in the U.S. economy as it was promised when quantitative easing was first introduced after the financial crisis. Quantitative easing is working to make big bank balance sheets strong and to create inflation, but I don’t see any economic growth being created by it.

I am looking at the Japanese economy as the best example of a country failing with long-term quantitative easing and what might be next for the U.S. economy and the dollar due to all this newly created money.

—-

Click below for the full article.

http://www.business2community.com/finance/u-s-dollar-to-become-the-next-yen-0486009

05.01.13
by

Reuters: Fed holds steady on stimulus, worried by fiscal drag

Chairman of the Federal Reserve Bank Ben Bernanke attends the Treasury Department's Financial Stability Oversight Council in Washington April 25, 2013. REUTERS/Gary Cameron

The U.S. Federal Reserve said on Wednesday it will continue buying $85 billion in bonds each month to keep interest rates low and spur growth, and added it would step up purchases if needed to protect the economy.

Expressing concern about a drag from Washington’s belt-tightening, the Fed described the economy as expanding moderately in a statement that largely mirrored its last policy announcement in March. Fed officials cited continued improvement in labor market conditions and did not change their description of inflation, saying it should remain at or below the central bank’s 2 percent target.

But policymakers reiterated that unemployment is still too high and restated their intention to keep buying assets until the outlook for jobs improves substantially.

“Fiscal policy is restraining economic growth,” the U.S. central bank’s Federal Open Market Committee said in its policy statement at the close of its two-day meeting. “The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation.”

Some economists were surprised that the statement did not contain a clearer acknowledgement of a recent weakening in the economic numbers.

Until recently, analysts had expected the Fed to buy a total of $1 trillion in Treasury and mortgage-backed securities during its ongoing third round of quantitative easing, known as QE3, with expectations the Fed would start to take its foot off the accelerator in the second half of this year.

Now, things are looking a bit more shaky.

—-

Click below for the full article.

http://www.reuters.com/article/2013/05/01/us-usa-fed-idUSBRE94003X20130501

04.29.13
by

Reuters: PRECIOUS-Gold rises 1 percent, holds near one-week high

Gold bars and granules are pictured at the Austrian Gold and Silver Separating Plant 'Oegussa' in Vienna October 23, 2012. REUTERS/Heinz-Peter Bader

Gold rose more than 1 percent on Monday and held near its highest in more than a week, as a rebound in prices from multi-year lows failed to damp investor appetite for the precious metal, causing a shortage in physical supply.

Recent bleak U.S. growth data that raised hopes the Federal Reserve would keep its current pace of bond buying at $85 billion a month also supported gold, widely seen as a hedge against inflation.

U.S. gold futures, which often provide trading cues to cash gold, hit a high of $1,472.20 an ounce. By 0553 GMT, prices stood at $1,468.90 an ounce, up $15.30. Spot gold rose $6.70 to $1,469.20 an ounce.

Both cash gold and futures sank to around $1,321 on April 16, their lowest in more than two years, after a drop below $1,500 sparked a sell-off that prompted investors to slash holdings of exchange-traded funds. They touched an 11-day peak above $1,484 on Friday.

“I don’t think gold is out of the woods yet, but there’s room for upward correction. One of the reasons why gold has dropped so much was the strong signs of U.S. economic recovery. Now, we don’t see much of it,” said Joyce Liu, an investment analyst at Phillip Futures in Singapore.

—-

Click below for the full article.

http://www.reuters.com/article/2013/04/29/markets-precious-idUSL3N0DG04220130429

 

04.23.13
by

Marketwatch: The slowdown is more than a soft patch, Goldman Sachs got it wrong before they got it right

For months, economists and the media have proclaimed that we are in full-recovery mode. While the markets were at record highs, unemployment had not improved, economic growth was stagnant and most corporate earnings had little to do with an increase in sales and revenue and were based on moves like laying-off thousands of people and shedding non-performing assets.

Last week, Goldman Sachs Group Inc. — one of those bullish outfits projecting enthusiasm — reversed its earlier upbeat message, saying that consumer spending is slowing down, which will likely have a negative impact on future growth. The significance is that most analysts and economists are coming to grips with the fact that the economic data doesn’t support stock-market valuations at these levels.

What economists and analysts failed to connect is the contrast between reality and the stock market — the low consumer spending, paltry economic growth, weak hiring by companies and reckless quantitative easing by the Federal Reserve while the stock market soared.

So, let’s look at everything Goldman Sachs (and many others) missed, and the chain of economic events.

The importance of consumption on the overall economy should not be overlooked. While in the economic cycle, it is production that comes first, as it provides the income necessary for individuals to consume, it is ultimately consumption that completes the cycle by creating the demand.

Despite repeated bailouts, programs, and interventions, economic growth remains mired at sub-par rates as consumers struggle in a low growth/high unemployment economy. Businesses, which have been pressured by poor sales, higher taxes and increased government regulations, have learned to do more with less. Higher productivity has led to less employment and higher levels of profits.

The dark side of that equation is that less employment means higher competition for jobs which suppresses wage growth. Lower wage growth and incomes means less consumption, which reduces the aggregate end demand. In turn, lower demand for products and services puts businesses on the defensive to “do more with less” in order to protect profit margins. Wash, rinse and repeat. This is why deflationary economic environments are so greatly feared by the Fed as that relationship between production and consumption is incredibly difficult to break.

I don’t believe that the current slowdown is just a “soft patch,” but is instead the end of the expansionary cycle that began in 2009. That belief is simply based on the fact that economies do not grow indefinitely but cycle between expansions and contractions.

In the current economic environment, where the consumer is caught in a balance sheet deleveraging cycle, economic contractions occur more frequently than they do under more normal economic conditions. This is not an indictment of fiscal or monetary policies, but simply a statement about the cycles of an economy.

So where does that leave us now and the remainder of 2013?

At some point, despite the ongoing interventions by the Federal Reserve, the stock market will revert to the underlying fundamental story which has been slowly deteriorating over time. The question that remains to be answered is simply how long can the Fed’s artificial intervention programs continue to elevate asset prices?

—

Click below for the full article.

http://www.marketwatch.com/story/the-current-slowdown-is-more-than-a-soft-patch-2013-04-23?siteid=yhoof2

04.21.13
by

Motley Fool: Will Obama Really Confiscate Your Retirement Savings?

The budget proposal President Obama recently submitted had several provisions designed to increase government tax revenue. But one provision concerning retirement accounts triggered alarm bells for many Americans, raising fears that the government will confiscate your retirement savings.

Why people think confiscation is possible The provision in the Obama budget calls for tax laws to “prohibit individuals from accumulating over $3 million in tax-preferred retirement accounts.” Specifically, the budget refers to a complicated formula that involves figuring out how much money a person would need in order to buy an annuity contract that would guarantee annual payments to retirees of $205,000 for the rest of their lives. The proposal would raise $9 billion over the next 10 years, according to the budget’s forecast.

Immediately, many analysts jumped to the conclusion that the provision might involve actually taking away money from retirement accounts. CNBC’s Larry Kudlow described the measure in a special editorial in the New York Sun as an “incredible and arbitrary limit or tax on — or even possible confiscation of — IRA-type tax-advantaged savings account [emphasis added].”

Past confiscation fears Constitutionally, the idea that the government could simply confiscate your retirement savings without compensation goes directly against the due process and takings clauses of the Fifth Amendment. More skeptical analysts will note that retirement accounts make up trillions of dollars in assets that major banks Bank of America (NYSE: BAC  )  and Wells Fargo (NYSE: WFC  )  and many other major financial institutions use to drive profits, giving them a huge incentive to use their political power to ensure that those assets don’t disappear instantaneously.

Yet this isn’t the first time that the issue of confiscation has come up. Even before President Obama was elected, Congress looked at a proposal to replace 401(k) plans with government-managed retirement accounts. Under the plan from Prof. Teresa Ghilarducci of the New School’s Schwartz Center for Economic Policy Analysis, these accounts would have had savers contributing 5% of their pay to a government-run retirement plan that would invest in bonds paying a fixed, guaranteed return over the rate of inflation. Ghilarducci’s plan did not propose confiscation, and as she described in an interview with Seattle talk show host Kirby Wilbur at the time, “Whatever you have in your 401(k) now will keep its tax break.”

Moreover, historians point to the 1933 executive order that required individuals to deliver gold coins, bullion, and certificates to banks in exchange for regular currency at a rate of $20.67 per ounce as being functionally equivalent to confiscation. With the government proceeding to devalue the dollar to $35 per gold ounce the following year, those who complied with the order suffered a substantial loss of purchasing power. Indeed, many gold investors use that same argument in arguing against bullion ETFs SPDR Gold Trust (NYSEMKT: GLD  ) , iShares Gold (NYSEMKT: IAU  ) , and iShares Silver Trust (NYSEMKT: SLV  ) , preferring instead to take physical possession of their gold and silver to ensure its safekeeping themselves.

Click below for the full article.