Fred tries to wake the sheep

Time for a little comedy and reality mixed. It's only two minutes.

Shaza’s Podcast of the Day

TDI Podcast 128: Trading Legend Art Cashin and more…

September 27, 2009

Guest: Art Cashin and Andrew discuss markets and the dollar. Is the NYSE auction system going by the wayside? Leveraged Inverse ETFs causing problems for floor traders? Where to now? We have a good time discussing other important aspects of the market and how to position your portfolio.

http://www.thedisciplinedinvestor.com/blog/2009/09/27/tdi-podcast-128-trading-ledgend-art-cashin-and-more/

Shaza’s Podcast of the Day:

Before you rush out and buy banks on the dips, thinking that the Government is going to hold these insolvent criminal organizations up forever, you had better listen to THE man who makes it his business to look at Banking and Risk Management.

PICKING NITS: THE BLOG

http://institutionalrisk.blogspot.com/2009/09/as-subsidies-subside.html

Excerpt from Santiago: “To me this means that the administration may be preparing to send a potentially uncomfortable message to Wall Street that it wants to begin to divert capital away from obsessing on artificially floating up the DJIA and redirect it back into economy building uses of private capital. By making it so that banks will soon need such private capital to survive the anticipated loss scenarios of 2010 it means that only collective and focused investment as a cadent nation of citizens can stave off the further withering of a weakened broader economy. It’s a glitch that changes the where and how the nation’s wealth reserves are to be employed. Pretty gutsy move. Wake up and smell that coffee!”

THE PODCAST:

“WALL ST IS A PARASITE ON THE AMERICAN ECONOMY...”

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2009/9/25_Chris_Whalen.html

The Amazing, shrinking Mine Production of Gold:

“... the industry as a whole continues to suffer from a dearth of major new gold discoveries, despite a sharp pick up in exploration spending. Only 1 major new gold discovery (defined as >2.0 million ounces) was reported in 2007 and
none in 2008, according to Metals Economics Groups, a far cry from the 15 discoveries a year being made ten years ago.”
(Metals Economics Group, Strategies for Gold Reserve Replacement)



Contributed by Shaza

Jim Sinclair's most important interview

QueenBee here if you don't listen to anything else this week, listen to this one! My sentiments exactly.

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2009/9/25_Jim_Sinclair.html

Biography from jsmineset.com

JIM SINCLAIR - Chairman of Tanzanian Royalty Exploration & Founder of Jim Sinclair’s Mine Set

Jim Sinclair is primarily a precious metals specialist and a commodities and foreign currency trader. He founded the Sinclair Group of Companies (1977), which offered full brokerage services in stocks, bonds, and other investment vehicles. The companies, which operated branches in New York , Kansas City, Toronto , Chicago , London and Geneva , were sold in 1983.

From 1981 to 1984, Mr. Sinclair served as a Precious Metals Advisor to Hunt Oil and the Hunt family for the liquidation of their silver position as a prerequisite for the $1 billion loan arranged by the Chairman of the Federal Reserve, Paul Volker.

He was also a General Partner and Member of the Executive Committee of two New York Stock Exchange firms and President of Sinclair Global Clearing Corporation (commodity clearing firm) and Global Arbitrage (derivative dealer in metals and currencies).

In April 2002, shareholders of Tanzanian Royalty Exploration (formerly Tan Range Exploration) approved the acquisition of Tanzania American International, a company controlled by the Sinclair family, for shares in Tan Range . Following this transaction, Mr. Sinclair became Chairman of Tan Range and now leads its efforts to become a gold royalty company.

He has authored numerous magazine articles and three books dealing with a variety of investment subjects, including precious metals, trading strategies and geopolitical events, and their relationship to world economics and the markets. He is a frequent and enormously popular speaker at gold investment conferences and his commentary on gold and other financial issues garners extensive media coverage at home and abroad.

In January 2003, Mr. Sinclair launched, “Jim Sinclairs MineSet,” which now hosts his gold commentary and is intended as a free service to the gold community.

Congressman who went werewolf on me now spooks Fed officials

Courtesy of Shaza and Zero Hedge

Alan Grayson: I would like to know whether it is within the Federal Reserve’s legal authority to try to manipulate the stock market or the futures market.

Federal Reserve GC Scott Alvarez: I don’t believe the Federal Reserve tries to manipulate the stock market…(Yoda: Do or do not, there is no try.)

Alan Grayson: Does the Federal Reserve actually possess all the gold that’s listed on their balance sheet.

Scott Alvarez, doing a classic poker body language tell, and taking his time: Yes…

Alan Grayson: Who actually executes the trades for the Federal Reserve in the markets?

Scott Alvarez: The Federal Reserve Bank of New York, which executes trades through Primary Dealers.

Alan Grayson: Can you name one Primary Dealer?

Scott Alvarez: JP Morgan Chase

Alan Grayson: Do you mind if we have a GAO audit to see if there has been front-running or insider trading by them? Do you mind? Is that ok with you?

Scott Alvarez: I am not sure if I have that authority…

via “Have The Federal Reserve Or Prime Brokers Ever Tried To Manipulate The Stock Market?” | zero hedge.

State of the Hive Address

All is well in the Hive and I would say

"Mission Accomplished"

I rarely write a post by myself (because of time constraints), but today I am making an exception. First of all we have a great community even though we are small; we share great insights about trading from many different perspectives. My research assistants Shaza and WaveRider have the time to sift through all the noise, financial information and then I publish it. However, without the comments section I don’t think it would be the same. Gotawatch, Mugabe along with Shaza offer us great technical analysis.

Edgar god bless him, brings his sarcastic whit that gives me the opinion he would have been a great comedy writer or stand up like George Carlin. Going Loco is also one of my favorite reads along with P.K. who offers great trading sites along with informed opinion. Bukko in AU and Drama Queen (who is always dramatic) and Tommy JR has been absent a while so he is probably on holiday. Bhagwan dear I’ve missed you as of late and VA-Bear whom I know is traveling. OMG I almost left out Taxhaven.

What we have built together “may it never be torn asunder.” Hopefully when TSHTF we will all be in an investment vehicle that weathers the storm, but the day is coming. As Karl Denninger writes “The math doesn’t lie.” I think if we see a repeat of October 2008 IMHO be “The Greatest Unwind in History.” I only hope that financial chaos doesn’t equate to violence in the street and societal breakdown.

I will confess that I voted for Obama and no one can be more disappointed than I am. I fear his legacy may be worse than George Bush, if that is possible. I don’t want to get into politics too much on this site as there are plenty of other blogs that cover that. I want to conclude that I am grateful for what I have and what Insidethehive has become. A place for civil discussion and trading opinions without too much politics and a little humor added in for good measure. From the bottom of my heart this is the Queen saying thank you.

Ron Paul on the Fed Audit

Ron Paul on Fed Audit hearing tomorrow.

Visit msnbc.com for Breaking News, World News, and News about the Economy

Further Reading:

http://jessescrossroadscafe.blogspot.com/2009/09/more-smoke-from-federal-reserve-on.html

Another Case for Inflation

Marc Faber, Ph.D. "Dr. Doom"

Marc Faber Limited

Editor, "Gloom Boom & Doom" report

This is a long one. You may want to save it for later. QB

http://www.financialsense.com/Experts/2009/Faber.html

Faber: Ken Fisher Is Wrong! America Already Has Way Too Much Debt

Posted Sep 22, 2009 01:58pm EDT by Aaron Task in Investing, Newsmakers

Related: ^DJI, ^GSPC, EEM, TBT, TIP, GLD, UDN

Ken Fisher's argument that America is "under indebted" and that more debt will be a global phenomenon in the next 10-20 years raised a lot of eyebrows last week - and quite a few catcalls in our comments section.

Fisher may be technically right -- that there's appetite for more U.S. debt, but Marc Faber, editor of The Gloom, Boom & Doom Report, scoffs at the idea that it would be healthy or smart.

More debt "comes at the expense of a falling dollar...and much higher inflation rates in the future," says Faber, who notes the U.S. has total debt-to-GDP ratio of 375%, "excluding contingent liabilities from Medicare and Medicaid."

Two major market forces about to collide...

Submitted by Waverider

October 11 2009 will mark two years after the Highs were made in 07.

October is a cruel month for markets anyway. A major Fibonacci trend is also approaching.

Watch the trend line from October 2007 AND the Fib retracement! While the trend may not follow down, it is something to pay close attention to!

This video also concurs with HOYE about major Fib retracement on the way!

Video at: http://broadcast.ino.com/education/sp500twoforces/

The New Normal

Contributed by Wave Rider

Bond King, Bill Gross of PIMCO has set out a pretty good glimpse of the NEW NORMAL in his September market statement. For Investors, it will be tricky because it IS a NEW normal that we must learn to navigate. Interim trading will be probably be the safer thing to do as the new normal evolves:

As of now, PIMCO observes that the highest probabilities favor the following strategic conclusions:

1. Global policy rates will remain low for extended periods of time.
2. The extent and duration of quantitative easing, term financing and fiscal stimulation efforts are keys to future investment returns across a multitude of asset categories, both domestically and globally.
3. Investors should continue to anticipate and, if necessary, shake hands with government policies, utilizing leverage and/or guarantees to their benefit.
4. Asia and Asian-connected economies (Australia, Brazil) will dominate future global growth.
5. The dollar is vulnerable on a long-term basis.

Entire article found here: http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2009/Gross+Sept+On+the+Course+to+a+New+Normal.htm

Shaza’s Sunday Podcast:

Time to change sectors?

OK, Technical Analysis groupies, here he is...my Favourite TA guy, Dave Skarica (Not to mention he is the best looking Techie around too!)

Charts include Nat Gas, S&P, Oil, Crude, Airlines, Gold and more

http://www.howestreet.com/audio/daveskarica_17092009.mp3

Charts:

http://www.howestreet.com/audio/September172009.pdf

Someone shared a great post

Shaza’s Podcast of the Day:

Inflation=Loss of Liberty!

Mark Twain sure hit the nail on the head when he said history rhymes! Today’s podcast is in the form of a history lesson from Mises.org...that well esteemed Austrian Economic site! As you listen to this historical speech about the destruction tof The Roman Empire and the preceding bad monetary policy which destroyed the Republic, you will have your jaw dropping at a face pace! It is almost a mirror of 2009! The story of Gold in this tale is a great yarn as well! Enjoy and Learn, dear podcasters!

Inflation and the Fall of the Roman Empire

Mises Daily by Joseph R. Peden

http://mises.org/MultiMedia/mp3/MoneyandGovernment84/01_1984_Peden.mp3

Goldman May Earn $2.3 Billion In 3Q - Barclays Capital

Let's just turn the earth over the Goldman Sachs and let them run it. Stock always rises and they always make money. it's a win win in my opinion.

By Alistair Barr
Goldman Sachs Group Inc. (GS) may post a $2.3 billion third-quarter profit as the investment bank benefits from the rebound in equity markets in recent months, Barclays Capital analyst Roger Freeman said Friday.
The Standard & Poor's 500 index has jumped more than 15% so far in the third quarter, while the broader MSCI World Index has gained even more. That should boost the value of some of the investments Goldman has made with its own money, known as principal investments, Freeman said.
Goldman owns a stake in Industrial & Commercial Bank of China (ICBAF), which has gained more than 20% during the third quarter. That should generate a gain of roughly $500 million, or 20 cents a share, for Goldman in the period, Freeman estimated.
Other gains from Goldman's principal investments in equities could boost quarterly income by $800 million in the third quarter, the analyst added in a note to investors.
Freeman raised his overall earnings forecast for Goldman's third quarter to $4.50 a share from $3.90 a share. That's roughly $2.3 billion in quarterly profit. The average analyst polled by Thomson Reuters expects the investment bank to make $3.73 a share.
During the second quarter, Goldman generated record profit of $3.44 billion as the firm took more risks while rivals were still recovering from the financial crisis.
Despite a few major deal announcements recently, mergers and acquisitions, where Goldman is a leading advisor, remain in the doldrums. Freeman expects the firm to generate $294 million in revenue from M&A advice, down from the second quarter and off more than 50% from a year earlier.
Goldman may also collect a less money from helping companies raise new capital selling equity during the third quarter. Freeman expects the firm to report $258 million in equity-underwriting fees for the period. That's down from $736 million in the second quarter, when Goldman was a leading underwriter for banks looking to boost capital in the wake of the financial crisis.
Goldman shares rose 0.8% to $182.86 during afternoon trading on Friday. The stock is up more than 115% so far this year and touched $183 Thursday, the highest level since August 2008.

http://online.wsj.com/article/BT-CO-20090918-709938.html

Most U.S. Stocks Fall on Valuations, FedEx, Oracle Sales

Went to all cash a little too late today. STEC crashed based on a new company entering the field. Had to watch as it closed around 39.00 opened at 36.00 and went waterfalling breaking all support. Fortunately I only had 75 shares so no fortunes were lost. Just a little pride.

By Rita Nazareth
Sept. 17 (Bloomberg) -- Most U.S. stocks fell, pulling the Standard & Poor’s 500 Index down from 11-month highs, on concern the market’s recent rally outpaced prospects for earnings growth and as FedEx Corp. and Oracle Corp. reported sales that missed analyst estimates.
FedEx and Oracle slid at least 2.9 percent, while Chesapeake Energy Corp. led energy shares lower as natural gas tumbled. The Standard & Poor’s 500 Index retreated for just the second time in 10 days after a six-month rally left the benchmark for U.S. stocks trading at the most expensive level compared with earnings in five years.
“We’re in rarefied air here,” said Peter Kenny, managing director in institutional sales at Knight Equity Markets in Jersey City, New Jersey. “We’ve had lots of good economic news, lots of stocks that have moved very dramatically. We need a breather here.”

Full Article here:http://www.bloomberg.com/apps/news?pid=20601103&sid=a65usFPgAfGA

What happened to STEC?

STEC Shares Drop On Competition Concerns, Lowered Price Target

http://online.wsj.com/article/BT-CO-20090917-711138.html

Housing Tsunami's Second Wave

Attached is my latest article "The Housing Tsunami's Second Wave". All the best! (It also appears on our web site www.sfgroup.org.

Richard Benson

Benson's Economic & Market Trends

www.sfgroup.org

BENSON’S ECONOMIC & MARKET TRENDS

September 16, 2009

The Housing Tsunami’s Second Wave

Written and published by Richard Benson, www.sfgroup.org

Spokesmen for the Obama Administration and the Wall Street establishment refer to the

slight up tic in lower-priced housing prices and existing home sales as a positive sign

that we’re close to a bottom. Why is it, then, that housing prices in the mid to high-end

range are still crashing? Indeed, if you close your eyes and listen to the happy talk, you

could be swayed into believing that the massive credit losses from housing are coming

to an end and economic recovery is finally here. But before singing the chorus to

“happy days are here again”, you’ll need to open your eyes and take a look at some

facts and their relationship to mortgage defaults.

The first wave of the mortgage credit tsunami (which actually began around 2005 when

loan underwriting started to unravel) was caused by hundreds of billions of sub-prime

mortgages that defaulted. These loans were made to unqualified borrowers who

couldn’t really afford the monthly payments, even if they had a job at the time the loan

was made. Because there was so little warning of the approaching tsunami, it took a

few more years for the storm to develop but when it did, it bankrupted Bear Stearns

and Lehman Brothers and caused the nationalization of Fannie Mae, Freddie Mac, GM

and Chrysler. Moreover, the fall in housing prices and the end of consumer refinancing

kicked the legs out from under consumer spending, fueling unemployment and a now

grim job market. Unfortunately for all, the sub-prime disaster was not the end of the

credit crisis in home mortgages, but just the first wave.

The next tidal wave of losses on home mortgages is testament to a failed housing

experiment designed by the Federal Reserve under the false pretense of home

ownership. In past years, mortgages were issued to responsible homeowners who took

pride in home ownership and paid their mortgage on time. But when so many risky

mortgage products, such as option ARMS, interest-only loans, cash out REFI’s, no

money down, etc., became available to practically anyone looking to buy a house,

regardless of income, these products became the rage (a 20 percent down payment to

bind an owner to a property was so yesterday) and home equity literally vanished.

The assumption that people will continue paying a mortgage without an equity stake in

a property worth less than they paid was a false hope. Mortgage losses from sub-prime

loans have now spread to Alt-A, Option ARM, and standard prime mortgages.

Practically every town, city, and state has been affected in some way by the 16 million

homeowners living in homes with negative equity (a home worth less than the

mortgage). Buyers of property who experimented and gambled with other people’s

money have been caught up in an American Dream that has now become their worst

nightmare.

Analysts at Deutsch Bank have forecasted that the 30 percent of underwater mortgages

today could rise to 48 percent by 2011, so you won’t have to look too far to see what will

happen to foreclosures and mortgage losses when the number rises to 20 million

people. A study done on $1.7 trillion mortgages by Fitch Ratings lays out the cold facts

in black and white on how people treat their mortgages:

From 2000 through 2006 when homeowners actually had equity in their homes,

and prices were rising, mortgages were paid on time. In this time frame, the

mortgage “cure rate” was 19.4 percent on sub-prime loans, 30.2 percent on Alt–

A loans, and 45 percent on standard prime loans.

In 2009, when housing prices had crashed and home mortgages were under water,

the “cure rate” for prime loans is a pathetic 6.6 percent (barely above the “cure

rates of sub-prime at 5.3 percent, and Alt-A at 4.3 percent). No wonder over 50

percent of foreclosures are now on prime mortgages!

The plan by Fannie Mae & and Freddie Mac to refinance loans up to 125 percent LTV is

a failure. Very few underwater homeowners are falling for the loan modification

government scheme. Even the FHA, which is now making 25 percent or more of all

new home loans and will take as little as 3.5 percent as a down payment, has seen late

and foreclosed loans jump from about 5 percent last year, to 8 percent today. FHA

borrowers generally have lower credit scores, wages, and job skills. Since initial

unemployment claims are still averaging 550,000 a week, many of these FHA borrowers

will lose their jobs, causing an FHA loan default rate of well over 10 percent.

In today’s world, homeowners motivated by cold hard economics and common sense

are not stupid. When you don’t have any real equity in your house or are underwater

and out of work, it’s time to mail the house keys back to the government or the bank!

Foreclosures are picking up not only because mortgage holders are walking away, but

when many people stop paying their mortgage, they also stop paying their property

taxes. Local governments everywhere are strapped for cash and are willing to quickly

sell tax liens on properties with delinquent taxes due. The buyer of a tax lien has rights

to the property that come before that of the mortgage holder so if the mortgage holder

doesn’t pay the tax lien, they could be wiped out when the holder of the tax lien files to

get clear title of the property.

So how big is the next wave in the housing mortgage disaster? Currently, one out of

eight mortgages is in foreclosure or paying late, and with unemployment averaging

over 9 percent for 2009 and 2010 and peaking in 2011, it’s likely one in five mortgages

could ultimately default. Moreover, we have seen that less than 7 percent of those

mortgages that are late will get cured and stay out of foreclosure. Over the last six

months, notices of home foreclosures have been running about 350,000 a month, which

is over 4 million a year. A lot of homes are headed to the auction block with their

mortgages headed for the shredder.

For mortgage losses we should recognize that prime mortgages on average are

significantly larger than sub-prime, and it only stands to reason that the larger the

house and mortgage, the bigger the loss. With over 50 percent of mortgages failing

coming from prime loans, bigger loan losses lie ahead. The total losses to come is

anyone’s guess, but the $11 trillion in outstanding home mortgages could easily

produce over $2 trillion in defaulted mortgages, and another $600 billion of credit

losses! So, until this wave has crashed on the shore, I would recommend staying away

from the water!

China Encourages Citizens to Buy Gold and Silver

A report suggests that the Chinese government is pushing the general public into buying gold and silver bullion, which could have a dramatic effect on the markets.

Author: Lawrence Williams
Posted: Thursday , 03 Sep 2009

LONDON -

We are indebted again to Paul Mylchreest’s Thunder Road Report for news that will bring big smiles to gold and silver investors everywhere. Apparently China is pushing the idea of buying gold and silver for investment purposes to the general population in the way that Western television sells soap powder. If 1.3 billion Chinese citizens start buying gold and silver, even in tiny quantities, imagine what that will do to the market!

The report notes that China’s Central Television, the main state-owned television company, has run a news programme letting the public know how easy it is to buy precious metals as an investment. On silver investment the announcer is quoted as saying ” China has introduced its first ever investment opportunity for silver bullion. The bars are available in 500g, 1kg, 2kg and 5kg with a purity of 99.9%. Figures show that gold was fifty times more expensive than silver in 2007, but now that figure has reached over seventy times. Analysts say that silver has been undervalued in recent years. They add that the metal is the right investment for individual investors and could be a good way to cash in.”

What appears to have happened in China is a total relaxation of strictures on holding precious metals by the individual with the government pushing gold and silver as an investment option, seemingly at every opportunity. This is a far cry from the situation only a few years ago where the distribution of gold and silver was strictly controlled. Now, the Thunder Road Report notes that every bank will sell gold and silver bullion bars in four different sizes to individuals and gold related investments are said to be soaring in popularity.

Around a year ago, Leyshon Resources managing director, Paul Atherley, in an investor presentation in London – and no doubt delivered elsewhere in the world too – commented that some employees at the company’s gold mining project in northern China would, on pay day, go to the local bank and buy a small gold bar as an investment and wealth protector. To an extent we put this down at the time to mining company hype – but this seems to be exactly the same phenomenon noted by Thunder Road. The Chinese are being converted from being the lowest per capita gold consumers in the world to a nation of small precious metals investors. Now, by next year, Chinese consumption of gold is likely to exceed that of India, which has been for years the world’s biggest gold market. And one suspects that the potential for gold purchasing by individuals is only in its earliest stages. As more and more Chinese move into the cities and individual wealth grows, this trend is only likely to accelerate.

Paul ends the piece on Chinese gold and silver potential with the following comment: “Simply put, the Chinese government is trying to trigger a national gold craze…and it’s working. The Chinese public now has gold trading platforms on steroids…. …Also, for the first time in history, Chinese investors can even trade gold abroad (in London) with the swipe of a ‘Lucky Gold’ card. I can’t even get Bank of America to open a foreign currency account.”

This may be an overstatement of the case from a precious metals bull – or it may not! Certainly if China is indeed pushing the public to buy gold then there may well be a hidden agenda here. It’s unlikely they are doing it and will suddenly pull the rug out from under millions of investors. A cynic (or a raging gold bull) would suggest that this will precede a move to switch a good proportion of the country’s reserves into gold which would have a huge effect on the global gold price and could prove disastrous for the dollar. Maybe it’s not in China’s interests to drive the dollar down too much until it has managed to divest itself of the huge dollar overhang (see the article on Chinese Sovereign Wealth Funds we published yesterday – Chinese sovereign wealth fund dumping dollars for strategic investments like gold ). The country may well already be, of course, surreptitiously building its gold reserves without reporting the build-up.

If the Chinese are indeed beginning to buy gold and silver as the quoted report suggests then this has to be a strong signal that prices are going to rise, and perhaps rise dramatically, in the relatively near future. We await comment from other China watchers for confirmation of the gold and silver buying spree, but with global gold production at best flat and probably in decline, even a small increase in Chinese buying could have a substantial impact on gold and silver prices.

Shaza’s Podcast...well, WEBINAR anyway!

This is a pre-recorded Webinar with slides that look at participating in the market and managing risk. This is aimed at INVESTORS as opposed to day trading. Active investors might like this seminar as it makes you really look at your competencies!

IT is an Australian Stock Exchange Presentation. You will need to set aside about 40 minutes and put on your Aussie Ears!

http://boardroom-pc.streamguys.us/files/ASX/ASX20090915/

GOLD A DUD DOWN UNDER! BUT HERE COMES THE USD-AUD CARRY TRADE IF INTEREST RATES TAKE A HIKE!

September 14, 2009 - 8:15AM Contributed by Shaza

Yes, that's correct. Despite all the headlines about gold closing at a record high over the weekend, it's actually down 25 per cent. All the yellow metal has done lately is recover a touch to be back where it was in November last year.

So much for the rampant gold bugs wetting themselves about chart levels and such, never mind the overtime being worked in the mini-industry that exists around promoting gold.

Gold did finish in New York at a record high of $US1006.50 an ounce – which is all very entertaining if you happen to be American or have most of your assets in US dollars or a currency more-or-less pegged to the greenback.

But if your assets are Australian dollar denominated, it doesn't really mean much at all. Our overwhelmingly American-centric media tends to ignore that.

As gold sceptics know, the yellow stuff occasionally has a day in the sun when there's fear and loathing in the financial system or when the herd decides to make gold the next candidate for a speculative bubble, but its price is mainly a reflex currency play for the US dollar.

For Americans worried about the diving greenback, there's certainly a case to be made for perhaps investing in gold – or other currencies.

(And there's one particular currency that's on the up-and-up, reflecting its "miracle economy" that also offers quite attractive interest rates – unlike gold. Watch for a carry trade out of the US into Australia, particularly with the promise of rising interest rates here.)

With all the benefit of hindsight, the smart time for Australians to buy gold was about this time last year – as long as you were also smart enough to sell in February.

The Aussie dollar was trading at over 80 US cents in mid-September and gold was worth 900-and-something Australian dollars an ounce. In February, when gold peaked at $A1546, the Aussie dollar was in the low US-60-cents range.

Yes, that would have been a nice trade – as long as the punter didn't confuse a currency game with any alleged intrinsic value of a shiny yellow metal.

In case you're wondering, the Australian dollar gold price now is just $1162. Since that February peak, gold has been a dud for Australians. Not only has its price been on a more-or-less one-way slide against our firming dollar, the opportunity cost of being in the metal as opposed to equities has been massive.

But don't try to tell hard-core bugs that – they've long been inured to Shakespeare's warning that all that glisters is not gold.

Michael Pascoe is a BusinessDay contributing editor.

Ron Paul on CNN America Morning

Posted by Edward Harrison on 14 September 2009 at 5:17 pm

Ron Paul was on CNN this morning talking about unemployment, the credit crisis, the Federal Reserve and a lot more.

COT WARNING

The COT DATA has reached an extreme which I think warrants some attention, especially if you hold gold stocks. From Bob Hoye’s Chartworks writer, Ross Clark:

Gold – COT Data Warns it is Time to be Wary

Submitted by Shaza

Chart by Ross Clark

The Commitment of Traders data (COT) is compiled each Tuesday for release on Friday.

It reports the total number of long and short positions of futures contracts held by

commercials, non-commercials and the percentages held by the largest 4 & 8 traders. For

the past ten years the commitments of speculators (non-commercials) have been in a rising trend together with the price while the commercials have made a long series of new lows (i.e. net short). This week made all-time extreme reading in each.

The data series is only available back to 1986 so we are precluded from analyzing the two biggest bull

markets; 1971 to 1974, $35 to $196 and 1976 to 1980, $103 to $875.

However, the findings of this study suggest that whatever upside action occurs in the next few weeks should be followed by a test of the breakout.

Our ( IA) technique of choice in analyzing the COT data series has been the use of a Relative

Strength Index. While the advent of ETF products has definitely impacted the size of

futures positions, the RSI oscillator continues to perform. The RSI avoids analysis of the absolute levels of the data, allowing for the evolution of positions over time by only reaching extremes when there is a push in the velocity of the trend. This week is a standout in the 23-year history of the data. The RSI on speculative positions is at

71.29. The non-commercials RSI is at 30.63.

The only weeks with an RSI of this level for non-commercials were:

· April 12, 1993; the end of a five year bear market followed by a breakout and

· small correction to the 20-week moving average.

· August 6, 1993; beginning of a 6-week decline of 16%

· January 26, 1996; one week before a top that lead to a 3-year decline of 40%

· February 25, 2000; beginning of a 1-year decline of 21%.

· May 25, 2001; followed by a 2-week decline of 11%, then sideways for nine

· weeks.

The only weeks for commercials at this level were:

· April 12, 1993; the end of a five year bear market followed by a small correction

· to the 20-week moving average.

· January 19, 1996; two weeks before a top that lead to a 3-year decline of 40%

· October 10, 1997; start of an 18% decline over 13 weeks

· May 25, 2001; 2-week decline of 11%, then sideways for nine weeks.

· September 5, 2003; topped within two weeks, then declined by 7%

ME: The report is much longer with many charts; to subscribe or take a trial contact Institutional Advisors www.institutionaladvisors.com I have subscribed for a few years and find this service mainly excellent, informative and a great market history lesson with each newsletter!

Quint Tatro at Tickerville now has a Radio program!

QUINT’S RADIO PROGRAM IS ALSO ON iTunes USA Site under Podcasts, Tape Talk Radio:Blog Talk Radio

Quint: “As many of you know I recently kicked off a radio show, broadcast each Sunday at 1:05pm EST.

I am going to be opening up the show to callers and would LOVE to hear from you. Do you have a question about a stock, a question about a trade, a question about psychology or maybe you just want to kick around the argument of inflation vs. deflation. (That's the 2pm show ;-) )

Whether you are listening via the web-stream HERE or not, you can call me toll free at 1-877-777-0590 between 1:05 and 2:00pm EST.

My goal for this show is simple. To continue educating the masses on how to really make money in the markets. I believe this show, in this format has fantastic potential, but it starts with YOU. Please don't be shy, pick up that phone and call me. (877) 777-0590”

Queenbee here and I think this is very exciting and I want to encourage everyone to take a listen. I will try to participate as well, but this will be hardest on our Aussie friends from the other side of the world as it will be 1am-3am when they tune in.

The Darvas Story... Told By Darvas Himself.

I've mentioned this theory several times and wanted to post it. Take it FWIW. If you get nothing else from this, it is a good story and you can read it in a couple of hours. Shaza, a friend from Canada and I are trying to use Darvas and VV to chart a path through today's choppy waters. This is how I found STEC.

I would like to personally thank Whirlingdervish (who found us from Mish) for turning me on to this concept. When I told him about the stock he immediately went out and bought it and advised serveral well connected friends onto it. I hope to share some of our findings soon. We are still working on them. I am not a financial advisor so trade at your own risk. This goes for any advice that you may glean from Shaza's podcasts or any of those in the comment section.

http://www.nicolasdarvas.org/start.php

Shaza’s Podcast of the Day:

A BULL-ISH END TO A WILD WEEK!

The more I listen to Dave Skarica the more I respect this guy and his charts. It is hard to listen to Technical Analysts while trying to visualise their charts! Dave supplies them, if you click on ‘Dave’s Charts’ at the Howestreet site.

His calls have been pretty similar to The Market Oracle’s general market calls. He was an early Bull and has played the tape really well!

Enjoy, and let us know what you think of his charting! Cheers.

http://www.howestreet.com/audio/daveskarica_11092009.mp3

Here are his charts.

http://www.howestreet.com/audio/september112009howestreet.pdf

Here are some reading highlights to start your weekend too:

Signs of Approaching Decline, by Jesse’s Cafe

http://jessescrossroadscafe.blogspot.com/2009/09/signs-of-approaching-decline-in-us.html

The Next Financial Crisis: It's coming--and we just made it worse, by Simon Johnson:

http://www.tnr.com/article/economy/the-next-financial-crisis

Moral of the Day:

"WHAT WILL FINALLY DESTROY US IS NOT COMMUNISM OR FASCISM, BUT MAN ACTING LIKE GOD." MALCOLM MUGGERIDGE

SPEAKING OF GOLD....Soros puts his bet on Dr. COPPER and MISS MOLY

Submitted by Shaza from Eurkea Report

Copper feels a Soros lift

By Tim Treadgold

September 9, 2009

PORTFOLIO POINT: His small stake in a PNG copper explorer soared in value in a matter of days, and has attracted other investors into the sector.

George Soros, the multi-billionaire speculator, has a habit of changing the rules of the game. In 1992 he effectively “broke” the Bank of England, and last week he placed a modest (by his standards) $10 million bet, which just might signal the official restart of the resources boom.

The key to what Soros has done – acquiring a 19.9% stake in the ASX-listed Papua New Guinea copper explorer Marengo Mining – was not in the size of the investment, it was status of Marengo, an explorer with a big, but undeveloped, resource.

In effect, the investment says Soros believes it’s time to buy on the ground floor of what might become one of the “next generation” of world-class mines, a repeat of an investment strategy popular at the height of the boom three years ago.

If Soros has bet wisely – and he has a potent track record, which includes his famous short-selling of $US10 billion in sterling to force a devaluation of the British currency – then he can expect to recoup a profit 10 or 20 times his outlay, made through Quantum Partners and the Sentient Group.

If Marengo fails to deliver on the promise of its Yandera copper and molybdenum project, his exposure is limited to the original outlay.

But, even if Soros doesn’t get his $50 million or $100 million payday, he is already a country mile ahead because he paid 9.5¢ for his Marengo shares then watched the stock soar to 19¢ before settling to trade around 16.5¢, or a 73.5% gain in a matter of days.

Interesting as that sounds, the real story is what happened elsewhere in the resources sector, where a conga line of companies in the same “early-stage explorer” category saw their share prices rise sharply as speculators followed Soros into a sector of the market totally ignored since last year’s stockmarket crash.

Among copper stocks, the reaction has been remarkable, with existing producers of the metal moving modestly higher or even falling, in line with a slight decline in the copper price and a rise in the Australian dollar. In contrast, those hunting for world-class ore bodies shot sharply higher.

Consider these examples. In the days after Soros placed his bet on Marengo, the share price of three established copper miners – OZ Minerals, Equinox Minerals, and Anvil Mining – did little. Equinox and Anvil rose 7¢ and 4¢ respectively between September 1 and September 4 (the Soros deal was announced on September 2), and OZ fell 2¢.

It was a totally different picture among the copper explorers, where three companies still busily drilling and planning to start mines hit 12-month share price highs.

Citadel Resources, which is planning a copper and gold mine in Saudi Arabia, rose from 32¢ to 37¢ between September 1 and 4, then up again to a fresh 12-month high of 41¢ on Tuesday.

Rex Minerals, which has made what looks to be a significant copper discovery on the Yorke Peninsula in South Australia, rose from $1.85 to $2.01 and then to its 12-month high of $2.35 today.

CuDeco, which was a speculator’s favourite two years ago when first announcing its Rocklands copper discovery in Queensland, returned to favour with a rise last week from $4.71 to a 12-month high of $5.73, before easing back to $5.59 on Tuesday.

Barrick Sees $5.6 Billion Charge to End Gold Hedges

A similar article posted over at Jesse's Cafe.

I just want this to be more than a needle in a haystack. I think it is important for gold.

By Edmond Lococo and Christopher Donville


Sept. 8 (Bloomberg) -- Barrick Gold Corp., the world’s largest gold producer, plans to record $5.6 billion in third- quarter costs to eliminate fixed-price contracts as the company bets that prices for the precious metal will climb.

As of yesterday, the company had gold sales contracts for 9.5 million ounces of gold, which had a mark-to-market position of negative $5.6 billion, Toronto-based Barrick said today in a statement. To fund some of the costs, Barrick agreed to sell 81.2 million shares at a price of $36.95 per share for proceeds of $3 billion, the company said.

Barrick has “an increasingly positive outlook on the gold price,” the company said in the statement. Gold today rose to the highest price since March 2008, topping $1,000 an ounce, as the slumping dollar and inflation concerns boosted the metal’s appeal to investors.

“If you believe the U.S. dollar is going to weaken, this makes a lot of sense for Barrick,” Andrew C. Parkinson, who helps manage the equivalent of $19 million at Van Arbor Asset Management in Vancouver, said today in a phone interview. “To close all your hedges is really taking a strong, one-sided position.”

Gold today reached as high as $1,009.70 in New York, within 3 percent of the record $1,033.90 in March 2008. Gold futures for December delivery rose $3.10, or 0.3 percent, to $999.80 on the Comex division of the New York Mercantile Exchange. The metal has climbed 13 percent this year.

‘Confidence’

“The fact that the world’s largest gold producer is shedding some of it’s hedging contracts displays a degree of confidence that is found primarily in speculators, not producers looking to hedge,” said Ralph Preston, an analyst at Heritage West Futures Inc. in San Diego. “This is extremely bullish for gold.”

About $1.9 billion of the proceeds from Barrick’s share sale will be used to eliminate all fixed-price gold contracts in the next 12 months, and $1 billion will eliminate a portion of its floating spot-price contracts, the company said.

Barrick’s effort to protect itself against a drop in bullion prices has led to clashes with investors as metal prices gained. In March, the company said it agreed to pay $24 million to settle a lawsuit in which investors claimed the company misled them by saying the hedging program wouldn’t hurt profits.

For the rest of the article go here: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a_Rt2xgQeWvY

From Jesse's Cafe:

Barrick Gold and their bullion bank partner J.P. Morgan were the target of lawsuits by the gold bulls, most recently Blanchard and Company, for price manipulation through the use of forward sales in their hedge book. The contention was that the selling was being used to manipulate the price of gold.

Barrick's initial defense was that if they were acting in conjunction with the central banks, they were therefore immune from prosecution since the central banks are immune from prosecution. Details of that story are here. The public document that Blanchard had put forward was shocking in its implications indeed, and can be seen here.