by Nicholas Larkin, Phoebe Sedgman

May 15 (Bloomberg) — Gold is seen gaining in London on speculation a drop to the lowest level this year will spur investors to buy the metal. Other precious metals advanced.

Bullion erased its gains for this year yesterday as concern Europe’s debt crisis is deepening boosted the dollar and cut gold’s appeal as an alternative asset. The greenback reached the highest since January versus the euro today amid mounting doubts that Greece can avoid an exit as an alternative asset. The greenback reached the highest since January versus the euro today amid mounting doubts that Greece can avoid an exit from the euro bloc. Gold’s 14-day relative-strength index is at 25.1. A level of 30 indicates to some analysts who study such charts that a rebound may be due.

“Given the scale of liquidation carried out in recent sessions and oversold signals, players may be looking to carry-out some bargain hunting and rebuild their exposure,” James Moore, an analyst at TheBullionDesk.com in London, said today in a report. Still, investors “are likely to be nervous to further euro zone issues which could easily spark another bout of cash generation.”

Bullion for immediate delivery rose 0.1 percent to $1,558.91 an ounce by 9:05 a.m. in London. Prices earlier today dropped to 1,547.75, the lowest since Dec. 30. June-delivery futures were 0.2 percent lower at $1,558.60 on the Comex in New York.

The metal advanced the previous 11 years. Holdings in bullion-backed ETPs are at 2,382.40 metric tons, about 1.2 percent below the March 13 record, data compiled by Bloomberg show. Gold reached an all-time high of $1,921.15 in September.

Greece’s president will call a meeting of all parliamentary party leaders except for an ultra-nationalist part today to make the case for a government of prominent non-politicians.

Greek Meeting

Alexis Tsipras, who heads Greece’s anti-bailout Syriza party and rejected a unity government following last week’s inconclusive election, boycotted yesterday’s meeting called by President Karolos Papoulias. Tsipras will attend today’s meeting, state-run NET TV reported. Greece may face new national elections unless a government is formed.

Silver for immediate delivery rose 0.7 percent to $28.3425 an ounce, after sliding to $27.9525, the lowest price since Jan. 3. Palladium gained 1.8 percent to $601.25 an ounce. It reached $590.50 earlier today, matching yesterday’s lowest level since November.

Platinum increased 0.7 percent to $1,448.25 an ounce. It slipped to $1,434.88 earlier today, the lowest level since Jan. 10, and is the best performing precious metal this year with a gain of 3.4 percent.

Posted by Street Authority – November 1, 2011

As of Oct. 27, gold spot prices were hovering around $1,747 per ounce. Platinum, on the other hand, was selling for about 1,636 an ounce.

This means it takes just 0.93 ounces of gold to buy an ounce of platinum. Or, from another perspective, you could trade in one ounce of gold for 1.07 ounces of platinum.

It’s not so much the size of the gold premium that matters — the very existence of a premium is highly unusual. In fact, gold hasn’t been worth more than platinum since 2008. Before that, you have to go back to January 1992 to see the last time the yellow metal traded this far above parity to the white one.

In other words, platinum prices relative to gold are at their cheapest level in nearly 20 years.
This has been a one-sided relationship throughout the years. Platinum almost always has the upper hand over gold, in terms of price. That’s to be expected, considering platinum is about 30 times rarer. Annual platinum production is just a tiny sliver compared with that of gold.

That’s what makes this such an odd occurrence.

The last time it happened was December 2008, when gold was soaring as a safe haven, just as weak auto sales were sapping demand for platinum (which is commonly used in catalytic converters). In that particular case, platinum retook gold just a few days later and went on to post a powerful 130%-plus gain during the next two years.

This time around, the extreme ratio has persisted for a couple months. It’s not so much because platinum prices have nosedived (they’re down about 9% for the year), but rather because gold is in the 11th year of a bull market and continues to soar. Prices have climbed another 25% since the start of the year.

On Jan. 1, it took 1.25 ounces of gold to buy one ounce of platinum. That exchange rate has now slipped all the way below 1:1. This is more than just a statistical aberration…

As you can see from the chart below, we’ve been in unprecedented territory.

Platinum has traded about 64% above gold on average during the past decade. Based on this, and with gold at $1,747 an ounce, you might expect platinum to have surged above $2,800 an ounce. Instead, it has sunk below $1,650.

This means either gold is too expensive, or platinum is too cheap. Personally, I think it’s the latter. Speculators might consider this an opportune time to enter a pair trade by going long platinum and short gold. This would remove any outside influences and just capture the performance of one metal against the other.

This strategy has a high probability of success because there’s no reason for platinum to be below gold. But I’m not a trader, nor am I betting against gold. I think the better solution for long-term investors is to simply overweight platinum — and not just because a chart tells them to.

Action to Take –> Platinum group metals (PGMs) are irreplaceable and will remain in high demand. Auto production is expected to rise, which should boost demand. There are looming strike threats in South Africa, home to 80% of the world’s supply. As my colleague David Sterman recently pointed out, the world’s other major producer, Russia, has warned that output will begin falling.

You won’t find any publicly-traded U.S. platinum companies. But First Trust has conveniently packaged all of the world’s top suppliers in one place. For a modest annual cost of just 0.70%, the First Trust ISE Global Platinum fund (Nasdaq: PLTM) offers a diverse global basket of 24 major producers, including well-positioned leaders such as Impala Platinum and Anglo Platinum.

The exchange-traded fund (ETF) was punished during the selloff and was down nearly 50% for the year before a strong rally in October. But I still think this in an opportune entry point for long-term investors.

(source: www.streetauthority.com)

Posted by Focus News Agency – March 14, 2012

Washington. The US, Japan and the European Union have filed a case against China at the World Trade Organization, challenging its restrictions on rare earth exports, the BBC informs.

US President Barack Obama accused China of breaking agreed trade rules as he announced the case at the White House.
Beijing has set quotas for exports of rare earths, which are critical to the manufacture of high-tech products from hybrid cars to flat-screen TVs.

It is the first WTO case to be filed jointly by the US, EU and Japan.

They argue that by limiting exports, China, which produces more than 95% of the world’s rare earth metals, has pushed up prices.

The co-ordinated complaints are the first step in a process that could ultimately lead to sanctions against China.

“We’ve got to take control of our energy future and we cannot let that energy industry take root in some other country because they were allowed to break the rules,” Mr Obama said in Tuesday’s Rose Garden press conference.

“If China would simply let the market work on its own we would have no objections. But their policies currently are preventing that from happening. And they go against the very rules that China agreed to follow.”

In the press conference, Mr Obama also said his new trade enforcement unit – which he established last month, with China the primary target – was ramping up its operations.

“When it is necessary, I will take action if our workers and our businesses are being subjected to unfair practices,” Mr Obama added.

Source: (www.focus-fen.net)

Posted by Wealth Wire – Wednesday, January 4th, 2012

I am constantly barraged with emails from gold bugs who passionately argue that their beloved metal is trading at a tiny fraction of its true value, and that the barbaric relic is really worth $5,000, $10,000, or even $50,000 an ounce (GLD). They claim the move in the yellow metal we are seeing is only the beginning of a 30 fold rise in prices similar to what we saw from 1972 to 1979, when it leapt from $32 to $950.

So when the chart below popped up in my in-box showing the gold backing of the US monetary base, I felt obligated to pass it on to you to illustrate one of the intellectual arguments these people are using. To match the 1936 monetary value peak, when the monetary base was collapsing, and the double top in 1979 when gold futures first tickled $950, this precious metal has to increase in value by eight times, or to $9,600 an ounce.

However, the seven year spike up in prices we saw in the seventies was triggered by a number of one off events that may never be repeated.

Some 40 years of demand was unleashed when Richard Nixon took the US off the gold standard and decriminalized private ownership in 1972. Inflation then peaked around 20%. Newly enriched sellers of oil had a strong historical affinity with gold. South Africa, the world’s largest gold producer, was then a boycotted international pariah and teetering on the edge of disaster. We are nowhere near the same geopolitical neighborhood today.

Source: (www.wealthwire.com)

by Matt Walcoff – 4 Jan 2012

Canadian stocks (SPTSX) rose the most since Nov. 30 as oil and metals gained after indexes of U.S., U.K. and Chinese manufacturing surpassed most economist forecasts and German unemployment fell to a 20-year low.

Suncor Energy Inc. (SU), Canada’s largest oil and gas producer, increased 5.5 percent as crude futures advanced after Iran said it produced its first nuclear fuel rod. Barrick Gold Corp. (ABX), the world’s biggest gold producer, climbed 4.5 percent as the U.S. Dollar Index declined the most in a month. Potash Corp. of Saskatchewan Inc., the world’s biggest fertilizer producer by market value, rallied 5.1 percent after an analyst at Susquehanna Financial Group raised his rating (POT) on the shares.

The Standard & Poor’s/TSX Composite Index (SPTSX) rose 253.34 points, or 2.1 percent, to 12,208.43, the highest close since Nov. 15.

“Manufacturing globally looks like it’s picking up,”Jennifer Radman, a money manager at Caldwell Investment Management Ltd. in Toronto, said in a telephone interview. The firm oversees about C$1 billion ($991 million). “As we get more comfortable the world isn’t going to fall apart, investors will increasingly be tolerant of taking on more risk in their portfolios.”

Canada’s benchmark index retreated 11 percent (SPTSX) in 2011, led by raw-materials and energy producers, on concern the European debt crisis will hamper global growth. The two industries make up 47 percent of Canadian stocks (SPTSX) by market value, according to Bloomberg data.

Source: (www.bloomberg.com)

from The Wall Street Journal:

Tensions are growing in Iraq over plans by some predominantly Sunni provinces to declare greater autonomy from the central government in Baghdad.

The provincial council of Diyala, a volatile area northeast of Baghdad and bordering Iran with a patchwork of ethnic and sectarian groups, said Tuesday that it was moving to hold a referendum to declare itself semiautonomous.

The timing couldn’t be more planned… On Dec. 31, 2011, U.S. troops will leave Iraq. It’s no surprise that the internal divisions between Sunni and Shiites are starting to widen.

Within Iraq, these tensions are one thing, but they won’t remain localized… Especially when Iran has so much to gain by backing its Shiite ideals.

And this has even bigger ramifications outside of stability within Iraq.

You see, Iran and Saudi Arabia are vying for control of the Middle East, and the two powers are very different. Iran is predominantly Shiite, while the powers that rule Saudi Arabia are Sunni. Iran has been encouraging Saudi Arabia’s Shiite population to turn against the State.

Most of these Shiites live in the northeastern part of the country – right where the biggest oil fields in the world are.

And we’re set to leave the region in 12 days.

The announcement in Iraq set off a wave of protests and demonstrations in Diyala and Baquba. Diyala had been the center of a lot of tensions, and was even controlled in part by militants with al-Qaida connections.

Here’s the interesting part. The demonstrations were composed of both Shiites and Sunnis who were against the idea of semi-autonomy. How this will play out across the country remains to be seen, but those sect tensions aren’t going anywhere.

And the stage is being set for an even bigger confrontation.

Both Iran and Saudi Arabia have a lot of heft. Six months ago, Iran, and a couple other OPEC producers blocked production decisions at its meeting in Vienna. The internal struggles were so bad that some insiders didn’t think OPEC would survive.

They have, for now. And Saudi Arabia has appeared to take charge in OPEC’s latest meeting, where production quotas were decided: 30 million barrels of oil a day.

But Iran is not impotent.

Indeed just last week Iran threatened to block the strategic Strait of Hormuz. About 15.5 millions barrels of oil a day flow through the Strait. That’s about one sixth of global demand, making the Strait Hormuz the most important oil shipping route in the world.

To be clear…Iranian officials said its military will conduct a training drill to practice closing the Strait.

This mere threat sent oil prices soaring $3 back above $100 a barrel.

The real thing could be much worse. And the action will set off a number of counter measures that will end up in a devastating war.

Iran has already said it will strike Israel and other U.S. interests in the Gulf if it is attacked. The other “interests” include oil and Saudi Arabia.

Think $100 is too expensive? OPEC doesn’t. They think it’s “reasonable.” That means that they won’t lift a finger if oil prices climb because of geopolitical tension between Iran and Saudi Arabia. Once the U.S. leaves, this age-old conflict will flare up again.

And oil prices will be caught in the middle.

Oil at $150 is not out of the question for 2012.

Posted by Wealth Wire – Tuesday, December 13th, 2011

What do you get when you mix negative real interest rates with stimulative money supply efforts by global central banks?

An exceptionally potent formula for higher gold prices that could send gold to the unimaginable level of $10,000 an ounce. Negative real interest rates and strong money supply growth are two key factors of what I refer to as the Fear Trade.

Negative real interest rates occur when the inflationary rate, or CPI, is greater than the current interest rate. A quick account of the G-7 and E-7 countries shows that the majority have negative real interest rates.

Across the developed G-7 countries, British citizens are the worst off with real interest rates in the U.K. sitting at negative 4.5 percent. U.S investors aren’t doing much better with rates at negative 3.25 percent and the Fed has all but guaranteed rates will remain there. Only Japan has a positive real interest rate among the G-7 and that rate is barely above zero.

Conversely, the most populous nations making up the E-7 have mostly positive real interest rates. However, the grouping’s grandest economic powerhouses, China and India, have negative real interest rates sitting around negative 2 percent.

Simply put, investors in those countries who have parked their savings in cash and low-yielding investments, such as Treasury bills and money market accounts in the U.S., are actually losing money due to inflation.

That can be tough for any investor, but when you’re the central bank of a country with millions of dollars in reserves, it can be catastrophic. This is why central banks around the globe have sought protection by diversifying their foreign-exchange reserves into gold bullion this year.

VTB Capital’s Andrey Kryuchenkov told The Wall Street Journal this week that, “Central banks are diversifying, and it has intensified to a rate that nobody had expected.” Latest estimates predict global central banks will purchase between 475-500 tons of gold in 2011.

This amount of capital flowing into gold has the potential to push prices up a level in 2012. John Mendelson from ISI Group sees gold prices reaching $2,200 an ounce during the first six months of 2012.

While real interest rates look to remain in the red for the foreseeable future, many of these same countries are printing record amounts of “green” with accommodative monetary policies.

U.S. Global’s director of research John Derrick says central banks around the world have focused their attention on stimulating growth. Beginning with Brazil’s interest rate cut in late August through the European Central Banks (ECB) cut early December, there have been 40 easing moves by global central banks, according to ISI Group.

John says this also means we will likely see more quantitative easing in 2012. The Bank of England has already started its quantitative easing, and many experts believe the ECB and the Federal Reserve will follow in its footsteps.

Bloomberg reports that global money supply (M2) is “set to increase the most on record in 2011.” The chart below shows the year-over-year change of global money supply has been gradually moving higher and higher since mid-2010.

The reason global central banks have shifted the printing presses into overdrive is simple: they need the money. My long-time friend Frank Giustra reminded us of this new reality in an op-ed piece for the Vancouver Sun last week. Frank writes:

The bottom line is that the money needed to bail out Europe and to fund America’s spiraling debt and future unfunded obligations is in the ten of trillions. IT DOES NOT EXIST. It has to be created by printing money in massive quantities, and despite all the rhetoric you will hear against such policies, in the end it’s the path of least resistance. Printing money is an invisible tax on savings, much easier to initiate, than, say, raising taxes or cutting back on services and entitlements.

As central banks print money and increase supply, currencies become devalued. Whereas in the recent past, one currency may be reduced in value compared with other currencies, this time there is global competitive devaluation as excess liquidity is put into the system. Historically, this excess liquidity has made its way to riskier assets, i.e. stocks and commodities.

Gold is generally a benefactor of this flight to riskier assets as many investors see it as a store of value. This chart illustrates the interconnectivity of gold and global money supply growth.

However, this image doesn’t tell the whole story. While the price of gold has followed the same upward path as money supply over the past 14 years, it hasn’t been able to keep pace with M2 growth, says the Bloomberg Precious Metal Mining Team.

In fact, if the global money supply were backed by gold, gold prices would be much higher, according to Bloomberg. The yellow line below shows how gold would be greater than $5,000 per troy ounce if just half of global money supply were backed by gold. If all of the money supply in the world were to be backed by gold, the price of one troy ounce would need to rise above $10,000.

It’s unlikely, of course, that this will happen, but it serves as a useful illustration for the disappearing value of the world’s fiat currencies.

Frank reminded readers that we have been down this path before. Frank says, “When great nations mature and over-extend themselves, they revert to the paths of least resistance: borrow and/or print money. They all did it and they all failed; this time will be no different.”

The beneficiary of this type of event has historically been gold.

*Post courtesy of Frank Holmes, CEO and Chief Investment Officer, U.S. Funds

Gold bullion and gold equities have for the most part been the best performing sectors since the Kondratiev winter got underway in 2000. Overall commodities led by gold, metals and oil have been the major strong performers.

Gold bullion is like the canary in the coal mine. When times are good, gold is likely to underperform. This was seen during the Kondratiev autumn from 1982 to 2000, when gold topped in 1980 at $850 an ounce and then collapsed to about $250 in 2001. But during periods of economic stress, as was seen during the Kondratiev summer of 1966 to 1982, gold outperforms. It is interesting to note that since the world came off the gold standard in August 1971 gold has gone up over 3,900% while the DJI has only gone up just over 1,200%.

Gold was not free trading during the Great Depression but it is interesting to note that gold was revalued up by 70% from $20.67 to $35 in 1933. Homestake Mining, the pre-eminent gold mining company during the Great Depression (now Barrick Gold ABX-TSX, NYSE), rose 56% during the same period that the Dow Jones Industrials (DJI) was falling 89%. By 1936 Homestake was up roughly 545% from September 1929 while the DJI was still down roughly 50% during the same
period.

In August 1971 US President Richard Nixon took the world off the gold standard. At the time the US$ was fully convertible into gold at a price of $35 an ounce. If the US were to back its debt today with its stated gold reserves it would require a price of almost $55,000 an ounce. In August 1971, $1,000 bought 28.5 ounces of gold. Today it would buy about 0.6 ounces.

The US$ has lost roughly 98% of its purchasing power over the past 100 years. Yet for over 200 years the purchasing power of the US$ held (with exceptions) quite steady at around 50 ounces of gold per $1,000. One exception was during the American Civil War, when the purchasing power of the US$ plunged. A decade later it had returned to roughly its previous levels. That held until the 1933 revaluation of gold.

Some might argue that the world is better off without a gold standard. Living standards have increased but so has debt. US GDP has grown roughly 1,200% since 1971 but US public debt has grown over 1,800%. For the consumer and corporations it has grown even faster. In effect debt has fuelled the growth in living standards. When the debt reaches unsustainable levels a period of deleveraging is needed in order to bring things back into balance.

As the world’s population grows (6.8 billion and counting), the strain on the world’s dwindling resources is showing and the planet is at risk due to man-made pollution. With no anchor for the world’s monetary system, hyperinflation becomes a risk as there are no constraints on the ability to print money (QE). History is abundant with the collapse of societies due to climate change and pollution, and there are more currencies that no longer exist than currently exist today. Gold as money has, however, been a constant for thousands of years.

The chart below demonstrates the loss of purchasing power of the US$ in terms of gold.

Many have said that gold has been in a bubble. Yet compared to earlier bubbles such as gold during the 1970s (up over 2,300%) and the NASDAQ during the 1990s (up over 1,000%), the current gold rise is quite orderly. From its lows in 2001 near $250, gold’s rise has been punctuated by numerous corrections. Sharp rises have been punctuated by periods of prolonged corrections. The current correction, for example, has now lasted three months. Yet during its 10-year rise gold has not once taken out the previous year’s low – not even during the fierce correction in 2008. That is a sign of a
powerful bull market and not one that has yet to move into bubble territory. A bubble is usually the last phase of the cycle. That suggests that the best for gold may be to come.

The Kondratiev winter drags on for years. Even during the Kondratiev spring, summer and autumn there are periods of contraction, but they are generally over in a few months. During the last Kondratiev autumn there were recessions or slowdowns in 1986, 1990-92, 1994 and 1998. But none were as steep as has been seen over the past ten years. US unemployment has been persistently high, while more are falling into poverty. These are signs of something much deeper and more prolonged.

Kondratiev winters in the past ranged from nine years (1835-1844) to 22 years (1874-1896). On average they have lasted 16.3 years. The current K-Wave cycle has been the longest recorded to date. The current K-Wave cycle got under way in 1949 and saw a spring (1949-66) of 17 years, a summer (1966-82) of 16 years and an autumn (1982-2000) of 18 years. If the current winter cycle were to last as long as the previous seasons in the current cycle, then it could continue until sometime between 2016 and 2018. If it were to last as long as it did during the “Long Depression of 1874-1896, it would not end until 2022.

No matter how one looks at it, the current Kondratiev winter has several years to go. Things may well get worse before they get better. The stock market could fall to new lows. Gold could soar to new highs as crisis deepens. The current solutions are band aids when what is required is a cleansing that allows the debt to be written off and deleveraged. The banking system may well go through another systemic crisis as was seen during the 2007-2009 collapse. The longer the crisis is postponed through the use of tools such as QE, the worse it might actually be when it does arrive.

The good news is that winter is followed by spring. What can’t be discerned is the precise position in the Kondratiev winter. Is it still December or has it moved into March? The best guess is that it is still in January, Kondratiev must be looking at all of this with some degree of satisfaction that his theories are alive and well.

from: David Chapman, MGI Securities Technical Scoop

How Bankers Use Partisan Politics to Cause Division Among Us

Gold and Silver Mining Stocks Offer the Best Value of Any Sector in the Stock Market By a Wide Margin

December 7th, 2011

Today, gold and silver mining stocks offer the best value by far of any sector in any stock market anywhere in the world. Due to the recent massive volatility that bankers have introduced into the PM stock sector, and the fact that commercial investment advisers worldwide have erroneously re-educated millions of people with the concept that volatility equals risk, the majority of people worldwide will miss a massive opportunity in gold and silver mining stocks over the next several years due to their misguided belief that gold and silver mining stocks cannot escape the throes of banker manipulation.

There has been much acceptance of the theory that Central Banks and bankers perpetually manipulate gold and silver spot prices through the gold/silver futures markets due to strong circumstantial, non free-market evidence such as gold/silver futures prices being significantly higher in Asian futures markets versus Western futures markets for long stretches of time as well as out-and-out flagrant behavior such as the irrational raising of initial and maintenance margins on silver futures five times in nine working days into falling prices instead of into rising prices. For those not aware of the multitude of schemes Central Banks execute to suppress gold and silver futures prices, please refer to this article, JS Kim Uncovers Four Parallel Markets for Gold, when during the Wall Street collapse of 2008, bullion banks (controlled by Central Banks) routinely knocked the gold futures price down by $10, $20, $30 and sometimes even $40 an ounce usually right at market open of the NY COMEX at a time when gold was trading at less than $900 an ounce and such movements reflected 2%+ to 3%+ waterfall movements downward in price (comparatively speaking today, such percent movements would consist of $40 to $50 an ounce movements downward.

Since then, bullion banks have executed this scheme over and over, pulling bids at the market open of the NY COMEX to cause a waterfall decline in gold futures prices in a matter of a few minutes. Throw in for good measure that you can check all US holidays when the COMEX is closed for the past five years and you can find nary a day when gold is not higher or at least about even, simply for the reason that the NY Comex is closed and the Western banking cartel is non-operational in the gold/silver markets on these days. If this circumstantial evidence, literally the tip of the iceberg in the mountain of circumstantial evidence of banker price suppression schemes against gold and silver futures, is insufficient to convince the most stubborn of skeptics, then consider former US Federal Reserve Chairman Alan Greenspan’s statement in 1966 that:

“An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense – perhaps more clearly and subtly than many consistent defenders of laissez-faire – that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.”

Would not statists that support the doctrine of seizing centralized control over economic planning and monetary policy, not covertly and actively suppress the price of gold, if the most famous Central Banker himself stated that they possess “an almost hysterical antagonism” towards gold? Today, nearly half a century later, banker propaganda and re-education campaigns regarding gold and silver have been so successful that Greenspan’s accusation that many defenders of the laissez-faire doctrine fail to recognize that gold and economic freedom are inseparable still stands true. I’ve read numerous essays by those that argue for less government interference in business and monetary affairs and for stronger free markets but yet vehemently deny that bankers ever interfere in gold and silvers futures markets through active price suppression schemes.

However, as I’ve written extensively about this topic for six years at my investment blog theUndergroundInvestor.com and will address this topic further in two books I will release by year’s end, I do not want to stray from the main topic of this essay: Gold and silver mining shares offer tremendous value and tremendous upside right now due to the fact that bankers have worked very diligently to suppress the price of gold and silver mining shares for the past 12 months.

I’ve always been surprised over the years by the lack of accusations from the CEOs of the mining world that one of the primary reasons, if not the primary reason, for the underperformance of their share prices in recent years are banker price suppression schemes enacted against the PM shares. I realize that many industry analysts refrain from making this accusation due to the fact that they are being afraid of labeled by their peers or superiors as “loony, conspiracy theorists” but who cares if someone at the CFTC or some top PM analyst at Goldman Sachs or Citigroup calls you a “loony”. Due to macro and micro-economic predictions that have the track record equivalency of Ben Bernanke, most of these guys have as much credibility as a talking dolphin, so to be discredited in an ad hominem attack by any of these guys should truly pose no worry. However, nearly all mainstream gold/silver analysts appear to still engage themselves in censoring the truth due to concerns of being ostracized by the mainstream financial industry. As far as I’m concerned, being ostracized by the criminal mainstream financial industry, in my opinion, should present one with the mark of credibility.

When I first started publicly speaking about the banker executed price suppression schemes against gold and silver futures prices six years ago, bankers tried to discredit and call me crazy back then, but now, six years later, such explanations for inexplicable movements downward in gold/silver futures markets when physical supply/demand fundamentals demand upward price movements are at times, even accepted by the mainstream media, or at a minimum, now reported by them instead of being ignored by them. These are huge steps forward in dispensing the red pill of truth to skeptics regarding the true reasons behind volatile price movements downward in the gold and silver markets. Furthermore, whenever I presented factual evidence of the manipulation in gold markets, most banking analysts that disagreed with me countered my arguments with simple ad hominem attacks that never once provided a solid refutation of, nor a credible argument against the evidence I presented, circumstantial and factual (in the form of Central Bank documents that specifically addressed their desire to suppress gold prices). I believe the same three stages of truth as described by German philosopher Shopenhauer, will also manifest itself in regard to PM mining shares just as they have manifested/are about to manifest with gold/silver prices: (1) First, truth is ridiculed; (2) Second, truth is violently opposed; and (3) Third, truth is accepted as self-evident. Finally, if people so widely accept now that bankers are interfering in suppressing much higher free-market prices from operating in gold and silver futures markets, is it really that much of a deductive leap to assume that they would also be interfering in suppressing free-market prices in gold and silver mining shares?

As is the case with the behavior of gold/silver futures markets, numerous illogical anomalies that manifest themselves with regularity in the gold/silver mining shares first made me suspect that bankers were routinely interfering with the prices of gold and silver mining shares. To illustrate my point, let’s look at the performance of a couple of flagship gold and silver mining shares versus the performance of some flagship retail and financial shares.

From the chart above, you can see that the mining shares either significantly outperformed or astoundingly outperformed non-mining industry companies with a similar market cap size in simple financial metrics except for share price appreciation in the last year, a category in which they astoundingly underperformed their competitors. I am not. In the case above, I have only provided a very basic example to illustrate how drastically undervalued share prices of producing gold and silver companies are right now. I fully realize that I am not comparing apples to oranges, but I merely wanted to illustrate how companies’ share prices with healthy earnings and revenues outside of the mining sector act, since bankers have targeted gold and silver mining shares as a sector for price suppression schemes. Thus, I had to look outside of the PM sector to provide examples of what should be happening with the PM mining share prices. And I only call the other company “competitors” of the mining stocks because the goal of commercial investment industry analysts is to prevent you from buying the most undervalued stocks in the entire market and to keep you invested in overvalued and overpriced stocks. After all, when gold and silver mining stocks finally get going in their next upleg, which may be very soon, investors will naturally want to also invest in physical gold and physical silver and thus dump the broad stock market index portfolios they may currently maintain. So in essence mining stocks are competitors of the retail and tech stocks though most would say they are not.

Furthermore, most would argue that substantially lower prices in the price component of PEG ratios are justified for the mining sector due to the typical volatility of mining shares, but this past year, this argument only serves to support my thesis regarding the fact that mining shares are the most undervalued sector and the most underappreciated sector in the market right now. Sectors that are viewed as volatile typically are expected to have lower share prices to compensate for the added risk of holding shares in that sector. However, this year, given that the broad stock market index of the S&P 500 has traveled an incredible 1,230+ points up and down since May 1st but has remained relatively unchanged in value, extra volatility of mining shares over components of broad stock market indexes does not justify lower share prices of the mining stocks. Furthermore, because banker attacks on gold and silver mining shares, whether achieved by indirect take downs of gold/silver futures prices and/or direct sell-offs of the shares during times of low volume trading, are responsible for the added volatility of PM shares, arguing that the volatility of the sector justifies lower PM share prices also loses credibility.

Even if we disregard this admittedly circumstantial argument, if we compare the trading ranges at which these four stocks traded at during most of the past 12 months, the volatility comparisons do not justify the huge differences in the PEG ratios of the past 12 months between the PM stocks and the stocks that trade on the broader stock market index. Chipotle traded between a range of $270 and $340, or a 25.93% spread for most of the year while Silver Wheaton traded in a range between $30 and $40 a share, or a spread of 33% most of the year, though both stocks traded both higher and lower than these ranges for short periods of time. Though this is but a comparison of two stocks out of hundreds of mining stocks and a couple thousand NYSE stocks, and though some may argue that Chipotle is overvalued at its current share price and PEG, many PM mining stocks across the board are flush with huge cash reserves, soaring revenues, double digit earnings growth for several consecutive quarters, but yet have experienced stagnant or even negative share price growth over the past 12 months. Again I am only comparing Chipotle to Silver Wheaton to highlight the massively manipulated state of flagship gold and silver mining companies over the past 12 months and not because I think a direct comparison is the most apropos one.

Besides the totally illogical performance of Barrick Gold and Silver Wheaton above when considering their PEG ratios and their massively positive earnings growth over the last year, I have witnessed numerous anomalies over the past decade that convince me beyond a shadow of doubt that bankers manipulate the prices of gold and silver mining stocks downward on a persistent and consistent basis to prevent the masses from understanding that ownership of physical gold and physical silver will liberate them from our current morally bankrupt, illegitimate and unconstitutional monetary and banking system. For example, during dozens of options expiration days over the past five years in particular, I have witnessed uptrends in the price of numerous mining stocks stall and shed 3% to 4% from the previous day’s market close on literally no negative news other than the fact that it was OpEx day. And usually the prices of mining stocks, on days when this happens, gap down significantly on market open. Then, the following Monday after OpEx day is finished, the uptrend in mining shares will resume. Yes, one can call this behavior coincidental but anyone that does so would be dismissing the laws of probabilities and calling for a new mathematical paradigm to apply only on OpEx days. The percent chance that attributes such regular and repeated price action behavior that occurs only on OpEx days to the probabilities of “random noise” would likely come in at less than a fraction of 1%.

For the first time I can recall in recent times, the CEO of a major PM mining company finally spoke out about the ridiculous and likely intervention of the banking cartel in suppressing the price of not only PM futures but PM share prices. Keith Neumeyer, the CEO of First Majestic mining, recently voiced his opinions behind the downward price volatility not only of gold/silver futures but of gold/silver mining shares: “I don’t think supply and demand has anything to do with the price [of silver], unfortunately. The world we live in today is a paper environment where silver is priced by financial circumstances. Banks, traders and investors around the world move markets to where they want them to be. Governments and commercials—big banks like HSBC and JP Morgan—all have a piece of the action. They alternately work together or sometimes against each other. All these forces price the metal. That’s one reason we’re seeing the volatility that we’re seeing today.”Dramatic silver volatility “has to do with the financial instruments that we trade in and with the fact that silver trades a billion ounces per day on the COMEX alone when there are 26 to 30 million ounces of silver available for delivery. With that kind of leverage, you just don’t have a proper market… The governments, regulators and bullion banks have let the silver market get more and more leveraged. We’ve seen a lot of wealth destruction as a result of this leverage and we’re going to see a lot more until, finally, the governments decide to change the system.” With these scathing comments about the casino like nature of banker-rigged gold and silver markets, Neumeyer hit the nail squarely on its head.

Unfortunately, governments, because they are partners with the bankers in this system of cronyism, will never voluntarily change the system. Thus, here is the billion dollar question if one understands the tremendous illicit activity of bankers in rigging gold/silver PM shares much lower than their free market prices: Why would you want to buy into these shares even if they are remarkably undervalued right now given massive banker desire to control and suppress their share prices? After all, all of this banker rigging convinced a few gold/silver technical analysts just two weeks ago to predict imminent collapses in the silver price to $20 an ounce in light of how bankers were “painting the charts” in gold and silver to keep investors fearful of these sectors. In fact, a look at the BPGDM (Gold Miners Bullish Percent Index) right now shows that bullish sentiment towards gold/silver stocks is practically non-existent though we are at a crossroads when people should be buying PM shares because of their current tremendous upside. So other than the fact that gold and silver mining shares offer great value right now, is there a reason to realistically believe that gold and silver mining shares will win their battle against banker initiated share price take downs any time soon? To answer this question, let me tell recall a couple of stories that will frame our current situation of negative sentiment about gold/silver mining shares in the proper perspective.

A couple of years ago, in April of 2009, I spoke in Asia to a group of investors at a time when bankers had knocked gold back down from the psychologically important $1,000 an ounce level for the fourth time in the about a period of 18 months. Back then, gold was trading at about $870 an ounce. The investors that attended my conference asked me back then why in the world they should buy gold at $870 if banker manipulation was one of the primary reasons responsible for the failure of gold to breach $1,000 an oz four consecutive times. Furthermore, they inquired, why couldn’t the bankers manipulate gold back down to $500 an oz if they could successfully prevent gold from breaching $1,000 on four consecutive occasions? I remember informing the investors that the banker manipulation schemes could only succeed short-term and that the bankers would fail long-term. Just as Central Banks’ endless rounds of QE will spectacularly fail long-term and only serve to kick the can of global economic failure down the road, the Central Banks’ price suppression schemes against gold and silver only kick the inevitable rises in gold and silver prices down the road as well. In addition, I informed my highly skeptical audience that the law of diminishing returns would apply to banker manipulation schemes that work against free market forces, and that each subsequent application of manipulation against free market forces would last a shorter time, as is evident in the chart above. Though there was a large gap of time between the second and third times that gold approached $1,000 an ounce after getting knocked backwards, the time in between the third and fourth time and the fourth and fifth time gold approached $1,000 an ounce was much more condensed. So those that remained skeptical and had more faith in banker amorality than in the belief they could defeat these banker manipulation schemes lost out on a 100% gain in the price of gold that has occurred between then and today.

If we look at the chart of the mining shares I presented above, the same pattern with the mining stocks that afflicted gold prices a couple of years ago is evident. The HUI Gold Bugs Amex has been turned back from the 600-610 level four consecutive times (with one false breakout in early September 2011) and each time bankers have rebuffed the index from this level, it has taken less and less time for the index to rebound to this level again as with the bankers’ attempt to defend the $1,000 an oz price level with gold. Though you may not recall, I remember many people being incredibly frustrated with the price action in gold from 2008 and 2009 and with some people selling all their gold as a result of the bankers’ intervention to control the price of gold, an action that ironically was the exact end goal of the bankers’ manipulation game. Today, despite the fact that we have history as a guide and the cliché that history always repeats itself, for some reason, I have seen many people become incredibly frustrated with the bankers’ rebuke of the attempts of gold and silver mining shares to climb higher and as I witnessed in 2009, I have seen people make the big mistake of dumping all of their gold and silver mining shares in the past couple of months due to frustration. In fact, after I scripted this article, Don’t Miss Out on One of the Best Investments of a Lifetime…Yet Again, on August 8, 2011 in which I advocated the HUI at 531.78 as a good low-risk, high-reward entry point to purchase some gold mining stocks, I received some comments that literally called me an “idiot” for writing this article after the HUI hit a low at market close of 502.92 in early October, even though this represented less than a 5.5% drop from the level I advocated buying mining stocks that past August.

As one can hardly legitimately call anyone an idiot for making a call that leads to a temporary 5% drop, I can easily guess the novice investor mistake that this irate person committed. Just as is the case today, as was the case on August 8, 2011, hardly any investors ever make a move when gold/silver assets are dirt-cheap. Instead they fall victim to the game of banker manipulation, and refuse to buy gold and silver assets when they present solid value as they fear a gold/silver crash. Consequently, they wait for significant rebounds before ever investing in gold/silver despite golden fundamentals at much lower prices that point to the strong possibility of much higher prices in the future. Even if much higher prices are followed by another round of manipulation and lower prices, interim volatility is irrelevant, as long as your decisions to enter gold/silver markets at the right time and prices are solid. I can only fathom that this person finally made the move to buy mining stocks after the HUI hit a short-term top of 635.04 one month after I advocated the buying of gold mining stocks. Thus, one month later, instead of being able to sit through a very manageable 5% drop, this investor likely panic-sold out of gold mining stocks after taking a 26% hit to his gold mining stock portfolio in little over a month. Though my call that PM stocks would be the best in class from that point forward to the end of this year has not yet come to fruition, I strongly believe that my end prediction will still prove correct, and that only the time frame of my prediction will be pushed out by several months. That is why I always provide timely guidance to my clients that distinguishes between the times we need to move into, or remain in cash, and the times we need to remain patient and fully committed. As I illustrated in my example above, timing can easily be the difference between easily waiting through a minor 5% correction or being stuck with a 26% loss after one month.

The short-term corrections of the HUI Gold Bugs index from the 600-610 level on four consecutive occasions has led to bullish sentiment being nearly non-existent for gold mining shares right now (and you could easily make the point that bullish sentiment in silver mining shares is even worse right now). Just as most investors committed the huge mistake of judging gold’s upside in 2009 as non-existent due to banker price suppression schemes, people are making the very same mistake in judging the upside of mining shares right now as non-existent. The banker price suppression scheme against gold and silver mining shares will fail, and I believe that the fifth approach of the HUI to the 600-610 level will be the time that the HUI breaks above this level for good and heads much higher.

Last time I saw an opportunity better than our current one in the mining shares, I informed my clients to double down on their positions in Silver Wheaton at $3.45 a share in November of 2008. Today with Silver Wheaton trading at $33.52 a share, those that acted during a time when sentiment regarding PM shares was at an all-time low, have been rewarded with a 872% gain in little more than three years. Though I don’t expect mining shares to gain 872% in 3 years again, no doubt there may be more than a handful that return several hundred percent in gains in the next three years.

We must not let our fear of bankers’ amorality and their desire to suppress our freedom scare us away from buying assets that will free us from their illegitimate and unconstitutional monetary system. If one remains too fearful to buy gold and silver mining shares due to banker introduced volatility into this sector, consider at a minimum, purchases of physical gold and physical silver to replace your fiat paper currencies and to replace your paper silver SLV and paper gold GLD ETFs. Also consider that the global broad stock market indexes have been no less volatile than mining shares this year with MUCH greater risk as banks have manipulated broad stock market indexes higher and mining share indexes lower. And what if I’m wrong about mining shares heading much higher from this point forward? The aforementioned Keith Neumeyer, CEO of First Majestic Silver, provides perhaps the best answer to have faith that history will repeat itself with the mining stocks share prices eventually moving higher into their free market, non downward-manipulated prices:

“If I’m wrong (about free market forces winning the battle in gold/silver markets in the future), the banks will run the world, even more so than they do today, 10 or 20 years from now. God forbid that we ever get there because that’s a one currency, one government world that would absolutely be a disaster for the human race. There would be no freedoms at all to move or to invest. It would be like having shackles on our ankles. There is a movement to go in that direction, unfortunately. There are a number of very wealthy people that want to see that. I hope that we can find the politicians to prevent that type of world from coming to pass.”

About the author: JS Kim is the Managing Director, Chief Investment Strategist & Founder of SmartKnowledgeU, a fiercely independent investment research and consulting firm that has been providing contrarian, independent investment guidance to clients in 33 different countries since 2006. Despite the struggles of PM mining shares in 2011, his Crisis Investment Opportunities newsletter, since inception in June, 2007 to the end of September 2011 has yielded a cumulative +162.40% gain versus the -36.20% loss of the ASX200 and the -25.70% loss of the S&P 500 over the same investment period. 

Republishing Rights: The above article may be reprinted on other websites only if all links remain intact and all text is reprinted as is, with no revisions to the above material, including the “about the author” section.

Proof We Were Right

(Extract from “Smart Investing Daily”)

30 Nov 2011 – Andrew Snyder, Editorial Director, Insiders Strategy Group

ConAgra Foods made a big move yesterday. It only shelled out $10 million, but its decision to buy more of a tiny food company proves we were right.

ConAgra Foods (CAG:NYSE) made headlines yesterday. What the company did yesterday proves our strategy is on the right track. Before the bell, ConAgra told us it opened its wallet and bought another $10 million worth of Agro Tech Foods shares. It’s now the majority owner of the Indian company. The move is great news for us for two reasons:

First… the food angle. The world is hungry. We’ve got 7 billion mouths to feed. Population growth is greatly outpacing the pace of crop yield expansion. It is a natural supply imbalance. By nabbing a stake in a country with some of the hottest growth and hungriest mouths, it puts its hands under a spigot of cash.

But there is more to this story. ConAgra is a rich company. It earns nearly 2 billion bucks a year and has over a billion in cash on hand. It could buy a lot of companies. But it chose tiny Agro Tech…. a small cap with a market value of about $200 million. It is not a coincidence a company like ConAgra is jumping into small caps – we believe this is the best time in a long time to invest in the little guy. Here’s why. It goes back to what I wrote on Nov. 21:

“With the exception of when fear is highest, small caps have a strong tendency to outperform their larger brethren. That means the time to buy is when fear is at its peak.”

Look around. Open up any newspaper. Turn on the TV.

Fear is everywhere. We’re scared of a meltdown in Europe. We’re scared the Occupy crowd will turn violent. We’re scared our government will destroy our great nation’s heritage. Because of it all, stocks are cheap. Some of the small caps we’ve looked at over the past few months are the cheapest they’ve been in over a decade.

Our strategy in this mess is simple… forget what you’ve been told. It’s time for unconventional techniques. It is exactly why I told my readers to buy shares of a small cap that is in the heart of the food industry.

We made our move with great timing. ConAgra tipped its hand yesterday. Valuations of companies across the food spectrum jumped… including our stake.

Despite the malaise created by political and economic uncertainty, opportunities remain. No matter how bad things get… we still need to eat.

From: http://www.smartinvestingdaily.com/articles/smart-investing-113011.html?sub=SID&o=541234&s=545208&u=55050304&l=343702&r=Milo